UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT 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
---------------------------------------------------------
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
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, 2003
-----------------
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, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Annual Report to Shareholders is attached herewith.
[LOGO OMITTED]
THE GABELLI
DIVIDEND &
INCOME TRUST
THE GABELLI DIVIDEND & INCOME TRUST
Annual Report
December 31, 2003
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 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/funds.
Enclosed are the audited financial statements and the investment portfolio
as of December 31, 2003.
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
February 24, 2004
--------------------------------------------------------------------------------
A description of the Trust's proxy voting policies and procedures is available
(i) without charge, upon request, by calling 800-GABELLI (800-422-3554); (ii) by
writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580; and (iii)
on the Securities and Exchange Commission's website at www.sec.gov.
--------------------------------------------------------------------------------
THE GABELLI DIVIDEND & INCOME TRUST
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES COST VALUE
------ ------- ------
COMMON STOCKS -- 33.7%
AEROSPACE -- 0.8%
10,000 Goodrich Corp. .......$ 280,470 $ 296,900
550,000 Titan Corp.+ ......... 11,951,669 11,995,500
-------------- --------------
12,232,139 12,292,400
-------------- --------------
AUTOMOTIVE -- 0.0%
2,000 General Motors Corp. . 85,260 106,800
-------------- --------------
CONSUMER PRODUCTS -- 2.1%
10,000 Altria Group Inc. .... 518,409 544,200
4,000 Avery Dennison Corp. . 221,550 224,080
750,000 Dial Corp. ........... 21,340,555 21,352,500
100 Eastman Kodak Co. .... 2,569 2,567
138,900 Genuine Parts Co. .... 4,551,369 4,611,480
27,800 Gucci Group NV, ADR .. 2,364,540 2,378,290
1,000 Kimberly-Clark Corp. . 54,269 59,090
10,000 Procter & Gamble Co. . 972,439 998,800
8,000 RJ Reynolds Tobacco
Holdings Inc. ...... 455,936 465,200
-------------- --------------
30,481,636 30,636,207
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 0.6%
1,000 Cooper Industries Ltd.,
Cl. A .............. 53,720 57,930
100,000 Dow Chemical Co. ..... 3,992,028 4,157,000
75,000 General Electric Co. . 2,208,735 2,323,500
70,000 Honeywell
International Inc. . 2,139,304 2,340,100
-------------- --------------
8,393,787 8,878,530
-------------- --------------
ENERGY AND UTILITIES: INTEGRATED -- 10.6%
250,000 Ameren Corp. ......... 11,309,214 11,500,000
220,000 American Electric Power
Company Inc. ....... 6,412,283 6,712,200
136,900 Cinergy Corp. ........ 5,119,272 5,313,089
102,100 CONSOL Energy Inc. ... 2,436,084 2,644,390
148,400 Consolidated Edison
Inc. ............... 6,180,677 6,382,684
100,000 DPL Inc. ............. 1,975,696 2,088,000
17,500 DTE Energy Co. ....... 667,957 689,500
150,000 Duke Energy Corp. .... 2,827,168 3,067,500
245,700 Duquesne Light
Holdings Inc. ...... 4,358,472 4,506,138
173,100 FirstEnergy Corp. .... 6,043,125 6,093,120
55,000 FPL Group Inc. ....... 3,499,281 3,598,100
282,800 Great Plains
Energy Inc. ........ 8,942,491 8,998,696
56,200 Hawaiian Electric
Industries Inc. .... 2,587,908 2,662,194
173,900 National Fuel Gas Co. 4,099,289 4,250,116
200,000 NiSource Inc. ........ 4,181,430 4,388,000
50,000 NSTAR ................ 2,374,684 2,425,000
450,200 OGE Energy Corp. ..... 10,869,341 10,890,338
150,000 ONEOK Inc. ........... 3,202,240 3,312,000
374,800 Pepco Holdings Inc. .. 7,027,937 7,323,592
150,000 Pinnacle West ........
Capital Corp. ...... 5,838,663 6,003,000
250,000 Progress Energy Inc. . 11,244,866 11,315,000
200,200 Public Service Enterprise
Group Inc. ......... 8,440,436 8,768,760
216,000 Southern Co. ......... 6,419,731 6,534,000
492,600 Unisource Energy Corp. 12,133,084 12,147,516
50,000 Westar Energy Inc. ... 980,503 1,012,500
90,000 WPS Resources Corp. .. 4,066,848 4,160,700
700,000 Xcel Energy Inc. ..... 11,950,357 11,886,000
-------------- --------------
155,189,037 158,672,133
-------------- --------------
MARKET
SHARES COST VALUE
------ ------- ------
ENERGY AND UTILITIES: NATURAL GAS -- 1.9%
150,000 KeySpan Corp. ........$ 5,404,269 $ 5,520,000
198,000 Nicor Inc. ........... 6,763,559 6,739,920
216,500 Peoples Energy Corp. . 9,047,668 9,101,660
211,300 Sempra Energy ........ 6,081,370 6,351,678
-------------- --------------
27,296,866 27,713,258
-------------- --------------
ENERGY AND UTILITIES: OIL -- 5.3%
100,000 BP plc, ADR .......... 4,414,676 4,935,000
110,000 ChevronTexaco Corp. .. 8,636,405 9,502,900
210,000 ConocoPhillips ....... 12,638,305 13,769,700
90,000 Diamond Offshore
Drilling Inc. ...... 1,724,791 1,845,900
62,000 Eni SpA, ADR ......... 5,540,237 5,888,760
85,000 Exxon Mobil Corp. .... 3,163,110 3,485,000
15,000 Halliburton Co. ...... 360,549 390,000
127,000 Kerr-McGee Corp. ..... 5,553,249 5,904,230
250,000 Marathon Oil Corp. ... 7,649,966 8,272,500
187,900 Occidental
Petroleum Corp. .... 7,431,206 7,936,896
85,000 Royal Dutch
Petroleum Co. ...... 3,973,473 4,453,150
15,000 Schlumberger Ltd. .... 715,094 820,800
172,900 Statoil ASA, ADR ..... 1,813,061 1,953,770
100,000 Sunoco Inc. .......... 4,897,834 5,115,000
52,000 Total SA, ADR ........ 4,389,297 4,810,520
-------------- --------------
72,901,253 79,084,126
-------------- --------------
ENERGY AND UTILITIES: WATER -- 0.0%
10,000 Philadelphia Suburban
Corp. .............. 213,628 221,000
-------------- --------------
EQUIPMENT AND SUPPLIES -- 0.3%
98,100 Graco Inc. ........... 3,926,047 3,933,810
-------------- --------------
FINANCIAL SERVICES -- 4.7%
4,000 Bank of America Corp. 303,976 321,720
238,300 Bank of Bermuda Ltd. . 10,704,158 10,711,585
105,800 Bank of New York
Co. Inc. ........... 3,327,035 3,504,096
59,000 Bank One Corp. ....... 2,598,971 2,689,810
95,000 Citigroup Inc. ....... 4,504,513 4,611,300
400,000 FleetBoston
Financial Corp. .... 17,042,455 17,460,000
185,000 JP Morgan Chase & Co. 6,560,566 6,795,050
159,200 KeyCorp .............. 4,525,994 4,667,744
100,000 PNC Financial Services
Group .............. 5,367,189 5,473,000
40,000 Travelers Property Casualty
Corp., Cl. A ....... 651,648 671,200
25,000 Unitrin Inc. ......... 949,479 1,035,250
74,000 Wachovia Corp. ....... 3,383,633 3,447,660
85,000 Waddell & Reed Financial
Inc., Cl. A ........ 1,876,080 1,994,100
140,000 Washington Mutual Inc. 5,601,923 5,616,800
2,000 Webster Financial Corp. 91,180 91,720
25,000 Wilmington Trust Corp. 877,503 900,000
-------------- --------------
68,366,303 69,991,035
-------------- --------------
FOOD AND BEVERAGE -- 2.3%
75,000 Albertson's Inc. ..... 1,539,482 1,698,750
30,000 ConAgra Foods Inc. ... 780,549 791,700
400,000 Dreyer's Grand Ice Cream
Holdings Inc., Cl. A 30,978,469 31,100,000
15,000 Heinz (H.J.) Co. ..... 545,198 546,450
1,000 Kellogg Co. .......... 35,550 38,080
20,000 Sara Lee Corp. ....... 416,634 434,200
-------------- --------------
34,295,882 34,609,180
-------------- --------------
See accompanying notes to financial statements.
