UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANIES
Investment Company Act file number 811-21423
The Gabelli Dividend & Income Trust
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
Rye, New York 10580-1422
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
(Name and address of agent for service)
registrant’s telephone number, including area code: 1-800-422-3554
Date of fiscal year end: December 31
Date of reporting period: December 31, 2009
Form N-CSR is to be used by management investment companies to file reports with the Commission not
later than 10 days after the transmission to stockholders of any report that is required to be
transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR
270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission
will make this information public. A registrant is not required to respond to the collection of
information contained in Form N-CSR unless the Form displays a currently valid Office of Management
and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the burden to Secretary,
Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed
this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
The Report to Shareholders is attached herewith.
The Gabelli Dividend &
Income Trust
Income Trust
Annual Report
December 31, 2009
December 31, 2009
|
 |
|
| Mario J. Gabelli, CFA | Barbara G. Marcin, CFA |
To Our Shareholders,
The Sarbanes-Oxley Act requires a fund’s principal executive and financial officers to certify
the entire contents of the semi-annual and annual shareholder reports in a filing with the
Securities and Exchange Commission (“SEC”) on Form N-CSR. This certification would cover the
portfolio manager’s commentary and subjective opinions if they are attached to or a part of the
financial statements. Many of these comments and opinions would be difficult or impossible to
certify.
Because we do not want our portfolio managers to eliminate their opinions and/or restrict
their commentary to historical facts, we have separated their commentary from the financial
statements and investment portfolio and have sent it to you separately. Both the commentary and the
financial statements, including the portfolio of investments, will be available on our website at
www.gabelli.com.
Enclosed are the audited financial statements including the investment portfolio as of December 31,
2009.
Investment Performance
For the year ended December 31, 2009, The Gabelli Dividend & Income Trust’s (the “Fund”) net
asset value (“NAV”) total return was 33.3% and the total return for the Fund’s publicly traded
shares was 40.4%, compared with gains of 26.5% and 22.7% for the S&P 500 Index and the Dow Jones
Industrial Average, respectively. On December 31, 2009, the Fund’s NAV per share was $15.58, while
the price of the publicly traded shares closed at $13.11 on the New York Stock Exchange (“NYSE”).
Sincerely yours,
Bruce N. Alpert
President
President
February 19, 2010
Comparative Results
Comparative Results
Average Annual Returns through December 31, 2009 (a) (Unaudited)
| Since | ||||||||||||||||||||
| Inception | ||||||||||||||||||||
| Quarter | 1 Year | 3 Year | 5 Year | (11/28/03) | ||||||||||||||||
Gabelli Dividend & Income Trust |
||||||||||||||||||||
NAV Total Return (b) |
6.44 | % | 33.30 | % | (6.32 | )% | 1.89 | % | 3.53 | % | ||||||||||
Investment Total Return (c) |
7.31 | 40.35 | (7.38 | ) | 1.89 | 0.85 | ||||||||||||||
S&P 500 Index |
6.04 | 26.47 | (5.62 | ) | 0.42 | 2.92 | ||||||||||||||
Dow Jones Industrial Average |
8.09 | 22.74 | (3.10 | ) | 1.97 | 3.65 | ||||||||||||||
Nasdaq Composite Index |
6.91 | 43.89 | (2.06 | ) | 0.85 | 2.43 | ||||||||||||||
| (a) | Returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are sold, they may be worth more or less than their original cost. Current performance may be lower or higher than the performance data presented. Visit www.gabelli.com for performance information as of the most recent month end. Performance returns for periods of less than one year are not annualized. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The Dow Jones Industrial Average is an unmanaged index of 30 large capitalization stocks. The S&P 500 and the Nasdaq Composite Indices are unmanaged indicators of stock market performance. Dividends are considered reinvested except for the Nasdaq Composite Index. You cannot invest directly in an index. | |
| (b) | Total returns and average annual returns reflect changes in the NAV per share and reinvestment
of distributions at NAV on the ex-dividend date and are net of expenses. Since inception return is based on an initial NAV of $19.06. |
|
| (c) | Total returns and average annual returns reflect changes in closing market values on the NYSE and reinvestment of distributions. Since inception return is based on an initial offering price of $20.00. |
THE GABELLI DIVIDEND & INCOME TRUST
Summary of Portfolio Holdings (Unaudited)
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of total investments as of December
31, 2009:
Financial Services |
11.7 | % | ||
Energy and Utilities: Oil |
10.9 | % | ||
Food and Beverage |
10.5 | % | ||
Energy and Utilities: Integrated |
10.0 | % | ||
Telecommunications |
6.8 | % | ||
U.S. Government Obligations |
6.2 | % | ||
Energy and Utilities: Electric |
5.3 | % | ||
Energy and Utilities: Natural Gas |
4.2 | % | ||
Diversified Industrial |
3.8 | % | ||
Consumer Products |
3.5 | % | ||
Energy and Utilities: Services |
3.5 | % | ||
Health Care |
3.2 | % | ||
Retail |
2.7 | % | ||
Cable and Satellite |
2.4 | % | ||
Aerospace |
1.7 | % | ||
Electronics |
1.5 | % | ||
Equipment and Supplies |
1.3 | % | ||
Specialty Chemicals |
1.2 | % | ||
Metals and Mining |
1.1 | % | ||
Automotive: Parts and Accessories |
0.9 | % | ||
Entertainment |
0.8 | % | ||
Energy and Utilities: Water |
0.8 | % | ||
Transportation |
0.8 | % | ||
Business Services |
0.8 | % | ||
Environmental Services |
0.7 | % | ||
Paper and Forest Products |
0.6 | % | ||
Computer Software and Services |
0.6 | % | ||
Machinery |
0.5 | % | ||
Broadcasting |
0.5 | % | ||
Wireless Communications |
0.3 | % | ||
Energy and Utilities |
0.3 | % | ||
Hotels and Gaming |
0.2 | % | ||
Agriculture |
0.2 | % | ||
Publishing |
0.2 | % | ||
Computer Hardware |
0.2 | % | ||
Communications Equipment |
0.1 | % | ||
Real Estate |
0.0 | % | ||
Automotive |
0.0 | % | ||
Building and Construction |
0.0 | % | ||
Manufactured Housing and Recreational Vehicles |
0.0 | % | ||
Restaurants |
0.0 | % | ||
Consumer Services |
0.0 | % | ||
| 100.0 | % | |||
The Fund files a complete schedule of portfolio holdings with the SEC for the first and third
quarters of each fiscal year on Form N-Q, the last of which was filed for the quarter ended
September 30, 2009. Shareholders may obtain this information at www.gabelli.com or by calling the
Fund at 800-GABELLI (800-422-3554). The Fund’s Form N-Q is available on the SEC’s website at
www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington,
DC. Information on the operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for the twelve months ended
June 30th, no later than August 31st of each year. A description of the Fund’s proxy voting
policies, procedures, and how the Fund voted proxies relating to portfolio securities is available
without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The
Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at
www.sec.gov.
2
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS
December 31, 2009
SCHEDULE OF INVESTMENTS
December 31, 2009
| Market | ||||||||||||
| Shares | Cost | Value | ||||||||||
COMMON STOCKS — 91.5% |
||||||||||||
Aerospace — 1.7% |
||||||||||||
| 10,000 | Goodrich Corp. |
$ | 281,823 | $ | 642,500 | |||||||
| 40,000 | Kaman Corp. |
748,703 | 923,600 | |||||||||
| 166,000 | Rockwell Automation Inc. |
8,236,469 | 7,798,680 | |||||||||
| 2,000,000 | Rolls-Royce Group plc† |
14,847,048 | 15,618,942 | |||||||||
| 120,000,000 | Rolls-Royce Group plc,
Cl. C† |
196,037 | 193,823 | |||||||||
| 77,000 | The Boeing Co. |
4,664,974 | 4,168,010 | |||||||||
| 28,975,054 | 29,345,555 | |||||||||||
Agriculture — 0.2% |
||||||||||||
| 115,000 | Archer-Daniels-Midland Co. |
3,213,601 | 3,600,650 | |||||||||
| 1,000 | Terra Industries Inc. |
39,650 | 32,190 | |||||||||
| 3,253,251 | 3,632,840 | |||||||||||
Automotive — 0.0% |
||||||||||||
| 20,000 | Navistar International Corp.† |
458,857 | 773,000 | |||||||||
Automotive: Parts and Accessories — 0.9% |
||||||||||||
| 30,000 | BorgWarner Inc. |
992,327 | 996,600 | |||||||||
| 380,000 | Genuine Parts Co. |
12,834,307 | 14,424,800 | |||||||||
| 13,826,634 | 15,421,400 | |||||||||||
Building and Construction — 0.0% |
||||||||||||
| 15,000 | Layne Christensen Co.† |
430,456 | 430,650 | |||||||||
Business Services — 0.8% |
||||||||||||
| 190,000 | Diebold Inc. |
6,770,214 | 5,405,500 | |||||||||
| 120,000 | Intermec Inc.† |
2,353,342 | 1,543,200 | |||||||||
| 36,000 | Lender Processing
Services Inc. |
1,216,358 | 1,463,760 | |||||||||
| 20,000 | MasterCard Inc., Cl. A |
3,089,996 | 5,119,600 | |||||||||
| 20,000 | PHH Corp.† |
403,933 | 322,200 | |||||||||
| 10,000 | Rewards Network Inc. |
135,825 | 126,400 | |||||||||
| 200,000 | Trans-Lux Corp.† (a) |
1,405,249 | 142,000 | |||||||||
| 15,374,917 | 14,122,660 | |||||||||||
Cable and Satellite — 2.4% |
||||||||||||
| 600,000 | Cablevision Systems Corp.,
Cl. A |
16,754,919 | 15,492,000 | |||||||||
| 16,000 | Cogeco Inc. |
316,415 | 438,763 | |||||||||
| 350,000 | DIRECTV, Cl. A† |
8,317,789 | 11,672,500 | |||||||||
| 240,000 | DISH Network Corp., Cl. A |
5,422,198 | 4,984,800 | |||||||||
| 50,000 | EchoStar Corp., Cl. A† |
1,307,563 | 1,007,000 | |||||||||
| 81,734 | Liberty Global Inc., Cl. A† |
1,686,985 | 1,790,792 | |||||||||
| 34,318 | Liberty Global Inc., Cl. C† |
760,276 | 749,848 | |||||||||
| 180,000 | Rogers Communications Inc.,
Cl. B |
2,310,816 | 5,580,000 | |||||||||
| 27,000 | Zon Multimedia Servicos de
Telecomunicacoes e
Multimedia SGPS SA |
265,410 | 167,906 | |||||||||
| 37,142,371 | 41,883,609 | |||||||||||
Communications Equipment — 0.1% |
||||||||||||
| 30,000 | Thomas & Betts Corp.† |
790,717 | 1,073,700 | |||||||||
Computer Hardware — 0.1% |
||||||||||||
| 30,000 | SanDisk Corp.† |
287,056 | 869,700 | |||||||||
Computer Software and Services — 0.6% |
||||||||||||
| 50,000 | Microsoft Corp. |
1,155,211 | 1,524,500 | |||||||||
| 800,000 | Sun Microsystems Inc.† |
7,403,987 | 7,496,000 | |||||||||
| 95,000 | Yahoo! Inc.† |
2,656,334 | 1,594,100 | |||||||||
| 11,215,532 | 10,614,600 | |||||||||||
Consumer Products — 3.5% |
||||||||||||
| 187,000 | Alberto-Culver Co. |
6,235,008 | 5,477,230 | |||||||||
| 20,000 | Altria Group Inc. |
375,937 | 392,600 | |||||||||
| 50,000 | Avon Products Inc. |
1,306,968 | 1,575,000 | |||||||||
| 450,000 | Eastman Kodak Co.† |
3,747,352 | 1,899,000 | |||||||||
| 85,000 | Fortune Brands Inc. |
3,417,169 | 3,672,000 | |||||||||
| 50,000 | Hanesbrands Inc.† |
1,118,462 | 1,205,500 | |||||||||
| 76,000 | Harman International
Industries Inc. |
3,006,689 | 2,681,280 | |||||||||
| 195,000 | Kimberly-Clark Corp. |
12,809,831 | 12,423,450 | |||||||||
| 25,000 | Philip Morris
International Inc. |
1,011,008 | 1,204,750 | |||||||||
| 1,020,000 | Swedish Match AB |
12,706,962 | 22,368,390 | |||||||||
| 160,000 | The Procter & Gamble Co. |
8,942,017 | 9,700,800 | |||||||||
| 54,677,403 | 62,600,000 | |||||||||||
Consumer Services — 0.0% |
||||||||||||
| 1,000 | Keystone North America Inc. |
7,494 | 7,573 | |||||||||
Diversified Industrial — 3.3% |
||||||||||||
| 100,000 | Bouygues SA |
3,516,295 | 5,221,698 | |||||||||
| 175,000 | Cooper Industries plc |
5,671,227 | 7,462,000 | |||||||||
| 500,000 | General Electric Co. |
13,238,120 | 7,565,000 | |||||||||
| 280,000 | Honeywell International Inc. |
9,789,754 | 10,976,000 | |||||||||
| 95,000 | ITT Corp. |
4,299,475 | 4,725,300 | |||||||||
| 130,000 | Owens-Illinois Inc.† |
4,551,363 | 4,273,100 | |||||||||
| 300,000 | Textron Inc. |
2,689,261 | 5,643,000 | |||||||||
| 950,000 | Tomkins plc |
4,601,533 | 2,964,530 | |||||||||
| 230,000 | Tyco International Ltd. |
10,307,915 | 8,206,400 | |||||||||
| 156,464 | WHX Corp.† |
2,189,218 | 375,514 | |||||||||
| 60,854,161 | 57,412,542 | |||||||||||
Electronics — 1.5% |
||||||||||||
| 20,000 | Chartered Semiconductor
Manufacturing Ltd.,
ADR† (b) |
368,968 | 381,400 | |||||||||
| 10,000 | Emulex Corp.† |
94,406 | 109,000 | |||||||||
| 1,000,000 | Intel Corp. |
20,787,583 | 20,400,000 | |||||||||
| 190,000 | Tyco Electronics Ltd. |
6,894,879 | 4,664,500 | |||||||||
| 28,145,836 | 25,554,900 | |||||||||||
Energy and Utilities: Electric — 5.3% |
||||||||||||
| 30,000 | Allegheny Energy Inc. |
438,040 | 704,400 | |||||||||
| 85,000 | ALLETE Inc. |
2,788,153 | 2,777,800 | |||||||||
| 250,000 | American Electric
Power Co. Inc. |
7,904,906 | 8,697,500 | |||||||||
| 720 | Brookfield Infrastructure
Partners LP |
15,120 | 12,074 | |||||||||
| 350,000 | DPL Inc. |
6,916,537 | 9,660,000 | |||||||||
| 30,000 | Edison International |
1,307,130 | 1,043,400 | |||||||||
| 270,000 | Electric Power
Development Co. Ltd. |
6,584,683 | 7,653,406 | |||||||||
| 220,000 | FPL Group Inc. |
7,596,481 | 11,620,400 | |||||||||
| 750,000 | Great Plains Energy Inc. |
21,429,625 | 14,542,500 | |||||||||
| 370,000 | Integrys Energy Group Inc. |
17,973,625 | 15,536,300 | |||||||||
| 110,000 | Pepco Holdings Inc. |
2,077,470 | 1,853,500 | |||||||||
| 230,000 | Pinnacle West Capital Corp. |
8,967,575 | 8,413,400 | |||||||||
| 100,000 | The Southern Co. |
2,893,572 | 3,332,000 | |||||||||
| 225,000 | UniSource Energy Corp. |
5,702,134 | 7,242,750 | |||||||||
| 92,595,051 | 93,089,430 | |||||||||||
Energy and Utilities: Integrated — 10.0% |
||||||||||||
| 12,000 | Alliant Energy Corp. |
305,115 | 363,120 | |||||||||
| 140,000 | Ameren Corp. |
6,365,276 | 3,913,000 | |||||||||
| 50,000 | Avista Corp. |
926,534 | 1,079,500 | |||||||||
| 50,000 | Black Hills Corp. |
1,384,060 | 1,331,500 | |||||||||
| 40,000 | CH Energy Group Inc. |
1,728,883 | 1,700,800 | |||||||||
| 108,000 | Chubu Electric Power Co. Inc. |
2,458,019 | 2,574,328 | |||||||||
| 150,000 | CONSOL Energy Inc. |
6,316,307 | 7,470,000 | |||||||||
| 190,000 | Consolidated Edison Inc. |
7,753,122 | 8,631,700 | |||||||||
| 70,000 | Dominion Resources Inc. |
2,986,000 | 2,724,400 | |||||||||
| 180,000 | Duke Energy Corp. |
2,531,073 | 3,097,800 | |||||||||
See accompanying notes to financial statements.
