<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>s462455.txt
<DESCRIPTION>EXH 99(A)(II)
<TEXT>
                           THE GABELLI UTILITY TRUST


                           STATEMENT OF PREFERENCES
                                      OF
                   [ ]% SERIES A CUMULATIVE PREFERRED SHARES


         The Gabelli Utility Trust, a Delaware statutory trust (hereinafter
called the "Trust"), hereby certifies that:

         FIRST: The Board of Trustees of the Trust, at a meeting duly convened
and held on February 19, 2003, pursuant to authority expressly vested in it by
Article III of the Agreement and Declaration of Trust, adopted resolutions
classifying and designating 2,000,000 authorized but unissued capital shares
of the Trust, par value $.001 per share, as "[ ]% Series A Cumulative
Preferred Shares" and authorizing the issuance of up to 2,000,000 shares of [
]% Series A Cumulative Preferred Shares at such times as the Pricing Committee
should determine.

         SECOND: The Pricing Committee, at a meeting duly convened and held on
July [ ], 2003, pursuant to authority granted it by the Board of Trustees of
the Trust at its February 19, 2003 meeting, approved the issuance by the Trust
of [ ] [ ]% Series A Cumulative Preferred Shares.

         THIRD: The preferences, rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption of the [ ]% Series A Cumulative Preferred Shares, par value $.001
per share, as set by the Board of Trustees are as follows:



                                    PART I

                                  DEFINITIONS

         Unless the context or use indicates another or different meaning or
intent, each of the following terms when used in this Statement of Preferences
shall have the meaning ascribed to it below, whether such term is used in the
singular or plural and regardless of tense:

         "Accountant's Confirmation" means a letter from an Independent
Accountant delivered to Moody's with respect to certain Basic Maintenance
Reports substantially to the effect that:

         (a)      the Independent Accountant has read the Basic Maintenance
                  Report or Reports prepared by the Administrator during the
                  referenced calendar year that are referred to in such
                  letter;

         (b)      with respect to the issue size compliance, issuer
                  diversification and industry diversification calculations,
                  such calculations and the resulting Market Value of the
                  Moody's Eligible Assets included in the Reports and the
                  Adjusted Value of the Moody's Eligible Assets included in
                  the Reports are numerically correct;

         (c)      with respect to the excess or deficiency of the Adjusted
                  Value of the Moody's Eligible Assets included in the Reports
                  when compared to the Basic Maintenance Amount calculated for
                  Moody's, the results of the calculation set forth in the
                  Reports have been recalculated and are numerically correct;

         (d)      with respect to the Moody's and S&P ratings on corporate
                  evidences of indebtedness, convertible corporate evidences
                  of indebtedness and preferred stock listed in the Reports,
                  that information has been traced and agrees with the
                  information provided directly or indirectly by the
                  respective rating agencies (in the event such information
                  does not agree or such information is not listed in the
                  accounting records of the Trust, the Independent Accountants
                  will inquire of the rating agencies what such information is
                  and provide a listing in their letter of such differences,
                  if any);

         (e)      with respect to issuer name and coupon or dividend rate
                  listed in the Reports, that information has been traced and
                  agrees with information listed in the accounting records of
                  the Trust;

         (f)      with respect to issue size listed in the Reports, that
                  information has been traced and agrees with information
                  provided by a Pricing Service or such other services as
                  Moody's may authorize from time to time;

         (g)      with respect to the prices (or alternative permissible
                  factors used in calculating the Market Value as provided by
                  this Statement of Preferences) provided by the Administrator
                  of the Trust's assets for purposes of valuing securities in
                  the portfolio, the Independent Accountant has traced the
                  price used in the Reports to the price provided by such
                  Administrator (in accordance with the procedures provided in
                  this Statement of Preferences) and verified that such
                  information agrees (in the event such information does not
                  agree, the Independent Accountants will provide a listing in
                  their letter of such differences); and

         (h)      with respect to the description of each security included in
                  the Reports, the description of Moody's Eligible Assets has
                  been compared to the definition of Moody's Eligible Assets
                  contained in this Statement of Preferences, and the
                  description as appearing in the Reports agrees with the
                  definition of Moody's Eligible Assets as described in this
                  Statement of Preferences.

         Each such letter may state that: (i) such Independent Accountant has
made no independent verification of the accuracy of the description of the
investment securities listed in the Reports or the Market Value of those
securities nor has it performed any procedures other than those specifically
outlined above for the purposes of issuing such letter; (ii) unless otherwise
stated in the letter, the procedures specified therein were limited to a
comparison of numbers or a verification of specified computations applicable
to numbers appearing in the Reports and the schedule(s) thereto; (iii) the
foregoing procedures do not constitute an examination in accordance with
generally accepted auditing standards and the Reports contained in the letter
do not extend to any of the Trust's financial statements taken as a whole;
(iv) such Independent Accountant does not express an opinion as to whether
such procedures would enable such Independent Accountant to determine that the
methods followed in the preparation of the Reports would correctly determine
the Market Value or Discounted Value of the investment portfolio; and (v)
accordingly, such Independent Accountant expresses no opinion as to the
information set forth in the Reports or in the schedule(s) thereto and makes
no representation as to the sufficiency of the procedures performed for the
purposes of this Statement of Preferences.

         Such letter shall also state that the Independent Accountant is an
"independent accountant" with respect to the Trust within the meaning of the
Securities Act of 1933, as amended, and the related published rules and
regulations thereunder.

         "Adjusted Value" of each Moody's Eligible Asset shall be computed as
follows:

         (a)      cash shall be valued at 100% of the face value thereof; and

         (b)      all other Moody's Eligible Assets shall be valued at the
                  Discounted Value thereof; and

         (c)      each asset that is not a Moody's Eligible Asset shall be
                  valued at zero.

         "Administrator" means the other party to the Administration Agreement
with the Trust which shall initially be Gabelli Funds, LLC, a New York limited
liability company, and will include, as appropriate, any sub-administrator
appointed by the Administrator.

         "ADRs" means U.S. dollar-denominated American Depository Receipts.

         "Adviser" means Gabelli Funds, LLC, a New York limited liability
company, or such other person as shall be serving as the investment adviser of
the Trust.

         "Annual Valuation Date" means the Valuation Date each calendar year
so designated by the Trust, commencing in the calendar year 2003.

         "Asset Coverage" means asset coverage, as determined in accordance
with Section 18(h) of the 1940 Act, of at least 200% with respect to all
outstanding senior securities of the Trust which are stock, including all
Outstanding Series A Preferred Shares (or such other asset coverage as may in
the future be specified in or under the 1940 Act as the minimum asset coverage
for senior securities which are stock of a closed-end investment company as a
condition of declaring dividends on its common stock), determined on the basis
of values calculated as of a time within 48 hours (not including Saturdays,
Sundays or holidays) next preceding the time of such determination.

         "Basic Maintenance Amount" means, as of any Valuation Date, the
dollar amount equal to (a) the sum of (i) the product of the number of shares
of each class or series of Preferred Shares Outstanding on such Valuation Date
multiplied by the Liquidation Preference per share; (ii) to the extent not
included in (i) the aggregate amount of cash dividends (whether or not earned
or declared) that will have accumulated for each Outstanding Preferred Share
from the most recent Dividend Payment Date to which dividends have been paid
or duly provided for (or, in the event the Basic Maintenance Amount is
calculated on a date prior to the initial Dividend Payment Date with respect
to a class or series of the Preferred Shares, then from the Date of Original
Issue) through the Valuation Date plus all dividends to accumulate on the
Preferred Shares then Outstanding during the 70 days following such Valuation
Date or, if less, during the number of days following such Valuation Date that
Preferred Shares called for redemption are scheduled to remain Outstanding;
(iii) the Trust's other liabilities due and payable as of such Valuation Date
(except that dividends and other distributions payable by the Trust on Common
Shares shall not be included as a liability) and such liabilities projected to
become due and payable by the Trust during the 90 days following such
Valuation Date (excluding liabilities for investments to be purchased and for
dividends and other distributions not declared as of such Valuation Date); and
(iv) any current liabilities of the Trust as of such Valuation Date to the
extent not reflected in (or specifically excluded by) any of (a)(i) through
(a)(iii) (including, without limitation, and immediately upon determination,
any amounts due and payable by the Trust pursuant to reverse repurchase
agreements and any payables for assets purchased as of such Valuation Date)
less (b)(i) the Adjusted Value of any of the Trust's assets or (ii) the face
value of any of the Trust's assets if, in the case of both (b)(i) and (b)(ii),
such assets are either cash or evidences of indebtedness which mature prior to
or on the date of redemption or repurchase of Preferred Shares or payment of
another liability and are either U.S. Government Obligations or evidences of
indebtedness which have a rating assigned by Moody's of at least Aaa, P-1,
VMIG-1 or MIG-1 or by S&P of at least AAA, SP-1+ or A-1+, and are irrevocably
held by the Trust's custodian bank in a segregated account or deposited by the
Trust with the Dividend-Disbursing Agent for the payment of the amounts needed
to redeem or repurchase Preferred Shares subject to redemption or repurchase
or any of (a)(ii) through (a)(iv); and provided that in the event the Trust
has repurchased Preferred Shares and irrevocably segregated or deposited
assets as described above with its custodian bank or the Dividend-Disbursing
Agent for the payment of the repurchase price the Trust may deduct 100% of the
Liquidation Preference of such Preferred Shares to be repurchased from (a)
above. Basic Maintenance Amount shall, for purposes of this Statement of
Preferences, have a correlative meaning with respect to any other class or
series of Preferred Shares.

         "Basic Maintenance Amount Cure Date" means, with respect to the
Series A Preferred Shares, 10 Business Days following a Valuation Date, such
date being the last day upon which the Trust's failure to comply with
paragraph 5(a)(ii)(A) of Part II hereof could be cured, and for the purposes
of this Statement of Preferences shall have a correlative meaning with respect
to any other class or series of Preferred Shares.

         "Basic Maintenance Report" or "Report" means, with respect to the
Series A Preferred Shares, a report prepared by the Administrator which sets
forth, as of the related Valuation Date, Moody's Eligible Assets sufficient to
meet or exceed the Basic Maintenance Amount, the Market Value and Discounted
Value thereof (seriatim and in the aggregate), and the Basic Maintenance
Amount, and for the purposes of this Statement of Preferences shall have a
correlative meaning with respect to any other class or series of Preferred
Shares.