2
THE GABELLI DIVIDEND & INCOME TRUST
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2003
MARKET
SHARES COST VALUE
------ ------- ------
COMMON STOCKS (CONTINUED)
HEALTH CARE -- 1.3%
2,000 Amersham plc, ADR .... $ 130,295 $ 136,560
30,000 Bristol-Myers
Squibb Co. ......... 804,335 858,000
50,000 CIMA Labs Inc.+ ...... 1,650,026 1,631,000
20,000 Eli Lilly & Co. ..... 1,415,927 1,406,600
232,000 Esperion Therapeutics
Inc.+ .............. 8,022,555 8,029,520
10,000 Johnson & Johnson .... 516,310 516,600
80,000 Merck & Co. Inc. ..... 3,533,076 3,696,000
100,000 Pfizer Inc. .......... 3,473,302 3,533,000
-------------- --------------
19,545,826 19,807,280
-------------- --------------
METALS AND MINING -- 0.0%
12,525 Freeport-McMoRan Copper
& Gold Inc., Cl. B . 566,550 527,678
-------------- --------------
REAL ESTATE -- 0.3%
100,000 Newhall Land &
Farming Co. ........ 4,041,907 4,038,000
-------------- --------------
SPECIALTY CHEMICALS -- 0.6%
60,000 Ashland Inc. ......... 2,515,651 2,643,600
100,000 E.I. du Pont de Nemours
and Co. ............ 4,407,022 4,589,000
50,000 Olin Corp. ........... 973,587 1,003,000
-------------- --------------
7,896,260 8,235,600
-------------- --------------
TELECOMMUNICATIONS -- 2.8%
60,000 ALLTEL Corp. ......... 2,702,707 2,794,800
140,000 AT&T Corp. ........... 2,713,774 2,842,000
500,000 BCE Inc. ............. 10,960,868 11,180,000
100,000 BellSouth Corp. ...... 2,688,578 2,830,000
70,000 BT Group plc, ADR .... 2,180,135 2,395,400
200,000 SBC Communications Inc. 4,843,984 5,214,000
90,000 Sprint Corp. -
FON Group .......... 1,350,086 1,477,800
200,000 TDC A/S, ADR ......... 3,579,235 3,632,000
12,000 Telecom Corp. of New
Zealand Ltd., ADR .. 322,396 339,000
80,300 Telstra Corp. Ltd., ADR 1,449,442 1,468,687
30,000 TELUS Corp., Non-Voting,
ADR ................ 542,842 561,811
220,000 Verizon Communications
Inc. ............... 7,274,915 7,717,600
-------------- --------------
40,608,962 42,453,098
-------------- --------------
TRANSPORTATION -- 0.1%
10,000 Frontline Ltd. ....... 255,550 254,700
30,700 Teekay Shipping Corp. 1,601,611 1,750,821
-------------- --------------
1,857,161 2,005,521
-------------- --------------
TOTAL COMMON
STOCKS .............. 487,898,504 503,205,656
-------------- --------------
PREFERRED STOCKS -- 0.1%
CLOSED END FUNDS -- 0.1%
60,000 General American Investors
Co. Inc.,
5.950% Cumulative
Pfd. ............... 1,501,580 1,502,400
-------------- --------------
CONVERTIBLE PREFERRED STOCKS -- 2.4%
AEROSPACE -- 0.1%
8,315 Northrop Grumman Corp.,
7.000% Cv. Pfd.,
Ser. B ............. 997,555 1,037,296
1,000 Titan Corp.,
$1.00 Cv. Pfd. ..... 20,050 20,000
-------------- --------------
1,017,605 1,057,296
-------------- --------------
MARKET
SHARES COST VALUE
------ ------- ------
AUTOMOTIVE -- 0.1%
23,900 General Motors Corp.,
4.500% Cv. Pfd.,
Ser. A .............$ 616,270 $ 640,520
-------------- --------------
AVIATION: PARTS AND SERVICES -- 0.0%
700 Sequa Corp.,
$5.00 Cv. Pfd. ..... 61,585 62,282
-------------- --------------
BROADCASTING -- 0.9%
264,400 Sinclair Broadcast Group Inc.,
6.000% Cv. Pfd.,
Ser. D ............. 12,355,860 13,048,140
-------------- --------------
BUSINESS SERVICES -- 0.0%
7,200 Allied Waste Industries Inc.,
6.250% Cv. Pfd. .... 506,554 550,800
-------------- --------------
COMMUNICATIONS EQUIPMENT -- 0.1%
21,000 Crown Castle International
Corp.,
6.250% Cv. Pfd. .... 938,000 913,500
-------------- --------------
CONSUMER PRODUCTS -- 0.1%
18,900 Newell Financial Trust,
5.250% Cv. Pfd. .... 871,763 869,400
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 0.0%
1,000 Owens-Illinois Inc.,
4.750% Cv. Pfd. .... 29,200 31,850
1,000 Smurfit-Stone Container Corp.,
7.000% Cv. Pfd.,
Ser. A ............. 24,350 24,600
1,000 US Steel Corp.,
7.000% Cv. Pfd.,
Ser. B ............. 88,510 118,215
-------------- --------------
142,060 174,665
-------------- --------------
ENERGY AND UTILITIES: ELECTRIC -- 0.1%
20,600 Calpine Corp.,
5.750% Cv. Pfd. .... 1,006,825 968,200
-------------- --------------
ENERGY AND UTILITIES: INTEGRATED -- 0.1%
9,750 Arch Coal Inc.,
5.000% Cv. Pfd. .... 733,750 832,065
20,000 CMS Energy Corp.,
4.500% Cv. Pfd. (a) 1,069,062 1,122,500
-------------- --------------
1,802,812 1,954,565
-------------- --------------
ENERGY AND UTILITIES: NATURAL GAS -- 0.0%
8,865 Western Gas Resources Inc.,
$2.625 Cv. Pfd. .... 507,521 531,457
-------------- --------------
ENERGY AND UTILITIES: OIL -- 0.2%
10,000 Chesapeake Energy Corp.,
5.000% Cv. Pfd. .... 1,077,500 1,108,750
1,000 Chesapeake Energy Corp.,
6.750% Cv. Pfd. .... 85,050 92,000
2,700 Chesapeake Energy Corp.,
6.000% Cv. Pfd. .... 194,400 204,525
20,000 El Paso Corp.,
4.750% Cv. Pfd. .... 625,100 675,000
11,390 Hanover Compressor Co.,
7.250% Cv. Pfd. .... 526,787 549,567
900 Westport Resources Corp.,
6.500% Cv. Pfd. .... 21,779 22,950
-------------- --------------
2,530,616 2,652,792
-------------- --------------
ENTERTAINMENT -- 0.1%
69,100 Six Flags Inc.,
7.250% Cv. Pfd. .... 1,542,745 1,582,390
-------------- --------------
See accompanying notes to financial statements.
