GABELLI UTILITY TRUST, N-2/A, 1999-09-22

GABELLI UTILITY TRUST
N-2/A, 1999-09-22

Previous: BID COM INTERNATIONAL INC, 6-K, 1999-09-22

Next: CALICO COMMERCE INC/, S-1/A, 1999-09-22

As filed with the Securities and Exchange Commission on September 22, 1999

Securities Act File No. 333-85593
Investment Company Act File No. 811-09243
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------

FORM N-2
------------------------

[ ] Registration Statement under the Securities Act of 1933
[X] Pre-Effective Amendment No. 1
[ ] Post-Effective Amendment No.
and/or

[X] Registration Statement under the Investment
Company Act of 1940 Amendment No. 2

(Check Appropriate Box or Boxes)
------------------------

THE GABELLI UTILITY TRUST
(Exact Name of Registrant as Specified in Charter)
------------------------

One Corporate Center
Rye, New York 10580-1434
(Address of Principal Executive Offices)

Registrant's Telephone Number, Including Area Code: (800) 422-3554

Bruce N. Alpert
The Gabelli Utility Trust
One Corporate Center
Rye, New York 10580-1434
(914) 921-5100
(Name and Address of Agent for Service)
------------------------

Copies to:

James E. McKee, Esq. Richard T. Prins, Esq.
The Gabelli Utility Trust Skadden, Arps, Slate, Meager & Flom LLP
One Corporate Center 919 Third Avenue
Rye, New York 10580 New York, New York 10022

------------------------

Approximate date of proposed public offering: As soon as practicable
after the effective date of this Registration Statement.

If any securities being registered on this form will be offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities
Act of 1933, as amended, other than securities offered in connection with a
dividend reinvestment plan, check the following box. [X]

------------------------

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>

Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Title of Securities Amount Being Price Offering Registration
Being Registered Registered Per Share(1) Price(1) Fee

<S> <C> <C> <C> <C>
Common Stock, .001
par value per share 1,000,000 Shares $7.50 $7,500,000 $2085

(1) Estimated solely for the purpose of calculating the registration fee.

</TABLE>

------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

CROSS-REFERENCE SHEET
PURSUANT TO RULE 481(a)

N-2 Item Number Location in Part A (Caption)
- ------------------------------------------------------------------------------

PART A

1. Outside Front Cover............... Outside Front Cover Page

2. Inside Front and Outside Back Cover
Page............................ Outside Front Cover Page; Inside
Front Cover Page

3. Fee Table and Synopsis............ Prospectus Summary; Table of Fees
and Expenses

4. Financial Highlights.............. Not Applicable

5. Plan of Distribution.............. Outside Front Cover Page; Prospectus
Summary; Purchasing Shares of the
Fund

6. Selling Shareholders.............. Not Applicable

7. Use of Proceeds................... Use of Proceeds; Investment
Objectives and Policies

8. General Description of the
Registrant...................... Outside Front Cover Page;
Prospectus Summary; The Fund;
Investment Objectives and
Policies; Special Investment
Methods; Risk Factors & Special
Considerations;

9. Management........................ Outside Front Cover Page; Prospectus
Summary; Management of the Fund;
Custodian, Transfer Agent,
Dividend-Disbursing Agent and
Registrar

10. Capital Stock, Long-Term Debt,
and Other Securities............ Outside Front Cover Page; Prospectus
Summary; Capitalization; Investment
Objectives and Policies; Description
of Capital Stock; Taxation

11. Defaults and Arrears on Senior
Securities...................... Not Applicable

12. Legal Proceedings................. Not Applicable

13. Table of Contents of the Statement
of Additional Information....... Table of Contents of the Statement
of Additional Information

PART B Location in Statement of
Additional Information
- ------------------------------------------------------------------------------

14. Cover Page........................ Outside Front Cover Page

15. Table of Contents................. Outside Front Cover Page

16. General Information and History... The Fund

17. Investment Objectives and
Policies........................ Investment Objectives and Policies;
Investment Restrictions

18. Management........................ Management of the Fund

19. Control Persons and Principal
Holders of Securities........... Management of the Fund; Beneficial
Owner

20. Investment Advisory and Other
Services........................ Management of the Fund

21. Brokerage Allocation and Other
Practices....................... Portfolio Transactions

22. Tax Status........................ Taxation

23. Financial Statements.............. Financial Statements

PART C

Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.

PROSPECTUS

1,000,000 Shares

The Gabelli Utility Trust

Common Stock

[GABELLI LOGO]

-----------------

The Gabelli Utility Trust (the "Fund") is a non-diversified
management investment company registered under the Investment Company Act
of 1940, as amended (the "1940 Act"). The Fund was organized under the laws
of the State of Delaware on February 25, 1999. Gabelli Funds, LLC is the
Fund's investment adviser (the "Adviser").

The outstanding common shares of beneficial interest of the Fund, par
value $0.001 (the "Common Stock"), are listed and traded on the New York
Stock Exchange under the symbol "GUT." On ___________, 1999, the last
reported sale price for the Common Stock was $_____________.

Pursuant to this Prospectus, the Fund is offering 1,000,000 shares of
Common Stock (the "Shares") for a period of up to two years from the date
of this Prospectus. For a period of 30 days from the date of this
Prospectus (the "Initial Period"), the Fund will offer the Shares directly
and through Gabelli and Company, Inc., a broker-dealer affiliate of the
Adviser ("Gabelli & Company"), to shareholders who held shares of the Fund
as of July 9, 1999, at a price per share equal to the net asset value next
computed after the Fund receives the order. There will be no initial sales
charge or underwriting discount for purchases of Shares during the Initial
Period. Subsequent to the Initial Period, the Fund will offer the Shares
continuously or from time to time as determined by the Board of Trustees of
the Fund, directly and through selected broker-dealers and financial
services firms, at a price per share not less than net asset value to be
determined by the Board of Trustees of the Fund on a periodic basis. The
Adviser will compensate such broker-dealers and financial services firms
(including Gabelli & Company) at a rate of up to 4.5% of the dollar value
of Shares purchased from the Fund by such broker-dealers or financial
services firms. The Fund reserves the right to terminate or suspend the
continuous offering of its Shares at any time without prior notice.

This Prospectus sets forth certain information about the Fund an
investor should know before investing and should be retained for future
reference.

A Statement of Additional Information dated ______, 1999 (the "SAI")
has been filed with the Securities and Exchange Commission and is
incorporated by reference in this Prospectus. The table of contents of the
SAI appears on page __ of this Prospectus. A copy of the SAI may be
obtained without charge by writing to the Fund at its address at One
Corporate Center, Rye, New York 10580-1434 or calling the Fund toll-free at
(800) 422-3554.

-----------------

See "Risk Factors and Special Considerations" beginning on page ___
for risk factors that should be considered by prospective investors.

-----------------

These securities have not been approved or disapproved by the
Securities and Exchange Commission or any State securities commission, nor
has the Securities and Exchange Commission or any State securities
commission passed upon the accuracy or adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.

-----------------

_____________, 1999

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This Prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.

PROSPECTUS SUMMARY

The following information is qualified in its entirety by reference
to the more detailed information included elsewhere in this Prospectus and
the SAI.

The Fund................... The Fund is a closed-end non-diversified
management investment company organized
under the laws of the State of Delaware on
February 25, 1999.

Investment Objectives...... The Fund's primary investment objective is
long-term growth of capital and income,
which the Fund attempts to achieve by
investing at least 65% of its total assets
in common stock and other securities of
foreign and domestic companies involved to
a substantial extent in providing (i)
products, services or equipment for the
generation or distribution of electricity,
gas and water and (ii) telecommunications
services or infrastructure operations, such
as airports, toll roads and municipal
services (collectively, the "Utility
Industry"). No assurance can be given that
the Fund's investment objectives will be
achieved. See "Investment Objectives and
Policies." The Fund's outstanding common
shares of beneficial interest, par value
$.001 per share (the "Common Stock"), is
listed and traded on the New York Stock
Exchange (the "NYSE"). As of August 31,
1999, the net assets of the Fund were
approximately $80 million.

The Offering............... Pursuant to this Prospectus, the Fund is
offering 1,000,000 shares of Common Stock
(the "Shares") for a period of up to two
years from the date of this Prospectus (the
"Offering"). For a period of 30 days from
the date of this Prospectus (the "Initial
Period"), the Fund will offer the Shares
directly and through Gabelli and Company,
Inc., a broker-dealer affiliate of the
Adviser ("Gabelli & Company"), to
shareholders who held shares of the Fund as
of July 9, 1999, at a price per share equal
to the net asset value next computed after
the Fund receives the order. There will be
no initial sales charge or underwriting
discount for purchases of Shares during the
Initial Period. Subsequent to the Initial
Period, the Fund will offer the Shares
continuously or from time to time as
determined by the Board of Trustees of the
Fund, directly and through selected
broker-dealers and financial services
firms, at a price per share not less than
net asset value to be determined by the
Board of Trustees of the Fund on a periodic
basis. The Adviser will compensate such
broker-dealers and financial services firms
(including Gabelli & Company) at a rate of
up to 4.5% of the dollar value of Shares
purchased from the Fund by such
broker-dealers or financial services firms.
The Fund reserves the right to terminate or
suspend the continuous offering of its
Shares at any time without prior notice.

Use of Proceeds............ The Fund will use the net proceeds from the
Offering to purchase additional portfolio
securities in accordance with its
investment objectives and policies. See
"Use of Proceeds."

Listing.................... The Fund's outstanding Common Stock is listed
and traded on the NYSE under the symbol
"GUT." On __________, 1999, the last
reported sale price for the Common Stock
was $___________.

Management and Fees........ Gabelli Funds, LLC serves as the Fund's
investment adviser (the "Adviser") and is
compensated for its services and its
related expenses at an annual rate of 1.00%
of the Fund's average daily net assets. The
Adviser is responsible for administration
of the Fund and currently utilizes and pays
the fees of a third party administrator.

Risk Factors and Special
Considerations ......... Repurchase and Charter Provisions. As
shareholders of a closed-end fund,
shareholders of the Fund do not have the
right to redeem their shares. However, the
shares are freely transferable, except for
shares received by persons who may be
deemed to be "affiliates" of the Fund under
the Securities Act of 1933, as amended
("1933 Act"). Shareholders desiring
liquidity may, subject to applicable
securities laws, trade their shares in the
Fund on the NYSE or other markets on which
the shares may trade at the then current
market value. The Fund is authorized to
repurchase its shares on the open market
when the shares are trading at a discount
of 10% or more (or such other percentage as
its Board of Trustees may determine from
time to time) from the net asset value. In
addition, certain provisions of the Fund's
Declaration of Trust may be regarded as
"anti-takeover" provisions. Pursuant to
these provisions only one of the three
classes of directors (which term includes
trustees) is elected each year, and the
affirmative vote of the holders of 75% of
the outstanding voting shares of the Fund
is necessary to authorize amendments to the
Fund's Declaration of Trust that would be
necessary to convert the Fund from a
closed-end to an open-end investment
company. In addition, the affirmative vote
of the holders of 80% of the outstanding
voting shares of each class of the Fund,
voting as a class, is generally required to
authorize certain business transactions
with the beneficial owner of more than 5%
of the outstanding shares of the Fund. In
addition, if the Fund issues preferred
stock, the holders of the preferred shares
would have the authority to elect two
directors at all times and would have
separate class voting rights on specified
matters including conversion of the Fund to
open-end status and certain reorganizations
of the Fund. The overall effect of these
provisions is to render more difficult the
accomplishment of a merger with, or the
assumption of control by, a principal
shareholder, or the conversion of the Fund
to open-end status. These provisions may
have the effect of depriving Fund
shareholders of an opportunity to sell
their shares at a premium above the
prevailing market price. See "Certain
Provisions of the Declaration of Trust and
By-laws."

Non-Diversified Status. As a non-diversified
investment company under the 1940 Act, the
Fund is not limited in the proportion of
its assets that may be invested in
securities of a single issuer, and
accordingly, an investment in the Fund may
present greater risk to an investor than an
investment in a diversified company because
the investment risk may be concentrated in
fewer securities. See "Investment
Objectives and Policies," "Risk Factors and
Special Considerations" and "Taxation."

Discount to Net Asset Value. Shares of
closed-end investment companies frequently
trade at a discount from net asset value.
This characteristic of shares of a
closed-end investment company is a risk
separate and distinct from the risk that
the Fund's net asset value may decrease.
The Adviser cannot predict whether the
Common Stock will trade at, below or above
net asset value. The risk of holding shares
of closed-end investment companies that
might trade at a discount to net asset
value is more pronounced for shareholders
who wish to sell their shares in a
relatively short period of time after
acquiring such shares. For those
shareholders, realization of a gain or loss
on their investment is likely to be more
dependent upon the existence of a premium
or discount than upon portfolio
performance. See "Investment and Objectives
and Policies" and "Risk Factors and Special
Considerations."

Industry Risks. The Fund will invest at least
65% of its assets in companies in the
Utility Industry and, as a result, the
value of the Fund's shares will be more
susceptible to factors affecting those
particular types of companies, including
governmental regulation, deregulation,
inflationary and other cost increases in
fuel and other operating expenses and high
interest costs or borrowings needed for
capital construction programs, including
compliance with environmental regulations.
As a consequence of its concentration
policy, the Fund's investments may be
subject to greater risk and market
fluctuation than a fund that has securities
representing a broader range of
alternatives. See "Investment Objectives
and Policies" and "Risk Factors and Special
Considerations."

Foreign Securities. There is no limitation on
the amount of foreign securities in which
the Fund may invest. Investing in
securities of foreign companies and foreign
governments, which generally are
denominated in foreign currencies, may
involve certain risk and opportunity
considerations not typically associated
with investing in domestic companies and
could cause the Fund to be affected
favorably or unfavorably by changes in
currency exchange rates and revaluations of
currencies. See "Investment Objectives and
Policies" and "Risk Factors and Special
Considerations."

Leveraging. As provided in the 1940 Act and
subject to certain exceptions, the Fund may
issue debt or preferred stock so long as
the Fund's total assets immediately after
such issuance, less certain ordinary course
liabilities, exceed 300% of the amount of
the debt outstanding and exceed 200% of the
sum of the amount of preferred stock and
debt outstanding. Such debt or preferred
stock may be convertible in accordance with
SEC staff guidelines which may permit each
fund to obtain leverage at attractive
rates. Use of leverage may magnify the
impact on the holders of common stock of
changes in net asset value and the cost of
leverage may exceed the return on the
securities acquired with the proceeds of
leverage, thereby diminishing rather than
enhancing the return to such shareholders
and generally making the Fund's total
return to such shareholders more volatile.
In addition, the Fund may be required to
sell investments in order to meet dividend
or interest payments on the debt or
preferred stock when it may be
disadvantageous to do so. See "Risk Factors
and Special Considerations" and "Special
Investment Methods".

Key Personnel. The Adviser is dependent upon
the expertise of Mr. Mario J. Gabelli in
providing advisory services with respect to
the Fund's investments. If the Adviser were
to lose the services of Mr. Gabelli, its
ability to service the Fund could be
adversely affected. There can be no
assurance that a suitable replacement could
be found for Mr. Gabelli in the event of
his death, resignation, retirement or
inability to act on behalf of the Adviser.

Taxation. The Fund intends to elect to be
treated and qualify, for Federal income tax
purposes, as a regulated investment
company. Qualification requires, among
other things, compliance by the Fund with
certain distribution requirements.
Statutory limitations on distributions on
the Common Stock if the Fund fails to
satisfy the 1940 Act's asset coverage
requirements could jeopardize the Fund's
ability to meet the distribution
requirements. See "Taxation" for a more
complete discussion of these and other
Federal income tax considerations.

Distribution Policy........ The Fund intends to file an exemptive
application with the Securities and
Exchange Commission requesting an order of
exemption from Section 19(b) of the 1940
Act (the "Section 19(b) Exemptive Order")
enabling it to distribute capital gains to
shareholders as often as monthly. There is
no guarantee that the Section 19(b)
Exemptive Order will be granted. If the
requested relief is granted, the Fund
intends to make distributions of net
investment income and capital gains
monthly. In the absence of the anticipated
Section 19(b) Exemptive Order, the Fund
intends to make one annual capital gains
distribution, one supplemental capital
gains distribution which does not exceed
10% of the aggregate amount distributed for
such taxable year and one additional
distribution of long-term capital gains for
the purpose of not incurring additional
taxes, in accordance with Rule 19b-1 under
the 1940 Act. See "Distribution Policy."

Custodian, Transfer and
Dividend-Disbursing
Agent and Registrar..... Boston Safe Deposit and Trust Company serves as
the Fund's custodian and State Street Bank
and Trust Company serves as transfer and
dividend-disbursing agent and registrar and
as agent to provide notice of redemption
and certain voting rights. See "Custodian,
Transfer Agent, Dividend-Disbursing Agent
and Registrar."

TABLE OF FEES AND EXPENSES

Registrant

SHAREHOLDER TRANSACTION EXPENSES
Voluntary Cash Purchase Plan Purchase Fees.... $0.75 (1)
Automatic Dividend Reinvestment and
Voluntary Cash Purchase Plan Sales Fees..... $2.50 (1)

ANNUAL OPERATING EXPENSES (as a percentage
of net assets attributable to Common Stock)

Management Fees............................. 1.00%

Other Expenses (2).......................... 0.75%
-----

Total Annual Operating Expenses....... 1.75%
-----

(1)Shareholders participating in the Fund's Automatic Dividend Reinvestment
and Voluntary Cash Purchase Plan would pay $0.75 per transaction to
purchase shares and $2.50 per transaction to sell shares. See "Automatic
Dividend Reinvestment and Voluntary Cash Purchase Plan" in the SAI.