         "Board of Trustees" means the Board of Trustees of the Trust or any
duly authorized committee thereof as permitted by applicable law.

         "Business Day" means a day on which the New York Stock Exchange is
open for trading and that is neither a Saturday, Sunday nor any other day on
which banks in The City of New York, New York are authorized or obligated by
law to close.

         "By-Laws" means the By-Laws of the Trust as amended from time to
time.

         "Common Shares" means the common shares, par value $.001 per share,
of the Trust.

         "Cure Date" shall have the meaning set forth in paragraph 3(a) of
Part II hereof.

         "Date of Original Issue" means [ ], and for the purposes of this
Statement of Preferences shall have a correlative meaning with respect to any
other class or series of Preferred Shares.

         "Declaration" means the Agreement and Declaration of Trust of the
Trust, dated as of February 25, 1999, as amended, supplemented or restated
from time to time (including by this Statement of Preferences or by way of any
other supplement or Statement of Preferences authorizing or creating a class
of shares of beneficial interest in the Trust).

         "Deposit Assets" means cash, Short-Term Money Market Instruments and
U.S. Government Obligations. Except for determining whether the Trust has
Moody's Eligible Assets with an Adjusted Value equal to or greater than the
Basic Maintenance Amount, each Deposit Asset shall be deemed to have a value
equal to its principal or face amount payable at maturity plus any interest
payable thereon after delivery of such Deposit Asset but only if payable on or
prior to the applicable payment date in advance of which the relevant deposit
is made.

         "Discounted Value" means, as applicable, (a) the quotient of the
Market Value of an Eligible Asset divided by the applicable Discount Factor or
(b) such other formula for determining the discounted value of an Eligible
Asset as may be established by an applicable Rating Agency, provided, in
either case that with respect to an Eligible Asset that is currently callable,
Discounted Value will be equal to the applicable quotient or product as
calculated above or the call price, whichever is lower, and that with respect
to an Eligible Asset that is prepayable, Discounted Value will be equal to the
applicable quotient or product as calculated above or the par value, whichever
is lower.

         "Dividend-Disbursing Agent" means, with respect to the Series A
Preferred Shares, EquiServe Trust Company, N.A. and its successors or any
other dividend-disbursing agent appointed by the Trust and, with respect to
any other class or series of Preferred Shares, the Person appointed by the
Trust as dividend-disbursing or paying agent with respect to such class or
series.

         "Dividend Payment Date" means with respect to the Series A Preferred
Shares, any date on which dividends declared by the Board of Trustees thereon
are payable pursuant to the provisions of paragraph 1(a) of Part II of this
Statement of Preferences and shall for the purposes of this Statement of
Preferences have a correlative meaning with respect to any other class or
series of Preferred Shares.

         "Dividend Period" shall have the meaning set forth in paragraph 1(a)
of Part II hereof, and for the purposes of this Statement of Preferences shall
have a correlative meaning with respect to any other class or series of
Preferred Shares.

         "Governing Documents" means the Declaration and the By-Laws.

         "Independent Accountant" means a nationally recognized accountant, or
firm of accountants, that is with respect to the Trust an independent public
accountant or firm of independent public accountants under the Securities Act
of 1933, as amended.

         "Liquidation Preference" shall, with respect to the Series A
Preferred Shares, have the meaning set forth in paragraph 2(a) of Part II
hereof, and for the purposes of this Statement of Preferences shall have a
correlative meaning with respect to any other class or series of Preferred
Shares.

         "Market Value" means the amount determined by the Trust with respect
to Moody's Eligible Assets in accordance with valuation policies adopted from
time to time by the Board of Trustees as being in compliance with the
requirements of the 1940 Act.

                  Notwithstanding the foregoing, "Market Value" may, at the
option of the Trust with respect to any of its assets, mean the amount
determined with respect to specific Moody's Eligible Assets of the Trust in
the manner set forth below:

         (a)      as to any common or preferred stock which is a Moody's
                  Eligible Asset, (i) if the stock is traded on a national
                  securities exchange or quoted on the Nasdaq System, the last
                  sales price reported on the Valuation Date or (ii) if there
                  was no reported sales price on the Valuation Date, the lower
                  of two bid prices for such stock provided to the
                  Administrator by two recognized securities dealers with
                  minimum capitalizations of $25,000,000 (or otherwise
                  approved for such purpose by Moody's) or by one such
                  securities dealer and any other source (provided that the
                  utilization of such source would not adversely affect
                  Moody's then-current rating of the Series A Preferred
                  Shares), at least one of which shall be provided in writing
                  or by telecopy, telex, other electronic transcription,
                  computer obtained quotation reducible to written form or
                  similar means, and in turn provided to the Trust by any such
                  means by such Administrator, or, if two bid prices cannot be
                  obtained, such Moody's Eligible Asset shall have a Market
                  Value of zero;

         (b)      as to any U.S. Government Obligation, Short Term Money
                  Market Instrument (other than demand deposits, federal
                  funds, bankers' acceptances and next Business Day repurchase
                  agreements) and commercial paper with a maturity of greater
                  than 60 days, the product of (i) the principal amount
                  (accreted principal to the extent such instrument accretes
                  interest) of such instrument, and (ii) the lower of the bid
                  prices for the same kind of instruments having, as nearly as
                  practicable, comparable interest rates and maturities
                  provided by two recognized securities dealers having a
                  minimum capitalization of $25,000,000 (or otherwise approved
                  for such purpose by Moody's) or by one such dealer and any
                  other source (provided that the utilization of such source
                  would not adversely affect Moody's then-current rating of
                  the Series A Preferred Shares) to the Administrator, at
                  least one of which shall be provided in writing or by
                  telecopy, telex, other electronic transcription, computer
                  obtained quotation reducible to written form or similar
                  means, and in turn provided to the Trust by any such means
                  by such Administrator, or, if two bid prices cannot be
                  obtained, such Moody's Eligible Asset will have a Market
                  Value of zero;

         (c)      as to cash, demand deposits, federal funds, bankers'
                  acceptances and next Business Day repurchase agreements
                  included in Short-Term Money Market Instruments, the face
                  value thereof;

         (d)      as to any U.S. Government Obligation, Short-Term Money
                  Market Instrument or commercial paper with a maturity of 60
                  days or fewer, amortized cost unless the Board of Trustees
                  determines that such value does not constitute fair value;

         (e)      as to any other evidence of indebtedness which is a Moody's
                  Eligible Asset, (i) the product of (A) the unpaid principal
                  balance of such indebtedness as of the Valuation Date and
                  (B)(1) if such indebtedness is traded on a national
                  securities exchange or quoted on the Nasdaq System, the last
                  sales price reported on the Valuation Date or (2) if there
                  was no reported sales price on the Valuation Date or if such
                  indebtedness is not traded on a national securities exchange
                  or quoted on the Nasdaq System, the lower of two bid prices
                  for such indebtedness provided by two recognized dealers
                  with a minimum capitalization of $25,000,000 (or otherwise
                  approved for such purpose by Moody's) or by one such dealer
                  and any other source (provided that the utilization of such
                  source would not adversely affect Moody's then-current
                  rating of the Series A Preferred Shares) to the
                  Administrator, at least one of which shall be provided in
                  writing or by telecopy, telex, other electronic
                  transcription, computer obtained quotation reducible to
                  written form or similar means, and in turn provided to the
                  Trust by any such means by such Administrator, plus (ii)
                  accrued interest on such indebtedness.

         "Moody's" means Moody's Investors Service, Inc., or its successors at
law. In the event that Moody's is no longer rating the Series A Preferred
Shares at the request of the Trust, "Moody's" shall be deemed to refer to any
other nationally recognized securities rating agency designated by the Trust.

         "Moody's Discount Factor" means, with respect to a Moody's Eligible
Asset specified below, the following applicable number:

<TABLE>
<CAPTION>

                                                                                  Moody's
Type of Moody's Eligible Asset:                                               Discount Factor:
------------------------------                                                ---------------

<S>                                                                           <C>
Short Term Money Market Instruments (other than U.S. Government Obligations
set forth below) and other commercial paper:
     U.S. Treasury Securities with final maturities that are less than or
     equal to 60 days.....................................
                                                                                    1.00
     Demand or time deposits, certificates of deposit and bankers'
     acceptances includible in Short Term Money Market Instruments                  1.00

     Commercial paper rated P-1 by Moody's maturing in 30 days or
     less.........................................................                  1.00

     Commercial paper rated P-1 by Moody's maturing in more than 30
     days but in 270 days or less.................................                  1.15

     Commercial paper rated A-1+ by S&P maturing in 270 days or less                1.25

     Repurchase obligations includible in Short Term Money Market
     Instruments if term is less than 30 days and counterparty is                   1.00
     rated at least A2............................................

     Other repurchase obligations.................................     Discount Factor applicable to
                                                                             underlying assets

U.S. Common Stocks and Common Stocks of foreign issuers for which ADR's are
traded:
                                                                                    1.70
        Utility ..................................................
                                                                                    2.64
        Industrial ...............................................
                                                                                    2.41
        Financial ................................................

