UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21423
The Gabelli Dividend & Income Trust
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
Date of fiscal year end: December 31
Date of reporting period: December 31, 2008
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
(THE GABELLI DIVIDEND & INCOME TRUST LOGO)
THE GABELLI DIVIDEND & INCOME TRUST
Annual Report
December 31, 2008
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.
Enclosed are the audited financial statements and the investment portfolio
as of December 31, 2008.
COMPARATIVE RESULTS
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2008 (a)
Since
Inception
Quarter 1 Year 3 Year 5 Year (11/28/03)
------- ------ ------ ------ ----------
GABELLI DIVIDEND & INCOME TRUST
NAV TOTAL RETURN (b) ....... (24.86)% (42.19)% (8.84)% (1.71)% (1.48)%
INVESTMENT TOTAL RETURN (C) (22.66) (45.63) (9.29) (5.59) (5.48)
S&P 500 Index ................. (21.95) (36.99) (8.36) (2.19) (1.17)
Dow Jones Industrial Average .. (18.41) (31.88) (4.10) (1.09) 0.26
Nasdaq Composite Index ........ (24.61) (40.54) (10.58) (4.67) (4.18)
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE.
WHEN SHARES ARE SOLD, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA
PRESENTED. VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST
RECENT MONTH END. PERFORMANCE RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED. INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT
OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND BEFORE INVESTING. THE
DOW JONES INDUSTRIAL AVERAGE IS AN UNMANAGED INDEX OF 30 LARGE
CAPITALIZATION STOCKS. THE S&P 500 AND THE NASDAQ COMPOSITE INDICES ARE
UNMANAGED INDICATORS OF STOCK MARKET PERFORMANCE. DIVIDENDS ARE CONSIDERED
REINVESTED EXCEPT FOR THE NASDAQ COMPOSITE INDEX. YOU CANNOT INVEST
DIRECTLY IN AN INDEX.
(b) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN THE NET ASSET
VALUE ("NAV") PER SHARE AND REINVESTMENT OF DISTRIBUTIONS AT NAV ON THE
EX-DIVIDEND DATE AND ARE NET OF EXPENSES. SINCE INCEPTION RETURN IS BASED
ON AN INITIAL NAV OF $19.06.
(c) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN CLOSING MARKET
VALUES ON THE NEW YORK STOCK EXCHANGE AND REINVESTMENT OF DISTRIBUTIONS.
SINCE INCEPTION RETURN IS BASED ON AN INITIAL OFFERING PRICE OF $20.00.
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
February 20, 2009
THE GABELLI DIVIDEND & INCOME TRUST
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total
investments as of December 31, 2008:
Financial Services ............................. 12.9%
Energy and Utilities: Oil ...................... 11.4%
Energy and Utilities: Integrated ............... 11.3%
Food and Beverage .............................. 9.7%
Telecommunications ............................. 6.7%
Energy and Utilities: Electric ................. 6.3%
U.S. Government Obligations .................... 5.2%
Consumer Products .............................. 4.2%
Health Care .................................... 4.0%
Energy and Utilities: Natural Gas .............. 3.7%
Diversified Industrial ......................... 3.1%
Energy and Utilities: Services ................. 2.6%
Retail ......................................... 2.3%
Cable and Satellite ............................ 2.3%
Specialty Chemicals ............................ 1.6%
Equipment and Supplies ......................... 1.2%
Aerospace ...................................... 1.2%
Electronics .................................... 1.2%
Automotive: Parts and Accessories .............. 1.0%
Entertainment .................................. 1.0%
Environmental Services ......................... 0.9%
Energy and Utilities: Water .................... 0.9%
Communications Equipment ....................... 0.7%
Transportation ................................. 0.6%
Business Services .............................. 0.5%
Metals and Mining .............................. 0.5%
Machinery ...................................... 0.4%
Publishing ..................................... 0.4%
Computer Software and Services ................. 0.4%
Wireless Communications ........................ 0.3%
Paper and Forest Products ...................... 0.3%
Broadcasting ................................... 0.3%
Agriculture .................................... 0.3%
Energy and Utilities ........................... 0.3%
Hotels and Gaming .............................. 0.2%
Automotive ..................................... 0.1%
Real Estate .................................... 0.0%
Building and Construction ...................... 0.0%
Manufactured Housing and Recreational Vehicles.. 0.0%
Computer Hardware .............................. 0.0%
-----
100.0%
=====
THE GABELLI DIVIDEND & INCOME TRUST (THE "FUND") FILES A COMPLETE SCHEDULE
OF PORTFOLIO HOLDINGS WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC")
FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF
WHICH WAS FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2008. SHAREHOLDERS MAY
OBTAIN THIS INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE SEC'S PUBLIC REFERENCE
ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC REFERENCE
ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12
months ended June 30th, no later than August 31st of each year. A description of
the Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities is available without charge, upon request, by
(i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One
Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC's website at
www.sec.gov.
2
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2008
MARKET
SHARES COST VALUE
------------ -------------- --------------
COMMON STOCKS -- 92.8%
AEROSPACE -- 1.2%
50,000 Boeing Co. ............................................ $ 3,451,003 $ 2,133,500
10,000 Goodrich Corp. ........................................ 281,823 370,200
55,000 Kaman Corp. ........................................... 1,006,361 997,150
150,000 Rockwell Automation Inc. .............................. 7,874,920 4,836,000
2,000,000 Rolls-Royce Group plc+ ................................ 14,847,048 9,647,323
114,400,000 Rolls-Royce Group plc, Cl. C+ ......................... 178,374 164,479
-------------- --------------
27,639,529 18,148,652
-------------- --------------
AGRICULTURE -- 0.3%
130,000 Archer-Daniels-Midland Co. ............................ 3,723,763 3,747,900
-------------- --------------
AUTOMOTIVE -- 0.1%
4,000 Copart Inc.+ .......................................... 113,367 108,760
440,000 General Motors Corp. .................................. 9,860,271 1,408,000
10,000 Navistar International Corp.+ ......................... 228,717 213,800
-------------- --------------
10,202,355 1,730,560
-------------- --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 1.0%
386,000 Genuine Parts Co. ..................................... 13,063,243 14,613,960
-------------- --------------
BUILDING AND CONSTRUCTION -- 0.0%
15,000 Layne Christensen Co.+ ................................ 449,560 360,150
-------------- --------------
BUSINESS SERVICES -- 0.5%
165,000 Diebold Inc. .......................................... 6,244,363 4,634,850
120,000 Intermec Inc.+ ........................................ 2,409,540 1,593,600
40,000 Lender Processing Services Inc. ....................... 1,342,861 1,178,000
30,000 PHH Corp.+ ............................................ 634,184 381,900
270,000 Trans-Lux Corp.+ (a) .................................. 1,933,866 207,900
-------------- --------------
12,564,814 7,996,250
-------------- --------------
CABLE AND SATELLITE -- 2.3%
670,000 Cablevision Systems Corp., Cl. A ...................... 19,165,209 11,282,800
14,200 Cogeco Inc. ........................................... 276,997 286,416
230,000 DISH Network Corp., Cl. A+ ............................ 5,597,764 2,550,700
46,000 EchoStar Corp., Cl. A+ ................................ 1,228,777 684,020
81,734 Liberty Global Inc., Cl. A+ ........................... 1,686,985 1,301,205