(2)"Other expenses" are based on estimated amounts for the first full
fiscal year for the Fund.

EXAMPLE

The following examples illustrate the projected dollar amount
of cumulative expenses that would be incurred over various periods with
respect to a hypothetical investment in the Fund. These amounts are based
upon payment by the Fund of expenses at levels set forth in the above
table.

You would pay the following expenses on a $1,000 investment,
assuming a 5% annual return: (3)

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

$18 $55 $95 $206

The foregoing table is to assist you in understanding the
various costs and expenses that an investor in the Fund will bear directly
or indirectly. The assumed 5% annual return is not a prediction of, and
does not represent, the projected or actual performance of the Common
Stock. Actual expenses and annual rates of return may be more or less than
those assumed for purposes of the Example.

The Fund commenced operations on July 9, 1999 and consequently
has a limited operating history. As such, expenses are based on current
estimates for the first full fiscal year of the Fund.

- ------------------------

(3) Amounts are exclusive of fees discussed in Note (1) above.

USE OF PROCEEDS

The net proceeds of the offering are estimated at $7,390,000, after
deduction of estimated offering expenses payable by the Fund. The Adviser
expects to invest such proceeds in accordance with the Fund's investment
objectives and policies within six months after receipt of such proceeds,
depending on market conditions for the types of securities in which the
Fund principally invests. Pending such investment, the proceeds will be
held in high quality short-term debt securities and instruments.

CAPITALIZATION

The following table sets forth the capitalization of the Fund as of
July 9, 1999,(a) and as adjusted to give effect to the Offering.

Actual As Adjusted(b)
Shareholders' equity:
Common Stock, $.001 par value:
Par value (Authorized unlimited shares; issued
and outstanding
10,611,635 shares; as adjusted 11,611,635
shares)....................................... $100,000 $100,000
Additional paid-in capital....................... $79,487,259 $86,887,259
Distributions in excess of net realized gain on
investments................................... $ 0 $0
Undistributed net investment income.............. $ 0 $0
Net unrealized appreciation of investments....... $ 0 $0
Net assets.................................... $79,587,259 $86,987,259

- -------------------

(a) The Fund commenced operations on July 9,1999.

(b) After deducting estimated costs of the Offering of $110,000.

THE FUND

The Fund is a closed-end non-diversified management investment
company organized under the laws of the State of Delaware on February 25,
1999.

INVESTMENT OBJECTIVES AND POLICIES

The primary objective of the Fund is long-term growth of capital and
income, which the Fund attempts to achieve by investing at least 65% of its
total assets in common stock and other securities of foreign and domestic
companies involved to a substantial extent in (e.g., at least 50% of the
assets, gross income or net profits of a company is committed to or derived
from) providing products, services or equipment for (i) the generation or
distribution of electricity, gas and water and (ii) telecommunications
services or infrastructure operations, such as airports, toll roads and
municipal services (collectively, the "Utility Industry"). The remaining
35% of its assets may be invested in other securities including stocks,
debt obligations and money market instruments, as well as certain
derivative instruments in the utility industry or other industries.
Morever, should extraordinary conditions affecting such sectors or
securities markets as a whole warrant, the Fund may temporarily be
primarily invested in money market instruments.

The companies in which the Fund may invest are those that are
included to a substantial extent in the Utility Industry. Although many of
these companies traditionally pay above average dividends, the Fund intends
to focus on those companies whose securities have the potential to increase
in value. The Fund's performance is expected to reflect conditions
affecting public utility industries. These industries are sensitive to
factors such as interest rates, local and national government regulations,
the price and availability of fuel, environmental protection or energy
conservation regulations, the level of demand for services, and the risks
associated with constructing and operating nuclear power facilities. These
factors may change rapidly. The Fund emphasizes quality in selecting
utility investments, and looks for companies that have proven dividend
records and sound financial structures. Believing that the industry is
under consolidation due to changes in regulation, the Fund intends to
position itself to take advantage of trends in consolidation.

Under normal circumstances the Fund may invest in securities of
issuers located in countries other than the United States. Investing in
securities of foreign issuers, which generally are denominated in foreign
currencies, may involve certain risk and opportunity considerations not
typically associated with investing in domestic companies and could cause
the Fund to be affected favorably or unfavorably by changes in currency
exchange rates and revaluations of currencies.

INVESTMENT METHODOLOGY OF THE FUND

In selecting securities for the Fund, the Adviser normally will
consider the following factors, among others: (1) the Adviser's own
evaluations of the private market value, cash flow, earnings per share and
other fundamental aspects of the underlying assets and business of the
company; (2) the potential for capital appreciation of the securities; (3)
the interest or dividend income generated by the securities; (4) the prices
of the securities relative to other comparable securities; (5) whether the
securities are entitled to the benefits of call protection or other
protective covenants; (6) the existence of any anti-dilution protections or
guarantees of the security; and (7) the diversification of the portfolio of
the Fund as to issuers. The Adviser's investment philosophy with respect to
debt and equity securities seeks to identify assets that are selling in the
public market at a discount to their private market value, which the
Adviser defines as the value informed purchasers are willing to pay to
acquire assets with similar characteristics. The Adviser also normally
evaluates the issuers' free cash flow and long-term earnings trends.
Finally, the Adviser looks for a catalyst -- something in the company's
industry or indigenous to the company or country itself that will surface
additional value.

SPECIAL INVESTMENT METHODS

TEMPORARY INVESTMENTS

During temporary defensive periods and during inopportune periods to
be fully invested, the Fund may invest in U.S. Government Securities and in
money market mutual funds not affiliated with the Adviser that invest in
those securities. Obligations of certain agencies and instrumentalities of
the U.S. Government, such as the Government National Mortgage Association,
are supported by the "full faith and credit" of the U.S. Government;
others, such as those of the Export-Import Bank of the U.S., are supported
by the right of the issuer to borrow from the U.S. Treasury; others, such
as those of the Federal National Mortgage Association, are supported by the
discretionary authority of the U.S. Government to purchase the agency's
obligations; and still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. Government would provide financial
support to U.S. Government-sponsored instrumentalities if it is not
obligated to do so by law.

OPTIONS

On behalf of the Fund, the Adviser may, subject to the guidelines of
the Board of Directors, purchase or sell, i.e., write, options on
securities, securities indices and foreign currencies which are listed on a
national securities exchange or in the U.S. over-the-counter ("OTC")
markets as a means of achieving additional return or of hedging the value
of the Fund's portfolio. The Fund may write covered call options on common
stocks that it owns or has an immediate right to acquire through conversion
or exchange of other securities in an amount not to exceed 25% of total
assets or invest up to 10% of its total assets in the purchase of put
options on common stocks that the Fund owns or may acquire through the
conversion or exchange of other securities that it owns.

A call option is a contract that gives the holder of the option the
right to buy from the writer (seller) of the call option, in return for a
premium paid, the security underlying the option at a specified exercise
price at any time during the term of the option. The writer of the call
option has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price during the option
period.

A put option is a contract that gives the holder of the option the
right to sell to the writer (seller), in return for the premium, the
underlying security at a specified price during the term of the option. The
writer of the put, who receives the premium, has the obligation to buy the
underlying security upon exercise, at the exercise price during the option
period.

An exchange traded option may be closed out only on an exchange which
provides a secondary market for an option of the same series. Although the
Fund will generally purchase or write only those options for which there
appears to be an active secondary market, there is no assurance that a
liquid secondary market on an exchange will exist for any particular
option.

FUTURES CONTRACTS AND OPTIONS THEREON

On behalf of the Fund, the Adviser may, subject to guidelines of the
Board of Directors, purchase and sell financial futures contracts and
options thereon which are traded on a commodities exchange or board of
trade for certain hedging, yield enhancement and risk management purposes,
in accordance with regulations of the Commodity Futures Trading Commission
("CFTC"). These futures contracts and related options may be on debt
securities, financial indices, securities indices, U.S. Government
securities and foreign currencies. A financial futures contract is an
agreement to purchase or sell an agreed amount of securities or currencies
at a set price for delivery in the future.

Under CFTC regulations, the Adviser on behalf of the Fund may
purchase and sell futures contracts and options thereon for bona fide
hedging purposes, as defined under CFTC regulations, without regard to the
percentage of the Fund's assets committed to margin and option premiums.
The Fund will not enter into futures contracts or options on futures
contracts unless (i) the aggregate initial margins and premiums do not
exceed 5% of the fair market value of its assets and (ii) the aggregate
market value of its outstanding futures contracts and the market value of
the currencies and futures contracts subject to outstanding options written
by the Fund, as the case may be, do not exceed 50% of the market value of
its total assets.

FORWARD CURRENCY EXCHANGE CONTRACTS

Subject to guidelines of the Board of Directors, the Fund may enter
into forward foreign currency exchange contracts to protect the value of
its portfolio against future changes in the level of currency exchange
rates. The Fund may enter into such contracts on a spot, i.e., cash, basis
at the rate then prevailing in the currency exchange market or on a forward
basis, by entering into a forward contract to purchase or sell currency. A
forward contract on foreign currency is an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days
agreed upon by the parties from the date of the contract at a price set on
the date of the contract. The Fund's dealings in forward contracts will be
limited to hedging involving either specific transactions or portfolio
positions, and the amount the Fund may invest in forward currency contracts
is limited to the amount of its aggregate investments in foreign
currencies. The Fund will only enter into forward currency contracts with
parties which it believes to be creditworthy.

LEVERAGING

As provided in the 1940 Act and subject to compliance with the Fund's
investment objectives, policies and restrictions, the Fund may issue debt
or preferred stock so long as the Fund's total assets immediately after
such issuance, less certain ordinary course liabilities, exceed 300% of the
amount of the debt outstanding and exceed 200% of the sum of the amount of
preferred stock and debt outstanding. Such debt or preferred stock may be
convertible in accordance with SEC staff guidelines which may permit the
Fund to obtain leverage at attractive rates.

Further information on the investment objectives and policies of the
Fund are set forth in the SAI.

INVESTMENT RESTRICTIONS

The Fund operates under the following restrictions that constitute
fundamental policies that, except as otherwise noted, cannot be changed
without the affirmative vote of the holders of a majority of the
outstanding voting securities of the Fund. Except as otherwise noted, all
percentage limitations set forth below apply immediately after a purchase
or initial investment and any subsequent change in any applicable
percentage resulting from market fluctuations does not require any action.
The Fund may not:

1. invest 25% or more of its total assets, taken at market
value at the time of each investment, in the securities of issuers in
any particular industry other than the Utility Industry. This
restriction does not apply to investments in U.S. Government
Securities.

2. purchase or sell commodities or commodity contracts except
that the Fund may purchase or sell futures contracts and related
options thereon if immediately thereafter (i) no more than 5% of its
total assets are invested in margins and premiums and (ii) the
aggregate market value of its outstanding futures contracts and
market value of the currencies and futures contracts subject to
outstanding options written by the Fund do not exceed 50% of the
market value of its total assets. The Fund may not purchase or sell
real estate, provided that the Fund may invest in securities secured
by real estate or interests therein or issued by companies which
invest in real estate or interests therein.

3. make loans of money, except by the purchase of a portion of
private or publicly distributed debt obligations or the entering into
of repurchase agreements. The Fund reserves the authority to make
loans of its portfolio securities to financial intermediaries in an
aggregate amount not exceeding 20% of its total assets. Any such
loans will only be made upon approval of, and subject to any
conditions imposed by, the Board of Trustees of the Fund. Because
these loans are required to be fully collateralized at all times, the
risk of loss in the event of default of the borrower should be
slight.

4. borrow money except to the extent permitted by applicable
law. The 1940 Act currently requires that the Fund have 300% asset
coverage with respect to all borrowings other than temporary
borrowings of up to 5% of the value of its total assets.

5. issue senior securities, except to the extent permitted by
applicable law.

6. underwrite securities of other issuers except insofar as the
Fund may be deemed an underwriter under the Securities Act 1933 (the
"1933 Act") in selling portfolio securities; provided, however, this
restriction shall not apply to securities of any investment company
organized by the Fund that are to be distributed pro rata as a
dividend to its shareholders.

PORTFOLIO TURNOVER

The Fund buys and sells securities to accomplish its investment
objective. The investment policies of the Fund may lead to frequent changes
in investments, particularly in periods of rapidly fluctuating interest or
currency exchange rates. The portfolio turnover may be higher than that of
other investment companies. While it is impossible to predict with
certainty the portfolio turnover, the Adviser does not expect that the
annual portfolio turnover rate for the Fund will exceed 100%

Portfolio turnover generally involves some expense to the Fund,
including brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestment in other securities. The
portfolio turnover rate is computed by dividing the lesser of the amount of
the long-term securities purchased or securities sold by the average
monthly value of securities owned during the year (excluding securities
whose maturities at acquisition were one year or less).

OTHER INVESTMENTS

The Fund is permitted to invest in securities subject to
reorganization, lower rated securities and repurchase agreements and enter
into forward commitments for the purchase or sale of securities, including
on a "when issued" or "delayed delivery" basis and the Fund may make short
sales of securities. See "Investment Objectives and Policies --Investment
Practices --When Issued, Delayed Delivery Securities and Forward
Commitments" in the SAI for a discussion of these investments and
techniques and the risks associated with them.

RISK FACTORS AND SPECIAL CONSIDERATIONS

Investors should consider the following special considerations
associated with investing in the Fund.

INDUSTRY RISKS

The Fund will invest a significant portion of its assets in foreign
and domestic companies involved in the Utility Industry and, as a result,
the value of the Fund's shares will be more susceptible to factors
affecting those particular types of companies, including governmental
regulation, inflation, cost increases in fuel and other operating expenses
and high interest costs such as borrowings needed for capital construction
programs, including compliance with environmental regulations.

Various regulatory regimes impose limitations on the percentage of
the shares of a public utility held by an investment for its clients. These
limitations may unfavorably restrict the ability of the Fund to make
certain investments.

In addition, deregulation of the utility industry could have a
positive or negative impact on the Fund's shares. The Adviser believes that
certain utility companies' fundamentals should continue to improve as the
industry undergoes deregulation. Companies may seek to strengthen their
competitive positions through mergers and takeovers. The loosening of the
government regulation of utilities should encourage convergence within the
industry. Improving earnings prospects, strong cash flows, share
repurchases and takeovers from industry consolidation may tend to boost
share prices. However, certain companies may be less able to meet the
challenge of deregulation as competition increases and investments in these
companies would not be likely to perform well.

LONG-TERM OBJECTIVE

The Fund is intended for investors seeking long-term capital growth
and income. The Fund is not meant to provide a vehicle for those who wish
to play short-term swings in the stock market. An investment in shares of
the Fund should not be considered a complete investment program. Each
shareholder should take into account the shareholder's investment
objectives as well as the shareholder's other investments when considering
the Transaction.

NON-DIVERSIFIED STATUS

The Fund is classified as a "non-diversified" investment company
under the 1940 Act, which means that the Fund is not limited by the 1940
Act in the proportion of its assets that may be invested in the securities
of a single issuer. However, the Fund intends to conduct its operations so
as to qualify as a "regulated investment company" for purposes of the
Internal Revenue Code of 1986, as amended (the "Code"), which will relieve
it of any liability for U.S. federal income tax if all of its earnings are
distributed to shareholders. See "Taxation --Taxation of the Fund." Because
the Fund, as a non-diversified investment company, may invest in the
securities of individual issuers to a greater degree than a diversified
investment company, an investment in the Fund may present greater risk to
an investor than an investment in a diversified company because the
investment risk may be concentrated in fewer securities.

MARKET VALUE AND NET ASSET VALUE

The Fund is a newly organized, non-diversified, closed-end management
investment company with no previous operating history. Shares of closed-end
investment companies frequently trade at a discount from net asset value.
The characteristic of shares of a closed-end fund is a risk separate and
distinct from the risk that the Fund's net asset value will decrease. The
risk of holding shares of a closed-end fund that might trade at a discount
is more pronounced for shareholders who wish to sell their shares in a
relatively short period of time after acquiring them because, for those
investors, realization of a gain or loss on their investments is likely to
be more dependent upon the existence of a premium or discount than upon
portfolio performance. The Fund's shares are not subject to redemption.
Shareholders desiring liquidity may, subject to applicable securities laws,
trade their shares in the Fund on the New York Stock Exchange or other
markets on which such shares may trade at the then current market value,
which may differ from the then current net asset value.

LOWER RATED SECURITIES

The Fund may invest up to 10% of its total assets in fixed-income
securities rated in the lower rating categories of recognized statistical
rating agencies, such as securities rated "CCC" or lower by S&P or "Caa" or
lower by Moody's, Inc., or non-rated securities of comparable quality.
These debt securities are predominantly speculative and involve major risk
exposure to adverse conditions and are often referred to in the financial
press as "junk bonds."

