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
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The Gabelli Dividend & Income Trust
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(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
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(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
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(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2004
------------------
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 Report to Shareholders is attached herewith.
[LOGO OMITTED]
THE GABELLI
DIVIDEND &
INCOME TRUST
THE GABELLI DIVIDEND & INCOME TRUST
Annual Report
December 31, 2004
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, 2004.
COMPARATIVE RESULTS
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2004 (a)
----------------------------------------------------
Since
Inception
Quarter 1 Year (11/28/03)
------- ------ ----------
GABELLI DIVIDEND & INCOME TRUST NAV RETURN (b) ......................... 7.03% 11.38% 11.46%
GABELLI DIVIDEND & INCOME TRUST INVESTMENT RETURN (c) .................. 0.03% (4.15)% (3.78)%
S&P 500 Index .......................................................... 9.23% 10.87% 16.68%
Dow Jones Industrial Average ........................................... 7.62% 5.40% 12.85%
Nasdaq Composite Index ................................................. 14.69% 8.59% 10.98%
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN SHARE PRICES
AND REINVESTMENT OF DIVIDENDS AND ARE NET OF EXPENSES. INVESTMENT RETURNS
AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN SHARES ARE
SOLD, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE
RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA PRESENTED.
VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST RECENT
MONTH END. INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS AND
CHARGES AND EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE DOW JONES
INDUSTRIAL AVERAGE IS AN UNMANAGED INDEX OF 30 LARGE CAPITALIZATION STOCKS.
THE S&P 500 INDEX AND THE NASDAQ COMPOSITE INDEX ARE UNMANAGED INDICATORS
OF STOCK MARKET PERFORMANCE. DIVIDENDS ARE REINVESTED EXCEPT FOR THE NASDAQ
COMPOSITE INDEX.
(b) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN NET ASSET VALUE
("NAV"), REINVESTMENT OF DISTRIBUTIONS AT NET ASSET VALUE ON THE
EX-DIVIDEND DATE AND ARE NET OF EXPENSES. SINCE INCEPTION RETURN BASED ON
INITIAL NET ASSET VALUE OF $19.06.
(c) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN CLOSING MARKET
VALUES ON THE NEW YORK STOCK EXCHANGE, REINVESTMENT OF DISTRIBUTIONS. SINCE
INCEPTION RETURN BASED ON INITIAL OFFERING PRICE OF $20.00.
--------------------------------------------------------------------------------
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
February 24, 2005
THE GABELLI DIVIDEND & INCOME TRUST
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
Under SEC rules, all funds are required to include in their annual and
semi-annual shareholder reports a presentation of portfolio holdings in a table,
chart or graph by reasonably identifiable categories. The following table which
presents portfolio holdings as a percent of total investments is provided in
compliance with such requirement.
U.S. Government Obligations ........................ 19.4%
Energy and Utilities: Integrated ................... 13.9%
Financial Services ................................. 11.9%
Energy and Utilities: Oil .......................... 9.2%
Repurchase Agreements .............................. 8.7%
Telecommunications ................................. 6.4%
Food and Beverage .................................. 3.9%
Energy and Utilities: Natural Gas .................. 3.5%
Diversified Industrial ............................. 3.2%
Energy and Utilities: Electric ..................... 2.4%
Health Care ........................................ 2.0%
Entertainment ...................................... 1.6%
Automotive: Parts and Accessories .................. 1.5%
Consumer Products .................................. 1.5%
Hotels and Gaming .................................. 1.4%
Machinery .......................................... 1.3%
Specialty Chemicals ................................ 1.3%
Retail ............................................. 1.2%
Cable and Satellite ................................ 0.8%
Aerospace .......................................... 0.6%
Broadcasting ....................................... 0.6%
Energy and Utilities ............................... 0.6%
Equipment and Supplies ............................. 0.5%
Transportation ..................................... 0.5%
Metals and Mining .................................. 0.4%
Business Services .................................. 0.2%
Communications Equipment ........................... 0.2%
Computer Software and Services ..................... 0.2%
Energy and Utilities: Water ........................ 0.2%
Publishing ......................................... 0.2%
Real Estate ........................................ 0.2%
Agriculture ........................................ 0.1%
Aviation: Parts and Services ....................... 0.1%
Closed-End Funds ................................... 0.1%
Environmental Services ............................. 0.1%
Wireless Communications ............................ 0.1%
Automotive ......................................... 0.0%
Building and Construction .......................... 0.0%
Real Estate Investment Trusts ...................... 0.0%
Electronics ........................................ 0.0%
------
100.0%
======
THE GABELLI DIVIDEND &INCOMETRUST (THE "FUND") FILES A COMPLETE SCHEDULE OF
PORTFOLIO HOLDINGS WITH THE SEC FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL
YEAR ON FORM N-Q, THE FIRST OF WHICH WAS FILED FOR THE QUARTER ENDED SEPTEMBER
30, 2004. SHAREHOLDERS MAY OBTAIN THIS INFORMATION AT WWW.GABELLI.COM OR BY
CALLING THE FUND AT 800-GABELLI (800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE
ON THE SEC'S WEBSITE AT WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE
COMMISSION'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE
OPERATION OF THE PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING
1-800-SEC-0330.
PROXY VOTING: The Fund files Form N-PX with its complete proxy voting record for
the 12 months ended June 30th, no later than August 31st of each year. A
description of the Fund's proxy voting policies and procedures are available
without charge (i) upon request, by calling 800-GABELLI (800-422-3554); (ii) by
writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; and
(iii) by visiting the Securities and Exchange Commission's website at
www.sec.gov.
2
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2004
MARKET
SHARES COST VALUE
------------ ------------- --------------
COMMON STOCKS -- 67.3%
AEROSPACE -- 0.5%
10,000 Goodrich Corp. ............ $ 281,823 $ 326,400
580,000 Titan Corp.+ .............. 11,627,550 9,396,000
-------------- --------------
11,909,373 9,722,400
-------------- --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 1.5%
550,000 Dana Corp. ................ 11,124,356 9,531,500
450,000 Genuine Parts Co. ......... 15,323,804 19,827,000
-------------- --------------
26,448,160 29,358,500
-------------- --------------
BROADCASTING -- 0.0%
12,000 Liberty Corp. ............. 585,559 527,520
-------------- --------------
CABLE AND SATELLITE -- 0.8%
10,000 Cablevision Systems Corp.,
Cl. A+ .................. 216,273 249,000
105,000 DIRECTV Group Inc.+ ....... 1,835,189 1,757,700
300,000 EchoStar Communications
Corp., Cl. A ............ 9,321,752 9,972,000
55,000 Liberty Media International
Inc., Cl. A+ ............ 1,974,904 2,542,650
107,700 UnitedGlobalCom Inc., Cl. A+ 936,076 1,040,382
-------------- --------------
14,284,194 15,561,732
-------------- --------------
COMPUTER SOFTWARE AND SERVICES -- 0.2%
150,000 Microsoft Corp. ........... 4,108,064 4,006,500
-------------- --------------
CONSUMER PRODUCTS -- 1.2%
15,000 Altria Group Inc. ......... 750,667 916,500
30,500 Del Laboratories Inc.+ .... 1,031,526 1,059,875
80,000 Eastman Kodak Co. ......... 2,062,700 2,580,000
135,000 Gallaher Group plc, ADR ... 6,687,853 8,195,850
1,000 Kimberly-Clark Corp. ...... 53,184 65,810
70,000 Procter & Gamble Co. ...... 3,642,739 3,855,600
719,500 Swedish Match AB .......... 7,274,631 8,336,820
-------------- --------------
21,503,300 25,010,455
-------------- --------------
DIVERSIFIED INDUSTRIAL-- 2.7%
250,000 Bouygues SA ............... 8,490,143 11,553,622
9,000 Brascan Corp., Cl. A ...... 210,697 324,090
120,000 Cooper Industries Ltd., Cl A 7,415,396 8,146,800
210,000 GATX Corp. ................ 5,512,154 6,207,600
350,000 General Electric Co. ...... 11,076,517 12,775,000
200,000 Honeywell International Inc. 6,549,070 7,082,000
100,000 Sonoco Products Co. ....... 2,400,642 2,965,000
1,000 Textron Inc. .............. 51,500 73,800
1,051,000 Tomkins plc ............... 5,080,148 5,130,297
30,000 Tomkins plc, ADR .......... 591,119 593,700
-------------- --------------
47,377,386 54,851,909
-------------- --------------
ELECTRONICS -- 0.0%
25,000 DuPont Photomasks Inc.+ ... 659,884 660,250
-------------- --------------
ENERGY AND UTILITIES: ELECTRIC -- 2.4%
300,000 American Electric
Power Co. Inc. .......... 8,872,293 10,302,000
20,000 Cleco Corp. ............... 349,431 405,200
375,000 DPL Inc. .................. 7,218,614 9,416,250
17,500 DTE Energy Co. ............ 667,957 754,775
280,000 Duquesne Light Holdings Inc. 5,007,032 5,278,000
105,000 Electric Power Development
Co., Ltd.+ .............. 2,915,016 2,940,861
610,000 Great Plains Energy Inc. .. 18,714,180 18,470,800
-------------- --------------
43,744,523 47,567,886
-------------- --------------
MARKET
SHARES COST VALUE