34,318 Liberty Global Inc., Cl. C+ ........................... 760,276 520,947
180,000 Rogers Communications Inc., Cl. B ..................... 2,310,816 5,414,400
550,000 The DIRECTV Group Inc.+ ............................... 13,163,570 12,600,500
30,000 Zon Multimedia Servicos de Telecomunicacoes e
Multimedia SGPS SA ................................. 294,900 154,712
7,042 Zon Multimedia Servicos de Telecomunicacoes e
Multimedia SGPS SA, ADR ............................ 101,053 36,316
-------------- --------------
44,586,347 34,832,016
-------------- --------------
COMMUNICATIONS EQUIPMENT -- 0.0%
20,000 Thomas & Betts Corp.+ ................................. 576,247 480,400
-------------- --------------
COMPUTER HARDWARE -- 0.0%
30,000 SanDisk Corp.+ ........................................ 287,056 288,000
-------------- --------------
COMPUTER SOFTWARE AND SERVICES -- 0.4%
2,000 i2 Technologies Inc.+ ................................. 23,260 12,780
170,000 Metavante Technologies Inc.+ .......................... 4,099,177 2,738,700
30,000 Microsoft Corp. ....................................... 843,187 583,200
14,000 NDS Group plc, ADR+ ................................... 847,267 802,760
100,000 Yahoo! Inc.+ .......................................... 2,796,559 1,220,000
-------------- --------------
8,609,450 5,357,440
-------------- --------------
MARKET
SHARES COST VALUE
------------ -------------- --------------
CONSUMER PRODUCTS -- 4.2%
190,000 Alberto-Culver Co. .................................... $ 6,349,919 $ 4,656,900
25,000 Altria Group Inc. ..................................... 433,289 376,500
70,000 Avon Products Inc. .................................... 1,852,512 1,682,100
350,000 Eastman Kodak Co. ..................................... 4,886,784 2,303,000
40,000 Fortune Brands Inc. ................................... 2,619,019 1,651,200
40,000 Hanesbrands Inc.+ ..................................... 955,063 510,000
90,000 Harman International Industries Inc. .................. 4,313,101 1,505,700
2,000 Heelys Inc. ........................................... 10,972 4,540
170,000 Kimberly-Clark Corp. .................................. 11,362,349 8,965,800
55,000 Mattel Inc. ........................................... 925,688 880,000
25,000 Philip Morris International Inc. ...................... 1,011,008 1,087,750
160,000 Procter & Gamble Co. .................................. 8,942,017 9,891,200
1,020,000 Swedish Match AB ...................................... 12,706,962 14,413,976
224,300 UST Inc. .............................................. 15,237,820 15,561,934
-------------- --------------
71,606,503 63,490,600
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 3.1%
148,000 Bouygues SA ........................................... 5,149,282 6,212,955
208,000 Cooper Industries Ltd., Cl. A ......................... 6,808,802 6,079,840
550,000 General Electric Co. .................................. 17,008,504 8,910,000
280,000 Honeywell International Inc. .......................... 9,789,754 9,192,400
95,000 ITT Corp. ............................................. 4,299,475 4,369,050
130,000 Owens-Illinois Inc.+ .................................. 4,551,363 3,552,900
2,000 Pentair Inc. .......................................... 63,318 47,340
40,000 Textron Inc. .......................................... 790,818 554,800
1,000,000 Tomkins plc ........................................... 4,838,471 1,768,436
210,000 Tyco International Ltd. ............................... 10,146,742 4,536,000
222,000 WHX Corp.+ ............................................ 4,115,409 1,776,000
-------------- --------------
67,561,938 46,999,721
-------------- --------------
ELECTRONICS -- 1.2%
1,000,000 Intel Corp. ........................................... 20,787,583 14,660,000
190,000 Tyco Electronics Ltd. ................................. 7,149,331 3,079,900
-------------- --------------
27,936,914 17,739,900
-------------- --------------
ENERGY AND UTILITIES: ELECTRIC -- 6.3%
30,000 Allegheny Energy Inc. ................................. 438,040 1,015,800
85,000 ALLETE Inc. ........................................... 2,788,153 2,742,950
250,000 American Electric Power Co. Inc. ...................... 7,904,906 8,320,000
720 Brookfield Infrastructure Partners LP ................. 15,120 8,064
15,000 CMS Energy Corp. ...................................... 204,900 151,650
410,000 DPL Inc. .............................................. 8,260,319 9,364,400
20,000 Edison International .................................. 977,494 642,400
270,000 Electric Power Development Co. Ltd. ................... 6,584,683 10,454,495
220,000 FPL Group Inc. ........................................ 7,596,481 11,072,600
804,698 Great Plains Energy Inc. .............................. 23,254,977 15,554,812
370,000 Integrys Energy Group Inc. ............................ 17,973,625 15,902,600
120,000 Pepco Holdings Inc. ................................... 2,291,425 2,131,200
240,000 Pinnacle West Capital Corp. ........................... 9,369,027 7,711,200
100,000 Southern Co. .......................................... 2,893,572 3,700,000
225,000 Unisource Energy Corp. ................................ 5,702,134 6,606,000
-------------- --------------
96,254,856 95,378,171
-------------- --------------
ENERGY AND UTILITIES: INTEGRATED -- 11.3%
12,000 Alliant Energy Corp. .................................. 305,115 350,160
140,000 Ameren Corp. .......................................... 6,365,276 4,656,400
50,000 Avista Corp. .......................................... 926,534 969,000
20,000 Black Hills Corp. ..................................... 612,441 539,200
40,000 CH Energy Group Inc. .................................. 1,728,883 2,055,600
See accompanying notes to financial statements.
3
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2008
MARKET
SHARES COST VALUE
------------ -------------- --------------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES: INTEGRATED (CONTINUED)
108,000 Chubu Electric Power Co. Inc. ......................... $ 2,458,019 $ 3,258,467
150,000 CONSOL Energy Inc. .................................... 6,316,307 4,287,000
205,000 Consolidated Edison Inc. .............................. 8,393,772 7,980,650
60,000 Dominion Resources Inc. ............................... 2,638,481 2,150,400
200,000 Duke Energy Corp. ..................................... 2,816,130 3,002,000
430,000 Edison SpA ............................................ 1,002,090 534,960
600,000 El Paso Corp. ......................................... 7,674,489 4,698,000
105,000 Endesa SA ............................................. 4,502,405 4,174,312
300,000 Enel SpA .............................................. 2,324,318 1,885,947
22,000 Exelon Corp. .......................................... 1,717,261 1,223,420
162,000 FirstEnergy Corp. ..................................... 5,730,248 7,869,960
140,000 Hawaiian Electric Industries Inc. ..................... 3,353,889 3,099,600
250,000 Hera SpA .............................................. 552,073 531,693
121,500 Hokkaido Electric Power Co. Inc. ...................... 2,282,208 3,049,228
121,500 Hokuriku Electric Power Co. ........................... 2,131,359 3,417,816
10,000 Iberdrola SA .......................................... 156,751 90,909
100,000 Iberdrola SA, ADR ..................................... 4,987,500 3,600,000
85,000 Korea Electric Power Corp., ADR ....................... 1,253,867 986,850
121,500 Kyushu Electric Power Co. Inc. ........................ 2,374,466 3,203,365
22,000 Maine & Maritimes Corp. ............................... 626,971 854,700
80,000 MGE Energy Inc. ....................................... 2,605,047 2,640,000
35,102 National Grid plc, ADR ................................ 1,588,562 1,771,247
255,000 NiSource Inc. ......................................... 5,329,541 2,797,350
600,000 NSTAR ................................................. 14,329,143 21,894,000
