To Our Shareholders,
For the quarter ended December 31, 2013, the net asset value
(“NAV”) total return of The Gabelli Global Utility & Income
Trust (the “Fund”) was 7.0%, compared with a total return of 2.8%
for the Standard & Poor’s (“S&P”) 500 Utilities Index. The
total return for the Fund’s publicly traded shares was 3.6%. The
Fund’s NAV per share was $22.36, while the price of the publicly
traded shares closed at $20.04 on the NYSE MKT.
Mario J. Gabelli, CFA
The Gabelli Global Utility & Income Trust Shareholder
Commentary – December 31, 2013
Portfolio Manager
Comparative Results
Average Annual Returns through December 31, 2013 (a) Since
Inception Quarter 1 Year 3 Year 5 Year (05/28/04)———–— —–—— ——–—
——–— ———–——
Gabelli Global Utility & Income Trust NAV Total Return (b) . .
. . . . . . . . . . . . . . . . . . . . . . 6.95% 21.56% 10.88%
11.42% 8.48% Investment Total Return (c) . . . . . . . . . . . . .
. . . . . 3.60 7.32 7.49 12.65 7.21
S&P 500 Utilities Index . . . . . . . . . . . . . . . . . . . .
. . . . . . 2.79 13.21 11.20 10.17 9.39 Lipper Utility Fund Average
. . . . . . . . . . . . . . . . . . . . . . . 5.01 19.90 13.35
13.57 10.67 S&P 500 Index . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 10.51 32.39 16.18 17.94 7.57 (a) Returns
represent past performance and do not guarantee future results.
Investment returns and the principal value
of an investment will fluctuate. When shares are redeemed, they may
be worth more or less than their original cost. Current performance
may be lower or higher than the performance data presented. Visit
www.gabelli.com for performance information as of the most recent
month end. Performance returns for periods of less than one year
are not annualized. Investors should carefully consider the
investment objectives, risks, charges, and expenses of the Fund
before investing. The S&P 500 Utilities Index is an unmanaged
indicator of electric and gas utility stock performance. The Lipper
Utility Fund Average reflects the average performance of mutual
funds classified in this particular category. The S&P 500 Index
is an unmanaged indicator of stock market performance. Dividends
are considered reinvested. You cannot invest directly in an
index.
(b) Total returns and average annual returns reflect changes in the
NAV per share, reinvestment of distributions at NAV on the
ex-dividend date, and adjustments for rights offerings and are net
of expenses. Since inception return is based on an initial NAV of
$19.06.
(c) Total returns and average annual returns reflect changes in
closing market values on the NYSE MKT and reinvestment of
distributions and adjustments for rights offerings. Since inception
return is based on an initial offering price of $20.00.
2
Introduction
The S&P 500 Utilities Index provided a 13% total return in 2013
versus the 32% total return of the S&P 500 Index. While utility
stocks significantly underperformed the roaring bull market, the
return was above the 8% - 10% annual total return generally
expected, and somewhat remarkable given the rise in interest rates,
including 10 and 30 Year U.S. Treasury yields, which rose to 3.03%
and 3.96% from 1.76% and 2.95%, respectively. Utility stock
performance was aided by the strong overall market as well as solid
fundamentals, but it was hampered by investor preference for growth
and cyclical stocks over defensive stocks and rising interest
rates. The U.S. economic recovery appears to be gaining strength,
as indicated by higher employment rates, stronger GDP growth, and
recovering housing markets.
Given the strong macroeconomic backdrop and comparatively modest
utility earnings growth potential, electric and gas utility stocks
have been largely neglected. In addition, some investors appear
concerned with the potential for headwinds, including higher
interest rates, stricter EPA standards, slower electric demand
growth, ongoing weak power markets, and the impact of rooftop solar
panels.
Investment Outlook
Fortunately for regulated utility investors, each of these factors
is recognized through constructive regulatory principles, i.e.,
higher rates, including sales/revenue decoupling mechanisms, annual
riders/trackers/adjustments, and higher returns on equity (ROE). As
such, we continue to expect 4% - 6% annual earnings growth for the
foreseeable future, and we are comfortable with the consensus
regulated utility earnings growth outlook of 6.3% in 2014 and 4.9%
in 2015. The median current dividend return of 3.9% is attractive,
and the healthy 63% dividend payout of 2014 earnings provides an
ample cushion for security as well as room for accelerated growth.
Further, it appears that capital investment programs could become
more manageable, or even more discretionary, following Mercury and
Air Toxins (MATS) compliance in late 2015. Importantly, utility
stocks are likely to experience the “uplift” associated with the
following tailwinds, including potentially higher ROEs, increased
transmission opportunities, ongoing consolidation, and the
potential for value creating financial engineering such as the
formation of alternative corporate structures such as a master
limited partnership (MLP), YieldCo (separated tax-advantaged set of
assets designed to produce shareholder value), or the spin-off of
non-regulated generation.
As we look into 2014, we recommend that investors take advantage of
the “2013 underperformance”, and continue to selectively build
positions in utility stocks. We emphasize that the fundamentals of
the utility sector remain strong, and include solid balance sheets,
positive credit outlooks, and generally constructive state public
utility commission (PUC) regulation. Interest rates, natural gas
prices, and economic growth will continue to be major macro drivers
of utility stock performance, while individual rate case decisions,
service area growth, and consolidation are the more important micro
drivers. In our opinion, utility stocks continue to offer a 3.9%
current return, 4% - 6% dividend and earnings growth, and potential
for upside associated with consolidation.
The global utility marketplace totals over $2 trillion in equity
capitalization, which includes $600 billion in North America, $600
billion in Europe, $600 billion in Asia, and $200 billion in South
America. The challenges of delivering low cost energy and water,
with significant variations in natural resource (fuel) situations
and political dynamics, have allowed for and fostered certain
valuable core competencies, such as nuclear and renewable
generation technological advancement across the world.
While there are fewer European utilities, they are significantly
larger and more geographically diversified than the U.S.-based
utilities. European utilities such as Iberdrola, Electricidade de
Portugal, and Endesa are
3
among the global leaders in renewable generation development.
Electricité de France is the world’s largest nuclear operator, and
National Grid is one of the world’s better transmission operators.
Asia, South/Latin America, and certain developing regions offer
greater demand growth, infrastructure investment opportunities, and
potentially greater return potential. Following the events at
Fukushima, the Japanese utilities have faced power supply
challenges and could offer interesting opportunities. We expect
continued investment and consolidation from abroad to result in
cross integration, and to provide a wider range of investment
opportunities.
Deal Activity
During the second half of 2013, two Southwestern utility merger
deals were announced at premium prices. While the pace of
consolidation has been relatively moderate over the past few years,
the recent activity, combined with the long term consolidation
trend, highlights the solid return potential of utility stocks. We
continue to believe that selected small and mid-capitalization
utilities offer healthy low risk returns, with the potential to be
purchased at material premiums. The deals were:
• On December 11, 2013, Canadian utility Fortis Inc. announced an
agreement to buy the Tucson, AZ electric utility, UNS Energy, for
$60.25 per share, a 31% premium to the previous day’s close. The
UNS offer price represents 20.0x and 18.6x P/E multiples of 2013
and 2014 earnings of $3.05 and $3.30 per share. The EV/EBITDA
multiple is roughly 10.0x 2012, but 8.0x 2015 EBITDA.
• On December 19, 2013, NV Energy (NVE) was acquired by MidAmerican
Energy Holdings Company (MEHC) for $23.75 in cash. The deal was
announced on May 30, 2013, and the offer price represented a 23%
premium over the previous day’s closing price. The deal valued NVE
at 18.3x, 17.6x, and 16.5x 2013, 2014, and 2015 consensus earnings
estimates, respectively, and an 8.9x multiple of 2013 estimated
EBITDA. NVE will operate as a separate subsidiary of MEHC, and will
continue to be headquartered in Las Vegas, NV.
Since 1995, the electric utility sector has experienced over 120
acquisition announcements and nearly 100 completed deals.
Consolidation and merger activity was particularly active during
the years 1995 - 2000, with fifty-eight announced deals, driven
primarily by what appeared to be the pending deregulation of the
electric utility sector. As such, utilities scrambled for merger
partners in order to gain the scale and expertise deemed necessary
to compete. Given that electric industry deregulation was
essentially halted following the California electricity crisis of
2000 - 2001 and Enron debacle, merger activity moderated.
Since 2002, consolidation has not progressed at a pace that
economic logic would suggest, primarily due to regulatory issues
such as the sharing of cost savings, market power, or federal/state
control issues. For example, on December 12, 2013, following the
Mississippi Public Service Commission’s rejection of the merger,
Entergy and ITC Holdings abandoned their agreement to merge ETR’s
transmission assets into ITC. Separately, the Federal Energy
Regulatory Commission’s (FERC) high standard for determining market
power in its mid-2012 approval of the Duke Energy/Progress Energy
merger hampered potential merger partners’ willingness to negotiate
contiguous mergers. Finally, European macroeconomic struggles have
sidelined the larger global utilities, which are currently in
divestiture mode.
Nonetheless, we expect consolidation to continue for years to come,
driven by ongoing challenges related to climate change and earnings
growth. More recent mergers were driven by the desire for scale to
spread costs of large infrastructure projects, diversify generation
assets, or achieve synergies in non-regulated power. Mergers
involving non-regulated power companies face minimal challenges,
including NRG Energy’s pending
4
purchase of generation from Edison Mission Energy and Dynegy’s
December 2013 purchase of generation from Ameren. The Canadian
utilities have been more active recently, including Fortis/CHG
Energy in June of 2013, Emera’s 2010 purchase of Maine and Maritime
and Gaz Metro’s mid-2012 purchase of Central Vermont.
