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THIRD QUARTER REPORT
SEPTEMBER 30, 2000
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Our cover icon represents the underpinnings of Gabelli. The Teton mountains in
Wyoming represent what we believe in in America -- that creativity, ingenuity,
hard work and a global uniqueness provide enduring values. They also stand out
in an increasingly complex, interconnected and interdependent economic world.
INVESTMENT OBJECTIVE:
The Gabelli Utility Trust is a closed-end, non-diversified management investment
company whose primary objectives are long-term growth of capital and income. The
Fund will invest in companies that provide products, services or equipment for
the generation or distribution of electricity, gas and water. Additionally, the
Fund will invest in companies in telecommunications services or infrastructure
operations.
THIS REPORT IS PRINTED ON RECYCLED PAPER.
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[MARIO J. GABELLI PHOTO OMITTED]
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TO OUR SHAREHOLDERS,
The third quarter of 2000 was extraordinary. The tech-heavy Nasdaq
Composite Index came under pressure, and equity investors sought the safe haven
that utilities traditionally afford. At the same time, improved earnings,
particularly for the generators, and accelerating industry consolidation added
to the attraction of utility shares. The confluence of these factors led to a
very sharp rise in electric and gas stocks. The run-up in utility stock prices
was not supported by changes in interest rates. Our world is changing. Utility
investors may no longer be prisoners of the yield curve. The old utility math
(long bond yield plus or minus 1-2% depending on dividend payout, dividend risk
and one or two qualitative factors determines utility stock prices) does not
seem to work any more. Investing in utilities may no longer be largely an
exercise in forecasting interest rates and looking at yield spreads for relative
bargains. Fundamentals really matter now. That is exciting. We like it.
Electric and gas stocks rallied substantially in the third quarter. The
best performances came from companies that sell electricity in the merchant
wholesale market. Wholesale prices were very high, particularly in the West,
where hot, dry weather combined with low hydro availability led to skyrocketing
prices. Prices were also high in the Midwest and Northeast in spite of
unseasonably cool summer weather. Companies focused on electricity distribution
conspicuously lagged as investor concern mounted about their ability to pass on
the high wholesale prices to end users. California utility companies are
particularly exposed, with Pacific Gas & Electric and Southern California Edison
running up multi-billion dollar deferred power bills that threaten as much as
half of the companies' book equity. Political pressure is mounting for something
to be done to alleviate rising prices, and the search for a villain is well
under way. The only risk to the rosy outlook for the wholesale generators in the
near-term is their vulnerability to charges of price gouging, profiteering and
market manipulation. This bears watching. The Trust owns wholesale generating
stocks, and they have performed extraordinarily well. Notwithstanding the
positive fundamental outlook, however, if the political rhetoric ratchets up, we
may need to take some chips off the table.
Water stocks generally traded sideways. The merger and acquisition boom
that made 1999 so exciting and profitable has stalled for the moment, and based
on fundamentals alone, these stocks are not cheap. Merger and acquisition
activity may pick up once pending deals have closed. In addition, Sierra
Pacific, a major Nevada electric and gas utility, has put its water division up
for sale. The water division sale is rumored to generate proceeds to Sierra
Pacific of $300 million or more, which would be a stretch for all but a handful
of buyers. This deal may spark renewed interest in the group.
Telecommunications stocks continued to suffer, weighed down by increasing
concern about imploding long distance pricing structures, as well as the
pervasive inability of many competitive local and long distance carriers to
achieve operational targets and to service their burgeoning debt loads. The
telecommunications environment is as ugly as we can ever remember seeing it.
Capital is no longer available except to the very highest quality companies, and
even for them the terms are extortionate. We have seen one Competitive Local
Exchange Carrier ("CLEC") declare bankruptcy (GST Telecommunications) and are
likely to see another, much larger CLEC go under soon. The
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strongest are now absorbing the weak on highly advantageous terms. Verizon
acquired NorthPoint Communications, a digital subscriber line ("DSL") provider,
for no premium after the stock had fallen over 70% from its high. In October,
McLeod USA bought the struggling CapRock Communications for less than $200
million and, again, no premium for its equity holders. SBC purchased 10% of
Covad Communications, a national provider of DSL services, on its own terms.