------------ ------------- --------------
ENERGY AND UTILITIES: INTEGRATED -- 13.9%
30,000 Allegheny Energy Inc.+ .... $ 438,040 $ 591,300
120,000 ALLETE Inc. ............... 3,983,448 4,410,000
10,000 Alliant Energy Corp. ...... 250,267 286,000
410,000 Ameren Corp. .............. 18,428,778 20,557,400
25,000 Avista Corp. .............. 433,003 441,750
10,300 Black Hills Corp. ......... 314,373 316,004
60,000 Burlington Resources Inc. . 2,374,465 2,610,000
22,800 Central Vermont Public
Service Corp. ........... 446,712 530,328
32,100 CH Energy Group Inc. ...... 1,481,792 1,542,405
72,000 Chubu Electric Power Co. Inc. 1,595,014 1,728,506
81,000 Chugoku Electric
Power Co. Inc. .......... 1,433,859 1,509,017
320,000 Cinergy Corp. ............. 12,099,334 13,321,600
170,000 CONSOL Energy Inc. ........ 3,912,925 6,978,500
200,000 Consolidated Edison Inc. .. 8,201,972 8,750,000
2,000 Dominion Resources Inc. ... 126,277 135,480
259,000 Duke Energy Corp. ......... 4,917,968 6,560,470
150,000 El Paso Corp. ............. 1,485,360 1,560,000
2,800 Empire District Electric Co. 57,082 63,504
300,000 Enel SpA .................. 2,324,318 2,948,213
47,000 Enel SpA, ADR ............. 1,839,336 2,323,680
145,100 Energy East Corp. ......... 3,292,295 3,871,268
220,000 FirstEnergy Corp. ......... 7,886,725 8,692,200
78,000 FPL Group Inc. ............ 4,949,739 5,830,500
130,000 Hawaiian Electric
Industries Inc. ......... 3,045,840 3,789,500
250,000 Hera SpA .................. 552,073 720,402
81,000 Hokkaido Electric Power
Co. Inc. ................ 1,486,342 1,592,808
81,000 Hokuriku Electric Power Co. 1,392,636 1,472,655
81,000 Kansai Electric Power Co. Inc. 1,515,634 1,644,189
81,000 Kyushu Electric Power Co. Inc. 1,558,572 1,636,284
25,000 Maine & Maritimes Corp. ... 746,488 658,750
1,500 MGE Energy Inc. ........... 51,074 54,045
40,000 National Grid Transco plc, ADR 1,588,564 1,919,600
260,000 NiSource Inc. ............. 5,433,717 5,922,800
300,000 NSTAR ..................... 14,242,809 16,284,000
500,000 OGE Energy Corp. .......... 12,037,779 13,255,000
200,000 Ormat Technologies Inc.+ .. 3,000,000 3,256,000
600,000 Pepco Holdings Inc. ....... 11,391,942 12,792,000
220,000 Pinnacle West Capital Corp. 8,566,123 9,770,200
320,000 Progress Energy Inc. ...... 14,384,854 14,476,800
260,000 Public Service Enterprise
Group Inc. .............. 11,095,739 13,460,200
200,000 Scottish Power plc, ADR ... 5,792,267 6,232,000
81,000 Shikoku Electric Power Co. Inc 1,476,075 1,580,951
500,000 Southern Co. .............. 14,779,216 16,760,000
2,000 TECO Energy Inc. .......... 27,648 30,680
81,000 Tohoku Electric Power Co. Inc. 1,385,001 1,454,474
72,000 Tokyo Electric Power Co. Inc. 1,670,999 1,767,151
1,000 TXU Corp. ................. 28,289 64,560
550,000 Unisource Energy Corp. .... 13,530,220 13,260,500
51,000 Vectren Corp. ............. 1,238,895 1,366,800
404,400 Westar Energy Inc. ........ 7,798,266 9,248,628
80,000 Wisconsin Energy Corp. .... 2,506,082 2,696,800
150,000 WPS Resources Corp. ....... 6,859,066 7,494,000
974,400 Xcel Energy Inc. .......... 16,710,898 17,734,080
-------------- --------------
248,166,190 277,953,982
-------------- --------------
See accompanying notes to financial statements.
3
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2004
MARKET
SHARES COST VALUE
------------ ------------- --------------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES: NATURAL GAS -- 3.5%
8,500 AGL Resources Inc. ........ $ 231,031 $ 282,540
90,000 Atmos Energy Corp. ........ 2,217,924 2,461,500
14,800 Delta Natural Gas Co. Inc. 374,076 402,841
3,000 Energen Corp. ............. 124,550 176,850
390,000 KeySpan Corp. ............. 14,109,990 15,385,500
22,000 Kinder Morgan Energy
Partners LP ............. 910,803 975,260
50,000 Laclede Group Inc. ........ 1,380,807 1,557,500
300,000 National Fuel Gas Co. ..... 7,226,378 8,502,000
215,000 Nicor Inc. ................ 7,320,919 7,942,100
223,500 ONEOK Inc. ................ 4,764,330 6,351,870
250,000 Peoples Energy Corp. ...... 10,457,701 10,987,500
300,000 SEMCO Energy Inc. ......... 1,686,087 1,602,000
211,300 Sempra Energy ............. 6,081,369 7,750,484
12,000 South Jersey Industries Inc. 497,736 630,720
20,000 Southern Union Co.+ ....... 457,198 479,600
151,000 Southwest Gas Corp. ....... 3,572,715 3,835,400
-------------- --------------
61,413,614 69,323,665
-------------- --------------
ENERGY AND UTILITIES: OIL-- 9.2%
1,000 Amerada Hess Corp. ........ 65,905 82,380
6,000 Anadarko Petroleum Corp. .. 325,515 388,860
30,000 Apache Corp. .............. 1,255,706 1,517,100
20,000 Baker Hughes Inc. ......... 759,763 853,400
150,000 BP plc, ADR ............... 6,894,243 8,760,000
5,000 Chesapeake Energy Corp. ... 65,488 82,500
300,000 ChevronTexaco Corp. ....... 14,711,216 15,753,000
1,000 Cimarex Energy Co.+ ....... 28,300 37,900
210,000 ConocoPhillips ............ 15,095,391 18,234,300
2,000 Cooper Cameron Corp.+ ..... 102,000 107,620
30,000 Devon Energy Corp. ........ 1,068,956 1,167,600
300,000 Diamond Offshore
Drilling Inc. ........... 6,478,892 12,015,000
75,000 Eni SpA, ADR .............. 6,854,713 9,438,000
190,000 Exxon Mobil Corp. ......... 8,628,951 9,739,400
200,000 Halliburton Co. ........... 5,839,449 7,848,000
71,100 Kaneb Services LLC ........ 3,060,684 3,070,809
120,000 Kerr-McGee Corp. .......... 5,806,427 6,934,800
283,000 Marathon Oil Corp. ........ 8,736,356 10,643,630
90,000 Murphy Oil Corp. .......... 6,863,680 7,240,500
1,000 Nabors Industries Ltd.+ ... 50,200 51,290
190,000 Occidental Petroleum Corp. 9,068,488 11,088,400
100,000 Patina Oil & Gas Corp. .... 3,668,370 3,750,000
280,000 Repsol YPF SA, ADR ........ 5,858,941 7,308,000
200,000 Royal Dutch Petroleum Co. . 9,567,840 11,476,000
40,000 Schlumberger Ltd. ......... 2,128,651 2,678,000
960,000 Statoil ASA, ADR .......... 10,729,300 15,244,800
100,000 Sunoco Inc. ............... 8,156,500 8,171,000
100,000 Total SA, ADR ............. 8,864,810 10,984,000
20,000 Yukos ADR+ ................ 286,000 52,000
-------------- --------------
151,020,735 184,718,289
-------------- --------------
ENERGY AND UTILITIES: WATER -- 0.2%
3,000 American States Water Co. . 69,243 78,000
38,000 Aqua America Inc. ......... 812,206 934,420
3,000 Artesian Resources Corp.,
Cl. A ................... 81,485 84,360
2,000 California Water
Service Group ........... 57,970 75,300
4,000 Connecticut Water Service Inc. 102,758 105,960
5,000 Middlesex Water Co. ....... 91,653 94,700
7,600 Pennichuck Corp. .......... 194,693 198,360
41,000 SJW Corp. ................. 1,366,226 1,492,400
MARKET
SHARES COST VALUE
------------ ------------- --------------
10,500 Southwest Water Co. ....... $ 125,580 $ 141,225
22,000 United Utilities plc, ADR . 429,085 540,320
5,000 York Water Co. ............ 93,633 97,050
-------------- --------------
3,424,532 3,842,095
-------------- --------------
ENTERTAINMENT -- 1.3%
2,000 Grupo Televisa SA, ADR .... 79,516 121,000
500,000 The Walt Disney Co. ....... 11,529,759 13,900,000
500,000 Time Warner Inc.+ ......... 8,553,485 9,720,000
70,000 Vivendi Universal SA, ADR+ 2,089,572 2,244,900
-------------- --------------
22,252,332 25,985,900
-------------- --------------
ENVIRONMENTAL SERVICES-- 0.1%
50,000 Ionics Inc.+ .............. 2,170,168 2,167,000
10,000 Veolia Environnement ...... 266,211 361,968
-------------- --------------
2,436,379 2,528,968
-------------- --------------
EQUIPMENT AND SUPPLIES -- 0.5%
115,000 CIRCOR International Inc. . 2,094,187 2,663,400
15,000 Lufkin Industries Inc. .... 474,063 598,620
77,500 Mueller Industries Inc. ... 3,444,806 2,495,500
132,000 RPC Inc. .................. 1,966,659 3,315,840
5,000 Weatherford International
Ltd.+ ................... 207,060 256,500
-------------- --------------
8,186,775 9,329,860
-------------- --------------
FINANCIAL SERVICES -- 11.4%
365,000 Alliance Capital Management
Holding LP .............. 12,259,858 15,330,000
340,000 American Express Co. ...... 17,226,202 19,165,800
200,000 American International
Group Inc. .............. 12,676,506 13,134,000
100,000 AmSouth Bancorporation .... 2,445,120 2,590,000
510,000 Bank of America Corp. ..... 20,565,031 23,964,900
361,400 Bank of New York Co. Inc. . 11,720,504 12,077,988
400,000 Citigroup Inc. ............ 19,465,042 19,272,000
25,000 Deutsche Bank AG, ADR ..... 2,065,488 2,225,250
90,000 Fidelity National Financial
Inc. .................... 4,054,017 4,110,300
53,900 First Horizon National Corp. 2,309,282 2,323,629
100,000 First National Bankshares
of Florida Inc. ......... 2,387,180 2,390,000
15,000 Flushing Financial Corp. .. 304,562 300,900
17,000 Hartford Financial Services
Group Inc. .............. 1,031,960 1,178,270
510,000 JPMorgan Chase & Co. ...... 18,568,142 19,895,100
190,000 KeyCorp ................... 5,412,741 6,441,000
60,000 Marsh & McLennan
Companies Inc. .......... 1,692,798 1,974,000
82,000 Morgan Stanley ............ 4,202,524 4,552,640
135,000 New York Community
Bancorp Inc. ............ 2,686,693 2,776,950
30,000 North Fork Bancorporation Inc. 729,176 865,500
238,500 PNC Financial Services Group 12,797,327 13,699,440
47,500 Popular Inc. .............. 1,110,954 1,369,425
1,000 Progressive Corp. ......... 89,520 84,840
50,391 Riggs National Corp. ...... 1,137,458 1,071,313
120,000 Sovereign Bancorp Inc. .... 2,668,642 2,706,000
267,000 St. Paul Travelers
Companies Inc. .......... 10,060,829 9,897,690
12,000 Sterling Bancorp .......... 275,190 339,000
50,000 T. Rowe Price Group Inc. .. 2,455,119 3,110,000
5,000 Unitrin Inc. .............. 187,486 227,250
8,800 Valley National Bancorp ... 241,864 243,320
245,000 Wachovia Corp. ............ 11,347,420 12,887,000
242,000 Waddell & Reed Financial
Inc., Cl. A ............. 5,678,316 5,781,380
See accompanying notes to financial statements.