FOREIGN SECURITIES

There is no limitation on the amount of foreign securities in which
the Fund may invest. Investing in securities of foreign companies and
foreign governments, which generally are denominated in foreign currencies,
may involve certain risk and opportunity considerations not typically
associated with investing in domestic companies and could cause the Fund to
be affected favorably or unfavorably by changes in currency exchange rates
and revaluations of currencies. In addition, less information may be
available about foreign companies and foreign governments than about
domestic companies and foreign companies and foreign governments generally
are not subject to uniform accounting, auditing and financial reporting
standards or to other regulatory practices and requirements comparable to
those applicable to domestic companies. Foreign securities and their
markets may not be as liquid as U.S. securities and their markets.
Securities of some foreign companies may involve greater market risk than
securities of U.S. companies. Investment in foreign securities may result
in higher expenses than investing in domestic securities because of the
payment of fixed brokerage commissions on foreign exchanges, which
generally are higher than commissions on U.S. exchanges, and the imposition
of transfer taxes or transaction charges associated with foreign exchanges.
Investment in foreign securities also may be subject to local economic or
political risks, including instability of some foreign governments, the
possibility of currency blockage or the imposition of withholding taxes on
dividend or interest payments, and the potential for expropriation,
nationalization or confiscatory taxation and limitations on the use or
removal of funds or other assets.

Among the foreign securities in which the Fund may invest are those
issued by companies located in developing countries, which are countries in
the initial stages of their industrialization cycles. Investing in the
equity and debt markets of developing countries involves exposure to
economic structures that are generally less diverse and less mature, and to
political systems that can be expected to have less stability, than those
of developed countries. The markets of developing countries historically
have been more volatile than the markets of the more mature economies of
developed countries, but often have provided higher rates of return to
investors. The Fund may also invest in debt securities of foreign
governments.

For a further description of lower rated securities and the risks
associated therewith, see "Investment Objectives and Policies -- Lower
Rated Securities."

SPECIAL RISKS OF DERIVATIVE TRANSACTIONS

Participation in the options or futures markets and in currency
exchange transactions involves investment risks and transaction costs to
which the Fund would not be subject absent the use of these strategies. If
the Adviser's prediction of movements in the direction of the securities,
foreign currency and interest rate markets are inaccurate, the consequences
to the Fund may leave the Fund in a worse position than if such strategies
were not used. Risks inherent in the use of options, foreign currency,
futures contracts and options on futures contracts, securities indices and
foreign currencies include (1) dependence on the Adviser's ability to
predict correctly movements in the direction of interest rates, securities
prices and currency markets; (2) imperfect correlation between the price of
options and futures contracts and options thereon and movements in the
prices of the securities or currencies being hedged; (3) the fact that
skills needed to use these strategies are different from those needed to
select portfolio securities; (4) the possible absence of a liquid secondary
market for any particular instrument at any time; (5) the possible need to
defer closing out certain hedged positions to avoid adverse tax
consequences; (6) the possible inability of the Fund to purchase or sell a
security at a time that otherwise would be favorable for it to do so, or
the possible need for the Fund to sell a security at a disadvantageous time
due to a need for the Fund to maintain "cover" or to segregate securities
in connection with the hedging techniques; and (7) the creditworthiness of
counterparties. For a further description, see "Risk Factors and Special
Considerations -- Futures Transactions" and "Risk Factors and Special
Considerations -- Forward Currency Exchange Contracts."

FUTURES TRANSACTIONS

Futures and options on futures entail certain risks, including but
not limited to the following: no assurance that futures contracts or
options on futures can be offset at favorable prices, possible reduction of
the yield of the Fund due to the use of hedging, possible reduction in
value of both the securities hedged and the hedging instrument, possible
lack of liquidity due to daily limits on price fluctuation, imperfect
correlation between the contracts and the securities being hedged, losses
from investing in futures transactions that are potentially unlimited and
the segregation requirements for such transactions. For a further
description, see "Investment Objectives and Policies -- Investment
Practices" in the SAI.

FORWARD CURRENCY EXCHANGE CONTRACTS

The use of forward currency contracts may involve certain risks,
including the failure of the counter party to perform its obligations under
the contract, and that such use may not serve as a complete hedge because
of an imperfect correlation between movements in the prices of the
contracts and the prices of the currencies hedged or used for cover. For a
further description of such investments, see "Investment Objectives and
Policies -- Investment Practices" in the SAI.

RISKS TO HOLDERS OF COMMON STOCK OF LEVERAGING AND ISSUANCE OF SENIOR
SECURITIES

Leverage entails two primary risks. The first risk is that the use of
leverage magnifies the impact on the common shareholders of changes in net
asset value. For example, a fund that uses 33% leverage (including, $50 of
leverage per $100 of common equity) will show a 1.5% increase or decline in
net asset value for each 1% increase or decline in the value of its total
assets. The second risk is that the cost of leverage will exceed the return
on the securities acquired with the proceeds of leverage, thereby
diminishing rather than enhancing the return to common shareholders. These
two risks would generally make the Fund's total return to common
shareholders more volatile. In addition, the Fund may be required to sell
investments in order to meet dividend or interest payments on the debt or
preferred stock when it may be disadvantageous to do so.

As provided in the 1940 Act and subject to certain exceptions, the
Fund may issue debt or preferred stock so long as the Fund's total assets
immediately after such issuance, less certain ordinary course liabilities,
exceed 300% of the amount of the debt outstanding and exceed 200% of the
sum of the amount of the preferred stock and debt outstanding. Such debt or
preferred stock may be convertible in accordance with Securities and
Exchange Commission ("SEC") guidelines which may permit the registrant to
obtain leverage at attractive rates. A leveraged capital structure creates
certain special risks and potential benefits not associated with
unleveraged funds having similar investment objectives and policies. Any
investment income or gains from the capital represented by preferred shares
or debt which is in excess of the dividends payable thereon will cause the
total return of the common shares to be higher than would otherwise be the
case. Conversely, if the investment performance of the capital represented
by preferred shares or debt fails to cover the dividends payable thereon,
the total return of the common shares would be less or, in the case of
negative returns, would result in higher negative returns to a greater
extent than would otherwise be the case. The requirement to pay dividends
on preferred shares or debt in full before any dividends may be paid on the
common shares means that dividends on the common shares from earnings may
be reduced or eliminated.

The mandatory requirements of the 1940 Act could also pose certain
risks for the holders of Common Stock in the same circumstances. If the
asset coverage for any preferred shares or debt securities falls below the
requirements of the 1940 Act, the Fund would be unable to pay dividends on
its common shares. Although an inability to pay dividends on the common
shares could conceivably result in the Fund ceasing to qualify as a
regulated investment company under the Internal Revenue Code of 1986, as
amended ("the Code"), which would be materially adverse to the holders of
the common shares, such inability can be avoided through the use of
mandatory redemption requirements designed to ensure that the Fund
maintains the necessary asset coverage.

The class voting rights of preferred shares could make it more
difficult for the Fund to take certain actions that may, in the future, be
proposed by the Board and/or the holders of Common Stock, such as a merger,
exchange of securities, liquidation or alteration of the rights of a class
of the Fund's securities if such actions would be adverse to the preferred
shares, or such as changing to an open-end investment company or acting
inconsistently with its fundamental investment restrictions or other
fundamental policies or seeking to operate other than as an investment
company.

Preferred shares will be issued only if the Board of the Fund
determines in light of all relevant circumstances known to the Board that
to do so would be in the best interests of the Fund and its shareholders.
The circumstances that the Board will consider before issuing preferred
shares, include not only the dividend rate on the preferred shares in
comparison to the historical performance of the Fund but also such matters
as the terms on which the Fund can call the preferred shares, the
circumstances in which the Adviser will earn additional investment advisory
fees on the net assets attributable to the preferred shares and the ability
of the Fund to meet the asset coverage tests and other requirements imposed
by the rating agencies for such preferred shares.

The issuance of preferred shares convertible into shares of common
stock might also reduce the net income and net asset value per share of the
common shares upon conversion. Such income dilution would occur if the Fund
could, from the investments made with the proceeds of the preferred shares,
earn an amount per common share issuable upon conversion greater than the
dividend required to be paid on the amount of preferred stock convertible
into one share of common stock. Such net asset value dilution would occur
if preferred shares were converted at a time when the net asset value per
common share was greater than the conversion price.

MANAGEMENT OF THE FUND

The Fund's Board of Trustees (who, with its officers, are described
in the SAI) has overall responsibility for the management of the Fund. The
Board of Trustees decides upon matters of general policy and reviews the
actions of the Adviser and the Administrator (as defined below). Pursuant
to an Investment Advisory Contract with the Fund, the Adviser, under the
supervision of the Fund's Board of Trustees, provides a continuous
investment program for the Fund's portfolio; provides investment research
and makes and executes recommendations for the purchase and sale of
securities; and provides all facilities and personnel, including officers
required for its administrative management and pays the compensation of all
officers and directors of the Fund who are its affiliates. As compensation
for its services and the related expenses borne by the Adviser, the Fund
pays the Adviser a fee, computed daily and payable monthly, equal, on an
annual basis, to 1.00% of the Fund's average weekly net assets, which is
higher than that paid by most mutual funds. For purposes of the calculation
of the fees payable to the Adviser by the Fund, average weekly net assets
of the Fund are determined at the end of each month on the basis of its
average net assets for each week during the month. The assets for each
weekly period are determined by averaging the net assets at the end of a
week with the net assets at the end of the prior week.

The Adviser, together with other affiliated investment advisers, has
assets under management totaling over $18.6 billion as of August 31, 1999.
The Adviser was organized in 1999 and is the successor to the investment
advisory division of Gabelli Funds, Inc. which was organized in 1980. As of
June 30, 1999, the Adviser and its affiliates acted as registered
investment advisers to 15 management investment companies with aggregate
net assets of $9.6 billion. GAMCO Investors, Inc., an affiliate of the
Adviser, acts as investment adviser for individuals, pension trusts, profit
sharing trusts and endowments, having aggregate assets of $7.4 billion
under management as of June 30, 1999. Gabelli Fixed Income LLC, an
affiliate of the Adviser, acts as investment adviser for the Treasurer's
Fund and separate accounts having aggregate assets under management of $1.2
billion. The Adviser is a wholly-owned subsidiary of Gabelli Asset
Management Inc., a New York corporation, whose Class A Common Stock is
traded on the New York Stock Exchange under the symbol "GBL." Mr. Mario J.
Gabelli may be deemed a "controlling person" of the Adviser on the basis of
his ownership of a majority of the stock of the Gabelli Group Capital
Partners, Inc., which owns 80% of the capital stock of Gabelli Asset
Management Inc.

The Adviser is obligated to pay expenses associated with providing
the services contemplated by the Investment Advisory Agreement between the
Fund and the Adviser (the "Advisory Agreement") including compensation of
and office space for its officers and employees connected with investment
and economic research, trading and investment management and administration
of the Fund, as well as the fees of all trustees of the Fund who are
affiliated with the Adviser. The Fund pays all other expenses incurred in
its operation including, among other things, expenses for legal and
independent accountants' services, costs of printing proxies, stock
certificates and shareholder reports, charges of the custodian, any
subcustodian and transfer and dividend paying agent, expenses in connection
with its respective Automatic Dividend Reinvestment and Voluntary Cash
Purchase Plan, SEC fees, fees and expenses of unaffiliated directors,
accounting and pricing costs, membership fees in trade associations,
fidelity bond coverage for its officers and employees, directors' and
officers' errors and omission insurance coverage, interest, brokerage
costs, taxes, stock exchange listing fees and expenses, expenses of
qualifying its shares for sale in various states, litigation and other
extraordinary or non-recurring expenses, and other expenses properly
payable by the Fund.

In addition to the fees of the Adviser, the Fund is responsible for
the payment of all its other expenses incurred in the operation of the
Fund, which include, among other things, expenses for legal and independent
accountant's services, stock exchange listing fees, expenses relating to
the offering of preferred stock, costs of printing proxies, stock
certificates and shareholder reports, charges of Boston Safe Deposit and
Trust Company ("Boston Safe" or the "Custodian," charges of State Street
Bank and Trust Company ("State Street," the "Transfer Agent" or the
"Dividend - Disbursing Agent"), SEC fees, fees and expenses of unaffiliated
directors, accounting and printing costs, the Fund's pro rata portion of
membership fees in trade organizations, fidelity bond coverage for the
Fund's officers and employees, interest, brokerage costs, taxes, expenses
of qualifying the Fund for sale in various states, expenses of personnel
performing shareholder servicing functions, litigation and other
extraordinary or non-recurring expenses and other expenses properly payable
by the Fund.

The Investment Advisory Contract contains provisions relating to the
selection of securities brokers to effect the portfolio transactions of the
Fund. Under those provisions, the Adviser may (1) direct Fund portfolio
brokerage to Gabelli & Company, Inc. or other broker-dealer affiliates of
the Adviser; and (2) pay commissions to brokers other than Gabelli &
Company, Inc. which are higher than might be charged by another qualified
broker to obtain brokerage and/or research services considered by the
Adviser to be useful or desirable for its investment management of the Fund
and/or its other advisory accounts or those of any investment adviser
affiliated with it. The SAI contains further information about the
Investment Advisory Contract including a more complete description of the
advisory and expense arrangements, exculpatory and brokerage provisions, as
well as information on the brokerage practices of the Fund.

PORTFOLIO MANAGER

Mario J. Gabelli is the leader of a team which is primarily
responsible for the day-to-day management of the Fund. Mr. Gabelli has
served as Chairman, President and Chief Investment Officer of the Adviser
since 1980. Mr. Gabelli also serves as Portfolio Manager for several other
funds in the Gabelli fund family. Because of the diverse nature of Mr.
Gabelli's responsibilities, he will devote less than all of his time to the
day-to-day management at the Fund.

NON-RESIDENT DIRECTORS

Karl Otto Pohl, a director of the Fund, resides outside the United
States and all or a significant portion of his assets are located outside
the United States. He has no authorized agent in the United States to
receive service of process. As a result, it may not be possible for
investors to effect service of process within the United States or to
enforce against him in United States courts judgments predicated upon civil
liability provisions of United States securities laws. It may also not be
possible to enforce against him in foreign courts judgments of United
States courts or liabilities in original actions predicated upon civil
liability provisions of the United States securities laws.

ADMINISTRATOR

The Adviser has entered into sub-administration agreement with First
Data Investor Services Group Inc. (the "Sub-Administrator") pursuant to
which the Sub-Administrator provides certain administrative services
necessary for the Fund's operations which do not include the investment
advisory and portfolio management services provided by the Adviser. For
these services and the related expenses borne by the Sub-Administrator, the
Adviser pays a prorated monthly fee at the annual rate of .0275% of the
first $10.0 billion of the aggregate average net assets of the Fund and all
other funds advised by the Adviser and administered by the
Sub-Administrator, .0125% of the aggregate average net assets exceeding
$10.0 billion and .01% of the aggregate average net assets in excess of $15
billion. The Sub-Administrator has its principal office at 101 Federal
Street, Boston, MA 02110.

DISTRIBUTION POLICY

The Fund intends to file the "Section 19(b) Exemptive Order" to
enable it to distribute substantially all of its annual capital gains to
shareholders as often as monthly. There is no guarantee that the Section
19(b) Exemptive Order will be granted. If the requested relief is granted,
the Fund intends to make distributions of net investment income and capital
gains monthly. In the absence of the anticipated Section 19(b) Exemptive
Order, the Fund intends to make one annual capital gains distribution, one
supplemental capital gains distribution which does not exceed 10% of the
aggregate amount distributed for such taxable year and one additional
distribution of long-term capital gains for the purpose of not incurring
additional taxes, in accordance with Rule 19b-1 under the 1940 Act. The
dividend policy of the Fund may be modified from time to time by the Fund's
Board of Trustees. As a regulated investment company under the Code, the
Fund will not be subject to U.S. federal income tax on its investment
company taxable income that it distributes to shareholders, provided that
at least 90% of its investment company taxable income for that taxable year
is distributed to its shareholders. See "Taxation."

The Fund reserves the right, but does not currently intend, to retain
for reinvestment and pay U.S. federal income taxes on the excess of its net
realized long-term capital gains over its net short-term capital losses, if
any. If for any calendar year, the total distributions exceed net
investment income and net realized capital gains, the excess will generally
be treated as a tax-free return of capital (up to the amount of the
shareholder's tax basis in his shares) which can be made payable by the
Fund either in the form of a cash distribution or a stock dividend. The
amount treated as a tax-free return of capital will reduce a shareholder's
adjusted basis in his shares, thereby increasing his potential gain or
reducing his potential loss on the sale of his shares. Such excess,
however, will be treated as ordinary dividend income up to the amount of
the Fund's current and accumulated earnings and profits.

In the event the Fund distributes amounts in excess of its net
investment income and net realized capital gains, such distributions will
decrease the Fund's total assets and therefore, have the likely effect of
increasing the Fund's expense ratio. In addition, in order to make such
distributions, the Fund may have to sell a portion of its investment
portfolio at a time when independent investment judgement might not dictate
such action.

DESCRIPTION OF CAPITAL STOCK

The Fund is authorized to issue an unlimited number of shares of
beneficial interest, par value $.001 per share, in multiple classes and
series thereof as determined from time to time by the Board of Trustees.
The Board of Trustees of the Fund has authorized issuance of an unlimited
number of shares of two classes, the Common Stock and preferred stock. Each
share within a particular class or series thereof has equal voting,
dividend, distribution and liquidation rights. When issued, in accordance
with the terms thereof, shares of Common Stock will be fully paid and
non-assessable. Shares of Common Stock are not redeemable and have no
preemptive, conversion or cumulative voting rights. The Common Stock is
listed and traded on the NYSE under the symbol "GUT."