3
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2009
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2009
| Market | ||||||||||||
| Shares | Cost | Value | ||||||||||
COMMON STOCKS (Continued) |
||||||||||||
Energy and Utilities: Integrated (Continued) |
||||||||||||
| 430,000 | Edison SpA |
$ | 1,002,090 | $ | 654,644 | |||||||
| 650,000 | El Paso Corp. |
8,134,739 | 6,389,500 | |||||||||
| 112,000 | Endesa SA |
4,642,723 | 3,844,546 | |||||||||
| 450,000 | Enel SpA |
2,812,556 | 2,611,028 | |||||||||
| 40,000 | Exelon Corp. |
2,582,860 | 1,954,800 | |||||||||
| 160,000 | FirstEnergy Corp. |
5,651,701 | 7,432,000 | |||||||||
| 120,000 | Hawaiian Electric
Industries Inc. |
2,801,280 | 2,508,000 | |||||||||
| 250,000 | Hera SpA |
552,073 | 580,229 | |||||||||
| 121,500 | Hokkaido Electric
Power Co. Inc. |
2,282,208 | 2,203,398 | |||||||||
| 121,500 | Hokuriku Electric Power Co. |
2,131,359 | 2,641,730 | |||||||||
| 10,000 | Iberdrola SA |
156,751 | 95,618 | |||||||||
| 102,000 | Iberdrola SA, ADR |
5,060,553 | 3,860,700 | |||||||||
| 85,000 | Korea Electric Power Corp.,
ADR† |
1,253,867 | 1,235,900 | |||||||||
| 121,500 | Kyushu Electric
Power Co. Inc. |
2,374,466 | 2,496,924 | |||||||||
| 22,000 | Maine & Maritimes Corp. |
626,971 | 765,600 | |||||||||
| 72,000 | MGE Energy Inc. |
2,324,253 | 2,573,280 | |||||||||
| 35,102 | National Grid plc, ADR |
1,588,562 | 1,908,847 | |||||||||
| 240,000 | NiSource Inc. |
5,019,902 | 3,691,200 | |||||||||
| 550,000 | NSTAR |
13,073,770 | 20,240,000 | |||||||||
| 420,000 | OGE Energy Corp. |
10,103,995 | 15,493,800 | |||||||||
| 30,000 | Ormat Technologies Inc. |
484,088 | 1,135,200 | |||||||||
| 310,000 | Progress Energy Inc. |
13,915,532 | 12,713,100 | |||||||||
| 290,000 | Public Service Enterprise
Group Inc. |
8,874,696 | 9,642,500 | |||||||||
| 121,500 | Shikoku Electric
Power Co. Inc. |
2,264,565 | 3,130,939 | |||||||||
| 15,000 | TECO Energy Inc. |
255,758 | 243,300 | |||||||||
| 121,500 | The Chugoku Electric
Power Co. Inc. |
2,194,052 | 2,315,590 | |||||||||
| 48,100 | The Empire District
Electric Co. |
1,046,694 | 900,913 | |||||||||
| 121,500 | The Kansai Electric
Power Co. Inc. |
2,333,021 | 2,739,572 | |||||||||
| 108,000 | The Tokyo Electric
Power Co. Inc. |
2,545,172 | 2,707,682 | |||||||||
| 121,500 | Tohoku Electric
Power Co. Inc. |
2,112,763 | 2,400,387 | |||||||||
| 205,000 | Vectren Corp. |
5,572,873 | 5,059,400 | |||||||||
| 465,000 | Westar Energy Inc. |
9,188,447 | 10,099,800 | |||||||||
| 85,000 | Wisconsin Energy Corp. |
2,690,561 | 4,235,550 | |||||||||
| 170,000 | Xcel Energy Inc. |
2,854,199 | 3,607,400 | |||||||||
| 163,263,489 | 176,999,225 | |||||||||||
Energy and Utilities: Natural Gas — 4.2% |
||||||||||||
| 30,000 | Atmos Energy Corp. |
749,916 | 882,000 | |||||||||
| 22,000 | Delta Natural Gas Co. Inc. |
554,413 | 629,420 | |||||||||
| 6,000 | Energen Corp. |
124,550 | 280,800 | |||||||||
| 160,356 | GDF Suez, Strips |
0 | 230 | |||||||||
| 20,000 | Kinder Morgan Energy
Partners LP |
824,553 | 1,219,600 | |||||||||
| 350,000 | National Fuel Gas Co. |
9,372,113 | 17,500,000 | |||||||||
| 210,000 | Nicor Inc. |
7,147,795 | 8,841,000 | |||||||||
| 230,000 | ONEOK Inc. |
5,763,836 | 10,251,100 | |||||||||
| 188,000 | Sempra Energy |
5,619,606 | 10,524,240 | |||||||||
| 35,000 | South Jersey Industries Inc. |
839,202 | 1,336,300 | |||||||||
| 140,000 | Southern Union Co. |
2,884,173 | 3,178,000 | |||||||||
| 190,000 | Southwest Gas Corp. |
4,719,351 | 5,420,700 | |||||||||
| 610,000 | Spectra Energy Corp. |
13,426,444 | 12,511,100 | |||||||||
| 43,000 | The Laclede Group Inc. |
1,222,566 | 1,452,110 | |||||||||
| 53,248,518 | 74,026,600 | |||||||||||
Energy and Utilities: Oil — 10.9% |
||||||||||||
| 44,000 | Anadarko Petroleum Corp. |
2,007,408 | 2,746,480 | |||||||||
| 39,000 | Apache Corp. |
1,861,319 | 4,023,630 | |||||||||
| 45,000 | BG Group plc, ADR |
1,819,092 | 4,072,500 | |||||||||
| 160,000 | BP plc, ADR |
7,479,063 | 9,275,200 | |||||||||
| 80,000 | Chesapeake Energy Corp. |
1,432,512 | 2,070,400 | |||||||||
| 230,000 | Chevron Corp. |
13,728,626 | 17,707,700 | |||||||||
| 320,000 | ConocoPhillips |
17,096,010 | 16,342,400 | |||||||||
| 78,000 | Devon Energy Corp. |
3,448,499 | 5,733,000 | |||||||||
| 170,000 | Eni SpA, ADR |
6,249,080 | 8,603,700 | |||||||||
| 210,000 | Exxon Mobil Corp. |
9,845,136 | 14,319,900 | |||||||||
| 36,000 | Hess Corp. |
1,130,043 | 2,178,000 | |||||||||
| 470,000 | Marathon Oil Corp. |
16,539,721 | 14,673,400 | |||||||||
| 136,000 | Murphy Oil Corp. |
6,865,210 | 7,371,200 | |||||||||
| 260,000 | Occidental Petroleum Corp. |
9,791,234 | 21,151,000 | |||||||||
| 20,000 | PetroChina Co. Ltd., ADR |
1,480,813 | 2,379,200 | |||||||||
| 98,000 | Petroleo Brasileiro SA, ADR |
4,072,585 | 4,672,640 | |||||||||
| 270,000 | Repsol YPF SA, ADR |
5,719,267 | 7,198,200 | |||||||||
| 200,000 | Royal Dutch Shell plc, Cl. A,
ADR |
9,567,840 | 12,022,000 | |||||||||
| 810,000 | Statoil ASA, ADR |
11,784,181 | 20,177,100 | |||||||||
| 175,000 | Sunoco Inc. |
9,228,015 | 4,567,500 | |||||||||
| 185,000 | Total SA, ADR |
8,118,724 | 11,847,400 | |||||||||
| 149,264,378 | 193,132,550 | |||||||||||
Energy and Utilities: Services — 3.5% |
||||||||||||
| 210,000 | ABB Ltd., ADR |
2,290,480 | 4,011,000 | |||||||||
| 77,000 | Cameron International Corp.† |
1,065,290 | 3,218,600 | |||||||||
| 102,000 | Diamond Offshore
Drilling Inc. |
5,683,975 | 10,038,840 | |||||||||
| 580,000 | Halliburton Co. |
15,557,482 | 17,452,200 | |||||||||
| 5,000 | Nabors Industries Ltd.† |
110,564 | 109,450 | |||||||||
| 10,000 | Noble Corp. |
254,820 | 407,000 | |||||||||
| 38,000 | Oceaneering
International Inc.† |
1,614,498 | 2,223,760 | |||||||||
| 205,000 | Rowan Companies Inc.† |
7,334,351 | 4,641,200 | |||||||||
| 120,000 | Schlumberger
Ltd. |
3,977,835 | 7,810,800 | |||||||||
| 46,000 | Transocean Ltd.† |
3,995,781 | 3,808,800 | |||||||||
| 480,000 | Weatherford
International Ltd.† |
10,047,467 | 8,596,800 | |||||||||
| 51,932,543 | 62,318,450 | |||||||||||
Energy and Utilities: Water — 0.8% |
||||||||||||
| 11,000 | American States Water Co. |
273,608 | 389,510 | |||||||||
| 380,000 | American Water
Works Co. Inc. |
7,954,100 | 8,515,800 | |||||||||
| 68,033 | Aqua America Inc. |
1,131,745 | 1,191,258 | |||||||||
| 6,000 | Artesian Resources Corp.,
Cl. A |
113,635 | 109,860 | |||||||||
| 3,000 | California Water Service
Group |
94,710 | 110,460 | |||||||||
| 11,500 | Connecticut Water
Service Inc. |
276,036 | 284,855 | |||||||||
| 2,000 | Consolidated Water Co. Ltd. |
26,006 | 28,580 | |||||||||
| 6,000 | Middlesex Water Co. |
111,082 | 105,780 | |||||||||
| 60,000 | Pennichuck Corp. |
1,362,461 | 1,267,800 | |||||||||
| 90,000 | SJW Corp. |
1,564,611 | 2,031,300 | |||||||||
| 16,800 | Southwest Water Co. |
192,169 | 98,952 | |||||||||
| 9,000 | The York Water Co. |
115,031 | 130,590 | |||||||||
| 25,000 | United Utilities Group plc,
ADR |
662,400 | 405,500 | |||||||||
| 13,877,594 | 14,670,245 | |||||||||||
Entertainment — 0.8% |
||||||||||||
| 8,000 | Grupo Televisa SA, ADR |
79,516 | 166,080 | |||||||||
| 290,000 | Take-Two Interactive
Software Inc.† |
7,230,943 | 2,914,500 | |||||||||
See accompanying notes to financial statements.
4
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2009
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2009
| Market | ||||||||||||
| Shares | Cost | Value | ||||||||||
COMMON STOCKS (Continued) |
||||||||||||
Entertainment (Continued) |
||||||||||||
| 200,000 | Time Warner Inc. |
$ | 6,387,568 | $ | 5,828,000 | |||||||
| 195,000 | Vivendi |
6,016,494 | 5,813,073 | |||||||||
| 19,714,521 | 14,721,653 | |||||||||||
Environmental Services — 0.7% |
||||||||||||
| 1,250 | Suez Environnement Co. SA |
0 | 28,895 | |||||||||
| 12,375 | Veolia Environnement |
395,937 | 410,241 | |||||||||
| 350,000 | Waste Management Inc. |
12,663,686 | 11,833,500 | |||||||||
| 13,059,623 | 12,272,636 | |||||||||||
Equipment and Supplies — 1.3% |
||||||||||||
| 95,000 | Circor International Inc. |
1,731,985 | 2,392,100 | |||||||||
| 30,000 | Lufkin Industries Inc. |
513,283 | 2,196,000 | |||||||||
| 65,000 | Mueller Industries Inc. |
2,587,485 | 1,614,600 | |||||||||
| 420,000 | RPC Inc. |
1,866,263 | 4,368,000 | |||||||||
| 230,000 | Tenaris SA, ADR |
10,691,126 | 9,809,500 | |||||||||
| 335,000 | Xerox Corp. |
3,552,457 | 2,834,100 | |||||||||
| 20,942,599 | 23,214,300 | |||||||||||
Financial Services — 11.5% |
||||||||||||
| 170,000 | Aflac Inc. |
9,031,497 | 7,862,500 | |||||||||
| 75,000 | AllianceBernstein Holding LP |
1,388,717 | 2,107,500 | |||||||||
| 450,000 | American Express Co. |
19,430,810 | 18,234,000 | |||||||||
| 50,000 | Artio Global Investors Inc.† |
1,299,580 | 1,274,500 | |||||||||
| 10,000 | Astoria Financial Corp. |
115,083 | 124,300 | |||||||||
| 590,000 | Bank of America Corp. |
8,787,139 | 8,885,400 | |||||||||
| 25,500 | BlackRock Inc. |
2,312,072 | 5,921,100 | |||||||||
| 500,000 | Citigroup Inc. |
1,655,000 | 1,655,000 | |||||||||
| 18,000 | CME Group Inc. |
6,236,837 | 6,047,100 | |||||||||
| 93,000 | Deutsche Bank AG |
8,136,739 | 6,594,630 | |||||||||
| 470,000 | Discover Financial Services |
8,054,511 | 6,913,700 | |||||||||
| 78,909 | Fidelity National Financial Inc.,
Cl. A |
1,529,570 | 1,062,115 | |||||||||
| 210,000 | Fidelity National Information
Services Inc. |
3,766,920 | 4,922,400 | |||||||||
| 60,000 | HSBC Holdings plc, ADR |
4,176,449 | 3,425,400 | |||||||||
| 90,000 | Hudson City Bancorp Inc. |
1,409,172 | 1,235,700 | |||||||||
| 125,000 | Invesco Ltd. |
3,131,339 | 2,936,250 | |||||||||
| 485,000 | JPMorgan Chase & Co. |
16,704,832 | 20,209,950 | |||||||||
| 261,000 | Legg Mason Inc. |
8,309,716 | 7,871,760 | |||||||||
| 40,000 | M&T Bank Corp. |
2,557,647 | 2,675,600 | |||||||||
| 120,000 | Moody’s Corp. |
4,380,102 | 3,216,000 | |||||||||
| 100,000 | Morgan Stanley |
2,912,750 | 2,960,000 | |||||||||
| 100,000 | National Australia Bank Ltd.,
ADR |
2,388,166 | 2,442,000 | |||||||||
| 180,000 | New York Community
Bancorp Inc. |
3,037,621 | 2,611,800 | |||||||||
| 260,000 | NewAlliance Bancshares Inc. |
3,751,892 | 3,122,600 | |||||||||
| 231,000 | PNC Financial Services
Group Inc. |
12,207,207 | 12,194,490 | |||||||||
| 235,000 | SLM Corp.† |
5,037,042 | 2,648,450 | |||||||||
| 46,000 | State Street Corp. |
961,661 | 2,002,840 | |||||||||
| 130,000 | T. Rowe Price Group Inc. |
4,538,233 | 6,922,500 | |||||||||
| 355,000 | The Bank of New York
Mellon Corp. |
11,679,796 | 9,929,350 | |||||||||
| 70,000 | The Blackstone Group LP |
1,269,007 | 918,400 | |||||||||
| 290,000 | The Travelers Companies Inc. |
10,913,064 | 14,459,400 | |||||||||
| 400,000 | Waddell & Reed Financial Inc.,
Cl. A |
8,243,214 | 12,216,000 | |||||||||
| 10,000 | Webster Financial Corp. |
40,182 | 118,700 | |||||||||
| 530,000 | Wells Fargo & Co. |
15,506,240 | 14,304,700 | |||||||||
| 19,260 | Willis Group Holdings Ltd. |
556,229 | 508,079 | |||||||||
| 170,000 | Wilmington Trust Corp. |
5,440,624 | 2,097,800 | |||||||||
| 200,896,660 | 202,632,014 | |||||||||||
Food and Beverage — 10.5% |
||||||||||||
| 215,000 | Cadbury plc, ADR |
10,349,819 | 11,048,850 | |||||||||
| 90,000 | Campbell Soup Co. |
2,793,859 | 3,042,000 | |||||||||
| 350,000 | China Mengniu
Dairy Co. Ltd.† |
857,331 | 1,252,676 | |||||||||
| 230,000 | ConAgra Foods Inc. |
5,501,671 | 5,301,500 | |||||||||
| 140,000 | Constellation Brands Inc.,
Cl. A† |
1,835,999 | 2,230,200 | |||||||||
| 300,082 | Danone |
15,096,110 | 18,424,692 | |||||||||
| 950,000 | Davide Campari —
Milano SpA |
9,573,232 | 9,934,845 | |||||||||
| 280,000 | Dr. Pepper Snapple
Group Inc. |
6,532,369 | 7,924,000 | |||||||||
| 280,000 | General Mills Inc. |
13,697,777 | 19,826,800 | |||||||||
| 90,000 | H.J. Heinz Co. |
3,150,879 | 3,848,400 | |||||||||
| 210,000 | ITO EN Ltd. |
4,917,151 | 3,149,944 | |||||||||
| 40,000 | ITO EN Ltd., Preference |
876,682 | 386,106 | |||||||||
| 1,000 | Kellogg Co. |
35,550 | 53,200 | |||||||||
| 240,000 | Kikkoman Corp. |
3,116,054 | 2,922,210 | |||||||||
| 400,000 | Kraft Foods Inc., Cl. A |
12,241,858 | 10,872,000 | |||||||||
| 150,000 | Morinaga Milk Industry
Co. Ltd. |
588,860 | 591,077 | |||||||||
| 200,000 | NISSIN FOODS
HOLDINGS CO. LTD. |
6,829,272 | 6,506,684 | |||||||||
| 600,000 | Parmalat SpA |
2,181,130 | 1,679,831 | |||||||||
| 339,450 | Parmalat SpA, GDR (c)(d) |
981,615 | 951,139 | |||||||||
| 240,000 | PepsiAmericas Inc. |
4,978,019 | 7,022,400 | |||||||||
| 75,480 | Pernod-Ricard SA |
6,780,748 | 6,482,513 | |||||||||
| 19,000 | Remy Cointreau SA |
919,900 | 969,788 | |||||||||
| 1,400,000 | Sara Lee Corp. |
21,492,909 | 17,052,000 | |||||||||
| 310,000 | The Coca-Cola Co. |
13,818,791 | 17,670,000 | |||||||||
| 370,000 | The Hershey Co. |
16,153,351 | 13,242,300 | |||||||||
| 450,000 | YAKULT HONSHA Co. Ltd. |
12,093,514 | 13,577,066 | |||||||||
| 177,394,450 | 185,962,221 | |||||||||||
Health Care — 3.2% |
||||||||||||
| 20,000 | Abbott Laboratories |
886,633 | 1,079,800 | |||||||||
| 10,000 | Allion Healthcare Inc.† |
64,580 | 65,600 | |||||||||
| 280,000 | Boston Scientific Corp.† |
3,242,593 | 2,520,000 | |||||||||
| 125,000 | Bristol-Myers Squibb Co |
3,034,562 | 3,156,250 | |||||||||
| 77,000 | Covidien plc |
3,264,457 | 3,687,530 | |||||||||
| 150,000 | Eli Lilly & Co. |
7,575,479 | 5,356,500 | |||||||||
| 1,000 | Facet Biotech Corp.† |
16,592 | 17,580 | |||||||||
| 6,000 | Fresenius Kabi Pharmaceuticals
Holding Inc., CVR† |
0 | 1,740 | |||||||||
| 220,000 | IMS Health Inc. |
4,954,327 | 4,633,200 | |||||||||
| 50,000 | Johnson & Johnson |
3,244,276 | 3,220,500 | |||||||||
| 10,000 | Mead Johnson Nutrition Co.
Cl. A |
240,000 | 437,000 | |||||||||
| 170,000 | Merck & Co. Inc. |
5,867,832 | 6,211,800 | |||||||||
| 80,000 | Owens & Minor Inc. |
2,569,964 | 3,434,400 | |||||||||
| 730,000 | Pfizer Inc. |
14,236,903 | 13,278,700 | |||||||||
| 26,000 | Schiff Nutrition
International Inc. |
145,435 | 203,320 | |||||||||
| 42,000 | St. Jude Medical Inc.† |
1,595,510 | 1,544,760 | |||||||||
| 55,000 | Watson Pharmaceuticals Inc.† |
1,977,646 | 2,178,550 | |||||||||
| 80,000 | Zimmer Holdings Inc.† |
5,101,084 | 4,728,800 | |||||||||
| 58,017,873 | 55,756,030 | |||||||||||
Hotels and Gaming — 0.2% |
||||||||||||
| 90,000 | Boyd Gaming Corp.† |
925,277 | 753,300 | |||||||||
| 900,000 | Ladbrokes plc |
8,455,012 | 1,998,805 | |||||||||
| 60,000 | Las Vegas Sands Corp.† |
350,218 | 896,400 | |||||||||
| 20,000 | Pinnacle Entertainment Inc.† |
89,925 | 179,600 | |||||||||
| 9,820,432 | 3,828,105 | |||||||||||
See accompanying notes to financial statements.
5
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2009
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2009
| Shares/ | Market | |||||||||||
| Units | Cost | Value | ||||||||||
COMMON STOCKS (Continued) |
||||||||||||
Machinery — 0.5% |
||||||||||||
| 215,000 | CNH Global NV† |
$ | 4,840,071 | $ | 5,370,700 | |||||||
| 70,000 | Deere & Co. |
3,746,042 | 3,786,300 | |||||||||
| 8,586,113 | 9,157,000 | |||||||||||
Manufactured Housing and Recreational Vehicles — 0.0% |
||||||||||||
| 17,000 | Skyline Corp. |
481,446 | 312,800 | |||||||||
Metals and Mining — 1.1% |
||||||||||||
| 16,000 | Agnico-Eagle Mines Ltd. |
766,400 | 864,000 | |||||||||
| 300,000 | Alcoa Inc. |
6,972,347 | 4,836,000 | |||||||||
| 20,000 | Alliance Holdings GP LP |
461,803 | 549,000 | |||||||||
| 8,000 | Arch Coal Inc. |
122,766 | 178,000 | |||||||||
| 8,000 | BHP Billiton Ltd., ADR |
217,549 | 612,640 | |||||||||
| 130,000 | Freeport-McMoRan Copper
& Gold Inc.† |
4,088,250 | 10,437,700 | |||||||||
| 10,000 | Massey Energy Co. |
235,475 | 420,100 | |||||||||
| 25,000 | Peabody Energy Corp. |
404,351 | 1,130,250 | |||||||||
| 3,000 | Rio Tinto plc, ADR |
326,635 | 646,170 | |||||||||
| 13,595,576 | 19,673,860 | |||||||||||
Paper and Forest Products — 0.6% |
||||||||||||
| 410,000 | International Paper Co. |
12,635,151 | 10,979,800 | |||||||||
Publishing — 0.2% |
||||||||||||
| 1,200,000 | Il Sole 24 Ore |
9,992,269 | 3,301,174 | |||||||||
Real Estate — 0.0% |
||||||||||||
| 18,000 | Brookfield Asset
Management Inc., Cl. A |
186,196 | 399,240 | |||||||||
Restaurants — 0.0% |
||||||||||||
| 1,000 | Landry’s Restaurants Inc.† |
13,599 | 21,290 | |||||||||
Retail — 2.4% |
||||||||||||
| 250,000 | CVS Caremark Corp. |
8,595,011 | 8,052,500 | |||||||||
| 142,000 | Ingles Markets Inc., Cl. A |
1,615,209 | 2,148,460 | |||||||||
| 105,000 | Macy’s Inc. |
1,203,699 | 1,759,800 | |||||||||
| 400,000 | Safeway Inc. |
8,456,277 | 8,516,000 | |||||||||
| 300,000 | Sally Beauty Holdings Inc.† |
3,712,676 | 2,295,000 | |||||||||
| 55,000 | SUPERVALU Inc. |
1,562,248 | 699,050 | |||||||||
| 130,000 | The Great Atlantic & Pacific
Tea Co. Inc.† |
2,130,179 | 1,532,700 | |||||||||
| 35,000 | Wal-Mart Stores Inc. |
1,729,286 | 1,870,750 | |||||||||
| 380,000 | Walgreen Co. |
14,470,477 | 13,953,600 | |||||||||
| 75,000 | Whole Foods Market Inc.† |
2,367,352 | 2,058,750 | |||||||||
| 45,842,414 | 42,886,610 | |||||||||||
Specialty Chemicals — 1.2% |
||||||||||||
| 5,000 | Arkema, ADR |
269,656 | 185,000 | |||||||||
| 108,000 | Ashland Inc. |
4,170,520 | 4,278,960 | |||||||||
| 160,000 | E. I. du Pont de Nemours and Co. |
6,907,625 | 5,387,200 | |||||||||
| 400,000 | Ferro Corp. |
4,388,817 | 3,296,000 | |||||||||
| 100,000 | Olin Corp. |
1,826,860 | 1,752,000 | |||||||||
| 200,000 | The Dow Chemical Co. |
7,933,394 | 5,526,000 | |||||||||
| 25,496,872 | 20,425,160 | |||||||||||
Telecommunications — 6.4% |
||||||||||||
| 610,000 | AT&T Inc. |
16,653,139 | 17,098,300 | |||||||||
| 275,000 | BCE Inc. |
6,597,703 | 7,592,750 | |||||||||
| 30,000 | Belgacom SA |
920,936 | 1,088,923 | |||||||||
| 45,000 | Bell Aliant Regional
Communications
Income Fund (b)(d) |
1,219,425 | 1,203,176 | |||||||||
| 65,000 | BT Group plc, ADR |
2,040,081 | 1,413,100 | |||||||||
| 16,000 | CenturyTel Inc. |
527,864 | 579,360 | |||||||||
| 685,000 | Deutsche Telekom AG, ADR |
12,496,181 | 10,069,500 | |||||||||
| 55,000 | France Telecom SA, ADR |
1,338,443 | 1,388,200 | |||||||||
| 10,000 | GVT Holding SA† |
229,223 | 321,597 | |||||||||
| 31,700 | Hellenic Telecommunications
Organization SA |
699,575 | 467,613 | |||||||||
| 219,800 | Hellenic Telecommunications
Organization SA, ADR |
1,748,090 | 1,652,896 | |||||||||
| 205,000 | Portugal Telecom SGPS SA |
2,457,634 | 2,503,835 | |||||||||
| 100,000 | Qwest Communications
International Inc. |
516,750 | 421,000 | |||||||||
| 2,270,000 | Sprint Nextel Corp.† |
18,616,538 | 8,308,200 | |||||||||
| 100,000 | Tandberg ASA |
2,900,204 | 2,849,839 | |||||||||
| 15,000 | Telecom Corp. of New
Zealand Ltd., ADR |
228,721 | 134,850 | |||||||||
| 90,000 | Telecom Italia SpA, ADR |
2,537,910 | 1,388,700 | |||||||||
| 15,000 | Telefonica SA, ADR |
640,361 | 1,252,800 | |||||||||
| 175,000 | Telefonos de Mexico SAB de
CV, Cl. L, ADR |
1,690,503 | 2,901,500 | |||||||||
| 80,000 | Telekom Austria AG |
1,284,524 | 1,141,104 | |||||||||
| 38,000 | Telephone & Data
Systems Inc. |
1,230,970 | 1,288,960 | |||||||||
| 100,000 | Telephone & Data
Systems Inc., Special |
3,548,843 | 3,020,000 | |||||||||
| 180,000 | Telmex Internacional
SAB de CV, ADR |
1,210,039 | 3,195,000 | |||||||||
| 130,000 | Telstra Corp. Ltd., ADR |
2,392,135 | 1,989,000 | |||||||||
| 76,100 | TELUS Corp., Non-Voting |
1,574,712 | 2,370,515 | |||||||||
| 1,000,000 | Verizon Communications Inc. |
36,248,381 | 33,130,000 | |||||||||
| 160,000 | Vodafone Group plc, ADR |
4,486,387 | 3,694,400 | |||||||||
| 126,035,272 | 112,465,118 | |||||||||||
Transportation — 0.8% |
||||||||||||
| 55,000 | Burlington Northern
Santa Fe Corp. |
5,395,003 | 5,424,100 | |||||||||
| 250,000 | GATX Corp. |
7,479,104 | 7,187,500 | |||||||||
| 20,000 | Golden Ocean Group Ltd.† |
12,000 | 36,512 | |||||||||
| 27,000 | Kansas City Southern† |
453,321 | 898,830 | |||||||||
| 22,000 | Teekay Corp. |
794,715 | 510,620 | |||||||||
| 14,134,143 | 14,057,562 | |||||||||||
Wireless Communications — 0.3% |
||||||||||||
| 111,030 | United States Cellular Corp.† |
5,129,256 | 4,708,782 | |||||||||
| 40,000 | Vimpel-Communications,
ADR |
230,241 | 743,600 | |||||||||
| 5,359,497 | 5,452,382 | |||||||||||
TOTAL COMMON
STOCKS |
1,541,826,018 | 1,615,498,184 | ||||||||||
CONVERTIBLE PREFERRED STOCKS — 0.9% |
||||||||||||
Broadcasting — 0.0% |
||||||||||||
| 16,000 | Emmis Communications Corp.,
6.250% Cv. Pfd., Ser. A† |
607,690 | 243,680 | |||||||||
Building and Construction — 0.0% |
||||||||||||
| 200 | Fleetwood Capital Trust,
6.000% Cv. Pfd.† |
6,210 | 52 | |||||||||
Energy and Utilities — 0.3% |
||||||||||||
| 5,000 | Chesapeake Energy Corp.,
5.000% Cv. Pfd. (d) |
512,500 | 432,550 | |||||||||
| 129,000 | El Paso Energy Capital Trust I,
4.750% Cv. Pfd. |
4,649,004 | 4,714,950 | |||||||||
| 5,161,504 | 5,147,500 | |||||||||||
Financial Services — 0.2% |
||||||||||||
| 1,500 | Doral Financial Corp.,
4.750% Cv. Pfd. |
207,335 | 73,768 | |||||||||
| 85,000 | Newell Financial Trust I,
5.250% Cv. Pfd. |
4,004,063 | 2,996,250 | |||||||||
| 4,211,398 | 3,070,018 | |||||||||||
See accompanying notes to financial statements.