Common Stocks of foreign issuers (in existence for at least five
years) for which no ADR's are traded..............................                  4.00

Convertible Preferred Stocks......................................                  3.00

Preferred stocks:

     Auction rate preferred stocks................................                  3.50

     Other preferred stocks issued by issuers in the financial and
     industrial industries........................................                  2.09

     Other preferred stocks issued by issuers in the utilities
     industry.....................................................                  1.55

U.S. Government Obligations (other than U.S. Treasury Securities Strips set
forth below) with remaining terms to maturity of:

     1 year or less...............................................                  1.04

     2 years or less..............................................                  1.09

     3 years or less..............................................                  1.12

     4 years or less..............................................                  1.15

     5 years or less..............................................                  1.18

     7 years of less..............................................                  1.21

     10 years or less.............................................                  1.24

     15 years or less.............................................                  1.25

     20 years or less.............................................                  1.26

     30 years or less.............................................                  1.26

U.S. Treasury Securities Strips with remaining terms to maturity of:

     1 year or less...............................................                  1.04

     2 years or less..............................................                  1.10

     3 years or less..............................................                  1.14

     4 years or less..............................................                  1.18

     5 years or less..............................................                  1.21

     7 years or less..............................................                  1.27

     10 years or less.............................................                  1.34

     15 years or less.............................................                  1.45

     20 years or less.............................................                  1.54

     30 years or less.............................................                  1.66

Corporate Debt:

     Non-convertible corporate debt rated Aaa with remaining terms to maturity
     of:

         1 year or less...........................................                  1.09

         2 years or less..........................................                  1.15

         3 years or less..........................................                  1.20

         4 years or less..........................................                  1.26

         5 years or less..........................................                  1.32

         7 years or less..........................................                  1.39

         10 years or less.........................................                  1.45

         15 years or less.........................................                  1.50

         20 years or less.........................................                  1.50

         30 years or less.........................................                  1.50

     Non-convertible corporate debt rated at least Aa3 with remaining terms to
     maturity of:

         1 year or less...........................................                  1.12

         2 years of less..........................................                  1.18

         3 years or less..........................................                  1.23

         4 years or less..........................................                  1.29

         5 years or less..........................................                  1.35

         7 years or less..........................................                  1.43

         10 years or less.........................................                  1.50

         15 years or less.........................................                  1.55

         20 years or less.........................................                  1.55

         30 years or less.........................................                  1.55

     Non-convertible corporate debt rated at least A3 with remaining terms to
     maturity of:

         1 year or less...........................................                  1.15

         2 years or less..........................................                  1.22

         3 years or less..........................................                  1.27

         4 years or less..........................................                  1.33

         5 years or less..........................................                  1.39

         7 years or less..........................................                  1.47

         10 years or less.........................................                  1.55

         15 years or less.........................................                  1.60

         20 years or less.........................................                  1.60

         30 years or less.........................................                  1.60

     Non-convertible corporate debt rated at least Baa3 with remaining terms
     of maturity of:

         1 year or less...........................................                  1.18

         2 years or less..........................................                  1.25

         3 years or less..........................................                  1.31

         4 years or less..........................................                  1.38

         5 years or less..........................................                  1.44

         7 years or less..........................................                  1.52

         10 years or less.........................................                  1.60

         15 years or less.........................................                  1.65

         20 years or less.........................................                  1.65

         30 years or less.........................................                  1.65

     Non-convertible corporate debt rated at least Ba3 with remaining terms of
     maturity of:

         1 year or less...........................................                  1.37

         2 years or less..........................................                  1.46

         3 years or less..........................................                  1.56

         4 years or less..........................................                  1.61

         5 years or less..........................................                  1.68

         7 years or less..........................................                  1.79

         10 years or less.........................................                  1.89

         15 years or less.........................................                  1.96

         20 years or less.........................................                  1.96

         30 years or less.........................................                  1.96

     Non-convertible corporate debt rated at least B1 and B2 with remaining
     terms of maturity of:

         1 year or less...........................................                  1.50

         2 years or less..........................................                  1.60

         3 years or less..........................................                  1.68

         4 years or less..........................................                  1.76

         5 years or less..........................................                  1.86

         7 years or less..........................................                  1.97

         10 years or less.........................................                  2.08

         15 years or less.........................................                  2.16

         20 years or less.........................................                  2.28

         30 years or less.........................................                  2.29

         Non-convertible unrated corporate debt of any maturity ..                  2.50

Convertible corporate debt securities rated at least Aa3 issued by the
following type of issuers:

     Utility......................................................               1.62-1.67

     Industrial...................................................               2.56-2.61

     Financial....................................................               2.33-2.38

     Transportation...............................................               2.50-2.65

Convertible corporate debt securities rated at least A3 issued by the
following type of issuers:

     Utility......................................................                  1.72

     Industrial...................................................                  2.66

     Financial....................................................                  2.43

     Transportation...............................................                  2.75

Convertible corporate debt securities rated at least Baa3 issued by the
following type of issuers:

     Utility......................................................                  1.88

     Industrial...................................................                  2.82

     Financial....................................................                  2.59

     Transportation...............................................                  2.85

Convertible corporate debt securities rated at least Ba3 issued by the
following type of issuers:

     Utility......................................................                  1.95

     Industrial...................................................                  2.90

     Financial....................................................                  2.65

     Transportation...............................................                  2.90

Convertible corporate debt securities rated at least B2 issued by the
following type of issuers:

     Utility......................................................                  1.99

     Industrial...................................................                  2.93

     Financial....................................................                  2.70

     Transportation...............................................                  2.95
</TABLE>


         "Moody's Eligible Assets" means:

         (a)      cash (including, for this purpose, receivables for
                  investments sold to a counterparty whose senior debt
                  securities are rated at least Baa3 by Moody's or a
                  counterparty approved by Moody's and payable within five
                  Business Days following such Valuation Date and dividends
                  and interest receivable within 49 days on investments);

         (b)      Short-Term Money Market Instruments;

         (c)      commercial paper that is not includible as a Short-Term
                  Money Market Instrument having on the Valuation Date a
                  rating from Moody's of at least P-1 and maturing within 270
                  days;

         (d)      preferred stocks (i) which either (A) are issued by issuers
                  whose senior debt securities are rated at least Baa1 by
                  Moody's or (B) are rated at least Baa3 by Moody's or (C) in
                  the event an issuer's senior debt securities or preferred
                  stock is not rated by Moody's, which either (1) are issued
                  by an issuer whose senior debt securities are rated at least
                  A- by S&P or (2) are rated at least A- by S&P and for this
                  purpose have been assigned a Moody's equivalent rating of at
                  least Baa3, (ii) of issuers which have (or, in the case of
                  issuers which are special purpose corporations, whose parent
                  companies have) common stock listed on the New York Stock
                  Exchange, the American Stock Exchange or the Nasdaq National
                  Market System, (iii) which have a minimum issue size (when
                  taken together with other of the issuer's issues of similar
                  tenor) of $50,000,000, (iv) which have paid cash dividends
                  consistently during the preceding three-year period (or, in
                  the case of new issues without a dividend history, are rated
                  at least A1 by Moody's or, if not rated by Moody's, are
                  rated at least AA- by S&P), (v) which pay cumulative cash
                  dividends in U.S. dollars, (vi) which are not convertible
                  into any other class of stock and do not have warrants
                  attached, (vii) which are not issued by issuers in the
                  transportation industry and (viii) in the case of auction
                  rate preferred stocks, which are rated at least Aa3 by
                  Moody's, or if not rated by Moody's, AAA by S&P, AAA by
                  Fitch or are otherwise approved in writing by Moody's and
                  have never had a failed auction; provided, however, that for
                  this purpose the aggregate Market Value of the Trust's
                  holdings of any single issue of auction rate preferred stock
                  shall not be more than 1% of the Trust's total assets.

         (e)      common stocks (i) (A) which are traded on a nationally
                  recognized stock exchange or in the over-the-counter market,
                  (B) if cash dividend paying, pay cash dividends in U.S.
                  dollars and (C) which may be sold without restriction by the
                  Trust; provided, however, that (y) common stock which, while
                  a Moody's Eligible Asset owned by the Trust, ceases paying
                  any regular cash dividend will no longer be considered a
                  Moody's Eligible Asset until 71 days after the date of the
                  announcement of such cessation, unless the issuer of the
                  common stock has senior debt securities rated at least A3 by
                  Moody's and (z) the aggregate Market Value of the Trust's
                  holdings of the common stock of any issuer in excess of 4%
                  in the case of utility common stock and 6% in the case of
                  non-utility common stock of the aggregate Market Value of
                  the Trust's holdings shall not be Moody's Eligible Assets,
                  (ii) which are securities denominated in any currency other
                  than the U.S. dollar or securities of issuers formed under
                  the laws of jurisdictions other than the United States, its
                  states and the District of Columbia for which there are
                  dollar-denominated ADRs or their equivalents which are
                  traded in the United States on exchanges or over-the-counter
                  and are issued by banks formed under the laws of the United
                  States, its states or the District of Columbia or (iii)
                  which are securities of issuers formed under the laws of
                  jurisdictions other than the United States (and in existence
                  for at least five years) for which no ADRs are traded;
                  provided, however, that the aggregate Market Value of the
                  Trust's holdings of securities denominated in currencies
                  other than the U.S. dollar and ADRs in excess of (A) 6% of
                  the aggregate Market Value of the outstanding shares of
                  common stock of such issuer thereof or (B) 10% of the Market
                  Value of the Trust's Moody's Eligible Assets with respect to
                  issuers formed under the laws of any single such non-U.S.
                  jurisdiction other than Australia, Belgium, Canada, Denmark,
                  Finland, France, Germany, Ireland, Italy, Japan, the
                  Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland
                  and the United Kingdom, shall not be a Moody's Eligible
                  Asset;

         (f)      ADR securities, based on the following guidelines: (i)
                  Sponsored ADR program or (ii) Level II or Level III ADRs.
                  Private placement Rule 144A ADRs are not eligible for
                  collateral consideration. Global GDR programs will be
                  evaluated on a case by case basis;

         (g)      U.S. Government Obligations;

         (h)      corporate evidences of indebtedness (i) which may be sold
                  without restriction by the Trust which are rated at least B3
                  (Caa subordinate) by Moody's (or, in the event the security
                  is not rated by Moody's, the security is rated at least BB-
                  by S&P and which for this purpose is assigned a Moody's
                  equivalent rating of one full rating category lower), with
                  such rating confirmed on each Valuation Date, (ii) which
                  have a minimum issue size of at least (A) $100,000,000 if
                  rated at least Baa3 or (B) $50,000,000 if rated B or Ba3,
                  (iii) which are not convertible or exchangeable into equity
                  of the issuing corporation and have a maturity of not more
                  than 30 years, and (iv) for which, if rated below Baa3 or
                  not rated, the aggregate Market Value of the Trust's
                  holdings do not exceed 10% of the aggregate Market Value of
                  any individual issue of corporate evidences of indebtedness
                  calculated at the time of original issuance; and

         (i)      convertible corporate evidences of indebtedness (i) which
                  are issued by issuers whose senior debt securities are rated
                  at least B2 by Moody's (or, in the event an issuer's senior
                  debt securities are not rated by Moody's, which are issued
                  by issuers whose senior debt securities are rated at least
                  BB by S&P and which for this purpose is assigned a Moody's
                  equivalent rating of one full rating category lower), (ii)
                  which are convertible into common stocks which are traded on
                  the New York Stock Exchange or the American Stock Exchange
                  or are quoted on the Nasdaq National Market System, and
                  (iii) which, if cash dividend paying, pay cash dividends in
                  U.S. dollars; provided, however, that once convertible
                  corporate evidences of indebtedness have been converted into
                  common stock, the common stock issued upon conversion must
                  satisfy the criteria set forth in clause (e) above and other
                  relevant criteria set forth in this definition in order to
                  be a Moody's Eligible Asset;

provided, however, that the Trust's investments in auction rate preferred
stocks described in clause (d) above shall be included in Moody's Eligible
Assets only to the extent that the aggregate Market Value of such stocks does
not exceed 10% of the aggregate Market Value of all of the Trust's investments
meeting the criteria set forth in clauses (a) through (g) above less the
aggregate Market Value of those investments excluded from Moody's Eligible
Assets pursuant to the paragraph appearing after clause (j) below; and

         (j)      no assets which are subject to any lien or irrevocably
                  deposited by the Trust for the payment of amounts needed to
                  meet the obligations described in clauses (a)(i) through
                  (a)(iv) of the definition of "Basic Maintenance Amount" may
                  be includible in Moody's Eligible Assets.