4
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2004
MARKET
SHARES COST VALUE
------------ ------------- --------------
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES (CONTINUED)
105,000 Washington Mutual Inc. .... $ 4,163,485 $ 4,439,400
93,400 Waypoint Financial Corp. .. 2,482,979 2,647,890
3,500 Webster Financial Corp. ... 155,536 177,240
130,000 Wells Fargo & Co. ......... 7,427,111 8,079,500
100,000 Wilmington Trust Corp. .... 3,578,188 3,615,000
53,000 Zions Bancorporation ...... 3,231,895 3,605,590
-------------- --------------
210,892,145 228,549,505
-------------- --------------
FOOD AND BEVERAGE -- 3.9%
500,000 Archer-Daniels-Midland Co. 8,215,368 11,155,000
1,000 Campbell Soup Co. ......... 28,030 29,890
135,000 Coca-Cola Co. ............. 6,091,712 5,620,050
200,000 ConAgra Foods Inc. ........ 5,403,166 5,890,000
450,000 Dreyer's Grand Ice Cream
Holdings Inc., Cl. A .... 34,980,593 36,193,500
125,000 General Mills Inc. ........ 5,592,578 6,213,750
80,000 Heinz (H.J.) Co. .......... 2,950,151 3,119,200
1,000 Kellogg Co. ............... 35,550 44,660
120,000 Molson Inc., Cl. A ........ 3,348,823 3,553,478
280,000 Sara Lee Corp. ............ 6,240,819 6,759,200
1,000 Wrigley (Wm.) Jr. Co. ..... 55,998 69,190
-------------- --------------
72,942,788 78,647,918
-------------- --------------
HEALTH CARE -- 1.8%
125,000 Bristol-Myers Squibb Co. .. 3,071,433 3,202,500
137,100 Eli Lilly & Co. ........... 8,549,765 7,780,425
10,000 Guidant Corp. ............. 722,500 721,000
250,000 Merck & Co. Inc. .......... 9,752,201 8,035,000
50,000 Owens & Minor Inc. ........ 1,240,047 1,408,500
520,000 Pfizer Inc. ............... 16,314,547 13,982,800
20,000 Sola International Inc.+ .. 551,600 550,800
-------------- --------------
40,202,093 35,681,025
-------------- --------------
HOTELS AND GAMING -- 1.4%
2,000,000 Hilton Group plc .......... 9,246,478 10,924,237
300,000 Hilton Hotels Corp. ....... 5,099,882 6,822,000
150,000 Mandalay Resort Group ..... 10,282,085 10,564,500
-------------- --------------
24,628,445 28,310,737
-------------- --------------
MACHINERY -- 1.3%
350,000 CNH Global NV ............. 6,922,214 6,779,500
260,000 Deere & Co. ............... 17,633,732 19,344,000
-------------- --------------
24,555,946 26,123,500
-------------- --------------
METALS AND MINING -- 0.3%
10,000 Arch Coal Inc. ............ 314,774 355,400
3,000 Fording Canadian Coal Trust 112,385 231,450
120,000 Freeport-McMoRan Copper
& Gold Inc., Cl. B ...... 4,389,476 4,587,600
10,000 Massey Energy Co. ......... 235,475 349,500
6,000 Peabody Energy Corp. ...... 291,734 485,460
3,000 Westmoreland Coal Co.+ .... 52,605 91,380
-------------- --------------
5,396,449 6,100,790
-------------- --------------
PUBLISHING -- 0.2%
5,100 Pulitzer Inc. ............. 326,904 330,735
200,000 Reader's Digest Association
Inc. .................... 2,978,081 2,782,000
-------------- --------------
3,304,985 3,112,735
-------------- --------------
REAL ESTATE -- 0.2%
53,500 LNR Property Corp. ........ 3,342,930 3,365,685
-------------- --------------
RETAIL -- 1.2%
420,000 Albertson's Inc. .......... 9,855,124 10,029,600
151,500 Ingles Markets Inc., Cl. A 1,688,145 1,877,085
600,000 Safeway Inc.+ ............. 12,997,052 11,844,000
-------------- --------------
24,540,321 23,750,685
-------------- --------------
MARKET
SHARES COST VALUE
------------ ------------- --------------
SPECIALTY CHEMICALS -- 1.3%
65,000 Ashland Inc. .............. $ 2,781,776 $ 3,794,700
1,000 Celanese AG ............... 53,931 61,302
185,000 Dow Chemical Co. .......... 7,402,232 9,159,350
185,000 E.I. du Pont de
Nemours and Co. ......... 8,133,855 9,074,250
65,000 Ferro Corp. ............... 1,247,019 1,507,350
80,000 Olin Corp. ................ 1,418,908 1,761,600
-------------- --------------
21,037,721 25,358,552
-------------- --------------
TELECOMMUNICATIONS -- 5.9%
440,000 AT&T Corp. ................ 8,188,152 8,386,400
680,000 BCE Inc. .................. 14,877,515 16,408,400
200,000 BellSouth Corp. ........... 5,333,936 5,558,000
74,000 BT Group plc, ADR ......... 2,312,412 2,925,220
100,000 CenturyTel Inc. ........... 2,916,859 3,547,000
160,000 Citizens Communications Co. 2,243,824 2,206,400
50,000 Compania de
Telecomunicaciones de
Chile SA, ADR ........... 607,686 562,000
91,000 Deutsche Telekom AG, ADR+ . 1,607,118 2,063,880
55,000 France Telecom SA, ADR .... 1,338,443 1,819,400
240,000 Hellenic Telecommunications
Organization SA, ADR .... 1,884,444 2,112,000
40,000 Manitoba Telecom
Services Inc. ........... 1,343,953 1,635,855
30,000 MCI Inc. .................. 501,308 604,800
225,000 Qwest Communications
International Inc.+ ..... 775,852 999,000
175,000 Rogers Communications Inc.,
Cl. B ................... 3,808,349 4,576,250
320,000 SBC Communications Inc. ... 7,933,700 8,246,400
840,000 Sprint Corp. .............. 15,078,015 20,874,000
346,800 TDC A/S, ADR .............. 6,049,542 7,379,904
12,000 Telecom Corp. of New
Zealand Ltd., ADR ....... 322,396 425,520
42,000 Telecom Italia SpA, ADR ... 1,285,636 1,716,540
25,000 Telefonica SA, ADR ........ 1,126,654 1,412,500
160,000 Telefonos de Mexico SA de
CV, Cl. L, ADR .......... 5,322,070 6,131,200
160,000 Telstra Corp. Ltd., ADR ... 2,939,066 3,062,400
150,000 TELUS Corp., Non-Voting ... 2,744,342 4,349,205
300,000 Verizon Communications Inc. 10,168,118 12,153,000
-------------- --------------
100,709,390 119,155,274
-------------- --------------
TRANSPORTATION -- 0.3%
8,000 Frontline Ltd. ............ 206,472 354,880
4,466 Ship Finance International Ltd. 78,726 91,642
100,000 Stelmar Shipping Ltd. ..... 4,780,417 4,771,000
40,000 Teekay Shipping Corp. ..... 1,038,528 1,684,400
-------------- --------------
6,104,143 6,901,922
-------------- --------------
WIRELESS COMMUNICATIONS -- 0.1%
6,582 Crown Castle
International Corp.+ .... 102,153 109,525
15,000 mm02 plc, ADR+ ............ 328,522 353,550
48,500 United States Cellular Corp.+ 2,212,700 2,170,860
4,000 Vimpel-Communications, ADR+ 116,900 144,560
-------------- --------------
2,760,275 2,778,495
-------------- --------------
TOTAL COMMON
STOCKS .................. 1,207,938,631 1,348,786,734
-------------- --------------
See accompanying notes to financial statements.