6
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2009
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2009
| Market | ||||||||||||
| Shares | Cost | Value | ||||||||||
CONVERTIBLE PREFERRED STOCKS (Continued) |
||||||||||||
Telecommunications — 0.4% |
||||||||||||
| 55,000 | Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B |
$ | 2,254,718 | $ | 2,035,000 | |||||||
| 105,000 | Crown Castle International Corp.,
6.250% Cv. Pfd. |
4,853,125 | 6,247,500 | |||||||||
| 7,107,843 | 8,282,500 | |||||||||||
Transportation — 0.0% |
||||||||||||
| 1,500 | GATX Corp., $2.50 Cv. Pfd.,
Ser. A (b) |
199,475 | 215,625 | |||||||||
TOTAL CONVERTIBLE
PREFERRED STOCKS |
17,294,120 | 16,959,375 | ||||||||||
WARRANTS — 0.0% |
||||||||||||
Food and Beverage — 0.0% |
||||||||||||
| 650 | Parmalat SpA, GDR,
expire 12/31/15† (b)(c)(d) |
0 | 659 | |||||||||
| Principal | ||||||||||||
| Amount | ||||||||||||
CONVERTIBLE CORPORATE BONDS — 1.4% |
||||||||||||
Automotive: Parts and Accessories — 0.0% |
||||||||||||
| $ | 500,000 | Standard Motor Products Inc.,
Sub. Deb. Cv.,
15.000%, 04/15/11 |
481,372 | 495,625 | ||||||||
Broadcasting — 0.5% |
||||||||||||
| 10,000,000 | Sinclair Broadcast Group Inc.,
Sub. Deb. Cv.,
6.000%, 09/15/12 |
8,930,832 | 8,337,500 | |||||||||
Computer Hardware — 0.1% |
||||||||||||
| 1,000,000 | SanDisk Corp., Cv.,
1.000%, 05/15/13 |
812,611 | 838,750 | |||||||||
Diversified Industrial — 0.5% |
||||||||||||
| 8,800,000 | Griffon Corp., Sub. Deb. Cv.,
4.000%, 01/15/17 (d) |
8,800,000 | 9,317,000 | |||||||||
Financial Services — 0.0% |
||||||||||||
| 200,000 | Janus Capital Group Inc., Cv.,
3.250%, 07/15/14 |
200,000 | 242,000 | |||||||||
Real Estate — 0.0% |
||||||||||||
| 1,000,000 | Palm Harbor Homes Inc., Cv.,
3.250%, 05/15/24 |
963,546 | 565,000 | |||||||||
Retail — 0.3% |
||||||||||||
| 5,300,000 | The Great Atlantic & Pacific
Tea Co. Inc., Cv.,
5.125%, 06/15/11 |
5,253,857 | 5,114,500 | |||||||||
TOTAL CONVERTIBLE
CORPORATE BONDS |
25,442,218 | 24,910,375 | ||||||||||
U.S. GOVERNMENT OBLIGATIONS — 6.2% |
||||||||||||
U.S. Treasury Bills — 4.6% |
||||||||||||
| 80,553,000 | U.S. Treasury Bills,
0.041% to 0.244%††,
01/28/10 to 06/03/10 |
80,526,885 | 80,530,880 | |||||||||
U.S. Treasury Cash Management Bills — 1.6% |
||||||||||||
| 27,816,000 | U.S. Treasury Cash
Management Bills,
0.101% to 0.178%††,
04/01/10 to 06/17/10 |
27,805,669 | 27,807,664 | |||||||||
U.S. Treasury Notes — 0.0% |
||||||||||||
| 595,000 | U.S. Treasury Note,
4.125%, 08/15/10 |
609,160 | 609,108 | |||||||||
TOTAL U.S. GOVERNMENT
OBLIGATIONS |
108,941,714 | 108,947,652 | ||||||||||
| TOTAL INVESTMENTS — 100.0% | $ | 1,693,504,070 | 1,766,316,245 | |||||||||
| Other Assets and Liabilities (Net) | (6,790,099 | ) | ||||||||||
| PREFERRED STOCK | ||||||||||||
| (5,603,095 preferred shares outstanding) | (459,257,875 | ) | ||||||||||
| NET ASSETS — COMMON SHARES | ||||||||||||
| (83,468,637 common shares outstanding) | $ | 1,300,268,271 | ||||||||||
| NET ASSET VALUE PER COMMON SHARE | ||||||||||||
| ($1,300,268,271 ÷ 83,468,637 shares outstanding) | $ | 15.58 | ||||||||||
| (a) | Security considered an affiliated holding because the Fund owns at least 5% of its outstanding shares. | |
| (b) | Security fair valued under procedures established by the Board of Trustees. The procedures may include reviewing available financial information about the company and reviewing the valuation of comparable securities and other factors on a regular basis. At December 31, 2009, the market value of fair valued securities amounted to $1,800,860 or 0.10% of total investments. | |
| (c) | At December 31, 2009, the Fund held investments in restricted and illiquid securities amounting to $951,798 or 0.05% of total investments, which were valued under methods approved by the Board of Trustees as follows: |
| 12/31/09 | ||||||||||||||||
| Acquisition | Acquisition | Acquisition | Carrying Value | |||||||||||||
| Shares | Issuer | Date | Cost | Per Unit | ||||||||||||
| 339,450 | Parmalat SpA, GDR |
12/02/03 | $ | 981,615 | $ | 2.8020 | ||||||||||
| 650 | Parmalat SpA, GDR,
Warrants expire 12/31/15 |
11/09/05 | — | 1.0138 | ||||||||||||
| (d) | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2009, the market value of Rule 144A securities amounted to $11,904,524 or 0.67% of total investments. Except as noted in (c), these securities are liquid. | |
| † | Non-income producing security. | |
| †† | Represents annualized yield at date of purchase. | |
| CVR | Contingent Value Right | |
| ADR | American Depositary Receipt | |
| GDR | Global Depositary Receipt |
| % of | ||||||||
| Market | Market | |||||||
| Geographic Diversification | Value | Value | ||||||
North America |
78.3 | % | $ | 1,383,413,438 | ||||
Europe |
16.5 | 291,268,916 | ||||||
Japan |
3.3 | 57,997,042 | ||||||
Latin America |
1.4 | 23,951,239 | ||||||
Asia/Pacific |
0.5 | 9,685,610 | ||||||
Total Investments |
100.0 | % | $ | 1,766,316,245 | ||||
See accompanying notes to financial statements.
7
THE GABELLI DIVIDEND & INCOME TRUST
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2009
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2009
Assets: |
||||
Investments, at value (cost $1,692,098,821) |
$ | 1,766,174,245 | ||
Investments in affiliates, at value (cost $1,405,249) |
142,000 | |||
Foreign currency, at value (cost $1,677) |
1,681 | |||
Cash |
78 | |||
Receivable for investments sold |
56,255 | |||
Dividends and interest receivable |
2,760,623 | |||
Unrealized appreciation on swap contracts |
1,575 | |||
Deferred offering expense |
141,715 | |||
Prepaid expense |
45,352 | |||
Total Assets |
1,769,323,524 | |||
Liabilities: |
||||
Distributions payable |
122,808 | |||
Payable for investment advisory fees |
5,690,614 | |||
Payable for payroll expenses |
55,857 | |||
Payable for accounting fees |
11,250 | |||
Unrealized depreciation on swap contracts |
1,866,144 | |||
Payable for auction agent fees |
1,569,484 | |||
Other accrued expenses |
481,221 | |||
Total Liabilities |
9,797,378 | |||
Preferred Shares: |
||||
Series A Cumulative Preferred Shares (5.875%, $25
liquidation value, $0.001 par value, 3,200,000 shares
authorized with 3,048,019 shares issued
and outstanding) |
76,200,475 | |||
Series B Cumulative Preferred Shares (Auction Market,
$25,000 liquidation value, $0.001 par value, 4,000
shares authorized with 3,600 shares issued
and outstanding) |
90,000,000 | |||
Series C Cumulative Preferred Shares (Auction Market,
$25,000 liquidation value, $0.001 par value, 4,800
shares authorized with 4,320 shares issued
and outstanding) |
108,000,000 | |||
Series D Cumulative Preferred Shares (6.000%, $25
liquidation value, $0.001 par value, 2,600,000 shares
authorized with 2,542,296 shares issued
and outstanding) |
63,557,400 | |||
Series E Cumulative Preferred Shares (Auction Market,
$25,000 liquidation value, $0.001 par value, 5,400
shares authorized with 4,860 shares issued
and outstanding) |
121,500,000 | |||
Total Preferred Shares |
459,257,875 | |||
Net Assets Attributable to Common Shareholders |
$ | 1,300,268,271 | ||
Net Assets Attributable to Common Shareholders Consist of: |
||||
Paid-in capital |
$ | 1,389,374,728 | ||
Accumulated net investment income |
2,005,214 | |||
Accumulated net realized loss on investments,
swap contracts, and foreign currency transactions |
(162,060,657 | ) | ||
Net unrealized appreciation on investments |
72,812,175 | |||
Net unrealized depreciation on swap contracts |
(1,864,569 | ) | ||
Net unrealized appreciation on foreign
currency translations |
1,380 | |||
Net Assets |
$ | 1,300,268,271 | ||
Net Asset Value per Common Share ($1,300,268,271 ÷ 83,468,637 shares outstanding, at $0.001 par value; unlimited number of shares authorized) |
$ | 15.58 | ||
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2009
For the Year Ended December 31, 2009
Investment Income: |
||||
Dividends (net of foreign taxes of $1,511,291) |
$ | 50,164,385 | ||
Interest |
1,652,223 | |||
Total Investment Income |
51,816,608 | |||
Expenses: |
||||
Investment advisory fees |
15,297,417 | |||
Auction agent expenses |
806,721 | |||
Shareholder communications expenses |
529,625 | |||
Payroll expenses |
229,096 | |||
Custodian fees |
223,235 | |||
Trustees’ fees |
177,375 | |||
Legal and audit fees |
148,929 | |||
Accounting fees |
45,000 | |||
Shareholder services fees |
40,062 | |||
Tax expense |
2,239 | |||
Interest expense |
123 | |||
Miscellaneous expenses |
312,958 | |||
Total Expenses |
17,812,780 | |||
Less: |
||||
Advisory fee reduction |
(5,741 | ) | ||
Advisory fee reduction on unsupervised assets (Note 4) |
(382 | ) | ||
Custodian fee credits |
(32 | ) | ||
Total Reductions and Credits |
(6,155 | ) | ||
Net Expenses |
17,806,625 | |||
Net Investment Income |
34,009,983 | |||
Net Realized and Unrealized Gain/(Loss) on Investments,
Swap Contracts, and Foreign Currency: |
||||
Net realized loss on investments — unaffiliated |
(116,213,429 | ) | ||
Net realized loss on investment — affiliated |
(489,047 | ) | ||
Net realized loss on swap contracts |
(2,612,992 | ) | ||
Net realized gain on foreign currency transactions |
55,617 | |||
Net realized loss on investments, swap contracts,
and foreign currency transactions |
(119,259,851 | ) | ||
Net change in unrealized appreciation/depreciation: |
||||
on investments |
421,414,476 | |||
on swap contracts |
1,357,295 | |||
on foreign currency translations |
(1,739 | ) | ||
Net change in unrealized appreciation/depreciation
on investments, swap contracts, and foreign
currency translations |
422,770,032 | |||
Net Realized and Unrealized Gain/(Loss) on Investments,
Swap Contracts, and Foreign Currency |
303,510,181 | |||
Net Increase in Net Assets Resulting from Operations |
337,520,164 | |||
Total Distributions to Preferred Shareholders |
(13,549,022 | ) | ||
Net Increase in Net Assets Attributable to Common
Shareholders Resulting from Operations |
$ | 323,971,142 | ||
See accompanying notes to financial statements.
8
THE GABELLI DIVIDEND & INCOME TRUST
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
| Year Ended | Year Ended | |||||||
| December 31, 2009 | December 31, 2008 | |||||||
Operations: |
||||||||
Net investment income |
$ | 34,009,983 | $ | 46,358,715 | ||||
Net realized loss on investments, swap contracts, and foreign currency
transactions |
(119,259,851 | ) | (43,160,884 | ) | ||||
Net change in unrealized appreciation/depreciation on investments, swap
contracts,
and foreign currency translations |
422,770,032 | (786,969,865 | ) | |||||
Net Increase/(Decrease) in Net Assets Resulting from Operations |
337,520,164 | (783,772,034 | ) | |||||
Distributions to Preferred Shareholders: |
||||||||
Net investment income |
(13,549,022 | ) | (22,608,188 | ) | ||||
Net realized long-term gain |
— | (45,049 | ) | |||||
Total Distributions to Preferred Shareholders |
(13,549,022 | ) | (22,653,237 | ) | ||||
Net Increase/(Decrease) in Net Assets Attributable to Common Shareholders
Resulting from Operations |
323,971,142 | (806,425,271 | ) | |||||
Distributions to Common Shareholders: |
||||||||
Net investment income |
(17,201,564 | ) | (23,970,465 | ) | ||||
Net realized long-term gain |
— | (214,542 | ) | |||||
Return of capital |
(65,457,086 | ) | (83,014,490 | ) | ||||
Total Distributions to Common Shareholders |
(82,658,650 | ) | (107,199,497 | ) | ||||
Fund Share Transactions: |
||||||||
Net decrease from repurchase of common shares |
(635,911 | ) | (3,449,357 | ) | ||||
Net increase in net assets from repurchase of preferred shares |
315,833 | 519,154 | ||||||
Net Decrease in Net Assets from Fund Share Transactions |
(320,078 | ) | (2,930,203 | ) | ||||
Net Increase/(Decrease) in Net Assets Attributable to Common Shareholders |
240,992,414 | (916,554,971 | ) | |||||
Net Assets Attributable to Common Shareholders: |
||||||||
Beginning of period |
1,059,275,857 | 1,975,830,828 | ||||||
End of period (including undistributed net investment income of
$2,005,214 and $1,356,853, respectively) |
$ | 1,300,268,271 | $ | 1,059,275,857 | ||||
See accompanying notes to financial statements.
9
THE GABELLI DIVIDEND & INCOME TRUST
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each period:
| Year Ended December 31, | ||||||||||||||||||||
| 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Operating Performance: |
||||||||||||||||||||
Net asset value, beginning of period |
$ | 12.68 | $ | 23.57 | $ | 23.65 | $ | 20.62 | $ | 20.12 | ||||||||||
Net investment income |
0.41 | 0.55 | 0.53 | 0.87 | 0.55 | |||||||||||||||
Net realized and unrealized gain/(loss) on investments, swap contracts,
and foreign currency transactions |
3.64 | (9.92 | ) | 1.37 | 4.00 | 1.33 | ||||||||||||||
Total from investment operations |
4.05 | (9.37 | ) | 1.90 | 4.87 | 1.88 | ||||||||||||||
Distributions to Preferred Shareholders: (a) |
||||||||||||||||||||
Net investment income |
(0.16 | ) | (0.27 | ) | (0.10 | ) | (0.12 | ) | (0.06 | ) | ||||||||||
Net realized gain |
— | (0.00 | )(f) | (0.23 | ) | (0.19 | ) | (0.10 | ) | |||||||||||
Total distributions to preferred shareholders |
(0.16 | ) | (0.27 | ) | (0.33 | ) | (0.31 | ) | (0.16 | ) | ||||||||||
Net Increase/(Decrease) in Net Assets Attributable to Common
Shareholders Resulting from Operations |
3.89 | (9.64 | ) | 1.57 | 4.56 | 1.72 | ||||||||||||||
Distributions to Common Shareholders: |
||||||||||||||||||||
Net investment income |
(0.21 | ) | (0.29 | ) | (0.51 | ) | (0.61 | ) | (0.48 | ) | ||||||||||
Net realized gain on investments |
— | (0.00 | )(f) | (1.15 | ) | (0.93 | ) | (0.72 | ) | |||||||||||
Return of capital |
(0.78 | ) | (0.99 | ) | — | — | — | |||||||||||||
Total distributions to common shareholders |
(0.99 | ) | (1.28 | ) | (1.66 | ) | (1.54 | ) | (1.20 | ) | ||||||||||
Fund Share Transactions: |
||||||||||||||||||||
Increase in net assets value from repurchase of common shares |
0.00 | (f) | 0.01 | 0.01 | 0.01 | 0.02 | ||||||||||||||
Increase in net assets value from repurchase of preferred shares |
0.00 | (f) | 0.02 | — | — | — | ||||||||||||||
Offering costs for common shares charged to paid-in capital |
— | — | — | — | — | |||||||||||||||
Offering costs for preferred shares charged to paid-in capital |
— | — | — | (0.00 | )(f) | (0.04 | ) | |||||||||||||
Total from fund share transactions |
0.00 | (f) | 0.03 | 0.01 | 0.01 | (0.02 | ) | |||||||||||||
Net Asset Value Attributable to Common Shareholders,
End of Period |
$ | 15.58 | $ | 12.68 | $ | 23.57 | $ | 23.65 | $ | 20.62 | ||||||||||
NAV total return † |
35.49 | % | (41.27 | )% | 7.75 | % | 24.09 | % | 9.47 | % | ||||||||||
Market value, end of period |
$ | 13.11 | $ | 10.30 | $ | 20.68 | $ | 21.47 | $ | 17.62 | ||||||||||
Investment total return †† |
40.35 | % | (45.63 | )% | 4.14 | % | 31.82 | % | 4.85 | % | ||||||||||
See accompanying notes to financial statements.