         Notwithstanding anything to the contrary in the preceding clauses
(a)-(j), the Trust's investment in preferred stock, common stock, corporate
evidences of indebtedness and convertible corporate evidences of indebtedness
shall not be treated as Moody's Eligible Assets except to the extent they
satisfy the following diversification requirements (utilizing Moody's Industry
and Sub-industry Categories) with respect to the Market Value of the Trust's
holdings:



Issuer:

                                   Non-Utility                   Utility
                                 Maximum Single               Maximum Single
                                  Issuer(3)(4)                 Issuer(3)(4)
                                  -----------                  ------------
Moody's Rating(1)(2)

Aaa                                        100%                        100%

Aa                                         20%                          20%

A                                          10%                          10%

CS/CB, Baa(5)                               6%                          4%

Ba                                          4%                          4%

B1/B2                                       3%                          3%

B3 or below                                 2%                          2%


<TABLE>
<CAPTION>

Industry and State:

                                                                Utility
                                       Non-Utility              Maximum                 Utility
                                      Maximum Single           Single Sub-           Maximum Single
Moody's Rating(1)                      Industry(3)           Industry(3)(6)             State(3)
-----------------                      -----------           --------------             --------

<S>                                          <C>                     <C>                       <C>
Aaa                                          100%                    100%                      100%

Aa                                            60%                     60%                       20%

A                                             40%                     50%                       10%(7)

CS/CB, Baa(5)                                 20%                     50%                        7%(7)

Ba                                            12%                     12%                        0%

B1/B2                                          8%                      8%                        0%

B3 or below                                    5%                      5%                        0%
</TABLE>

___________________

         (1)      Unless conclusions regarding liquidity risk as well as
                  estimates of both the probability and severity of default
                  for the Trust's assets can be derived from other sources,
                  securities rated below B by Moody's and unrated securities,
                  which are securities rated by neither Moody's, S&P nor
                  Fitch, are limited to 10% of Moody's Eligible Assets. If a
                  corporate, municipal or other debt security is unrated by
                  Moody's, S&P or Fitch, the Trust will use the percentage set
                  forth under "Below B and Unrated" in this table. Ratings
                  assigned by S&P or Fitch are generally accepted by Moody's
                  at face value. However, adjustments to face value may be
                  made to particular categories of credits for which the S&P
                  and/or Fitch rating does not seem to approximate a Moody's
                  rating equivalent.

         (2)      Corporate evidences of indebtedness from issues ranging from
                  $50,000,000 to $100,000,000 are limited to 20% of Moody's
                  Eligible Assets.

         (3)      The referenced percentages represent maximum cumulative
                  totals only for the related Moody's rating category and each
                  lower Moody's rating category.

         (4)      Issuers subject to common ownership of 25% or more are
                  considered as one name.

         (5)      CS/CB refers to common stock and convertible corporate
                  evidences of indebtedness, which are diversified
                  independently from the rating level.

         (6)      In the case of utility common stock, utility preferred
                  stock, utility evidences of indebtedness and utility
                  convertible evidences of indebtedness, the definition of
                  industry refers to sub-industries (electric, water, hydro
                  power, gas, diversified). Investments in other
                  sub-industries are eligible only to the extent that the
                  combined sum represents a percentage position of the Moody's
                  Eligible Assets less than or equal to the percentage limits
                  in the diversification tables above.

         (7)      Such percentage shall be 15% in the case of utilities
                  regulated by California, New York and Texas.


         "Moody's Industry Classifications" means for the purposes of
determining Moody's Eligible Assets, each of the following industry
classifications (or such other classifications as Moody's may from time to
time approve for application to the Series A Preferred Shares).

                  1.    Aerospace and Defense: Major Contractor, Subsystems,
                        Research, Aircraft Manufacturing, Arms, Ammunition.

                  2.    Automobile: Automobile Equipment, Auto-Manufacturing,
                        Auto Parts Manufacturing, Personal Use Trailers, Motor
                        Homes, Dealers.

                  3.    Banking: Bank Holding, Savings and Loans, Consumer
                        Credit, Small Loan, Agency, Factoring, Receivables.

                  4.    Beverage, Food and Tobacco: Beer and Ale, Distillers,
                        Wines and Liquors, Distributors, Soft Drink Syrup,
                        Bottlers, Bakery, Mill Sugar, Canned Foods, Corn
                        Refiners, Dairy Products, Meat Products, Poultry
                        Products, Snacks, Packaged Foods, Distributors, Candy,
                        Gum, Seafood, Frozen Food, Cigarettes, Cigars,
                        Leaf/Snuff, Vegetable Oil.

                  5.    Buildings and Real Estate: Brick, Cement, Climate
                        Controls, Contracting, Engineering, Construction,
                        Hardware, Forest Products (building-related only),
                        Plumbing, Roofing, Wallboard, Real Estate, Real Estate
                        Development, REITs, Land Development.

                  6.    Chemicals, Plastics and Rubber: Chemicals
                        (non-agricultural), Industrial Gases, Sulphur,
                        Plastics, Plastic Products, Abrasives, Coatings,
                        Paints, Varnish, Fabricating Containers.

                  7.    Packaging and Glass: Glass, Fiberglass, Containers
                        made of: Glass, Metal, Paper, Plastic, Wood or
                        Fiberglass.

                  8.    Personal and Non-Durable Consumer Products
                        (Manufacturing Only): Soaps, Perfumes, Cosmetics,
                        Toiletries, Cleaning Supplies, School Supplies.

                  9.    Diversified/Conglomerate Manufacturing.

                  10.   Diversified/Conglomerate Service.

                  11.   Diversified Natural Resources, Precious Metals and
                        Minerals: Fabricating, Distribution.

                  12.   Ecological: Pollution Control, Waste Removal, Waste
                        Treatment and Waste Disposal.

                  13.   Electronics: Computer Hardware, Electric Equipment,
                        Components, Controllers, Motors, Household Appliances,
                        Information Service Communication Systems, Radios,
                        TVs, Tape Machines, Speakers, Printers, Drivers,
                        Technology.

                  14.   Finance: Investment Brokerage, Leasing, Syndication,
                        Securities.

                  15.   Farming and Agriculture: Livestock, Grains, Produce,
                        Agriculture Chemicals, Agricultural Equipment,
                        Fertilizers.

                  16.   Grocery: Grocery Stores, Convenience Food Stores.

                  17.   Healthcare, Education and Childcare: Ethical Drugs,
                        Proprietary Drugs, Research, Health Care Centers,
                        Nursing Homes, HMOs, Hospitals, Hospital Supplies,
                        Medical Equipment.

                  18.   Home and Office Furnishings, Housewares, and Durable
                        Consumer Products: Carpets, Floor Coverings,
                        Furniture, Cooking, Ranges.

                  19.   Hotels, Motels, Inns and Gaming.

                  20.   Insurance: Life, Property and Casualty, Broker, Agent,
                        Surety.

                  21.   Leisure, Amusement, Motion Pictures, Entertainment:
                        Boating, Bowling, Billiards, Musical Instruments,
                        Fishing, Photo Equipment, Records, Tapes, Sports,
                        Outdoor Equipment (Camping), Tourism, Resorts, Games,
                        Toy Manufacturing, Motion Picture Production Theaters,
                        Motion Picture Distribution.

                  22.   Machinery (Non-Agricultural, Non-Construction,
                        Non-Electronic): Industrial, Machine Tools, Steam
                        Generators.

                  23.   Mining, Steel, Iron and Non-Precious Metals: Coal,
                        Copper, Lead, Uranium, Zinc, Aluminum, Stainless
                        Steel, Integrated Steel, Ore Production, Refractories,
                        Steel Mill Machinery, Mini-Mills, Fabricating,
                        Distribution and Sales of the foregoing.

                  24.   Oil and Gas: Crude Producer, Retailer, Well Supply,
                        Service and Drilling.

                  25.   Printing, Publishing, and Broadcasting: Graphic Arts,
                        Paper, Paper Products, Business Forms, Magazines,
                        Books, Periodicals, Newspapers, Textbooks, Radio,
                        T.V., Cable Broadcasting Equipment.

                  26.   Cargo Transport: Rail, Shipping, Railroads, Rail-car
                        Builders, Ship Builders, Containers, Container
                        Builders, Parts, Overnight Mail, Trucking, Truck
                        Manufacturing, Trailer Manufacturing, Air Cargo,
                        Transport.

                  27.   Retail Stores: Apparel, Toy, Variety, Drugs,
                        Department, Mail Order Catalog, Showroom.

                  28.   Telecommunications: Local, Long Distance, Independent,
                        Telephone, Telegraph, Satellite, Equipment, Research,
                        Cellular.

                  29.   Textiles and Leather: Producer, Synthetic Fiber,
                        Apparel Manufacturer, Leather Shoes.

                  30.   Personal Transportation: Air, Bus, Rail, Car Rental.

                  31.   Utilities: Electric, Water, Hydro Power, Gas.

                  32.   Diversified Sovereigns: Semi-sovereigns, Canadian
                        Provinces, Supra-national Agencies.

         The Trust will use SIC codes in determining which industry
classification is applicable to a particular investment in consultation with
the Independent Accountant and Moody's, to the extent the Trust considers
necessary.

         "1933 Act" means the Securities Act of 1933, as amended, or any
successor statute.

         "1940 Act" means the Investment Company Act of 1940, as amended, or
any successor statute.

         "Notice of Redemption" shall have the meaning set forth in paragraph
3(c)(i) of Part II hereof.