3
THE GABELLI DIVIDEND & INCOME TRUST
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2003
MARKET
SHARES COST VALUE
------ ------- ------
CONVERTIBLE PREFERRED STOCKS (CONTINUED)
FINANCIAL SERVICES -- 0.4%
3,920 Doral Financial Corp.,
4.750% Cv. Pfd. (a) $ 1,029,000 $ 1,013,320
130,100 National Australia Bank Ltd.,
7.875% Cv. Pfd.,
Ser. UNIT .......... 4,856,665 4,969,820
1,000 United Fire & Casualty Co.,
6.375% Cv. Pfd.,
Ser. A ............. 29,000 29,000
-------------- --------------
5,914,665 6,012,140
-------------- --------------
HEALTH CARE -- 0.1%
16,306 McKesson Financing Trust,
5.000% Cv. Pfd. .... 815,300 835,683
10,000 Omnicare Inc.,
4.000% Cv. Pfd. .... 605,400 637,500
-------------- --------------
1,420,700 1,473,183
-------------- --------------
METALS AND MINING -- 0.0%
700 Phelps Dodge Corp.,
6.750% Cv. Pfd. .... 103,635 118,440
-------------- --------------
REAL ESTATE -- 0.0%
2,100 Equity Office Properties Trust,
5.250% Cv. Pfd.,
Ser. B ............. 104,120 105,021
2,000 Felcor Lodging Trust Inc.,
$1.95 Cv. Pfd.,
Ser. A ............. 48,100 48,360
-------------- --------------
152,220 153,381
-------------- --------------
TELECOMMUNICATIONS -- 0.1%
19,800 Cincinnati Bell Inc.,
6.750% Cv. Pfd.,
Ser. B ............. 828,170 811,800
2,200 Citizens Communications Co.,
5.000% Cv. Pfd. .... 109,694 112,200
14,973 Emmis Communications Corp.,
6.250% Cv. Pfd.,
Ser. A ............. 703,731 748,650
-------------- --------------
1,641,595 1,672,650
-------------- --------------
TRANSPORTATION -- 0.0%
982 Kansas City Southern,
4.250% Cv. Pfd. .... 551,884 577,539
-------------- --------------
TOTAL CONVERTIBLE
PREFERRED STOCKS .... 33,684,915 35,013,340
-------------- --------------
PRINCIPAL
AMOUNT
---------
CONVERTIBLE CORPORATE BONDS -- 0.4%
AEROSPACE -- 0.1%
$ 650,000 GenCorp Inc., Sub. Deb. Cv.,
5.750%, 04/15/07 ... 638,031 654,062
-------------- --------------
AGRICULTURE -- 0.1%
750,000 Bunge Ltd. Financial Corp., Cv.,
3.750%, 11/15/22 ... 830,933 878,438
-------------- --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.0%
400,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ... 375,108 376,000
-------------- --------------
ELECTRONICS -- 0.1%
600,000 Agere Systems Inc., Sub. Deb. Cv.,
6.500%, 12/15/09 ... 832,636 825,000
-------------- --------------
MARKET
SHARES COST VALUE
------ ------- ------
ENTERTAINMENT -- 0.0%
$ 287,000 The Walt Disney Co., Cv.,
2.125%, 04/15/23 ...$ 299,693 $ 305,296
-------------- --------------
FINANCIAL SERVICES -- 0.0%
250,000 AON Corp., Sub. Deb. Cv.,
3.500%, 11/15/12 ... 300,282 310,000
300,000 First Data Corp., Cv.,
2.000%, 03/01/08 ... 312,895 326,250
-------------- --------------
613,177 636,250
-------------- --------------
FOOD AND BEVERAGE -- 0.0%
2,500,000 Parmalat Soparfi SA,
Sub. Deb. Cv.,
6.125%, 05/23/32 (b) 1,911,740 298,439
-------------- --------------
HEALTH CARE -- 0.0%
300,000 Quest Diagnostic Inc.,
Sub. Deb. Cv.,
1.750%, 11/30/21 ... 315,331 309,375
-------------- --------------
RETAIL -- 0.0%
375,000 School Specialty Inc.,
Sub. Deb. Cv.,
6.000%, 08/01/08 ... 411,841 435,000
-------------- --------------
TELECOMMUNICATIONS -- 0.1%
350,000 Nextel Communications
Inc., Cv.,
6.000%, 06/01/11 ... 409,907 435,750
350,000 Telefonos de Mexico SA,
Sub. Deb. Cv.,
4.250%, 06/15/04 ... 404,882 402,056
-------------- --------------
814,789 837,806
-------------- --------------
TRANSPORTATION -- 0.0%
550,000 GATX Corp., Cv.,
7.500%, 02/01/07 ... 631,481 644,188
-------------- --------------
TOTAL CONVERTIBLE
CORPORATE BONDS ..... 7,674,760 6,199,854
-------------- --------------
U.S. GOVERNMENT AGENCY MORTGAGES -- 10.1%
75,000,000 Federal National
Mortgage Assoc.
Discount Note,
01/02/04 ........... 75,000,000 75,000,000
75,000,000 Federal National
Mortgage Assoc.
Discount Note,
01/08/04 ........... 74,987,000 74,987,000
-------------- --------------
TOTAL U.S. GOVERNMENT
AGENCY
MORTGAGES ........... 149,987,000 149,987,000
-------------- --------------
U.S. GOVERNMENT OBLIGATIONS -- 39.9%
595,484,000 U.S. Treasury Bills,
0.867% to 0.944%++,
01/02/04 to 01/22/04 595,232,486 595,232,486
-------------- --------------
See accompanying notes to financial statements.