This combination of bankruptcies and distressed fire sales will likely go on for
a while before the market clears.
The woes of the CLECs and the long distance companies have weighed on the
prices of the incumbent local exchange carriers ("ILECs"), also known as the
local telephone companies. This is understandable from a market psychology
standpoint, but we think that the bad news for the competitors of the ILECs must
in some sense be good news for the ILECs.
INVESTMENT PERFORMANCE
For the third quarter ended September 30, 2000, The Gabelli Utility Trust's
(the "Utility Trust") net asset value ("NAV") total return was 10.28% after
adjusting for the reinvestments of $0.15 per share in distributions. The
Standard & Poor's ("S&P") Utility Index and Lipper Utility Fund Average had
total returns of 32.38% and 8.96%, respectively, over the same period. The S&P
Utility Index is an unmanaged indicator of electric and gas utility stock
performance, while the Lipper Average reflects the average performance of mutual
funds classified in this particular category.
The Utility Trust was up 18.83% over the trailing twelve-month period after
adjusting for reinvestments of the $0.60 per share in distributions. The S&P
Utility Index and Lipper Utility Fund Average rose 43.34% and 22.65%,
respectively, over the same twelve-month period. Since inception on July 9, 1999
through September 30, 2000, the Trust had a cumulative total return of 18.99%,
including reinvestments of $0.60 per share in distributions, which equates to an
average annual total return of 15.14%.
The Utility Trust's common shares ended the third quarter at $8.3125 per
share on the New York Stock Exchange, a total return of 6.68% for the third
quarter. The Utility Trust's common shares rose 7.23% over the trailing
twelve-month period after adjusting for all distributions.
The Trust is noticeably underperforming the S&P Utility Index year to date
and somewhat less substantially outperforming the Lipper Utility Fund Average
year to date, and this merits some discussion. The Trust is not a utility index
fund, and its performance will, by design, deviate from the index. Sometimes
that deviation will be positive. Sometimes, as has been the case this year, the
Trust will lag the index. Indices do not hold cash or incur transaction costs,
while funds do, and this has been a minor negative for the Trust's performance
versus the index.
OUR APPROACH
There are over 80 publicly traded investor-owned electric utilities in the
U.S., and this is at least 50 more than are really needed from the standpoint of
economic efficiency. The balkanized structure of the industry is inherently
inefficient, and competitive forces are now punishing inefficiency. The industry
has consolidated
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PYRAMID TEXT AS FOLLOWS:
EPS
PMV
MANAGEMENT
CASH FLOW
RESEARCH
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substantially already, and would have done so even faster except for regulatory
paralysis impeding the pace of mergers and acquisitions. Our investments in the
electric stocks have primarily, though not exclusively, focused on fundamentally
sound, reasonably priced mid-cap and small-cap utilities that are logical
acquisition targets for large utilities seeking to bulk up. We have not made
major investments in the water sector for the moment, but if these stocks return
to more reasonable valuations we would expect to initiate and/or expand
positions.
COMMENTARY
The once-homogeneous electric utilities are now looking a lot less similar.
A handful of companies have built on their substantial size and scale advantages
to penetrate and perhaps dominate emerging wholesale and retail bulk power and
energy services markets. Some companies have sold off their generating assets
and now supply and distribute electricity to end customers. This looked like a
low risk business until this summer's wholesale price spike left the "wires"
companies exposed to substantial supply losses as wholesale prices exceeded
retail rates. We are learning in the U.S. today the same hard lesson learned in
the U.K. over the past five years: generation assets provide a physical hedge
against price volatility, and supply businesses not backed by physical
generation assets are very risky indeed.
The condition of the gas distribution utilities is generally stable and
sound. Pipeline companies are running into some earnings pressure as long-term
contracts run off and are replaced with shorter-term deals. Arbitrage pressures
have also compressed pipeline margins, since real world gas transportation rates
are now limited to basis differentials, regardless of what the tariffed rate
happens to be. In addition, near-term excess pipeline capacity is putting
pressure on transportation rates. The margin pressure should be manageable, but
we are watching developments carefully. The pressure on transportation rates is,
however, being more than offset by improved midstream results and rising profits
on the exploration & production side. Gas stocks, particularly the pipelines,
were some of the better-performing stocks in the Trust's portfolio in the third
quarter.