440,000 OGE Energy Corp. ...................................... 10,589,559 11,343,200
30,000 Ormat Technologies Inc. ............................... 484,088 956,100
320,000 Progress Energy Inc. .................................. 14,361,775 12,752,000
300,000 Public Service Enterprise Group Inc. .................. 9,183,315 8,751,000
121,500 Shikoku Electric Power Co. Inc. ....................... 2,264,565 4,061,169
15,000 TECO Energy Inc. ...................................... 255,758 185,250
121,500 The Chugoku Electric Power Co. Inc. ................... 2,194,052 3,176,558
45,000 The Empire District Electric Co. ...................... 998,787 792,000
121,500 The Kansai Electric Power Co. Inc. .................... 2,333,021 3,484,832
108,000 The Tokyo Electric Power Co. Inc. ..................... 2,545,172 3,574,186
121,500 Tohoku Electric Power Co. Inc. ........................ 2,112,763 3,263,679
205,000 Vectren Corp. ......................................... 5,572,873 5,127,050
470,000 Westar Energy Inc. .................................... 9,309,271 9,639,700
85,000 Wisconsin Energy Corp. ................................ 2,690,561 3,568,300
200,000 Xcel Energy Inc. ...................................... 3,389,999 3,710,000
-------------- --------------
165,368,705 171,957,258
-------------- --------------
ENERGY AND UTILITIES: NATURAL GAS -- 3.7%
8,000 AGL Resources Inc. .................................... 217,299 250,800
50,000 Atmos Energy Corp. .................................... 1,251,665 1,185,000
20,000 Delta Natural Gas Co. Inc. ............................ 504,315 485,000
6,000 Energen Corp. ......................................... 124,550 175,980
4,767 GDF Suez+ ............................................. 156,718 238,483
160,356 GDF Suez, Strips+ ..................................... 0 223
20,000 Kinder Morgan Energy Partners LP ...................... 824,553 915,000
350,000 National Fuel Gas Co. ................................. 9,372,113 10,965,500
210,000 Nicor Inc. ............................................ 7,147,795 7,295,400
MARKET
SHARES COST VALUE
------------ -------------- --------------
220,000 ONEOK Inc. ............................................ $ 5,480,182 $ 6,406,400
190,000 Sempra Energy ......................................... 5,675,668 8,099,700
35,000 South Jersey Industries Inc. .......................... 839,202 1,394,750
140,000 Southern Union Co. .................................... 2,996,933 1,825,600
190,000 Southwest Gas Corp. ................................... 4,719,351 4,791,800
620,000 Spectra Energy Corp. .................................. 13,685,181 9,758,800
60,000 The Laclede Group Inc. ................................ 1,690,312 2,810,400
-------------- --------------
54,685,837 56,598,836
-------------- --------------
ENERGY AND UTILITIES: OIL -- 11.4%
42,000 Anadarko Petroleum Corp. .............................. 1,870,013 1,619,100
39,000 Apache Corp. .......................................... 1,861,319 2,906,670
45,000 BG Group plc, ADR ..................................... 1,819,092 3,201,750
160,000 BP plc, ADR ........................................... 7,479,063 7,478,400
85,000 Chesapeake Energy Corp. ............................... 1,519,622 1,374,450
243,000 Chevron Corp. ......................................... 14,531,853 17,974,710
1,000 Cimarex Energy Co. .................................... 28,300 26,780
330,000 ConocoPhillips ........................................ 17,735,510 17,094,000
78,000 Devon Energy Corp. .................................... 3,448,499 5,125,380
170,000 Eni SpA, ADR .......................................... 6,249,080 8,129,400
210,000 Exxon Mobil Corp. ..................................... 9,845,136 16,764,300
30,000 Hess Corp. ............................................ 830,468 1,609,200
475,000 Marathon Oil Corp. .................................... 16,752,703 12,996,000
140,000 Murphy Oil Corp. ...................................... 7,080,005 6,209,000
1,000 Niko Resources Ltd. ................................... 57,456 34,419
295,000 Occidental Petroleum Corp. ............................ 11,115,782 17,697,050
20,000 PetroChina Co. Ltd., ADR .............................. 1,480,813 1,779,600
90,000 Petroleo Brasileiro SA, ADR ........................... 3,861,611 2,204,100
270,000 Repsol YPF SA, ADR .................................... 5,719,267 5,807,700
200,000 Royal Dutch Shell plc, Cl. A, ADR ..................... 9,567,840 10,588,000
845,000 StatoilHydro ASA, ADR ................................. 12,183,860 14,077,700
180,000 Sunoco Inc. ........................................... 9,558,099 7,822,800
190,000 Total SA, ADR ......................................... 8,319,782 10,507,000
-------------- --------------
152,915,173 173,027,509
-------------- --------------
ENERGY AND UTILITIES: SERVICES -- 2.6%
220,000 ABB Ltd., ADR ......................................... 2,399,710 3,302,200
20,000 Baker Hughes Inc. ..................................... 759,763 641,400
80,000 Cameron International Corp.+ .......................... 1,103,787 1,640,000
110,000 Diamond Offshore Drilling Inc. ........................ 6,139,336 6,483,400
10,000 Exterran Holdings Inc.+ ............................... 353,410 213,000
620,000 Halliburton Co. ....................................... 16,900,706 11,271,600
4,000 Nabors Industries Ltd.+ ............................... 97,350 47,880
10,000 Noble Corp. ........................................... 254,820 220,900
30,000 Oceaneering International Inc.+ ....................... 1,368,819 874,200
220,000 Rowan Companies Inc. .................................. 7,903,181 3,498,000
120,000 Schlumberger Ltd. ..................................... 3,977,835 5,079,600
45,000 Transocean Ltd.+ ...................................... 3,943,035 2,126,250
430,000 Weatherford International Ltd.+ ....................... 9,321,786 4,652,600
-------------- --------------
54,523,538 40,051,030
-------------- --------------
ENERGY AND UTILITIES: WATER -- 0.9%
11,000 American States Water Co. ............................. 273,608 362,780
340,000 American Water Works Co. Inc. ......................... 7,310,000 7,099,200
63,333 Aqua America Inc. ..................................... 1,056,640 1,304,026
6,000 Artesian Resources Corp., Cl. A ....................... 113,635 94,920
3,000 California Water Service Group ........................ 94,710 139,290
11,500 Connecticut Water Service Inc. ........................ 276,036 271,515
2,000 Consolidated Water Co. Ltd. ........................... 38,961 25,000
See accompanying notes to financial statements.
4
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2008
MARKET
SHARES COST VALUE
------------ -------------- --------------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES: WATER (CONTINUED)
6,000 Middlesex Water Co. ................................... $ 111,082 $ 103,380
60,000 Pennichuck Corp. ...................................... 1,362,461 1,231,800
82,000 SJW Corp. ............................................. 1,384,964 2,455,080
16,800 Southwest Water Co. ................................... 192,169 54,096
27,818 United Utilities Group plc, ADR ....................... 733,071 517,415
9,000 York Water Co. ........................................ 115,031 109,260
-------------- --------------
13,062,368 13,767,762
-------------- --------------
ENTERTAINMENT -- 1.0%
8,000 Grupo Televisa SA, ADR ................................ 79,516 119,520
340,000 Take-Two Interactive Software Inc. .................... 8,700,928 2,570,400
550,000 Time Warner Inc. ...................................... 8,614,238 5,533,000
200,000 Vivendi ............................................... 6,351,618 6,467,890
-------------- --------------
23,746,300 14,690,810
-------------- --------------
ENVIRONMENTAL SERVICES -- 0.9%
1,000 Hyflux Ltd. ........................................... 1,686 1,242
1,250 Suez Environnement SA+ ................................ 0 21,372