4
THE GABELLI DIVIDEND & INCOME TRUST
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2003
PRINCIPAL MARKET
AMOUNT COST VALUE
------ ------- ------
REPURCHASE AGREEMENTS -- 13.4%
$100,000,000 ABN Amro, 0.840%,
dated 12/31/03, due 01/02/04,
proceeds at maturity,
$100,004,667 (c) ...$ 100,000,000 $ 100,000,000
100,000,000 State Street Bank & Trust Co.,
0.810%, dated 12/31/03,
due 01/02/04,
proceeds at maturity,
$100,004,500 (d) ... 100,000,000 100,000,000
-------------- --------------
TOTAL REPURCHASE
AGREEMENTS .......... 200,000,000 200,000,000
-------------- --------------
TOTAL INVESTMENTS -- 100.0% .......$1,475,979,245 $1,491,140,736
==============
LIABILITIES IN EXCESS OF OTHER ASSETS ........... (39,490,310)
NET ASSETS -- COMMON STOCK
(75,363,205 common shares outstanding) ........ 1,451,650,426
==============
NET ASSET VALUE PER COMMON SHARE
(1,451,650,426 (DIVIDE) 75,363,205
shares outstanding) .......................... $19.26
======
----------------
For Federal tax purposes:
Aggregate cost ..................... $1,475,979,663
==============
Gross unrealized appreciation ...... $ 17,048,777
Gross unrealized depreciation ...... (1,887,704)
--------------
Net unrealized appreciation ........ $ 15,161,073
==============
-----------------
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
(a) 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, 2003, the market value of Rule 144A securities amounted
to $2,135,820 or 0.1% of total net assets.
(b) Security in default.
(c) Collateralized by U.S. Treasury Note, 1.625%, due 04/30/05, market value
$102,276,848.
(d) Collateralized by U.S. Treasury Note, 3.375%, due 04/30/04, market value
$102,567,800.
ADR - American Depository Receipt.
See accompanying notes to financial statements.
5
THE GABELLI DIVIDEND & INCOME TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003
ASSETS:
Investments, at value (Cost $1,275,979,245) $1,291,140,736
Repurchase agreements, at value
(Cost $200,000,000) ...................... 200,000,000
Cash ....................................... 1,287
Receivable for investments sold ............ 1,756,578
Dividends and interest receivable .......... 729,602
Other assets ............................... 55,726
--------------
TOTAL ASSETS ............................... 1,493,683,929
--------------
LIABILITIES:
Payable for investments purchased .......... 38,269,026
Payable for investment advisory fees ....... 1,224,127
Other accrued expenses and liabilities ..... 2,540,350
--------------
TOTAL LIABILITIES .......................... 42,033,503
--------------
NET ASSETS applicable to 75,363,205
shares outstanding ....................... $1,451,650,426
==============
NET ASSETS CONSIST OF:
Shares of beneficial interest, at par value 75,363
Additional paid-in capital ................. 1,436,398,092
Accumulated net realized gain on investments
and foreign currency transactions ........ 11,089
Net unrealized appreciation on investments
and foreign currency transactions ........ 15,165,882
--------------
TOTAL NET ASSETS ........................... $1,451,650,426
==============
NET ASSET VALUE
($1,451,650,426 (DIVIDE) 75,363,205
shares outstanding;
unlimited number of shares
authorized of
$0.001 par value) ........................ $19.26
======
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 2003 (A)
INVESTMENT INCOME:
Dividends (net of foreign taxes of $1,550) .... $ 819,176
Interest ...................................... 975,605
------------
TOTAL INVESTMENT INCOME ....................... 1,794,781
------------
EXPENSES:
Investment advisory fees ...................... 1,342,197
Shareholder communications expenses ........... 250,000
Custodian fees ................................ 65,897
Legal and audit fees .......................... 45,000
Trustees' fees ................................ 31,560
Payroll ....................................... 20,833
Shareholder services fees ..................... 16,667
Miscellaneous expenses ........................ 72,000
------------
TOTAL EXPENSES ................................ 1,844,154
------------
NET INVESTMENT LOSS ........................... (49,373)
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain on investments
and foreign currency transactions ........... 16,702
Net change in net unrealized appreciation on
investments and foreign currency transactions 15,165,882
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS ................................ 15,182,584
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ............................. $ 15,133,211
============
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED
DECEMBER 31, 2003 (A)
---------------------
OPERATIONS:
Net investment loss .................................... $ (49,373)
Net realized gain on investments and
foreign currency transactions ....................... 16,702
Net change in unrealized appreciation on investments
and foreign currency transactions ................... 15,165,882
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ... 15,133,211
---------------
TRUST SHARE TRANSACTIONS:
Net increase in net assets from common shares
issued in offering .................................. 1,439,300,001
Offering costs for common shares charged to
paid-in-capital ..................................... (2,920,000)
---------------
NET INCREASE IN NET ASSETS FROM TRUST
SHARE TRANSACTIONS .................................. 1,436,380,001
---------------
NET INCREASE IN NET ASSETS ............................. 1,451,513,212
NET ASSETS:
Beginning of period .................................... 137,214
---------------
End of period .......................................... $ 1,451,650,426
===============
(a) The Gabelli Dividend & Income Trust commenced investment operations on
November 28, 2003.
See accompanying notes to financial statements.
6
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. The Gabelli Dividend & Income Trust (the "Trust") is a
closed-end, non-diversified management investment company organized under the
laws of the State of Delaware and registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Trust sold 7,184 shares to Gabelli Funds,
LLC (the "Adviser") for $137,214 on November 18, 2003. Investment operations
commenced on November 28, 2003.
The Trust's investment objective is to provide a high level of total return on
its assets with an emphasis on dividends and income. The Trust 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 preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Dividend & Income Trust 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 so determines, by such other method as the Board of Trustees
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 the Adviser. Portfolio securities primarily traded in foreign markets are
generally valued at the preceding closing values of such securities on their
respective exchanges or markets. Securities and assets for which market
quotations are not readily available are valued at their fair value as
determined in good faith under procedures established by and under the general
supervision of the Board of Trustees. Short term debt securities with remaining
maturities of 60 days or less are valued at amortized cost, unless the Board of
Trustees determines such does not reflect the securities fair value, in which
case these securities will be valued at their fair value as determined by the
Board of Trustees. Debt instruments having a maturity greater than 60 days for
which market quotations are readily available are valued at the latest average
of the bid and asked prices. If there were no asked prices quoted on such day,
the security is valued using the closing bid price on that day. Options are
valued at the last sale price on the exchange on which they are listed. If no
sales of such options have taken place that day, they will be valued at the mean
between their closing bid and asked prices.
REPURCHASE AGREEMENTS. The Trust may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System of with other brokers or dealers
that meet credit guidelines established by the Adviser and reviewed by the Board
of Trustees. Under the terms of a typical repurchase agreement, a Trust takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and a Trust to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during a Trust's holding period. A
Trust will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 102% of the dollar
amount invested by a Trust in each agreement. The Trust 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 Trust may be delayed or limited.