Water companies with few exceptions are doing well in a low risk, slow
growth, highly capital-intensive business. Following the merger and acquisition
frenzy of 1999, the few remaining independent water stocks moved to price levels
that incorporated substantial acquisition premiums, and we have elected to wait
for prices to return to more normal levels before buying.
Telecommunications companies continue to generate very impressive earnings
growth in the face of mounting competitive pressures. The Trust has small
positions in U.S. incumbent local exchange carriers, also known as the local
telephone companies. These companies are generating EPS growth in the low teens,
trade at half the market multiple, and have solid balance sheets and substantial
cash flows. We are further attracted to U.S. local exchange carriers because
they look very cheap compared to their European peers, and we feel that this
valuation disparity will narrow or reverse. This has largely occurred, although
much of the disparity was eliminated by European providers' stocks falling
rather than domestic telephone stocks rising. So be it. We still like the
opportunities in the U.S. local telecommunications market.
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LET'S TALK STOCKS
The following are stock specifics on selected holdings of our Trust.
Favorable earnings prospects do not necessarily translate into higher stock
prices, but they do express a positive trend which we believe will develop over
time.
DPL INC. (DPL - $29.75 - NYSE) provides electric service to metropolitan Dayton,
Ohio. In the past year DPL sold its gas distribution operations to Vectren
Corp., sold a significant equity stake to KKR, and repurchased 25 million shares
of stock in a self-tender. We sold most of the Trust's shares to the company in
the tender in the first quarter at $23, and when the stock sold off below $20
after the tender offer closed, we bought back in. The stock is cheap based on
current and prospective earnings, and has substantial unrealized gains in its
sizeable investment portfolio. We think that KKR's involvement in the company
may ultimately lead to a merger or leveraged buyout of DPL.
GPU INC. (GPU - $32.4375 - NYSE) was our pick as National Grid's acquisition
target, as we discussed in the second quarter shareholder letter. First Energy
of Ohio beat the Grid to the punch, and announced in early August that it would
acquire GPU for $36.50 per share. The Grid had other names in its little black
book, however, and announced its own deal less than a month later.
MCN ENERGY GROUP INC. (MCN - $25.625 - NYSE) is a large natural gas distribution
utility serving southeastern Michigan. MCN is under agreement to be acquired by
DTE Energy for $28.50 in cash and stock. The acquisition is hung up at the FTC,
which continues to have concerns about competition in generation and in energy
supply in the overlapping service territories. Recently the companies filed a
proposed settlement with the FTC that will hopefully lead to a successful close
of the merger in the fourth quarter.
NATIONAL FUEL GAS CO. (NFG - $56.0625 - NYSE) is a major natural gas
distribution company serving western New York State and northeastern
Pennsylvania. The company has major natural gas storage assets, which are
increasingly important in ensuring ready availability of gas close to the point
of use. NFG also has a major oil and gas exploration and production operation.
We own the stock because it is cheap. In addition, NFG is the last remaining
significant natural gas distribution and storage company in the Northeast, all
of the others having been acquired by electric utilities. While NFG has stoutly
maintained its independence for many years and continues to do so today, and
while NFG management objects to the company being discussed as an acquisition
target, we think that the company is ultimately destined to go where so many of
its peers have already gone. We note in passing that the company's capable
senior management team owns a lot of stock, and that its chairman, Bernard
Kennedy, is in his late 60s. Enough said.
NIAGARA MOHAWK HOLDINGS INC. (NMK - $15.75 - NYSE) is the holding company of
Niagara Mohawk Power Corporation, which is primarily a regulated electric and
gas utility, and Opinac North America, which is mainly involved in unregulated
activities in the energy business. Niagara Mohawk provides electric service, and
sells, distributes, and transports natural gas to approximately 1.6 million
electric and 540,000 gas customers in areas of central, northern and western New
York State. On September 5, National Grid Group plc (NGG - $43.125 - NYSE)
signed a merger agreement to acquire Niagara Mohawk in exchange for a
combination of American Depositary
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Shares (ADSs) and cash. Niagara Mohawk is National Grid's third U.S.
acquisition, after New England Electric System and Eastern Utilities
Association. The combination will create the ninth largest electric utility in
the U.S. with an electric customer base of approximately 3.3 million, and
National Grid will own and operate the most extensive transmission network (by
miles) and be the second largest distribution business (by power delivered) in
the New England/New York market.