The following table shows the number of shares of (i) capital stock
authorized, (ii) capital stock unissued and (iii) capital stock outstanding
for each class of authorized securities of the Fund as of August 31, 1999
as if the Offering had been completed by such date.

Amount Held by
Amount Company or for Amount
Title of Class Authorized its Own Account Outstanding

Common Stock............ unlimited 0 11,611,635
------------ ----------- -----------
Preferred Stock......... - - -
----------- ----------- -----------

PURCHASING SHARES OF THE FUND

Pursuant to this Prospectus, the Fund is offering 1,000,000 shares of
Common Stock (the "Shares") for a period of up to two years from the date
of this Prospectus. For a period of 30 days from the date of this
Prospectus (the "Initial Period"), the Fund will offer the Shares directly
and through Gabelli and Company to shareholders who held shares of the Fund
as of July 9, 1999, at a price per share equal to the net asset value next
computed after the Fund receives the order. There will be no initial sales
charge or underwriting discount for purchases of Shares during the Initial
Period. Subsequent to the Initial Period, the Fund will offer the Shares
continuously or from time to time as determined by the Board of Trustees of
the Fund, directly and through selected broker-dealers and financial
services firms, at a price per share not less than net asset value to be
determined by the Board of Trustees of the Fund on a periodic basis. The
Adviser will compensate such broker-dealers and financial services firms
(including Gabelli & Company) at a rate of up to 4.5% of the dollar value
of Shares purchased from the Fund by such broker-dealers or financial
services firms. The Fund reserves the right to terminate or suspend the
continuous offering of its Shares at any time without prior notice.

TAXATION

Set forth below is a discussion of certain U.S. federal income tax
issues concerning the Fund and the purchase, ownership and disposition of
Fund shares. This discussion is based upon present provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the regulations
promulgated thereunder, and judicial and administrative ruling authorities,
all of which are subject to change, which change may be retroactive. This
discussion does not purport to be complete or to deal with all aspects of
U.S. federal income taxation that may be relevant to investors in light of
their particular circumstances. Prospective investors should consult their
own tax advisers with regard to the U.S. federal tax consequences of the
purchase, ownership, or disposition of Fund shares, as well as the tax
consequences arising under the laws of any state, foreign country, or other
taxing jurisdiction. A more complete discussion of the tax rules applicable
to the Fund can be found under the heading "Taxation" in the Statement of
Additional Information which is incorporated by reference into this
Prospectus.

TAXATION OF THE FUND

The Fund intends to qualify and to elect to be taxed as a regulated
investment company under Subchapter M of the Code. Accordingly, the Fund
must, among other things, (a) derive in each taxable year at least 90% of
its gross income from dividends, interest, payments with respect to certain
securities loans, and gains from the sale or other disposition of stock,
securities or foreign currencies, or other income derived with respect to
its business of investing in such stock, securities or currencies; and (b)
diversify its holdings so that, at the end of each fiscal quarter (i) at
least 50% of the value of the Fund's total assets is represented by cash
and cash items, U.S. Government securities, the securities of other
regulated investment companies and other securities, with such other
securities limited, in respect of any one issuer, to an amount not greater
than 5% of the value of the Fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value
of its total assets is invested in the securities (other than U.S.
Government securities and the securities of other regulated investment
companies) of any one issuer or of any two or more issuers that the Fund
controls and that are determined to be engaged in the same business or
similar or related businesses.

As a regulated investment company, the Fund generally is not subject
to U.S. federal income tax on income and gains that it distributes to
shareholders, if at least 90% of the Fund's investment company taxable
income (which includes, among other items, dividends, interest and the
excess of any net short-term capital gains over net long-term capital
losses) for the taxable year is distributed. The Fund intends to distribute
at least annually substantially all of such income.

Amounts not distributed on a timely basis in accordance with a
calendar year distribution requirement are subject to a nondeductible 4%
excise tax at the Fund level. To avoid the tax, the Fund must distribute
during each calendar year an amount equal to the sum of (1) at least 98% of
its ordinary income (not taking into account any capital gains or losses)
for the calendar year, (2) at least 98% of its capital gains in excess of
its capital losses (adjusted for certain ordinary losses) for a one-year
period generally ending on October 31 of the calendar year (unless, an
election is made by a fund with a November or December year-end to use the
fund's fiscal year), and (3) all ordinary income and capital gains for
previous years that were not distributed during such years. While the Fund
intends to distribute any income and capital gains in the manner necessary
to minimize imposition of the 4% excise tax, there can be no assurance that
sufficient amounts of the Fund's taxable income and capital gains will be
distributed to avoid entirely the imposition of the tax. In that event, the
Fund will be liable for the tax only on the amount by which it does not
meet the foregoing distribution requirement.

A distribution will be treated as paid on December 31 of a calendar
year if it is declared by the Fund in October, November or December of that
year with a record date in such a month and paid by the Fund during January
of the following year. Such a distribution will be taxable to shareholders
in the calendar year in which the distribution is declared, rather than the
calendar year in which it is received.

If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital
gains) will be subject to tax at regular corporate rates without any
deduction for distributions to shareholders, and such distributions will be
taxable to the shareholders as ordinary dividends to the extent of the
Fund's current and accumulated earnings and profits.

TAXATION OF SHAREHOLDERS

Dividends paid by the Fund from its ordinary income or from an excess
of net short-term capital gains over net long-term capital losses are
taxable to shareholders as ordinary income. Distributions from an excess of
net long-term capital gains over net short-term capital losses realized,
properly designated by the Fund, whether paid in cash or reinvested in Fund
shares, will generally be taxable to shareholders as long-term gain,
regardless of how long a shareholder has held Fund shares. Distributions in
excess of the Fund's current and accumulated earnings and profits are first
a non-taxable reduction in the adjusted basis of the holder's common stock
and, after such adjusted tax basis is reduced to zero, then constitute
capital gains to such holder (provided such common stock is held as a
capital asset).

Shareholders will be notified annually as to the U.S. federal tax
status of distributions, and shareholders receiving distributions in the
form of newly issued shares will receive a report as to the value of the
shares received.

Investors should be careful to consider the tax implications of
buying shares of the Fund just prior to the record date of a distribution
(including a capital gain dividend). The price of shares purchased at such
a time will reflect the amount of the forthcoming distribution, but the
distribution will generally be taxable to the shareholder.

To the extent that the Fund retains any net long-term capital gains,
it may designate them as "deemed distributions" and pay a tax thereon for
the benefit of its shareholders. In that event, the shareholders report
their share of the Fund's retained realized capital gains on their
individual tax returns as if it had been received, and report a refundable
credit for the tax paid thereon by the Fund. The amount of the deemed
distribution net of such tax is then added to the shareholder's cost basis
for his shares. Shareholders who are not subject to U.S. federal income tax
or tax on capital gains may file a return on the appropriate form or a
claim for refund that allows them to recover the tax paid on their behalf.

Distributions may be subject to additional state, local and foreign
taxes, depending on each shareholder's particular situation. Non-U.S.
shareholders may be subject to U.S. tax rules that differ significantly
from those summarized above, including the likelihood that ordinary income
dividends distributed to them will be subject to withholding of U.S. tax at
a rate of 30% (or a lower treaty rate, if applicable). Non-U.S. investors
should consult their own tax advisers regarding federal, state, local and
foreign tax considerations.

Upon a redemption, sale or exchange of shares of the Fund, a
shareholder will realize a taxable gain or loss depending upon his basis in
the shares. A gain or loss will be treated as capital gain or loss if the
shares are capital assets in the shareholder's hands, and the rate of tax
will vary depending upon the shareholder's holding period for the shares.
Any loss realized on a redemption, sale or exchange will be disallowed to
the extent the shares disposed of are replaced (including through
reinvestment of dividends) within a period of 61 days, beginning 30 days
before and ending 30 days after the shares are disposed of. In such a case,
the basis of the shares acquired will be adjusted to reflect the disallowed
loss. If a shareholder holds Fund shares for six months or less and during
that period receives a distribution taxable to the shareholder as long-term
capital gain, any loss realized on the sale of such shares during such six
month period would be a long-term capital loss to the extent of such
distribution.

The Fund generally will be required to withhold U.S. federal income
tax at a rate of 31% ("backup withholding") from dividends, capital gain
distributions and redemption proceeds paid to shareholders if (1) the
shareholder fails to furnish the Fund with the shareholder's correct
taxpayer identification number or social security number, (2) the IRS
notifies the shareholder or the Fund that the shareholder has failed to
report properly certain interest and dividend income to the IRS and to
respond to notices to that effect, or (3) when required to do so, the
shareholder fails to certify that he or she is not subject to backup
withholding. Any amounts withheld may be credited against the shareholder's
U.S. federal income tax liability

CERTAIN PROVISIONS OF THE DECLARATION OF TRUST AND BY-LAWS

The Fund presently has provisions in its Declaration of Trust and
By-Laws (together, its "Governing Documents") which could have the effect
of limiting, in each case, (i) the ability of other entities or persons to
acquire control of the fund, (ii) the Fund's freedom to engage in certain
transactions, or (iii) the ability of the Fund's trustees or shareholders
to amend the Governing Documents or effectuate changes in the Fund's
management. These provisions of the Governing Documents of the Fund may be
regarded as "anti-takeover" provisions. The Board of Trustees of the Fund
is divided into three classes, each having a term of no more than three
years (except, to ensure that the term of a class of the Fund's trustees
expires each year, one class of the Fund's trustees will serve an initial
one-year term and three-year terms thereafter and another class of its
trustees will serve an initial two-year term and three-year terms
thereafter). Each year the term of one class of trustees will expire.
Accordingly, only those trustees in one class may be changed in any one
year, and it would require a minimum of two years to change a majority of
the Board of Trustees. Such system of electing trustees may have the effect
of maintaining the continuity of management and, thus, make it more
difficult for the shareholders of the Fund to change the majority of
trustees. See "Trustees and Officers." A trustee of the Fund may be removed
with or without cause by 662/3% of the votes entitled to be cast for the
election of such trustees. This voting requirement also applies to mergers
into or a sale of all or substantially all of the Fund's assets to an
open-end fund (or other closed-end fund that does not have minority
shareholder protections against conversion to open-end status) and is 75%
of its outstanding voting shares and, if the Fund issues preferred stock, a
majority of the outstanding shares of preferred stock or, if less, 662/3%
of the preferred stock voting on such matter if a majority of such shares
are present and voting. In addition, 80% of the holders of the outstanding
voting securities of the Fund voting as a class is generally required in
order to authorize any of the following transactions:

A. merger or consolidation of the Fund with or into any other
corporation;

B. issuance of any securities of the Fund to any person or
entity for cash;

C. sale, lease or exchange of all or any substantial part of
the assets of the Fund to any entity or person (except assets having an
aggregate fair market value of less than $1,000,000); or

D. sale, lease or exchange to the Fund, in exchange for
securities of the Fund, of any assets of any entity or person (except
assets having an aggregate fair market value of less than $1,000,000);

E. the purchase of the Fund's Common Stock by the Fund from any
other person or entity;

if such corporation, person or entity is directly, or indirectly through
affiliates, the beneficial owner of more than 5% of the outstanding shares
of the Fund. However, such vote would not be required when, under certain
conditions, the Board of Trustees approves the transaction. Reference is
made to the Governing Documents of the Fund, on file with the SEC, for the
full text of these provisions.

The provisions of the Governing Documents described above could have
the effect of depriving the owners of shares in the Fund of opportunities
to sell their shares at a premium over prevailing market prices, by
discouraging a third party from seeking to obtain control of the Fund in a
tender offer or similar transaction. The overall effect of these provisions
is to render more difficult the accomplishment of a merger or the
assumption of control by a principal shareholder.

CUSTODIAN, TRANSFER AGENT, DIVIDEND DISBURSING AGENT
AND REGISTRAR

Boston Safe located at One Boston Place, Boston, Massachusetts 02108,
serves as the custodian of the Fund's assets pursuant to a custody
agreement. Under the custody agreement, Boston Safe will hold the Fund's
assets in compliance with the 1940 Act. For its custody services, Boston
Safe will receive a monthly fee based upon the average value of the total
assets of the Fund, plus certain charges for securities transactions.

State Street serves as the Fund's dividend disbursing agent, as agent
of the Plan and as transfer agent and registrar for shares of Fund's Common
Stock.

LEGAL MATTERS

Certain legal matters will be passed on by Skadden, Arps, Slate,
Meagher & Flom LLP, New York, New York, special counsel to the Fund in
connection with the offering of the Common Stock.

EXPERTS

PricewaterhouseCoopers LLP, independent accountants, are the
independent accountants of the Fund. PricewaterhouseCoopers LLP has an
office at 1177 Avenue of the Americas, New York, New York 10036, and also
performs tax and other professional services for the Fund.

ADDITIONAL INFORMATION

The Fund is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the 1940 Act and in
accordance therewith files reports and other information with the SEC.
Reports, proxy statements and other information filed by the Fund with the
SEC pursuant to the informational requirements of such Acts can be
inspected and copied at the public reference facilities maintained by the
SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following Regional Offices of the SEC: Northeast Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048;
Pacific Regional Office, 5670 Wilshire Boulevard, 11th Floor, Los Angeles,
California 90036-3648; and Midwest Regional Office, Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511;
and copies of such material can be obtained from the Public Reference
Section of the SEC, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The SEC maintains a Web site at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants, including the Fund, that file
electronically with the SEC.

The Fund's Common Stock is listed on the NYSE, and reports, proxy
statements and other information concerning the Fund and filed with the SEC
by the Fund can be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.

This Prospectus constitutes part of a Registration Statement filed by
the Fund with the SEC under the 1933 Act and the 1940 Act. This Prospectus
omits certain of the information contained in the Registration Statement,
and reference is hereby made to the Registration Statement and related
exhibits for further information with respect to the Fund and the Common
Stock offered hereby. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and, in each
instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the SEC. Each
such statement is qualified in its entirety by such reference. The complete
Registration Statement may be obtained from the SEC upon payment of the fee
prescribed by its rules and regulations.

TABLE OF CONTENTS OF SAI

A Statement of Additional Information ("SAI") dated , 1999 has been
filed with the SEC and is incorporated by reference in this Prospectus. An
SAI may be obtained without charge by writing to the Fund at its address at
One Corporate Center, Rye, New York 10580-1434 or by calling the Fund
toll-free at (800) GABELLI (422-3554). The Table of Contents of the SAI is
as follows:

TABLE OF CONTENTS

PAGE

INVESTMENT OBJECTIVES AND POLICIES ........................ B-
MANAGEMENT OF THE FUND..................................... B-
PORTFOLIO TRANSACTIONS .................................... B-
AUTOMATIC DIVIDEND REINVESTMENT AND
VOLUNTARY CASH PURCHASE PLAN............................. B-
TAXATION .................................................. B-
NET ASSET VALUE............................................ B-
BENEFICIAL OWNER........................................... B-
GENERAL INFORMATION........................................ B-
FINANCIAL STATEMENTS....................................... B-

------------------------

TABLE OF CONTENTS

Page

Prospectus Summary................................................
Table of Fees and Expenses........................................
Use of Proceeds...................................................
Capitalization....................................................
The Fund..........................................................
Investment Objectives and Policies................................
Special Investment Methods........................................
Investment Restrictions...........................................
Risk Factors and Special
Considerations.................................................
Management of the Fund............................................
Distribution Policy...............................................
Description of Capital Stock......................................
Purchasing Shares of the Fund.....................................
Taxation..........................................................
Certain Provisions of the Declaration of Trust and
By-laws........................................................
Custodian, Transfer Agent,
Dividend-Disbursing Agent and Registrar........................
Legal Matters.....................................................
Experts...........................................................
Additional Information............................................
Table of Contents of SAI..........................................

1,000,000 Shares

THE GABELLI UTILITY TRUST

------------

PROSPECTUS
, 1999

------------

THE GABELLI UTILITY TRUST
-------------------

STATEMENT OF ADDITIONAL INFORMATION

The Gabelli Utility Trust (the "Fund") is a non-diversified,
closed-end management investment company that seeks long-term growth of
capital and income by investing primarily in a portfolio of equity
securities selected by Gabelli Funds, LLC, the investment adviser to the
Fund (the "Adviser"). It is the policy of the Fund, under normal market
conditions, to invest at least 65% of its total assets in common stock and
other securities of foreign and domestic companies involved to a
substantial extent in (e.g., at least 50% of the assets, gross income or
net profits of a company is committed to or derived from) providing
products, services or equipment for (i) the generation or distribution of
electricity, gas and water and (ii) telecommunications services or
infrastructure operations, such as airports, toll roads and municipal
services.

This Statement of Additional Information ("SAI") is not a prospectus,
but should be read in conjunction with the Prospectus for the Fund dated
_______ __, 1999 (the "Prospectus"). This SAI does not include any
information that a prospective investor should consider before purchasing
shares of the Fund, and investors should obtain and read the Prospectus
prior to purchasing shares. A copy of the Prospectus may be obtained
without charge, by calling the Fund at 1-800-GABELLI (1-800-422-3554) or
(914) 921-5070. This SAI incorporates by reference the entire Prospectus.