Larger Utility Transactions Announced Since 1/1/2010 Date Value
Premium Multiple Paid Date
Announced Target Entity Acquirer ($ Millions) Paid (%) EV/EBITDA
(X) Type Closed 12/11/13 UNS Energy Fortis 4,300 31 8 Cash Pending
5/29/13 NVE Energy Mid-American 5,600 23 9 Cash Pending 5/28/13 New
Mexico Gas TECO Energy 950 NA 11 Cash Pending 2/11/13 New England
Gas Company Algonquin Power 74 NA 7.8 Cash Pending
12/20/12 EQT Distribution Assets Peoples Natural Gas 1,080 NA 9.5
Cash/Assets Pending 12/17/12 Missouri Gas & New England Gas
Laclede Group 1,020 NA 10.8 Cash 9/1/2013 7/22/12 GenON NRG Energy
Inc. 3,400 21 7.4 Stock 12/14/2012 2/21/12 CH Energy Group Fortis
1.267 10.5 10 Cash 6/27/2013 10/16/11 El Paso Corporation Kinder
Morgan 38,000 37 10.5 Cash/Stock 5/24/2012 7/19/11 Southern Union
Gas (a) Energy Transfer Equity 9,232 57 10 Cash/Stock 3/26/2012
6/23/11 Central Vermont P.S. (a) Gaz Metro 695 NMF 10.7 Cash
6/27/2012 4/28/11 Constellation Energy Exelon 10,500 18 6.6 Stock
3/12/2012 4/20/11 DPL, Inc. AES Corp. 4,700 9 7.2 Cash 11/28/2011
1/10/11 Progress Energy Duke Energy 25,700 7 8.4 Stock
7/2/2012
12/15/10 Dynegy, Inc. (a) Icahn Enterprises 5,000 NA $408/kilowatt
Cash/Debt Terminated 12/9/10 Granite State Electric Co. Algonquin
Power 285 9.2 Cash 7/3/2012 12/5/10 NICOR AGL Resources 3,100 22
7.7 Cash/Stock 12/9/2011 10/18/10 NSTAR Northeast Utilities 6,900 0
7.1 Stock 4/10/2012 5/25/10 CT/MA LDCs UIL Holdings Corp. 1,296 NA
9.4 Cash 11/16/2010 4/29/10 E.ON U.S. LLC PPL Corp. 7,625 NA 9.9
Cash 11/1/2010 4/21/10 Conectiv Energy Fleet Calpine Corp. 1,650 NA
$427/kilowatt Cash 7/1/2010 4/11/10 Mirant Corp. RRI Energy Inc.
2,297 4 $228/kilowatt Stock 12/3/2010 3/12/10 Maine & Maritimes
Corp. Emera Inc. 105 41 16.7 Cash 12/21/2010 2/11/10 Allegheny
Energy Inc. FirstEnergy Corp. 8,500 32 7.1 Stock 2/25/2011
(a) Winning bid Source: Company documents, Gabelli & Company
estimates
In addition to takeovers, utility stocks have and will likely
continue to benefit from financial engineering, or the creation of
alternative structures such as MLPs or YieldCos.
• On July 16, NRG Energy conducted a $430 million initial public
offering (IPO) of a portion of its contracted generation capacity
into a separate company called NRG Yield (NYLD). NYLD is a
dividend- oriented equity that owns, operates, and acquires
contracted renewable and conventional generation and thermal
infrastructure assets. NYLD shares, which were priced at $22 per
share, have performed strongly and currently trade at $38.80 per
share.
• On July 25, ONEOK announced plans to separate its natural gas
distribution business, with two million customers in OK, KS, and
TX, into a separate, publicly traded company, to be called ONE Gas,
with shares to be distributed in the first quarter of 2014.
• On November 6, Dominion Resources Inc. (D) announced plans to
file an S-1 for an MLP of its Cove Point LNG facility and its
interest in Blue Racer Midstream in the first quarter of 2014, with
an expected issuance in mid-2014. D estimates Cove Point and Blue
Racer would have “up to $1 billion of EBITDA” by 2018. In addition,
D had roughly $1 billion of EBITDA potential to “drop-down” from
other assets at Dominion East Ohio, Dominion Transmission, and the
Iroquois Pipeline.
5
COMMENTARY
While consolidation and financial engineering offer upside
potential, investors harbor a number of concerns, including the
potential for higher interest rates, higher gas prices, overly
onerous EPA rules, anemic electric demand growth, and even some
discussion of distributed generation technologies replacing the
electric utility. Below, we briefly discuss each of these issues
and how constructive regulatory principles recognize them.
• Higher interest rates: Treasury yields have risen considerably,
and many investors fear that interest rates will continue to rise
if the economy continues to strengthen. Similar to most equity
investments, utility stocks are negatively impacted when interest
rates rise. The current 3.9% utility dividend return is 130% of the
3.0% rate on the 10 Year U.S. Treasury. Should U.S. Treasury rates
continue to rise, the utility dividend return becomes less
compelling. In addition, the present value (or stock price) is
often determined by the present value of future cash flows. As
such, the higher interest rate (discount rate), the lower the
present value, assuming all other variables hold constant.
Utility stocks often appear to be more sensitive to interest rates
than other stocks, because the variables impacting changes in
utility revenues and expenses, etc. are less sensitive to other
factors. However, utility stocks pay higher dividends than other
sectors, and so utility cash flows are less impacted by changes in
interest rates. In addition, utility cost of capital, including
ROEs, are set by state PUCs and should increase as interest rates
rise.
• Higher gas prices: The abundance of shale gas supply and the
sustained period of low prices are transforming the energy and
utility industry. While natural gas prices have doubled over the
past year, they remain at historically inexpensive levels, which
has significant financial and operational implications. Regulated
utilities pass on fuel prices to customers via frequent adjustments
to customer bills, and so changes in gas prices are margin neutral.
However, lower gas prices result in lower customer bills, and
create a more favorable environment for base rate increases.
Natural gas has become the fuel of choice for electric generation,
and the multi-year price declines have minimized net retail
electric rate increases and depressed wholesale power prices. The
low wholesale power prices continue to depress non-regulated coal
and nuclear generation. As a result, utilities have updated their
investment plans to include new gas fired generation, accelerated
retirement of smaller older coal plants, and the re-consideration
of the development of new nuclear plants. The low gas price
environment has also helped accelerate the retirement of older coal
plants and some older single unit nuclear plants.
• Stricter EPA rules: With considerable investment, electric
utilities continue to meet numerous EPA rules, particularly the
late 2015 compliance with Mercury and Air Toxins rules, though
extensions are possible through 2016 and 2017. On September 20,
2013, the EPA announced carbon emission rules for new sources of
generation that effectively bar the construction of new coal
facilities until technology that allows carbon sequestration is
economically feasible. In June of 2014, the EPA is scheduled to
propose standards for existing facilities. We expect this proposal
to be controversial and to exert further pressure on coal-fired
generation. Several other rules, including a Coal Ash disposal
timeline and Coal Ash settling pond standards, are expected to be
implemented by the end of 2014. While stricter environmental rules
present operational challenges for regulated utilities, they also
represent rate base investment, or earnings growth. However, higher
costs of compliance negatively impact non-regulated coal-fired
generation.
6
• Modest electric demand growth: Since the beginning of the Great
Recession in 2008, U.S. electric demand growth has been relatively
anemic at a national average growth rate of ~1% per annum, though
it varies by region. Historically, electric demand has been highly
correlated with GDP growth. Conservation, efficiency, and
distributed generation (solar panels, microturbines, fuel cells)
played some role in negating growth, but unusual weather patterns,
combined with exaggerated price elasticity during the weak economic
times, continue to impact demand data. The housing market has been
a difficult variable, as residential electric demand is highly
influenced by the number of households. After a dramatic decline,
it appears that housing is rapidly recovering in many regions.
While our financial and valuation forecasts are based on the new
consensus of lower electric demand growth (we assume ~1% per
annum), we suspect that electric demand growth will return to
historical trends as consumers’ budgets and outlooks improve.
• Distributed generation: The penetration rates of residential
rooftop solar panels in most states are extremely low, but strong
enough in California, Hawaii, and Arizona to warrant investment
consideration. The rapid growth in these states is at least
partially driven by subsidies, lease or financing models, and
favorable net metering rules, but it is also due to improving
technology and lower costs. The addition of rooftop solar panels
negatively impacts electric demand, but customers remain dependent
on the grid for reliability during absences of sunlight. Given that
these states have decoupled revenues from sales, the lower demand
does not negatively impact revenues but becomes a cost sharing
challenge. Residential customers using distributed generation
reduce their net energy usage and, therefore, their contribution to
transmission and distribution costs. In order to maintain revenue
levels, utilities raise electric rates on customers, causing
non-self-generating customers to subsidize self-generating
customers, who are usually higher income customers. Regulators have
been proactive in evaluating cost sharing challenges, as seen by
the passage of California Assembly Bill 327 on October 7, 2013,
which allows the California Public Utility Commission (CPUC) to
modify rate design.
We believe that regulators will continue to take action to limit
the impacts of cost sharing when it becomes necessary. Further, we
believe that major technological advances in battery storage would
be required to significantly disrupt the long standing utility
business model.
• Ongoing weak power markets: Competitive power markets have been
weak since mid-2008 and, absent more material supply and/or demand
changes, could remain weak for some time. Weak electric demand
growth, a more robust electric grid, and an abundance of natural
gas all offset higher power prices. As mentioned in our September
2013 commentary, the results of the May 24, 2013 PJM
Interconnection capacity auction (the Northeastern region from the
Midwest through MidAtlantic) 2016/2017 was disappointing. The
auction to procure power supply for a three year period is
conducted every May. Capacity pricing was down compared to the
prior year’s auction, driven by increased power imports
(transmission constraints were relieved), new capacity, and weaker
electric demand. The number of non-regulated players continues to
diminish, and many of the larger utilities have, and continue, to
minimize non-regulated generation exposure.
• Potentially higher ROEs: Allowed ROEs have gradually declined
over the past two decades, and they have likely bottomed at roughly
10%. The average allowed ROE through the first three quarters of
2013 (thirty-nine rate cases) was 10.02%, compared with the 2012
average awarded ROE of 10.15% (fifty- three rate cases). Given the
recent rise in interest rates, we expect ROEs to remain near the
10% level. We emphasize that the absolute decline in profit levels
has not been as significant as the decline in utility cost of
capital, and this favorable spread has benefited utilities.
7
The current spread between the average allowed ROE of 10.02% and
the 10 Year U.S. Treasury yield of 3.0% is roughly 700 basis
points. In addition, many regulatory jurisdictions encourage the
investment through annual, semi-annual, or even quarterly riders,
which results in more timely earnings growth. When combined with
opportunities to invest and earn returns on a growing rate base,
particularly via environmental compliance projects and higher
earning transmission investments, we consider the allowed ROEs to
be more than adequate to grow earnings and dividends at the
consensus growth rates.
• Transmission opportunities: The FERC’s favorable incentive
oriented regulation continues to make transmission investment one
of the more compelling uses of capital for electric utilities.
Allowed ROEs have ranged as high as 14% and, as a result,
transmission growth opportunities command premium multiples and are
among the more desirable projects sought by utility management
teams. Not surprisingly, transmission investment continued to grow
in 2013, nearly doubling from $8.6 billion in 2006 to $15.2 billion
in 2013, and we expect transmission to be a focus for most
management teams going forward. The level of announced project
investment is expected to total approximately $41.6 billion from
2013 to 2015.