NSTAR (NST - $40.25 - NYSE) provides electric and gas distribution and supply
service in eastern and southeastern Massachusetts. The company also has a
significant telecom operation which currently is growing nicely but modestly
depresses NSTAR's EPS. With the consolidation of electric and gas utilities in
New England now essentially completed (a few small cap companies remain to be
rolled up, but these are too small for NSTAR to bother with), the company will
have to do a noncontiguous acquisition in order to expand. We think that NSTAR
will be acquired someday (recognizing that management objects vehemently to our
opinion), but this is unlikely to occur for the foreseeable future. NSTAR has a
young, vigorous and capable management team that is objectively doing a good
job.
RGS ENERGY GROUP INC. (RGS - $28.1875 - NYSE) is a small electric and gas
utility serving metropolitan Rochester, NY. RGS is sandwiched neatly between
Niagara Mohawk and Energy East's service territory, and would be an easily
digested bolt-on acquisition for either. Energy East has bought five electric
and gas utilities in New England and New York in the past eighteen months, while
Niagara Mohawk announced in September its acquisition by the National Grid of
the U.K., which already owns New England Electric and Eastern Utilities of
Massachusetts. We think that RGS is in position to be acquired by one or the
other in the next year or two. We'll be sorry to see it go, since its management
team is one that we respect, but we think that RGS's time is at hand.
SBC COMMUNICATIONS INC. (SBC - $50.00 - NYSE) is one of the largest ILECs. The
stock has been weighed down by estimate reductions following the Ameritech
acquisition, and concern about the impact of competition. The competitors
currently are the ones who are suffering, however, and SBC is promising to
deliver EPS growth off of its rebased earnings. With capital expenditures
peaking this year at $13 billion and expected to decline next year to $9-10
billion as Project Pronto spending winds down, the company's free cash flow
should improve.
TECO ENERGY INC. (TE - $28.75 - NYSE) is a small electric utility serving Tampa,
Florida. TECO was one of the few successfully diversified electric utilities,
with a big barge business and a struggling coal handling and shipping business.
Earnings growth slowed in the late 1990s, and TECO lost its customary premium
valuation. New management has done well in reinvigorating the company, and
earnings are now growing nicely again. The stock should be acquired in time, we
think, but as long as the current capable management team keeps up the good
work, we are willing to wait.
MONTHLY DISTRIBUTIONS
The Gabelli Utility Trust has set a $.05 per share monthly distribution policy
for the year 2000.
WWW.GABELLI.COM
Please visit us on the Internet. Our homepage at http://www.gabelli.com contains
information about Gabelli Asset Management Inc., the Gabelli Mutual Funds, IRAs,
401(k)s, quarterly reports, closing prices and other current news. You can send
us e-mail at [email protected].
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IN CONCLUSION
The major factors depressing utility stock prices in 1999 and early this
year have been rising long-term interest rates and investors' infatuation with
technology stocks. With long-term interest rates perhaps having peaked for this
cycle and with technology stocks now coming under some pressure, utility price
performance is likely to continue to improve in both absolute and relative
terms.
Sincerely,
/S/ SIGNATURE MARIO J. GABELLI
MARIO J. GABELLI, CFA
President and Chief Investment Officer
November 14, 2000
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TOP TEN HOLDINGS
SEPTEMBER 30, 2000
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Niagara Mohawk Power Corp. Western Resources Inc.
Eastern Enterprises LG&E Energy Corp.
EnergyNorth Inc. E'Town Corp.
Columbia Energy Group RGS Energy Group Inc.
El Paso Electric Co. Entergy Corp.
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NOTE: The views expressed in this report reflect those of the portfolio
manager only through the end of the period stated in this report. The manager's
views are subject to change at any time based on market and other conditions.