5
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2004
MARKET
SHARES COST VALUE
------------ ------------- --------------
PREFERRED STOCKS -- 0.1%
CLOSED-END FUNDS -- 0.1%
75,000 General American Investors
Co. Inc.,
5.950% Cumulative Pfd.,
Ser. B .................. $ 1,860,400 $ 1,872,750
-------------- --------------
CONVERTIBLE PREFERRED STOCKS -- 3.5%
AEROSPACE -- 0.0%
8,315 Northrop Grumman Corp.,
7.000% Cv. Pfd., Ser. B . 997,555 1,097,663
-------------- --------------
AUTOMOTIVE -- 0.0%
20,000 General Motors Corp.,
4.500% Cv. Pfd., Ser. A . 518,910 501,800
-------------- --------------
AVIATION: PARTS AND SERVICES -- 0.1%
12,200 Sequa Corp.,
$5.00 Cv. Pfd. .......... 1,141,435 1,189,500
-------------- --------------
BROADCASTING -- 0.6%
17,460 Emmis Communications Corp.,
6.250% Cv. Pfd., Ser. A . 828,081 804,033
265,000 Sinclair Broadcast Group
Inc.,
6.000% Cv. Pfd., Ser. D . 12,368,975 11,524,850
-------------- --------------
13,197,056 12,328,883
-------------- --------------
BUILDING AND CONSTRUCTION -- 0.0%
200 Fleetwood Capital Trust,
6.000% Cv. Pfd.+ .......... 6,210 9,100
-------------- --------------
BUSINESS SERVICES -- 0.0%
18,000 Allied Waste Industries Inc.,
6.250% Cv. Pfd. ......... 1,079,078 948,780
-------------- --------------
CABLE AND SATELLITE -- 0.0%
10,000 Rainbow Equity Securities
Trust II,
6.250% Cv. Pfd. ......... 243,462 250,100
-------------- --------------
CONSUMER PRODUCTS -- 0.3%
138,900 Newell Financial Trust,
5.250% Cv. Pfd. ......... 6,516,450 6,545,662
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 0.5%
179,400 Owens-Illinois Inc.,
4.750% Cv. Pfd. ......... 5,956,159 7,265,700
80,502 Smurfit-Stone Container Corp.,
7.000% Cv. Pfd., Ser. A . 2,008,346 2,052,801
1,000 US Steel Corp.,
7.000% Cv. Pfd., Ser. B . 88,510 166,850
-------------- --------------
8,053,015 9,485,351
-------------- --------------
ENERGY AND UTILITIES -- 0.6%
9,750 Arch Coal Inc.,
5.000% Cv. Pfd. ......... 733,750 887,250
Chesapeake Energy Corp.,
20,000 5.000% Cv. Pfd. ......... 2,193,750 2,447,000
2,700 6.000% Cv. Pfd. ......... 194,400 242,325
20,000 CMS Energy Corp.,
4.500% Cv. Pfd. ......... 1,069,062 1,272,500
130,000 El Paso Corp.,
4.750% Cv. Pfd. ......... 4,680,219 4,771,000
42,615 Hanover Compressor,
7.250% Cv. Pfd. ......... 2,134,125 2,226,634
-------------- --------------
11,005,306 11,846,709
-------------- --------------
MARKET
SHARES COST VALUE
------------ ------------- --------------
ENTERTAINMENT -- 0.2%
168,000 Six Flags Inc.,
7.250% Cv. Pfd. ......... $ 3,904,309 $ 3,717,840
-------------- --------------
FINANCIAL SERVICES -- 0.5%
3,920 Doral Financial Corp.,
4.750% Cv. Pfd. (a) ..... 1,029,000 1,307,320
215,000 National Australia Bank Ltd.,
7.875% Cv. Pfd. ......... 8,179,115 8,157,100
5,100 United Fire & Casualty Co.,
6.375% Cv. Pfd., Ser. A . 152,000 215,322
-------------- --------------
9,360,115 9,679,742
-------------- --------------
HEALTH CARE -- 0.2%
57,436 McKesson Financing Trust,
5.000% Cv. Pfd. ......... 2,888,529 2,900,518
10,000 Omnicare Inc.,
4.000% Cv. Pfd. ......... 605,400 551,600
-------------- --------------
3,493,929 3,452,118
-------------- --------------
METALS AND MINING -- 0.1%
6,000 Phelps Dodge Corp.,
6.750% Cv. Pfd. ......... 1,002,916 1,241,160
-------------- --------------
REAL ESTATE INVESTMENT TRUST -- 0.0%
2,100 Equity Office Properties
Trust,
5.250% Cv. Pfd., Ser. B . 104,120 107,856
-------------- --------------
TELECOMMUNICATIONS -- 0.4%
39,500 Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B ... 1,682,413 1,609,625
121,000 Crown Castle International
Corp.,
6.250% Cv. Pfd. ......... 5,568,000 5,929,000
-------------- --------------
7,250,413 7,538,625
-------------- --------------
TRANSPORTATION -- 0.0%
1,500 GATX Corp.,
$2.50 Cv. Pfd. ............ 199,475 225,000
982 Kansas City Southern,
4.250% Cv. Pfd. ........... 551,884 645,911
-------------- --------------
751,359 870,911
-------------- --------------
TOTAL CONVERTIBLE
PREFERRED STOCKS ........ 68,625,638 70,811,800
-------------- --------------
PRINCIPAL
AMOUNT
-----------
CONVERTIBLE CORPORATE BONDS -- 1.0%
AEROSPACE -- 0.1%
$ 1,000,000 GenCorp Inc., Sub. Deb. Cv.,
5.750%, 04/15/07 ........ 989,174 1,098,750
-------------- --------------
AGRICULTURE-- 0.1%
750,000 Bunge Ltd. Financial Corp.,
Cv.,
3.750%, 11/15/22 ........ 793,722 1,352,812
-------------- --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.0%
500,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ........ 476,286 488,750
-------------- --------------
BUSINESS SERVICES-- 0.2%
Trans-Lux Corp., Sub. Deb.
Cv.,
950,000 8.250%, 03/01/2012 ...... 946,185 964,250
2,000,000 7.500%, 12/01/2006 ...... 2,007,191 2,030,000
-------------- --------------
2,953,376 2,994,250
-------------- --------------
See accompanying notes to financial statements.
6
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2004
PRINCIPAL MARKET
AMOUNT COST VALUE
------------ -------------- --------------
CONVERTIBLE CORPORATE BONDS (CONTINUED)
COMMUNICATIONS EQUIPMENT -- 0.2%
$ 2,000,000 Agere Systems Inc., Sub.
Deb. Cv.,
6.500%, 12/15/09 ........ $ 2,082,572 $ 2,125,000
2,000,000 TriQuint Semiconductor Inc.,
Sub. Deb. Cv.,
4.000%, 03/01/07 ........ 1,936,699 1,945,000
-------------- --------------
4,019,271 4,070,000
-------------- --------------
ENTERTAINMENT -- 0.1%
1,000,000 The Walt Disney Co., Cv.,
2.125%, 04/15/23 ........ 1,029,146 1,117,500
-------------- --------------
EQUIPMENT AND SUPPLIES -- 0.0%
700,000 Robbins & Myers Inc.,
Sub. Deb. Cv.,
8.000%, 01/31/08 ........ 709,317 745,500
-------------- --------------
FINANCIAL SERVICES-- 0.0%
250,000 AON Corp., Deb. Cv.,
3.500%, 11/15/12 ........ 287,699 309,688
-------------- --------------
FOOD AND BEVERAGE -- 0.0%
1,550,000 Parmalat Soparfi SA,
Sub. Deb. Cv.,
6.125%, 05/23/32+ (b) ... 981,615 802,353
-------------- --------------
HEALTH CARE-- 0.0%
300,000 Quest Diagnostics Inc.,
Deb. Cv.,
1.750%, 11/30/21 ........ 300,000 328,875
-------------- --------------
REAL ESTATE -- 0.0%
1,000,000 Palm Harbor Homes Inc., Cv.,
3.250%, 05/15/24 (a) .... 971,543 908,750
-------------- --------------
TELECOMMUNICATIONS -- 0.1%
2,000,000 Nortel Networks Corp., Cv.,
4.250%, 09/01/08 ........ 1,932,233 1,955,000
-------------- --------------
TRANSPORTATION -- 0.2%
2,700,000 GATX Corp., Cv.,
7.500%, 02/01/07 ........ 3,034,084 3,165,750
-------------- --------------
TOTAL CONVERTIBLE
CORPORATE BONDS ......... 18,477,466 19,337,978
-------------- --------------
CORPORATE BONDS -- 0.0%
DIVERSIFIED INDUSTRIAL -- 0.0%
1,000,000 WHX Corp.,
10.500%, 04/15/05 ....... 977,085 955,000
-------------- --------------
U.S. GOVERNMENT OBLIGATIONS -- 19.4%
389,590,000 U.S. Treasury Bills,
1.727% to 2.202%++,
01/13/05 to 03/17/05 (e) 388,726,514 388,743,822
-------------- --------------
PRINCIPAL MARKET
AMOUNT COST VALUE
------------ -------------- --------------
SHORT-TERM OBLIGATIONS -- 8.7%
REPURCHASE AGREEMENTS -- 8.7%
$100,000,000 ABN Amro, 1.450%, dated
12/31/04, due 01/03/05,
proceeds at maturity,
$100,012,083 (c) ........ $ 100,000,000 $ 100,000,000
75,000,000 Barclays Capital, 1.300%,
dated 12/31/04, due
01/03/05, proceeds at
maturity, $75,008,125 (d) 75,000,000 75,000,000
-------------- --------------
TOTAL SHORT-TERM
OBLIGATIONS ............. 175,000,000 175,000,000
-------------- --------------
TOTAL INVESTMENTS -- 100.0% .............. $1,861,605,734 2,005,508,084
==============
OTHER ASSETS IN EXCESS OF LIABILITIES ..................... 1,195,260
--------------
PREFERRED STOCK
(3,208,800 preferred shares outstanding) ................ (300,000,000)
--------------
NET ASSETS -- COMMON STOCK
(84,817,505 common shares outstanding) .................. $1,706,703,344
==============
NET ASSET VALUE PER COMMON SHARE
($1,706,703,344 / 84,817,505 shares outstanding) ....... $ 20.12
=======
NUMBER OF EXPIRATION DATE/ MARKET
CONTRACTS ISSUE EXERCISE PRICE VALUE
--------- ----- ---------------- --------------
WRITTEN CALL OPTIONS -- SHORT POSITION -- 0.0%
100 T Rowe Price ......... Jan. 05/65 $ 2,500
300 Verizon Communications Jan. 05/40 25,500
--------------
TOTAL WRITTEN CALL OPTIONS -- SHORT POSITION
(Proceeds $56,549) ...................................... $ 28,000
==============
----------
For Federal tax purposes:
Aggregate cost ............................. $1,862,242,886
==============
Gross unrealized appreciation .............. $ 159,389,709
Gross unrealized depreciation .............. (16,095,961)
--------------
Net unrealized appreciation (depreciation) . $ 143,293,748
==============
-------------
(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, 2004, the Rule 144A securities are considered liquid and the market
value amounted to $2,216,070 or 0.11% of total net assets.