-------------------

TABLE OF CONTENTS

PAGE

Investment Objectives and Policies..........................................B-
Management of the Fund......................................................B-
Portfolio Transactions......................................................B-
Automatic Dividend Reinvestment and Voluntary Cash Purchase Plan............B-
Taxation....................................................................B-
Net Asset Value.............................................................B-
General Information.........................................................B-
Beneficial Owner............................................................B-
Financial Statements........................................................B-

The Prospectus and this SAI omit certain of the information contained
in the registration statement filed with the Securities and Exchange
Commission, Washington, D.C. The registration statement may be obtained
from the Securities and Exchange Commission upon payment of the fee
prescribed, or inspected at the Securities and Exchange Commission's office
at no charge.

This Statement of Additional Information is dated ________ __, 1999.

INVESTMENT OBJECTIVES AND POLICIES

INVESTMENT OBJECTIVES

The Fund's primary investment objectives are long-term growth of
capital and income. Under normal market conditions, the Fund will invest at
least 65% of its total assets in common stock and other securities of
foreign and domestic companies involved to a substantial extent in (e.g.,
at least 50% of the assets, gross income or net profits of a company is
committed to or derived from) providing products, services or equipment for
(i) the generation or distribution of electricity, gas and water and (ii)
telecommunications services or infrastructure operations, such as airports,
toll roads and municipal services. See "Investment Objectives and Policies"
in the Prospectus.

INVESTMENT PRACTICES

Securities Subject to Reorganization. The Fund may invest without
limit in securities for which a tender or exchange offer has been made or
announced and in securities of companies for which a merger, consolidation,
liquidation or reorganization proposal has been announced if, in the
judgment of the Adviser, there is a reasonable prospect of high total
return significantly greater than the brokerage and other transaction
expenses involved.

In general, securities which are the subject of such an offer or
proposal sell at a premium to their historic market price immediately prior
to the announcement of the offer or may also discount what the stated or
appraised value of the security would be if the contemplated transaction
were approved or consummated. Such investments may be advantageous when the
discount significantly overstates the risk of the contingencies involved;
significantly undervalues the securities, assets or cash to be received by
shareholders of the prospective portfolio company as a result of the
contemplated transaction; or fails adequately to recognize the possibility
that the offer or proposal may be replaced or superseded by an offer or
proposal of greater value. The evaluation of such contingencies requires
unusually broad knowledge and experience on the part of the Adviser which
must appraise not only the value of the issuer and its component businesses
as well as the assets or securities to be received as a result of the
contemplated transaction but also the financial resources and business
motivation of the offeror and the dynamics and business climate when the
offer or proposal is in process. Since such investments are ordinarily
short-term in nature, they will tend to increase the turnover ratio of the
Fund, thereby increasing its brokerage and other transaction expenses. The
Adviser intends to select investments of the type described which, in its
view, have a reasonable prospect of capital appreciation which is
significant in relation to both risk involved and the potential of
available alternative investments.

Temporary Investments. Although under normal market conditions at
least 65% of the Fund's assets will consist of common stock and other
securities of foreign and domestic companies involved in the utility
industry, when a temporary defensive posture is believed by the Adviser to
be warranted ("temporary defensive periods"), the Fund may without
limitation hold cash or invest its assets in money market instruments and
repurchase agreements in respect of those instruments. The money market
instruments in which the Fund may invest are obligations of the United
States Government, its agencies or instrumentalities ("U.S. Government
Securities"); commercial paper rated A-1 or higher by Standard & Poor's
Corporation ("S&P") or Prime-1 by Moody's Investors Service, Inc.
("Moody's"); and certificates of deposit and bankers' acceptances issued by
domestic branches of U.S. banks that are members of the Federal Deposit
Insurance Corporation. During temporary defensive periods, the Fund may
also invest to the extent permitted by applicable law in shares of money
market mutual funds. Money market mutual funds are investment companies and
the investments in those companies in some cases by the Fund are subject to
certain fundamental investment restrictions and applicable law. See
"Investment Restrictions." As a shareholder in a mutual fund, the Fund will
bear its ratable share of the its expenses, including management fees, and
will remain subject to payment of the fees to the Adviser, with respect to
assets so invested. See "Management of the Fund-Investment Advisory and
Administration Arrangements."

Lower Rated Securities. The Fund may invest up to 25%, of its total
assets in fixed-income securities rated in the lower rating categories of
recognized statistical rating agencies, such as securities rated "CCC" or
lower by S&P or "Caa" or lower by Moody's, or non-rated securities of
comparable quality. These debt securities are predominantly speculative and
involve major risk exposure to adverse conditions and are often referred to
in the financial press as "junk bonds."

Generally, such lower rated securities and unrated securities of
comparable quality offer a higher current yield than is offered by higher
rated securities, but also (i) will likely have some quality and protective
characteristics that, in the judgment of the rating organizations, are
outweighed by large uncertainties or major risk exposures to adverse
conditions and (ii) are predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with
the terms of the obligation. The market values of certain of these
securities also tend to be more sensitive to individual corporate
developments and changes in economic conditions than higher quality bonds.
In addition, such lower rated securities and comparable unrated securities
generally present a higher degree of credit risk. The risk of loss due to
default by these issuers is significantly greater because such lower rated
securities and unrated securities of comparable quality generally are
unsecured and frequently are subordinated to the prior payment of senior
indebtedness. In light of these risks, the Adviser, in evaluating the
creditworthiness of an issue, whether rated or unrated, will take various
factors into consideration, which may include, as applicable, the issuer's
financial resources, its sensitivity to economic conditions and trends, the
operating history of and the community support for the facility financed by
the issue, the ability of the issuer's management and regulatory matters.

In addition, the market value of securities in lower rated categories
is more volatile than that of higher quality securities, and the markets in
which such lower rated or unrated securities are traded are more limited
than those in which higher rated securities are traded. The existence of
limited markets may make it more difficult for the Fund to obtain accurate
market quotations for purposes of valuing its portfolio and calculating its
net asset value. Moreover, the lack of a liquid trading market may restrict
the availability of securities for the Fund to purchase and may also have
the effect of limiting the ability of the Fund to sell securities at their
fair value to respond to changes in the economy or the financial markets.

Lower rated debt obligations also present risks based on payment
expectations. If an issuer calls the obligation for redemption, the Fund
may have to replace the security with a lower yielding security, resulting
in a decreased return for investors. Also, as the principal value of bonds
moves inversely with movements in interest rates, in the event of rising
interest rates the value of the securities held by the Fund may decline
proportionately more than a portfolio consisting of higher rated
securities. Investments in zero coupon bonds may be more speculative and
subject to greater fluctuations in value due to changes in interest rates
than bonds that pay interest currently.

The Fund may invest in securities of issuers in default within their
limitations on the purchase of fixed-income securities. The Fund will make
an investment in securities of issuers in default only when the Adviser
believes that such issuers will honor their obligations or emerge from
bankruptcy protection and the value of these securities will appreciate. By
investing in securities of issuers in default, the Fund bears the risk that
these issuers will not continue to honor their obligations or emerge from
bankruptcy protection or that the value of the securities will not
appreciate.

In addition to using recognized rating agencies and other sources,
the Adviser also performs its own analysis of issues in seeking investments
that it believes to be underrated (and thus higher-yielding) in light of
the financial condition of the issuer. Its analysis of issuers may include,
among other things, current and anticipated cash flow and borrowing
requirements, value of assets in relation to historical cost, strength of
management, responsiveness to business conditions, credit standing and
current anticipated results of operations. In selecting investments for the
Fund, the Adviser may also consider general business conditions,
anticipated changes in interest rates and the outlook for specific
industries.

Subsequent to its purchase by the Fund, an issue of securities may
cease to be rated or its rating may be reduced. In addition, it is possible
that statistical rating agencies might change their ratings of a particular
issue or reflect subsequent events on a timely basis. None of these events
will require the sale of the securities by the Fund, although the Adviser
will consider these events in determining whether the Fund should continue
to hold the securities.

Fixed-income securities, including lower rated securities and
comparable unrated securities, frequently have call or buy-back features
that permit their issuers to call or repurchase the securities from their
holders, such as the Fund. If an issuer exercises these rights during
periods of declining interest rates, the Fund may have to replace the
security with a lower yielding security, thus resulting in a decreased
return for the Fund.

The market for certain lower rated and comparable unrated securities
several years ago experienced a major economic recession. The recession
adversely affected the value of such securities as well as the ability of
certain issuers of such securities to repay principal and pay interest
thereon. The market for those securities could react in a similar fashion
in the event of any future economic recession.

Options. A call option is a contract that, in return for a premium,
gives the holder of the option the right to buy from the writer of the call
option the security underlying the option at a specified exercise price at
any time during the term of the option. The writer of the call option has
the obligation, upon exercise of the option, to deliver the underlying
security upon payment of the exercise price during the option period. A put
option is the reverse of a call option, giving the holder the right to sell
the security to the writer and obligating the writer to purchase the
underlying security from the holder.

A written call option is "covered" if the writer owns the underlying
security covered by the call or has an absolute and immediate right to
acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by its
custodian) upon conversion or exchange of other securities held in its
portfolio. A call option is also covered if the Fund holds a call on the
same security as the call written where the exercise price of the call held
is (1) equal to or less than the exercise price of the call written or (2)
greater than the exercise price of the call written if the difference is
maintained by the Fund in cash, U.S. Government Securities or other high
grade short-term obligations in a segregated account held with its
custodian. A written put option is "covered" if the Fund maintains cash or
other high grade short-term obligations with a value equal to the exercise
price in a segregated account held with its custodian, or else holds a put
on the same security as the put written where the exercise price of the put
held is equal to or greater than the exercise price of the put written.

If the Fund has written an option, it may terminate its obligation by
effecting a closing purchase transaction. This is accomplished by
purchasing an option of the same series as the option previously written.
However, once it has been assigned an exercise notice, the Fund will be
unable to effect a closing purchase transaction. Similarly, if the Fund is
the holder of an option it may liquidate its position by effecting a
closing sale transaction. This is accomplished by selling an option of the
same series as the option previously purchased. There can be no assurance
that either a closing purchase or sale transaction can be effected when the
Fund so desires.

The Fund will realize a profit from a closing transaction if the
price of the transaction is less than the premium received from writing the
option or is more than the premium paid to purchase the option; the Fund
will realize a loss from a closing transaction if the price of the
transaction is more than the premium received from writing the option or is
less than the premium paid to purchase the option. Since call option prices
generally reflect increases in the price of the underlying security, any
loss resulting from the repurchase of a call option may also be wholly or
partially offset by unrealized appreciation of the underlying security.
Other principal factors affecting the market value of a put or a call
option include supply and demand, interest rates, the current market price
and price volatility of the underlying security and the time remaining
until the expiration date. Gains and losses on investments in options
depend, in part, on the ability of the Adviser to predict correctly the
effect of these factors. The use of options cannot serve as a complete
hedge since the price movement of securities underlying the options will
not necessarily follow the price movements of the portfolio securities
subject to the hedge.

An option position may be closed out only on an exchange which
provides a secondary market for an option of the same series or in a
private transaction. Although the Fund will generally purchase or write
only those options for which there appears to be an active secondary
market, there is no assurance that a liquid secondary market on an exchange
will exist for any particular option. In such event, it might not be
possible to effect closing transactions in particular options, so that the
Fund would have to exercise its options in order to realize any profit and
would incur brokerage commissions upon the exercise of call options and
upon the subsequent disposition of underlying securities for the exercise
of put options. If the Fund, as a covered call option writer, is unable to
effect a closing purchase transaction in a secondary market, it will not be
able to sell the underlying security until the option expires or it
delivers the underlying security upon exercise or otherwise covers the
position.

In addition to options on individual securities, the Fund may also
purchase and sell call and put options on securities indices. A stock index
reflects in a single number the market value of many different stocks.
Relative values are assigned to the stocks included in an index and the
index fluctuates with changes in the market values of the stocks. The
options give the holder the right to receive a cash settlement during the
term of the option based on the difference between the exercise price and
the value of the index. By writing a put or call option on a securities
index, the Fund is obligated, in return for the premium received, to make
delivery of this amount. The Fund may offset its position in stock index
options prior to expiration by entering into an closing transaction on an
exchange or it may let the option expire unexercised.

The Fund also may buy or sell put and call options on foreign
currencies. A put option on a foreign currency gives the purchaser of the
option the right to sell a foreign currency at the exercise price until the
option expires. A call option on a foreign currency gives the purchaser of
the option the right to purchase the currency at the exercise price until
the option expires. Currency options traded on U.S. or other exchanges may
be subject to position limits which may limit the ability of the Fund to
reduce foreign currency risk using such options. Over-the-counter options
differ from exchange-traded options in that they are two-party contracts
with price and other terms negotiated between buyer and seller and
generally do not have as much market liquidity as exchange-traded options.
Over-the-counter options are illiquid securities.

Use of options on securities indices entails the risk that trading in
the options may be interrupted if trading in certain securities included in
the index is interrupted. The Fund will not purchase these options unless
the Adviser is satisfied with the development, depth and liquidity of the
market and the Adviser believes the options can be closed out.

Price movements in the portfolio of the Fund are unlikely to
correlate precisely with movements in the level of an index and, therefore,
the use of options on indices cannot serve as a complete hedge and will
depend, in part, on the ability of the Adviser to predict correctly
movements in the direction of the stock market generally or of a particular
industry. Because options on securities indices require settlement in cash,
the Adviser may be forced to liquidate portfolio securities to meet
settlement obligations. The SEC considers over-the-counter options such as
options on indices illiquid securities.

Although the Adviser will attempt to take appropriate measures to
minimize the risks relating to the Fund's writing of put and call options,
there can be no assurance that the Fund will succeed in any option-writing
program it undertakes.

Futures Contracts and Options on Futures. The Fund will not enter
into futures contracts or options on futures contracts unless (i) the
aggregate initial margins and premiums do not exceed 5% of the fair market
value of its assets and (ii) the aggregate market value of its outstanding
futures contracts and the market value of the currencies and futures
contracts subject to outstanding options written by the Fund do not exceed
50% of the market value of its total assets. It is anticipated that these
investments, if any, will be made by the Fund solely for the purpose of
hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Such investments will only be
made if they are economically appropriate to the reduction of risks
involved in the management of the Fund. In this regard, the Fund may enter
into futures contracts or options on futures for the purchase or sale of
securities indices or other financial instruments including but not limited
U.S. Government securities.

A "sale" of a futures contract (or a "short" futures position) means
the assumption of a contractual obligation to deliver the securities
underlying the contract at a specified price at a specified future time. A
"purchaser" of a futures contract (or a "long" futures position) means the
assumption of a contractual obligation to acquire the securities underlying
the contract at a specified future time. Certain futures contracts,
including stock and bond index futures, are settled on a net cash payment
basis rather than by the sale and delivery of the securities underlying the
futures contracts.

No consideration will be paid or received by the Fund upon the
purchase or sale of a futures contract. Initially, the Fund will be
required to deposit with the broker an amount of cash or cash equivalents
equal to approximately 1% to 10% of the contract amount (this amount is
subject to change by the exchange or board of trade on which the contract
is traded and brokers or members of such board of trade may charge a higher
amount). This amount is known as "initial margin" and is in the nature of a
performance bond or good faith deposit on the contract. Subsequent
payments, known as "variation margin," to and from the broker will be made
daily as the price of the index or security underlying the futures contract
fluctuates. At any time prior to the expiration of the futures contract,
the Fund may elect to close the position by taking an opposite position,
which will operate to terminate its existing position in the contract.

An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract at
a specified exercise price at any time to the expiration of the option.
Upon exercise of an option, the delivery of the futures position by the
writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's futures margin account
attributable to that contract, which represents the amount by which the
market price of the futures contract exceeds, in the case of a call, or is
less than, in the case of a put, the exercise price of the option on the
futures contract. The potential loss related to the purchase of an option
on futures on contracts is limited to the premium paid for the option (plus
transaction costs). Because the value of the option purchased is fixed at
the point of sale, there are no daily cash payments by the purchaser to
reflect changes in the value of the underlying contract; however, the value
of the option does change daily and that change would be reflected in the
net assets of the Fund.

Futures and options on futures entail certain risks, including but
not limited to the following: no assurance that futures contracts or
options on futures can be offset at favorable prices, possible reduction of
the yield of the Fund due to the use of hedging, possible reduction in
value of both the securities hedged and the hedging instrument, possible
lack of liquidity due to daily limits on price fluctuations, imperfect
correlation between the contracts and the securities being hedged, losses
from investing in futures transactions that are potentially unlimited and
the segregation requirements described below.

In the event the Fund sells a put option or enters into long futures
contracts, under current interpretations of the 1940 Act, an amount of
cash, obligations of the U.S. Government and its agencies and
instrumentalities or other liquid securities equal to the market value of
the contract must be deposited and maintained in a segregated account with
the custodian of the Fund to collateralize the positions, in order for the
Fund to avoid being treated as having issued a senior security in the
amount of its obligations. For short positions in futures contracts and
sales of call options, the Fund may establish a segregated account (not
with a futures commission merchant or broker) with cash obligations of the
U.S. Government and its agencies and instrumentalities or other high grade
debt securities that, when added to amounts deposited with a futures
commission merchant or a broker as margin, equal the market value of the
instruments or currency underlying the futures contracts or call options,
respectively (but are no less than the stock price of the call option or
the market price at which the short positions were established).