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THE GABELLI UTILITY TRUST
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000 (UNAUDITED)
MARKET
SHARES VALUE
------ -----------
COMMON STOCKS -- 79.2%
AGRICULTURE -- 0.1%
6,000 Cadiz Inc.+ ........................ $ 60,000
-----------
COMMUNICATIONS EQUIPMENT -- 0.7%
25,000 Furukawa Electric Co. Ltd. ......... 690,589
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ENERGY AND UTILITIES: ELECTRIC -- 23.4%
63,000 Bangor Hydro-Electric Co. .......... 1,523,812
5,000 Cleco Corp. ........................ 233,750
122,000 Conectiv Inc. ...................... 2,180,750
39,521 DPL Inc. ........................... 1,175,750
208,000 El Paso Electric Co.+ .............. 2,864,160
40,000 Florida Progress Corp. ............. 2,117,500
4,000 FPL Group Inc. ..................... 263,000
30,000 GPU Inc. ........................... 973,125
34,000 IPALCO Enterprises Inc. ............ 777,750
52,200 Maine Public Service Co. ........... 1,278,900
250,000 Niagara Mohawk Power Corp. ......... 3,937,500
58,706 SCANA Corp. ........................ 1,812,548
18,000 TECO Energy Inc. ................... 517,500
25,000 UIL Holdings Corp. ................. 1,285,938
20,000 Unisource Energy Corp. ............. 327,500
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21,269,483
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ENERGY AND UTILITIES: INTEGRATED -- 22.7%
13,000 Allete ............................. 287,625
28,000 CH Energy Group Inc. ............... 1,116,500
32,000 Cinergy Corp. ...................... 1,058,000
138 Energy East Corp. .................. 3,122
60,000 Entergy Corp. ...................... 2,235,000
50,000 Florida Public Utilities Co. ....... 790,625
100,000 LG&E Energy Corp. .................. 2,443,750
22,000 Madison Gas & Electric Co. ......... 500,500
85,000 MCN Energy Group Inc. .............. 2,178,125
10,000 Montana Power Co. .................. 333,750
95,000 Northeast Utilities ................ 2,060,313
48,000 NSTAR .............................. 1,932,000
6,000 Public Service Co. of New Mexico ... 155,250
82,000 RGS Energy Group Inc. .............. 2,311,375
5,332 Vectren Corp. ...................... 108,306
130,000 Western Resources Inc. ............. 2,811,250
7,000 WPS Resources Corp. ................ 229,250
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20,554,741
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ENERGY AND UTILITIES: NATURAL GAS -- 21.1%
42,000 AGL Resources Inc. ................. 842,625
45,000 Columbia Energy Group .............. 3,195,000
34,000 Delta Natural Gas Co. Inc. ......... 595,000
30,000 Dynegy Inc., Cl. A ................. 1,710,000
60,985 Eastern Enterprises ................ 3,891,605
53,500 EnergyNorth Inc. ................... 3,246,781
2,000 National Fuel Gas Co. .............. 112,125
12,000 Nicor Inc. ......................... 434,250
20,000 Peoples Energy Corp. ............... 667,500
28,000 Piedmont Natural Gas Co. Inc. ...... 857,500
68,000 SEMCO Energy Inc. .................. 1,045,500
MARKET
SHARES VALUE
------ -----------
16,463 Southern Union Co.+ ................ $ 326,173
104,000 Southwest Gas Corp. ................ 2,177,500
-----------
19,101,559
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ENERGY AND UTILITIES: WATER -- 7.0%
8,000 American States Water Co. .......... 242,000
11,000 Artesian Resources Corp., Cl. A .... 257,125
20,000 Azurix Corp.+ ...................... 71,250
21,000 Birmingham Utilities Inc. .......... 280,875
20,520 California Water Service Group ..... 548,910
12,000 Connecticut Water Service Inc. ..... 387,000
36,000 E'Town Corp. ....................... 2,407,500
16,000 Middlesex Water Co. ................ 468,000
4,000 Pennichuck Corp. ................... 104,000
13,000 SJW Corp. .......................... 1,543,750
4,000 Southwest Water Co. ................ 52,750
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6,363,160
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SATELLITE -- 0.3%
7,500 General Motors Corp., Cl. H+ ....... 278,850
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TELECOMMUNICATIONS -- 3.9%
8,000 ALLTEL Corp. ....................... 417,500
4,000 AT&T Canada Inc., Cl. B+ ........... 122,000
75,000 CenturyTel Inc. .................... 2,043,750
60,000 Citizens Communications Co. ........ 806,250
3,000 Global Crossing Ltd.+ .............. 93,000
1,000 SBC Communications Inc. ............ 50,000
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3,532,500
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TOTAL COMMON STOCKS ................ 71,850,882
-----------
PREFERRED STOCKS -- 0.9%
TELECOMMUNICATIONS -- 0.9%
15,000 Citizens Communications Co.,
5.00% Cv. Pfd. ................... 813,750