10
THE GABELLI DIVIDEND & INCOME TRUST
FINANCIAL HIGHLIGHTS (Continued)
FINANCIAL HIGHLIGHTS (Continued)
Selected data for a share of beneficial interest outstanding throughout each period:
| Year Ended December 31, | ||||||||||||||||||||
| 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Ratios and Supplemental Data: |
||||||||||||||||||||
Net assets including liquidation value of preferred shares,
end of period (in 000’s) |
$ | 1,759,526 | $ | 1,521,400 | $ | 2,475,831 | $ | 2,486,081 | $ | 2,238,155 | ||||||||||
Net assets attributable to common shares, end of period (in 000’s) |
$ | 1,300,268 | $ | 1,059,276 | $ | 1,975,831 | $ | 1,986,081 | $ | 1,738,155 | ||||||||||
Ratio of net investment income to average net assets attributable to
common shares before preferred share distributions |
3.18 | % | 2.94 | % | 2.17 | % | 3.91 | % | 2.75 | % | ||||||||||
Ratio of operating expenses to average net assets attributable to
common shares before fees waived |
1.66 | % | 1.48 | % | — | — | — | |||||||||||||
Ratio of operating expenses to average net assets attributable to
common shares net of advisory fee reduction, if any (b) |
1.66 | % | 1.17 | % | 1.38 | % | 1.41 | % | 1.33 | % | ||||||||||
Ratio of operating expenses to average net assets including
liquidation value of preferred shares before fees waived |
1.16 | % | 1.13 | % | — | — | — | |||||||||||||
Ratio of operating expenses to average net assets including
liquidation
value of preferred shares net of advisory fee reduction, if any
(b) |
1.16 | % | 0.89 | % | 1.11 | % | 1.11 | % | 1.12 | % | ||||||||||
Portfolio turnover rate ††† |
13.3 | % | 32.0 | % | 33.8 | % | 28.8 | % | 25.6 | % | ||||||||||
5.875% Series A Cumulative Preferred Shares |
||||||||||||||||||||
Liquidation value, end of period (in 000’s) |
$ | 76,201 | $ | 78,211 | $ | 80,000 | $ | 80,000 | $ | 80,000 | ||||||||||
Total shares outstanding (in 000’s) |
3,048 | 3,128 | 3,200 | 3,200 | 3,200 | |||||||||||||||
Liquidation preference per share |
$ | 25.00 | $ | 25.00 | $ | 25.00 | $ | 25.00 | $ | 25.00 | ||||||||||
Average market value (c) |
$ | 23.34 | $ | 22.25 | $ | 23.52 | $ | 23.86 | $ | 24.82 | ||||||||||
Asset coverage per share |
$ | 95.78 | $ | 82.30 | $ | 123.79 | $ | 124.30 | $ | 111.91 | ||||||||||
Series B Auction Market Cumulative Preferred Shares |
||||||||||||||||||||
Liquidation value, end of period (in 000’s) |
$ | 90,000 | $ | 90,000 | $ | 100,000 | $ | 100,000 | $ | 100,000 | ||||||||||
Total shares outstanding (in 000’s) |
4 | 4 | 4 | 4 | 4 | |||||||||||||||
Liquidation preference per share |
$ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | ||||||||||
Average market value (d) |
$ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | ||||||||||
Asset coverage per share |
$ | 95,781 | $ | 82,305 | $ | 123,792 | $ | 124,304 | $ | 111,908 | ||||||||||
Series C Auction Market Cumulative Preferred Shares |
||||||||||||||||||||
Liquidation value, end of period (in 000’s) |
$ | 108,000 | $ | 108,000 | $ | 120,000 | $ | 120,000 | $ | 120,000 | ||||||||||
Total shares outstanding (in 000’s) |
4 | 4 | 5 | 5 | 5 | |||||||||||||||
Liquidation preference per share |
$ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | ||||||||||
Average market value (d) |
$ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | ||||||||||
Asset coverage per share |
$ | 95,781 | $ | 82,305 | $ | 123,792 | $ | 124,304 | $ | 111,908 | ||||||||||
6.000% Series D Cumulative Preferred Shares |
||||||||||||||||||||
Liquidation value, end of period (in 000’s) |
$ | 63,557 | $ | 64,413 | $ | 65,000 | $ | 65,000 | $ | 65,000 | ||||||||||
Total shares outstanding (in 000’s) |
2,542 | 2,577 | 2,600 | 2,600 | 2,600 | |||||||||||||||
Liquidation preference per share |
$ | 25.00 | $ | 25.00 | $ | 25.00 | $ | 25.00 | $ | 25.00 | ||||||||||
Average market value (c) |
$ | 24.44 | $ | 23.99 | $ | 24.41 | $ | 24.37 | $ | 24.72 | ||||||||||
Asset coverage per share |
$ | 95.78 | $ | 82.30 | $ | 123.79 | $ | 124.30 | $ | 111.91 | ||||||||||
Series E Auction Rate Cumulative Preferred Shares |
||||||||||||||||||||
Liquidation value, end of period (in 000’s) |
$ | 121,500 | $ | 121,500 | $ | 135,000 | $ | 135,000 | $ | 135,000 | ||||||||||
Total shares outstanding (in 000’s) |
5 | 5 | 5 | 5 | 5 | |||||||||||||||
Liquidation preference per share |
$ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | ||||||||||
Average market value (d) |
$ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | ||||||||||
Asset coverage per share |
$ | 95,781 | $ | 82,305 | $ | 123,792 | $ | 124,304 | $ | 111,908 | ||||||||||
Asset Coverage (e) |
383 | % | 329 | % | 495 | % | 497 | % | 448 | % | ||||||||||
| † | Based on net asset value per share, adjusted for reinvestment of distributions at prices determined under the Fund’s dividend reinvestment plan. | |
| †† | Based on market value per share, adjusted for reinvestment of distributions at prices determined under the Fund’s dividend reinvestment plan. | |
| ††† | Effective in 2008, a change in accounting policy was adopted with regard to the calculation of the portfolio turnover rate to include cash proceeds due to mergers. Had this policy been adopted retroactively, the portfolio turnover rate for the years ended December 31, 2007, 2006, and 2005, would have been 58.0%, 30.8%, and 39.5%, respectively. | |
| (a) | Calculated based upon average common shares outstanding on the record dates throughout the period. | |
| (b) | The ratios do not include a reduction of expenses for custodian fee credits on cash balances maintained with the custodian. Including such custodian fee credits for the year ended December 31, 2007, the ratios of operating expenses to average net assets attributable to common shares net of fee reduction would have been 1.37% and the ratios of operating expenses to average net assets including liquidation value of preferred shares net of fee reduction would have been 1.10%. For the years ended December 31, 2009, 2008, 2006, and 2005, the effect of the custodian fee credits was minimal. | |
| (c) | Based on weekly prices. | |
| (d) | Based on weekly auction prices. Since February 2008, the weekly auctions have failed. Holders that have submitted orders have not been able to sell any or all of their shares in the auctions. | |
| (e) | Asset coverage is calculated by combining all series of preferred shares. | |
| (f) | Amount represents less than $0.005 per share. |
See accompanying notes to financial statements.
11
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
1. Organization. The Gabelli Dividend & Income Trust (the “Fund”) is a non-diversified
closed-end management investment company organized as a Delaware statutory trust on November 18,
2003 and registered under the Investment Company Act of 1940, as amended (the “1940 Act”).
Investment operations commenced on November 28, 2003.
The Fund’s investment objective is to provide a high level of total return on its assets with
an emphasis on dividends and income. The Fund will attempt to achieve its investment objective by
investing, under normal market conditions, at least 80% of its assets in dividend paying securities
(such as common and preferred stock) or other income producing securities (such as fixed income
debt securities and securities that are convertible into equity securities).
2. Significant Accounting Policies. The Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) has become the exclusive reference of authoritative U.S. generally
accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental
entities. Rules and interpretive releases of the SEC under authority of federal laws are also
sources of authoritative GAAP for SEC registrants. The ASC has superseded all existing non-SEC
accounting and reporting standards. The Fund’s financial statements are prepared in accordance with
GAAP, which may require the use of management estimates and assumptions. Actual results could
differ from those estimates. The following is a summary of significant accounting policies followed
by the Fund in the preparation of its financial statements.
Security Valuation. Portfolio securities listed or traded on a nationally recognized
securities exchange or traded in the U.S. over-the-counter market for which market quotations are
readily available are valued at the last quoted sale price or a market’s official closing price as
of the close of business on the day the securities are being valued. If there were no sales that
day, the security is valued at the average of the closing bid and asked prices or, if there were no
asked prices quoted on that day, then the security is valued at the closing bid price on that day.
If no bid or asked prices are quoted on such day, the security is valued at the most recently
available price or, if the Board of Trustees (the “Board”) so determines, by such other method as
the Board shall determine in good faith to reflect its fair market value. Portfolio securities
traded on more than one national securities exchange or market are valued according to the broadest
and most representative market, as determined by Gabelli Funds, LLC (the “Adviser’’).
Portfolio securities primarily traded on a foreign market are generally valued at the
preceding closing values of such securities on the relevant market, but may be fair valued pursuant
to procedures established by the Board if market conditions change significantly after the close of
the foreign market but prior to the close of business on the day the securities are being valued.
Debt instruments with remaining maturities of sixty days or less that are not credit impaired are
valued at amortized cost, unless the Board determines such amount does not reflect the securities’
fair value, in which case these securities will be fair valued as determined by the Board. Debt
instruments having a maturity greater than sixty days for which market quotations are readily
available are valued at the average of the latest bid and asked prices. If there were no asked
prices quoted on such day, the security is valued using the closing bid price. Futures contracts
are valued at the closing settlement price of the exchange or board of trade on which the
applicable contract is traded.
Securities and assets for which market quotations are not readily available are fair valued as
determined by the Board. Fair valuation methodologies and procedures may include, but are not
limited to: analysis and review of available financial and non-financial information about the
company; comparisons with the valuation and changes in valuation of similar securities, including a
comparison of foreign securities with the equivalent U.S. dollar value ADR securities at the close
of the U.S. exchange; and evaluation of any other information that could be indicative of the value
of the security.
The inputs and valuation techniques used to measure fair value of the Fund’s investments are
summarized into three levels as described in the hierarchy below:
| • | Level 1 — quoted prices in active markets for identical securities; | ||
| • | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | ||
| • | Level 3 — significant unobservable inputs (including the Fund’s determinations as to the fair value of investments). |
12
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTES TO FINANCIAL STATEMENTS (Continued)
The inputs or methodology used for valuing securities are not necessarily an indication
of the risk associated with investing in those securities. The summary of the Fund’s investments
and other financial instruments by inputs used to value the Fund’s investments as of December 31,
2009 is as follows:
| Valuation Inputs | ||||||||||||
| Level 1 | Level 2 | Total | ||||||||||
| Quoted | Other Significant | Market Value | ||||||||||
| Prices | Observable Inputs | at 12/31/09 | ||||||||||
INVESTMENTS IN SECURITIES: |
||||||||||||
ASSETS (Market Value): |
||||||||||||
Common Stocks: |
||||||||||||
Aerospace |
$ | 29,151,732 | $ | 193,823 | $ | 29,345,555 | ||||||
Electronics |
25,173,500 | 381,400 | 25,554,900 | |||||||||
Food and Beverage |
185,011,082 | 951,139 | 185,962,221 | |||||||||
Telecommunications |
111,261,942 | 1,203,176 | 112,465,118 | |||||||||
Other Industries (a) |
1,262,170,390 | — | 1,262,170,390 | |||||||||
Total Common Stocks |
1,612,768,646 | 2,729,538 | 1,615,498,184 | |||||||||
Convertible Preferred Stocks (a) |
16,743,750 | 215,625 | 16,959,375 | |||||||||
Warrants (a) |
— | 659 | 659 | |||||||||
Convertible Corporate Bonds |
— | 24,910,375 | 24,910,375 | |||||||||
U.S. Government Obligations |
— | 108,947,652 | 108,947,652 | |||||||||
TOTAL INVESTMENT IN SECURITIES |
$ | 1,629,512,396 | $ | 136,803,849 | $ | 1,766,316,245 | ||||||
OTHER FINANCIAL INSTRUMENTS: |
||||||||||||
ASSETS (Unrealized Appreciation): * |
||||||||||||
Contract for Difference Swap Agreement |
$ | — | $ | 1,575 | $ | 1,575 | ||||||
LIABILITIES (Unrealized Depreciation): * |
||||||||||||
Interest Rate Swap Agreement |
— | (1,866,144 | ) | (1,866,144 | ) | |||||||
TOTAL OTHER FINANCIAL INSTRUMENTS |
$ | — | $ | (1,864,569 | ) | $ | (1,864,569 | ) | ||||
| (a) | Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings. | |
| * | Other financial instruments are derivatives not reflected in the Schedule of Investments, such as futures, forwards, and swaps which are valued at the unrealized appreciation/depreciation of the instrument. |
There were no Level 3 investments at December 31, 2009 or December 31, 2008.
Derivative Financial Instruments.
The Fund may engage in various portfolio investment strategies by investing in a number of
derivative financial instruments for the purpose of hedging the value of the Fund’s portfolio,
increasing the income of the Fund, hedging or protecting its exposure to interest rate movements
and movements in the securities markets, managing risks, or protecting the value of its portfolio
against uncertainty in the level of future currency exchange rates. Investing in certain derivative
financial instruments, including participation in the options, futures, or swap markets, entails
certain execution, liquidity, hedging, tax, and securities, interest, credit, or currency market
risks. Losses may arise if the Adviser’s prediction of movements in the direction of the
securities, foreign currency, and interest rate markets is inaccurate. Losses may also arise if the
counterparty does not perform its duties under a contract, or that, in the event of default, the
Fund may be delayed in or prevented from obtaining payments or other contractual remedies owed to
it under derivative contracts. The creditworthiness of the counterparties is closely monitored in
order to minimize these risks. Participation in derivative transactions involves investment risks,
transaction costs, and potential losses to which the Fund would not be subject absent the use of
these strategies. The consequences of these risks, transaction costs, and losses may have a
negative impact on the Fund’s ability to pay distributions.
Options. The Fund may purchase or write call or put options on securities or indices for the
purpose of achieving additional return or of hedging the value of the Fund’s portfolio. As a writer
of put options, the Fund receives a premium at the outset and then bears the risk of unfavorable
changes in the price of the financial instrument underlying the option. The Fund would incur a loss
if the price of the underlying financial instrument decreases between the date the option is
written and the date on which the option is terminated. The Fund would realize a gain, to the
extent of the premium, if the price of the financial instrument increases between those dates. If a
written call option is exercised, the premium is added to the proceeds from the sale of the
underlying security in determining whether there has been a realized gain or loss. If a written put
option is exercised, the premium reduces the cost basis of the security.
As a purchaser of put options, the Fund pays a premium for the right to sell to the seller of the
put option the underlying security at a specified price. The seller of the put has the obligation
to purchase the underlying security upon exercise at the exercise price. If the price of the
underlying security declines, the Fund would realize a gain upon sale or exercise. If the price of
the underlying security increases or stays the same, the Fund would realize a loss upon sale or at
the expiration date, but only to the extent of the premium paid.
In the case of call options, these exercise prices are referred to as “in-the-money,”
“at-the-money,” and “out-of-the-money,” respectively. The Fund may write (a) in-the-money call
options when the Adviser expects that the price of the underlying security will remain stable
13
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTES TO FINANCIAL STATEMENTS (Continued)
or decline during the option period, (b) covered at-the-money call options when the Adviser
expects that the price of the underlying security will remain stable, decline, or advance
moderately during the option period, and (c) out-of-the-money call options when the Adviser expects
that the premiums received from writing the call option will be greater than the appreciation in
the price of the underlying security above the exercise price. By writing a call option, the Fund
limits its opportunity to profit from any increase in the market value of the underlying security
above the exercise price of the option. Out-of-the-money, at-the-money, and in-the-money put
options (the reverse of call options as to the relation of exercise price to market price) may be
utilized in the same market environments that such call options are used in equivalent
transactions. During the year ended December 31, 2009 the Fund had no investments in options.
Swap Agreements. The Fund may enter into equity, contract for difference, and interest rate swap or
cap transactions for the purpose of increasing the income of the Fund or hedging or protecting its
exposure to interest rate movements and movements in the securities markets. The use of swaps is a
highly specialized activity that involves investment techniques and risks different from those
associated with ordinary portfolio security transactions. In an interest rate swap, the Fund would
agree to pay periodically to the other party (which is known as the “counterparty”) a fixed rate
payment in exchange for the counterparty agreeing to pay to the Fund periodically a variable rate
payment that is intended to approximate the Fund’s variable rate payment obligation on Series B
Auction Market Cumulative Preferred Shares (“Series B Shares”). In an interest rate cap, the Fund
would pay a premium to the counterparty and, to the extent that a specified variable rate index
exceeds a predetermined fixed rate, would receive from that counterparty payments of the difference
based on the notional amount of such cap. Swap and cap transactions introduce additional risk
because the Fund would remain obligated to pay preferred share dividends when due in accordance
with the Statement of Preferences even if the counterparty defaulted. In a swap, a set of future
cash flows is exchanged between two counterparties. One of these cash flow streams will typically
be based on a reference interest rate combined with the performance of a notional value of shares
of a stock. The other will be based on the performance of the shares of a stock. Depending on the
general state of short-term interest rates and the returns on the Fund’s portfolio securities at
the time a swap transaction reaches its scheduled termination date, there is a risk that the Fund
will not be able to obtain a replacement transaction or that the terms of the replacement will not
be as favorable as on the expiring transaction.
Unrealized gains related to swaps are reported as an asset and unrealized losses are reported as a
liability in the Statement of Assets and Liabilities. The change in the value of swaps, including
the accrual of periodic amounts of interest to be paid or received on swaps, is reported as
unrealized gain or loss in the Statement of Operations. A realized gain or loss is recorded upon
payment or receipt of a periodic payment or termination of swap agreements.
The Fund has entered into an interest rate swap agreement with Citibank N.A. Under the agreement,
the Fund receives a floating rate of interest and pays a respective fixed rate of interest on the
nominal value of the swap. Details of the swap at December 31, 2009 are as follows:
| Notional | Floating Rate* | Termination | Net Unrealized | |||||
| Amount | Fixed Rate | (rate reset monthly) | Date | Depreciation | ||||
$100,000,000
|
4.01000% | 0.23531% | 6/02/10 | $(1,866,144) |
| * | Based on LIBOR (London Interbank Offered Rate). |
Current notional amounts are an indicator of the average volume of the Fund’s derivative
activities during the period.
The Fund has entered into an equity contract for difference swap agreement with The Goldman Sachs
Group, Inc. Details of the swap at December 31, 2009 are as follows:
| Notional | Equity Security | Interest Rate/ | Termination | Net Unrealized | ||||
| Amount | Received | Equity Security Paid | Date | Appreciation | ||||
| One Month LIBOR plus | ||||||||
| Market Value | 90 bps plus Market Value | |||||||
| Appreciation on: | Depreciation on: | |||||||
| $2,635,085 (204,800 Shares) | Cadbury plc | Cadbury plc | 6/25/10 | $1,575 |
The Fund increased the volume of activity in equity contract for difference swap agreements
during the year ended December 31, 2009 with an average notional amount of approximately
$1,981,349.
Futures Contracts. The Fund may engage in futures contracts for the purpose of certain hedging,
yield enhancements, and risk management purposes. Upon entering into a futures contract, the Fund
is required to deposit with the broker an amount of cash or cash equivalents equal to a certain
percentage of the contract amount. This is known as the “initial margin.” Subsequent payments
(“variation margin”) are made or received by the Fund each day, depending on the daily fluctuations
in the value of the contract, which are included in unrealized appreciation/depreciation on
investments and futures contracts. The Fund recognizes a realized gain or loss when the contract is
closed.
There are several risks in connection with the use of futures contracts as a hedging instrument.
The change in value of futures contracts primarily corresponds with the value of their underlying
instruments, which may not correlate with the change in value of the hedged investments. In
addition, there is the risk that the Fund may not be able to enter into a closing transaction
because of an illiquid secondary market. During the year ended December 31, 2009, the Fund had no
investments in futures contracts.
14
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTES TO FINANCIAL STATEMENTS (Continued)
Forward Foreign Exchange Contracts. The Fund may engage in forward foreign exchange contracts
for the purpose of protecting the value of its portfolio against uncertainty in the level of future
currency exchange rates or hedging a specific transaction with respect to either the currency in
which the transaction is denominated or another currency as deemed appropriate by the Adviser.
Forward foreign exchange contracts are valued at the forward rate and are marked-to-market daily.
The change in market value is included in unrealized appreciation/depreciation on investments and
foreign currency translations. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the time it was opened and the
value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate fluctuations in the underlying
prices of the Fund’s portfolio securities, but it does establish a rate of exchange that can be
achieved in the future. Although forward foreign exchange contracts limit the risk of loss due to a
decline in the value of the hedged currency, they also limit any potential gain that might result
should the value of the currency increase. In addition, the Fund could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts. During the year
ended December 31, 2009, the Fund had no investments in forward foreign exchange contracts.
Fair Values of Derivative Instruments as of December 31, 2009:
The following table presents the value of derivatives held as of December 31, 2009, by their
primary underlying risk exposure and respective location on the Statement of Assets and
Liabilities:
| Derivative Contracts | Statement of Assets and Liabilities Location | Fair Value | ||||||
Assets: |
||||||||
Equity Contracts |
Assets, Unrealized appreciation on swap contracts |
$ | 1,575 | |||||
Liabilities: |
||||||||
Interest Rate Contracts |
Liabilities, Unrealized depreciation on swap contracts |
$ | (1,866,144 | ) | ||||
Effect of Derivative Instruments on the Statement of Operations during the Year Ended December 31, 2009:
The following table presents the effect of derivatives on the Statement of Operations during the
year ended December 31, 2009, by primary risk exposure:
| Change in Unrealized | ||||||||
| Appreciation or Depreciation on | ||||||||
| Realized Gain or (Loss) on | Derivatives Recognized | |||||||
| Derivative Contracts | Derivatives Recognized in Income | in Income | ||||||
Equity Contracts |
$ | 957,775 | $ | (68,942 | ) | |||
Interest Rate Contracts |
(3,570,767 | ) | 1,426,237 | |||||
Total |
$ | (2,612,992 | ) | $ | 1,357,295 | |||
The Fund’s derivative contracts held at December 31, 2009 are not accounted for as hedging
instruments under accounting principles generally accepted in the United States of America.