(b) Security in default.
(c) Collateralized by U.S. Treasury Bonds, 3.625% and 6.125%, due 04/15/28 and
11/15/27, market value $116,656,670.
(d) Collateralized by U.S. Treasury Bond, 7.625%, due 02/15/25, market value
$76,662,707.
(e) At December 31, 2004, $3,200,000 principal amount was pledged as
collateral for options.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR - American Depository Receipt.
See accompanying notes to financial statements.
7
THE GABELLI DIVIDEND & INCOME TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2004
ASSETS:
Investments, at value (cost $1,686,605,734) ........... $1,830,508,084
Repurchase agreements, at value
(cost $175,000,000) ................................. 175,000,000
Cash .................................................. 1,401
Deposit at broker ..................................... 57,180
Receivable for investments sold ....................... 3,446,709
Dividends and interest receivable ..................... 2,689,812
Other assets .......................................... 71,024
--------------
TOTAL ASSETS .......................................... 2,011,774,210
--------------
LIABILITIES:
Options written (premium received $56,549) ............ 28,000
Dividends payable ..................................... 97,578
Payable for investments purchased ..................... 2,126,410
Payable for investment advisory fees .................. 2,086,125
Payable for offering expenses ......................... 362,910
Payable to custodian .................................. 32,180
Other accrued expenses and liabilities ................ 337,663
--------------
TOTAL LIABILITIES ..................................... 5,070,866
--------------
PREFERRED STOCK:
Series A Cumulative Preferred Stock (5.875%,
$25 liquidation value, $0.001 par value,
3,200,000 shares authorized with 3,200,000
shares issued and outstanding) ...................... 80,000,000
Series B Cumulative Preferred Stock (Auction Rate,
$25,000 liquidation value, $0.001 par value,
4,000 shares authorized with 4,000 shares issued
and outstanding) .................................... 100,000,000
Series C Cumulative Preferred Stock (Auction Rate,
$25,000 liquidation value, $0.001 par value,
4,800 shares authorized with 4,800 shares issued
and outstanding) .................................... 120,000,000
--------------
TOTAL PREFERRED STOCK ................................. 300,000,000
--------------
NET ASSETS ATTRIBUTABLE TO COMMON
STOCK SHAREHOLDERS .................................. $1,706,703,344
==============
NET ASSETS ATTRIBUTABLE TO COMMON STOCK
SHAREHOLDERS CONSIST OF:
Shares of beneficial interest, at par value ........... $ 84,817
Additional paid-in capital ............................ 1,563,420,459
Accumulated net realized loss on investments,
options and foreign currency transactions ........... (734,730)
Net unrealized appreciation on investments,
options and foreign currency translations ........... 143,932,798
--------------
TOTAL NET ASSETS ...................................... $1,706,703,344
==============
NET ASSET VALUE PER COMMON SHARE
($1,706,703,344 / 84,817,505 shares outstanding;
unlimited number of shares authorized of
$0.001 par value) $20.12
======
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2004
INVESTMENT INCOME:
Dividends (net of foreign taxes of $684,643) ............ $ 46,145,532
Interest ................................................ 7,256,870
------------
TOTAL INVESTMENT INCOME ................................. 53,402,402
------------
EXPENSES:
Investment advisory fees ................................ 16,947,519
Shareholder communications expenses ..................... 476,419
Trustees' fees .......................................... 181,000
Payroll ................................................. 181,779
Legal and audit fees .................................... 91,676
Custodian fees .......................................... 66,916
Shareholder services fees ............................... 7,854
Miscellaneous expenses .................................. 290,228
------------
TOTAL EXPENSES .......................................... 18,243,391
------------
NET INVESTMENT INCOME ................................... 35,159,011
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS,
OPTIONS AND FOREIGN CURRENCY:
Net realized gain on investments and options ............ 19,855,956
Net realized gain on foreign currency
transactions .......................................... 50,265
------------
Net realized gain on investments, options and
foreign currency transactions ......................... 19,906,221
Net change in net unrealized appreciation/
depreciation on investments, options and
foreign currency translations ......................... 128,766,916
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS, OPTIONS AND FOREIGN CURRENCY ............. 148,673,137
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ....................................... 183,832,148
Total Distributions to Preferred
Stock Shareholders .................................... (2,058,689)
------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO
COMMON STOCK SHAREHOLDERS RESULTING
FROM OPERATIONS ....................................... $181,773,459
============
See accompanying notes to financial statements.
8
THE GABELLI DIVIDEND & INCOME TRUST
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED PERIOD ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003(a)
----------------- --------------------
OPERATIONS:
Net investment income (loss) ................................................... $ 35,159,011 $ (49,373)
Net realized gain on investments, options and foreign currency transactions .... 19,906,221 16,702
Net change in unrealized appreciation on investments, options and foreign
currency translations ........................................................ 128,766,916 15,165,882
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................... 183,832,148 15,133,211
-------------- --------------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income .......................................................... (1,276,372) --
Net realized short-term gain on investments, options
and foreign currency transactions ........................................... (342,333) --
Net realized long-term gains on investments, options
and foreign currency transactions ........................................... (439,984) --
-------------- --------------
TOTAL DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS ............................ (2,058,689) --
-------------- --------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS
RESULTING FROM OPERATIONS .................................................... 181,773,459 --
-------------- --------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income .......................................................... (33,326,081) --
Net realized short-term gain on investments, options
and foreign currency transactions ........................................... (8,938,304) --
Net realized long-term gains on investments, options
and foreign currency transactions ........................................... (11,487,977) --
Return of capital .............................................................. (48,189,583) --
-------------- --------------
TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS ............................... (101,941,945) --
-------------- --------------
TRUST SHARE TRANSACTIONS:
Net increase in net assets from common shares issued in offering ............... 185,270,000 1,439,300,001
Net decrease from repurchase of common stock ................................... (4,246,068) --
Offering costs for common shares charged to paid-in capital .................... (482,528) (2,920,000)
Offering costs for preferred shares charged to paid-in capital ................. (5,320,000) --
-------------- --------------
NET INCREASE IN NET ASSETS FROM TRUST SHARE TRANSACTIONS ....................... 175,221,404 1,436,380,001
-------------- --------------
NET INCREASE IN NET ASSETS ..................................................... 255,052,918 1,451,513,212
NET ASSETS:
Beginning of period ............................................................ 1,451,650,426 137,214
-------------- --------------
End of period .................................................................. $1,706,703,344 $1,451,650,426
============== ==============
----------
(a) The Gabelli Dividend & Income Trust commenced investment operations on November 28, 2003.
See accompanying notes to financial statements.
9
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. The Gabelli Dividend & Income Trust (the "Trust" or the
"Fund") 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. See Note 5 for share transactions.
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 U.S. 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 Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Trustees (the "Board") so determines, by such other method as the Board
shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by the Adviser.
Portfolio securities primarily traded on foreign markets are generally
valued at the preceding closing values of such securities on their respective
exchanges or if after the close, market conditions change significantly, certain
foreign securities may be fair valued pursuant to procedures established by the
Board. Debt instruments that are not credit impaired with remaining maturities
of 60 days or less are valued at amortized cost, unless the Board 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. 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. Futures contracts are valued at the closing settlement price
of the exchange or board of trade on which the applicable contract is traded.
Securities and assets for which market quotations are not readily available
are valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Board. Fair valuation
methodologies and procedures may include, but are not limited to: analysis and
review of available financial and non-financial information about the company;
comparisons to the valuation and changes in valuation of similar securities,
including a comparison of foreign securities to the equivalent U.S. dollar value
ADR securities at the close of the U.S. exchange; and evaluation of any other
information that could be indicative of the value of the security.
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 or with other brokers or dealers
that meet credit guidelines established by the Adviser and reviewed by the
Board. Under the terms of a typical repurchase agreement, the Trust takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Trust to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Trust's holding period.
The Trust will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 100% of the dollar
amount invested by the 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.
OPTIONS. The Trust may purchase or write call or put options on securities
or indices. As a writer of put options, the Trust receives a premium at the
outset and then bears the risk of unfavorable changes in the price of the
financial instrument underlying the option. The Trust would incur a loss if the
price of the underlying financial instrument decreases between the date the
option is written and the date on which the option is terminated. The Trust
would realize a gain, to the extent of the premium, if the price of the
financial instrument increases or stays the same between those dates.
As a purchaser of put options, the Trust pays a premium for the right to
sell to the seller of the put option the underlying security at a specified
price. The seller of the put has the obligation to purchase the underlying
security upon exercise at the exercise price. If
10
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the price of the underlying security declines, the Trust would realize a gain
upon sale or exercise. If the price of the underlying security increases or
stays the same, the Trust would realize a loss upon sale or at expiration date,
but only to the extent of the premium paid.
In the case of call options, these exercise prices are referred to as
"in-the-money," "at-the-money" and "out-of-the-money," respectively. The Trust
may write (a) in-the-money call options when the Adviser expects that the price
of the underlying security will remain stable or decline moderately during the
option period, (b) at-the-money call options when the Adviser expects that the
price of the underlying security will remain stable or advance moderately during
the option period and (c) out-of-the-money call options when the Adviser expects
that the premiums received from writing the call option plus the appreciation in
market price of the underlying security up to the exercise price will be greater
than the appreciation in the price of the underlying security alone. In these
circumstances, if the market price of the underlying security declines and the
security is sold at this lower price, the amount of any realized loss will be
offset wholly or in part by the premium received. Out-of-the-money, at-the-money
and in-the-money put options (the reverse of call options as to the relation of
exercise price to market price) may be utilized in the same market environments
that such call options are used in equivalent transactions.