-----------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT -- 18.3%
$16,556,000 Agreement with State Street Bank &
Trust Co., 6.46%, dated 09/29/00,
due 10/02/00, proceeds at
maturity $16,564,913 (a) ......... 16,556,000
-----------
TOTAL INVESTMENTS -- 98.4%
(Cost $80,401,446) .............................. 89,220,632
OTHER ASSETS AND
LIABILITIES (NET) -- 1.6% ....................... 1,452,876
-----------
NET ASSETS -- 100.0%
(10,981,533 shares outstanding) ................. $90,673,508
===========
NET ASSET VALUE
($90,673,508 [DIVIDE] 10,981,533 shares outstanding) $8.26
=====
--------------------
(a) Collateralized by U.S. Treasury Bond, 8.50%, due 02/15/20, market value
$16,891,506.
+ Non-income producing security.
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AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLAN
ENROLLMENT IN THE PLAN
It is the policy of The Gabelli Utility Trust ("Utility Trust") to
automatically reinvest dividends. As a "registered" shareholder you
automatically become a participant in the Utility Trust's Automatic Dividend
Reinvestment Plan (the "Plan"). The Plan authorizes the Utility Trust to issue
shares to participants upon an income dividend or a capital gains distribution
regardless of whether the shares are trading at a discount or a premium to net
asset value. All distributions to shareholders whose shares are registered in
their own names will be automatically reinvested pursuant to the Plan in
additional shares of the Utility Trust. Plan participants may send their stock
certificates to State Street Bank and Trust Company ("State Street") to be held
in their dividend reinvestment account. Registered shareholders wishing to
receive their distribution in cash must submit this request in writing to:
The Gabelli Utility Trust
c/o State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan may contact State Street at 1 (800)
336-6983.
SHAREHOLDERS WISHING TO LIQUIDATE REINVESTED SHARES held at State Street
Bank must do so in writing or by telephone. Please submit your request to the
above mentioned address or telephone number. Include in your request your name,
address and account number. The cost to liquidate shares is $2.50 per
transaction as well as the brokerage commission incurred. Brokerage charges are
expected to be less than the usual brokerage charge for such transactions.
If your shares are held in the name of a broker, bank or nominee, you
should contact such institution. If such institution is not participating in the
Plan, your account will be credited with a cash dividend. In order to
participate in the Plan through such institution, it may be necessary for you to
have your shares taken out of "street name" and re-registered in your own name.
Once registered in your own name your dividends will be automatically
reinvested. Certain brokers participate in the Plan. Shareholders holding shares
in "street name" at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must
contact their broker to make this change.
The number of shares of Common Stock distributed to participants in the
Plan in lieu of cash dividends is determined in the following manner. Under the
Plan, whenever the market price of the Utility Trust's Common Stock is equal to
or exceeds net asset value at the time shares are valued for purposes of
determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued shares of Common Stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current market price of the Utility Trust's Common Stock. The valuation
date is the dividend or distribution payment date or, if that date is not a New
York Stock Exchange trading day, the next trading day. If the net asset value of
the Common Stock at the time of valuation exceeds the market price of the Common
Stock, participants will receive shares from the Utility Trust valued at market
price. If the Utility Trust should declare a dividend or capital gains
distribution payable only in cash, State Street will buy Common Stock in the
open market, or 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 Utility Trust to issue shares at net
asset value if, following the commencement of such purchases, the market value
of the Common Stock exceeds the then current net asset value.
The automatic reinvestment of dividends and capital gains distributions
will not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for Federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.
The Utility Trust reserves the right to amend or terminate the Plan as
applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to written notice of the change sent to the members of the Plan
at least 90 days before the record date for such dividend or distribution. The
Plan also may be amended or terminated by State Street on at least 90 days'
written notice to participants in the Plan.