As the economy rebounds, we expect further investment. As of March
2013, twenty-nine states and the District of Columbia have
implemented renewable portfolio standards that range as high as 33%
over the 2015 - 2030 timeframe. Connecting these generation assets
to the grid poses a number of additional reliability and
transportation issues, due to the intermittency of renewable
generation and the need to transport power from where it is
generated to load centers. The consultancy, The Brattle Group,
anticipates that the U.S. will need $240 - $320 billion of
transmission investment through 2030 to ensure reliability and meet
all current and proposed renewable standards. Even without a robust
economic recovery, we believe that investment levels would be even
higher in the absence of notable related challenges, including the
larger scale and long term nature of the projects.
In July of 2011, FERC Order 1000 authorized the cost sharing of
larger regional transmission projects and opened up development
opportunities to non-incumbent utilities. These rules allow pure
play transmission companies to participate in projects throughout
the country, and have led to an increase the number of multistate
projects and projects required to bring renewable energy from where
it is generated to where it is needed.
Utility Investment Opportunities to Continue Through 2015 and
Beyond
We expect the utility capital investment cycle to continue through
at least 2015. Capital investment grew from $41.1 billion in 2004
to $82.8 billion in 2008, with major spending on environmental
control equipment, generation projects, and transmission. In 2012,
utility capital expenditures were $90.5 billion, compared with $79
billion in 2011. The Edison Electric Institute currently projects
industry spending at $95.2 billion in 2013, $92.8 billion in 2014,
and $85.3 billion in 2015.
However, we believe heavy investment is likely to continue, should
the EPA maintain its aggressive policy to reduce emissions, and we
also believe that the mid-2014 GHG/carbon standards are likely to
represent yet another round of investment. Further, we believe that
utility investment will allow for more discretionary use of cash
for investment in ongoing environmental needs, replacement of older
generation, transmission, reliability, and smart grid technology.
Finally, some utility boards could decide to raise dividend payout
ratios.
8
Gas and Renewables Taking Market Share from Coal and Nuclear
Over the next several years, we expect gas-fired generation to
increase as a proportion of the overall generation mix. In 2012,
coal-fired generation fell to 37.4% from 42.3% the previous year,
while gas generation rose to 30.4% from 24.7%. Nuclear generation
comprised 19% each year, and renewable forms will continue to
increase. We expect 50,000 - 70,000 MWs of older and less efficient
coal fired generation to retire by 2016, with a significant portion
ending between the spring of 2015 and the spring of 2016. In
addition, the nation’s 100 (previously 104) nuclear reactors were
built in the 1970s and 1980s. They face increasing safety and
operational standards, which accelerated following the Fukushima
disaster. In late 2012 and 2013, several companies announced their
intention to retire nuclear plants, totaling 4,200 MWs of capacity,
which include: Entergy’s 620-MW Vermont Yankee (1972; 2014); Edison
International’s Units 2 (1,100MW; 2022) and 3 (1,100 MW; 2022) of
its 78%-owned (Sempra Energy owns 20%); San Onofre, Duke Energy’s
789-MW Crystal River (789 MWs; 1977 - 2016); and Dominion Resources
Kewaunee Nuclear Station (556 MWs; 1974 - 2013).
Most of the nation’s plants have been relicensed, but the future of
some, such as Indian Point 2 and 3 (1,025, 1040 MWs; 1974 - 2013,
1976 - 2015, respectively), continue to be debated. As plants age,
we expect to see more retire, but not necessarily at the expense of
the nuclear power industry. Most utilities and energy experts favor
a diversified fuel mix, including nuclear, coal, gas, and
renewables. There are currently four new nuclear units under
construction, totaling 4,000 MWs (more than MWs being retired), in
SC and GA, to be completed in 2017 - 2019. Several more have
applied for licenses. The desire and ability to build new nuclear
will be a function of gas prices, legislative/regulatory riders to
recover financing costs during construction, and electric
demand.
Our Approach
For several decades, utility companies have acquired other
utilities and utility assets for the sake of gaining economies of
scale and efficiency. The same forces that resulted in more than
one hundred utility takeover announcements over the past two
decades remain in place, and new forces have come into play that
continue to drive this long term trend. Climate change and
environmental policy have pressured marginal players. The pickup in
merger activity reinforces the longterm bias of utilities to
increase scale or gain a strategic benefit. Small companies are
selling out at premium prices as the cost of staying in the game
rises. The historically lengthy merger review and approval process
appears to have eased, as policy makers come to understand the new
economic dynamics.
Despite over ninety completed utility mergers/acquisitions since
1993, the electric and gas utility sector remains fragmented, with
over sixty electric utilities and thirty gas utilities. This is
fifty more than we need, from the standpoint of economic
efficiency.
Our investments in regulated companies have primarily, though not
exclusively, focused on fundamentally sound, reasonably priced,
mid-cap and small-cap utilities that are likely acquisition targets
for large utilities seeking increased bulk. We prefer utilities
that operate in more constructive regulatory environments, possess
lower carbon footprints, and/or have access to strategic
geographies. We favor utilities with pending transmission line
developments, and we focus on natural gas pipelines and storage
operators as a way to take advantage of the growing demand for
natural gas in the U.S.
Let’s Talk Stocks
The following are stock specifics on selected holdings of our Fund.
Favorable earnings prospects do not necessarily translate into
higher stock prices, but they do express a positive trend that we
believe will develop over time. Individual securities mentioned are
not necessarily representative of the entire portfolio. The share
prices of the following holdings are stated in U.S. dollars or U.S.
dollar equivalent terms as of December 31, 2013.
AES Corp. (AES - $14.51 - NYSE) is a global power company that owns
distribution and generation assets on five continents in twenty-one
countries, with a generating capacity of 37,761 MW and distribution
networks in five countries, including larger utilities in the U.S.
and Brazil. Since late 2011, AES has been undergoing a
transformation to narrow its strategic focus, allocate capital
efficiently, and improve existing operations. As a result, the
company has sold ~$1.4 billion in non-core assets, and repurchased
stock and debt. In early 2013, AES formed six strategic business
units to include six focus regions, consisting of the U.S., Andes
(Chile, Columbia, Argentina), Brazil, MCAC (Mexico, Central
America, and the Caribbean), EMEA (Europe, Middle East and Africa),
and Asia. Future capital investments and growth projects will focus
in areas where a platform already exists. Additionally, the company
instituted a quarterly dividend of $0.04 per share in the third
quarter of 2012, and has since raised it to $0.05 per share
quarter, with further plans to increase it in the future. With this
new, focused approach to management, we regard AES as one of the
better securities to allow the Fund to gain exposure to utility
markets both inside and outside of the U.S.
Duke Energy Corp (DUK - $69.01 - NYSE) is based in Charlotte, NC.
Since the completion of its merger with Progress Energy on July 2,
2012, Duke Energy is the largest utility in the nation, serving 7.2
million electric customers in six states (NC, SC, IN, OH, KY, and
FL) with 58 GW of generation, and 500,000 natural gas customers in
OH and KY. Its commercial and international businesses own and
operate diverse power generation assets in North America and Latin
America, including a portfolio of renewable energy assets.
Regulatory scrutiny following the merger was mostly alleviated
through a settlement with North Carolina regulators, in which
former CEO Jim Rogers stepped down in July 2013. DUK will continue
to benefit from synergies, increased flexibility, favorable long
term demographics, and rate base investment opportunities, and
operate in constructive regulatory environments. From 2013 - 2015,
DUK expects to grow its earnings 4% - 6% annually, continue growing
the dividend within a 65% - 70% payout ratio, and maintain strong,
investment grade credit ratings.
Electric Power Development Co. Ltd. (9513 - $29.10 - Tokyo Stock
Exchange), also known as J-Power, generates, transmits,
distributes, and sells electric power using hydroelectric, wind
power, nuclear, coal fired, and other thermal power stations
throughout Japan. The company owns 17.8 GWs of installed capacity
(8.4 GW’s of coal; 8.6 GW’s of hydro) in Japan and 4.5 GW’s
overseas, including Indonesia, Thailand, and the U.S. Listed in
2004, J-Power is Japan’s only large scale wholesale power
generator, owning 21% of the nation’s coal capacity and 19% of its
hydro capacity. J-Power’s earnings are insulated from the current
upheaval because its generation is sold via contract to the
regional utilities (EPCO’s). In addition, the low cost hydro and
coal capacity will be among the first dispatched, and could offer
significant earnings, cash flow, and value upside, should the
Japanese sector deregulate. The company has several overseas growth
projects in the pipeline, including 2,000 MWs in Indonesia and
~2,300 MWs in Thailand. In October 2012, J-Power resumed
construction of the Ohma Nuclear Plant, a 1,383 MW Advanced Boiling
Water Reactor (JPY470 billion), which began in May of 2008 but had
been suspended following the Fukushima nuclear disaster. J-Power
generates free cash flow and emphasizes dividends, including an
annual dividend of JPY70 per share over the past several
years.
9
10
Emera Inc. (EMA –$28.78 – Toronto Stock Exchange), based in
Halifax, Nova Scotia, is a growing utility and energy company with
85% of earnings derived from the regulated utility business, which
includes Nova Scotia Power (497,000 customers; 50% of earnings),
Bangor Hydro (120,000 customers; 15% of earnings), Maine Public
Service (36,000 customers; 1% of earnings), and the Caribbean
utilities (193,000 customers; 5% of earnings). Another 10% of
earnings comes from the Brunswick Pipeline. Emera’s strategy is
focused on the transformation of the electricity industry to
cleaner generation and the delivery of that clean energy to market.
Over the last few years, the company has invested throughout the
Atlantic region and beyond in an effort to lessen its reliance on
the Nova Scotia market, including 1,050 MW of gas-fired generation
in New England and plans to develop $7.7 billion of transmission
investment to bring hydro power from Canada to Nova Scotia and into
New England over the next decade. Emera also owns about a 24.5%
interest in Algonquin Power, and the two Canadian power companies
have partnered in several growth ventures.
NextEra Energy Inc. (NEE - $85.62 - NYSE) is the holding company
for Florida Power & Light (FP&L), the largest electric
utility in Florida, and NextEra Energy Resources (NER), a leading
wholesale power generator. We regard NEE as one of the better
positioned electric companies to grow earnings and dividends over
the next several years. FP&L operates one of the premier
utility franchises in the nation, with favorable long term
demographics and above average rate base growth potential, due to
the power plant rate adjustments, flexible amortization, and other
regulatory mechanisms. Additionally, NER owns and operates the
nation’s largest renewable power portfolio, with a significant
pipeline of future growth opportunities. Given a 54% payout of our
2013 earnings estimate and 5% - 7% annual earnings growth forecast,
we expect 8% annual dividend growth through 2016 to achieve the
targeted 55% payout ratio. In January 2013, as part of a four year
plan, FP&L implemented a $350 million annual base rate increase
premised on an allowed ROE of 10.5% (+/-100 basis points).