SECURITIES SOLD SHORT. A short sale involves selling a security which the
Trust does not own. The proceeds received for short sales are recorded as
liabilities and the Trust records an unrealized gain or loss to the extent of
the difference between the proceeds received and the value of the open short
position on the day of determination. The Trust records a realized gain or loss
when the short position is closed out. By entering into a short sale, the Trust
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 Trust on the
ex-dividend date and interest expense is recorded on the accrual basis. At
December 31, 2003, there were no open short sales.
FOREIGN CURRENCY TRANSLATION. The books and records of the Trust are
maintained in United States (U.S.) dollars. Foreign currencies, investments and
other assets and liabilities are translated into U.S. dollars at the exchange
rates prevailing at the end of the period, and 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, which
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 transactions. 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 Trust
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.
7
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for as of 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 as earned.
Dividend income is recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders
are recorded on the ex-dividend date. Income distributions and capital gain
distributions are determined in accordance with Federal income tax regulations,
which may differ from accounting principles generally accepted in the United
States.
For the year ended December 31, 2003, reclassifications were made to
increase accumulated net investment loss for $49,373 and to decrease accumulated
net realized gain on investments for $5,613, with an offsetting adjustment to
additional paid-in capital.
PROVISION FOR INCOME TAXES. The Trust intends to qualify and elect to be
treated as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. It is the Trust's policy to comply with the
requirements of the Internal Revenue 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.
Dividends and interest from non-U.S. sources received by the Trust are
generally subject to non-U.S. withholding taxes at rates ranging up to 30%. Such
withholding taxes may be reduced or eliminated under the terms of applicable
U.S. income tax treaties, and the Trust intends to undertake any procedural
steps required to claim the benefits of such treaties.
As of December 31, 2003, the components of accumulated earnings/(losses) on
a tax basis were as follows:
Accumulated net gains on investments ..... $ 11,507
Net unrealized appreciation on investments 15,160,655
Net unrealized appreciation on foreign
currency transactions ................. 4,809
-----------
Total accumulated gain ................... $15,176,971
===========
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. The Trust has entered into an
investment advisory agreement (the "Advisory Agreement") with the Adviser which
provides that the Trust will pay the Adviser on the first business day of each
month a fee for the previous month equal on an annual basis to 1.00% of the
value of the Trust's average weekly net assets. In accordance with the Advisory
Agreement, the Adviser provides a continuous investment program for the Trust's
portfolio and oversees the administration of all aspects of the Trust's business
and affairs.
During the year ended December 31, 2003, Gabelli & Company, Inc. received
$684,983 in brokerage commissions as a result of executing agency transactions
in portfolio securities on behalf of the Trust.
The cost of calculating the Trust's net asset value per share is a Trust
expense pursuant to the Investment Advisory Agreement between the Trust and the
Adviser. During fiscal 2003, the Trust reimbursed the Adviser $2,900 in
connection with the cost of computing the Trust's net asset value.
4. PORTFOLIO SECURITIES. Cost of purchases and proceeds from sales of
securities, other than short-term securities, for the year ended December 31,
2003 aggregated $532,827,181 and $2,052,613, respectively.
5. CAPITAL. The Trust is authorized to issue an unlimited number of common
shares of beneficial interest, par value $.001 per share. The Board of Trustees
of the Trust has authorized the repurchase of its shares on the open market when
the shares are trading at a discount of 10% or more (or such other percentage as
the Board of Trustees may determine from time to time) from the net asset value
of the shares. During the year ended December 31, 2003, the Trust did not
repurchase any shares of beneficial interest in the open market.
Transactions in shares of beneficial interest were as follows:
PERIOD ENDED
DECEMBER 31, 2003 (A)
-------------------------
Shares Amount
---------- --------------
Initial seed capital, November 18, 2003 ......... 7,184 $ 137,214
Shares issued in offering ....................... 75,356,021 1,436,380,001
---------- --------------
Net increase .................................... 75,363,205 $1,436,517,215
========== ==============
(a) The Gabelli Dividend & Income Trust commenced investment operations on
November 28, 2003.
6. OTHER MATTERS. On October 7, 2003, the Trust's Adviser received a subpoena
from the Attorney General of the State of New York requesting information on
mutual fund shares trading practices. The Adviser is fully cooperating in
responding to the request. The Trust does not believe that this matter will have
a material adverse effect on the Trust's financial position or results of the
operations.
7. SUBSEQUENT EVENTS. On January 7, 2004 the Trust issued 9,700,000 shares of
common stock in connection with the underwriters' over-allotment option for a
total of $184,882,000 (net of underwriting fees and expenses of $9,118,000).
8
THE GABELLI DIVIDEND & INCOME TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A DIVIDEND & INCOME TRUST SHARE OF BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT EACH PERIOD:
PERIOD ENDED
DECEMBER 31, 2003 (A)
---------------------
OPERATING PERFORMANCE:
Net asset value, beginning of period .................... $ 19.06(b)
-----------
Net investment loss ..................................... --
Net realized and unrealized gain on investments ......... 0.20
-----------
Total from investment operations ........................ 0.20
-----------
NET ASSET VALUE, END OF PERIOD .......................... $ 19.26
==========
Net asset value total return* ........................... 1.0%
==========
Market value, end of period ............................. $ 20.00
==========
Total investment return** ............................... 0.0%
==========
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .................... $1,451,650
Ratio of net investment loss to average net assets ...... (0.04)%(c)
Ratio of operating expenses to average net assets ....... 1.38%(c)
Portfolio turnover rate ................................. 0.4%
--------------------------
(a) The Gabelli Dividend & Income Trust commenced investment operations on
November 28, 2003.
(b) The beginning NAV includes a $0.04 reduction for costs associated with the
initial public offering.
(c) Annualized.
* Based on net asset value per share at commencement of operations of $19.06
per share. Total return for the period of less than one year is not
annualized.
** Based on market value per share at initial public offering of $20.00 per
share. Total return for the period of less than one year is not annualized.
See accompanying notes to financial statements.
9
THE GABELLI DIVIDEND & INCOME TRUST
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
The Gabelli Dividend & Income Trust
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio 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
(the "Trust") at December 31, 2003, the results of its operations, the changes
in its net assets and the financial highlights for the period from November 28,
2003 (commencement of operations) through December 31, 2003, 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 audit. We conducted our audit of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which 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 audit, which included
confirmation of securities at December 31, 2003 by correspondence with the
custodian and brokers, provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 20, 2004
10
THE GABELLI DIVIDEND & INCOME TRUST
ADDITIONAL FUND INFORMATION (UNAUDITED)
The names and business addresses of the Trustees and principal officers of
this Fund are set forth in the following table, together with their positions
and their principal occupations during the past five years and, in the case of
the Trustees, their positions with certain other organizations and companies.
Trustees who are "interested persons" of the Fund, as defined by the 1940 Act,
are indicated by a "+".