         "Outstanding" means, as of any date, Preferred Shares theretofore
issued by the Trust except:

         (a)      any such Preferred Share theretofore cancelled by the Trust
                  or delivered to the Trust for cancellation;

         (b)      any such Preferred Share, other than an auction rate
                  Preferred Share, as to which a notice of redemption shall
                  have been given and for whose payment at the redemption
                  thereof Deposit Assets in the necessary amount are held by
                  the Trust in trust for, or have been irrevocably deposited
                  with the relevant disbursing agent for payment to, the
                  holder of such share pursuant to the Statement of
                  Preferences with respect thereto;

         (c)      in the case of an auction rate Preferred Share, any such
                  share theretofore delivered to the auction agent for
                  cancellation or with respect to which the Trust has given
                  notice of redemption and irrevocably deposited with the
                  paying agent sufficient funds to redeem such share; and

         (d)      any such Preferred Share in exchange for or in lieu of which
                  other shares have been issued and delivered.

Notwithstanding the foregoing, (i) for purposes of voting rights (including
the determination of the number of shares required to constitute a quorum),
any Preferred Shares as to which the Trust or any subsidiary of the Trust is
the holder will be disregarded and deemed not Outstanding, and (ii) in
connection with any auction of Auction Market Preferred Shares as to which the
Trust or any Person known to the auction agent to be a subsidiary of the Trust
is the holder will be disregarded and not deemed Outstanding.

         "Person" means and includes an individual, a partnership, the Trust,
a trust, a corporation, a limited liability company, an unincorporated
association, a joint venture or other entity or a government or any agency or
political subdivision thereof.

         "Preferred Shares" means the preferred shares, par value $.001 per
share, of the Trust, and includes the Series A Preferred Shares.

         "Pricing Service" means any of the following: Bloomberg Financial
Service, Bridge Information Services, Data Resources Inc., FT Interactive,
International Securities Market Association, Merrill Lynch Securities Pricing
Service, Muller Data Corp., Reuters, S&P/J.J. Kenny, Telerate, Trepp Pricing
and Wood Gundy.

         "Redemption Price" has the meaning set forth in paragraph 3(a) of
Part II hereof, and for the purposes of this Statement of Preferences shall
have a correlative meaning with respect to any other class or series of
Preferred Shares.

         "S&P" means Standard & Poor's Ratings Services, or its successors at
law.

         "Series A Preferred Shares" means the [ ]% Series A Cumulative
Preferred Shares, par value $.001 per share, of the Trust.

         "Series A Asset Coverage Cure Date" means, with respect to the
failure by the Trust to maintain Asset Coverage (as required by paragraph
5(a)(i) of Part II hereof) as of the last Business Day of each March, June,
September and December of each year, 49 days following such Business Day.

         "Short-Term Money Market Instruments" means the following types
of instruments if, on the date of purchase or other acquisition thereof
by the Trust, the remaining term to maturity thereof is not in excess of 180
days:

         (i)      commercial paper rated A-1 if such commercial paper matures
                  in 30 days or A-1+ if such commercial paper matures in over
                  30 days;

         (ii)     demand or time deposits in, and banker's acceptances and
                  certificates of deposit of (A) a depository institution or
                  trust company incorporated under the laws of the United
                  States of America or any state thereof or the District of
                  Columbia or (B) a United States branch office or agency of a
                  foreign depository institution (provided that such branch
                  office or agency is subject to banking regulation under the
                  laws of the United States, any state thereof or the District
                  of Columbia);

         (iii)    overnight funds; and

          (iv) U.S. Government Obligations.

         "Trust" means The Gabelli Utility Trust, a Delaware statutory trust.

         "U.S. Government Obligations" means direct obligations of the United
States or by its agencies or instrumentalities that are entitled to the full
faith and credit of the United States and that, other than United States
Treasury Bills, provide for the periodic payment of interest and the full
payment of principal at maturity or call for redemption.

         "Valuation Date" means the last Business Day of each month, or such
other date as the Trust and Moody's may agree to for purposes of determining
the Basic Maintenance Amount.

         "Voting Period" shall have the meaning set forth in paragraph 4(b) of
Part II hereof.

<PAGE>

                                   PART II

                           SERIES A PREFERRED SHARES

                  1. Dividends.

         (a) Holders of Series A Preferred Shares shall be entitled to
receive, when, as and if declared by the Board of Trustees, out of funds
legally available therefor, cumulative cash dividends at the rate of [ ] per
annum (computed on the basis of a 360-day year consisting of twelve 30-day
months) of the Liquidation Preference on the Series A Preferred Shares and no
more, payable quarterly on [____ __], [____ __], [____ __] and [____ __] in
each year (each, a Dividend Payment Date) commencing [ ], 2003 (or, if any
such day is not a Business Day, then on the next succeeding Business Day) to
holders of record of Series A Preferred Shares as they appear on the stock
register of the Trust at the close of business on the fifth preceding Business
Day in preference to dividends on Common Shares and any other capital shares
of the Trust ranking junior to the Series A Preferred Shares in payment of
dividends. Dividends on Series A Preferred Shares shall accumulate from the
date on which such shares are originally issued. Each period beginning on and
including a Dividend Payment Date (or the Date of Original Issue, in the case
of the first dividend period after issuance of such shares) and ending on but
excluding the next succeeding Dividend Payment Date is referred to herein as a
"Dividend Period." Dividends on account of arrears for any past Dividend
Period or in connection with the redemption of Series A Preferred Shares may
be declared and paid at any time, without reference to any Dividend Payment
Date, to holders of record on such date not exceeding 30 days preceding the
payment date thereof as shall be fixed by the Board of Trustees.

         (b) (i) No full dividends shall be declared or paid on Series A
Preferred Shares for any Dividend Period or part thereof unless full
cumulative dividends due through the most recent Dividend Payment Dates
therefor for all series of Preferred Shares of the Trust ranking on a parity
with the Series A Preferred Shares as to the payment of dividends have been or
contemporaneously are declared and paid through the most recent Dividend
Payment Dates therefor. If full cumulative dividends due have not been paid on
all such Outstanding Preferred Shares, any dividends being paid on such
Preferred Shares (including the Series A Preferred Shares) will be paid as
nearly pro rata as possible in proportion to the respective amounts of
dividends accumulated but unpaid on each such series of Preferred Shares on
the relevant Dividend Payment Date. No holders of Series A Preferred Shares
shall be entitled to any dividends, whether payable in cash, property or
shares, in excess of full cumulative dividends as provided in this paragraph
1(b)(i) on Series A Preferred Shares. No interest or sum of money in lieu of
interest shall be payable in respect of any dividend payments on any Series A
Preferred Shares that may be in arrears.

               (ii) For so long as Series A Preferred Shares are Outstanding,
the Trust shall not pay any dividend or other distribution (other than a
dividend or distribution paid in Common Shares, or options, warrants or rights
to subscribe for or purchase Common Shares or other shares, if any, ranking
junior to the Series A Preferred Shares as to dividends and upon liquidation)
in respect of the Common Shares or any other shares of the Trust ranking
junior to the Series A Preferred Shares as to the payment of dividends and the
distribution of assets upon liquidation, or call for redemption, redeem,
purchase or otherwise acquire for consideration any Common Shares or any other
shares of the Trust ranking junior to the Series A Preferred Shares as to the
payment of dividends and the distribution of assets upon liquidation (except
by conversion into or exchange for shares of the Trust ranking junior to the
Series A Preferred Shares as to dividends and upon liquidation), unless, in
each case, (A) immediately thereafter, the aggregate Adjusted Value of the
Trust's Moody's Eligible Assets shall equal or exceed the Basic Maintenance
Amount and the Trust shall have Asset Coverage, (B) all cumulative dividends
on all Series A Preferred Shares due on or prior to the date of the
transaction have been declared and paid (or shall have been declared and
sufficient funds for the payment thereof deposited with the applicable
Dividend-Disbursing Agent) and (C) the Trust has redeemed the full number of
Series A Preferred Shares to be redeemed mandatorily pursuant to any provision
contained herein for mandatory redemption.

               (iii) Any dividend payment made on the Series A Preferred
Shares shall first be credited against the dividends accumulated with respect
to the earliest Dividend Period for which dividends have not been paid.

         (c) Not later than the Business Day immediately preceding each
Dividend Payment Date, the Trust shall deposit with the Dividend-Disbursing
Agent Deposit Assets having an initial combined value sufficient to pay the
dividends that are payable on such Dividend Payment Date, which Deposit Assets
shall mature on or prior to such Dividend Payment Date. The Trust may direct
the Dividend-Disbursing Agent with respect to the investment of any such
Deposit Assets, provided that such investment consists exclusively of Deposit
Assets and provided further that the proceeds of any such investment will be
available at the opening of business on such Dividend Payment Date.

         2. Liquidation Rights.

         (a) In the event of any liquidation, dissolution or winding up of the
affairs of the Trust, whether voluntary or involuntary, the holders of Series
A Preferred Shares shall be entitled to receive out of the assets of the Trust
available for distribution to shareholders, after satisfying claims of
creditors but before any distribution or payment shall be made in respect of
the Common Shares or any other shares of the Trust ranking junior to the
Series A Preferred Shares as to liquidation payments, a liquidation
distribution in the amount of $25.00 per share (the "Liquidation Preference"),
plus an amount equal to all unpaid dividends accumulated to and including the
date fixed for such distribution or payment (whether or not earned or declared
by the Trust, but excluding interest thereon), and such holders shall be
entitled to no further participation in any distribution or payment in
connection with any such liquidation, dissolution or winding up.

         (b) If, upon any liquidation, dissolution or winding up of the
affairs of the Trust, whether voluntary or involuntary, the assets of the
Trust available for distribution among the holders of all Outstanding Series A
Preferred Shares, and any other Outstanding class or series of Preferred
Shares of the Trust ranking on a parity with the Series A Preferred Shares as
to payment upon liquidation, shall be insufficient to permit the payment in
full to such holders of Series A Preferred Shares of the Liquidation
Preference plus accumulated and unpaid dividends and the amounts due upon
liquidation with respect to such other Preferred Shares, then such available
assets shall be distributed among the holders of Series A Preferred Shares and
such other Preferred Shares ratably in proportion to the respective
preferential liquidation amounts to which they are entitled. Unless and until
the Liquidation Preference plus accumulated and unpaid dividends has been paid
in full to the holders of Series A Preferred Shares, no dividends or
distributions will be made to holders of the Common Shares or any other shares
of the Trust ranking junior to the Series A Preferred Shares as to
liquidation.