VOLUNTARY CASH PURCHASE PLAN
The Voluntary Cash Purchase Plan is yet another vehicle for our
shareholders to increase their investment in the Utility Trust. In order to
participate in the Voluntary Cash Purchase Plan, shareholders must have their
shares registered in their own name.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to State Street for investments in the Utility Trust's
shares at the then current market price. Shareholders may send an amount from
$250 to $10,000. State Street will use these funds to purchase shares in the
open market on or about the 15th of each month. State Street will charge each
shareholder who participates $0.75, plus a pro rata share of the brokerage
commissions. Brokerage charges for such purchases are expected to be less than
the usual brokerage charge for such transactions. It is suggested that any
voluntary cash payments be sent to State Street Bank and Trust Company, P.O. Box
8200, Boston, MA 02266-8200 such that State Street receives such payments
approximately 10 days before the 15th of the month. Funds not received at least
five days before the investment date shall be held for investment in the
following month. A payment may be withdrawn without charge if notice is received
by State Street at least 48 hours before such payment is to be invested.
For more information regarding the Dividend Reinvestment Plan and Voluntary
Cash Purchase Plan, brochures are available by calling (914) 921-5070 or by
writing directly to the Utility Trust.
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DIRECTORS AND OFFICERS
THE GABELLI UTILITY TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1434
DIRECTORS
Mario J. Gabelli, CFA
CHAIRMAN AND CHIEF INVESTMENT OFFICER,
GABELLI ASSET MANAGEMENT INC.
Dr. Thomas E. Bratter
PRESIDENT, JOHN DEWEY ACADEMY
Felix J. Christiana
FORMER SENIOR VICE PRESIDENT,
DOLLAR DRY DOCK SAVINGS BANK
Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.
James P. Conn
FORMER MANAGING DIRECTOR AND CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Vincent D. Enright
FORMER SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER,
KEYSPAN ENERGY CORP.
Frank J. Fahrenkopf, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER,
AMERICAN GAMING ASSOCIATION
John D. Gabelli
SENIOR VICE PRESIDENT,
GABELLI & COMPANY, INC.
Karl Otto Pohl
FORMER PRESIDENT, DEUTSCHE BUNDESBANK
Anthony R. Pustorino
CERTIFIED PUBLIC ACCOUNTANT,
PROFESSOR, PACE UNIVERSITY
Salvatore J. Zizza
CHAIRMAN, THE BETHLEHEM CORP.
OFFICERS
Mario J. Gabelli, CFA
PRESIDENT & CHIEF INVESTMENT OFFICER
Bruce N. Alpert
VICE PRESIDENT & TREASURER
David I. Schachter
VICE PRESIDENT & OMBUDSMAN
James E. McKee
SECRETARY
INVESTMENT ADVISOR
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1434
CUSTODIAN
Boston Safe Deposit and Trust Company
COUNSEL
Skadden, Arps, Slate, Meagher & Flom, LLP
TRANSFER AGENT AND REGISTRAR
State Street Bank and Trust Company
STOCK EXCHANGE LISTING
Common
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NYSE-Symbol: GUT
Shares Outstanding: 10,981,533
The Net Asset Value appears in the Publicly Traded Funds column, under the
heading "Specialized Equity Funds," in Sunday's The New York Times and in
Monday's The Wall Street Journal. It is also listed in Barron's Mutual
Funds/Closed End Funds section under the heading "Specialized Equity Funds."
The Net Asset Value may be obtained each day by calling (914) 921-5071.
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For general information about the Gabelli Funds, call 1-800-GABELLI
(1-800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: HTTP://WWW.GABELLI.COM or e-mail us at: [email protected]
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Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Utility Trust may, from time to time,
purchase its shares in the open market when the Utility Trust shares are trading
at a discount of 10% or more from the net asset value of the shares.
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THE GABELLI UTILITY TRUST
ONE CORPORATE CENTER
RYE, NY 10580-1434
(914) 921-5070
HTTP://WWW.GABELLI.COM
THIRD QUARTER REPORT
SEPTEMBER 30, 2000
GBFUF 09/00