Importantly, FP&L can raise rates to recognize $3.5 billion of
power plant modernization projects. In addition, NEE currently
expects up to $1.5 billion in free cash (after dividends and
capital expenditures) flow in 2014, absent new growth projects,
that could be used for stock buybacks or higher dividends.
NiSource Inc. (NI - $32.88 - NYSE) is based in Merrillville, IN.
Through its regulated gas utility, NiSource serves more than 3.3
million natural gas customers in IN, KY, MA, MD, OH, PA, and VA,
and through its regulated electric utility it serves 455,000
electric customers in IN. NI’s Columbia Pipeline Group (CPG) owns
15,000 miles of interstate pipelines and operates one of the
nation’s largest natural gas storage systems, with a footprint in
the Marcellus and Utica Shale production regions. NI expects 3% -
5% annual dividend growth and targets a 60% - 70% payout ratio. NI
remains focused on low risk infrastructure investments that support
earnings growth of 5% - 7%. Over the next 15 - 20 years, NI plans
to spend $25 - $30 billion, approximately $10 billion at the gas
utility, $6 - $8 billion at the electric utility, and $8 - $10
billion at CPG.
Northeast Utilities (NU - $42.39 - NYSE) is New England’s largest
electric and gas distribution utility and delivery system, serving
3.6 million customers. On April 10, 2012, NU, headquartered in
Hartford, CT, completed its merger with NSTAR, headquartered in
Boston, MA. NST shareholders received 1.312 shares of NU, creating
an even stronger New England distribution utility. Northeast
Utilities serves 2.1 million customers in CT, NH, and MA, and NSTAR
serves 1.5 million electric and gas customers in Eastern and
Central MA. We believe that the combined company will be able to
take advantage of its larger scale and scope to execute on a number
of regulated investment projects, including expanding
infrastructure to serve more natural gas customers. NST’s strong
balance sheet allows for the funding of the combined transmission
investment opportunities, including the Northern Pass, which is
designed to bring enormous hydro capacity from Quebec into New
England, New England reliability (the NEEWS Projects), and smaller
projects within their service territory. We consider NU to be one
of the better transmission plays and, given merger synergies and
larger scale, we expect an enhanced earnings growth profile (the
higher end of ~6% - 9% regulated earnings per share CAGR).
11
OGE Energy Corp. (OGE- $33.90 -NYSE) is the parent company of
Oklahoma Gas and Electric Company (OG&E), a regulated electric
utility, and Enable Midstream Partners, of which OGE owns a 28.5%
limited partner stake and a 50% general partner stake. Enable was
formed on May 1, 2013, when OGE combined their Enogex assets with
CenterPoint Energy’s interstate pipelines. Enable will have over
$11 billion in assets. It will own and operate 8,400 miles of
interstate pipe, 11,000 miles of gathering lines, 90 Bcf of natural
gas storage, and eleven processing plants. In late November 2013,
OGE and CenterPoint Energy filed the S-1 for the initial public
offering of the Enable partnership. Further driving earnings growth
will be investment in the utility’s base infrastructure and ~$1.6
billion in electric transmission over the next five years.
Severn Trent plc (SVT - $28.23 - London Stock Exchange) is an
international provider of water and wastewater services. Severn
Trent Water, the UK-based regulated water and wastewater utility,
serves over 4.2 million households and businesses in the Midlands
and Mid-Wales. The regulated UK utility business provides steady
and modestly growing returns. As one of the UK’s premier water and
wastewater providers, Severn Trent is well positioned to provide
needed expertise and infrastructure investment opportunities in
less developed regions across the world. Severn Trent Services, the
non-regulated water and waste water service division of the
company, which focuses on water purification projects and operating
plants and systems for municipalities, has a growing presence in
Europe, the Middle East, and Asia. In May, a consortium made a
conditional offer for the company that represented a ~30% premium
to the share price, and subsequently raised the offer when
management said they would decline it. In June, the consortium
withdrew the offer, but we still consider SVT to have significant
takeover potential.
The Southern Company (SO - $41.11 - NYSE), one of the largest
regulated electric utilities in the U.S., provides service to 4.4
million customers and owns 46,000 megawatts of generating capacity
throughout four states in the Southeast. We consider SO to be one
of the higher quality and lower risk U.S. utilities due to its
strong management team, financial and operating track record,
historically constructive regulatory environment, and growing
service territory. The company faces significant investment
necessary to bring a large coal fired generation portfolio into EPA
compliance, but we expect such investment to be recognized by
regulators. Issues in the construction of 2,200 MW of new nuclear
generation at the Vogtle site have been resolved, and completion is
expected in 2017 and 2018. We expect the company to continue its
long term track record of strong earnings and dividend growth for
the foreseeable future.
January 28, 2014
Note: The views expressed in this Shareholder Commentary reflect
those of the Portfolio Manager only through the end of the period
stated in this Shareholder Commentary. The Portfolio Manager’s
views are subject to change at any time based on market and other
conditions. The information in this Shareholder Commentary
represents the opinions of the individual Portfolio Manager and is
not intended to be a forecast of future events, a guarantee of
future results, or investment advice. Views expressed are those of
the Portfolio
Top Ten Holdings December 31, 2013
Invensys plc Koninklijke KPN NV Sky Deutschland AG Leap Wireless
International Inc. Severn Trent plc
Millicom International Cellular S.A. Rogers Communications Inc.
Cablevisions Systems Corp. Cable & Wireless Communications plc
Northeast Utilities
12
Manager and may differ from those of other portfolio managers or of
the Firm as a whole. This Shareholder Commentary does not
constitute an offer of any transaction in any securities. Any
recommendation contained herein may not be suitable for all
investors. Information contained in this Shareholder Commentary has
been obtained from sources we believe to be reliable, but cannot be
guaranteed.
Portfolio Manager Compensation
Mr. Gabelli’s incentive-based, variable compensation structure and
dollar amount have been fully disclosed each year since April of
2000 in the annual proxy statement for GAMCO Investors, Inc.
(NYSE:GBL). Mr. Gabelli receives no base salary, no annual bonus,
and no stock options.
As founder and portfolio manager of The Gabelli Global Utility
& Income Trust, Mr. Gabelli received $59,756 in calendar year
2012. For the Fund’s first twelve months of operation starting in
May 2004, Mr. Gabelli received less than $130,000. Mario J. Gabelli
and various entities he is deemed to control owned 242,102 and
67,859 common and preferred shares, respectively, of the Fund with
a total value of $4,851,714 and $3,437,058 in the common and
preferred shares, respectively, as of December 31, 2013. Mr.
Gabelli may not have one hundred percent pecuniary interest in some
of the entities he is deemed to control.
Monthly Distribution Policy
The Board has reaffirmed the continuation of the Fund’s monthly
distribution policy for the first quarter of 2014. Pursuant to its
distribution policy, the Fund paid $0.10 per share cash
distributions on October 24, 2013, November 21, 2013, and December
19, 2013 to common shareholders of record on October 17, 2013,
November 14, 2013, and December 13, 2013, respectively, for a total
distribution of $0.30 per share during the fourth quarter of
2013.
Under the Fund’s initial distribution policy, the Fund pays a
minimum annual distribution of 6% of the initial public offering
price of $20.00 per share. Pursuant to this policy, the Fund
intends to pay a distribution of $0.10 per share each month and, if
necessary, an adjusting distribution in December which includes any
additional income and realized net capital gains in excess of the
monthly distributions for that year to satisfy the minimum
distribution requirements of the Internal Revenue Code.
Each quarter, the Board reviews the amount of any potential
distribution and the income, capital gain, or capital available.
The Board will continue to monitor the Fund’s distribution level,
taking into consideration the Fund’s net asset value and the
financial market environment. The Fund’s distribution policy is
subject to modification by the Board at any time. The distribution
rate should not be considered the dividend yield or total return on
an investment in the Fund.
All or part of the distribution may be treated as long term capital
gain or qualified dividend income (or a combination of both) for
individuals, each subject to the maximum federal income tax rate,
which is currently 20% in taxable accounts for individuals. In
addition, for taxable years beginning on or after January 1, 2013,
certain U.S. shareholders who are individuals, estates, or trusts
and whose income exceeds certain thresholds will be required to pay
a 3.8% Medicare tax on their “net investment income,” which
includes dividends received from the Fund and capital gains from
the sale or other disposition of shares of the Fund.
If the Fund does not generate sufficient earnings (dividends and
interest income and realized net capital gain) equal to or in
excess of the aggregate distributions paid by the Fund in a given
year, then the amount distributed in excess of the Fund’s earnings
would be deemed a return of capital. Since this would be
13
considered a return of a portion of a shareholder’s original
investment, it is generally not taxable and is treated as a
reduction in the shareholder’s cost basis. Under federal tax
regulations, some or all of the return of capital distributed by
the Fund may be taxable as ordinary income in certain
circumstances. This may occur when the Fund has a capital loss
carry forward, net capital gains are realized in a fiscal year, and
distributions are made in excess of investment company taxable
income.
Long term capital gains, qualified dividend income, ordinary
income, and paid-in capital, if any, will be allocated on a
pro-rata basis to all distributions to common shareholders for the
year. Based on the distribution allocations of the Fund as of
December 31, 2013, the total distributions paid to common
shareholders in 2013 represent approximately 21% from net
investment income, 12% from net capital gains, and 67% from paid-in
capital. The estimated components of each distribution are updated
and provided to shareholders of record in a notice accompanying the
distribution and are available on our website (www.gabelli.com).
All shareholders with taxable accounts will receive written
notification regarding the components and tax treatment for all
2013 distributions in early 2014 via Form 1099-DIV.
Series A Cumulative Puttable and Callable Preferred Shares
The Fund’s Series A Cumulative Puttable and Callable Preferred
Shares paid a $0.75 per share cash distribution on December 26,
2013 to preferred shareholders of record on December 18, 2013. The
Series A Preferred Shares, which trade on the NYSE MKT under the
symbol “GLU Pr A”, were issued on June 19, 2013 at $50.00 per share
and pay distributions quarterly. The Series A Preferred Shares have
an annual dividend rate of 6.00% for the four dividend periods
ending on or prior to June 26, 2014 and 3.00% for the subsequent
eight dividend periods ending on or prior to June 26, 2016. Within
the dividend period ending June 26, 2016, the Fund’s Board of
Trustees will determine a fixed annual dividend rate that will
apply for all subsequent dividend periods, which will be 200 basis
points over the yield of the ten year U.S. Treasury Note, but in no
case will the annual dividend rate be less than 3.00% or greater
than 5.00%. The Series A Preferred will be non-callable for five
years from the date of issuance, unless the redemption is necessary
in the judgment of the Fund’s Board of Trustees to maintain the
Fund’s status as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, as amended, and may be put
back to the Fund by shareholders during the 30-day period prior to
each of June 26, 2015 and June 26, 2018. The next distribution is
scheduled for March 2014.