Forward Currency Transactions. The Fund may hold currencies to meet
settlement requirements for foreign securities and may engage in currency
exchange transactions to protect against uncertainty in the level of future
exchange rates between a particular foreign currency and the U.S. dollar or
between foreign currencies in which its securities are or may be
denominated. Forward currency contracts are agreements to exchange one
currency for another at a future date. The date (which may be any
agreed-upon fixed number of days in the future), the amount of currency to
be exchanged and the price at which the exchange takes place will be
negotiated and fixed for the term of the contract at the time that the Fund
enters into the contract. Forward currency contracts (1) are traded in a
market conducted directly between currency traders (typically, commercial
banks or other financial institutions) and their customers, (2) generally
have no deposit requirements and (3) are typically consummated without
payment of any commissions. The Fund, however, may enter into forward
currency contracts requiring deposits or involving the payment of
commissions. To assure that its forward currency contracts are not used to
achieve investment leverage, the Fund will segregate liquid assets
consisting of cash, U.S. Government Securities or other liquid securities
with its custodian, or a designated sub-custodian, in an amount at all
times equal to or exceeding its commitment with respect to the contracts.

The dealings of the Fund in forward foreign exchange are limited to
hedging involving either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of one forward foreign currency
for another currency with respect to specific receivables or payables of
the Fund accruing in connection with the purchase and sale of its portfolio
securities or its payment of dividends and distributions. Position hedging
is the purchase or sale of one forward foreign currency for another
currency with respect to portfolio security positions denominated or quoted
in the foreign currency to offset the effect of an anticipated substantial
appreciation or depreciation, respectively, in the value of the currency
relative to the U.S. dollar. In this situation, the Fund also may, for
example, enter into a forward contract to sell or purchase a different
foreign currency for a fixed U.S. dollar amount where it is believed that
the U.S. dollar value of the currency to be sold or bought pursuant to the
forward contract will fall or rise, as the case may be, whenever there is a
decline or increase, respectively, in the U.S. dollar value of the currency
in which its portfolio securities are denominated (this practice being
referred to as a "cross-hedge").

In hedging a specific transaction, the Fund may enter into a forward
contract with respect to either the currency in which the transaction is
denominated or another currency deemed appropriated by the Adviser. The
amount the Fund may invest in forward currency contracts is limited to the
amount of its aggregate investments in foreign currencies.

The use of forward currency contracts may involve certain risks,
including the failure of the counterparty to perform its obligations under
the contract, and such use may not serve as a complete hedge because of an
imperfect correlation between movements in the prices of the contracts and
the prices of the currencies hedged or used for cover. The Fund will only
enter into forward currency contracts with parties which it believes to be
creditworthy institutions.

When Issued, Delayed Delivery Securities and Forward Commitments. The
Fund may enter into forward commitments for the purchase or sale of
securities, including on a "when issued" or "delayed delivery" basis, in
excess of customary settlement periods for the type of security involved.
In some cases, a forward commitment may be conditioned upon the occurrence
of a subsequent event, such as approval and consummation of a merger,
corporate reorganization or debt restructuring, i.e., a when, as and if
issued security. When such transactions are negotiated, the price is fixed
at the time of the commitment, with payment and delivery taking place in
the future, generally a month or more after the date of the commitment.
While it will only enter into a forward commitment with the intention of
actually acquiring the security, the Fund may sell the security before the
settlement date if it is deemed advisable.

Securities purchased under a forward commitment are subject to market
fluctuation, and no interest (or dividends) accrues to the Fund prior to
the settlement date. The Fund will segregate with its custodian cash or
liquid securities in an aggregate amount at least equal to the amount of
its outstanding forward commitments.

Short Sales. The Fund may make short sales of securities. A short
sale is a transaction in which the Fund sells a security it does not own in
anticipation that the market price of that security will decline. The
market value of the securities sold short of any one issuer will not exceed
either 5% of the Fund's total assets or 5% of such issuer's voting
securities. The Fund also will not make a short sale, if, after giving
effect to such sale, the market value of all securities sold short exceeds
25% of the value of its assets or the Fund's aggregate short sales of a
particular class of securities exceeds 25% of the outstanding securities of
that class. The Fund may also make short sales "against the box" without
respect to such limitations. In this type of short sale, at the time of the
sale, the Fund owns, or has the immediate and unconditional right to
acquire at no additional cost, the identical security.

The Fund expects to make short sales both to obtain capital gains
from anticipated declines in securities and as a form of hedging to offset
potential declines in long positions in the same or similar securities. The
short sale of a security is considered a speculative investment technique.

When the Fund makes a short sale, it must borrow the security sold
short and deliver it to the broker-dealer through which it made the short
sale in order to satisfy its obligation to deliver the security upon
conclusion of the sale. The Fund may have to pay a fee to borrow particular
securities and is often obligated to pay over any payments received on such
borrowed securities.

The Fund's obligation to replace the borrowed security will be
secured by collateral deposited with the broker-dealer, usually cash, U.S.
government securities or other highly liquid debt securities. The Fund will
also be required to deposit similar collateral with its custodian, Boston
Safe Deposit and Trust Company ("Boston Safe"), and, to the extent, if any,
necessary so that the value of both collateral deposits in the aggregate is
at all times equal to the greater of the price at which the security is
sold short or 100% of the current market value of the security sold short.
Depending on arrangements made with the broker-dealer from which it
borrowed the security regarding payment over of any payments received by
the Fund on such security, the Fund may not receive any payments (including
interest) on its collateral deposited with such broker-dealer. If the price
of the security sold short increases between the time of the short sale and
the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a capital
gain. Any gain will be decreased, any loss increased, by the transaction
costs described above. Although the Fund's gain is limited to the price at
which it sold the security short, its potential loss is theoretically
unlimited.

To secure its obligations to deliver the securities sold short, the
Fund will deposit in escrow in a separate account with the custodian, an
amount at least equal to the securities sold short or securities
convertible into, or exchangeable for, the securities. The Fund may close
out a short position by purchasing and delivering an equal amount of
securities sold short, rather than by delivering securities already held by
the Fund, because the Fund may want to continue to receive interest and
dividend payments on securities in its portfolio that are convertible into
the securities sold short.

Repurchase Agreements. The Fund may engage in repurchase agreement
transactions involving money market instruments with banks, registered
broker-dealers and government securities dealers approved by the Board of
Trustees. The Fund will not enter into repurchase agreements with the
Adviser or any of its affiliates. Under the terms of a typical repurchase
agreement, the Fund would acquire an underlying debt obligation for a
relatively short period (usually not more than one week) subject to an
obligation of the seller to repurchase, and the Fund to resell, the
obligation at an agreed price and time, thereby determining the yield
during its holding period. Thus, repurchase agreements may be seen to be
loans by the Fund collateralized by the underlying debt obligation. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the holding period. The value of the underlying
securities will be at least equal to all times to the total amount of the
repurchase obligation, including interest. The Fund bears a risk of loss in
the event that the other party to a repurchase agreement defaults on its
obligations and the Fund is delayed in or prevented from exercising its
rights to dispose of the collateral securities, including the risk of a
possible decline in the value of the underlying securities during the
period in which it seeks to assert these rights. The Adviser, acting under
the supervision of the Board of Trustees of the Fund, reviews the
creditworthiness of those banks and dealers with which the Fund enters into
repurchase agreements to evaluate these risks and monitors on an ongoing
basis the value of the securities subject to repurchase agreements to
ensure that the value is maintained at the required level.

MANAGEMENT OF THE FUND

TRUSTEES AND OFFICERS

Overall responsibility for management and supervision of the Fund
rests with its Board of Trustees. The Board of Trustees approves all
significant agreements between the Fund and the companies that furnish the
Fund with services, including agreements with the Adviser, the Fund's
custodian and the Fund's transfer agent. The day-to-day operations of the
Fund are delegated to the Adviser.

The names and business addresses of the trustees and principal
officers of the Fund are set forth in the following table, together with
their positions and their principal occupations during the past five years
and, in the case of the trustees, their positions with certain other
organizations and companies. Trustees who are "interested persons" of the
Fund, as defined by the 1940 Act, are indicated by an asterisk.

NAME (AND AGE) AND POSITION WITH THE FUND AND PRINCIPAL
BUSINESS ADDRESS OCCUPATION DURING PAST FIVE YEARS

Dr. Thomas E. Bratter (60) Trustee of the Fund; Director,
One Corporate Center President and Founder, The John Dewey Academy
Rye, NY 10580-1434 (residential college preparatory therapeutic
high school). (10)(15)

Felix J. Christiana (73) Trustee of the Fund; Retired; formerly
One Corporate Center Senior Vice President of Dollar Dry Dock
Rye, NY 10580-1434 Savings Bank. (1)(2)(3)(4)(5)(8)(10)(13)(15)

Anthony J. Colavita (62 ) Trustee of the Fund; President and Attorney at
One Corporate Center law in the law firm of Anthony J. Colavita, P.C.
Rye, NY 10580-1434 since 1961. (1)(2)(3)(4)(6)(7)(8)(9)(11)(12)
(13)(14)

James P. Conn (61) Trustee of the Fund; Former Managing
One Corporate Center Director and Chief Investment Officer of
Rye, New York 10580-1434 Financial Security Assurance Holdings Ltd.,
1992-1998; Director of Meditrust Corporation
(real estate investment trust); Director of
First Republic Bank. (1)(2)(10)(14)(15)

Vincent D. Enright (55) Trustee of the Fund; Former Senior Vice
One Corporate Center President and Chief Financial Officer of
Rye, NY 10580-1434 KeySpan Energy Corporation through 1998.
(5)(6)(7)

Frank J. Fahrenkopf, Jr. Trustee of the Fund; President and CEO
(59) of the American Gaming Association since
One Corporate Center June 1995; Partner of Hogan & Hartson;
Rye, New York 10508-1434 Chairman of International Trade Practice
Group. Co-Chairman of the Commission on
Presidential Debates; former Chairman of
the Republican National Committee. (15)

* Mario J. Gabelli (57) Chairman of the Board, President and
One Corporate Center Chief Investment Officer of the Fund;
Rye, New York 10580-1434 Chairman of the Board, Chief Executive Officer
of Gabelli Asset Management Inc. and Chief
Investment Officer of the Adviser and GAMCO
Investors, Inc; Chairman of the Board and
Chief Executive Officer of Lynch corporation
(diversified manufacturing and communications
services company); Director of East/West
Communications Inc.
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(15)

* John D. Gabelli (53) Trustee of the Fund; Senior Vice
One Corporate Center President of Gabelli & Company and Director
Rye, New York 10580-1434 of Gabelli Advisers, Inc. (1)(2)(5)(8)

* Karl Otto Pohl (69) Trustee of the Fund; Member of the
One Corporate Center Shareholder Committee of Sal. Oppenheim Jr.
Rye, New York 10580-1434 & Cie (private investment bank); Board Member
of TrizecHahn Corporation (real estate
company) and Zurich Versicherungs-Gesellschaft
(Insurance company); Director of Gabelli Asset
Management Inc. Former President of the
Deutsche Bundesbank and Chairman of its
Central Bank Council from 1980 through
1991. (1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)
(13)(14)(15)

Anthony R. Pustorino (73) Trustee of the Fund; Certified Public
One Corporate Center Accountant; Professor of Accounting, Pace
Rye, New York 10580-1434 University, since 1965.
(1)(2)(3)(4)(5)(10)(11)(13)(15)

* Salvatore J. Zizza (53) Trustee of the Fund; Adviser to The
One Corporate Center Gabelli Growth Fund; Chairman of The Bethlehem
Rye, New York 10580-1434 Corp.; Board Member of Hollis Eden
Pharmaceuticals; Former Executive Vice
President of FMG Group (a healthcare
provider); Former President and Chief Executive
Officer of the Lehigh Group Inc. (an electrical
supply wholesaler); Former Chairman of the
Executive Committee and Director of Binnings
Building Products, Inc.; (1)(4)(10)(15)

Bruce N. Alpert (47) Vice President and Treasurer of the
One Corporate Center Fund; Executive Vice President and Chief
Rye, New York 10580-1434 Operating Officer of the Adviser since June
1988; Director and President of Gabelli
Advisers, Inc.; Officer of all other registered
investment companies advised by the Adviser;
Vice President of The Treasurer's Fund Inc.;
Vice President of Gabelli Westwood Funds.

David Schachter (46) Vice President of the Fund since July 9,
One Corporate Center 1999; Financial Services Research Analyst of
Rye, New York 10580-1434 Gabelli & Company from October 1, 1998
to July 9, 1999; Previously, Vice President
of Thomas J. Herzfeld Advisers, Inc. a
registered investment adviser and noted
closed-end fund authority.

James E. McKee (36) Secretary of the Fund; Vice President
One Corporate Center and Secretary of the Adviser (since 1995)
Rye, New York 10580-1434 and Vice President and General Counsel of GAMCO
Investors, Inc. (since 1993); Secretary of
the registered investment companies advised
by the Adviser and its affiliates; Branch
Chief of the Securities and Exchange
Commission --Northeast Regional Office,
1992-1993.

- ---------------
* "Interested person" of the Fund, as defined in the 1940 Act. Mr.
Mario Gabelli is an "interested person" of the Fund as a result of his
employment as an officer of the Fund and the Adviser. Messrs. John and
Mario Gabelli are registered representatives of an affiliated
broker-dealer. Mr. Pohl is a director of the parent company of the Adviser.
Mr. Zizza may be an "interested person" as a result of his previous
association within the last three years with Binnings Building Products,
Inc., an entity which was controlled by GLI, Inc., an affiliate of the
Adviser.

(1) Trustee of The Gabelli Asset (8) Director of Gabelli Global
Fund. Series Funds, Inc.
(2) Trustee of The Gabelli Growth (9) Director of Gabelli Gold Fund,
Fund. Inc.
(3) Director of The Gabelli Value (10) Trustee of The Gabelli Global
Fund Inc. Multimedia Trust Inc.
(4) Director of The Gabelli (11) Director of Gabelli Capital
Convertible Securities Series Funds
Fund, Inc. (12) Director of Gabelli
(5) Director of Gabelli Equity International Growth Fund, Inc.
Series Funds, Inc. (13) Director of the Treasurer's
(6) Trustee of The Gabelli Money Fund, Inc.
Market Funds (14) Director of the Gabelli
(7) Director of Gabelli Investor Westwood Funds
Funds, Inc. (15) Director of the Gabelli Equity
Trust Inc. (the "Equity Trust")

The Board of Trustees of the Fund are divided into three classes,
with a class having a term of three years except as described below. Each
year the term of office of one class of trustees of the Fund will expire.
However, to ensure that the term of a class of the Fund's trustees expires
each year, one class of the Fund's trustees will serve an initial one-year
term and three-year terms thereafter and another class of its trustees will
serve an initial two-year term and three-year terms thereafter. The terms
of Messrs. Conn, John Gabelli, Pohl and Pustorino as trustees of the Fund
expire in 2000; the terms of Messrs. Bratter, Christiana, Enright and Mario
Gabelli as trustees of the Fund expire in 2001; The terms of Messrs.
Fahrenkopf and Zizza as trustees of the Fund expire in 2002; See "Certain
Provisions of the Declaration of Trust and the By-Laws" in the Prospectus.

REMUNERATION OF TRUSTEES AND OFFICERS

The Fund pays each trustee who is not affiliated with the Adviser or
its affiliates a fee of $3,000 per year plus $500 per meeting attended,
together with each trustee's actual out-of-pocket expenses relating to
attendance at such meetings.

The following table shows certain compensation information for the
Trustees and Officers of the Fund for the fiscal year ended December 31,
1998. Mr. Schachter is employed by the Fund and is not employed by the
Adviser. Officers who are employed by the Adviser receive no compensation
or expense reimbursement from the Fund.

COMPENSATION TABLE
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

TOTAL COMPENSATION
FROM THE FUND AND
AGGREGATE FUND COMPLEX
COMPENSATION PAID TO
NAME OF PERSON AND POSITION FROM THE FUND TRUSTEES/OFFICERS*
- --------------------------- ------------- -------------------

MARIO J. GABELLI $ 0 $ 0(13)
Chairman of the Board

DR. THOMAS E. BRATTER $ 0 $ 27,500(2)
Trustee

FELIX J. CHRISTIANA $ 0 $ 88,500(9)
Trustee

JAMES P. CONN $ 0 $ 46,000(5)
Trustee

VINCENT D. ENRIGHT $ 0 $ 18,000(3)
Trustee

FRANK J. FAHRENKOPF, JR. $ 0 $ 8,000(1)
Trustee

JOHN D. GABELLI $ 0 $ 0(4)
Trustee

KARL OTTO POHL $ 0 $ 102,466(15)
Trustee

ANTHONY R. PUSTORINO $ 0 $ 100,500(9)
Trustee

SALVATORE J. ZIZZA $ 21,500 $ 51,000(4)
Trustee

* Represents the total compensation paid to such persons during the
calendar year ended December 31, 1998 by investment companies (including
the Fund) or portfolios thereof from which such person receives
compensation that are considered part of the same fund complex as the Fund
because they have common or affiliated investment advisers. The number in
parenthesis represents the number of such investment companies and
portfolios.

LIMITATION OF OFFICERS' AND TRUSTEES' LIABILITY.