TERM OF NUMBER OF
OFFICE AND FUNDS IN TRUST
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED 2 TRUSTEE DURING PAST FIVE YEARS HELD BY TRUSTEE
----------------- ---------- ------------- ----------------------- --------------------
INTERESTED TRUSTEES 3:
-------------------
MARIO J. GABELLI+ Since 2003* 24 Chairman of the Board and Chief Executive Director of Morgan Group
Trustee Officer of Gabelli Asset Management Inc. and Holdings, Inc. (holding
Chief Investment Officer Chief Investment Officer of Gabelli Funds, company); Vice Chairman
Age: 61 LLC and GAMCO Investors, Inc.; Vice of Lynch Corporation
Chairman and Chief Executive Officer (diversified manufacturing)
of Lynch Interactive Corporation (multimedia
and services)
KARL OTTO POHL+ Since 2003*** 33 Member of the Shareholder Committee of Director of Gabelli Asset
Trustee Sal Oppenheim Jr. & Cie, Zurich (private Management Inc. (investment
Age: 74 investment bank); Former President of the management); Chairman,
Deutsche Bundesbank and Chairman of its Incentive Capital and
Central Bank Council from 1980 through Incentive Asset Management
1991 (Zurich); Director at Sal
Oppenheim Jr. & Cie, Zurich
EDWARD T. TOKAR+ Since 2003*** 1 Chief Executive Officer of Allied Capital Trustee, LEVCO Series Trust;
Trustee Management LLC, since 1997; Vice Director of DB Hedge
Age: 56 President of Honeywell International Strategies Fund LLC;
Inc., since 1997 Director, The Topiary
Benefit Plan Investor
Fund LLC
NON-INTERESTED TRUSTEES:
-----------------------
ANTHONY J. COLAVITA Since 2003** 35 President and Attorney at law in the law firm --
Trustee of Anthony J. Colavita, P.C.
Age: 68
JAMES P. CONN Since 2003*** 12 Former Managing Director and Chief Investment Director of LaQuinta Corp.
Trustee Officer of Financial Security Assurance (hotels) and First Republic
Age: 65 Holdings Ltd. 1992-1998; Bank
MARIO D'URSO Since 2003* 1 Chairman of Mittel Capital Markets S.p.A., Director of SJPC, London
Trustee since 2001; Senator in the Italian (financial services)
Age: 63 Parliament, 1996-2001
FRANK J. FAHRENKOPF, JR. Since 2003** 4 President and Chief Executive Officer of the Director of First
Trustee American Gaming Association since June 1995; Republic Bank
Age: 64 Partner in the law firm of Hogan & Hartson;
Co-Chairman of the Commission on Presidential
Debates; Former Chairman of the Republican
National Committee
MICHAEL J. MELARKEY Since 2003* 1 Attorney at law in the law firm of Avansino, --
Trustee Melarkey, Knobel & Mulligan
Age: 53
SALVATORE M. SALIBELLO Since 2003*** 1 Certified Public Accountant and Managing --
Trustee Partner of the accounting firm Salibello
Age: 58 & Broder, since 1978
11
THE GABELLI DIVIDEND & INCOME TRUST
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
TERM OF NUMBER OF
OFFICE AND FUNDS IN TRUST
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED 2 TRUSTEE DURING PAST FIVE YEARS HELD BY TRUSTEE
----------------- ---------- ------------- ----------------------- --------------------
NON-INTERESTED TRUSTEES (CONTINUED):
-----------------------------------
ANTHONIE C. VAN EKRIS Since 2003** 20 Managing Director of BALMAC Director of Aurado
Trustee International, Inc. (consulting) Exploration Inc. (oil and
Age: 69 gas operations)
SALVATORE J. ZIZZA Since 2003** 11 Chairman, Hallmark Electrical Director of Hollis Eden
Trustee Supplies Corp. Pharmaceuticals
Age: 58
OFFICERS:
BRUCE N. ALPERT Since 2003 -- Executive Vice President and Chief Operating --
President Officer of Gabelli Funds, LLC since 1988
Age: 52 and an officer of all mutual funds advised by
Gabelli Funds, LLC and its affiliates;
Director and President of Gabelli Advisers, Inc.
CARTER W. AUSTIN Since 2003 -- Vice President of the Gabelli Equity Trust --
Vice President since 2000. Vice President of Gabelli Funds,
Age: 36 LLC since 1996
MATTHEW A. HULTQUIST Since 2003 -- Assistant Vice President of Gabelli Asset --
Vice President and Management Company since 2001
Ombudsman
Age: 24
JAMES E. MCKEE Since 2003 -- Vice President, General Counsel and Secretary --
Secretary of Gabelli Asset Management Inc. (since 1999)
Age: 40 and of GAMCO Investors, Inc. (since 1993); Secretary
of all the registered investment companies in the
Gabelli fund complex
RICHARD C. SELL, JR. Since 2003 -- Vice President, Controller of Gabelli & Company, --
Treasurer Inc. since 1998
Age: 53
-----------
1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
2 The Trust'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 Trust's 2004 Annual Meeting of Shareholders and
until their successors are duly elected and qualified.
** - Term expires at the Trust's 2005 Annual Meeting of Shareholders and
until their successors are duly elected and qualified.
*** - Term expires at the Trust's 2006 Annual Meeting of Shareholders and
until their successors are duly elected and qualified.
3 "Interested person" of the Trust, as defined in the 1940 Act. Mr. Gabelli is
an "interested person" of the Trust as a result of his employment as an
officer of the Investment Adviser. Mr. Gabelli is also a registered
representative of an affiliated broker-dealer. Mr. Pohl is an "interested
person" as a result of his role as a director of the parent company of the
Investment Adviser. Mr. Tokar is an "interested person" as a result of his
son's employment by an affiliate of the Investment Adviser.
12
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLAN
ENROLLMENT IN THE PLAN
It is the policy of The Gabelli Dividend & Income Trust ("Dividend & Income
Trust") to automatically reinvest dividends. As a "registered" shareholder you
automatically become a participant in the Dividend & Income Trust's Automatic
Dividend Reinvestment Plan (the "Plan"). The Plan authorizes the Dividend &
Income Trust to issue shares to participants upon an income dividend or a
capital gains distribution regardless of whether the shares are trading at a
discount or a premium to net asset value. All distributions to shareholders
whose shares are registered in their own names will be automatically reinvested
pursuant to the Plan in additional shares of the Dividend & Income Trust. Plan
participants may send their stock certificates to EquiServe Trust Company
("EquiServe") to be held in their dividend reinvestment account. Registered
shareholders wishing to receive their distribution in cash must submit this
request in writing to:
The Gabelli Dividend & Income Trust
c/o EquiServe
P.O. Box 43011
Providence, RI 02940-3011
Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan may contact EquiServe at (800) 336-6983.
SHAREHOLDERS WISHING TO LIQUIDATE REINVESTED SHARES held at EquiServe must do
so in writing or by telephone. Please submit your request to the above mentioned
address or telephone number. Include in your request your name, address and
account number. The cost to liquidate shares is $2.50 per transaction as well as
the brokerage commission incurred. Brokerage charges are expected to be less
than the usual brokerage charge for such transactions.