The Board shares the Investment Advisor’s view that the issuance of
Preferred Shares is designed to benefit the common shareholders. To
the extent that the Fund earns in excess of the dividend rate on
the Preferred Shares, additional value will thereby be created for
its common shareholders.
All or part of the distribution may be treated as long-term capital
gain or qualified dividend income (or a combination of both) for
individuals, each subject to the maximum federal income tax rate,
which is currently 20% in taxable accounts for individuals. In
addition, for taxable years beginning on or after January 1, 2013,
certain U.S. shareholders who are individuals, estates or trusts
and whose income exceeds certain thresholds will be required to pay
a 3.8% Medicare tax on their “net investment income”, which
includes dividends received from the Fund and capital gains from
the sale or other disposition of shares of the Fund.
Long-term capital gains, qualified dividend income, and ordinary
income, if any, will be allocated on a pro- rata basis to all
distributions to preferred shareholders for the year. Based on the
distribution allocations of the Fund as of December 31, 2013, the
total distributions paid to preferred shareholders in 2013 would
include approximately 63% from net investment income and 37% from
net capital gains. The estimated components
14
of each distribution are updated and provided to shareholders of
record in a notice accompanying the distribution and are available
on our website (www.gabelli.com). All shareholders with taxable
accounts will receive written notification regarding the components
and tax treatment for all 2013 distributions in early 2014 via Form
1099-DIV.
www.gabelli.com
Please visit us on the Internet. Our homepage at www.gabelli.com
contains information about GAMCO Investors, Inc., the Gabelli/GAMCO
Closed-End Funds and Mutual Funds, IRAs, 401(k)s, current and
historical quarterly reports, closing prices, and other current
news. We welcome your comments and questions via e-mail at
[email protected].
You may sign up for our e-mail alerts at www.gabelli.com and
receive notice of quarterly report availability, news events, media
sightings, and mutual fund prices and performance.
e-delivery
We are pleased to offer electronic delivery of Gabelli fund
documents. Shareholders of our closed-end funds can now elect to
receive e-mail announcements regarding available materials,
including shareholder commentaries and Fund reports. For more
information or to register for e-delivery, please visit our website
at www.gabelli.com.
THE GABELLI GLOBAL UTILITY & INCOME TRUST One Corporate Center
Rye, NY 10580-1422
Notice is hereby given in accordance with Section 23(c) of the
Investment Company Act of 1940, as amended, that the Fund may from
time to time purchase its common shares in the open market when the
Fund’s shares are trading at a discount of 10% or more from the net
asset value of the shares. The Fund may also from time to time
purchase shares of its preferred stock in the open market when the
preferred shares are trading at a discount to the liquidation
value.
The Net Asset Value per share appears in the Publicly Traded Funds
column, under the heading “Specialized Equity Funds,” in Monday’s
The Wall Street Journal. It is also listed in Barron’s Mutual
Funds/Closed End Funds section under the heading “Specialized
Equity Funds.” The Net Asset Value per share may be obtained each
day by calling (914) 921-5070 or visiting www.gabelli.com. The
NASDAQ symbol for the Net Asset Value per share is “XGLUX.”
This report is printed on recycled paper.
Portfolio Manager Biography Mario J. Gabelli, CFA, is Chairman and
Chief Executive Officer of GAMCO Investors, Inc. that he founded in
1977 and Chief Investment Officer – Value Portfolios of Gabelli
Funds, LLC and GAMCO Asset Management Inc. Mr. Gabelli is a summa
cum laude graduate of Fordham University and holds an MBA degree
from Columbia Business School and Honorary Doctorates from Fordham
University and Roger Williams University.
We have separated the portfolio manager’s commentary from the
financial statements and investment portfolio due to corporate
governance regulations stipulated by the Sarbanes-Oxley Act of
2002. We have done this to ensure that the content of the portfolio
manager’s commentary is unrestricted. The financial statements and
investment portfolio are mailed separately from the commentary.
Both the commentary and the financial statements, including the
portfolio of investments, will be available on our website at
www.gabelli.com.
THE GABELLI GLOBAL UTILITY & INCOME TRUST One Corporate Center
Rye, NY 10580-1422
t 800-GABELLI (800-422-3554) f 914-921-5118 e
[email protected]
GABELL I .COM
James P. Conn Former Managing Director & Chief Investment
Officer, Financial Security Assurance Holdings Ltd.
Mario d’Urso Former Italian Senator
Vincent D. Enright Former Senior Vice President & Chief
Financial Officer, KeySpan Corp.
Michael J. Melarkey Partner, Avansino, Melarkey, Knobel, Mulligan
& McKenzie
Salvatore M. Salibello, CPA Partner, BDO Seidman, LLP
Salvatore J. Zizza Chairman, Zizza & Associates Corp.
OFFICERS
David I. Schachter Vice President
Adam E. Tokar Vice President & Ombudsman
INVESTMENT ADVISER
Gabelli Funds, LLC One Corporate Center Rye, New York
10580-1422
CUSTODIAN
COUNSEL
TRANSFER AGENT AND REGISTRAR
Computershare Trust Company, N.A.
Shareholder Commentary December 31, 2013
GLU Dec/2013
To Our Shareholders,
For the year ended December 31, 2013, the net asset value (“NAV”)
total return of The Gabelli Global Utility & Income Trust (the
“Fund”) was 21.5%, compared with a total return of 13.2% for the
Standard & Poor’s (“S&P”) 500 Utilities Index. The total
return for the Fund’s publicly traded shares was 7.3%. The Fund’s
NAV per share was $22.36, while the price of the publicly traded
shares closed at $20.04 on the NYSE MKT. See below for additional
performance information.
Enclosed are the schedule of investments and financial statements
as of December 31, 2013.
Sincerely yours,
Average Annual Returns through December 31, 2013 (a)
(Unaudited)
1 Year 3 Year 5 Year
Since Inception (05/28/04)
Gabelli Global Utility & Income Trust NAV Total Return (b) . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 21.54% 10.88% 11.42% 8.47% Investment Total Return
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . 7.32 7.49 12.65 7.21
S&P 500 Utilities Index . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . 13.21 11.20 10.17
9.39 Lipper Utility Fund Average . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . 19.90 13.35 13.57
10.67 S&P 500 Index . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 32.39 16.18
17.94 7.57 (a) Returns represent past performance and do not
guarantee future results. Investment returns and the principal
value of an
investment will fluctuate. When shares are redeemed, they may be
worth more or less than their original cost. Current performance
may be lower or higher than the performance data presented. Visit
www.gabelli.com for performance information as of the most recent
month end. Investors should carefully consider the investment
objectives, risks, charges, and expenses of the Fund before
investing. The S&P 500 Utilities Index is an unmanaged
indicator of electric and gas utility stock performance. The Lipper
Utility Fund Average reflects the average performance of open-end
mutual funds classified in this particular category. The S&P
500 Index is an unmanaged indicator of stock market performance.
Dividends are considered reinvested. You cannot invest directly in
an index.
(b) Total returns and average annual returns reflect changes in the
NAV per share, reinvestment of distributions at NAV on the
ex-dividend date, and adjustments for right offerings and are net
of expenses. Since inception return is based on an initial NAV of
$19.06.
(c) Total returns and average annual returns reflect changes in
closing market values on the NYSE MKT, reinvestment of
distributions, and adjustments for the rights offering. Since
inception return is based on an initial offering price of
$20.00.
The Gabelli Global Utility & Income Trust Annual Report —
December 31, 2013
The following table presents portfolio holdings as a percent of
total investments as of December 31, 2013:
The Gabelli Global Utility & Income Trust
Energy and Utilities: Integrated . . . . . . . 22.1% U.S.
Government Obligations. . . . . . . . . 22.1% Telecommunications .
. . . . . . . . . . . . . . . 11.8% Cable and Satellite . . . . . .
. . . . . . . . . . . . 10.7% Wireless Communications. . . . . . .
. . . . . 7.7% Energy and Utilities: Services . . . . . . . . 5.5%
Energy and Utilities: Water . . . . . . . . . . . 3.2% Energy and
Utilities: Natural Gas
Integrated . . . . . . . . . . . . . . . . . . . . . . . . 3.2%
Energy and Utilities: Natural Gas
Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7%
Energy and Utilities: Electric
Transmission and Distribution . . . . . . 1.6% Aerospace . . . . .
. . . . . . . . . . . . . . . . . . . . 1.5% Entertainment . . . .
. . . . . . . . . . . . . . . . . . 1.4% Energy and Utilities: Oil.
. . . . . . . . . . . . . 1.2% Electronics . . . . . . . . . . . .
. . . . . . . . . . . . . 1.1% Food and Beverage . . . . . . . . .
. . . . . . . . 1.1%
Diversified Industrial. . . . . . . . . . . . . . . . . 0.9%
Financial Services . . . . . . . . . . . . . . . . . . 0.6%
Specialty Chemicals. . . . . . . . . . . . . . . . . 0.5% Metals
and Mining . . . . . . . . . . . . . . . . . . 0.5% Building and
Construction . . . . . . . . . . . . 0.3% Transportation . . . . .
. . . . . . . . . . . . . . . . . 0.3% Business Services . . . . .
. . . . . . . . . . . . . 0.3% Independent Power Products and
Energy Traders . . . . . . . . . . . . . . . . . . . 0.2% Real
Estate . . . . . . . . . . . . . . . . . . . . . . . . 0.2%
Environmental Services. . . . . . . . . . . . . . 0.1% Machinery. .
. . . . . . . . . . . . . . . . . . . . . . . . 0.1% Energy and
Utilities: Alternative
Energy . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1%
Retail. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.0%*
* Amount represents less than 0.05%.
The Fund files a complete schedule of portfolio holdings with the
Securities and Exchange Commission (“SEC”) for the first and third
quarters of each fiscal year on Form N-Q. Shareholders may obtain
this information at www.gabelli.com or by calling the Fund at
800-GABELLI (800-422-3554).The Fund’s Form N-Q is available on the
SEC’s website at www.sec.gov and may also be reviewed and copied at
the SEC’s Public Reference Room in Washington, DC. Information on
the operation of the Public Reference Room may be obtained by
calling 800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for
the twelve months ended June 30, no later than August 31 of each
year. A description of the Fund’s proxy voting policies,
procedures, and how the Fund voted proxies relating to portfolio
securities is available without charge, upon request, by (i)
calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli
Funds at One Corporate Center, Rye, NY 10580-1422; or (iii)
visiting the SEC’s website at www.sec.gov.