Repurchase Agreements. The Fund may enter into repurchase agreements with primary government
securities dealers recognized by the Federal Reserve Board, with member banks of the Federal
Reserve System, or with other brokers or dealers that meet credit guidelines established by the
Adviser and reviewed by the Board. Under the terms of a typical repurchase agreement, the Fund
takes possession of an underlying debt obligation subject to an obligation of the seller to
repurchase, and the Fund to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Fund’s holding period. It is the policy of the Fund to always
receive and maintain securities as collateral whose market value, including accrued interest, is at
least equal to 102% of the dollar amount invested by the Fund in each agreement. The Fund will make
payment for such securities only upon physical delivery or upon evidence of book entry transfer of
the collateral to the account of the custodian. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market on a daily basis to
maintain the adequacy of the collateral. If the seller defaults and the value of the collateral
declines or if bankruptcy proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At December 31, 2009, there
were no open repurchase agreements.
Securities Sold Short. The Fund may enter into short sale transactions. Short selling involves
selling securities that may or may not be owned and, at times, borrowing the same securities for
delivery to the purchaser, with an obligation to replace such borrowed securities at a later date.
The proceeds received from short sales are recorded as liabilities and the Fund records an
unrealized gain
15
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTES TO FINANCIAL STATEMENTS (Continued)
or loss to the extent of the difference between the proceeds received and the value of an open
short position on the day of determination. The Fund records a realized gain or loss when the short
position is closed out. By entering into a short sale, the Fund bears the market risk of an
unfavorable change in the price of the security sold short. Dividends on short sales are recorded
as an expense by the Fund on the ex-dividend date and interest expense is recorded on the accrual
basis. The Fund did not hold any short positions as of December 31, 2009.
Foreign Currency Translations. The books and records of the Fund are maintained in U.S.
dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S.
dollars at the current exchange rates. Purchases and sales of investment securities, income, and
expenses are translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign exchange rates and/or
changes in market prices of securities have been included in unrealized appreciation/depreciation
on investments and foreign currency translations. Net realized foreign currency gains and losses
resulting from changes in exchange rates include foreign currency gains and losses between trade
date and settlement date on investment securities transactions, foreign currency transactions, and
the difference between the amounts of interest and dividends recorded on the books of the Fund and
the amounts actually received. The portion of foreign currency gains and losses related to
fluctuation in exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/loss on investments.
Foreign Securities. The Fund may directly purchase securities of foreign issuers. Investing in
securities of foreign issuers involves special risks not typically associated with investing in
securities of U.S. issuers. The risks include possible revaluation of currencies, the inability to
repatriate funds, less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign issuers and their markets
may be less liquid and their prices more volatile than those of securities of comparable U.S.
issuers.
Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or
currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and
recoveries as applicable, based upon its current interpretation of tax rules and regulations that
exist in the markets in which it invests.
Restricted and Illiquid Securities. The Fund is not subject to an independent limitation on
the amount it may invest in securities for which the markets are illiquid. Illiquid securities
include securities the disposition of which is subject to substantial legal or contractual
restrictions. The sale of illiquid securities often requires more time and results in higher
brokerage charges or dealer discounts and other selling expenses than does the sale of securities
eligible for trading on national securities exchanges or in the over-the-counter markets.
Restricted securities may sell at a price lower than similar securities that are not subject to
restrictions on resale. Securities freely saleable among qualified institutional investors under
special rules adopted by the SEC may be treated as liquid if they satisfy liquidity standards
established by the Board. The continued liquidity of such securities is not as well assured as that
of publicly traded securities, and accordingly the Board will monitor their liquidity.
Securities Transactions and Investment Income. Securities transactions are accounted for on
the trade date with realized gain or loss on investments determined by using the identified cost
method. Interest income (including amortization of premium and accretion of discount) is recorded
on the accrual basis. Premiums and discounts on debt securities are amortized using the effective
yield to maturity method. Dividend income is recorded on the ex-dividend date except for certain
dividends which are recorded as soon as the Fund is informed of the dividend.
Custodian Fee Credits and Interest Expense. When cash balances are maintained in the custody
account, the Fund receives credits which are used to offset custodian fees. The gross expenses paid
under the custody arrangement are included in custodian fees in the Statement of Operations with
the corresponding expense offset, if any, shown as “custodian fee credits.” When cash balances are
overdrawn, the Fund is charged an overdraft fee of 2.00% above the federal funds rate on
outstanding balances. This amount, if any, would be included in “interest expense” in the Statement
of Operations.
Distributions to Shareholders. Distributions to common shareholders are recorded on the
ex-dividend date. Distributions to shareholders are based on income and capital gains as determined
in accordance with federal income tax regulations, which may differ from income and capital gains
as determined under U.S. generally accepted accounting principles. These differences are primarily
due to differing treatments of income and gains on various investment securities and foreign
currency transactions held by the Fund, timing differences, and differing characterizations of
distributions made by the Fund. Distributions from net investment income for federal income tax
purposes include net realized gains on foreign currency transactions. These book/tax differences
are either temporary or permanent in nature. To the extent these differences are permanent,
adjustments are made to the appropriate capital accounts in the period when the differences arise.
Permanent differences were primarily due to recharacterization of distributions and
reclassifications of swaps and gains on swaps. These reclassifications have no impact on the NAV of
the Fund. For the year ended December 31, 2009, reclassifications were made to decrease accumulated
net investment income by $2,611,036 and to decrease accumulated net realized loss on investments,
swap contracts, and foreign currency transactions by $2,391,099, with an offsetting adjustment to
paid-in capital.
Under the Fund’s distribution policy, the Fund declares and pays monthly distributions from net
investment income, capital gains, and paid-in capital. The actual source of the distribution is
determined after the end of the year. Pursuant to this policy, distributions during the year may be
made in excess of required distributions. To the extent such distributions are made from current
earnings and profits, they are considered ordinary income or long-term capital gains. The Fund’s
current distribution policy may restrict the Fund’s ability to pass through to shareholders all of
its net realized long-term capital gains as a Capital Gain Dividend, subject to the maximum federal
income tax rate of 15%, and may cause such gains to be treated as ordinary income subject to a
maximum federal income tax rate of 35%. The Board will continue to monitor the Fund’s distribution
level, taking into consideration the Fund’s net asset value and the financial market environment.
The Fund’s distribution policy is subject to modification by the Board at any time.
16
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTES TO FINANCIAL STATEMENTS (Continued)
Distributions to shareholders of the Fund’s 5.875% Series A Cumulative Preferred Shares,
Series B Auction Market Cumulative Preferred Shares, Series C Auction Market Cumulative Preferred
Shares, 6.000% Series D Cumulative Preferred Shares, and Series E Auction Rate Cumulative Preferred
Shares (“Cumulative Preferred Shares”) are recorded on a daily basis and are determined as
described in Note 5.
The tax character of distributions paid during the years ended December 31, 2009 and December
31, 2008 was as follows:
| Year Ended | Year Ended | |||||||||||||||
| December 31, 2009 | December 31, 2008 | |||||||||||||||
| Common | Preferred | Common | Preferred | |||||||||||||
Distributions paid from: |
||||||||||||||||
Ordinary income (inclusive of short-term capital gains) |
$ | 17,201,564 | $ | 13,549,022 | $ | 23,970,465 | $ | 22,608,188 | ||||||||
Net long-term capital gains |
— | — | 214,542 | 45,049 | ||||||||||||
Return of capital |
65,457,086 | — | 83,014,490 | — | ||||||||||||
Total distributions
paid |
$ | 82,658,650 | $ | 13,549,022 | $ | 107,199,497 | $ | 22,653,237 | ||||||||
Provision for Income Taxes. The Fund intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
“Code”). It is the policy of the Fund to comply with the requirements of the Code applicable to
regulated investment companies and to distribute substantially all of its net investment company
taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
As of December 31, 2009, the components of accumulated earnings/losses on a tax basis were as
follows:
Accumulated capital loss carryforwards |
$ | (129,734,874 | ) | |
Net unrealized depreciation on investments, swap contracts, and
foreign currency translations |
61,445,915 | |||
Post-October capital loss deferral |
(20,845,593 | ) | ||
Other temporary differences* |
28,095 | |||
Total |
$ | (89,106,457 | ) | |
| * | Other temporary differences are primarily due to income from investments in hybrid securities, adjustments on preferred share class distribution payables, and swap accrual adjustments. |
At December 31, 2009, the Fund had net capital loss carryforwards for federal income tax
purposes of $129,734,874, which are available to reduce future required distributions of net
capital gains to shareholders. $22,445,283 of the loss carryforward is available through 2016; and
$107,289,591 is available through 2017.
Under the current tax law, capital losses related to securities and foreign currency realized
after October 31 and prior to the Fund’s fiscal year end may be treated as occurring on the first
day of the following year. For the year ended December 31, 2009, the Fund had deferred capital
losses of $20,845,593.
At December 31, 2009, the difference between book basis and tax basis unrealized
appreciation/depreciation was primarily due to deferral of losses from wash sales for tax purposes
and basis adjustments for investments in partnerships.
The following summarizes the tax cost of investments and the related unrealized
appreciation/depreciation at December 31, 2009:
| Gross | Gross | |||||||||||||||
| Unrealized | Unrealized | Net Unrealized | ||||||||||||||
| Cost | Appreciation | Depreciation | Appreciation | |||||||||||||
Investments |
$ | 1,703,007,142 | $ | 229,072,761 | $ | (165,763,658 | ) | $ | 63,309,103 | |||||||
The Fund is required to evaluate tax positions taken or expected to be taken in the
course of preparing the Fund’s tax returns to determine whether the tax positions are
“more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related
interest and penalties would be recognized by the Fund as tax expense in the Statement of
Operations if the tax positions were deemed to not meet the more-likely-than-not threshold. For the
year ended December 31, 2009, the Fund did not incur any interest or penalties. As of December 31,
2009, the Adviser has reviewed all open tax years and concluded that there was no impact to the
Fund’s net assets or results of operations. Tax years ended December 31, 2007 through December 31,
2009, remain subject to examination by the Internal Revenue Service and state taxing authorities.
On an ongoing basis, the Adviser will monitor its tax positions to determine if adjustments to this
conclusion are necessary.
17
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Agreements and Transactions with Affiliates.
The Fund has entered into an investment advisory
agreement (the “Advisory Agreement”) with the Adviser which provides that the Fund will pay the
Adviser a fee, computed weekly and paid monthly, equal on an annual basis to 1.00% of the value of
the Fund’s
average weekly net assets including the liquidation value of preferred shares. In accordance with
the Advisory Agreement, the Adviser provides a continuous investment program for the Fund’s
portfolio and oversees the administration of all aspects of the Fund’s business and affairs. The
Adviser has agreed to reduce the management fee
on the incremental assets attributable to the Preferred Shares if the total return of the NAV
of the common shares of the Fund, including distributions and advisory fee subject to reduction,
does not exceed the stated dividend rate or corresponding swap rate of each particular series of
the Preferred Shares for the year.
The Fund’s total return on the NAV of the common shares is monitored on a monthly basis to
assess whether the total return on the NAV of the common shares exceeds the stated dividend rate or
corresponding swap rate of each particular series of Preferred Shares for the period. For the year
ended December 31, 2009, the Fund’s total return on the NAV of the common shares exceeded the
stated dividend rate or corresponding swap rate of the outstanding Preferred Shares. Thus, advisory
fees were accrued on these assets.
During the year ended December 31, 2009, the Fund paid brokerage commissions on security
trades of $452,328 to Gabelli & Company, Inc. (“Gabelli & Company”), an affiliate of the Adviser.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory
Agreement between the Fund and the Adviser. During the year ended December 31, 2009, the Fund paid
or accrued $45,000 to the Adviser in connection with the cost of computing the Fund’s NAV.
As per the approval of the Board, the Fund compensates officers of the Fund, who are employed
by the Fund and are not employed by the Adviser (although the officers may receive incentive based
variable compensation from affiliates of the Adviser) and pays its allocated portion of the cost of
the Fund’s Chief Compliance Officer. For the year ended December 31, 2009 the Fund paid or accrued
$229,096 in payroll expenses in the Statement of Operations.
The Fund pays each Trustee who is not considered an affiliated person an annual retainer of
$12,000 plus $1,500 for each Board meeting attended. Each Trustee is reimbursed by the Fund for any
out of pocket expenses incurred in attending meetings. All Board committee members receive $1,000
per meeting attended. The Audit Committee Chairman receives an annual fee of $3,000, the Proxy
Voting Committee Chairman receives an annual fee of $1,500, the Nominating Committee Chairman
receives an annual fee of $2,000, and the Lead Trustee receives an annual fee of $1,000. A Trustee
may receive a single meeting fee, allocated among the participating funds, for participation in
certain meetings held on behalf of multiple funds. Trustees who are directors or employees of the
Adviser or an affiliated company receive no compensation or expense reimbursement from the Fund.
4. Advisory Fee Reduction on Unsupervised Assets. This reduction in the advisory fee paid to the
Adviser relates to certain portfolio holdings, i.e., unsupervised assets, of the Fund with respect
to which the Adviser has transferred dispositive and voting control to the Fund’s Proxy Voting
Committee. During 2009, the Fund’s Proxy Voting Committee exercised control and discretion over all
rights to vote or consent with respect to such securities and the Adviser reduced its fee with
respect to such securities by $382.
5. Portfolio Securities. Purchases and sales of securities for the year ended December 31, 2009,
other than short-term securities and U.S Government obligations, aggregated $192,598,795 and
$291,106,302, respectively.
Purchases of U.S. Government obligations for the year ended December 31, 2009, other than
short-term obligations, aggregated $609,410.
6. Capital. The Fund is authorized to issue an unlimited number of common shares of beneficial
interest (par value $0.001). The Board has authorized the repurchase and retirement of its shares
on the open market when the shares are trading at a discount of 7.5% or more (or such other
percentage as the Board may determine from time to time) from the NAV of the shares.
During the
year ended December 31, 2009,
the Fund repurchased and retired 60,000 shares of beneficial interest in the open market at a cost
of $635,911 and an average discount of approximately 16.16% from its NAV.
During the year ended
December 31, 2008, the Fund repurchased and retired 300,433 common shares of beneficial interest in
the open market at a cost of $3,449,357 and an average discount of approximately 19.07% from its
NAV.
Transactions in shares of beneficial interest were as follows:
| Year Ended | Year Ended | |||||||||||||||
| December 31, 2009 | December 31, 2008 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
Net decrease from repurchase of common shares |
(60,000 | ) | $ | (635,911 | ) | (300,433 | ) | $ | (3,449,357 | ) | ||||||
The Fund’s Declaration of Trust, as amended, authorizes the issuance of an unlimited
number of shares of $0.001 par value Cumulative Preferred Shares. The Cumulative Preferred Shares
is senior to the common shares and results in the financial leveraging
18
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTES TO FINANCIAL STATEMENTS (Continued)
of the common shares. Such
leveraging tends to magnify both the risks and opportunities to common shareholders. Dividends on
shares of the Cumulative Preferred Shares are cumulative. The Fund is required by the 1940 Act and
by the Statements of Preferences to meet certain asset coverage tests with respect to the
Cumulative Preferred Shares. If the Fund fails to meet these requirements and does not correct such
failure, the Fund may be required to redeem, in part or in full, the 5.875% Series A, Series B
Auction Market, Series C Auction Market, 6.000% Series D, and Series E Auction Rate Cumulative Preferred
Shares at redemption prices of $25, $25,000, $25,000, $25, and $25,000, respectively, per share
plus an amount equal to the accumulated and unpaid dividends whether or not declared on such shares
in order to meet these requirements. Additionally, failure to meet the foregoing asset coverage
requirements could restrict the Fund’s ability to pay dividends to common shareholders and could
lead to sales of portfolio securities at inopportune times. The income received on the Fund’s
assets may vary in a manner unrelated to the fixed and variable rates, which could have either a
beneficial or detrimental impact on net investment income and gains available to common
shareholders.
The shelf registration authorizing the offering of preferred shares or notes was declared
effective by the SEC on June 17, 2008.
On October 12, 2004, the Fund received net proceeds of $77,280,971 (after underwriting
discounts of $2,520,000 and offering expenses of $199,029) from the public offering of 3,200,000
shares of 5.875% Series A Cumulative Preferred Shares. Commencing October 12, 2009 and thereafter,
the Fund, at its option, may redeem the 5.875% Series A Cumulative Preferred Shares in whole or in
part at the redemption price at any time. The Board has authorized the repurchase of Series A
Cumulative Preferred Shares in the open market at prices less than the $25 liquidation value per
share. During the year ended December 31, 2009 the Fund repurchased and retired 80,397 shares of
5.875% Series A Cumulative Preferred Shares in the open market at a cost of $1,796,631 and an
average discount of approximately 10.65% from its liquidation preference. At the time the Fund
repurchased its Series A Cumulative Preferred Shares, the total return on the NAV of the Common
Shares did not exceed the dividend rate of the Series A Cumulative Preferred Shares; therefore
advisory fees were not paid on these shares, reducing the advisory fee by $4,195. At December 31,
2009, 3,048,019 shares of 5.875% Series A Cumulative Preferred Shares were outstanding and accrued
dividends amounted to $49,742.
During the year ended December 31, 2008, the Fund repurchased and retired 71,584 Series A
Cumulative Preferred Shares in the open market at a cost of $1,386,077 and an average discount of
approximately 30.39% from its liquidation preference.
On October 12, 2004, the Fund received net proceeds of $217,488,958 (after underwriting
discounts of $2,200,000 and offering expenses of $311,042) from the public offering of 4,000 shares
of Series B Shares and 4,800 shares of Series C Auction Market Cumulative Preferred Shares (“Series
C Shares”), respectively. The dividend rate, as set by the auction process, which is generally held
every seven days, is expected to vary with short-term interest rates. Since February 2008, the
number of Series B and Series C Shares subject to bid orders by potential holders has been less
than the number of Series B and Series C Shares subject to sell orders. Therefore, the weekly
auctions have failed, and the dividend rate since then has been the maximum rate. Holders that have
submitted sell orders have not been able to sell any or all of the Series B or Series C Shares for
which they have submitted sell orders. The current maximum rate for both Series B and Series C
Shares is 125 basis points greater than the seven day Telerate/British Bankers Association LIBOR
rate on the day of such auction. The dividend rates of Series B Shares ranged from 1.461% to 1.696%
during the year ended December 31, 2009. The dividend rates of Series C Shares ranged from 1.464%
to 1.709% during the year ended December 31, 2009. Existing shareholders may submit an order to
hold, bid, or sell such shares on each auction date. Series B and C Shares shareholders may also
trade their shares in the secondary market. The Fund, at its option, may redeem the Series B and C
Shares in whole or in part at the redemption price at any time. There were no redemptions of Series
B and C Shares during the year ended December 31, 2009. At December 31, 2009, 3,600 and 4,320
shares of the Series B and C Shares were outstanding with an annualized dividend rate of 1.467% and
1.464% per share and accrued dividends amounted to $7,335 and $17,568, respectively.
During the year ended December 31, 2008, the Fund redeemed and retired 400 Series B Shares and
480 Series C Shares. Shareholders received the redemption price of $25,000 per share, which was
equal to the liquidation preference, together with any accumulated and unpaid dividends, for each
share redeemed.
On November 3, 2005, the Fund received net proceeds of $62,617,239 (after underwriting
discounts of $2,047,500 and offering expenses of $335,261) from the public offering of 2,600,000
shares of 6.000% Series D Cumulative Preferred Shares. Commencing November 3, 2010 and thereafter,
the Fund, at its option, may redeem the 6.000% Series D Cumulative Preferred Shares in whole or in
part at the redemption price at any time. The Board has authorized the repurchase of Series D
Cumulative Preferred Shares in the open market at prices less than the $25 liquidation value per
share. During the year ended December 31, 2009 the Fund repurchased and retired 34,238 shares of
6.000% Series D Cumulative Preferred Shares in the open market at a cost of $753,411 and an average
discount of approximately 12.02% from its liquidation preference. At the time the Fund repurchased
its Series D Cumulative Preferred Shares, the total return on the NAV of the Common Shares did not
exceed the dividend rate of the Series D Cumulative Preferred Shares; therefore advisory fees were
not paid on these shares, reducing the advisory fee by $1,546. At December 31, 2009, 2,542,296
shares of 6.000% Series D Cumulative Preferred Shares were outstanding and accrued dividends
amounted to $42,372.
During the year ended December 31, 2008, the Fund repurchased and retired 23,466 Series D
Cumulative Preferred Shares in the open market at a cost of $471,019 and an average discount of
approximately 19.76% from its liquidation preference.
19
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTES TO FINANCIAL STATEMENTS (Continued)
On November 3, 2005, the Fund received net proceeds of $133,379,387 (after underwriting
discounts of $1,350,000 and offering expenses of $270,613) from the public offering of 5,400 shares
of Series E Auction Rate Cumulative Preferred Shares (“Series E Shares”). The dividend rate, as set
by the auction process, which is generally held every seven days, is expected to vary with
short-term interest rates. Since February 2008 the number of Series E Shares subject to bid orders
by potential holders has been less than the number of Series E Shares subject to sell orders.
Therefore the weekly auctions have failed, and the dividend rate since then has been the maximum
rate. Holders that have submitted sell orders have not been able to sell any or all of the Series E
Shares for which they have submitted sell orders. The current maximum rate is 150 basis points
greater than the seven day Telerate/British Bankers Association LIBOR rate on the day of such
auction. The dividend rates of Series E Shares ranged from 1.714% to 1.951% during the year ended
December 31, 2009. Existing shareholders may submit an order to hold, bid, or sell such shares on
each auction date. Shareholders of the Series E Shares may also trade their shares in the secondary
market. The Fund, at its option, may redeem the Series E Shares in whole or in part at the
redemption price at any time. There were no redemptions of Series E Shares during the year ended
December 31, 2009. At December 31, 2009, 4,860 Series E Shares were outstanding with an annualized
dividend rate of 1.716% and accrued dividends amounted to $5,791.