The option activity for the Trust for the year ended December 31, 2004 was
as follows:
NUMBER OF
CONTRACTS PREMIUMS
---------- ---------
Call options written during the period ........... 3,105 $ 283,648
Call options exercised during the period ......... (1,505) --
Call options closed during the period ............ (1,200) (227,099)
------ ---------
Call options outstanding at December 31, 2004 .... 400 $ 56,549
====== =========
FOREIGN CURRENCY TRANSLATIONS. 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 translations. Net realized foreign currency
gains and losses resulting from changes in exchange rates include foreign
currency gains and losses between trade date and settlement date on investment
securities transactions, foreign currency transactions and the difference
between the amounts of interest and dividends recorded on the books of the 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.
FOREIGN SECURITIES. The Trust may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
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 that determined by U.S. generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investment securities held by the Trust, timing
differences and differing characterizations of distributions made by the Trust.
For the year ended December 31, 2004, reclassifications were made to
decrease accumulated net investment income by $556,558 and to decrease
accumulated net realized loss on investments, options and foreign currency
transactions by $556,558.
The tax character of distributions paid during the year ended December 31,
2004 was as follows:
YEAR ENDED
DECEMBER 31, 2004
------------------------------
COMMON PREFERRED
------------ ----------
DISTRIBUTIONS PAID FROM:
Ordinary income
(Inclusive of short term capital gain) ........... $ 42,201,712 $1,616,305
Net long term capital gain ......................... 11,550,650 442,384
Non-taxable return of capital ...................... 48,189,583 --
------------ ----------
Total distribution paid ............................ $101,941,945 $2,058,689
============ ==========
11
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
PROVISION FOR INCOME TAXES. The Trust intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code") and comply with the requirements of the Code
applicable to regulated investment companies and to distribute substantially all
of its net investment company taxable income and net capital gains. Therefore,
no provision for Federal income taxes is required.
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, 2004, the components of accumulated earnings/(losses) on
a tax basis were as follows:
Net unrealized appreciation on investments ........ $143,293,748
Net unrealized appreciation on foreign
currency transactions .......................... 1,898
Other ............................................. (97,578)
------------
Total accumulated gain ............................ $143,198,068
============
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 including the liquidation value
of the Cumulative Preferred Stock. 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. The Adviser has agreed to reduce the management fee on the incremental
assets attributable to the liquidation value of the Cumulative Preferred Stock
if the total return of the net asset value of the common shares of the Trust,
including distributions and advisory fee subject to reduction, does not exceed
the stated dividend rate or corresponding swap rate of the Cumulative Preferred
Stock.
The Fund's total return on the net asset value of the common shares is
monitored on a monthly basis to assess whether the total return on the net asset
value of the common shares exceeds the stated dividend rate of the Cumulative
Preferred Stock for the period. For the year ended December 31, 2004, the Fund's
total return on the net asset value of the common shares exceeded the stated
dividend rate of all outstanding preferred stock. Thus, management fees were
accrued on these assets.
During the year ended December 31, 2004, Gabelli & Company, Inc. ("Gabelli
&Company"), an affiliate of the Adviser, received $1,993,089 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 the year ended December 31, 2004, the Trust reimbursed the
Adviser $34,800 in connection with the cost of computing the Trust's net asset
value.
The Trust is assuming its portion of the allocated cost of the Gabelli
Funds' Chief Compliance Officer in the amount of $8,581 for the period of
October 1, 2004 through December 31, 2004 which is included in payroll expense
in the Statement of Operations.
4. PORTFOLIO SECURITIES. Purchases and proceeds from sales of securities for the
year ended December 31, 2004, other than short-term securities, aggregated
$1,288,414,031 and $371,762,819, 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 in the open market when
the shares are trading at a discount of 7.5% or more (or such other percentage
as the Board may determine from time to time) from the net asset value of the
shares. During the year ended December 31, 2004, the Trust repurchased 245,700
shares of beneficial interest in the open market at a cost of $4,246,068 and an
average discount of approximately 8.94% from its net asset value. All shares of
beneficial interest repurchased have been retired.
Transactions in shares of beneficial interest were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003 (a)
-------------------------- ---------------------------
Shares Amount Shares Amount
--------- ------------ ---------- --------------
Initial seed capital, November 18, 2003 ... -- -- 7,184 $ 137,214
Shares issued in offering ................. 9,700,000 $184,787,472 75,356,021 1,436,380,001
Shares repurchased ........................ (245,700) (4,246,068) -- --
--------- ------------ ---------- --------------
Net increase .............................. 9,454,300 $180,541,404 75,363,205 $1,436,517,215
========= ============ ========== ==============
----------
(a) The Gabelli Dividend & Income Trust commenced investment operations on November 28, 2003.
12
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
On October 12, 2004, the Trust received net proceeds of $77,255,000 (after
underwriting discounts of $2,520,000 and estimated offering expenses of
$225,000) from the public offering of 3,200,000 shares of 5.875% Series A
Cumulative Preferred Shares. Commencing October 12, 2009 and thereafter, the
Trust, at its option, may redeem the 5.875% Series A Cumulative Preferred Shares
in whole or in part at the liquidation value price. During the year ended
December 31, 2004, the Trust did not repurchase any shares of Series A
Cumulative Preferred Shares. At December 31, 2004, 3,200,000 shares of the
5.875% Series A Cumulative Preferred Shares were outstanding and accrued
dividends amounted to $65,278.
On October 12, 2004, the Trust received net proceeds of $217,425,000 (after
underwriting discounts of $2,200,000 and estimated offering expenses of
$375,000) from the public offering of 4,000 shares of Series B and 4,800 shares
of Series C Auction Market Preferred Shares, respectively. The dividend rate, as
set by the auction process, which is generally held every 7 days, is expected to
vary with short-term interest rates. The Rates of Series B Auction Market
Preferred Shares ranged from 1.80% to 2.80% from October 12, 2004 through
December 31, 2004. The Rates of Series C Auction Market Preferred Shares ranged
from 1.84% to 2.69% from October 12, 2004 through December 31, 2004. Existing
shareholders may submit an order to hold, bid or sell such shares on each
auction date. Series B and C Auction Market Preferred Shares shareholders may
also trade shares in the secondary market. The Trust, at its option, may redeem
the Series B and C Auction Market Preferred Shares in whole or in part at the
liquidation value price at any time. During the year ended December 31, 2004,
the Trust did not repurchase any shares of Series B and C Auction Market
Preferred Shares. At December 31, 2004, 4,000 and 4,800 shares of the Series B
and C Auction Rate Cumulative Preferred Shares were outstanding with an
annualized dividend rate of 2.80 and 2.69 percent and accrued dividends amounted
to $23,333 and $8,967, respectively.
The holders of Cumulative Preferred Stock have voting rights equivalent to
those of the holders of common stock (one vote per share) and will vote together
with holders of shares of common stock as a single class. In addition, the 1940
Act requires that along with approval of a majority of the holders of common
stock, approval of a majority of the holders of any outstanding shares of
Cumulative Preferred Stock, voting separately as a class, would be required to:
(a) adopt any plan of reorganization that would adversely affect the Cumulative
Preferred Stock, and (b) take any action requiring a vote of security holders,
including, among other things, changes in the Trust's subclassification as a
closed-end investment company or changes in its fundamental investment
restrictions. The Trust's Articles of Incorporation, as amended, authorize the
issuance of an unlimited number of shares of $0.001 par value Cumulative
Preferred Stock. The Cumulative Preferred Stock is senior to the common stock
and results in the financial leveraging of the common stock. Such leveraging
tends to magnify both the risks and opportunities to common shareholders.
Dividends on shares of the Cumulative Preferred Stock are cumulative. The Trust
is required to meet certain asset coverage tests as required by the 1940 Act and
by each series of Cumulative Preferred Stocks' Statement of Preferences with
respect to the Cumulative Preferred Stock. If the Trust fails to meet these
requirements and does not correct such failure, the Trust may be required to
redeem, in part or in full, the 5.875% Series A, Series B Auction Rate and
Series C Auction Rate Cumulative Preferred Stock at a redemption price of $25,
$25,000, and $25,000, respectively, per share plus an amount equal to the
accumulated and unpaid dividends whether or not declared on such shares in order
to meet these requirements. Additionally, failure to meet the foregoing asset
requirements could restrict the Trust's ability to pay dividends to common
shareholders and could lead to sales of portfolio securities at inopportune
times. The income received on the Trust's assets may vary in a manner unrelated
to the fixed and variable rates, which could have either a beneficial or
detrimental impact on net investment income and gains available to common
shareholders.
Under Emerging Issues Task Force (EITF) promulgating Topic D-98,
Classification and Measurement of Redeemable Securities, which was issued on
July 19, 2001, preferred securities that are redeemable for cash or other assets
are to be classified outside of permanent equity to the extent that the
redemption is at a fixed or determinable price and at the option of the holder
or upon the occurrence of an event that is not solely within the control of the
issuer. In accordance with the guidance of the EITF, the Trust's Cumulative
Preferred Stock is classified outside of permanent equity (net assets
attributable to common stock shareholders) in the accompanying financial
statements.
6. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from the
Attorney General of the State ofNew York and the SEC requesting information on
mutual fund shares trading practices. Gabelli Asset Management Inc., the
Adviser's parent company, is responding to these requests. TheTrust does not
believe that these matters will have a material adverse effect on the Trust's
financial position or the results of its operations.