Summary of Portfolio Holdings
Shares Cost Market Value
COMMON STOCKS — 77.5% ENERGY AND UTILITIES — 39.8% Alternative
Energy — 0.1% U.S. Companies
6,500 Ormat Technologies Inc.. . . . . . . . . . $ 179,303 $
176,865
Electric Transmission and Distribution — 1.6% Non U.S.
Companies
6,000 Algonquin Power & Utilities Corp.. . . . . . . . . . . .
. . . . . . . . . . . . . . 30,772 41,459
13,000 Fortis Inc.. . . . . . . . . . . . . . . . . . . . . . . .
401,125 372,652 8,775 National Grid plc, ADR . . . . . . . . . . .
401,681 573,183 5,000 Red Electrica Corporacion SA. . . . . 227,553
333,609
U.S. Companies 3,000 Consolidated Edison Inc. . . . . . . . . .
143,440 165,840
38,000 Pepco Holdings Inc. . . . . . . . . . . . . . . 720,883
726,940 6,000 Twin Disc Inc. . . . . . . . . . . . . . . . . . . .
. 139,074 155,340
2,064,528 2,369,023
150,000 A2A SpA . . . . . . . . . . . . . . . . . . . . . . . . .
276,010 175,506 8,000 Areva SA† . . . . . . . . . . . . . . . . . .
. . . . . 256,191 209,107
12,000 BP plc, ADR. . . . . . . . . . . . . . . . . . . . . .
513,193 583,320 9,000 Chubu Electric Power Co. Inc. . . . . 190,737
116,143
152,000 Datang International Power Generation Co. Ltd., Cl. H . . .
. . . 59,610 70,175
1,400 E.ON SE . . . . . . . . . . . . . . . . . . . . . . . . .
24,642 25,837 7,500 E.ON SE, ADR. . . . . . . . . . . . . . . . . .
. . 167,141 138,599 9,760 EDP - Energias de Portugal SA,
ADR. . . . . . . . . . . . . . . . . . . . . . . . . . . 262,599
356,923 10,000 Electric Power Development Co.
Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . 252,321
291,046 6,000 Emera Inc. . . . . . . . . . . . . . . . . . . . . .
. . 163,066 172,671
10,000 Endesa SA† . . . . . . . . . . . . . . . . . . . . . .
256,647 320,539 70,000 Enel SpA. . . . . . . . . . . . . . . . . .
. . . . . . . 404,630 305,654 28,000 Enersis SA, ADR . . . . . . .
. . . . . . . . . . 166,650 419,720 1,000 Eni SpA . . . . . . . . .
. . . . . . . . . . . . . . . . . 24,751 24,061
217,100 Hera SpA . . . . . . . . . . . . . . . . . . . . . . . .
426,556 492,798 18,000 Hokkaido Electric Power Co.
Inc.† . . . . . . . . . . . . . . . . . . . . . . . . . . 271,540
206,647 18,000 Hokuriku Electric Power Co. . . . . . . 274,290
243,909 17,000 Huaneng Power International Inc.,
ADR. . . . . . . . . . . . . . . . . . . . . . . . . . . 551,217
616,250 94,987 Iberdrola SA . . . . . . . . . . . . . . . . . . . .
. 497,004 605,674 5,000 Iberdrola SA, ADR. . . . . . . . . . . . .
. . . 181,697 127,750
34,000 Korea Electric Power Corp., ADR† . . . . . . . . . . . . . .
. . . . . . . . . . . 392,916 564,740
17,000 Kyushu Electric Power Co. Inc.† . . 270,794 216,637 10,000
Shikoku Electric Power Co. Inc.† . 171,759 149,558
Shares Cost Market Value
10,000 The Chugoku Electric Power Co. Inc. . . . . . . . . . . . .
. . . . . . . . . . . . . . . $ 170,328 $ 155,351
19,000 The Kansai Electric Power Co. Inc.† . . . . . . . . . . . .
. . . . . . . . . . . . . . 283,000 218,127
10,000 Tohoku Electric Power Co. Inc.† . . 158,898 112,335 2,500
Verbund AG. . . . . . . . . . . . . . . . . . . . . . 62,274
53,360
U.S. Companies 2,000 ALLETE Inc.. . . . . . . . . . . . . . . . . .
. . . . 71,269 99,760
21,000 Ameren Corp. . . . . . . . . . . . . . . . . . . . . 816,820
759,360 30,000 American Electric Power Co. Inc. . 943,467 1,402,200
1,500 Avista Corp.. . . . . . . . . . . . . . . . . . . . . .
27,915 42,285 7,000 Black Hills Corp. . . . . . . . . . . . . . . .
. . 193,684 367,570
500 Cleco Corp. . . . . . . . . . . . . . . . . . . . . . . 9,790
23,310 500 CMS Energy Corp. . . . . . . . . . . . . . . . 4,875
13,385
10,000 Dominion Resources Inc.. . . . . . . . . 406,566 646,900
23,000 Duke Energy Corp.(a) . . . . . . . . . . . . 1,049,205
1,587,230 4,000 El Paso Electric Co.. . . . . . . . . . . . . . .
77,953 140,440 1,834 FirstEnergy Corp. . . . . . . . . . . . . . .
. . 65,874 60,485
35,000 Great Plains Energy Inc. . . . . . . . . . . 783,130 848,400
22,000 Hawaiian Electric Industries Inc. . . 541,164 573,320 29,500
Integrys Energy Group Inc. . . . . . . . 1,408,474 1,605,095 12,000
MGE Energy Inc. . . . . . . . . . . . . . . . . . 393,736 694,800
14,000 NextEra Energy Inc. . . . . . . . . . . . . . . 654,896
1,198,680 45,000 NiSource Inc. . . . . . . . . . . . . . . . . . .
. . 908,189 1,479,600 50,000 Northeast Utilities(a) . . . . . . . .
. . . . . 1,026,475 2,119,500 13,000 NorthWestern Corp. . . . . . .
. . . . . . . . 391,049 563,160 39,000 OGE Energy Corp. . . . . . .
. . . . . . . . . . 481,892 1,322,100 14,000 Otter Tail Corp. . . .
. . . . . . . . . . . . . . . . 352,319 409,780 1,000 PG&E
Corp. . . . . . . . . . . . . . . . . . . . . . . 33,930
40,280
16,000 Pinnacle West Capital Corp. . . . . . . 650,094 846,720
4,200 PPL Corp.. . . . . . . . . . . . . . . . . . . . . . . .
117,280 126,378
32,000 Public Service Enterprise Group Inc. . . . . . . . . . . . .
. . . . . . . . . . . . . . . 1,065,920 1,025,280
18,000 SCANA Corp. . . . . . . . . . . . . . . . . . . . . 646,320
844,740 2,000 TECO Energy Inc. . . . . . . . . . . . . . . . .
33,510 34,480
30,000 The AES Corp. . . . . . . . . . . . . . . . . . . . 272,995
435,300 2,000 The Empire District Electric Co. . . . 41,522
45,380
40,000 The Southern Co. . . . . . . . . . . . . . . . . 1,178,050
1,644,400 25,000 UNS Energy Corp.. . . . . . . . . . . . . . . .
1,002,212 1,496,250 15,000 Vectren Corp. . . . . . . . . . . . . .
. . . . . . . 360,570 532,500 37,000 Westar Energy Inc. . . . . . .
. . . . . . . . . 783,109 1,190,290 9,000 Wisconsin Energy Corp. .
. . . . . . . . . 154,181 372,060
32,000 Xcel Energy Inc.. . . . . . . . . . . . . . . . . . 541,913
894,080
24,220,809 32,457,935
80,000 Snam SpA . . . . . . . . . . . . . . . . . . . . . . .
288,733 447,489
U.S. Companies 2,000 Anadarko Petroleum Corp.. . . . . . . .
162,314 158,640
The Gabelli Global Utility & Income Trust Schedule of
Investments — December 31, 2013
See accompanying notes to financial statements.
3
COMMON STOCKS (Continued) ENERGY AND UTILITIES (Continued) Natural
Gas Integrated (Continued) U.S. Companies (Continued)
2,200 Apache Corp. . . . . . . . . . . . . . . . . . . . . $
185,719 $ 189,068 12,000 CONSOL Energy Inc. . . . . . . . . . . . .
. 452,508 456,480 1,000 Energen Corp.. . . . . . . . . . . . . . .
. . . . . 30,935 70,750
14,000 Kinder Morgan Inc.. . . . . . . . . . . . . . . 259,445
504,000 21,000 National Fuel Gas Co.. . . . . . . . . . . . .
694,641 1,499,400 4,000 ONEOK Inc. . . . . . . . . . . . . . . . .
. . . . . . 51,437 248,720
30,000 Spectra Energy Corp.. . . . . . . . . . . . . 634,201
1,068,600
2,759,933 4,643,147
1,500 Enagas SA . . . . . . . . . . . . . . . . . . . . . . .
37,053 39,197 1,890 GDF Suez . . . . . . . . . . . . . . . . . . .
. . . . . 49,337 44,448
11,454 GDF Suez, ADR . . . . . . . . . . . . . . . . . . 362,710
271,116
U.S. Companies 16,764 AGL Resources Inc. . . . . . . . . . . . . .
. 667,385 791,764 11,000 Atmos Energy Corp. . . . . . . . . . . . .
. . 271,115 499,620 1,800 Chesapeake Utilities Corp. . . . . . . .
. 52,334 108,036 4,500 Piedmont Natural Gas Co. Inc. . . . .
105,090 149,220 8,000 Southwest Gas Corp. . . . . . . . . . . . . .
204,008 447,280 4,500 The Laclede Group Inc. . . . . . . . . . . .
143,720 204,930
1,892,752 2,555,611
Oil — 1.2% Non U.S. Companies
1,000 Niko Resources Ltd.† . . . . . . . . . . . . 2,671 2,391
1,000 PetroChina Co. Ltd., ADR. . . . . . . . . 79,302
109,740
10,000 Petroleo Brasileiro SA, ADR . . . . . . 186,815 137,800
9,000 Royal Dutch Shell plc, Cl. A, ADR . 460,931 641,430
U.S. Companies 10,000 Atlas Resource Partners LP. . . . . . .
197,047 204,800 2,000 Chevron Corp. . . . . . . . . . . . . . . . .