The Governing Documents of the Fund provide that the Fund will
indemnify its trustees and officers and may indemnify its employees or
agents against liabilities and expenses incurred in connection with
litigation in which they may be involved because of their positions with
the Fund, to the fullest extent permitted by law. However, nothing in the
Governing Documents of the Fund protects or indemnifies a trustee, officer,
employee or agent of the Fund against any liability to which such person
would otherwise be subject in the event of such person's willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her position.

INVESTMENT ADVISORY AND ADMINISTRATIVE ARRANGEMENTS

Gabelli Funds, LLC acts as the Fund's investment adviser pursuant to
an advisory agreement with the Fund (the "Advisory Agreement"). The Adviser
is a New York corporation with principal offices located at One Corporate
Center, Rye, New York 10580-1434. The Adviser was organized in 1999 and is
the successor to Gabelli Funds, Inc. which was organized in 1980. As of
June 30, 1999, the Adviser and its affiliates acted as registered
investment advisers to 15 management investment companies with aggregate
net assets of $8.6 billion. The Adviser, together with other affiliated
investment advisers, has assets under management totaling $18.0 billion.
GAMCO Investors, Inc., an affiliate of the Adviser, acts as investment
adviser for individuals, pension trusts, profit sharing trusts and
endowments, having aggregate assets of $7.6 billion under management as of
June 30, 1999. Gabelli Fixed Income LLC, an affiliate of the Adviser, acts
as investment adviser for The Treasurer's Fund and separate accounts having
aggregate assets under management of $1.5 billion. The Adviser is a
wholly-owned subsidiary of Gabelli Asset Management Inc., a New York
corporation, whose Class A Common Stock is traded on the New York Stock
Exchange under the symbol "GBL." Mr. Mario J. Gabelli may be deemed a
"controlling person" of the Adviser on the basis of his ownership of a
majority of the stock of the Gabelli Group Capital Partners, Inc., which
owns 80% of the capital stock of Gabelli Asset Management Inc.

Under the terms of the Advisory Agreement, the Adviser manages the
portfolio of the Fund in accordance with its stated investment objective
and policies, makes investment decisions for the Fund, places orders to
purchase and sell securities on behalf of the Fund and manages its other
business and affairs, all subject to the supervision and direction of the
Fund's Board of Trustees. In addition, under the Advisory Agreement, the
Adviser oversees the administration of all aspects of the Fund's business
and affairs and provides, or arranges for others to provide, at the
Adviser's expense, certain enumerated services, including maintaining the
Fund's books and records, preparing reports to the Fund's shareholders and
supervising the calculation of the net asset value of its shares. All
expenses of computing the net asset value of the Fund, including any
equipment or services obtained solely for the purpose of pricing shares or
valuing its investment portfolio, will be an expense of the Fund under its
Advisory Agreement unless the Adviser voluntarily assumes responsibility
for such expense. For its services, the Adviser is paid a fee computed
daily and paid monthly at an annual rate of 1.00% of the average weekly net
assets of the Fund.

The Advisory Agreement combines investment advisory and
administrative responsibilities in one agreement. For services rendered by
the Adviser on behalf of the Fund under the Advisory Agreement, the Fund
pays the Adviser a fee computed daily and paid monthly at the annual rate
of 1.00% of the average weekly net assets of the Fund.

The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard for its
obligations and duties thereunder, the Adviser is not liable for any error
or judgment or mistake of law or for any loss suffered by the Fund. As part
of the Advisory Agreement, the Fund has agreed that the name "Gabelli" is
the Adviser's property, and that in the event the Adviser ceases to act as
an investment adviser to the Fund, the Fund will change its name to one not
including "Gabelli."

Pursuant to its terms, the Advisory Agreement will remain in effect
with respect to the Fund until the second anniversary of shareholder
approval of such Agreement, and from year to year thereafter if approved
annually (i) by the Fund's Board of Trustees or by the holders of a
majority of its outstanding voting securities and (ii) by a majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act) of
any party to the Advisory Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. The Advisory Agreement
terminates automatically on its assignment and may be terminated without
penalty on 60 days' written notice at the option of either party thereto or
by a vote of a majority (as defined in the 1940 Act) of the Fund's
outstanding shares.

PORTFOLIO TRANSACTIONS

Subject to policies established by the Board of Trustees of the Fund,
the Adviser is responsible for placing purchase and sale orders and the
allocation of brokerage on behalf of the Fund. Transactions in equity
securities are in most cases effected on U.S. stock exchanges and involve
the payment of negotiated brokerage commissions. In general, there may be
no stated commission in the case of securities traded in over-the-counter
markets, but the prices of those securities may include undisclosed
commissions or mark-ups. Principal transactions are not entered into with
affiliates of the Fund. However, Gabelli & Company may execute transactions
in the over-the-counter markets on an agency basis and receive a stated
commission therefrom. To the extent consistent with applicable provisions
of the 1940 Act and the rules and exemptions adopted by the SEC thereunder,
as well as other regulatory requirements, the Fund's Board of Trustees have
determined that portfolio transactions may be executed through Gabelli &
Company and its broker-dealer affiliates if, in the judgment of the
Adviser, the use of those broker-dealers is likely to result in price and
execution at least as favorable as those of other qualified broker-dealers,
and if, in particular transactions, those broker-dealers charge the Fund a
rate consistent with that charged to comparable unaffiliated customers in
similar transactions. The Fund has no obligations to deal with any broker
or group of brokers in executing transactions in portfolio securities. In
executing transactions, the Adviser seeks to obtain the best price and
execution for the Fund, taking into account such factors as price, size of
order, difficulty of execution and operational facilities of the firm
involved and the firm's risk in positioning a block of securities. While
the Adviser generally seeks reasonably competitive commission rates, the
Fund does not necessarily pay the lowest commission available.

Subject to obtaining the best price and execution, brokers who
provide supplemental research, market and statistical information to the
Adviser or its affiliates may receive orders for transactions by the Fund.
The term "research, market and statistical information" includes advice as
to the value of securities, and advisability of investing in, purchasing or
selling securities, and the availability of securities or purchasers or
sellers of securities, and furnishing analyses and reports concerning
issues, industries, securities, economic factors and trends, portfolio
strategy and the performance of accounts. Information so received will
be in addition to and not in lieu of the services required to be performed
by the Adviser under the Advisory Agreement and the expenses of the Adviser
will not necessarily be reduced as a result of the receipt of such
supplemental information. Such information may be useful to the Adviser and
its affiliates in providing services to clients other than the Fund, and
not all such information is used by the Adviser in connection with the
Fund. Conversely, such information provided to the Adviser and its
affiliates by brokers and dealers through whom other clients of the Adviser
and its affiliates effect securities transactions may be useful to the
Adviser in providing services to the Fund.

Although investment decisions for the Fund are made independently
from those of the other accounts managed by the Adviser and its affiliates,
investments of the kind made by the Fund may also be made by those other
accounts. When the same securities are purchased for or sold by the Fund
and any of such other accounts, it is the policy of the Adviser and its
affiliates to allocate such purchases and sales in the manner deemed fair
and equitable to all of the accounts, including the Fund.

REPURCHASE OF SHARES

The Fund is a closed-end, non-diversified, management investment
company and as such its shareholders do not, and will not, have the right
to redeem their shares. The Fund, however, may repurchase its shares from
time to time as and when it deems such a repurchase advisable. Such
repurchases will be made when the Fund's shares are trading at a discount
of 10% or more (or such other percentage as the Board of Trustees of the
Fund may determine from time to time) from the net asset value of the
shares. Pursuant to the 1940 Act, the Fund may repurchase its shares on a
securities exchange (provided that the Fund has informed its shareholders
within the preceding six months of its intention to repurchase such shares)
or as otherwise permitted in accordance with Rule 23c-1 under the 1940 Act.
Under that Rule, certain conditions must be met regarding, among other
things, distribution of net income for the preceding fiscal year, identity
of the seller, price paid, brokerage commissions, prior notice to
shareholders of an intention to purchase shares and purchasing in a manner
and on a basis which does not discriminate unfairly against the other
shareholders through their interest in the Fund.

When the Fund repurchases its shares for a price below their net
asset value, the net asset value of those shares that remain outstanding
will be enhanced, but this does not necessarily mean that the market price
of those outstanding shares will be affected, either positively or
negatively.

PORTFOLIO TURNOVER

It is not expected that the annual portfolio turnover rate for the
Fund will exceed 100%. Portfolio turnover rate is calculated by dividing
the lesser of an investment company's annual sales or purchases of
portfolio securities by the monthly average value of securities in its
portfolio during the year, excluding portfolio securities the maturities of
which at the time of acquisition were one year or less. A high rate of
portfolio turnover involves correspondingly greater brokerage commission
expense than a lower rate, which expense must be borne by the Fund and its
shareholders, as applicable.

AUTOMATIC DIVIDEND REINVESTMENT AND VOLUNTARY
CASH PURCHASE PLAN

Under the Automatic Dividend Reinvestment and Voluntary Cash Purchase
Plan adopted by the Fund ( the "Plan"), a shareholder whose Common Stock is
registered in his own name will have all distributions reinvested
automatically by State Street Bank and Trust Company ("State Street"),
which is agent under the Plan, unless the shareholder elects to receive
cash. Distributions with respect to shares registered in the name of a
broker-dealer or other nominee (that is, in "street name") will be
reinvested by the broker or nominee in additional shares under the Plan,
unless the service is not provided by the broker or nominee or the
shareholder elects to receive distributions in cash. Investors who own
Common Stock registered in street name should consult their broker-dealers
for details regarding reinvestment. All distributions to investors who do
not participate in the Plan will be paid by check mailed directly to the
record holder by State Street as dividend disbursing agent.

Under the Plan, whenever the market price of the 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
dividend or capital gains distribution, participants in such plan 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 Common Stock. The valuation date is the dividend or
distribution payment date or, if that date is not a New York Stock Exchange
trading day, the next preceding 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, or acquired
by the Plan agent in the open market, valued at market price. If the Fund
should declare a dividend or capital gains distribution payable only in
cash, State Street will buy the Fund's Common Stock for the Plan in the
open market, on the New York Stock Exchange or elsewhere, for the
participants' accounts, except that State Street 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 its Common Stock exceeds net asset value.

Participants in the Plan have the option of making additional cash
payments to State Street, twice per month for the Fund, for investment in
the shares. Such payments may be made in any amount from $250 to $10,000.
State Street will use all funds received from participants to purchase
shares of the Fund in the open market on the 1st and 15th of each month. It
is suggested that participants send voluntary cash payments to State Street
in a manner that ensures that State Street will receive these payments
approximately 10 days before the investment date. A participant may without
charge withdraw a voluntary cash payment by written notice, if the notice
is received by State Street at least 48 hours before such payment is to be
invested.

State Street maintains all shareholder accounts in the Plan and
furnishes written confirmations of all transactions in the account,
including information needed by shareholders for personal and tax records.
Shares in the account of each Plan participant will be held by State Street
in noncertificated form in the name of the participant, and each
shareholder's proxy will include those shares purchased pursuant to the
Plan. A Plan participant may send his share certificates to State Street so
that the shares represented by such certificates will be held by State
Street in the participant's shareholder account under the Plan.

In the case of shareholders such as banks, brokers or nominees, which
hold shares for others who are the beneficial owners, State Street will
administer the Plan on the basis of the number of shares certified from
time to time by the shareholder as representing the total amount registered
in the shareholder's name and held for the account of beneficial owners who
participate in the Plan.

There is no charge to participants for reinvesting dividends or
capital gains distributions payable in either stock or cash. State Street's
fees for handling the reinvestment of such dividends and capital gains
distributions are paid by the Fund. There are no brokerage charges with
respect to shares issued directly by the Fund as a result of dividends or
capital gains distributions payable in stock or in cash. However, each
participant bears a pro rata share of brokerage commissions incurred with
respect to State Street's open market purchases in connection with the
reinvestment of dividends or capital gains distributions.

With respect to purchases from voluntary cash payments, State Street
will charge $0.75 for each such purchase for a participant, plus a pro rata
share of the brokerage commissions. Brokerage charges for purchasing small
amounts of stock for individual accounts through the Plan are expected to
be less than the usual brokerage charges for such transactions, as State
Street will be purchasing shares for all participants in blocks and
prorating the lower commission thus attainable.

The automatic reinvestment of dividends and distributions will not
relieve participants of any income tax which may be payable on such
dividends or distributions.

Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate its 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 such Plan at least 90 days before the record date for such
dividend or distribution. The Plan also may be amended or terminated by
State Street on at least 90 days' written notice to the participants in
such Plan. All correspondence concerning the Plan should be directed to
State Street at P.O. Box 8200, Boston, Massachusetts 02266-8200.

TAXATION

TAX STATUS OF THE FUND

As a regulated investment company, the Fund generally is not subject
to U.S. federal income tax on income and gains that it distributes to
shareholders, if at least 90% of the Fund's investment company taxable
income (which includes, among other items, dividends, interest, the excess
of any net short-term capital gains over net long-term capital losses) for
the taxable year is distributed. The Fund intends to distribute annually
substantially all of such income.

Amounts not distributed on a timely basis in accordance with a
calendar year distribution requirement are subject to a nondeductible 4%
excise tax at the Fund level. To avoid the tax, the Fund must distribute
during each calendar year an amount equal to the sum of (1) at least 98% of
its ordinary income (not taking into account any capital gains or losses)
for the calendar year, (2) at least 98% of its capital gains in excess of
its capital losses (adjusted for certain ordinary losses) for a one-year
period generally ending on October 31 of the calendar year (unless, an
election is made by a fund with a November or December year-end to use the
fund's fiscal year), and (3) all ordinary income and capital gains for
previous years that were not distributed during such years. While the Fund
intends to distribute income and capital gains in the manner necessary to
minimize imposition of the 4% excise tax, there can be no assurance that
sufficient amounts of the Fund's taxable income and capital gains will be
distributed to avoid entirely the imposition of the tax. In that event, the
Fund will be liable for the tax only on the amount by which it does not
meet the foregoing distribution requirement.

DISTRIBUTIONS

Dividend distributions of investment company taxable income are
taxable to a U.S. shareholder as ordinary income, whether paid in cash or
shares. Dividends paid by the Fund to a corporate shareholder, to the
extent such dividends are attributable to dividends received by the Fund
from U.S. corporations, may, subject to limitations, be eligible for the
dividends received deduction. Dividends paid by the Fund from its ordinary
income or from an excess of net short-term capital gains over net long-term
capital losses are taxable to shareholders as ordinary income.
Distributions from excess of net long-term capital gains over net
short-term capital losses realized, properly designated by the Fund,
whether paid in cash or reinvested in Fund shares, will generally be
taxable to shareholders as long-term gain, regardless of how long a
shareholder has held Fund shares. Distributions in excess of the Fund's
current and accumulated earnings and profits are first a non-taxable
reduction in the adjusted basis of the holder's common stock and, after
such adjusted tax basis is reduced to zero, then constitute capital gains
to such holder (provided such common stock is held as a capital asset).

FOREIGN TAXES

The Fund may be subject to certain taxes imposed by the countries in
which it invests or operates. If the Fund qualifies as a regulated
investment company and if more than 50% of the value of the Fund's total
assets at the close of any taxable year consists of stocks or securities of
foreign corporations, the Fund may elect, for U.S. federal income tax
purposes, to treat any foreign taxes paid by the Fund that qualify as
income or similar taxes under U.S. income tax principles as having been
paid by the Fund's shareholders. For any year for which the Fund makes such
an election, each shareholder will be required to include in its gross
income an amount equal to its allocable share of such taxes paid by the
Fund and the shareholders will be entitled, subject to certain limitations,
to credit their portions of these amounts against their U.S. federal income
tax liability, if any, or to deduct their portions from their U.S. taxable
income, if any. No deduction for foreign taxes may be claimed by
individuals who do not itemize deductions. In any year in which it elects
to "pass through" foreign taxes to shareholders, the Fund will notify
shareholders within 60 days after the close of the Fund's taxable year of
the amount of such taxes and the sources of its income. Because application
of the credit depends on the particular circumstances for each shareholder,
shareholders are advised to consult their own tax advisers.

DISPOSITIONS

BACKUP WITHHOLDING

OTHER TAXATION

FUND INVESTMENTS

Market Discount. If the Fund purchases a debt security at a price
lower than the stated redemption price of such debt security, the excess of
the stated redemption price over the purchase price is "market discount."
If the amount of market discount is more than a de minimis amount, a
portion of such market discount must be included as ordinary income (not
capital gain) by the Fund in each taxable year in which the Fund owns an
interest in such debt security and receives a principal payment on it. It
particular, the Fund will be required to allocate that principal payment
first to the portion of the market discount on the debt security that has
accrued but has not previously been includable in income. In general, the
amount of market discount that must be included for each period is equal to
the lesser of (i) the amount of market discount accruing during such period
(plus any accrued market discount for prior periods not previously taken
into account) or (ii) the amount of the principal payment with respect to
such period. Generally, market discount accrues on a daily basis for each
day the debt security is held by the Fund at a constant rate over the time
remaining to the debt security's maturity or, at the election of the Fund,
at a constant yield to maturity which takes into account the semiannual
compounding of interest. Gain realized on the disposition of a market
discount obligation must be recognized as ordinary interest income (not
capital gain) to the extent of the "accrued market discount."