During the year ended December 31, 2008, the Fund redeemed and retired 540 Series E Shares.
Shareholders received the redemption price of $25,000 per share, which was equal to the liquidation
preference together, with any accumulated and unpaid dividends, for each share redeemed.
The holders of Cumulative Preferred Shares generally are entitled to one vote per share held
on each matter submitted to a vote of shareholders of the Fund and will vote together with holders
of common shares as a single class. The holders of Cumulative Preferred Shares voting together as a
single class also have the right currently to elect two Trustees and under certain circumstances
are entitled to elect a majority of the Board of Trustees. In addition, the affirmative vote of a
majority of the votes entitled to be cast by holders of all outstanding shares of the Preferred
Shares, voting as a single class, will be required to approve any plan of reorganization adversely
affecting the Preferred Shares, and the approval of two-thirds of each class, voting separately, of
the Fund’s outstanding voting stock must approve the conversion of the Fund from a closed-end to an
open-end investment company. The approval of a majority (as defined in the 1940 Act) of the
outstanding Preferred Shares and a majority (as defined in the 1940 Act) of the Fund’s outstanding
voting securities are required to approve certain other actions, including changes in the Fund’s
investment objectives or fundamental investment policies.
7. Transactions in Securities of Affiliated Issuers. The 1940 Act defines affiliated issuers as
those in which the Fund’s holdings of an issuer represent 5% or more of the outstanding voting
securities of the issuer. A summary of the Fund’s transactions in the securities of affiliated
issuer during the year ended December 31, 2009 is set forth below:
| Percent | ||||||||||||||||||||||||||||
| Net Change in | Value at | Owned of | ||||||||||||||||||||||||||
| Beginning | Shares | Ending | Unrealized | Realized | December 31, | Shares | ||||||||||||||||||||||
| Shares | Sold | Shares | Depreciation | Loss | 2009 | Outstanding | ||||||||||||||||||||||
Trans-Lux Corp. |
270,000 | (70,000 | ) | 200,000 | $ | (26,330 | ) | $ | (489,047 | ) | $ | 142,000 | 9.90 | % | ||||||||||||||
8. Indemnifications. The Fund enters into contracts that contain a variety of
indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the
Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to
be remote.
9. Other Matters. On April 24, 2008, the Adviser entered into an administrative settlement with the
SEC to resolve the SEC’s inquiry regarding prior frequent trading activity in shares of the GAMCO
Global Growth Fund (the “Global Growth Fund”) by one investor who was banned from the Global Growth
Fund in August 2002. In the settlement, the SEC found that the Adviser had violated Section 206(2)
of the Investment Advisers Act, Section 17(d) of the 1940 Act, and Rule 17d-1 thereunder, and had
aided and abetted and caused violations of Section 12(d)(1)(B)(i) of the 1940 Act. Under the terms
of the settlement, the Adviser, while neither admitting nor denying the SEC’s findings and
allegations, agreed, among other things, to pay the previously reserved total of $16 million
(including a $5 million penalty), of which at least $11 million will be distributed to shareholders
of the Global Growth Fund in accordance with a plan developed by an independent distribution
consultant and approved by the independent directors of the Global Growth Fund and the staff of the
SEC, and to cease and desist from future violations of the above referenced federal securities
laws. The settlement will not have a material adverse impact on the Adviser or its ability to
fulfill its obligations under the Advisory Agreement. On the same day, the SEC filed a civil action
against the Executive Vice President and Chief Operating Officer of the Adviser, alleging
violations of certain federal securities laws arising from the same matter. The officer is also an
officer of the Global Growth Fund and other funds in the Gabelli/GAMCO fund complex including the
Fund. The officer denies the allegations and is continuing in his positions with the Adviser and
the funds. The Adviser currently expects that any resolution of the action against the officer will
not have a material adverse impact on the Fund or the Adviser or its ability to fulfill its
obligations under the Advisory Agreement.
10. Subsequent Events. Management has evaluated the impact on the Fund of events occurring
subsequent to December 31, 2009 through February 25, 2010, the date the financial statements were
issued, and has determined that there were no subsequent events requiring recognition or disclosure
in the financial statements.
20
THE GABELLI DIVIDEND & INCOME TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
The Gabelli Dividend & Income Trust:
The Gabelli Dividend & Income Trust:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of
investments, and the related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the financial position of The
Gabelli Dividend & Income Trust (hereafter referred to as the “Trust”) at December 31, 2009, the
results of its operations for the year then ended, the changes in its net assets for each of the
two years in the period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted in the United States
of America. These financial statements and financial highlights (hereafter referred to as
“financial statements”) are the responsibility of the Trust’s management. Our responsibility is to
express an opinion on these financial statements based on our audits. We conducted our audits of
these financial statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at December 31, 2009 by
correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 25, 2010
New York, New York
February 25, 2010
21
THE GABELLI DIVIDEND & INCOME TRUST
ADDITIONAL FUND INFORMATION (Unaudited)
ADDITIONAL FUND INFORMATION (Unaudited)
The business and affairs of the Fund are managed under the direction of the Fund’s Board
of Trustees. Information pertaining to the Trustees and officers of the Fund is set forth below.
The Fund’s Statement of Additional Information includes additional information about the Fund’s
Trustees and is available without charge, upon request, by calling 800-GABELLI (800-422-3554) or by
writing to The Gabelli Dividend & Income Trust at One Corporate Center, Rye, NY 10580-1422.
| Number of | ||||||||||
| Term of | Funds in Fund | |||||||||
| Name, Position(s) | Office and | Complex | ||||||||
| Address1 | Length of | Overseen by | Principal Occupation(s) | Other Directorships | ||||||
| and Age | Time Served2 | Trustee | During Past Five Years | Held by Trustee4 | ||||||
| INTERESTED TRUSTEES3: | ||||||||||
Mario J. Gabelli Trustee and Chief Investment Officer Age: 67 |
Since 2003* | 26 | Chairman and Chief Executive Officer of GAMCO Investors, Inc. and Chief Investment Officer — Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Director/Trustee or Chief Investment Officer of other registered investment companies in the Gabelli/GAMCO Funds complex; Chairman and Chief Executive Officer of GGCP, Inc. | Director of Morgan Group Holdings, Inc. (holding company); Chairman of the Board of LICT Corp. (multimedia and communication services company); Director of CIBL, Inc. (broadcasting and wireless communications) | ||||||
Salvatore M. Salibello Trustee Age: 64 |
Since 2003*** | 3 | Certified Public Accountant and Managing Partner of the public accounting firm Salibello & Broder LLP since 1978 | — | ||||||
Edward T. Tokar Trustee Age: 62 |
Since 2003*** | 2 | Senior Managing Director of Beacon Trust Company (trust services) since 2004; Chief Executive Officer of Allied Capital Management LLC (1977-2004); Vice President of Honeywell International Inc. (1977-2004); Director of Teton Advisors, Inc. (financial services) (2008-present) | Director of CH Energy Group (energy services) | ||||||
| INDEPENDENT TRUSTEES5: | ||||||||||
Anthony J. Colavita Trustee Age: 74 |
Since 2003** | 34 | President of the law firm of Anthony J. Colavita, P.C. | — | ||||||
James P. Conn Trustee Age: 71 |
Since 2003*** | 18 | Former Managing Director and Chief Investment Officer of Financial Security Assurance Holdings Ltd. (insurance holding company) (1992-1998) | — | ||||||
Mario d’Urso Trustee Age: 69 |
Since 2003* | 5 | Chairman of Mittel Capital Markets S.p.A. since 2001; Senator in the Italian Parliament (1996-2001) | — | ||||||
Frank J. Fahrenkopf, Jr. Trustee Age: 70 |
Since 2003** | 6 | President and Chief Executive Officer of the American Gaming Association; Co-Chairman of the Commission on Presidential Debates; Former Chairman of the Republican National Committee (1983-1989) | — | ||||||
Michael J. Melarkey Trustee Age: 60 |
Since 2003* | 5 | Partner in the law firm of Avansino, Melarkey, Knobel & Mulligan | Director of Southwest Gas Corporation (natural gas utility) | ||||||
Anthonie C. van Ekris Trustee Age: 75 |
Since 2003** | 20 | Chairman of BALMAC International, Inc. (commodities and futures trading) | — | ||||||
Salvatore J. Zizza Trustee Age: 64 |
Since 2003** | 28 | Chairman of Zizza & Co., Ltd. (consulting) | Director of Hollis-Eden Pharmaceuticals (biotechnology) Director of Trans-Lux Corporation (business services) | ||||||
22
THE GABELLI DIVIDEND & INCOME TRUST
ADDITIONAL FUND INFORMATION (Continued) (Unaudited)
ADDITIONAL FUND INFORMATION (Continued) (Unaudited)
| Term of | ||||
| Name, Position(s) | Office and | |||
| Address1 | Length of | Principal Occupation(s) | ||
| and Age | Time Served2 | During Past Five Years | ||
OFFICERS: |
||||
Bruce N. Alpert President Age: 58 |
Since 2003 | Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988 and an officer of all of the registered investment companies in the Gabelli/GAMCO Funds complex. Director and President of Teton Advisors, Inc. 1998 through 2008; Chairman of Teton Advisors, Inc. since 2008; Senior Vice President of GAMCO Investors, Inc. since 2008 | ||
Carter W. Austin Vice President Age: 43 |
Since 2003 | Vice President of The Gabelli Equity Trust since 2000, The Gabelli Global Gold, Natural Resources & Income Trust since 2005, The Gabelli Global Deal Fund since 2006, and The Gabelli Healthcare & WellnessRx Trust since 2007; Vice President of Gabelli Funds, LLC since 1996 | ||
Peter D. Goldstein Chief Compliance Officer Age: 56 |
Since 2004 | Director of Regulatory Affairs at GAMCO Investors, Inc. since 2004; Chief Compliance Officer of all of the registered investment companies in the Gabelli/GAMCO Funds complex | ||
Agnes Mullady Treasurer and Secretary Age: 51 |
Since 2006 | Senior Vice President of GAMCO Investors, Inc. since 2009; Vice President of Gabelli Funds, LLC since 2007; Officer of all of the registered investment companies in the Gabelli/GAMCO Funds complex; Senior Vice President of U.S. Trust Company, N.A. and Treasurer and Chief Financial Officer of Excelsior Funds from 2004 through 2005 |
| 1 | Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. | |
| 2 | The Fund’s Board of Trustees is divided into three classes, each class having a term of three years. Each year the term of office of one class expires and the successor or successors elected to such class serve for a three year term. The three year term for each class expires as follows: | |
| * | — Term expires at the Fund’s 2010 Annual Meeting of Shareholders or until their successors are duly elected and qualified. | |
| ** | — Term expires at the Fund’s 2011 Annual Meeting of Shareholders or until their successors are duly elected and qualified. | |
| *** | — Term expires at the Fund’s 2012 Annual Meeting of Shareholders or until their successors are duly elected and qualified. | |
| Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified. | ||
| 3 | “Interested person” of the Fund, as defined in the 1940 Act. Mr. Gabelli is an “interested person” of the Fund as a result of his employment as an officer of the Adviser. Mr. Gabelli is also a registered representative of an affiliated broker-dealer. Mr. Tokar is an “interested person” as a result of his son’s employment by an affiliate of the Adviser. Mr. Salibello may be considered an “interested person” of the Fund as a result of being a partner in an accounting firm that provides professional services to affiliates of the Adviser. | |
| 4 | This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934, as amended (i.e. public companies) or other investment companies registered under the 1940 Act. | |
| 5 | Trustees who are not interested persons are considered “Independent” Trustees. |
Certifications
The Fund’s Chief Executive Officer has certified to the New York Stock Exchange (“NYSE”) that,
as of June 12, 2009, he was not aware of any violation by the Fund of applicable NYSE corporate
governance listing standards. The Fund reports to the SEC on Form N-CSR which contains
certifications by the Fund’s principal executive officer and principal financial officer that
relate to the Fund’s disclosure in such reports and that are required by Rule 30a-2(a) under the
1940 Act.
23
THE GABELLI DIVIDEND & INCOME TRUST
INCOME TAX INFORMATION (Unaudited)
December 31, 2009
INCOME TAX INFORMATION (Unaudited)
December 31, 2009
Cash Dividends and Distributions
| Total Amount | Ordinary | Long-Term | Dividend | |||||||||||||||||||||||||
| Payable | Record | Paid | Investment | Capital | Return of | Reinvestment | ||||||||||||||||||||||
| Date | Date | Per Share (a) | Income (a) | Gains (a) | Capital (c) | Price | ||||||||||||||||||||||
Common Shares |
||||||||||||||||||||||||||||
| 01/23/09 | 01/15/09 | $ | 0.1100 | $ | 0.0227 | — | $ | 0.0873 | $ | 9.8255 | ||||||||||||||||||
| 02/20/09 | 02/12/09 | 0.1100 | 0.0227 | — | 0.0873 | 7.6069 | ||||||||||||||||||||||
| 03/24/09 | 03/17/09 | 0.1100 | 0.0227 | — | 0.0873 | 8.7814 | ||||||||||||||||||||||
| 04/23/09 | 04/16/09 | 0.1000 | 0.0207 | — | 0.0793 | 9.3250 | ||||||||||||||||||||||
| 05/21/09 | 05/14/09 | 0.1000 | 0.0207 | — | 0.0793 | 10.0703 | ||||||||||||||||||||||
| 06/23/09 | 06/16/09 | 0.1000 | 0.0207 | — | 0.0793 | 10.0605 | ||||||||||||||||||||||
| 07/24/09 | 07/17/09 | 0.0600 | 0.0124 | — | 0.0476 | 11.0776 | ||||||||||||||||||||||
| 08/24/09 | 08/17/09 | 0.0600 | 0.0124 | — | 0.0476 | 11.7928 | ||||||||||||||||||||||
| 09/23/09 | 09/16/09 | 0.0600 | 0.0124 | — | 0.0476 | 12.3652 | ||||||||||||||||||||||
| 10/23/09 | 10/16/09 | 0.0600 | 0.0124 | — | 0.0476 | 12.7859 | ||||||||||||||||||||||
| 11/20/09 | 11/13/09 | 0.0600 | 0.0124 | — | 0.0476 | 12.7775 | ||||||||||||||||||||||
| 12/17/09 | 12/14/09 | 0.0600 | 0.0124 | — | 0.0476 | 12.7443 | ||||||||||||||||||||||
| $ | 0.9900 | $ | 0.2046 | — | $ | 0.7854 | ||||||||||||||||||||||
5.875% Series
A Cumulative
Preferred Shares |
||||||||||||||||||||||||||||
| 03/26/09 | 03/19/09 | $ | 0.36719 | $ | 0.36719 | — | ||||||||||||||||||||||
| 06/26/09 | 06/19/09 | 0.36719 | 0.36719 | — | ||||||||||||||||||||||||
| 09/28/09 | 09/21/09 | 0.36719 | 0.36719 | — | ||||||||||||||||||||||||
| 12/28/09 | 12/18/09 | 0.36719 | 0.36719 | — | ||||||||||||||||||||||||
| $ | 1.46875 | $ | 1.46875 | — | ||||||||||||||||||||||||
6.000% Series
D Cumulative
Preferred Shares |
||||||||||||||||||||||||||||
| 03/26/09 | 03/19/09 | $ | 0.37500 | $ | 0.37500 | — | ||||||||||||||||||||||
| 06/26/09 | 06/19/09 | 0.37500 | 0.37500 | — | ||||||||||||||||||||||||
| 09/28/09 | 09/21/09 | 0.37500 | 0.37500 | — | ||||||||||||||||||||||||
| 12/28/09 | 12/18/09 | 0.37500 | 0.37500 | — | ||||||||||||||||||||||||
| $ | 1.50000 | $ | 1.50000 | — | ||||||||||||||||||||||||
Series B and C Auction Market Cumulative and Series E Auction Rate Cumulative Preferred Shares
The Series B Auction Market Cumulative Preferred Shares, Series C Auction Market Cumulative
Preferred Shares, and Series E Auction Rate Cumulative Preferred Shares pay dividends weekly based
on a rate set at auction, usually held every seven days. There were no 2009 distributions derived
from long-term capital gains for the Series B, Series C, or Series E Auction Rate Cumulative
Preferred Shares.
A Form 1099-DIV has been mailed to all shareholders of record for the distributions mentioned
above, setting forth specific amounts to be included in the 2009 tax returns. Ordinary income
distributions include
net investment income and realized net short-term capital gains. Ordinary income is reported
in box 1a of Form 1099-DIV. Capital gain distributions are reported in box 2 of Form 1099-DIV.
24
THE GABELLI DIVIDEND & INCOME TRUST
INCOME TAX INFORMATION (Continued) (Unaudited)
December 31, 2009
INCOME TAX INFORMATION (Continued) (Unaudited)
December 31, 2009
Corporate Dividends Received Deduction, Qualified Dividend Income, and U.S. Government
Securities Income
In 2009, the Fund paid to common, 5.875% Series A, and 6.00% Series D Cumulative Preferred
shareholders ordinary income dividends of $0.2046, $1.46875, and $1.50 per share, respectively. The
Fund paid weekly distributions to Series B, C, and E preferred shareholders at varying rates
throughout the year, including ordinary income dividends totaling $388.12, $388.02, and $451.10 per
share, respectively. For the year ended December 31, 2009, 100% of the ordinary dividend qualified
for the dividends received deduction available to corporations, and 100% of the ordinary income
distribution was qualified dividend income. The percentage of ordinary income dividends paid by the
Fund during 2009 derived from U.S. Treasury securities was 0.08%. Such income is exempt from state
and local tax in all states. However, many states, including New York and California, allow a tax
exemption for a portion of the income earned only if a mutual fund has invested at least 50% of its
assets at the end of each quarter of the Fund’s fiscal year in U.S. Government securities. The Fund
did not meet this strict requirement in 2009. The percentage of U.S. Treasury securities held as of
December 31, 2009 was 6.19%.
Historical Distribution Summary
| Short-Term | Long-Term | Adjustment | ||||||||||||||||||||||
| Investment | Capital | Capital | Return of | Total | to | |||||||||||||||||||
| Income (b) | Gains (b) | Gains | Capital (c) | Distributions (a) | Cost Basis (d) | |||||||||||||||||||
Common Shares |
||||||||||||||||||||||||
2009 |
$ | 0.20460 | — | — | $ | 0.78540 | $ | 0.99000 | $ | 0.78540 | ||||||||||||||
2008 |
0.27910 | — | $ | 0.00250 | 0.99840 | 1.28000 | 0.99840 | |||||||||||||||||
2007 |
0.50910 | $ | 0.23480 | 0.91610 | — | 1.66000 | — | |||||||||||||||||
2006 |
0.60798 | 0.24082 | 0.69120 | — | 1.54000 | — | ||||||||||||||||||
2005 |
0.45996 | 0.08568 | 0.65436 | — | 1.20000 | — | ||||||||||||||||||
2004 |
0.40005 | 0.10023 | 0.13893 | 0.56079 | 1.20000 | 0.56079 | ||||||||||||||||||
5.875% Series A Cumulative Preferred Shares |
||||||||||||||||||||||||
2009 |
$ | 1.46875 | — | — | — | $ | 0.146875 | — | ||||||||||||||||
2008 |
1.46583 | — | $ | 0.00292 | — | 1.46875 | — | |||||||||||||||||
2007 |
0.45059 | $ | 0.20776 | 0.81040 | — | 1.46875 | — | |||||||||||||||||
2006 |
0.57983 | 0.22967 | 0.65925 | — | 1.46875 | — | ||||||||||||||||||
2005 |
0.56290 | 0.10493 | 0.80092 | — | 1.46875 | — | ||||||||||||||||||
2004 |
0.19150 | 0.04798 | 0.06651 | — | 0.30599 | — | ||||||||||||||||||
6.000% Series D Cumulative Preferred Shares |
||||||||||||||||||||||||
2009 |
$ | 1.50000 | — | — | — | $ | 1.50000 | — | ||||||||||||||||
2008 |
1.49700 | — | $ | 0.00300 | — | 1.50000 | — | |||||||||||||||||
2007 |
0.46020 | $ | 0.21220 | 0.82760 | — | 1.50000 | — | |||||||||||||||||
2006 |
0.59215 | 0.23457 | 0.67328 | — | 1.50000 | — | ||||||||||||||||||
2005 |
0.08620 | 0.01610 | 0.12270 | — | 0.22500 | — | ||||||||||||||||||
Auction Market/Rate Cumulative Preferred Shares |
||||||||||||||||||||||||
2009 Class B Shares |
$ | 388.12000 | — | — | — | $ | 388.12000 | — | ||||||||||||||||
2009 Class C Shares |
388.02000 | — | — | — | 388.02000 | — | ||||||||||||||||||
2009 Class E Shares |
451.10000 | — | — | — | 451.10000 | — | ||||||||||||||||||
2008 Class B Shares |
944.35220 | — | $ | 1.87780 | — | 946.23000 | — | |||||||||||||||||
2008 Class C Shares |
966.50741 | — | 1.92259 | — | 968.43000 | — | ||||||||||||||||||
2008 Class E Shares |
1,044.21367 | — | 2.07633 | — | 1,046.29000 | — | ||||||||||||||||||
2007 Class B Shares |
414.02782 | $ | 190.66719 | 743.74499 | — | 1,348.44000 | — | |||||||||||||||||
2007 Class C Shares |
409.97064 | 188.64406 | 735.87530 | — | 1,334.49000 | — | ||||||||||||||||||
2007 Class E Shares |
407.63287 | 187.65002 | 731.97711 | — | 1,327.26000 | — | ||||||||||||||||||
2006 Class B Shares |
484.90820 | 192.07260 | 551.32920 | — | 1228.31000 | — | ||||||||||||||||||
2006 Class C Shares |
484.32800 | 191.84250 | 550.66950 | — | 1226.84000 | — | ||||||||||||||||||
2006 Class E Shares |
483.94880 | 191.69260 | 550.23860 | — | 1225.88000 | — | ||||||||||||||||||
2005 Class B Shares |
320.22640 | 59.69220 | 455.63150 | — | 835.55000 | — | ||||||||||||||||||
2005 Class C Shares |
324.19300 | 60.43160 | 461.27540 | — | 845.90000 | — | ||||||||||||||||||
2005 Class E Shares |
67.54440 | 12.59070 | 96.10490 | — | 176.24000 | — | ||||||||||||||||||
2004 Class B Shares |
68.71140 | 17.21520 | 23.86340 | — | 109.80000 | — | ||||||||||||||||||
2004 Class C Shares |
70.77030 | 17.73100 | 24.57840 | — | 113.10000 | — | ||||||||||||||||||
| (a) | Total amounts may differ due to rounding. | |
| (b) | Taxable as ordinary income for federal tax purposes. | |
| (c) | Non-taxable. | |
| (d) | Decrease in cost basis. |
All designations are based on financial information available as of the date of this
annual report and, accordingly, are subject to change. For each item, it is the intention of the
Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations
thereunder.