12,375 Veolia Environnement .................................. 395,937 381,881
420,000 Waste Management Inc. ................................. 14,809,006 13,918,800
-------------- --------------
15,206,629 14,323,295
-------------- --------------
EQUIPMENT AND SUPPLIES -- 1.2%
99,000 CIRCOR International Inc. ............................. 1,804,425 2,722,500
30,000 Lufkin Industries Inc. ................................ 513,283 1,035,000
60,000 Mueller Industries Inc. ............................... 2,463,788 1,504,800
420,000 RPC Inc. .............................................. 1,866,263 4,099,200
240,000 Tenaris SA, ADR ....................................... 11,262,456 5,035,200
500,000 Xerox Corp. ........................................... 6,810,505 3,985,000
-------------- --------------
24,720,720 18,381,700
-------------- --------------
FINANCIAL SERVICES -- 12.7%
170,000 Aflac Inc. ............................................ 9,031,497 7,792,800
300,000 AllianceBernstein Holding LP .......................... 13,696,527 6,237,000
440,000 American Express Co. .................................. 19,643,120 8,162,000
80,000 Astoria Financial Corp. ............................... 2,005,945 1,318,400
200,000 Bank of America Corp. ................................. 7,532,173 2,816,000
6,000 BlackRock Inc. ........................................ 535,154 804,900
130,000 Capital One Financial Corp. ........................... 6,927,309 4,145,700
200,000 CIT Group Inc. ........................................ 2,693,386 908,000
325,000 Citigroup Inc. ........................................ 11,667,871 2,180,750
25,000 CME Group Inc. ........................................ 9,302,911 5,202,750
100,000 Deutsche Bank AG ...................................... 9,711,821 4,069,000
595,000 Discover Financial Services ........................... 11,324,000 5,670,350
300,400 Federal National Mortgage Association ................. 1,196,518 228,304
78,909 Fidelity National Financial Inc., Cl. A ............... 1,529,570 1,400,635
86,496 Fidelity National Information Services Inc. ........... 1,785,246 1,407,290
70,000 Flushing Financial Corp. .............................. 1,253,654 837,200
175,000 HSBC Holdings plc, ADR ................................ 14,471,463 8,517,250
90,000 Hudson City Bancorp Inc. .............................. 1,409,172 1,436,400
125,000 Invesco Ltd. .......................................... 3,131,339 1,805,000
420,000 JPMorgan Chase & Co. .................................. 15,189,246 13,242,600
180,000 Legg Mason Inc. ....................................... 8,276,521 3,943,800
28,000 M&T Bank Corp. ........................................ 2,046,584 1,607,480
180,000 Marshall & Ilsley Corp. ............................... 6,151,668 2,455,200
480,000 Merrill Lynch & Co., Inc. ............................. 20,705,480 5,587,200
175,000 Moody's Corp. ......................................... 6,431,663 3,515,750
105,000 National Australia Bank Ltd., ADR ..................... 2,508,087 1,543,500
MARKET
SHARES COST VALUE
------------ -------------- --------------
70,000 Nationwide Financial Services Inc., Cl. A ............. $ 3,577,797 $ 3,654,700
300,000 New York Community Bancorp Inc. ....................... 5,422,652 3,588,000
270,000 NewAlliance Bancshares Inc. ........................... 3,899,679 3,555,900
220,000 PNC Financial Services Group Inc. ..................... 11,891,734 10,780,000
285,000 SLM Corp.+ ............................................ 9,144,554 2,536,500
160,000 State Street Corp. .................................... 9,738,790 6,292,800
95,050 Sterling Bancorp ...................................... 1,542,455 1,333,552
120,000 T. Rowe Price Group Inc. .............................. 4,290,139 4,252,800
105,000 The Allstate Corp. .................................... 5,231,929 3,439,800
420,000 The Bank of New York Mellon Corp. ..................... 14,495,591 11,898,600
50,000 The Blackstone Group LP ............................... 1,072,290 326,500
290,000 The Travelers Companies Inc. .......................... 10,913,064 13,108,000
72,522 Valley National Bancorp ............................... 1,512,495 1,468,570
250,000 Wachovia Corp. ........................................ 5,048,024 1,385,000
450,000 Waddell & Reed Financial Inc., Cl. A .................. 9,462,271 6,957,000
60,000 Webster Financial Corp. ............................... 1,530,915 826,800
560,000 Wells Fargo & Co. ..................................... 16,614,113 16,508,800
19,260 Willis Group Holdings Ltd. ............................ 556,229 479,189
180,000 Wilmington Trust Corp. ................................ 5,831,895 4,003,200
-------------- --------------
311,934,541 193,230,970
-------------- --------------
FOOD AND BEVERAGE -- 9.7%
210,000 Cadbury plc, ADR ...................................... 11,018,481 7,490,700
80,000 Campbell Soup Co. ..................................... 2,470,209 2,400,800
200,000 China Mengniu Dairy Co. Ltd. .......................... 498,054 260,122
230,000 ConAgra Foods Inc. .................................... 5,620,877 3,795,000
960,000 Davide Campari-Milano SpA ............................. 9,710,824 6,405,338
220,000 Dr. Pepper Snapple Group Inc.+ ........................ 5,848,174 3,575,000
250,000 General Mills Inc. .................................... 12,280,223 15,187,500
270,000 Groupe Danone ......................................... 14,818,114 16,206,005
90,000 H.J. Heinz Co. ........................................ 3,150,879 3,384,000
210,000 ITO EN Ltd. ........................................... 4,917,151 3,062,548
50,000 ITO EN Ltd., Preference ............................... 1,116,348 496,966
1,000 Kellogg Co. ........................................... 35,550 43,850
220,000 Kikkoman Corp. ........................................ 2,923,199 2,550,689
400,000 Kraft Foods Inc., Cl. A ............................... 12,241,858 10,740,000
150,000 Morinaga Milk Industry Co. Ltd. ....................... 588,860 577,496
250,000 Nissin Foods Holdings Co. Ltd. ........................ 8,607,187 8,604,523
500,000 Parmalat SpA .......................................... 1,885,518 809,703
339,450 Parmalat SpA, GDR (b)(c) .............................. 981,615 549,705
320,000 PepsiAmericas Inc. .................................... 6,616,558 6,515,200
61,000 Pernod-Ricard SA ...................................... 6,480,669 4,491,479
14,000 Remy Cointreau SA ..................................... 757,474 576,619
1,300,000 Sara Lee Corp. ........................................ 20,942,627 12,727,000
300,000 The Coca-Cola Co. ..................................... 13,301,591 13,581,000
404,000 The Hershey Co. ....................................... 17,978,510 14,034,960
465,000 YAKULT HONSHA Co. Ltd. ................................ 12,519,548 9,792,443
-------------- --------------
177,310,098 147,858,646
-------------- --------------
HEALTH CARE -- 4.0%
25,649 Advanced Medical Optics Inc.+ ......................... 328,943 169,540
220,000 Boston Scientific Corp.+ .............................. 2,874,341 1,702,800
115,000 Bristol-Myers Squibb Co. .............................. 2,789,992 2,673,750
45,000 Covidien Ltd. ......................................... 1,971,821 1,630,800
500 Datascope Corp. ....................................... 25,760 26,120
150,000 Eli Lilly & Co. ....................................... 8,318,465 6,040,500
See accompanying notes to financial statements.
5
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2008
MARKET
SHARES COST VALUE
------------ -------------- ---------------
COMMON STOCKS (CONTINUED)
HEALTH CARE (CONTINUED)
6,000 Fresenius Kabi Pharmaceuticals
Holding Inc., CVR+ ................................. $ 0 $ 2,100
75,000 Genentech Inc.+ ....................................... 6,820,529 6,218,250
100,000 IMS Health Inc. ....................................... 2,416,169 1,516,000