Original Issue Discount. Certain debt securities acquired by the Fund
may be treated as debt securities that were originally issued at a
discount. Very generally, original issue discount is defined as the
difference between the price at which a security was issued and its stated
redemption price at maturity. Although no cash income on account of such
discount is actually received by the Fund, original issue discount that
accrues on a debt security in a given year generally is treated for U.S.
federal income tax purposes as interest and, therefore, such income would
be subject to the distribution requirements applicable to regulated
investment companies.

Options, Futures and Forward Contracts. Any regulated futures
contracts and certain options in which the Fund may invest may be "section
1256 contracts." Gains (or losses) on these contracts generally are
considered to be 60% long-term and 40% short-term capital gains or losses.
Also, section 1256 contracts held by the Fund at the end of each taxable
year (and on certain other dates prescribed in the Code) are "marked to
market" with the result that unrealized gains or losses are treated as
though they were realized.

Code section 1092, which applies to certain straddles, may affect
the taxation of the Fund's sales of securities and transactions in
financial futures contracts and related options. Under section 1092, the
Fund may be required to postpone recognition of losses incurred in certain
sales of securities and certain closing transactions in financial futures
contracts or related options.

Passive Foreign Investment Companies. The Fund may invest in shares
of foreign corporations that may be classified under the Code as passive
foreign investment companies ("PFICs"). In general, a foreign corporation
is classified as a PFIC if at least one-half of its assets constitute
investment-type assets, or 75% or more of its gross income is
investment-type income. If the Fund receives a so-called "excess
distribution" with respect to PFIC stock, the Fund itself may be subject to
a tax on a portion of the excess distribution, whether or not the
corresponding income is distributed by the Fund to shareholders. In
general, under the PFIC rules, any excess distribution is treated as having
been realized ratably over the period during which the Fund held the PFIC
shares. The Fund will itself be subject to tax on the portion, if any, of
an excess distribution that is so allocated to prior Fund taxable years and
an interest factor will be added to the tax, as if the tax had been payable
in such prior taxable years. Certain distributions from a PFIC as well as
gain from the sale of PFIC shares are treated as excess distributions.
Excess distributions are characterized as ordinary income even though,
absent application of the PFIC rules, certain excess distributions might
have been classified as capital gain.

The Fund may be eligible to elect alternative tax treatment with
respect to PFIC shares. Under one election currently available in some
circumstances, the Fund would be required to include in its gross income
its share of the earnings of a PFIC, on a current basis, whether or not
distributions were received from the PFIC in a given year. Under another
election, the Fund would be required to mark to market the Fund's PFIC
shares at the end of each taxable year, with the result that unrealized
gains would be treated as realized and such gains would be required to be
reported as ordinary income. Any mark-to-market losses and any loss from an
actual disposition of PFIC shares would be deductible as ordinary losses to
the extent of any net mark-to-market gains included in income in prior
years. If either one of these elections were made the special rules,
discussed above, relating to the taxation of excess distributions would not
apply.

Special Code provisions applicable to Fund investments, discussed
above, may affect characterization of gains and losses realized by the
Fund, and may accelerate recognition of income or defer recognition of
losses. The Fund will monitor these investments and when possible will make
appropriate elections in order to mitigate unfavorable tax treatment.

NET ASSET VALUE

The net asset value of the Fund's shares will be computed, based on
the market value of the securities it holds and determined daily as of the
close of regular trading on the New York Stock Exchange.

Portfolio instruments of the Fund which are traded in a market
subject to government regulation on which trades are reported
contemporaneously will be valued at the last sale price on the principal
market for such instruments as of the close of regular trading on the day
the instruments are being valued, or lacking any sales, at the average of
the bid and asked price on the principal market for such instruments on the
most recent date on which bid and asked prices are available. Other readily
marketable assets will be valued at the average of quotations provided by
dealers maintaining an active market in such instruments. Securities and
other assets for which market quotations are not readily available will be
valued at fair value as determined in good faith by or under the direction
of the Board of Trustees. Short-term investments that mature in more than
60 days are valued at the highest bid price obtained from a dealer
maintaining an active market in that security or on the basis of prices
obtained from a pricing service approved as reliable by the Board of
Trustees. Short-term investments that mature in 60 days or fewer are valued
at amortized cost, unless the Board of Trustees determines that such
valuation does not constitute fair value. The Fund may employ recognized
pricing services from time to time for the purpose of pricing portfolio
instruments.

Net asset value per share is calculated by dividing the value of the
securities held plus any cash or other assets minus all liabilities,
including accrued expenses, by the total number of shares outstanding at
such time.

GENERAL INFORMATION

COUNSEL AND INDEPENDENT ACCOUNTANTS

Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York,
New York 10022 is special counsel to the Fund in connection with the
offering of the Fund's Common Stock.

PricewaterhouseCoopers LLP, independent accountants, 1177 Avenue of
the Americas, New York, New York 10036, serve as auditors of the Fund and
will annually render an opinion on the financial statements of the Fund.

BENEFICIAL OWNER

There are no persons known to the Fund who may be deemed beneficial
owners of 5% or more of shares of the Fund's Common Stock because they
possessed or shared voting or investment power with respect to shares of
the Fund's Common Stock.

FINANCIAL STATEMENTS

The statement of assets and liabilities of the Fund as of March 29,
1999 and the report of independent accountants with respect thereto are
incorporated herein by reference to Pre-Effective Amendment No. 1 to the
Fund's Registration Statement on Form N-14 as filed with the Commission on
March 30, 1999.

PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(1) Financial Statements

(a) Statement of Assets and Liabilities as of March 29, 1999**
(b) Report of Independent Accountants**

(2) Exhibits

(a) Amended and Restated Agreement and Declaration of Trust of
Registrant***
(b) Amended and Restated By-Laws of Registrant*
(c) Not applicable
(d) Form of Registrant's Common Stock Certificate*
(e) Automatic Dividend Reinvestment and Voluntary Cash Purchase
Plan of Registrant**
(f) Not applicable
(g) Form of Investment Advisory Agreement between Registrant
and Gabelli Funds, LLC**
(h) Not applicable
(i) Not applicable
(j)(1)Form of Custodian Contract between Registrant and Boston
Safe Deposit and Trust Company**
(j)(2)Form of Custodian Fee Schedule between Registrant and
Boston Safe Deposit and Trust Company**
(k)(1)Form of Registrar, Transfer Agency and Service Agreement
between Registrant and State Street Bank and Trust Company**
(k)(2)Form of Transfer Agent and Registrar Service Fee Agreement
between Registrant and State Street Bank and Trust Company**
(l) Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom LLP
with respect to legality****
(m) Not applicable
(n) Consent of PricewaterhouseCoopers LLC****
(o) Not applicable
(p) Purchase Agreement dated March 29, 1999 between Registrant
and The Gabelli Equity Trust Inc.**
(q) Not applicable
(r) Financial Data Schedule*

- ---------------

* Previously filed.
** Incorporated by reference from Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form N-14, filed with the
Securities and Exchange Commission on March 30, 1999.
*** Incorporated by reference from the Registrant's Registration
Statement on Form N-2, filed with the Securities and Exchange
Commission on May 21, 1999.
**** Filed herewith.

Item 25. Marketing Arrangements

Not Applicable

Item 26. Other Expenses of Issuance and Distribution

The following table sets forth the estimated expenses to be incurred in
connection with the offering described in this Registration Statement:

SEC registration fees........................... $ 2,085
New York Stock Exchange listing fee............. 14,750
Printing and engraving expenses................. 30,000
Auditing fees and expenses...................... 10,000
Legal fees and expenses......................... 40,000
Blue Sky fees and expenses...................... 10,000
Miscellaneous................................... 3,165
Total..................................... $110,000
-------

Item 27. Persons Controlled by or Under Common Control with Registrant

Insofar as the following have substantially identical boards of
directors or trustees they may be deemed with Registrant to be under common
control: The Gabelli Asset Fund, The Gabelli Growth Fund and The Gabelli
Westwood Funds, each a Massachusetts Business Trust, The Gabelli Money
Market Funds, The Gabelli Blue Chip Value Fund, and The Gabelli Utilities
Fund, each a Delaware Business Trust, The Gabelli Equity Trust Inc., The
Gabelli Global Multimedia Trust Inc., The Gabelli Value Fund Inc., The
Gabelli Investor Funds, Inc., Gabelli Capital Series Funds, Inc., The
Gabelli Global Series Funds, Inc., The Gabelli Convertible Securities Fund,
Inc., Gabelli International Growth Fund, Inc., Gabelli Gold Fund, Inc. and
Gabelli Equity Series Funds, Inc., each a Maryland corporation.

Item 28. Number of Holders of Securities as of August 31, 1999

Number of
Title of Class Record Holders

Capital Stock, par value $.001 per share..... 86,371

Item 29. Indemnification

The response of this Item is incorporated by reference to the caption
"Limitation of Officers' and Trustees Liability" in the Part B of this
Registration Statement.

Insofar as indemnification for liability arising under the 1933 Act
may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant
has been advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the 1933 Act, and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer or controlling person of Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered. Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the 1933 Act and will be
governed by the final adjudication of such issue.

Item 30. Business and Other Connections of Adviser

Item 30. Business and Other Connections of Investment Adviser

The Adviser, a limited liability company organized under the laws of
the State of New York, acts as investment adviser to the Registrant. The
Registrant is fulfilling the requirement of this Item 30 to provide a list
of the officers and directors of the Investment Adviser, together with
information as to any other business, profession, vocation or employment of
a substantial nature engaged in by the Investment Adviser or those officers
and directors during the past two years, by incorporating by reference the
information contained in the Form ADV of the Investment Adviser filed with
the Commission pursuant to the Investment Advisers Act of 1940 (Commission
File No. 801-26202).

Item 31. Location of Accounts and Records

The accounts and records of the Registrant are maintained in part at
the office of the Adviser at One Corporate Center, Rye, New York
10580-1434, in part at the offices of the Custodian, Boston Safe Deposit
and Trust Company, One Boston Place, Boston, Massachusetts 02108, at the
offices of the Fund's Administrator, First Data Investor Services, 101
Federal Street, 6th Floor, Boston, MA 02110, and in part at the offices of
Boston EquiServe, 150 Royall Street, Mail Stop 45-02-62, Canton, MA 02021.

Item 32. Management Services

Not applicable.

Item 33. Undertakings

1. Registrant undertakes to suspend the offering of shares until
the prospectus is amended, if subsequent to the effective date
of this registration statement, its net asset value declines
more than ten percent from its net asset value, as of the
effective date of the registration statement or its net asset
value increases to an amount greater than its net proceeds as
stated in the prospectus.

2. Not applicable.

3. Not applicable.

4. Not applicable.

5. Registrant undertakes that, for the purpose of determining any
liability under the 1933 Act the information omitted from the
form of prospectus filed as part of the Registration Statement
in reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant pursuant to Rule 497(h) will
be deemed to be a part of the Registration Statement as of the
time it was declared effective.

Registrant undertakes that, for the purpose of determining any
liability under the 1933 Act, each post-effective amendment
that contains a form of prospectus will be deemed to be a new
Registration Statement relating to the securities offered
therein, and the offering of such securities at that time will
be deemed to be the initial bona fide offering thereof.

6. Registrant undertakes to send by first class mail or other
means designed to ensure equally prompt delivery, within two
business days of receipt of a written or oral request, any
Statement of Additional Information constituting Part B of this
Registration Statement.

SIGNATURES

As required by the Securities Act of 1933, this Registrant's
Registration Statement has been signed on behalf of the Registrant, in the
City of Rye, State of New York, on the 22nd day of September, 1999.

THE GABELLI UTILITY TRUST

By: /s/ Bruce N. Alpert
--------------------------
Bruce N. Alpert
Treasurer

As required by the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
and on the dates indicated.

Signature Title Date

/s/ * Chairman of the Board, September 22, 1999
- ------------------------ President, Chief Investment
Mario J. Gabelli Officer and Trustee

/s/ Bruce N. Alpert Chief Financial Officer September 22, 1999
- -----------------------
Bruce N. Alpert

/s/ * Trustee September 22, 1999
- ------------------------
Thomas E. Bratter

/s/ * Trustee September 22, 1999
- ------------------------
Felix J. Christiana

/s/ * Trustee September 22, 1999
- ------------------------
Anthony J. Colavita

/s/ * Trustee September 22, 1999
- ------------------------
James P. Conn

/s/ * Trustee September 22, 1999
- ------------------------
Vincent D. Enright

/s/ * Trustee September 22, 1999
- ------------------------
Frank J. Fahrenkopf, Jr.

/s/ * Trustee September 22, 1999
- ------------------------
John D. Gabelli

/s/ * Trustee September 22, 1999
- ------------------------
Karl Otto Pohl

/s/ * Trustee September 22, 1999
- ------------------------
Anthony R. Pustorino

/s/ * Trustee September 22, 1999
- ------------------------
Salvatore J. Zizza

/s/ Bruce N. Alpert September 22, 1999
- ----------------------------
* Bruce N. Alpert, Attorney-in-Fact

EXHIBIT INDEX

EXHIBIT NUMBER DESCRIPTION

ITEM 24.2

(a) Amended and Restated Agreement and Declaration of
Trust of Registrant***

(b) Amended and Restated By-Laws of Registrant*

(d) Form of Registrant's Common Stock Certificate*

(e) Automatic Dividend Reinvestment and Voluntary Cash
Purchase Plan of Registrant**

(g) Form of Investment Advisory Agreement between
Registrant and Gabelli Funds, LLC**

(j)(1) Form of Custodian Contract between Registrant
and State Street Bank and Trust Company**

(j) (2) Form of Custodian Fee Schedule between Registrant and
State Street Bank and Trust Company**

(k) (1) Form of Registrar, Transfer Agency and Service
Agreement between Registrant and State Street Bank
and Trust Company**

(k) (2) Form of Transfer Agent and Registrar Services
Fee Agreement**

(l) Opinion and Consent of Skadden, Arps, Slate, Meagher &
Flom LLP with respect to legality****

(n) Consent of PricewaterhouseCoopers LLP****

(p) Purchase Agreement dated March 29, 1999
between Registrant and The Gabelli Equity Trust Inc.**

(r) Financial Data Schedule*

- ---------------

EXHIBIT 24.2(l)

September 21, 1999

The Gabelli Utility Trust
One Corporate Center
Rye, NY 10580

Re: The Gabelli Utility Trust
Registration on Form N-2

Ladies and Gentlemen:

We have acted as special counsel to The Gabelli Utility Trust, a
business trust formed under the Delaware Business Trust Act (the "Fund"),
in connection with the registration by the Fund of 1,000,000 shares of the
Fund's Common Shares of Beneficial Interest, par value $.001 per share (the
"Shares").

This opinion is being furnished in accordance with the
requirements of Item 24(l) of Form N-2.

In connection with this opinion, we have examined originals or
copies (including facsimile transmission), certified or otherwise
identified to our satisfaction, of (i) the Registration Statement on Form
N-2 (File Nos. 333-85593 and 811-09243), as filed with the Securities and
Exchange Commission (the "Commission") on August 19, 1999 under the
Securities Act of 1933, as amended (the "1933 Act"), and the Investment
Company Act of 19940, as amended, and Pre-Effective Amendment No. 1
thereto, as filed with the Commission on September 21, 1999 (such
Registration Statement, as so amended, being hereinafter referred to as the
"Registration Statement"); (ii) a specimen certificate representing the
Shares; (iii) the Agreement and Declaration of Trust of the Fund, as
currently in effect (the "Declaration"); (iv) the By-Laws of the Fund, as
currently in effect; and (v) certain resolutions of the Board of Trustees
of the Fund relating to the issuance and sale of the Shares and related
matters. We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Fund and such
agreements, certificates of public officials, certificates of officers or
other representatives of the Fund and others, and such other documents,
certificates and records as we have deemed necessary or appropriate as a
basis for the opinions set forth herein.

In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified, conformed,
facsimile or photostatic copies and the authenticity of the originals of
such latter documents. In making our examination of documents executed or
to be executed by parties other than the Fund, we have assumed that such
parties had or will have the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due
authorization by all requisite action, corporate or other, and execution
and delivery by such parties of such documents and the validity and binding
effect thereof. As to any facts material to the opinions expressed herein
which we have not independently established or verified, we have relied
upon statements and representations of officers and other representatives
of the Fund and others.

Members of our firm are admitted to the bar in the States of New
York and Delaware, and we do not express any opinion as to any laws other
than the Delaware Business Trust Act.

Based upon and subject to the foregoing, we are of the opinion
that when Pre-Effective Amendment No. 1 to the Registration Statement
becomes effective, the issuance and sale of the Shares by the Fund
thereunder will have been duly authorized, and the Shares will be validly
issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. We also consent to
the reference to our firm under the caption "Legal Matters" in the
Registration Statement. In giving this consent, we do not thereby admit
that we are included in the category of persons whose consent is required
under Section 7 of the 1933 Act or the rules and regulations of the
Commission.

Very truly yours,

/s/ Skadden, Arps, Slate, Meagher & Flom LLP

Exhibit 24.2(n)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting part of this registration
statement on Form N-2 of our report dated March 30, 1999, relating to the
statement of assets and liabilities of The Gabelli Utility Trust at March
29, 1999. We also consent to the references to us under the heading
"Experts" in the Prospectus and under the headings "Counsel and Independent
Accountants" and "Financial Statements" in the Statement of Additional
Information.

PricewaterhouseCoopers LLP
New York, New York
September 16, 1999