25
THE GABELLI DIVIDEND & INCOME TRUST
ANNUAL APPROVAL OF CONTINUANCE OF INVESTMENT ADVISORY AGREEMENT
During the six months ended December 31, 2009, the Board of Trustees of the Trust approved the
continuation of the investment advisory agreement with the Adviser for the Trust on the basis of
the recommendation by the trustees (the “Independent Board Members”) who are not “interested
persons” of the Trust. The following paragraphs summarize the material information and factors
considered by the Independent Board Members as well as their conclusions relative to such factors.
Nature, Extent, and Quality of Services. The Independent Board Members considered information
regarding the portfolio managers, the depth of the analyst pool available to the Adviser and the
portfolio managers, the scope of administrative, shareholder, and other services supervised or
provided by the Adviser, and the absence of significant service problems reported to the Board. The
Independent Board Members noted the experience, length of service, and reputation of the portfolio
managers.
Investment Performance. The Independent Board Members reviewed the performance of the Fund over
one, three, and five year periods against a peer group of equity closed-end funds prepared by
Lipper. The Board Members noted the Fund’s second quartile relative performance for the one, three,
and five year periods. The Board Members also noted that the Fund has not achieved its initial goal
of earning at least 9% per year.
Profitability. The Independent Board Members reviewed summary data regarding the profitability of
the Fund to the Adviser.
Economies of Scale. The Independent Board Members noted that the Fund was a closed-end fund trading
at a discount to net asset value and, accordingly, unlikely to achieve growth of the type that
might lead to economies of scale that the shareholders would not participate in. The Independent
Board Members noted that the investment management fee schedule for the Fund does not take into
account any potential economies of scale that may develop.
Service and Cost Comparisons. The Independent Board Members compared the expense ratios of the
investment management fee, other expenses, and total expenses of the Fund with similar expense
ratios of the Lipper peer group of equity closed-end value funds and noted that the Adviser’s
management fee includes substantially all administrative services of the Fund as well as investment
advisory services. The Board noted that the Fund was larger than average within the peer group and
that its expense ratios were slightly below average. The Board Members compared the fee with the
fees charged by the Adviser for other funds and noted that neither the Adviser nor any of its
affiliates managed any other accounts with a similar mandate.
Conclusions. The Independent Board Members concluded that the Fund enjoyed highly experienced
portfolio management services, good ancillary services, and a reasonable performance record. The
Independent Board Members also concluded that the Fund’s expense ratios and the profitability to
the Adviser of managing the Fund were reasonable, and that economies of scale were not a
significant factor in their thinking. The Board Members did not view the potential profitability of
ancillary services as material to their decision. On the basis of the foregoing and without
assigning particular weight to any single conclusion, the Independent
Board Members determined to recommend continuation of the Advisory Agreement to the full Board.
The Annual Meeting of The Gabelli Dividend & Income Trust’s shareholders will be
held on Monday, May 17, 2010 at the Greenwich Library in Greenwich, Connecticut.
26
TRUSTEES AND OFFICERS
THE GABELLI DIVIDEND & INCOME TRUST
One Corporate Center, Rye, NY 10580-1422
THE GABELLI DIVIDEND & INCOME TRUST
One Corporate Center, Rye, NY 10580-1422
Trustees |
Mario J. Gabelli, CFA |
Chairman & Chief Executive Officer, |
GAMCO Investors, Inc. |
Anthony J. Colavita |
President, |
Anthony J. Colavita, P.C. |
James P. Conn |
Former Managing Director & |
Chief Investment Officer, |
Financial Security Assurance Holdings Ltd. |
Mario d’Urso |
Former Italian Senator |
Frank J. Fahrenkopf, Jr. |
President & Chief Executive Officer, |
American Gaming Association |
Michael J. Melarkey |
Attorney-at-Law, |
Avansino, Melarkey, Knobel & Mulligan |
Salvatore M. Salibello |
Certified Public Accountant, |
Salibello & Broder, LLP |
Edward T. Tokar |
Senior Managing Director, |
Beacon Trust Company |
Anthonie C. van Ekris |
Chairman, BALMAC International, Inc. |
Salvatore J. Zizza |
Chairman, Zizza & Co., Ltd. |
Officers |
Bruce N. Alpert |
President |
Carter W. Austin |
Vice President |
Peter D. Goldstein |
Chief Compliance Officer |
Agnes Mullady |
Treasurer & Secretary |
Investment Adviser |
Gabelli Funds, LLC |
One Corporate Center |
Rye, New York 10580-1422 |
Custodian |
State Street Bank and Trust Company |
Counsel |
Skadden, Arps, Slate, Meagher & Flom LLP |
Transfer Agent and Registrar |
Computershare Trust Company, N.A. |
Stock Exchange Listing
| 5.875% | 6.00% | |||||||||||
| Common | Preferred | Preferred | ||||||||||
NYSE–Symbol: |
GDV | GDV PrA | GDV PrD | |||||||||
Shares Outstanding: |
83,468,637 | 3,048,019 | 2,542,296 | |||||||||
The Net Asset Value per share appears in the Publicly Traded Funds column, under the heading
“General Equity Funds,” in Monday’s The Wall Street Journal. It is also listed in Barron’s Mutual
Funds/Closed End Funds section under the heading “General Equity Funds.”
The Net Asset Value per share may be obtained each day by calling (914) 921-5070 or visiting
www.gabelli.com.
For general information about the Gabelli Funds, call 800-GABELLI (800-422-3554), fax us at
914-921-5118, visit Gabelli Funds’ Internet homepage at: www.gabelli.com, or e-mail us at:
closedend@gabelli.com
Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as
amended, that the Fund may, from time to time, purchase its common shares in the open market when
the Fund’s shares are trading at a discount of 7.5% or more from the net asset value of the
shares. The Fund may also, from time to time, purchase its preferred shares in the open market
when the preferred shares are trading at a discount to the liquidation value.
Item 2. Code of Ethics.
| (a) | The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. | ||
| (c) | There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. | ||
| (d) | The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions. |
Item 3. Audit Committee Financial Expert.
As of the end of the period covered by the report, the registrant’s Board of Trustees has
determined that Salvatore J. Zizza is qualified to serve as an audit committee financial expert
serving on its audit committee and that he is “independent,” as defined by Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
Audit Fees
| (a) | The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $62,700 for 2008 and $52,600 for 2009. |
Audit-Related Fees
| (b) | The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item are $9,145 |
| for 2008 and $9,400 for 2009. Audit-related fees represent services provided in the preparation of Preferred Shares Reports. |
Tax Fees
| (c) | The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $5,000 for 2008 and $5,000 for 2009. Tax fees represent tax compliance services provided in connection with the review of the Registrant’s tax returns. |
All Other Fees
| (d) | The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 for 2008 and $0 for 2009. | ||
| (e)(1) | Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. | ||
| Pre-Approval Policies and Procedures. The Audit Committee (“Committee”) of the registrant is responsible for pre-approving (i) all audit and permissible non-audit services to be provided by the independent registered public accounting firm to the registrant and (ii) all permissible non-audit services to be provided by the independent registered public accounting firm to the Adviser, Gabelli Funds, LLC, and any affiliate of Gabelli Funds, LLC (“Gabelli”) that provides services to the registrant (a “Covered Services Provider”) if the independent registered public accounting firm’s engagement related directly to the operations and financial reporting of the registrant. The Committee may delegate its responsibility to pre-approve any such audit and permissible non-audit services to the Chairperson of the Committee, and the Chairperson must report to the Committee, at its next regularly scheduled meeting after the Chairperson’s pre-approval of such services, his or her decision(s). The Committee may also establish detailed pre-approval policies and procedures for pre-approval of such services in accordance with applicable laws, including the delegation of some or all of the Committee’s pre-approval responsibilities to the other persons (other than Gabelli or the registrant’s officers). Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the permissible non-audit services were not recognized by the registrant at the time of the engagement to be non-audit services; and (ii) such services are promptly brought to the attention of the Committee and approved by the Committee or Chairperson prior to the completion of the audit. | |||
| (e)(2) | The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows: |
| (b) | 100% | ||
| (c) | 100% | ||
| (d) | N/A |
| (f) | The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work |
| performed by persons other than the principal accountant’s full-time, permanent employees was zero percent (0%). | |||
| (g) | The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $0 for 2008 and $0 for 2009. | ||
| (h) | The registrant’s audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. |
Item 5. Audit Committee of Listed registrants.
The registrant has a separately designated audit committee consisting of the following members:
Frank J. Fahrenkopf, Jr., Anthonie C. van Ekris and Salvatore J. Zizza.
Item 6. Investments.
| (a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. |
| (b) | Not applicable. |
| Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
The Proxy Voting Policies are attached herewith.
The Voting of Proxies on Behalf of Clients
Rules 204(4)-2 and 204-2 under the Investment Advisers Act of 1940 and Rule 30b1-4 under the
Investment Company Act of 1940 require investment advisers to adopt written policies and procedures
governing the voting of proxies on behalf of their clients.
These procedures will be used by GAMCO Asset Management Inc., Gabelli Funds, LLC, Gabelli
Securities, Inc., and Teton Advisors, Inc. (collectively, the “Advisers”) to determine how to vote
proxies relating to portfolio securities held by their clients, including the procedures that the
Advisers use when a vote presents a conflict between the interests of the shareholders of an
investment company managed by one of the Advisers, on the one hand, and those of the Advisers; the
principal underwriter; or any affiliated person of the investment company, the Advisers, or the
principal underwriter. These procedures will not apply where the Advisers do not have voting
discretion or where the Advisers have agreed to with a client to vote the client’s proxies in
accordance with specific guidelines or procedures supplied by the client (to the extent permitted
by ERISA).
I. Proxy Voting Committee
The Proxy Voting Committee was originally formed in April 1989 for the purpose of formulating
guidelines and reviewing proxy statements within the parameters set by the substantive proxy voting
guidelines originally published in 1988 and updated periodically, a copy of which are appended as
Exhibit A. The Committee will include representatives of Research, Administration, Legal, and the
Advisers. Additional or replacement members of the Committee will be nominated by the Chairman and
voted upon by the entire Committee.
Meetings are held as needed basis to form views on the manner in which the Advisers should
vote proxies on behalf of their clients.
In general, the Director of Proxy Voting Services, using the Proxy Guidelines, recommendations
of Institutional Shareholder Corporate Governance Service (“ISS”), other third-party services and
the analysts of Gabelli & Company, Inc., will determine
how to vote on each issue. For non-controversial matters, the Director of Proxy Voting
Services may vote the proxy if the vote is (1) consistent with the recommendations of the issuer’s
Board of Directors and not contrary to the Proxy Guidelines; (2) consistent with the
recommendations of the issuer’s Board of Directors and is a non-controversial issue not covered by
the Proxy Guidelines; or (3) the vote is contrary to the recommendations of the Board of Directors
but is consistent with the Proxy Guidelines. In those instances, the Director of Proxy Voting
Services or the Chairman of the Committee may sign and date the proxy statement indicating how each
issue will be voted.
All matters identified by the Chairman of the Committee, the Director of Proxy Voting Services
or the Legal Department as controversial, taking into account the
recommendations of ISS or other
third party services and the analysts of Gabelli & Company, Inc., will be presented to the Proxy
Voting Committee. If the Chairman of the Committee, the Director of Proxy Voting Services or the
Legal Department has identified the matter as one that (1) is controversial; (2) would benefit from
deliberation by the Proxy Voting Committee; or (3) may give rise to a conflict of interest between
the Advisers and their clients, the Chairman of the Committee will initially determine what vote to
recommend that the Advisers should cast and the matter will go before the Committee.
| A. | Conflicts of Interest. | ||
| The Advisers have implemented these proxy voting procedures in order to prevent conflicts of interest from influencing their proxy voting decisions. By following the Proxy Guidelines, as well as the recommendations of ISS, other third-party services and the analysts of Gabelli & Company, the Advisers are able to avoid, wherever possible, the influence of potential conflicts of interest. Nevertheless, circumstances may arise in which one or more of the Advisers are faced with a conflict of interest or the appearance of a conflict of interest in connection with its vote. In general, a conflict of interest may arise when an Adviser knowingly does business with an issuer, and may appear to have a material conflict between its own interests and the interests of the shareholders of an investment company managed by one of the Advisers regarding how the proxy is to be voted. A conflict also may exist when an Adviser has actual knowledge of a material business arrangement between an issuer and an affiliate of the Adviser. | |||
| In practical terms, a conflict of interest may arise, for example, when a proxy is voted for a company that is a client of one of the Advisers, such as GAMCO Asset Management Inc. A conflict also may arise when a client of one of the Advisers has made a shareholder proposal in a proxy to be voted upon by one or more of the Advisers. The Director of Proxy Voting Services, together with the Legal Department, will scrutinize all proxies for these or other situations that may give rise to a conflict of interest with respect to the voting of proxies. | |||
| B. | Operation of Proxy Voting Committee | ||
| For matters submitted to the Committee, each member of the Committee will receive, prior to the meeting, a copy of the proxy statement, any relevant third party research, a summary of any views provided by the Chief Investment Officer and any recommendations by Gabelli & Company, Inc. analysts. The Chief Investment Officer or the Gabelli & Company, Inc. analysts may be invited to present their viewpoints. If the Director of Proxy Voting Services or the Legal Department believe that the matter before the committee is one with respect to which a conflict of interest may exist between the Advisers and their clients, counsel will |
| provide an opinion to the Committee concerning the conflict. If the matter is one in which the interests of the clients of one or more of Advisers may diverge, counsel will so advise and the Committee may make different recommendations as to different clients. For any matters where the recommendation may trigger appraisal rights, counsel will provide an opinion concerning the likely risks and merits of such an appraisal action. |
Each matter submitted to the Committee will be determined by the vote of a majority of the
members present at the meeting. Should the vote concerning one or more recommendations be tied in
a vote of the Committee, the Chairman of the Committee will cast the deciding vote. The Committee
will notify the proxy department of its decisions and the proxies will be voted accordingly.
Although the Proxy Guidelines express the normal preferences for the voting of any shares not
covered by a contrary investment guideline provided by the client, the Committee is not bound by
the preferences set forth in the Proxy Guidelines and will review each matter on its own merits.
Written minutes of all Proxy Voting Committee meetings will be maintained. The Advisers subscribe
to ISS, which supplies current information on companies, matters being voted on, regulations,
trends in proxy voting and information on corporate governance issues.
If the vote cast either by the analyst or as a result of the deliberations of the Proxy Voting
Committee runs contrary to the recommendation of the Board of Directors of the issuer, the matter
will be referred to legal counsel to determine whether an amendment to the most recently filed
Schedule 13D is appropriate.
II. Social Issues and Other Client Guidelines
If a client has provided special instructions relating to the voting of proxies, they should
be noted in the client’s account file and forwarded to the proxy department. This is the
responsibility of the investment professional or sales assistant for the client. In accordance
with Department of Labor guidelines, the Advisers’ policy is to vote on behalf of ERISA accounts in
the best interest of the plan participants with regard to social issues that carry an economic
impact. Where an account is not governed by ERISA, the Advisers will vote shares held on behalf of
the client in a manner consistent with any individual investment/voting guidelines provided by the
client. Otherwise the Advisers will abstain with respect to those shares.
III. Client Retention of Voting Rights
If a client chooses to retain the right to vote proxies or if there is any change in voting
authority, the following should be notified by the investment professional or sales assistant for
the client.
- Operations
- Legal Department
- Proxy Department
- Investment professional assigned to the account
In the event that the Board of Directors (or a Committee thereof) of one or more of the
investment companies managed by one of the Advisers has retained direct voting control over any
security, the Proxy Voting Department will provide each Board Member (or Committee member) with a
copy of the proxy statement together with any other relevant information including recommendations
of ISS or other third-party services.
IV. Voting Records
The Proxy Voting Department will retain a record of matters voted upon by the Advisers for
their clients. The Advisers will supply information on how an account voted its proxies upon
request.
A letter is sent to the custodians for all clients for which the Advisers have voting
responsibility instructing them to forward all proxy materials to:
[Adviser name]
Attn: Proxy Voting Department
One Corporate Center
Rye, New York 10580-1433
Attn: Proxy Voting Department
One Corporate Center
Rye, New York 10580-1433
The sales assistant sends the letters to the custodians along with the trading/DTC instructions.
Proxy voting records will be retained in compliance with Rule 204-2 under the Investment Advisers
Act.
V. Voting Procedures
1. Custodian banks, outside brokerage firms and clearing firms are responsible for forwarding
proxies directly to the Advisers.
Proxies are received in one of two forms:
| • | Shareholder Vote Authorization Forms (“VAFs”) — Issued by Broadridge Financial Solutions, Inc. (“Broadridge”) VAFs must be voted through the issuing institution causing a time lag. Broadridge is an outside service contracted by the various institutions to issue proxy materials. | |
| • | Proxy cards which may be voted directly. |
2. Upon receipt of the proxy, the number of shares each form represents is logged into the proxy
system according to security.
3. In the case of a discrepancy such as an incorrect number of shares, an improperly signed
or dated card, wrong class of security, etc., the issuing custodian is notified by phone. A
corrected proxy is requested. Any arrangements are made to insure that a
proper proxy is received
in time to be voted (overnight delivery, fax, etc.). When securities are out on loan on record
date, the custodian is requested to supply written verification.
4. Upon receipt of instructions from the proxy committee (see Administrative), the votes are cast
and recorded for each account on an individual basis.
Records have been maintained on the Proxy Edge system. The system is backed up regularly.
Proxy Edge records include:
Security Name and Cusip Number
Date and Type of Meeting (Annual, Special, Contest)
Client Name
Adviser or Fund Account Number
Directors’ Recommendation
How GAMCO voted for the client on each issue
Date and Type of Meeting (Annual, Special, Contest)
Client Name
Adviser or Fund Account Number
Directors’ Recommendation
How GAMCO voted for the client on each issue
5. VAFs are kept alphabetically by security. Records for the current proxy season are located in
the Proxy Voting Department office. In preparation for the upcoming season, files are transferred
to an offsite storage facility during January/February.
6. Shareholder Vote Authorization Forms issued by Broadridge are always sent directly to a
specific individual at Broadridge.
7. If a proxy card or VAF is received too late to be voted in the conventional matter, every
attempt is made to vote on one of the following manners:
| • | VAFs can be faxed to Broadridge up until the time of the meeting. This is followed up by mailing the original form. | |
| • | When a solicitor has been retained, the solicitor is called. At the solicitor’s direction, the proxy is faxed. |
8. In the case of a proxy contest, records are maintained for each opposing entity.
9. Voting in Person
a) At times it may be necessary to vote the shares in person. In this case, a “legal proxy” is
obtained in the following manner:
| • | Banks and brokerage firms using the services at Broadridge: |
The back of the VAF is stamped indicating that we wish to vote in person. The forms are then
sent overnight to Broadridge. Broadridge issues individual legal proxies and
sends them back via
overnight (or the Adviser can pay messenger charges). A lead-time of at least two weeks prior to
the meeting is needed to do this. Alternatively, the procedures detailed below for banks not using
Broadridge may be implemented.
| • | Banks and brokerage firms issuing proxies directly: |
The bank is called and/or faxed and a legal proxy is requested.
All legal proxies should appoint:
“Representative of [Adviser name] with full power of substitution.”
b) The legal proxies are given to the person attending the meeting along with the following
supplemental material:
| • | A limited Power of Attorney appointing the attendee an Adviser representative. |
| • | A list of all shares being voted by custodian only. Client names and account numbers are not included. This list must be presented, along with the proxies, to the Inspectors of Elections and/or tabulator at least one-half hour prior to the scheduled start of the meeting. The tabulator must “qualify” the votes (i.e. determine if the vote have previously been cast, if the votes have been rescinded, etc. vote have previously been cast, etc.). |
| • | A sample ERISA and Individual contract. |
| • | A sample of the annual authorization to vote proxies form. |
| • | A copy of our most recent Schedule 13D filing (if applicable). |
Appendix A
Proxy Guidelines
Proxy Guidelines
PROXY VOTING GUIDELINES
GENERAL POLICY STATEMENT
It is the policy of GAMCO Investors, Inc. to vote in the best economic interests of our clients.
As we state in our Magna Carta of Shareholders Rights, established in May 1988, we are neither for
nor against management. We are for shareholders.
At our first proxy committee meeting in 1989, it was decided that each proxy statement should be
evaluated on its own merits within the framework first established by our Magna Carta of
Shareholders Rights. The attached guidelines serve to enhance that broad framework.