50,000 Johnson & Johnson ..................................... 3,244,276 2,991,500
8,000 Mentor Corp. .......................................... 244,858 247,440
200,000 Merck & Co. Inc. ...................................... 7,533,281 6,080,000
110,000 Owens & Minor Inc. .................................... 3,312,937 4,141,500
1,050,000 Pfizer Inc. ........................................... 27,940,141 18,595,500
26,000 Schiff Nutrition International Inc.+ .................. 145,435 155,220
25,000 St. Jude Medical Inc.+ ................................ 1,044,606 824,000
130,000 Wyeth ................................................. 6,096,113 4,876,300
75,000 Zimmer Holdings Inc.+ ................................. 4,911,937 3,031,500
--------------- --------------
80,019,604 60,922,820
--------------- --------------
HOTELS AND GAMING -- 0.2%
110,000 Boyd Gaming Corp. ..................................... 1,650,177 520,300
690,000 Ladbrokes plc ......................................... 9,056,911 1,835,292
60,000 Las Vegas Sands Corp.+ ................................ 350,218 355,800
130,000 Pinnacle Entertainment Inc.+ .......................... 2,077,726 998,400
--------------- --------------
13,135,032 3,709,792
--------------- --------------
MACHINERY -- 0.4%
200,000 CNH Global NV ......................................... 5,348,172 3,120,000
70,000 Deere & Co. ........................................... 3,746,042 2,682,400
--------------- --------------
9,094,214 5,802,400
--------------- --------------
MANUFACTURED HOUSING AND RECREATIONAL VEHICLES -- 0.0%
17,000 Skyline Corp. ......................................... 481,446 339,830
--------------- --------------
METALS AND MINING -- 0.5%
260,000 Alcoa Inc. ............................................ 7,820,817 2,927,600
10,000 Alliance Holdings GP LP ............................... 230,523 148,000
13,000 Alpha Natural Resources Inc.+ ......................... 713,100 210,470
17,000 Arch Coal Inc. ........................................ 265,374 276,930
8,000 BHP Billiton Ltd., ADR ................................ 217,549 343,200
120,000 Freeport-McMoRan Copper & Gold Inc. ................... 3,863,124 2,932,800
10,000 Massey Energy Co. ..................................... 235,475 137,900
20,000 Peabody Energy Corp. .................................. 274,124 455,000
4,200 Rio Tinto plc, ADR .................................... 816,504 373,422
245 Teck Cominco Ltd., Cl. B .............................. 18,255 1,205
3,000 Westmoreland Coal Co.+ ................................ 52,605 33,300
--------------- --------------
14,507,450 7,839,827
--------------- --------------
PAPER AND FOREST PRODUCTS -- 0.3%
415,000 International Paper Co. ............................... 12,809,318 4,897,000
--------------- --------------
PUBLISHING -- 0.4%
35,000 Idearc Inc. ........................................... 138,481 2,975
1,715,000 Il Sole 24 Ore ........................................ 14,333,005 5,411,523
--------------- --------------
14,471,486 5,414,498
--------------- --------------
REAL ESTATE -- 0.0%
18,000 Brookfield Asset Management Inc., Cl. A ............... 186,196 274,860
--------------- --------------
RETAIL -- 2.1%
210,000 CVS Caremark Corp. .................................... 7,892,649 6,035,400
142,000 Ingles Markets Inc., Cl. A ............................ 1,615,209 2,497,780
12,700 Macy's Inc. ........................................... 126,301 131,445
410,000 Safeway Inc. .......................................... 8,674,488 9,745,700
18,000 Saks Inc.+ ............................................ 261,932 78,840
310,000 Sally Beauty Holdings Inc.+ ........................... 3,837,420 1,763,900
85,000 SUPERVALU Inc. ........................................ 2,526,712 1,241,000
155,000 The Great Atlantic & Pacific Tea Co. Inc.+ ............ 3,219,345 971,850
SHARES/ MARKET
UNITS COST VALUE
------------ --------------- ---------------
380,000 Walgreen Co. .......................................... $ 14,707,879 $ 9,374,600
85,000 Whole Foods Market Inc. ............................... 2,774,041 802,400
--------------- ---------------
45,635,976 32,642,915
--------------- ---------------
SPECIALTY CHEMICALS -- 1.6%
5,000 Arkema, ADR ........................................... 269,656 85,400
129,550 Ashland Inc. .......................................... 5,505,570 1,361,570
170,000 E.I. du Pont de Nemours & Co. ......................... 7,402,747 4,301,000
260,000 Ferro Corp. ........................................... 4,980,743 1,833,000
100,000 Olin Corp. ............................................ 1,826,861 1,808,000
175,000 Rohm and Haas Co. ..................................... 12,964,559 10,813,250
230,000 The Dow Chemical Co. .................................. 9,203,870 3,470,700
--------------- ---------------
42,154,006 23,672,920
--------------- ---------------
TELECOMMUNICATIONS -- 6.4%
585,000 AT&T Inc. ............................................. 16,008,654 16,672,500
220,000 BCE Inc. .............................................. 5,564,597 4,507,800
45,000 Bell Aliant Regional Communications Income
Fund (b)(d) ........................................ 1,219,425 858,445
71,000 BT Group plc, ADR ..................................... 2,221,635 1,418,580
30,000 CenturyTel Inc. ....................................... 1,018,424 819,900
650,000 Deutsche Telekom AG, ADR .............................. 12,129,448 9,945,000
55,000 France Telecom SA, ADR ................................ 1,338,443 1,543,850
31,700 Hellenic Telecommunications Organization SA ........... 699,575 524,368
219,800 Hellenic Telecommunications Organization SA, ADR ...... 1,748,090 1,826,538
215,000 Portugal Telecom SGPS SA .............................. 2,574,406 1,814,081
250,000 Qwest Communications International Inc. ............... 1,360,992 910,000
1,400,000 Sprint Nextel Corp.+ .................................. 17,800,677 2,562,000
20,000 Telecom Corp. of New Zealand Ltd., ADR ................ 312,271 134,000
150,000 Telecom Italia SpA, ADR ............................... 4,229,850 2,437,500
16,000 Telefonica SA, ADR .................................... 683,716 1,078,240
196,000 Telefonos de Mexico SAB de CV, Cl. L, ADR ............. 1,903,750 4,104,240
80,000 Telephone & Data Systems Inc., Special ................ 2,988,359 2,248,000
196,000 Telmex Internacional SAB de CV, ADR ................... 1,322,945 2,226,560
130,000 Telstra Corp. Ltd., ADR ............................... 2,392,135 1,774,500
76,100 TELUS Corp., Non-Voting ............................... 1,574,712 2,162,762
1,000,000 Verizon Communications Inc. ........................... 36,248,381 33,900,000
170,000 Vodafone Group plc, ADR ............................... 4,757,006 3,474,800
--------------- ---------------
120,097,491 96,943,664
--------------- ---------------
TRANSPORTATION -- 0.6%
3,000 Frontline Ltd. ........................................ 105,687 88,830
250,000 GATX Corp. ............................................ 7,479,103 7,742,500
24,000 Golden Ocean Group Ltd. ............................... 14,400 15,355
27,000 Kansas City Southern+ ................................. 453,321 514,350
3,000 Ship Finance International Ltd. ....................... 66,356 33,150
22,000 Teekay Corp. .......................................... 794,715 432,300
--------------- ---------------
8,913,582 8,826,485
--------------- ---------------
WIRELESS COMMUNICATIONS -- 0.3%
5,000 Crown Castle International Corp.+ ..................... 80,650 87,900
111,030 United States Cellular Corp.+ ......................... 5,129,256 4,800,937
14,000 Vimpel-Communications, ADR ............................ 85,375 100,240
3,000 Wayfinder System AB+ .................................. 4,226 4,477
--------------- ---------------
5,299,507 4,993,554
--------------- ---------------
TOTAL COMMON STOCKS ................................... 1,745,341,792 1,411,332,101
--------------- ---------------
See accompanying notes to financial statements.