         3. Redemption.

         The Series A Preferred Shares shall be redeemed by the Trust as
provided below:

         (a) Mandatory Redemptions.

         If the Trust is required to redeem any Preferred Shares (which may
include Series A Preferred Shares) pursuant to paragraphs 5(b) or 5(c) of Part
II hereof, then the Trust shall, to the extent permitted by the 1940 Act and
Delaware law, by the close of business on such Series A Asset Coverage Cure
Date or Basic Maintenance Amount Cure Date (herein collectively referred to as
a "Cure Date"), as the case may be, fix a redemption date and proceed to
redeem shares as set forth in paragraph 3(c) hereof. On such redemption date,
the Trust shall redeem, out of funds legally available therefor, the number of
Preferred Shares, which, to the extent permitted by the 1940 Act and Delaware
law, at the option of the Trust may include any proportion of Series A
Preferred Shares or any other series of Preferred Shares, equal to the minimum
number of shares the redemption of which, if such redemption had occurred
immediately prior to the opening of business on such Cure Date, would have
resulted in the Trust having Asset Coverage or an Adjusted Value of its
Moody's Eligible Assets equal to or greater than the Basic Maintenance Amount,
as the case may be, immediately prior to the opening of business on such Cure
Date or, if Asset Coverage or an Adjusted Value of its Eligible Assets equal
to or greater than the Basic Maintenance Amount, as the case may be, cannot be
so restored, all of the Outstanding Series A Preferred Shares, at a price
equal to $25.00 per share plus accumulated but unpaid dividends (whether or
not earned or declared by the Trust) through the date of redemption (the
"Redemption Price"). In the event that Preferred Shares are redeemed pursuant
to paragraphs 5(b) or 5(c) of Part II hereof, the Trust may, but is not
required to, redeem a sufficient number of Series A Preferred Shares pursuant
to this paragraph 3(a) which, when aggregated with other Preferred Shares
redeemed by the Trust, permits the Trust to have with respect to the Preferred
Shares (including the Series A Preferred Shares) remaining Outstanding after
such redemption (i) Asset Coverage of as much as 220% and (ii) Moody's
Eligible Assets with Adjusted Value of as great as 110% of the Basic
Maintenance Amount. In the event that all of the Series A Preferred Shares
then Outstanding are required to be redeemed pursuant to paragraph 5 of Part
II hereof, the Trust shall redeem such shares at the Redemption Price and
proceed to do so as set forth in paragraph 3(c) hereof.


         (b) Optional Redemptions.

         Prior to [ ], [__], the Series A Preferred Shares are not subject to
optional redemption by the Trust unless such redemption is necessary, in the
judgment of the Board of Trustees, to maintain the Trust's status as a
regulated investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended. Commencing [ ], [__] and thereafter, and prior thereto to
the extent necessary to maintain the Trust's status as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended,
to the extent permitted by the 1940 Act and Delaware law, the Trust may at any
time upon Notice of Redemption redeem the Series A Preferred Shares in whole
or in part at the Redemption Price per share, which notice shall specify a
redemption date of not fewer than 15 days nor more than 40 days after the date
of such notice.

         (c) Procedures for Redemption.

               (i) If the Trust shall determine or be required to redeem
Series A Preferred Shares pursuant to this paragraph 3, it shall mail a
written notice of redemption ("Notice of Redemption") with respect to such
redemption by first class mail, postage prepaid, to each holder of the shares
to be redeemed at such holder's address as the same appears on the stock books
of the Trust on the close of business on such date as the Board of Trustees
may determine, which date shall not be earlier than the second Business Day
prior to the date upon which such Notice of Redemption is mailed to the
holders of Series A Preferred Shares. Each such Notice of Redemption shall
state: (A) the redemption date as established by the Board of Trustees; (B)
the number of Series A Preferred Shares to be redeemed; (C) the CUSIP
number(s) of such shares; (D) the Redemption Price; (E) the place or places
where the certificate(s) for such shares (properly endorsed or assigned for
transfer, if the Board of Trustees shall so require and the Notice of
Redemption shall so state) are to be surrendered for payment in respect of
such redemption; (F) that dividends on the shares to be redeemed will cease to
accrue on such redemption date; (G) the provisions of this paragraph 3 under
which such redemption is made; and (H) in the case of a redemption pursuant to
paragraph 3(b), any conditions precedent to such redemption. If fewer than all
Series A Preferred Shares held by any holder are to be redeemed, the Notice of
Redemption mailed to such holder also shall specify the number or percentage
of shares to be redeemed from such holder. No defect in the Notice of
Redemption or the mailing thereof shall affect the validity of the redemption
proceedings, except as required by applicable law.

               (ii) If the Trust shall give a Notice of Redemption, then by
the close of business on the Business Day preceding the redemption date
specified in the Notice of Redemption (so long as any conditions precedent to
such redemption have been met) or, if the Dividend-Disbursing Agent so agrees,
another date not later than the redemption date, the Trust shall (A) deposit
with the Dividend-Disbursing Agent Deposit Assets that shall mature on or
prior to such redemption date having an initial combined value sufficient to
effect the redemption of the Series A Preferred Shares to be redeemed and (B)
give the Dividend-Disbursing Agent irrevocable instructions and authority to
pay the Redemption Price to the holders of the Series A Preferred Shares
called for redemption on the redemption date. The Trust may direct the
Dividend-Disbursing Agent with respect to the investment of any Deposit Assets
so deposited provided that the proceeds of any such investment will be
available at the opening of business on such redemption date. Upon the date of
such deposit (unless the Trust shall default in making payment of the
Redemption Price), all rights of the holders of the Series A Preferred Shares
so called for redemption shall cease and terminate except the right of the
holders thereof to receive the Redemption Price thereof and such shares shall
no longer be deemed Outstanding for any purpose. The Trust shall be entitled
to receive, promptly after the date fixed for redemption any cash in excess of
the aggregate Redemption Price of the Series A Preferred Shares called for
redemption on such date and any remaining Deposit Assets. Any assets so
deposited that are unclaimed at the end of two years from such redemption date
shall, to the extent permitted by law, be repaid to the Trust, after which the
holders of the Series A Preferred Shares so called for redemption shall look
only to the Trust for payment of the Redemption Price thereof. The Trust shall
be entitled to receive, from time to time after the date fixed for redemption,
any interest on the Deposit Assets so deposited.

               (iii) On or after the redemption date, each holder of Series A
Preferred Shares that are subject to redemption shall surrender the
certificate evidencing such shares to the Trust at the place designated in the
Notice of Redemption and shall then be entitled to receive the cash Redemption
Price, without interest.

               (iv) In the case of any redemption of less than all of the
Series A Preferred Shares pursuant to this Statement of Preferences, such
redemption shall be made pro rata from each holder of Series A Preferred
Shares in accordance with the respective number of shares held by each such
holder on the record date for such redemption.

               (v) Notwithstanding the other provisions of this paragraph 3,
the Trust shall not redeem Series A Preferred Shares unless all accumulated
and unpaid dividends on all Outstanding Series A Preferred Shares and other
Preferred Shares ranking on a parity with the Series A Preferred Shares with
respect to dividends for all applicable past Dividend Periods (whether or not
earned or declared by the Trust) shall have been or are contemporaneously paid
or declared and Deposit Assets for the payment of such dividends shall have
been deposited with the Dividend-Disbursing Agent as set forth in paragraph
1(c) of Part II hereof, provided, however, that the foregoing shall not
prevent the purchase or acquisition of outstanding Preferred Shares pursuant
to the successful completion of an otherwise lawful purchase or exchange offer
made on the same terms to holders of all Outstanding Series A Preferred
Shares.

         If the Trust shall not have funds legally available for the
redemption of, or is otherwise unable to redeem, all the Series A Preferred
Shares or other Preferred Shares designated to be redeemed on any redemption
date, the Trust shall redeem on such redemption date the number of Series A
Preferred Shares and other Preferred Shares so designated as it shall have
legally available funds, or is otherwise able, to redeem ratably on the basis
of the Redemption Price from each holder whose shares are to be redeemed, and
the remainder of the Series A Preferred Shares and other Preferred Shares
designated to be redeemed shall be redeemed on the earliest practicable date
on which the Trust shall have funds legally available for the redemption of,
or is otherwise able to redeem, such shares upon Notice of Redemption.

         4. Voting Rights.

         (a) General.

         Except as otherwise provided in the Governing Documents or a
resolution of the Board of Trustees, or as required by applicable law, holders
of Series A Preferred Shares shall have no power to vote on any matter except
matters submitted to a vote of the Common Shares. In any matter submitted to a
vote of the holders of the Common Shares, each holder of Series A Preferred
Shares shall be entitled to one vote for each Series A Preferred Share held
and the holders of the Outstanding Preferred Shares, including Series A
Preferred Shares, and the Common Shares shall vote together as a single class;
provided, however, that at any meeting of the shareholders of the Trust held
for the election of trustees, the holders of the Outstanding Preferred Shares,
including Series A Preferred Shares, shall be entitled, as a class, to the
exclusion of the holders of all other securities and classes of capital shares
of the Trust, to elect a number of Trust's trustees, such that following the
election of trustees at the meeting of the shareholders, the Trust's Board of
Trustees shall contain two trustees elected by the holders of the Outstanding
Preferred Shares, including the Series A Preferred Shares. Subject to
paragraph 4(b) of Part II hereof, the holders of the outstanding capital
shares of the Trust, including the holders of Outstanding Preferred Shares,
including the Series A Preferred Shares, voting as a single class, shall elect
the balance of the trustees.

         (b) Right to Elect Majority of Board of Trustees.

         During any period in which any one or more of the conditions
described below shall exist (such period being referred to herein as a "Voting
Period"), the number and/or composition of trustees constituting the Board of
Trustees shall be adjusted as necessary to permit the holders of Outstanding
Preferred Shares, including the Series A Preferred Shares, voting separately
as one class (to the exclusion of the holders of all other securities and
classes of capital shares of the Trust) to elect the number of trustees that,
when added to the two trustees elected exclusively by the holders of Preferred
Shares pursuant to paragraph 4(a) above, would constitute a simple majority of
the Board of Trustees as so adjusted. The Trust and the Board of Trustees
shall take all necessary actions, including effecting the removal of trustees
or amendment of the Trust's Declaration, to effect an adjustment of the number
and/or composition of trustees as described in the preceding sentence. A
Voting Period shall commence:

               (i) if at any time accumulated dividends (whether or not earned
or declared, and whether or not funds are then legally available in an amount
sufficient therefor) on the Outstanding Series A Preferred Shares equal to at
least two full years' dividends shall be due and unpaid and sufficient cash or
specified securities shall not have been deposited with the
Dividend-Disbursing Agent for the payment of such accumulated dividends; or

               (ii) if at any time Holders of any other Preferred Shares are
entitled to elect a majority of the trustees of the Trust under the 1940 Act
or Statement of Preferences creating such shares.