7. INDEMNIFICATIONS. The Trust enters into contracts that contain a variety of
indemnifications. The Trust's maximum exposure under these arrangements is
unknown. However, the Trust has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
13
THE GABELLI DIVIDEND & INCOME TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A DIVIDEND & INCOME TRUST SHARE OF BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT EACH PERIOD:
YEAR ENDED PERIOD ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003 (a)
----------------- ---------------------
OPERATING PERFORMANCE:
Net asset value, beginning of period ........................................... $ 19.26 $ 19.06(b)
---------- ----------
Net investment income (loss) ................................................... 0.40 --
Net realized and unrealized gain on investments ................................ 1.80 0.20
---------- ----------
Total from investment operations ............................................... 2.20 0.20
---------- ----------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income .......................................................... (0.01) --
Net realized gain on investments ............................................... (0.01) --
---------- ----------
Total distributions to preferred stock shareholders ............................ (0.02) --
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO COMMON STOCK
SHAREHOLDERS RESULTING FROM OPERATIONS ....................................... 2.18 --
---------- ----------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income .......................................................... (0.39) --
Net realized gain on investments ............................................... (0.24) --
Return of capital .............................................................. (0.57) --
---------- ----------
Total distributions to common stock shareholders ............................... (1.20) --
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Decrease in net asset value from common stock share transactions ............... (0.05) --
Offering costs for common shares charged to paid-in capital .................... (0.01) --
Offering costs for preferred shares charged to paid-in capital ................. (0.06) --
---------- ----------
Total from capital share transactions .......................................... (0.12) --
---------- ----------
NET ASSET VALUE ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS, END OF PERIOD ....... $ 20.12 $ 19.26
========== ==========
Net asset value total return * ................................................. 11.56% 1.0%
========== ==========
Market value, end of period .................................................... $ 17.95 $ 20.00
========== ==========
Total investment return ** ..................................................... (4.15)% 0.0%
========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets including liquidation value of preferred shares, end of period
(in 000's) ................................................................... $2,006,703 --
Net assets attributable to common shares, end of period (in 000's) ............. $1,706,703 $1,451,650
Ratio of net investment income to average net assets attributable to common
shares ....................................................................... 2.17% (0.04)%(c)
Ratio of operating expenses to average net assets attributable to common
shares ....................................................................... 1.12% 1.38%(c)
Ratio of operating expenses to average total net assets including liquidation
value of preferred shares .................................................... 1.07% --
Portfolio turnover rate ........................................................ 33.3% 0.4%
5.875% CUMULATIVE PREFERRED STOCK SERIES A
Liquidation value, end of period (in 000's) .................................... $ 80,000 --
Total shares outstanding (in 000's) ............................................ 3,200 --
Liquidation preference per share ............................................... $ 25.00 --
Average market value (d) ....................................................... $ 24.68 --
Asset coverage per share ....................................................... $ 167.23 --
AUCTION RATE SERIES B CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) .................................... $ 100,000 --
Total shares outstanding (in 000's) 4 --
Liquidation preference per share ............................................... $ 25,000 --
Average market value (d) ....................................................... $ 25,000 --
Asset coverage per share ....................................................... $ 167,225 --
AUCTION RATE SERIES C CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) .................................... $ 120,000 --
Total shares outstanding (in 000's) 5 --
Liquidation preference per share ............................................... $ 25,000 --
Average market value (d) ....................................................... $ 25,000 --
Asset coverage per share ....................................................... $ 167,225 --
ASSET COVERAGE (e) 669% --
----------
(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.
(d) Based on weekly prices.
(e) Asset coverage is calculated by combining all series of preferred stock.
* 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.
14
THE GABELLI DIVIDEND & INCOME TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Dividend & Income Trust
(the "Trust") at December 31, 2004, the results of its operations for the year
then ended, and the changes in its net assets and the financial highlights for
the year then ended and for the period November 28, 2003 (commencement of
investment 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 audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2004 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 28, 2005
15
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 4
----------------- ---------- -------------- ----------------------- -------------------
INTERESTED TRUSTEES 3:
----------------------
MARIO J. GABELLI+ Since 2003*** 24 Chairman of the Board and Chief Director of Morgan Group
Trustee Executive Officer of Gabelli Asset Holdings, Inc. (holding
Chief Investment Officer Management Inc. and Chief Investment company)
Age: 62 Officer of Gabelli Funds, LLC and GAMCO
Investors, Inc.; Vice Chairman and Chief
Executive Officer of Lynch Interactive
Corporation (multimedia and services)
KARL OTTO POHL+ Since 2003** 34 Member of the Shareholder Committee of Director of Gabelli Asset
Trustee Sal Oppenheim Jr. & Cie, (private Management Inc. (investment
Age: 75 investment bank); Former President of management); Chairman,
the Deutsche Bundesbank and Chairman of Incentive Capital and
its Central Bank Council (1980-1991) Incentive Asset Management
(Zurich); Director at
Sal Oppenheim Jr. &
Cie, Zurich
EDWARD T. TOKAR+ Since 2003** 1 Senior Manager of Beacon Trust Company Trustee, LEVCO Series Trust;
Trustee since 2004; Chief Executive Officer of Director of DB Hedge
Age: 57 Allied Capital Management LLC, Strategies Fund LLC;
1997-2004; Vice President of Honeywell Director, The Topiary
International Inc., 1997-2004 Benefit Plan Investor
Fund LLC
NON-INTERESTED TRUSTEES:
------------------------
ANTHONY J. COLAVITA Since 2003* 36 President and Attorney at law in the --
Trustee law firm of Anthony J. Colavita, P.C.
Age: 69
JAMES P. CONN Since 2003** 13 Former Managing Director and Chief Director of LaQuinta Corp.
Trustee Investment Officer of Financial Security (hotels) and First Republic
Age: 66 Assurance Holdings Ltd. (1992-1998) Bank
MARIO D'URSO Since 2003*** 2 Chairman of Mittel Capital Markets S.p.A., Director of SJPC, London
Trustee since 2001; Senator in the Italian (financial services)
Age: 64 Parliament, (1996-2001)
FRANK J. FAHRENKOPF, JR. Since 2003* 4 President and Chief Executive Officer of Director of First Republic
Trustee the American Gaming Association since Bank
Age: 65 June 1995; 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*** 2 Attorney at law in the law firm of --
Trustee Avansino, Melarkey, Knobel & Mulligan
Age: 55
SALVATORE M. SALIBELLO Since 2003** 2 Certified Public Accountant and Managing --
Trustee Partner of the accounting firm Salibello
Age: 59 & Broder, since 1978
16
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 Energy Inc.
Trustee International, Inc. (consulting) (oil and gas operations)
Age: 70
SALVATORE J. ZIZZA Since 2003* 24 Chairman, Hallmark Electrical Supplies Director of Hollis Eden
Trustee Corp. Pharmaceuticals and Earl
Age: 59 Scheib, Inc. (automotive
services)
OFFICERS:
---------
BRUCE N. ALPERT Since 2003 -- Executive Vice President and Chief --
President Operating Officer of Gabelli Funds, LLC
Age: 53 since 1988 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 --
Vice President Trust since 2000. Vice President of
Age: 38 Gabelli Funds, LLC since 1996
JAMES E. MCKEE Since 2003 -- Vice President, General Counsel and --
Secretary Secretary of Gabelli Asset Management
Age: 41 Inc. (since 1999) 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 & --
Treasurer Company, Inc. since 1998
Age: 55
PETER D. GOLDSTEIN Since 2004 -- Director of Regulatory Affairs at --
Chief Compliance Officer Gabelli Asset Management Inc. since
Age: 51 February 2004; Vice President of Goldman
Sachs Asset Management from November
2000 through January 2004; Deputy
General Counsel at Gabelli Asset
Management Inc. from February 1998
through November 2000
------------
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 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.
*** - Term expires at the Trust's 2007 Annual Meeting of Shareholders and until
their successors are duly elected and qualified.
Each officer will hold office for an indefinite term until the date he or she
resigns or retires or until his or her successor is elected and qualified.
3 "Interested person" of the 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.
4 This column includes only directorships of companies required to report to the
SEC under the Securities Exchange Act of 1934 (i.e. publiccompanies) or other
investment companies registered under the 1940 Act.
CERTIFICATIONS
The Trust's Chief Executive Officer has certified to the New York Stock
Exchange that, as of June 7, 2004, he was not aware of any violation by the
Trust of applicable NYSE corporate governance listing standards. The Trust
reports to the SEC on Form N-CSR and N-CSR's contain certifications by the
Trust's principal executive officer and principal financial officer that relate
to the Trust's disclosure in such reports and that are required by Rule 30a-2(a)
under the Investment Company Act.
17
THE GABELLI DIVIDEND & INCOME TRUST
INCOME TAX INFORMATION (UNAUDITED)
DECEMBER 31, 2004
CASH DIVIDENDS AND DISTRIBUTIONS
TOTAL AMOUNT ORDINARY LONG-TERM DIVIDEND
PAYABLE RECORD PAID INVESTMENT CAPITAL RETURN OF REINVESTMENT
DATE DATE PER SHARE (a) INCOME (a) GAINS (a) CAPITAL (c) PRICE
------- -------- ------------- ----------- --------- ----------- ------------
COMMON STOCK
03/25/04 03/17/04 $0.3000 $0.1251 $0.0347 $0.1402 $19.1000
06/24/04 06/16/04 0.3000 0.1251 0.0347 0.1402 18.7000
09/24/04 09/16/04 0.3000 0.1251 0.0347 0.1402 18.9900
10/25/04 10/15/04 0.1000 0.0417 0.0116 0.0467 18.9300
11/23/04 11/15/04 0.1000 0.0417 0.0116 0.0467 19.5100
12/27/04 12/16/04 0.1000 0.0417 0.0116 0.0467 19.8500
------- ------- ------- -------
Total Common Stock $1.2000 $0.5004 $0.1389 $0.5607
5.875% PREFERRED SHARES
12/27/04 12/17/04 $0.3060 $0.2395 $0.0665
AUCTION RATE PREFERRED SHARES
Auction Rate Preferred Shares pay dividends weekly based on a rate set at
auction, usually held every seven days. The percentage of 2004 distributions
derived from long-term capital gains for the Auction Rate Preferred Shares was
21.73%.
A Form 1099-DIV has been mailed to all shareholders of record for the
distributions mentioned above, setting forth specific amounts to be included in
your 2004 tax returns. Ordinary income distributions include net investment
income and realized net short-term capital gains.
RETURN OF CAPITAL
The amount received as a non-taxable (return of capital) distribution should
be applied to reduce the tax cost of shares. There was a $0.56079 per share
return of capital in 2004 on common shares.
CORPORATE DIVIDENDS RECEIVED DEDUCTION, QUALIFIED DIVIDEND INCOME AND U.S.