6
THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2008
MARKET
SHARES COST VALUE
------------ --------------- ---------------
CONVERTIBLE PREFERRED STOCKS -- 0.8%
AGRICULTURE -- 0.0%
12,000 Archer-Daniels-Midland Co.,
6.250% Cv. Pfd. .................................... $ 473,157 $ 454,800
--------------- ---------------
BROADCASTING -- 0.0%
20,000 Emmis Communications Corp.,
6.250% Cv. Pfd., Ser. A ............................ 872,170 42,200
--------------- ---------------
BUILDING AND CONSTRUCTION -- 0.0%
200 Fleetwood Capital Trust,
6.000% Cv. Pfd. .................................... 6,210 263
--------------- ---------------
DIVERSIFIED INDUSTRIAL -- 0.0%
32,000 Smurfit-Stone Container Corp.,
7.000% Cv. Pfd., Ser. A ............................ 780,000 50,240
--------------- ---------------
ENERGY AND UTILITIES -- 0.3%
5,000 Chesapeake Energy Corp.,
5.000% Cv. Pfd. (b) ................................ 512,500 345,550
129,000 El Paso Energy Capital Trust I,
4.750% Cv. Pfd. .................................... 4,649,004 3,302,400
--------------- ---------------
5,161,504 3,647,950
--------------- ---------------
FINANCIAL SERVICES -- 0.2%
1,500 Doral Financial Corp.,
4.750% Cv. Pfd. .................................... 207,335 90,230
100,000 Newell Financial Trust I,
5.250% Cv. Pfd. .................................... 4,707,188 2,625,000
--------------- ---------------
4,914,523 2,715,230
--------------- ---------------
HEALTH CARE -- 0.0%
5,000 Omnicare Inc.,
4.000% Cv. Pfd., Ser. B ............................ 256,808 180,000
TELECOMMUNICATIONS -- 0.3%
50,000 Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B ............................ 2,118,418 1,150,000
105,000 Crown Castle International Corp.,
6.250% Cv. Pfd. .................................... 4,853,125 3,786,563
--------------- ---------------
6,971,543 4,936,563
--------------- ---------------
TRANSPORTATION -- 0.0%
1,500 GATX Corp., $2.50 Cv. Pfd. ............................ 199,475 385,965
--------------- ---------------
TOTAL CONVERTIBLE PREFERRED STOCKS .................... 19,635,390 12,413,211
--------------- ---------------
WARRANTS -- 0.0%
FOOD AND BEVERAGE -- 0.0%
650 Parmalat SpA, GDR, expire
12/31/15+ (b)(c)(d) 0 116
--------------- ---------------
PRINCIPAL
AMOUNT
------------
CONVERTIBLE CORPORATE BONDS -- 1.2%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.0%
$ 500,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ................................... 496,738 457,500
--------------- ---------------
BROADCASTING -- 0.3%
10,000,000 Sinclair Broadcast Group Inc.,
Sub. Deb. Cv.,
6.000%, 09/15/12 ................................... 8,746,927 4,600,000
--------------- ---------------
COMMUNICATIONS EQUIPMENT -- 0.7%
10,000,000 Agere Systems Inc.,
Sub. Deb. Cv.,
6.500%, 12/15/09 ................................... 10,018,805 9,862,500
--------------- ---------------
REAL ESTATE -- 0.0%
1,100,000 Palm Harbor Homes Inc., Cv.,
3.250%, 05/15/24 ................................... 1,061,676 526,625
--------------- ---------------
PRINCIPAL MARKET
AMOUNT COST VALUE
------------ --------------- ---------------
RETAIL -- 0.2%
$ 5,300,000 The Great Atlantic &
Pacific Tea Co. Inc., Cv.,
5.125%, 06/15/11 ................................... $ 5,230,033 $ 2,736,125
--------------- ---------------
TOTAL CONVERTIBLE CORPORATE BONDS ..................... 25,554,179 18,182,750
--------------- ---------------
U.S. GOVERNMENT OBLIGATIONS -- 5.2%
U.S. TREASURY CASH MANAGEMENT BILLS -- 0.6%
8,974,000 U.S. Treasury Cash Management Bill,
0.122%++, 04/29/09 ................................. 8,969,441 8,972,313
--------------- ---------------
U.S. TREASURY BILLS -- 4.6%
70,432,000 U.S. Treasury Bills,
0.020% to 1.924%++,
01/15/09 to 06/25/09 ............................... 70,390,693 70,388,703
--------------- ---------------
TOTAL U.S. GOVERNMENT OBLIGATIONS ..................... 79,360,134 79,361,016
--------------- ---------------
TOTAL INVESTMENTS -- 100.0% .......................................... $ 1,869,891,495 1,521,289,194
===============
OTHER ASSETS AND LIABILITIES (NET) ................................... 110,413
PREFERRED STOCK
(5,717,730 preferred shares outstanding) .......................... (462,123,750)
===============
NET ASSETS -- COMMON SHARES
(83,528,637 common shares outstanding) ............................ $ 1,059,275,857
===============
NET ASSET VALUE PER COMMON SHARE
($1,059,275,857 / 83,528,637 shares outstanding) .................. $ 12.68
===============
----------
(a) Security considered an affiliated holding because the Fund owns at least 5%
of its outstanding shares.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At December
31, 2008, the market value of Rule 144A securities amounted to $1,753,816
or 0.12% of total investments. Except as noted in (c), these securities are
liquid.
(c) At December 31, 2008, the Fund held investments in restricted and illiquid
securities amounting to $549,821 or 0.04% of total investments, which were
valued under methods approved by the Board of Trustees as follows:
12/31/08
ACQUISITION ACQUISITION ACQUISITION CARRYING VALUE
SHARES ISSUER DATE COST PER UNIT
----------- ----------------------------- ----------- ----------- --------------
339,450 Parmalat SpA, GDR ........... 12/02/03 $981,615 $1.6194
650 Parmalat SpA, GDR warrants
expire 12/31/15 .......... 11/09/05 -- 0.1785
(d) Security fair valued under procedures established by the Board of Trustees.
The procedures may include reviewing available financial information about
the company and reviewing the valuation of comparable securities and other
factors on a regular basis. At December 31, 2008, the market value of fair
valued securities amounted to $858,561 or 0.06% of total investments.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depositary Receipt
GDR Global Depositary Receipt
% OF
MARKET MARKET
GEOGRAPHIC DIVERSIFICATION VALUE VALUE
-------------------------- ------ --------------
North America ............ 79.1% $1,203,786,678
Europe ................... 13.7 208,261,401
Japan .................... 4.3 66,028,461
Latin America ............ 2.4 36,217,462
Asia/Pacific ............. 0.5 6,995,192
----- --------------
Total Investments ........ 100.0% $1,521,289,194
===== ==============
See accompanying notes to financial statements.
7
THE GABELLI DIVIDEND & INCOME TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2008
ASSETS:
Investments, at value (cost $1,867,957,629) ................ $1,521,081,294
Investments in affiliates, at value (cost $1,933,866) ...... 207,900
Cash ....................................................... 3,680,210
Receivable for investments sold ............................ 1,722,781
Dividends and interest receivable .......................... 3,183,414
Unrealized appreciation on swap contracts .................. 70,517
Deferred offering expense .................................. 73,650
Prepaid expense ............................................ 61,872
--------------
TOTAL ASSETS ............................................... 1,530,081,638
--------------
LIABILITIES:
Payable for investments purchased .......................... 3,020,504
Distributions payable ...................................... 214,827
Payable for Preferred shares repurchased ................... 56,026
Payable for investment advisory fees ....................... 862,241
Payable for payroll expenses ............................... 52,508
Payable for accounting fees ................................ 7,501
Unrealized depreciation on swap contracts .................. 3,292,381
Payable for auction agent fees ............................. 762,791
Other accrued expenses ..................................... 413,252
--------------
TOTAL LIABILITIES .......................................... 8,682,031
--------------
PREFERRED SHARES, ALL AT $0.001 PER VALUE:
Series A Cumulative Preferred Shares (5.875%, $25
liquidation value, 3,200,000 shares authorized with
3,128,416 shares issued and outstanding) ................ 78,210,400
Series B Cumulative Preferred Shares (Auction Market,
$25,000 liquidation value, 4,000 shares authorized
with 3,600 shares issued and outstanding) ............... 90,000,000
Series C Cumulative Preferred Shares (Auction Market,
$25,000 liquidation value, 4,800 shares authorized
with 4,320 shares issued and outstanding) ............... 108,000,000
Series D Cumulative Preferred Shares (6.00%, $25
liquidation value, 2,600,000 shares authorized with
2,576,534 shares issued and outstanding) ................ 64,413,350
Series E Cumulative Preferred Shares (Auction Rate,
$25,000 liquidation value, 5,400 shares authorized
with 4,860 shares issued and outstanding) ............... 121,500,000
--------------
TOTAL PREFERRED SHARES ..................................... 462,123,750
--------------
NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS ............. $1,059,275,857
==============
NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
CONSIST OF:
Paid-in capital, at $0.001 par value ....................... $1,454,931,955
Accumulated net investment income .......................... 1,356,853
Accumulated distributions in excess of net realized gain
on investments, swap contracts, and foreign
currency transactions ................................... (45,191,905)
Net unrealized depreciation on investments ................. (348,602,301)
Net unrealized depreciation on swap contracts .............. (3,221,864)
Net unrealized appreciation on foreign
currency translations ................................... 3,119
--------------
NET ASSETS ................................................. $1,059,275,857
==============
NET ASSET VALUE PER COMMON SHARE
($1,059,275,857 / 83,528,637 shares outstanding;
unlimited number of shares authorized) ..................... $ 12.68
==============
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2008
INVESTMENT INCOME:
Dividends (net of foreign taxes of $1,504,922) ............. $ 60,620,848
Interest ................................................... 4,129,032
--------------
TOTAL INVESTMENT INCOME .................................... 64,749,880
--------------
EXPENSES:
Investment advisory fees ................................... 20,662,372
Auction agent fees ......................................... 895,527
Shareholder communications expenses ........................ 550,980
Custodian fees ............................................. 270,664
Payroll expenses ........................................... 215,342
Trustees' fees ............................................. 179,560
Legal and audit fees ....................................... 131,352
Shareholder services fees .................................. 45,006
Accounting fees ............................................ 45,000
Interest expense ........................................... 2,332
Miscellaneous expenses ..................................... 352,697
--------------
TOTAL EXPENSES ............................................. 23,350,832
Less:
Advisory fee reduction .................................. (4,948,148)
Custodian fee credits ................................... (11,519)
--------------
NET EXPENSES ............................................... 18,391,165
--------------
NET INVESTMENT INCOME ...................................... 46,358,715
--------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS,
SWAP CONTRACTS, AND FOREIGN CURRENCY:
Net realized loss on investments - unaffiliated ............ (40,001,828)
Net realized loss on investments - affiliated .............. (110,507)
Net realized loss on swap contracts ........................ (3,022,871)
Net realized loss on foreign currency transactions ......... (25,678)
--------------
Net realized loss on investments, swap contracts,
and foreign currency transactions ....................... (43,160,884)
--------------
Net change in unrealized appreciation/(depreciation):
on investments .......................................... (784,994,302)
on swap contracts ....................................... (1,974,267)
on foreign currency translations ........................ (1,296)
--------------
Net change in unrealized appreciation/(depreciation)
on investments, swap contracts, and foreign
currency translations ................................... (786,969,865)
--------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS,
SWAP CONTRACTS, AND FOREIGN CURRENCY .................... (830,130,749)
--------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ......................................... (783,772,034)
--------------
Total Distributions to Preferred Shareholders .............. (22,653,237)
--------------
NET DECREASE IN NET ASSETS ATTRIBUTABLE TO COMMON
SHAREHOLDERS RESULTING FROM OPERATIONS .................. $ (806,425,271)
==============
See accompanying notes to financial statements.