         Upon the termination of a Voting Period, the voting rights described
in this paragraph 4(b) shall cease, subject always, however, to the reverting
of such voting rights in the holders of Preferred Shares upon the further
occurrence of any of the events described in this paragraph 4(b).

         (c) Right to Vote with Respect to Certain Other Matters.

         Subject to paragraph 1 of Part III of this Statement of Preferences,
so long as any Series A Preferred Shares are Outstanding, the Trust shall not,
without the affirmative vote of the holders of a majority (as defined in the
1940 Act) of the Preferred Shares Outstanding at the time and present and
voting on such matter, voting separately as one class, amend, alter or repeal
the provisions of this Statement of Preferences so as to in the aggregate
adversely affect the rights and preferences set forth in any Statement of
Preferences, including the Series A Preferred Shares. To the extent permitted
under the 1940 Act, in the event that more than one series of Preferred Shares
are Outstanding, the Trust shall not effect any of the actions set forth in
the preceding sentence which in the aggregate adversely affects the rights and
preferences set forth in the Statement of Preferences for a series of
Preferred Shares differently than such rights and preferences for any other
series of Preferred Shares without the affirmative vote of the holders of at
least a majority of the Preferred Shares Outstanding and present and voting on
such matter of each series adversely affected (each such adversely affected
series voting separately as a class to the extent its rights are affected
differently). The holders of the Series A Preferred Shares shall not be
entitled to vote on any matter that affects the rights or interests of only
one or more other series of Preferred Shares. The Trust shall notify Moody's
ten Business Days prior to any such vote described above. Unless a higher
percentage is required under the Governing Documents or applicable provisions
of the Delaware Statutory Trust Act or the 1940 Act, the affirmative vote of
the holders of a majority of the Outstanding Preferred Shares, including
Series A Preferred Shares, voting together as a single class, will be required
to approve any plan of reorganization adversely affecting the Preferred Shares
or any action requiring a vote of security holders under Section 13(a) of the
1940 Act. For purposes of this paragraph 4(c), the phrase "vote of the holders
of a majority of the Outstanding Preferred Shares" (or any like phrase) shall
mean, in accordance with Section 2(a)(42) of the 1940 Act, the vote, at the
annual or a special meeting of the shareholders of the Trust duly called (i)
of 67 percent or more of the Preferred Shares present at such meeting, if the
holders of more than 50 percent of the Outstanding Preferred Shares are
present or represented by proxy; or (ii) of more than 50 percent of the
Outstanding Preferred Shares, whichever is less. The class vote of holders of
Preferred Shares described above will in each case be in addition to a
separate vote of the requisite percentage of Common Shares and Preferred
Shares, including Series A Preferred Shares, voting together as a single
class, necessary to authorize the action in question. An increase in the
number of authorized Preferred Shares pursuant to the Governing Documents or
the issuance of additional shares of any series of Preferred Shares (including
Series A Preferred Shares) pursuant to the Governing Documents shall not in
and of itself be considered to adversely affect the rights and preferences of
the Preferred Shares.

         (d) Voting Procedures.

               (i) As soon as practicable after the accrual of any right of
the holders of Preferred Shares to elect additional trustees as described in
paragraph 4(b) above, the Trust shall call a special meeting of such holders
and instruct the Dividend-Disbursing Agent to mail a notice of such special
meeting to such holders, such meeting to be held not less than 10 nor more
than 20 days after the date of mailing of such notice. If the Trust fails to
send such notice to the Dividend-Disbursing Agent or if the Trust does not
call such a special meeting, it may be called by any such holder on like
notice. The record date for determining the holders entitled to notice of and
to vote at such special meeting shall be the close of business on the day on
which such notice is mailed or such other date as the Board of Trustees shall
determine. At any such special meeting and at each meeting held during a
Voting Period, such holders of Preferred Shares, voting together as a class
(to the exclusion of the holders of all other securities and classes of
capital shares of the Trust), shall be entitled to elect the number of
trustees prescribed in paragraph 4(b) above on a one-vote-per-share basis. At
any such meeting, or adjournment thereof in the absence of a quorum, a
majority of such holders present in person or by proxy shall have the power to
adjourn the meeting without notice, other than by an announcement at the
meeting, to a date not more than 120 days after the original record date.

               (ii) For purposes of determining any rights of the holders of
Series A Preferred Shares to vote on any matter or the number of shares
required to constitute a quorum, whether such right is created by this
Statement of Preferences, by the other provisions of the Governing Documents,
by statute or otherwise, any Series A Preferred Share which is not Outstanding
shall not be counted.

               (iii) The terms of office of all persons who are trustees of
the Trust at the time of a special meeting of holders of Preferred Shares to
elect trustees and who remain trustees following such meeting shall continue,
notwithstanding the election at such meeting by such holders of the number of
trustees that they are entitled to elect, and the persons so elected by such
holders, together with the two incumbent trustees elected by the holders of
Preferred Shares, and the remaining incumbent trustees elected by the holders
of the Common Shares and Preferred Shares, shall constitute the duly elected
trustees of the Trust.

               (iv) Upon the expiration of a Voting Period, the terms of
office of the additional trustees elected by the holders of Preferred Shares
pursuant to paragraph 4(b) above shall expire at the earliest time permitted
by law, and the remaining trustees shall constitute the trustees of the Trust
and the voting rights of such holders of Preferred Shares, including Series A
Preferred Shares, to elect additional trustees pursuant to paragraph 4(b)
above shall cease, subject to the provisions of the last sentence of paragraph
4(b). Upon the expiration of the terms of the trustees elected by the holders
of Preferred Shares pursuant to paragraph 4(b) above, the number of trustees
shall be automatically reduced to the number of trustees on the Board
immediately preceding such Voting Period.

         (e) Exclusive Remedy.

         Unless otherwise required by law, the holders of Series A Preferred
Shares shall not have any rights or preferences other than those specifically
set forth herein. The holders of Series A Preferred Shares shall have no
preemptive rights or rights to cumulative voting. In the event that the Trust
fails to pay any dividends on the Series A Preferred Shares, the exclusive
remedy of the holders shall be the right to vote for trustees pursuant to the
provisions of this paragraph 4.

         (f) Notification to Moody's.

         In the event a vote of holders of Series A Preferred Shares is
required pursuant to the provisions of Section 13(a) of the 1940 Act, as long
as the Series A Preferred Shares are rated by Moody's at the Trust's request,
the Trust shall, not later than ten Business Days prior to the date on which
such vote is to be taken, notify Moody's that such vote is to be taken and the
nature of the action with respect to which such vote is to be taken and, not
later than ten Business Days after the date on which such vote is taken,
notify Moody's of the result of such vote.

         5. Coverage Tests.

         (a) Determination of Compliance.

         For so long as any Series A Preferred Shares are Outstanding, the
Trust shall make the following determinations:

               (i) Asset Coverage. The Trust shall have Asset Coverage as of
the last Business Day of each March, June, September and December of each year
in which any Series A Preferred Shares are Outstanding.

               (ii) Basic Maintenance Amount Requirement.

                  (A) For so long as any Series A Preferred Shares are
Outstanding and are rated by Moody's at the Trust's request, the Trust shall
maintain, on each Valuation Date, Moody's Eligible Assets having an Adjusted
Value at least equal to the Basic Maintenance Amount, each as of such
Valuation Date. Upon any failure to maintain Moody's Eligible Assets having an
Adjusted Value at least equal to the Basic Maintenance Amount, the Trust shall
use all commercially reasonable efforts to retain Moody's Eligible Assets
having an Adjusted Value at least equal to the Basic Maintenance Amount on or
prior to the Basic Maintenance Amount Cure Date, by altering the composition
of its portfolio or otherwise.

                  (B) The Administrator shall prepare a Basic Maintenance
Report relating to each Valuation Date. On or before 5:00 P.M., New York City
time, on the fifth Business Day after the first Valuation Date following the
Date of Original Issue of the Series A Preferred Shares and after each (1)
Annual Valuation Date, (2) Valuation Date on which the Trust fails to satisfy
the requirements of paragraph 5(a)(ii)(A) above, (3) Basic Maintenance Amount
Cure Date following a Valuation Date on which the Trust fails to satisfy the
requirements of paragraph 5(a)(ii)(A) above and (4) Valuation Date and any
immediately succeeding Business Day on which the Adjusted Value of the Trust's
Moody's Eligible Assets exceeds the Basic Maintenance Amount by 5% or less,
the Trust shall complete and deliver to Moody's a Basic Maintenance Report,
which will be deemed to have been delivered to Moody's if Moody's receives a
copy or telecopy, telex or other electronic transcription or transmission of
the Basic Maintenance Report and on the same day the Trust mails to Moody's
for delivery on the next Business Day the Basic Maintenance Report. A failure
by the Trust to deliver a Basic Maintenance Report under this paragraph
5(a)(ii)(B) shall be deemed to be delivery of a Basic Maintenance Report
indicating an Adjusted Value of the Trust's Moody's Eligible Assets less than
the Basic Maintenance Amount, as of the relevant Valuation Date.

                  (C) Within ten Business Days after the date of delivery to
Moody's of a Basic Maintenance Report in accordance with paragraph 5(a)(ii)(B)
above relating to an Annual Valuation Date, the Trust shall deliver to Moody's
an Accountant's Confirmation relating to such Basic Maintenance Report that
was prepared by the Trust during the quarter ending on such Annual Valuation
Date. Also, within ten Business Days after the date of delivery to Moody's of
a Basic Maintenance Report in accordance with paragraph 5(a)(ii)(B) above
relating to a Valuation Date on which the Trust fails to satisfy the
requirements of paragraph 5(a)(ii)(A) and any Basic Maintenance Amount Cure
Date, the Trust shall deliver to Moody's an Accountant's Confirmation relating
to such Basic Maintenance Report.