TREASURY SECURITIES INCOME
The Fund paid to common shareholders an ordinary income dividend of $0.5004
per share in 2004. The Fund paid to 5.875% preferred shareholders an ordinary
income dividend totalling $0.2395 per share in 2004. For the year ended December
31, 2004, 86.10% of the ordinary dividend qualifies for the dividend received
deduction available to corporations, and 100% of the ordinary income
distribution was qualifying dividend income. The percentage of ordinary income
dividends paid by the Fund during 2004 derived from U.S. Treasury Securities was
12.85%. The percentage of U.S.Treasury Securities held as ofDecember 31, 2004
was 19.37%. However, it should be noted that the Dividend andIncome Trust did
not hold more than 45.94% of its assets in U.S. Treasury Securities at the end
of each calendar quarter during 2004.
HISTORICAL DISTRIBUTION SUMMARY
SHORT-TERM LONG-TERM ADJUSTMENT
INVESTMENT CAPITAL CAPITAL RETURN OF TOTAL TO
INCOME (b) GAINS (b) GAINS CAPITAL (c) DISTRIBUTIONS (a) COST BASIS (d)
---------- --------- --------- ----------- ----------------- --------------
COMMON STOCK
2004 ........................... $0.40005 $0.10023 $0.13893 $0.56079 $1.20000 $0.56079
5.875% PREFERRED STOCK
2004 ........................... $0.19150 $0.04798 $0.06651 -- $0.30599 --
AUCTION RATE PREFERRED SHARES
2004 Class B Shares ............ $68.71140 $17.21520 $23.86340 -- $109.80000 --
2004 Class C Shares ............ 70.77030 17.73100 24.57840 -- 113.10000 --
----------
(a) Total amounts may differ due to rounding.
(b) Taxable as ordinary income for Federal tax purposes.
(c) Non-taxable.
(d) Decrease in cost basis.
18
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
12:00 P.M. on Monday, May 9, 2005, in Greenwich, Connecticut.
--------------------------------------------------------------------------------
19
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 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
SENIOR MANAGING DIRECTOR, BEACON TRUST COMPANY
Anthonie 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
James E. McKee
SECRETARY
Richard C. Sell, Jr.
TREASURER
Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
INVESTMENT ADVISER
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
CUSTODIAN
State Street Bank and Trust Company
COUNSEL
Skadden, Arps, Slate, Meagher & Flom, LLP
TRANSFER AGENT AND REGISTRAR
EquiServe Trust Company
STOCK EXCHANGE LISTING
5.875%
Common Preferred
---------- ---------
NYSE-Symbol: GDV GDV PrA
Shares Outstanding: 84,817,505 3,200,000
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 common shares in the open market when the Dividend &
Income Trust shares are trading at a discount of 7.5% or more from the net asset
value of the shares. The Dividend & Income Trust may also, from time to time,
purchase its Cumulative Preferred Shares in the open market when the shares are
trading at a discount to the Liquidation Value of $25.00.
--------------------------------------------------------------------------------
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-12/04
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's Board of
Trustees has determined that Salvatore J. Zizza is qualified to serve as an
audit committee financial expert serving on its audit committee and that he is
"independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees
----------
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$95,022 in 2004 and $65,784 in 2003.
Audit-Related Fees
------------------
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $13,800 in 2004 and $0 in 2003.
Audit-related fees represent services provided in the preparation of
Preferred Shares Reports.
Tax Fees
--------
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $2,550 in 2004 and $2,450
in 2003.
Tax fees represent tax compliance services provided in connection with
the review of the Registrant's tax returns.
All Other Fees
--------------
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
for 2004 and $0 for 2003.
(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 the Adviser, Gabelli Funds, LLC, and any affiliate of
Gabelli Funds, LLC ("Gabelli") that provides services to the
registrant (a "Covered Services Provider") if the independent
auditors' engagement related directly to the operations and
financial reporting of the registrant. The Committee may delegate
its responsibility to pre-approve any such audit and permissible
non-audit services to the Chairperson of the Committee, and the
Chairperson must report to the Committee, at its next regularly
scheduled meeting after the Chairperson's pre-approval of such
services, his or her decision(s). The Committee may also establish
detailed pre-approval policies and procedures for pre-approval of
such services in accordance with applicable laws, including the
delegation of some or all of the Committee's pre-approval
responsibilities to the other persons (other than Gabelli or the
registrant's officers). Pre-approval by the Committee of any
permissible non-audit services is not required so long as: (i) the
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
Chairperson prior to the completion of the audit.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X
are as follows:
(b) 100%
(c) 100%
(d) N/A
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was zero percent (0%).
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $0 in 2004 and $0 in 2003.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately designated audit committee consisting of the
following members: Frank J. Fahrenkopf, Jr., Anthonie C. van Ekris and Salvatore
J. Zizza
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
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 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 December 31, 2004, the members are:
Bruce N. Alpert, Chief Operating Officer of Gabelli Funds, LLC
Ivan Arteaga, Portfolio Manager
Caesar M. P. Bryan, Portfolio Manager
Stephen DeTore, Deputy General Counsel
Joshua Fenton, Director of Buy-Side Research
Douglas R. Jamieson, Chief Operating Officer of GAMCO
James E. McKee, General Counsel
Karyn-Marie Prylucki, 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 on an 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 First Clearing 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, 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 the Adviser voted for the client on each issue
The rationale for the vote when it is 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. On
an annual basis, all registered investment companies file their Proxy
Voting History for the period July 1 - June 30 on Form N-PX.
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. votes 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
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PROXY VOTING GUIDELINES
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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. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Provide the information specified in the table with respect to any purchase made
by or on behalf of the registrant or any "affiliated purchaser" as defined in
Rule 10b-18(a)(3) under the Exchange Act (17CFR 240-10b-18(a)(3)), of shares or
other units of any class of the registrant's equity securities that is
registered by the registrant pursuant to Section 12 of the Exchange Act (15
U.S.C. 781).
REGISTRANT PURCHASES OF EQUITY SECURITIES
---------------------------------------------------------------------------------------------------------------------------------
(C) TOTAL NUMBER OF SHARES (OR (D) MAXIMUM NUMBER (OR APPROXIMATE
(A) TOTAL NUMBER (B) AVERAGE UNITS) PURCHASED AS PART OF DOLLAR VALUE) OF SHARES (OR UNITS) THAT
OF SHARES (OR PRICE PAID PER PUBLICLY ANNOUNCED PLANS OR MAY YET BE PURCHASED UNDER
PERIOD UNITS) PURCHASED SHARE (OR UNIT) PROGRAMS THE PLANS OR PROGRAMS
---------------------------------------------------------------------------------------------------------------------------------
Month #1 Common - 138,700 Common - $17.2605 Common - 138,700 Common - 85,000,205 - 138,700
07/01/04 = 84,861,505
through Preferred - N/A Preferred - N/A
07/31/04 Preferred - N/A Preferred - N/A
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Month #2 Common - 19,000 Common - $16.6253 Common - 19,000 Common - 84,861,505 - 19,000 =
08/01/04 84,842,505
through Preferred - N/A Preferred - N/A Preferred - N/A
08/31/04 Preferred - N/A
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Month #3 Common - N/A Common - N/A Common - N/A Common - 84,842,505
09/01/04
through Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
09/30/04
---------------------------------------------------------------------------------------------------------------------------------
Month #4 Common - N/A Common - N/A Common - N/A Common - 84,842,505
10/01/04
through Preferred Series A- N/A Preferred Series A- N/A Preferred Series A- N/A Preferred Series A- N/A
10/31/04
---------------------------------------------------------------------------------------------------------------------------------
Month #5 Common - 5,000 Common - $17.78 Common - 5,000 Common - 84,842,505 - 5,000 =
11/01/04 84,837,505
through Preferred Series A- N/A Preferred Series A- N/A Preferred Series A- N/A
11/30/04 Preferred Series A- N/A
---------------------------------------------------------------------------------------------------------------------------------
Month #6 Common - 20,000 Common - $17.71 Common - 20,000 Common - 84,837,505 - 20,000 =
12/01/04 84,817,505
through Preferred Series A- N/A Preferred Series A- N/A Preferred Series A- N/A
12/31/04 Preferred Series A- 3,200,000
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Total Common - 182,700 Common - $17.2605 Common - 182,700 N/A
Preferred Series A- N/A Preferred Series A- N/A Preferred Series A- N/A
---------------------------------------------------------------------------------------------------------------------------------
Footnote columns (c) and (d) of the table, by disclosing the following
information in the aggregate for all plans or programs publicly announced:
a. The date each plan or program was announced - The notice of the potential
repurchase of common and preferred shares occurs quarterly in the Fund's
quarterly report in accordance with Section 23(c) of the Investment Company Act
of 1940, as amended.
b. The dollar amount (or share or unit amount) approved - Any or all common
shares outstanding may be repurchased when the Fund's common shares are trading
at a discount of 7.5% or more from the net asset value of the shares.
Any or all preferred shares outstanding may be repurchased when the Fund's
preferred shares are trading at a discount to the liquidation value of $25.00.
c. The expiration date (if any) of each plan or program - The Fund's repurchase
plans are ongoing.
d. Each plan or program that has expired during the period covered by the table
- The Fund's repurchase plans are ongoing.
e. Each plan or program the registrant has determined to terminate prior to
expiration, or under which the registrant does not intend to make further
purchases. - The Fund's repurchase plans are ongoing.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Trustees, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, that is the subject of disclosure required by Item
2, filed as exhibit (a)(1) to the Registrant's Form N-CSR, filed
on March 10, 2004 (Accession No. 0000935069-04-000468).
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Gabelli Dividend & Income Trust
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By (Signature and Title)* /s/ Bruce N. Alpert
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Bruce N. Alpert, Principal Executive Officer
Date March 9, 2005
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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, 2005
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By (Signature and Title)* /s/ Richard C. Sell
-------------------------------------------------------
Richard C. Sell, Jr., Principal Financial
Officer and Treasurer
Date March 9, 2005
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* Print the name and title of each signing officer under his or her signature.