If your shares are held in the name of a broker, bank or nominee, you should
contact such institution. If such institution is not participating in the Plan,
your account will be credited with a cash dividend. In order to participate in
the Plan through such institution, it may be necessary for you to have your
shares taken out of "street name" and re-registered in your own name. Once
registered in your own name your dividends will be automatically reinvested.
Certain brokers participate in the Plan. Shareholders holding shares in "street
name" at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must
contact their broker to make this change.
The number of shares of Common Shares distributed to participants in the Plan
in lieu of cash dividends is determined in the following manner. Under the Plan,
whenever the market price of the Dividend & Income Trust's Common Shares is
equal to or exceeds net asset value at the time shares are valued for purposes
of determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued Common Shares valued at the greater
of (i) the net asset value as most recently determined or (ii) 95% of the then
current market price of the Dividend & Income Trust's Common Shares. The
valuation date is the dividend or distribution payment date or, if that date is
not a New York Stock Exchange trading day, the next trading day. If the net
asset value of the Common Stock at the time of valuation exceeds the market
price of the Common Shares, participants will receive shares from the Dividend &
Income Trust valued at market price. If the Dividend & Income Trust should
declare a dividend or capital gains distribution payable only in cash, EquiServe
will buy Common Shares in the open market, or on the New York Stock Exchange or
elsewhere, for the participants' accounts, except that EquiServe will endeavor
to terminate purchases in the open market and cause the Dividend & Income Trust
to issue shares at net asset value if, following the commencement of such
purchases, the market value of the Common Shares exceeds the then current net
asset value.
The automatic reinvestment of dividends and capital gains distributions will
not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for Federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.
The Dividend & Income Trust reserves the right to amend or terminate the Plan
as applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to written notice of the change sent to the members of the Plan
at least 90 days before the record date for such dividend or distribution. The
Plan also may be amended or terminated by EquiServe on at least 90 days' written
notice to participants in the Plan.
VOLUNTARY CASH PURCHASE PLAN
The Voluntary Cash Purchase Plan is yet another vehicle for our shareholders
to increase their investment in the Dividend & Income Trust. In order to
participate in the Voluntary Cash Purchase Plan, shareholders must have their
shares registered in their own name.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to EquiServe for investments in the Dividend & Income
Trust's shares at the then current market price. Shareholders may send an amount
from $250 to $10,000. EquiServe will use these funds to purchase shares in the
open market on or about the 1st and 15th of each month. EquiServe will charge
each shareholder who participates $0.75, plus a pro rata share of the brokerage
commissions. Brokerage charges for such purchases are expected to be less than
the usual brokerage charge for such transactions. It is suggested that any
voluntary cash payments be sent to EquiServe, P.O. Box 43011, Providence, RI
02940-3011 such that EquiServe receives such payments approximately 10 days
before the 1st and 15th of the month. Funds not received at least five days
before the investment date shall be held for investment in the following
investment period. A payment may be withdrawn without charge if notice is
received by EquiServe at least 48 hours before such payment is to be invested.
For more information regarding the Dividend Reinvestment Plan and Voluntary
Cash Purchase Plan, brochures are available by calling (914) 921-5070 or by
writing directly to the Dividend & Income Trust.
--------------------------------------------------------------------------------
The Annual Meeting of the Dividend & Income Trust's stockholders will be held
at 11:00 A.M. on Monday, May 10, 2004, at the Greenwich Public Library, 101
West Putnam Avenue in Greenwich, Connecticut.
--------------------------------------------------------------------------------
13
--------------------------------------------------------------------------------
THE GABELLI DIVIDEND & INCOME TRUST
AND YOUR PERSONAL PRIVACY
WHO ARE WE?
The Gabelli Dividend & Income Trust (the "Trust") is a closed-end
investment company registered with the Securities and Exchange Commission
under the Investment Company Act of 1940. We are managed by Gabelli Funds
LLC, which is affiliated with Gabelli Asset Management Inc. Gabelli Asset
Management is a publicly-held company that has subsidiaries that provide
investment advisory or brokerage services for a variety of clients.
WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A
GABELLI CUSTOMER? When you purchase shares of the Trust on the New York
Stock Exchange, you have the option of registering directly with our
transfer agent in order, for example, to participate in our dividend
reinvestment and voluntary cash purchase plan.
o INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include
your name, address, telephone number, social security number, bank
account number, and other information.
o INFORMATION ABOUT YOUR TRANSACTIONS WITH US. This would include
information about the shares that you buy or sell, it may also include
information about whether you sell or exercise rights that we have
issued from time to time. If we hire someone else to provide
services--like a transfer agent--we will also have information about the
transactions that you conduct through them.
WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT?
We do not disclose any non-public personal information about our customers
or former customers to anyone, other than our affiliates, our service
providers who need to know such information and as otherwise permitted by
law. If you want to find out what the law permits, you can read the privacy
rules adopted by the Securities and Exchange Commission. They are in volume
17 of the Code of Federal Regulations, Part 248. The Commission often posts
information about its regulations on its web site, www.sec.gov.
WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION?
We restrict access to non-public personal information about you to the
people who need to know that information in order to provide services to
you or the Fund and to ensure that we are complying with the laws governing
the securities business. We maintain physical, electronic, and procedural
safeguards to keep your personal information confidential.
--------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
THE GABELLI DIVIDEND & INCOME TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422
TRUSTEES
Mario J. Gabelli, CFA
CHAIRMAN AND CHIEF INVESTMENT OFFICER,
GABELLI ASSET MANAGEMENT INC.
Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.
James P. Conn
FORMER MANAGING DIRECTOR AND CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Mario d'Urso
CHAIRMAN, MITTEL CAPITAL MARKETS SPA
Frank J. Fahrenkopf, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER,
AMERICAN GAMING ASSOCIATION
Michael J. Melarkey
ATTORNEY-AT-LAW,
AVANSINO, MELARKEY, KNOBEL & MULLIGAN
Karl Otto Pohl
FORMER PRESIDENT, DEUTSCHE BUNDESBANK
Salvatore M. Salibello
CERTIFIED PUBLIC ACCOUNTANT,
SALIBELLO & BRODER
Edward T. Tokar
CHIEF EXECUTIVE OFFICER, ALLIED CAPITAL MANAGEMENT, LLC
Anthony C. van Ekris
MANAGING DIRECTOR, BALMAC INTERNATIONAL, INC.
Salvatore J. Zizza
CHAIRMAN, HALLMARK ELECTRICAL SUPPLIES CORP.
OFFICERS
Bruce N. Alpert
PRESIDENT
Carter W. Austin
VICE PRESIDENT
Matthew A. Hultquist
VICE PRESIDENT AND OMBUDSMAN
James E. McKee
SECRETARY
Richard C. Sell, Jr.