. . . 120,100 249,820 2,000 ConocoPhillips . . . . . . . . . . . .
. . . . . . . 57,018 141,300 2,500 Devon Energy Corp. . . . . . . .
. . . . . . . 94,760 154,675 1,000 Exxon Mobil Corp. . . . . . . .
. . . . . . . . 45,500 101,200
1,244,144 1,743,156
Services — 5.5% Non U.S. Companies
10,000 ABB Ltd., ADR . . . . . . . . . . . . . . . . . . . 123,092
265,600 620,000 Invensys plc . . . . . . . . . . . . . . . . . . .
. . 4,811,157 5,220,739 120,000 Weatherford International Ltd.†. .
. 1,685,931 1,858,800
U.S. Companies 10,000 AZZ Inc. . . . . . . . . . . . . . . . . . .
. . . . . . . 359,505 488,600
Shares Cost Market Value
200 Donaldson Co. Inc. . . . . . . . . . . . . . . . $ 7,180 $
8,692 3,500 Halliburton Co. . . . . . . . . . . . . . . . . . . .
110,825 177,625
7,097,690 8,020,056
Water — 3.2% Non U.S. Companies
5,000 Consolidated Water Co. Ltd. . . . . . . 60,554 70,500 115,000
Severn Trent plc. . . . . . . . . . . . . . . . . . 2,667,241
3,246,920 37,090 United Utilities Group plc . . . . . . . . .
366,828 412,432
U.S. Companies 10,000 Aqua America Inc.. . . . . . . . . . . . . .
. . 119,790 235,900
5,400 California Water Service Group . . . 76,295 124,578 4,000
Middlesex Water Co. . . . . . . . . . . . . . 75,033 83,760
16,000 SJW Corp. . . . . . . . . . . . . . . . . . . . . . . .
260,936 476,640
3,626,677 4,650,730
Diversified Industrial — 0.9% Non U.S. Companies
9,000 Bouygues SA . . . . . . . . . . . . . . . . . . . . 300,585
339,497 11,000 Jardine Matheson Holdings Ltd. . . 597,394 575,410
11,000 Jardine Strategic Holdings Ltd. . . . 371,394 352,000
1,269,373 1,266,907
Environmental Services — 0.1% Non U.S. Companies
500 Suez Environnement Co. . . . . . . . . . 0 8,959 12,000 Veolia
Environnement SA. . . . . . . . . 184,423 195,708
184,423 204,667
9,000 NRG Energy Inc. . . . . . . . . . . . . . . . . . 217,490
258,480
TOTAL ENERGY AND UTILITIES . . 44,757,122 58,346,577
COMMUNICATIONS — 30.1% Cable and Satellite — 10.7% Non U.S.
Companies
35,000 British Sky Broadcasting Group plc . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 387,280 489,170
10,000 Cogeco Inc. . . . . . . . . . . . . . . . . . . . . . .
195,069 461,097 58,000 Rogers Communications Inc.,
Cl. B . . . . . . . . . . . . . . . . . . . . . . . . . . 2,299,382
2,624,500 395,000 Sky Deutschland AG† . . . . . . . . . . . .
3,508,734 4,347,228
U.S. Companies 125,000 Cablevision Systems Corp., Cl. A . 2,128,393
2,241,250
200 Charter Communications Inc., Cl. A† . . . . . . . . . . . . . .
. . . . . . . . . . . 25,037 27,352
13,000 Comcast Corp., Cl. A, Special . . . . . 281,627 648,440
25,000 DIRECTV† . . . . . . . . . . . . . . . . . . . . . . .
633,442 1,727,250 30,000 DISH Network Corp., Cl. A†. . . . . . .
551,620 1,737,600
The Gabelli Global Utility & Income Trust Schedule of
Investments (Continued) — December 31, 2013
See accompanying notes to financial statements.
4
COMMON STOCKS (Continued) COMMUNICATIONS (Continued) Cable and
Satellite (Continued) U.S. Companies (Continued)
6,000 EchoStar Corp., Cl. A†. . . . . . . . . . . . $ 150,819 $
298,320 5,500 Liberty Global plc, Cl. A† . . . . . . . . . 146,144
489,445 5,500 Liberty Global plc, Cl. C† . . . . . . . . . 139,226
463,760 1,000 Time Warner Cable Inc.. . . . . . . . . . . 128,520
135,500
10,575,293 15,690,912
Telecommunications — 11.7% Non U.S. Companies
34,000 BCE Inc. . . . . . . . . . . . . . . . . . . . . . . . . .
884,186 1,471,860 11,000 Belgacom SA . . . . . . . . . . . . . . .
. . . . . 273,950 325,430 2,102 Bell Aliant Inc.(b). . . . . . . .
. . . . . . . . . 51,669 53,031
898 Bell Aliant Inc. . . . . . . . . . . . . . . . . . . . 23,812
22,597 24,000 BT Group plc, ADR . . . . . . . . . . . . . . .
797,407 1,515,120 37,000 Deutsche Telekom AG, ADR . . . . . .
615,333 638,620 29,651 Global Telecom Holding,
GDR†(c) . . . . . . . . . . . . . . . . . . . . . . 111,809 99,331
1,375,000 Koninklijke KPN NV† . . . . . . . . . . . . . 4,141,296
4,432,006
15,000 Koninklijke KPN NV, ADR . . . . . . . . . 114,993 47,670
8,000 Manitoba Telecom Services Inc. . . 249,141 223,601 5,000
Orange SA, ADR . . . . . . . . . . . . . . . . . 59,302
61,750
29,651 Orascom Telecom Media and Technology Holding SAE, GDR(b). .
. . . . . . . . . . . . . . . . . . . . . . 43,481 14,233
100,000 Portugal Telecom SGPS SA. . . . . . . 727,258 434,723 1,200
Swisscom AG . . . . . . . . . . . . . . . . . . . . 384,765 633,462
1,000 Swisscom AG, ADR . . . . . . . . . . . . . . 43,980
52,890
20,000 Telecom Italia SpA . . . . . . . . . . . . . . . 19,045
19,838 9,300 Telefonica Brasil SA, ADR . . . . . . . . 161,522
178,746
39,300 Telefonica Deutschland Holding AG . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 265,009 324,391
49,263 Telefonica SA, ADR. . . . . . . . . . . . . . . 718,984
804,957 30,000 Telekom Austria AG . . . . . . . . . . . . . .
354,921 227,156 23,000 Telenet Group Holding NV . . . . . . . .
1,047,596 1,372,438 16,000 VimpelCom Ltd., ADR . . . . . . . . . .
. . 146,091 207,040
U.S. Companies 27,000 AT&T Inc. . . . . . . . . . . . . . . . .
. . . . . . . . 758,355 949,320 40,000 CenturyLink Inc. . . . . . .
. . . . . . . . . . . 1,272,180 1,274,000 63,064 Cincinnati Bell
Inc.† . . . . . . . . . . . . . . 190,690 224,508 31,845 Sprint
Corp.† . . . . . . . . . . . . . . . . . . . . 180,561 342,334
1,000 T-Mobile US Inc. . . . . . . . . . . . . . . . . . 22,694
33,640
22,000 Verizon Communications Inc.. . . . . 760,341 1,081,080
14,420,371 17,065,772
Wireless Communications — 7.7% Non U.S. Companies
1,000 America Movil SAB de CV, Cl. L, ADR. . . . . . . . . . . . .
. . . . . . . . . . . . . . 15,150 23,370
Shares Cost Market Value
2,300,000 Cable & Wireless Communi- cations plc . . . . . . . .
. . . . . . . . . . . . $ 1,457,218 $ 2,142,396
30,400 Millicom International Cellular SA, SDR. . . . . . . . . . .
. . . . . . . . . . . . . . . . 2,179,706 3,027,309
4,000 Mobile TeleSystems OJSC, ADR . . 54,874 86,520 2,000 SK
Telecom Co. Ltd., ADR . . . . . . . . 40,399 49,240
11,000 Turkcell Iletisim Hizmetleri A/S, ADR† . . . . . . . . . . .
. . . . . . . . . . . . . . 158,724 146,850
45,000 Vodafone Group plc, ADR . . . . . . . . 1,382,873
1,768,950
U.S. Companies 200,000 Leap Wireless International Inc.† .
3,289,922 3,480,000 90,000 NII Holdings Inc.†. . . . . . . . . . .
. . . . . 451,770 247,500 7,500 United States Cellular Corp. . . .
. . . 264,225 313,650
9,294,861 11,285,785
4,000 European Aeronautic Defence and Space Co. NV. . . . . . . . .
. . . . . . . . . 280,487 307,112
90,000 Rolls-Royce Holdings plc. . . . . . . . . 628,651 1,900,212
7,740,000 Rolls-Royce Holdings plc,
Cl. C†(d) . . . . . . . . . . . . . . . . . . . . . . 12,500
12,817
921,638 2,220,141
500 Acciona SA . . . . . . . . . . . . . . . . . . . . . . 25,414
28,728
Business Services — 0.3% Non U.S. Companies
4,000 Sistema JSFC, GDR(c) . . . . . . . . . . . 95,619
128,480
U.S. Companies 8,000 Diebold Inc. . . . . . . . . . . . . . . . . .
. . . . . 241,784 264,080
337,403 392,560
95,000 Sony Corp., ADR . . . . . . . . . . . . . . . . . 1,879,000
1,642,550
Entertainment — 1.4% Non U.S. Companies
15,000 Grupo Televisa SAB, ADR. . . . . . . . . 451,306 453,900
60,000 Vivendi SA . . . . . . . . . . . . . . . . . . . . . . .
1,574,482 1,581,098
2,025,788 2,034,998
15,000 Kinnevik Investment AB, Cl. A . . . . 421,004 698,011
The Gabelli Global Utility & Income Trust Schedule of
Investments (Continued) — December 31, 2013
See accompanying notes to financial statements.
5
4,000 Hartford Financial Services Group Inc. . . . . . . . . . . .
. . . . . . . . . . . . . . . . $ 136,142 $ 144,920
557,146 842,931
Food and Beverage — 1.1% Non U.S. Companies
30,000 Davide Campari-Milano SpA . . . . . . 264,479 250,929 1,000
Diageo plc . . . . . . . . . . . . . . . . . . . . . . . 32,986
33,119 4,500 Diageo plc, ADR. . . . . . . . . . . . . . . . . .
586,201 595,890 3,000 Heineken NV . . . . . . . . . . . . . . . . .
. . . . 203,985 202,559 6,000 Nestlé SA . . . . . . . . . . . . . .
. . . . . . . . . . 420,868 439,213 1,000 Pernod Ricard SA . . . .