                  (D) In the event the Adjusted Value of the Trust's Moody's
Eligible Assets shown in any Basic Maintenance Report prepared pursuant to
paragraph 5(a)(ii)(B) above is less than the applicable Basic Maintenance
Amount, the Trust shall have until the Basic Maintenance Amount Cure Date to
achieve an Adjusted Value of the Trust's Moody's Eligible Assets at least
equal to the Basic Maintenance Amount, and upon such achievement (and not
later than such Basic Maintenance Amount Cure Date) the Trust shall inform
Moody's of such achievement in writing by delivery of a revised Basic
Maintenance Report showing an Adjusted Value of the Trust's Moody's Eligible
Assets at least equal to the Basic Maintenance Amount as of the date of such
revised Basic Maintenance Report.

                  (E) On or before 5:00 P.M., New York City time, on no later
than the fifth Business Day after the next Valuation Date following each date
on which the Trust has repurchased more than 1% of its Common Shares since the
most recent date of delivery of a Basic Maintenance Report, the Trust shall
complete and deliver to Moody's a Basic Maintenance Report. A Basic
Maintenance Report delivered as provided in paragraph 5(a)(ii)(B) above also
shall be deemed to have been delivered pursuant to this paragraph 5(a)(ii)(E).

         (b) Failure to Meet Asset Coverage.

         If the Trust fails to have Asset Coverage as provided in paragraph
5(a)(i) hereof and such failure is not cured as of the related Series A Asset
Coverage Cure Date, (i) the Trust shall give a Notice of Redemption as
described in paragraph 3 of Part II hereof with respect to the redemption of a
sufficient number of Preferred Shares, which at the Trust's determination (to
the extent permitted by the 1940 Act and Delaware law) may include any
proportion of Series A Preferred Shares, to enable it to meet the requirements
of paragraph 5(a)(i) above, and, at the Trust's discretion, such additional
number of Series A Preferred Shares or other Preferred Shares in order that
the Trust have Asset Coverage with respect to the Series A Preferred Shares
and any other Preferred Shares remaining Outstanding after such redemption as
great as 220%, and (ii) deposit with the Dividend-Disbursing Agent Deposit
Securities having an initial combined value sufficient to effect the
redemption of the Series A Preferred Shares or other Preferred Shares to be
redeemed, as contemplated by paragraph 3 of Part II hereof.

         (c) Failure to Maintain Moody's Eligible Assets having an Adjusted
Value at Least Equal to the Basic Maintenance Amount.

         If the Trust fails to have Moody's Eligible Assets having an Adjusted
Value at least equal to the Basic Maintenance Amount as provided in paragraph
5(a)(ii)(A) above and such failure is not cured, the Trust shall, on or prior
to the Basic Maintenance Amount Cure Date, (i) give a Notice of Redemption as
described in paragraph 3 of Part II hereof with respect to the redemption of a
sufficient number of Series A Preferred Shares or other Preferred Shares to
enable it to meet the requirements of paragraph 5(a)(ii)(A) above, and, at the
Trust's discretion, such additional number of Series A Preferred Shares or
other Preferred Shares in order that the Trust have Adjusted Assets with
respect to the remaining Series A Preferred Shares and any other Preferred
Shares remaining Outstanding after such redemption as great as 110% of the
Basic Maintenance Amount, and (ii) deposit with the Dividend-Disbursing Agent
Deposit Assets having an initial combined value sufficient to effect the
redemption of the Series A Preferred Shares or other Preferred Shares to be
redeemed, as contemplated by paragraph 3 of Part II hereof.

         (d) Status of Shares Called for Redemption.

         For purposes of determining whether the requirements of paragraphs
5(a)(i) and 5(a)(ii)(A) hereof are satisfied, (i) no Series A Preferred Share
shall be deemed to be Outstanding for purposes of any computation if, prior to
or concurrently with such determination, sufficient Deposit Assets to pay the
full Redemption Price for such share shall have been deposited in trust with
the Dividend-Disbursing Agent (or applicable paying agent) and the requisite
Notice of Redemption shall have been given, and (ii) such Deposit Assets
deposited with the Dividend-Disbursing Agent (or paying agent) shall not be
included.

         6. Certain Other Restrictions.

         (a) For so long as the Series A Preferred Shares are rated by Moody's
at the request of the Trust, the Trust will not, and will cause the Adviser
not to, (i) knowingly and willfully purchase or sell any asset for the
specific purpose of causing, and with the actual knowledge that the effect of
such purchase or sale will be to cause, the Trust to have Moody's Eligible
Assets having an Adjusted Value as of the date of such purchase or sale to be
less than the Basic Maintenance Amount as of such date, (ii) in the event
that, as of the immediately preceding Valuation Date, the Adjusted Value of
the Trust's Moody's Eligible Assets exceeded the Basic Maintenance Amount by
5% or less, alter the composition of the Trust's assets in a manner reasonably
expected to reduce the Adjusted Value of the Trust's Moody's Eligible Assets,
unless the Trust shall have confirmed that, after giving effect to such
alteration, the Adjusted Value of the Trust's Moody's Eligible Assets exceeded
the Basic Maintenance Amount or (iii) declare or pay any dividend or other
distribution on any Common Shares or repurchase any Common Shares, unless the
Trust shall have confirmed that, after giving effect to such declaration,
other distribution or repurchase, the Trust continued to satisfy the
requirements of paragraph 5(a)(ii)(A) of Part II hereof.

         (b) For so long as the Series A Preferred Shares are rated by Moody's
at the request of the Trust, unless the Trust shall have received written
confirmation from Moody's, the Trust may engage in the lending of its
portfolio securities only in an amount of up to 5% of the Trust's total
assets, provided that the Trust receives cash collateral for such loaned
securities which is maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities and, if invested, is
invested only in Short-Term Money Market Investments or in money market mutual
funds meeting the requirements of Rule 2a-7 under the 1940 Act that maintain a
constant $1.00 per share net asset value and treat the loaned securities
rather than the collateral as the assets of the Trust for purposes of
determining compliance with paragraph 5 of Part II hereof.

         (c) For so long as the Series A Preferred Shares are rated by Moody's
at the request of the Trust, the Trust shall not consolidate the Trust with,
merge the Trust into, sell or otherwise transfer all or substantially all of
the Trust's assets to another Person or adopt a plan of liquidation of the
Trust, in each case without providing prior written notification to Moody's.

         7. Limitation on Incurrence of Additional Indebtedness and Issuance
of Additional Preferred Shares

         (a) So long as any Series A Preferred Shares are Outstanding the
Trust may issue and sell one or more series of a class of senior securities of
the Trust representing indebtedness under Section 18 of the 1940 Act and/or
otherwise create or incur indebtedness, provided that immediately after giving
effect to the incurrence of such indebtedness and to its receipt and
application of the proceeds thereof, the Trust shall have an "asset coverage"
for all senior securities representing indebtedness, as defined in Section
18(h) of the 1940 Act, of at least 300% of the amount of all indebtedness of
the Trust then outstanding and no such additional indebtedness shall have any
preference or priority over any other indebtedness of the Trust upon the
distribution of the assets of the Trust or in respect of the payment of
interest. Any possible liability resulting from lending and/or borrowing
portfolio securities, entering into reverse repurchase agreements, entering
into futures contracts and writing options, to the extent such transactions
are made in accordance with the investment restrictions of the Trust then in
effect, shall not be considered to be indebtedness limited by this paragraph
7(a).

         (b) So long as any Series A Preferred Shares are Outstanding, the
Trust may issue and sell shares of one or more other series of Preferred
Shares constituting a series of a class of senior securities of the Trust
representing stock under Section 18 of the 1940 Act in addition to the Series
A Preferred Shares, provided that (i) the Trust shall, immediately after
giving effect to the issuance of such additional Preferred Shares and to its
receipt and application of the proceeds thereof, including, without
limitation, to the redemption of Preferred Shares for which a Redemption
Notice has been mailed prior to such issuance, have an "asset coverage" for
all senior securities which are stock, as defined in Section 18(h) of the 1940
Act, of at least 200% of the sum of the liquidation preference of the Series A
Preferred Shares and all other Preferred Shares of the Trust then Outstanding,
and (ii) no such additional Preferred Shares shall have any preference or
priority over any other Preferred Shares of the Trust upon the distribution of
the assets of the Trust or in respect of the payment of dividends.


                                   PART III

      ABILITY OF BOARD OF TRUSTEES TO MODIFY THE STATEMENT OF
                                 PREFERENCES

         1. Modification to Prevent Ratings Reduction or Withdrawal.

         The Board of Trustees, without further action by the shareholders,
may amend, alter, add to or repeal any provision of this Statement of
Preferences including provisions that have been adopted by the Trust pursuant
to the Rating Agency guidelines, if the Board of Trustees determines that such
amendments or modifications are necessary to prevent a reduction in, or the
withdrawal of, a rating of the Preferred Shares and are in the aggregate in
the best interests of the holders of the Preferred Shares.

         2. Other Modification.

         The Board of Trustees, without further action by the shareholders,
may amend, alter, add to or repeal any provision of this Statement of
Preferences including provisions that have been adopted by the Trust pursuant
to the rating agency guidelines, if the Board of Trustees determines that such
amendments or modifications will not in the aggregate adversely affect the
rights and preferences of the holders of any series of the Preferred Shares,
provided, that the Trust has received advice from each applicable Rating
Agency that such amendment or modification is not expected to adversely affect
such Rating Agency's then-current rating of such series of the Trust's
Preferred Shares.

         Notwithstanding the provisions of the preceding paragraph, to the
extent permitted by law, the Board of Trustees, without the vote of the
holders of the Series A Preferred Shares or any other capital shares of the
Trust, may amend the provisions of this Statement of Preferences to resolve
any inconsistency or ambiguity or to remedy any formal defect so long as the
amendment does not in the aggregate adversely affect the rights and
preferences of the Series A Preferred Shares.

         WHEREOF, The Gabelli Utility Trust has caused these presents to be
signed in its name and on its behalf by a duly authorized officer, and its
corporate seal to be hereunto affixed and attested by its Secretary, and the
said officers of the Trust further acknowledge said instrument to be the
corporate act of the Trust, and state that to the best of their knowledge,
information and belief under penalty of perjury the matters and facts herein
set forth with respect to approval are true in all material respects, all on
July [ ], 2003.






                                                     By____________________
                                                       Name:  Bruce Alpert
                                                       Title:     President


Attest:

_______________________
Name:    James E. McKee
Title:   Secretary

</TEXT>
</DOCUMENT>