TREASURER
INVESTMENT ADVISOR
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
EquiServe Trust Company
STOCK EXCHANGE LISTING
Common
--------
NYSE-Symbol: GDV
Shares Outstanding: 75,363,205
The Net Asset Value appears in the Publicly Traded Funds column, under the
heading "General Equity Funds," in Sunday's The New York Times and in Monday's
The Wall Street Journal. It is also listed in Barron's Mutual Funds/Closed End
Funds section under the heading "General Equity Funds."
The Net Asset Value may be obtained each day by calling (914) 921-5071.
--------------------------------------------------------------------------------
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 Dividend & Income Trust may, from
time to time, purchase its shares in the open market when the Dividend &
Income Trust shares are trading at a discount of 10% or more from the net
asset value of the shares.
--------------------------------------------------------------------------------
THE GABELLI DIVIDEND & INCOME TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422
PHONE: 800-GABELLI (800-422-3554)
FAX: 914-921-5118 INTERNET: WWW.GABELLI.COM
E-MAIL: CLOSEDEND@GABELLI.COM
GBFDV-AR-12/03
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.
(b) No response required.
(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
directors 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 this Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES: 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 $63,666 in 2003 and $0 in 2002.
(b) AUDIT-RELATED FEES: 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 $0 in 2003 and $0 in 2002.
(c) TAX FEES: 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 $2,350 in 2003 and
$0 in 2002.
Tax fees represent tax compliance services provided in connection with
the review of the Registrant's tax returns.
(d) ALL OTHER FEES: 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 2003 and $0 for 2002.
(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 auditors to the registrant and (ii) all
permissible non-audit services to be provided by the independent
auditors to Gabelli and any affiliate of Gabelli that provides
services to the registrant (a "Covered Services Provider") if the
independent auditors' engagement relates 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 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 aggregate amount of all such permissible
non-audit services provided to the registrant, Gabelli and any
Covered Services Provider constitutes not more than 5% of the
total amount of revenues paid by the registrant to its independent
auditors during the fiscal year in which the permissible non-audit
services are provided; (ii) the permissible non-audit services
were not recognized by the registrant at the time of the
engagement to be non-audit services; and (iii) such services are
promptly brought to the attention of the Committee and approved by
the Committee or the 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) N/A
(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 in 2003 and
$0 in 2002.
(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.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are attached herewith.
GABELLI ASSET MANAGEMENT INC. AND AFFILIATES
--------------------------------------------------------------------------------
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 Investors, Inc., Gabelli Funds,
LLC and Gabelli Advisers, 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
by GAMCO Investors, Inc. 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. As of June 30, 2003, the members are:
Bruce N. Alpert, Chief Operating Officer of Gabelli Funds, LLC
Ivan Arteaga, Research Analyst
Caesar M. P. Bryan, Portfolio Manager
Stephen DeTore, Deputy General Counsel
Joshua Fenton, Director of Research
Douglas R. Jamieson, Chief Operating Officer of GAMCO
James E. McKee, General Counsel
Karyn M. Nappi, Director of Proxy Voting Services
William S. Selby, Managing Director of GAMCO
Howard F. Ward, Portfolio Manager
Peter D. Zaglio, Senior Vice President
Peter D. Zaglio currently chairs the Committee. In his absence, the
Director of Research will chair the 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.
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 Legal Department believes 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' staff may request proxy-voting
records for use in presentations to current or prospective clients. Requests for
proxy voting records should be made at least ten days prior to client meetings.
If a client wishes to receive a proxy voting record on a quarterly,
semi-annual or annual basis, please notify the Proxy Voting Department. The
reports will be available for mailing approximately ten days after the quarter
end of the period. First quarter reports may be delayed since the end of the
quarter falls during the height of the proxy season.
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
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 Wexford Clearing Services
Corporation are responsible for forwarding proxies directly to GAMCO.
Proxies are received in one of two forms:
o Shareholder Vote Authorization Forms (VAFs) - Issued by ADP. VAFs must be
voted through the issuing institution causing a time lag. ADP is an outside
service contracted by the various institutions to issue proxy materials.
o 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.
Since January 1, 1992, records have been maintained on the Proxy Edge system.
The system is backed up regularly. From 1990 through 1991, records were
maintained on the PROXY VOTER system and in hardcopy format. Prior to 1990,
records were maintained on diskette and in hardcopy format.
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
The rationale for the vote when it appropriate
Records prior to the institution of the PROXY EDGE system include:
Security name
Type of Meeting (Annual, Special, Contest)
Date of Meeting
Name of Custodian
Name of Client
Custodian Account Number
Adviser or Fund Account Number
Directors' recommendation
How the Adviser voted for the client on each issue
Date the proxy statement was received and by whom
Name of person posting the vote
Date and method by which the vote was cast
o From these records individual client proxy voting records are compiled. It is
our policy to provide institutional clients with a proxy voting record during
client reviews. In addition, we will supply a proxy voting record at the
request of the client on a quarterly, semi-annual or annual basis.
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 ADP are always sent directly
to a specific individual at ADP.
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:
o VAFs can be faxed to ADP up until the time of the meeting. This is followed
up by mailing the original form.
o 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:
o Banks and brokerage firms using the services at ADP:
A call is placed to ADP requesting legal proxies. The VAFs are then sent
overnight to ADP. ADP issues individual legal proxies and sends them back
via overnight. 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 ADP may be implemented.
o 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:
o A limited Power of Attorney appointing the attendee an Adviser
representative.
o 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.).
o A sample ERISA and Individual contract.
o A sample of the annual authorization to vote proxies form.
o A copy of our most recent Schedule 13D filing (if applicable).
APPENDIX A
PROXY GUIDELINES
-------------------------------
PROXY VOTING GUIDELINES
-------------------------------
GENERAL POLICY STATEMENT
It is the policy of GABELLI ASSET MANAGEMENT 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:
o Historical responsiveness to shareholders
This may include such areas as:
-Paying greenmail
-Failure to adopt shareholder resolutions receiving a majority of
shareholder votes
o Qualifications
o Nominating committee in place
o Number of outside directors on the board
o Attendance at meetings
o 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:
o 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
o Amount of stock currently authorized but not yet issued or reserved for stock
option plans
o 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:
o State of Incorporation
o Management history of responsiveness to shareholders
o 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:
o Dilution of voting power or earnings per share by more than 10%
o Kind of stock to be awarded, to whom, when and how much
o Method of payment
o 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. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not yet applicable.
ITEM 10. 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 last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 11. 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) of the Investment Company
Act of 1940, as amended, are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) of the Investment Company
Act of 1940, as amended, 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
-------------------------------------------------------
Bruce N. Alpert, Principal Executive
Officer
Date March 9, 2004
----------------------------------------------------------------------------
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
-------------------------------------------------------
Bruce N. Alpert, Principal Executive
Officer
Date March 9, 2004
---------------------------------------------------------------------------
By (Signature and Title)* /s/ Richard C. Sell, Jr.
-------------------------------------------------------
Richard C. Sell, Jr., Principal
Financial Officer
Date March 9, 2004
---------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.