. . . . . . . . . . . . 122,560 113,922
1,631,079 1,635,632
Metals and Mining — 0.5% Non U.S. Companies
6,200 Compania de Minas Buenaventura SA, ADR. . . . . . . . . . . .
. . . . . . . . . . . 64,838 69,564
U.S. Companies 30,000 Peabody Energy Corp.. . . . . . . . . . . .
545,802 585,900
610,640 655,464
6,000 Brookfield Asset Management Inc., Cl. A. . . . . . . . . . .
. . . . . . . . . . . 149,494 232,980
344 Brookfield Property Partners LP . . 7,444 6,859
156,938 239,839
Specialty Chemicals — 0.5% Non U.S. Companies
109,200 AZ Electronic Materials SA. . . . . . . . 706,902
714,281
Transportation — 0.3% U.S. Companies
TOTAL OTHER . . . . . . . . . . . . . . . . . . . 9,370,942
11,096,239
Shares Cost Market Value
CONVERTIBLE PREFERRED STOCKS — 0.1% COMMUNICATIONS — 0.1%
Telecommunications — 0.1% U.S. Companies
1,600 Cincinnati Bell Inc., 6.750% Cv. Pfd., Ser. B . . . . . . . $
42,282 $ 72,976
WARRANTS — 0.0% COMMUNICATIONS — 0.0% Wireless Communications —
0.0% Non U.S. Companies
6,000 Bharti Airtel Ltd., expire 08/04/16†(b) . . . . . . . . . . .
. . . . . . . 28,648 32,063
Principal Amount
CONVERTIBLE CORPORATE BONDS — 0.3% OTHER — 0.3% Building and
Construction — 0.3% U.S. Companies
$ 500,000 Layne Christensen Co. 4.250%, 11/15/18 . . . . . . . . .
. . . . 500,000 501,563
U.S. GOVERNMENT OBLIGATIONS — 22.1% 32,444,000 U.S. Treasury
Bills,
0.030% to 0.100%††, 03/20/14 to 06/05/14(e) . . . . . . .
32,434,188 32,437,842
TOTAL INVESTMENTS — 100.0% . . . . . . . . . . . . . . $121,423,707
146,529,729
Settlement Date
3,650,000(f) Deliver British Pounds in exchange for United States
Dollars 6,042,955(g) . . . . . . 01/31/14 (68,616)
11,000,000(h)Deliver Euros in exchange for United States Dollars
15,132,439(g) . . . . . 01/31/14 (83,734)
TOTAL FORWARD FOREIGN EXCHANGE CONTRACTS . . . . . . . . . . . . .
. . . . . . (152,350)
The Gabelli Global Utility & Income Trust Schedule of
Investments (Continued) — December 31, 2013
See accompanying notes to financial statements.
6
$ 1 Rolls-Royce Holdings plc, Cl. C(i). 06/27/14 $ 7,119 (4,300,000
Shares)
1,027,481 Rolls-Royce Holdings plc(i) . . . . . . 06/27/14 27,827
(50,000 Shares)
TOTAL EQUITY CONTRACT FOR DIFFERENCE SWAP AGREEMENTS . . . . . . .
. . . . . . . . . . . . . . . . . . 34,946
Market Value
PREFERRED STOCK (1,032,428 preferred shares outstanding) . . . . .
. . . . . . . . . . . . (51,621,400)
NET ASSETS — COMMON SHARES (4,118,534 common shares outstanding). .
. . . . . . . . . . . . . . . . $ 92,102,748
NET ASSET VALUE PER COMMON SHARE ($92,102,748 ÷ 4,118,534 shares
outstanding) . . . . . . . . . . . . . $ 22.36
(a) Securities, or a portion thereof, with a value of $1,002,600,
were reserved and/or pledged with the custodian for forward foreign
exchange contracts and equity contract for difference swap
agreements.
(b) Security exempt from registration under Rule 144A of the
Securities Act of 1933, as amended. These securities may be resold
in transactions exempt from registration, normally to qualified
institutional buyers. At December 31, 2013, the market value of
Rule 144A securities amounted to $99,327 or 0.07% of total
investments.
(c) Security purchased pursuant to Regulation S under the
Securities Act of 1933, which exempts from registration securities
offered and sold outside of the United States. Such securities
cannot be sold in the United States without either an effective
registration statement filed pursuant to the Securities Act of
1933, or pursuant to an exemption from registration. At December
31, 2013, the market value of Regulation S securities amounted to
$227,811 or 0.16% of total investments, which were valued as
follows:
Acquisition Shares Issuer
4,000 Sistema JSFC, GDR . . . . . . 09/05/06 95,619 32.1200
(d) At December 31, 2013, the Fund held an investment in a
restricted and illiquid security amounting to $12,817 or 0.01% of
total investments, which was valued as follows:
Acquisition Shares Issuer
7,740,000 Rolls-Royce Holdings plc, Cl. C . . . . . . . . . . . . .
. . . . 10/23/13 $12,500 $0.0017
(e) At December 31, 2013, $22,050,000 of the principal amount was
pledged as collateral for equity contract for difference swap
agreements and forward foreign exchange contracts.
(f) Principal amount denoted in British Pounds. (g) At December 31,
2013, the Fund had entered into forward foreign exchange
contracts with State Street Bank and Trust Co. (h) Principal amount
denoted in Euros. (i) At December 31, 2013, the Fund had entered
into equity contract for difference
swap agreements with The Goldman Sachs Group, Inc. † Non-income
producing security. †† Represents annualized yield at date of
purchase.
ADR American Depositary Receipt GDR Global Depositary Receipt JSFC
Joint Stock Financial Corporation OJSC Open Joint Stock Company SDR
Swedish Depositary Receipt
Geographic Diversification
North America . . . . . . . . . . . . . . . . 62.1% $ 90,988,963
Europe. . . . . . . . . . . . . . . . . . . . . 33.0 48,383,746
Japan . . . . . . . . . . . . . . . . . . . . . 2.3 3,352,302
Asia/Pacific . . . . . . . . . . . . . . . . . . 1.6 2,337,555
Latin America. . . . . . . . . . . . . . . . . 0.9 1,353,600
Africa/Middle East . . . . . . . . . . . . . . 0.1 113,563 Total
Investments . . . . . . . . . . . . . . 100.0% $146,529,729
The Gabelli Global Utility & Income Trust Schedule of
Investments (Continued) — December 31, 2013
See accompanying notes to financial statements.
7
Assets: Investments, at value (cost $121,423,707) . . . . . .
$146,529,729 Foreign currency, at value (cost $1,089). . . . . . .
. 1,111 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 9,599 Receivable for investments sold . . .
. . . . . . . . . . . . 396,337 Dividends and interest receivable.
. . . . . . . . . . . . . 258,826 Unrealized appreciation on swap
contracts . . . . . 34,946 Deferred offering expense . . . . . . .
. . . . . . . . . . . . . 68,228 Prepaid expenses . . . . . . . . .
. . . . . . . . . . . . . . . . . . 2,903 Total Assets . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . 147,301,679
Liabilities: Distributions payable . . . . . . . . . . . . . . . .
. . . . . . . . . 51,621 Payable for Fund shares redeemed. . . . .
. . . . . . . 151,091 Payable for investments purchased . . . . . .
. . . . . . 3,036,361 Payable for payroll expenses . . . . . . . .
. . . . . . . . . 39,414 Payable for investment advisory fees . . .
. . . . . . . 60,524 Payable for accounting fees . . . . . . . . .
. . . . . . . . . 3,750 Unrealized depreciation on forward
foreign
exchange contracts . . . . . . . . . . . . . . . . . . . . . . . .
152,350 Other accrued expenses . . . . . . . . . . . . . . . . . .
. . . 82,420 Total Liabilities . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 3,577,531
Preferred Shares: Series A Cumulative Preferred Shares ($50
liquidation value, $0.001 par value, 1,200,000 shares authorized
with 1,032,428 shares issued and outstanding) . . . . . . . . . . .
. . . . . . . . . 51,621,400
Net Assets Attributable to Common Shareholders . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . $ 92,102,748
Net Assets Attributable to Common Shareholders Consist of: Paid-in
capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. $ 67,524,009 Distributions in excess of net investment
income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . (314,347) Accumulated net realized loss on
investments,
swaps contracts, and foreign currency transactions. . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . (96,913)
Net unrealized appreciation on investments. . . . . 25,106,022 Net
unrealized appreciation on swap contracts . . 34,946 Net unrealized
depreciation on foreign currency
translations . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . (150,969) Net Assets . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . $ 92,102,748
Net Asset Value per Common Share: ($92,102,748 ÷ 4,118,534 shares
outstanding at
$0.001 par value; unlimited number of shares authorized) . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . $22.36
Investment Income: Dividends (net of foreign withholding taxes
of
$98,119). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . $ 2,822,069 Interest . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . 17,123 Total Investment
Income . . . . . . . . . . . . . . . . . . . . . 2,839,192
Expenses: Investment advisory fees . . . . . . . . . . . . . . . .
. . . . . . 535,801 Payroll expenses . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 110,268 Shareholder communications
expenses . . . . . . . . . 63,873 Trustees’ fees . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . 62,500 Legal and
audit fees . . . . . . . . . . . . . . . . . . . . . . . . . .
50,554 Custodian fees . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 49,508 Accounting fees . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . 45,000 Shareholder services fees .
. . . . . . . . . . . . . . . . . . . . 21,120 Miscellaneous
expenses. . . . . . . . . . . . . . . . . . . . . . . 21,080 Total
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 959,704 Less: Custodian fee credits. . . . . . . . . . . . . . .
. . . . . . . . . . . (252) Net Expenses . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 959,452 Net Investment Income .
. . . . . . . . . . . . . . . . . . . . . 1,879,740
Net Realized and Unrealized Gain/(Loss) on Investments, Swap
Contracts, and Foreign Currency: Net realized gain on investments .
. . . . . . . . . . . . . . 1,261,621 Net realized gain on swap
contracts . . . . . . . . . . . . 336,684 Net realized loss on
foreign currency
transactions . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . (539,909) Net realized gain on investments, swap
contracts, and foreign currency transactions . . . 1,058,396 Net
change in unrealized appreciation/
depreciation: on investments . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 13,541,008 on swap contracts . . . . . . . . .
. . . . . . . . . . . . . . . . . 22,702 on foreign currency
translations . . . . . . . . . . . . . . (150,499)
Net change in unrealized appreciation/ depreciation on investments,
swap contracts, and foreign currency translations . . . . . . . . .
. . . . 13,413,211
Net Realized and Unrealized Gain/(Loss) on Investments, Swap
Contracts, and Fo