We do not consider any issue routine. We take into consideration all of our research on the
company, its directors, and their short and long-term goals for the company. In cases where issues
that we generally do not approve of are combined with other issues, the negative aspects of the
issues will be factored into the evaluation of the overall proposals but will not necessitate a
vote in opposition to the overall proposals.
BOARD OF DIRECTORS
The advisers do not consider the election of the Board of Directors a routine issue. Each slate of
directors is evaluated on a case-by-case basis.
Factors taken into consideration include:
| • | Historical responsiveness to shareholders |
| This may include such areas as: |
| -Paying greenmail | |
| -Failure to adopt shareholder resolutions receiving a majority of shareholder votes |
| • | Qualifications |
| • | Nominating committee in place |
| • | Number of outside directors on the board |
| • | Attendance at meetings |
| • | Overall performance |
SELECTION OF AUDITORS
In general, we support the Board of Directors’ recommendation for auditors.
BLANK CHECK PREFERRED STOCK
We oppose the issuance of blank check preferred stock.
Blank check preferred stock allows the company to issue stock and establish dividends, voting
rights, etc. without further shareholder approval.
CLASSIFIED BOARD
A classified board is one where the directors are divided into classes with overlapping terms. A
different class is elected at each annual meeting.
While a classified board promotes continuity of directors facilitating long range planning, we feel
directors should be accountable to shareholders on an annual basis. We will look
at this proposal
on a case-by-case basis taking into consideration the board’s historical responsiveness to the
rights of shareholders.
Where a classified board is in place we will generally not support attempts to change to an
annually elected board.
When an annually elected board is in place, we generally will not support attempts to classify the
board.
INCREASE AUTHORIZED COMMON STOCK
The request to increase the amount of outstanding shares is considered on a case-by-case basis.
Factors taken into consideration include:
| • | Future use of additional shares |
| -Stock split | |
| -Stock option or other executive compensation plan | |
| -Finance growth of company/strengthen balance sheet | |
| -Aid in restructuring | |
| -Improve credit rating | |
| -Implement a poison pill or other takeover defense |
| • | Amount of stock currently authorized but not yet issued or reserved for stock option plans |
| • | Amount of additional stock to be authorized and its dilutive effect |
We will support this proposal if a detailed and verifiable plan for the use of the additional
shares is contained in the proxy statement.
CONFIDENTIAL BALLOT
We support the idea that a shareholder’s identity and vote should be treated with confidentiality.
However, we look at this issue on a case-by-case basis.
In order to promote confidentiality in the voting process, we endorse the use of independent
Inspectors of Election.
CUMULATIVE VOTING
In general, we support cumulative voting.
Cumulative voting is a process by which a shareholder may multiply the number of directors being
elected by the number of shares held on record date and cast the total number for one candidate or
allocate the voting among two or more candidates.
Where cumulative voting is in place, we will vote against any proposal to rescind this shareholder
right.
Cumulative voting may result in a minority block of stock gaining representation on the board.
When a proposal is made to institute cumulative voting, the proposal will be reviewed on a
case-by-case basis. While we feel that each board member should represent all shareholders,
cumulative voting provides minority shareholders an opportunity to have their views represented.
DIRECTOR LIABILITY AND INDEMNIFICATION
We support efforts to attract the best possible directors by limiting the liability and increasing
the indemnification of directors, except in the case of insider dealing.
EQUAL ACCESS TO THE PROXY
The SEC’s rules provide for shareholder resolutions. However, the resolutions are limited in scope
and there is a 500 word limit on proponents’ written arguments. Management has no such
limitations. While we support equal access to the proxy, we would look at such variables as length
of time required to respond, percentage of ownership, etc.
FAIR PRICE PROVISIONS
Charter provisions requiring a bidder to pay all shareholders a fair price are intended to prevent
two-tier tender offers that may be abusive. Typically, these provisions do not apply to
board-approved transactions.
We support fair price provisions because we feel all shareholders should be entitled to receive the
same benefits.
Reviewed on a case-by-case basis.
GOLDEN PARACHUTES
Golden parachutes are severance payments to top executives who are terminated or demoted after a
takeover.
We support any proposal that would assure management of its own welfare so that they may continue
to make decisions in the best interest of the company and shareholders even if the decision results
in them losing their job. We do not, however, support excessive golden parachutes. Therefore,
each proposal will be decided on a case-by- case basis.
Note: Congress has imposed a tax on any parachute that is more than three times the executive’s
average annual compensation.
ANTI-GREENMAIL PROPOSALS
We do not support greenmail. An offer extended to one shareholder should be extended to all
shareholders equally across the board.
LIMIT SHAREHOLDERS’ RIGHTS TO CALL SPECIAL MEETINGS
We support the right of shareholders to call a special meeting.
CONSIDERATION OF NONFINANCIAL EFFECTS OF A MERGER
This proposal releases the directors from only looking at the financial effects of a merger and
allows them the opportunity to consider the merger’s effects on employees, the community, and
consumers.
As a fiduciary, we are obligated to vote in the best economic interests of our clients. In
general, this proposal does not allow us to do that. Therefore, we generally cannot support this
proposal.
Reviewed on a case-by-case basis.
MERGERS, BUYOUTS, SPIN-OFFS, RESTRUCTURINGS
Each of the above is considered on a case-by-case basis. According to the Department of Labor, we
are not required to vote for a proposal simply because the offering price is at a premium to the
current market price. We may take into consideration the long term interests of the shareholders.
MILITARY ISSUES
Shareholder proposals regarding military production must be evaluated on a purely economic set of
criteria for our ERISA clients. As such, decisions will be made on a case-by-case basis.
In voting on this proposal for our non-ERISA clients, we will vote according to the client’s
direction when applicable. Where no direction has been given, we will vote in the best economic
interests of our clients. It is not our duty to impose our social judgment on others.
NORTHERN IRELAND
Shareholder proposals requesting the signing of the MacBride principles for the purpose of
countering the discrimination of Catholics in hiring practices must be evaluated on a purely
economic set of criteria for our ERISA clients. As such, decisions will be made on a case-by-case
basis.
In voting on this proposal for our non-ERISA clients, we will vote according to client direction
when applicable. Where no direction has been given, we will vote in the best economic interests of
our clients. It is not our duty to impose our social judgment on others.
OPT OUT OF STATE ANTI-TAKEOVER LAW
This shareholder proposal requests that a company opt out of the coverage of the state’s takeover
statutes. Example: Delaware law requires that a buyer must acquire at least 85% of the company’s
stock before the buyer can exercise control unless the board approves.
We consider this on a case-by-case basis. Our decision will be based on the following:
| • | State of Incorporation |
| • | Management history of responsiveness to shareholders |
| • | Other mitigating factors |
POISON PILL
In general, we do not endorse poison pills.
In certain cases where management has a history of being responsive to the needs of shareholders
and the stock is very liquid, we will reconsider this position.
REINCORPORATION
Generally, we support reincorporation for well-defined business reasons. We oppose reincorporation
if proposed solely for the purpose of reincorporating in a state with more stringent anti-takeover
statutes that may negatively impact the value of the stock.
STOCK OPTION PLANS
Stock option plans are an excellent way to attract, hold and motivate directors and employees.
However, each stock option plan must be evaluated on its own merits, taking into consideration the
following:
| • | Dilution of voting power or earnings per share by more than 10% | |
| • | Kind of stock to be awarded, to whom, when and how much | |
| • | Method of payment |
| • | Amount of stock already authorized but not yet issued under existing stock option plans |
SUPERMAJORITY VOTE REQUIREMENTS
Supermajority vote requirements in a company’s charter or bylaws require a level of voting approval
in excess of a simple majority of the outstanding shares. In general, we oppose
supermajority-voting requirements. Supermajority requirements often exceed the average level of
shareholder participation. We support proposals’ approvals by a simple majority of the shares
voting.
LIMIT SHAREHOLDERS RIGHT TO ACT BY WRITTEN CONSENT
Written consent allows shareholders to initiate and carry on a shareholder action without having to
wait until the next annual meeting or to call a special meeting. It permits action to be taken by
the written consent of the same percentage of the shares that would be required to effect proposed
action at a shareholder meeting.
Reviewed on a case-by-case basis.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
PORTFOLIO MANAGERS
Mr. Mario J. Gabelli, CFA, is primarily responsible for the day-to-day management of The Gabelli
Dividend & Income Trust, (the Trust). Mr. Gabelli has served as Chairman, Chief Executive Officer,
and Chief Investment Officer —Value Portfolios of GAMCO Investors, Inc. and its affiliates since
their organization.
Additionally, Barbara G. Marcin serves as Senior Portfolio Manager for the Trust. Ms. Marcin
joined GAMCO Investors, Inc. in 1999 to manage larger capitalization value style portfolios.
MANAGEMENT OF OTHER ACCOUNTS
The table below shows the number of other accounts managed by the Portfolio Managers and the total
assets in each of the following categories: registered investment companies, other paid investment
vehicles and other accounts. For each category, the table also shows the number of accounts and
the total assets in the accounts with respect to which the advisory fee is based on account
performance.
| No. of | Total Assets | |||||||||||||||||
| Accounts | in Accounts | |||||||||||||||||
| where | where | |||||||||||||||||
| Total | Advisory Fee | Advisory Fee | ||||||||||||||||
| Name of Portfolio | Type of | No. of Accounts | Total | is Based on | is Based on | |||||||||||||
| Manager | Accounts | Managed | Assets | Performance | Performance | |||||||||||||
| 1. Mario J. Gabelli | Registered
Investment Companies: |
22 | 11.1B | 5 | 2.1B | |||||||||||||
Other Pooled
Investment
Vehicles: |
15 | 382.9M | 14 | 349.9M | ||||||||||||||
Other Accounts: |
1,840 | 10.6B | 6 | 1.2B | ||||||||||||||
| 2. Barbara G. Marcin | Registered
Investment Companies: |
3 | 649.8B | 1 | 616.0M | |||||||||||||
Other Pooled
Investment
Vehicles: |
1 | 37.3K | 1 | 37.3K | ||||||||||||||
Other Accounts: |
18 | 108.3M | 0 | 0 | ||||||||||||||
POTENTIAL CONFLICTS OF INTEREST
As reflected above, the Portfolio Managers manage accounts in addition to the Trust. Actual or
apparent conflicts of interest may arise when a Portfolio Manager also has day-to-day management
responsibilities with respect to one or more other accounts. These potential conflicts include:
ALLOCATION OF LIMITED TIME AND ATTENTION. As indicated above, the Portfolio Managers manage
multiple accounts. As a result, he/she will not be able to devote all of their time to the
management of the Trust. The Portfolio Managers, therefore, may not be able to formulate as
complete a strategy or identify equally attractive investment opportunities for each of those
accounts as might be the case if he/she were to devote all of their attention to the management of
only the Trust.
ALLOCATION OF LIMITED INVESTMENT OPPORTUNITIES. As indicated above, the Portfolio Managers manage
managed accounts with investment strategies and/or policies that are similar to the Trust. In these
cases, if the Portfolio Manager identifies an investment opportunity that may be suitable for
multiple accounts, a Fund may not be able to take full advantage of that opportunity because the
opportunity may be allocated among all or many of these accounts or other accounts managed
primarily by other Portfolio Managers of the Adviser, and their affiliates. In addition, in the
event a Portfolio Manager determines to purchase a security
for more than one account in an
aggregate amount that may influence the market price of the security, accounts that purchased or
sold the security first may receive a more favorable price than accounts that made subsequent
transactions.
SELECTION OF BROKER/DEALERS. Because of Mr. Gabelli’s position with the Distributor and his
indirect majority ownership interest in the Distributor, he may have an incentive to use the
Distributor to execute portfolio transactions for a Fund.
PURSUIT OF DIFFERING STRATEGIES. At times, the Portfolio Managers may determine that an investment
opportunity may be appropriate for only some of the accounts for which he/she exercises investment
responsibility, or may decide that certain of the funds or accounts should take differing positions
with respect to a particular security. In these cases, the Portfolio Manager may execute differing
or opposite transactions for one or more accounts which may affect the market price of the security
or the execution of the transaction, or both, to the detriment of one or more other accounts.
VARIATION IN COMPENSATION. A conflict of interest may arise where the financial or other benefits
available to the Portfolio Manager differs among the accounts that he/she manages. If the
structure of the Adviser’s management fee or the Portfolio Manager’s compensation differs among
accounts (such as where certain accounts pay higher management fees or performance-based management
fees), the Portfolio Manager may be motivated to favor certain accounts over others. The Portfolio
Manager also may be motivated to favor accounts in which they have an investment interest, or in
which the Adviser, or their affiliates have investment interests. Similarly, the desire to
maintain assets under management or to enhance a Portfolio Manager’s performance record or to
derive other rewards, financial or otherwise, could influence the Portfolio Manager in affording
preferential treatment to those accounts that could most significantly benefit the Portfolio
Manager. For example, as reflected above, if the Portfolio Manager manages accounts which have
performance fee
arrangements, certain portions of his/her compensation will depend on the achievement of
performance milestones on those accounts. The Portfolio Manager could be incented to afford
preferential treatment to those accounts and thereby be subject to a potential conflict of
interest.
The Adviser, and the Funds have adopted compliance policies and procedures that are designed to
address the various conflicts of interest that may arise for the Adviser and their staff members.
However, there is no guarantee that such policies and procedures will be able to detect and prevent
every situation in which an actual or potential conflict may arise.
COMPENSATION STRUCTURE FOR MARIO J. GABELLI
Mr. Gabelli receives incentive-based variable compensation based on a percentage of net revenues
received by the Adviser for managing the Trust. Net revenues are determined by deducting from gross
investment management fees the firm’s expenses (other than Mr. Gabelli’s compensation) allocable to
this Trust. Five closed-end registered investment companies (including this Trust) managed by Mr.
Gabelli have arrangements whereby the Adviser will only receive its investment advisory fee
attributable to the liquidation value of outstanding preferred stock (and Mr. Gabelli would only
receive his percentage of such advisory fee) if certain performance levels are met. Additionally,
he receives similar incentive based variable compensation for managing other accounts within the
firm and its affiliates. This method of compensation is based on the premise that superior
long-term performance in managing a portfolio should be rewarded with higher compensation as a
result of growth of assets through appreciation and net investment activity. The level of
compensation is not determined with specific reference to the performance of any account against
any specific benchmark. One of the other registered investment companies managed by Mr. Gabelli
has a performance (fulcrum) fee arrangement for which his compensation is adjusted up or down based
on the performance of the investment company relative to an index. Mr. Gabelli manages other
accounts with performance fees. Compensation for managing these accounts has two components. One
component is based on a percentage of net revenues to the investment adviser for managing the
account. The second component is based on absolute performance of the account, with respect to
which a percentage of such performance fee is paid to Mr. Gabelli. As an executive officer of the
Adviser’s parent company, GBL, Mr.
Gabelli also receives ten percent of the net operating profits
of the parent company. He receives no base salary, no annual bonus, and no stock options.
COMPENSATION STRUCTURE FOR BARBARA G. MARCIN
The compensation of Ms. Marcin for the Trust is structured to enable the Adviser to attract and
retain highly qualified professionals in a competitive environment. The Portfolio Manager receives
a compensation package that includes a minimum draw or base salary, equity-based incentive
compensation via awards of stock options, and incentive based variable compensation based on a
percentage of net revenue received by the Adviser for managing the Trust to the extent that the
amount exceeds a minimum level of compensation. Net revenues are determined by deducting from
gross investment management fees certain of the firm’s expenses (other than the Portfolio Managers’
compensation) allocable to the Trust (the incentive-based variable compensation for managing other
accounts is also based on a percentage of net revenues to the investment adviser for managing the
account). This method of compensation is based on the premise that superior long-term performance
in managing a portfolio should be rewarded with higher compensation as a result of growth of assets
through appreciation and net investment activity. The level of equity-based incentive and
incentive-based variable compensation is based on an evaluation by the Adviser’s parent, GBL, of
quantitative and qualitative performance evaluation criteria. This evaluation takes into account,
in a broad sense, the performance of the accounts managed by the Portfolio Manager, but the level
of compensation is not determined with specific reference to the performance of any account against
any specific benchmark. Generally, greater consideration is given to the performance of larger
accounts and to longer term performance over smaller accounts and short-term performance.
OWNERSHIP OF SHARES IN THE FUND
Mario Gabelli and Barbara Marcin owned over $1,000,000 and $0 of shares, respectively, of the Trust
as of December 31, 2009.
(b) Not applicable.
| Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
REGISTRANT PURCHASES OF EQUITY SECURITIES
| (c) Total Number of | (d) Maximum Number (or | |||||||
| Shares (or Units) | Approximate Dollar Value) of | |||||||
| (a) Total Number of | Purchased as Part of | Shares (or Units) that May | ||||||
| Shares (or Units) | (b) Average Price Paid | Publicly Announced | Yet Be Purchased Under the | |||||
| Period | Purchased | per Share (or Unit) | Plans or Programs | Plans or Programs | ||||
Month #1 07/01/09 through 07/31/09 |
Common – N/A Preferred Series A – N/A Preferred Series D – N/A |
Common – N/A Preferred Series A – N/A Preferred Series D – N/A |
Common – N/A Preferred Series A – N/A Preferred Series D – N/A |
Common – 83,483,637 Preferred Series A –3,048,858 Preferred Series D – 2,542,296 |
||||
Month #2 08/01/09 through 08/31/09 |
Common – 5,000 Preferred Series A – N/A Preferred Series D – N/A |
Common – $11.37 Preferred Series A – N/A Preferred Series D – N/A |
Common – 5,000 Preferred Series A – N/A Preferred Series D – N/A |
Common – 83,483,637 – 5,000 = 83,478,637 Preferred Series A –3,048,858 Preferred Series D – 2,542,296 |
| (c) Total Number of | (d) Maximum Number (or | |||||||
| Shares (or Units) | Approximate Dollar Value) of | |||||||
| (a) Total Number of | Purchased as Part of | Shares (or Units) that May | ||||||
| Shares (or Units) | (b) Average Price Paid | Publicly Announced | Yet Be Purchased Under the | |||||
| Period | Purchased | per Share (or Unit) | Plans or Programs | Plans or Programs | ||||
Month #3 09/01/09 through 09/30/09 |
Common – N/A Preferred Series A – N/A Preferred Series D – N/A |
Common – N/A Preferred Series A – N/A Preferred Series D – N/A |
Common – N/A Preferred Series A – N/A Preferred Series D – N/A |
Common – 83,478,637 Preferred Series A –3,048,858 Preferred Series D – 2,542,296 |
||||
Month #4 10/01/09 through 10/31/09 |
Common – N/A Preferred Series A – N/A Preferred Series D – N/A |
Common – N/A Preferred Series A – N/A Preferred Series D – N/A |
Common – N/A Preferred Series A – N/A Preferred Series D – N/A |
Common – 83,478,637 Preferred Series A –3,048,858 Preferred Series D – 2,542,296 |
||||
Month #5 11/01/09 through 11/30/09 |
Common – N/A Preferred Series A – N/A Preferred Series D – N/A |
Common – N/A Preferred Series A – N/A Preferred Series D – N/A |
Common – N/A Preferred Series A – N/A Preferred Series D – N/A |
Common – 83,478,637 Preferred Series A –3,048,858 Preferred Series D – 2,542,296 |
||||
Month #6 12/01/09 through 12/31/09 |
Common – 10,000 Preferred Series A – N/A Preferred Series D – N/A |
Common – 12.54 Preferred Series A – N/A Preferred Series D – N/A |
Common – 10,000 Preferred Series A – N/A Preferred Series D – N/A |
Common – 83,468,637 Preferred Series A –3,048,858 Preferred Series D – 2,542,296 |
||||
Total
|
Common – 15,000 Preferred Series A – N/A Preferred Series D – N/A |
Common – $12.15 Preferred Series A – N/A Preferred Series D – N/A |
Common – 45,000 Preferred Series A – N/A Preferred Series D – N/A |
N/A |
Footnote columns (c) and (d) of the table, by disclosing the following information in the
aggregate for all plans or programs publicly announced:
| a. | The date each plan or program was announced – The notice of the potential repurchase of common and preferred shares occurs quarterly in the Fund’s quarterly report in accordance with Section 23(c) of the Investment Company Act of 1940, as amended. | |
| b. | The dollar amount (or share or unit amount) approved – Any or all common shares outstanding may be repurchased when the Fund’s common shares are trading at a discount of 7.5% or more from the net asset value of the shares. | |
| Any or all preferred shares outstanding may be repurchased when the Fund’s preferred shares are trading at a discount to the liquidation value of $25.00. | ||
| c. | The expiration date (if any) of each plan or program – The Fund’s repurchase plans are ongoing. | |
| d. | Each plan or program that has expired during the period covered by the table — The Fund’s repurchase plans are ongoing. |
| e. | Each plan or program the registrant has determined to terminate prior to expiration, or under which the registrant does not intend to make further purchases. – The Fund’s repurchase plans are ongoing. |
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend
nominees to the registrant’s Board of Trustees, where those changes were implemented after the
registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of
Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR
240.14a-101)), or this Item.
Item 11. Controls and Procedures.
| (a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). | ||
| (b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Exhibits.
| (a)(1) | Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. | ||
| (a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. | ||
| (a)(3) | Not applicable. | ||
| (b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act
of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
(registrant) The Gabelli Dividend & Income Trust
By (Signature and Title)*
|
/s/ Bruce N. Alpert
|
Date 3/5/10
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act
of 1940, this report has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
By (Signature and Title)*
|
/s/ Bruce N. Alpert
|
Date 3/5/10
By (Signature and Title)*
|
/s/ Agnes Mullady
|
Date 3/5/10
| * | Print the name and title of each signing officer under his or her signature. |