8
THE GABELLI DIVIDEND & INCOME TRUST
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
YEAR ENDED YEAR ENDED
DECEMBER 31, 2008 DECEMBER 31, 2007
----------------- -----------------
OPERATIONS:
Net investment income ................................................... $ 46,358,715 $ 44,287,243
Net realized gain/(loss) on investments, swap contracts, and foreign
currency transactions ................................................ (43,160,884) 111,203,897
Net change in unrealized appreciation/(depreciation) on investments,
swap contracts, and foreign currency translations .................... (786,969,865) 4,134,547
-------------- --------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ......... (783,772,034) 159,625,687
-------------- --------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
Net investment income ................................................... (22,608,188) (8,447,993)
Net realized short-term gain ............................................ -- (3,890,830)
Net realized long-term gain ............................................. (45,049) (15,176,885)
-------------- --------------
TOTAL DISTRIBUTIONS TO PREFERRED SHAREHOLDERS ........................... (22,653,237) (27,515,708)
-------------- --------------
NET INCREASE/(DECREASE) IN NET ASSETS ATTRIBUTABLE TO COMMON
SHAREHOLDERS RESULTING FROM OPERATIONS ............................... (806,425,271) 132,109,979
-------------- --------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income ................................................... (23,970,465) (42,713,304)
Net realized short-term gain ............................................ -- (19,699,634)
Net realized long-term gain ............................................. (214,542) (76,860,455)
Return of capital ....................................................... (83,014,490) --
-------------- --------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS .............................. (107,199,497) (139,273,393)
-------------- --------------
FUND SHARE TRANSACTIONS:
Net decrease from repurchase of common shares ........................... (3,449,357) (3,091,222)
Recapture of gain on sale of Fund shares by an affiliate ................ -- 4,338
Net increase in net assets from repurchase of preferred shares .......... 519,154 --
-------------- --------------
NET DECREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS ................. (2,930,203) (3,086,884)
-------------- --------------
NET DECREASE IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS .......... (916,554,971) (10,250,298)
-------------- --------------
NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS:
Beginning of period ..................................................... 1,975,830,828 1,986,081,126
-------------- --------------
End of period (including undistributed net investment income of
$1,356,853 and $1,741,110, respectively) ............................. $1,059,275,857 $1,975,830,828
============== ==============
See accompanying notes to financial statements.
9
THE GABELLI DIVIDEND & INCOME TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD:
YEAR ENDED DECEMBER 31,
--------------------------------------------------
2008 2007 2006 2005 2004
------- ------ ------ ------ ------
OPERATING PERFORMANCE:
Net asset value, beginning of period .................. $ 23.57 $23.65 $20.62 $20.12 $19.26
------- ------ ------ ------ ------
Net investment income ................................. 0.55 0.53 0.87 0.55 0.40
Net realized and unrealized gain/(loss) on investments,
swap contracts, and foreign currency transactions .. (9.92) 1.37 4.00 1.33 1.80
------- ------ ------ ------ ------
Total from investment operations ...................... (9.37) 1.90 4.87 1.88 2.20
------- ------ ------ ------ ------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS: (a)
Net investment income ................................. (0.27) (0.10) (0.12) (0.06) (0.01)
Net realized gain ..................................... (0.00)(e) (0.23) (0.19) (0.10) (0.01)
------- ------ ------ ------ ------
Total distributions to preferred shareholders ......... (0.27) (0.33) (0.31) (0.16) (0.02)
------- ------ ------ ------ ------
NET INCREASE/(DECREASE) IN NET ASSETS ATTRIBUTABLE
TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS ... (9.64) 1.57 4.56 1.72 2.18
------- ------ ------ ------ ------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income ................................. (0.29) (0.51) (0.61) (0.48) (0.39)
Net realized gain on investments....................... (0.00)(e) (1.15) (0.93) (0.72) (0.24)
Return of capital ..................................... (0.99) -- -- -- (0.57)
------- ------ ------ ------ ------
Total distributions to common shareholders ............ (1.28) (1.66) (1.54) (1.20) (1.20)
------- ------ ------ ------ ------
FUND SHARE TRANSACTIONS:
Decrease in net asset value from common share
transactions ....................................... -- -- -- -- (0.05)
Increase in net asset value from repurchase of
common shares ...................................... 0.01 0.01 0.01 0.02 --
Increase in net asset value from repurchase of
preferred shares ................................... 0.02 -- -- -- --
Offering costs for common shares charged to
paid-in capital .................................... -- -- -- -- (0.01)
Offering costs for preferred shares charged to
paid-in capital .................................... -- -- (0.00)(e) (0.04) (0.06)
------- ------ ------ ------ ------
Total from fund share transactions..................... 0.03 0.01 0.01 (0.02) (0.12)
------- ------ ------ ------ ------
NET ASSET VALUE ATTRIBUTABLE TO COMMON SHAREHOLDERS,
END OF PERIOD....................................... $ 12.68 $23.57 $23.65 $20.62 $20.12
======= ====== ====== ====== ======
NAV total return +..................................... (41.27)% 7.75% 24.09% 9.47% 11.56%
======= ====== ====== ====== ======
Market value, end of period............................ $ 10.30 $20.68 $21.47 $17.62 $17.95
======= ====== ====== ====== ======
Investment total return ++............................. (45.63)% 4.14% 31.82% 4.85% (4.15)%
======= ====== ====== ====== ======
See accompanying notes to financial statements.
10
THE GABELLI DIVIDEND & INCOME TRUST
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD:
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
2008 2007 2006 2005 2004
---------- ---------- ---------- ---------- ----------
RATIOS AND SUPPLEMENTAL DATA:
Net assets including liquidation value of preferred shares,
end of period (in 000's) ........................................ $1,521,400 $2,475,831 $2,486,081 $2,238,155 $2,006,703
Net assets attributable to common shares, end of
period (in 000's) ............................................... $1,059,276 $1,975,831 $1,986,081 $1,738,155 $1,706,703
Ratio of net investment income to average net assets attributable to
common shares before preferred share distributions .............. 2.94% 2.17% 3.91% 2.75% 2.17%
Ratio of operating expenses to average net assets attributable to
common shares before fees waived ................................ 1.48% -- -- -- --
Ratio of operating expenses to average net assets attributable to
common shares net of advisory fee reduction, if any (b) ......... 1.17% 1.38% 1.41% 1.33% 1.12%
Ratio of operating expenses to average net assets including
liquidation value of preferred shares before fees waived ........ 1.13% -- -- -- --
Ratio of operating expenses to average net assets including
liquidation value of preferred shares net of advisory fee
reduction, if any (b) ........................................... 0.89% 1.11% 1.11% 1.12% 1.07%
Portfolio turnover rate +++ ........................................ 32.0% 33.8% 28.8% 25.6% 33.3%
5.875% SERIES A CUMULATIVE PREFERRED SHARES
Liquidation value, end of period (in 000's) ........................ $ 78,211 $ 80,000 $ 80,000 $ 80,000 $ 80,000
Total shares outstanding (in 000's) ................................ 3,128 3,200 3,200 3,200 3,200
Liquidation preference per share ................................... $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00
Average market value (c) ........................................... $ 22.25 $ 23.52 $ 23.86 $ 24.82 $ 24.68
Asset coverage per share ........................................... $ 82.30 $ 123.79 $ 124.30 $ 111.91 $ 167.23
SERIES B AUCTION MARKET CUMULATIVE PREFERRED SHARES
Liquidation value, end of period (in 000's) ........................ $ 90,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000
Total shares outstanding (in 000's) ................................ 4 4 4 4 4
Liquidation preference per share ................................... $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Average market value (c) ........................................... $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Asset coverage per share ........................................... $ 82,305 $ 123,792 $ 124,304 $ 111,908 $ 167,225
SERIES C AUCTION MARKET CUMULATIVE PREFERRED SHARES
Liquidation value, end of period (in 000's) ........................ $ 108,000 $ 120,000 $ 120,000 $ 120,000 $ 120,000
Total shares outstanding (in 000's) ................................ 4 5 5 5 5
Liquidation preference per share ................................... $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Average market value (c) ........................................... $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Asset coverage per share ........................................... $ 82,305 $ 123,792 $ 124,304 $ 111,908 $ 167,225
6.000% SERIES D CUMULATIVE PREFERRED SHARES
Liquidation value, end of period (in 000's) ........................ $ 64,413 $ 65,000 $ 65,000 $ 65,000 --
Total shares outstanding (in 000's) ................................ 2,577 2,600 2,600 2,600 --
Liquidation preference per share ................................... $ 25.00 $ 25.00 $ 25.00 $ 25.00 --
Average market value (c) ........................................... $ 23.99 $ 24.41 $ 24.37 $ 24.72 --
Asset coverage per share ........................................... $ 82.30 $ 123.79 $ 124.30 $ 111.91 --
SERIES E AUCTION RATE CUMULATIVE PREFERRED SHARES
Liquidation value, end of period (in 000's) ........................ $ 121,500 $ 135,000 $ 135,000 $ 135,000 --
Total shares outstanding (in 000's) ................................ 5 5 5 5 --
Liquidation preference per share ................................... $ 25,000 $ 25,000 $ 25,000 $ 25,000 --
Average market value (c) ........................................... $ 25,000 $ 25,000 $ 25,000 $ 25,000 --
Asset coverage per share ........................................... $ 82,305 $ 123,792 $ 124,304 $ 111,908 --
ASSET COVERAGE (d) ................................................. 329% 495% 497% 448% 669%
----------
+ Based on net asset value per share, adjusted for reinvestment of
distributions at prices obtained under the Fund's dividend reinvestment
plan.
++ Based on market value per share, adjusted for reinvestment of distributions
at prices obtained under the Fund's dividend reinvestment plan.
+++ Effective in 2008, a change in accounting policy was adopted with regard to
the calculation of the portfolio turnover rate to include cash proceeds due
to mergers. Had this policy been adopted retroactively, the portfolio
turnover rate for the years ended December 31, 2007, 2006, 2005, and 2004
would have been 58.0%, 30.8%, 39.5%, and 48.7%, respectively.
(a) Calculated based upon average common shares outstanding on the record dates
throughout the period.
(b) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. Including such custodian
fee credits for the year ended December 31, 2007, the ratios of operating
expenses to average net assets attributable to common shares net of fee
reduction would have been 1.37% and the ratios of operating expenses to
average net assets including liquidation value of preferred shares net of
fee reduction would have been 1.10%. For the years ended December 31, 2008,
2006, and 2005, the effect of the custodian fee credits was minimal.
(c) Based on weekly prices.
(d) Asset coverage is calculated by combining all series of preferred shares.
(e) Amount represents less than $0.005 per share.
See accompanying notes to financial statements.
11
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. The Gabelli Dividend & Income Trust (the "Fund") is a
non-diversified closed-end management investment company organized as a Delaware
statutory trust on November 18, 2003 and registered under the Investment Company
Act of 1940, as amended (the "1940 Act"). Investment operations commenced on
November 28, 2003.
The Fund's investment objective is to provide a high level of total return
on its assets with an emphasis on dividends and income. The Fund will attempt to
achieve its investment objective by investing, under normal market conditions,
at least 80% of its assets in dividend paying securities (such as common and
preferred stock) or other income producing securities (such as fixed income debt
securities and securities that are convertible into equity securities).
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with United States ("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 Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on a foreign market are generally
valued at the preceding closing values of such securities on the relevant
market, but may be fair valued pursuant to procedures established by the Board
if market conditions change significantly after the close of the foreign market
but prior to the close of business on the day the securities are being valued.
Debt instruments with remaining maturities of 60 days or less that are not
credit impaired are valued at amortized cost, unless the Board determines such
amount does not reflect the securities' fair value, in which case these
securities will be fair valued as determined by the Board. Debt instruments
having a maturity greater than 60 days for which market quotations are readily
available are valued at the average of the latest bid and asked prices. If there
were no asked prices quoted on such day, the security is valued using the
closing bid price. Futures contracts are valued at the closing settlement price
of the exchange or board of trade on which the applicable contract is traded.
Securities and assets for which market quotations are not readily available
are fair valued as determined by the Board. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available
financial and non-financial information about the company; comparisons with the
valuation and changes in valuation of similar securities, including a comparison
of foreign securities with the equivalent U.S. dollar value ADR securities at
the close of the U.S. exchange; and evaluation of any other information that
could be indicative of the value of the security.
Statement of Financial Accounting Standard No. 157, "Fair Value
Measurements" ("SFAS 157") clarifies the definition of fair value for financial
reporting, establishes a framework for measuring fair value, and requires
additional disclosures about the use of fair value measurements. The three
levels of the fair value hierarchy under SFAS 157 are described below:
- Level 1 - quoted prices in active markets for identical securities;
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds, credit
risk, etc.); and
- Level 3 - significant unobservable inputs (including the Fund's
determinations as to the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily
an indication of the risk associated with investing in those securities. The
summary of the Fund's investments and other financial instruments, by inputs
used to value the Fund's investments as of December 31, 2008 is, as follows:
OTHER FINANCIAL OTHER FINANCIAL
INVESTMENTS IN INSTRUMENTS INSTRUMENTS
SECURITIES (UNREALIZED (UNREALIZED
(MARKET VALUE) APPRECIATION)* DEPRECIATION)*
VALUATION INPUTS ASSETS ASSETS LIABILITIES
---------------- -------------- --------------- ---------------
Level 1 - Quoted Prices $1,422,722,388 -- --
Level 2 - Other Significant Observable Inputs 98,566,806 $70,517 $(3,292,381)
-------------- ------- -----------
Total $1,521,289,194 $70,517 $(3,292,381)
============== ======= ===========
There were no Level 3 investments held at December 31, 2007 or 2008.
----------
* Other financial instruments are derivative instruments not reflected in the
Schedule of Investments, such as futures, forwards, and swaps which are
valued at the unrealized appreciation/depreciation on the investment.
12
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In March 2008, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standard No. 161, "Disclosures about
Derivative Instruments and Hedging Activities" ("SFAS 161") that is effective
for fiscal years beginning after November 15, 2008. SFAS 161 is intended to
improve financial reporting for derivative instruments by requiring enhanced
disclosure that enables investors to understand how and why an entity uses
derivatives, how derivatives are accounted for, and how derivative instruments
affect an entity's results of operations and financial position. Management is
currently evaluating the implications of SFAS 161 on the Fund's financial
statement disclosures.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System, or with other brokers or
dealers that meet credit guidelines established by the Adviser and reviewed by
the Board. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
It is the policy of the Fund to always receive and maintain securities as
collateral whose market value, including accrued interest, are at least equal to
102% of the dollar amount invested by the Fund in each agreement. The Fund will
make payment for such securities only upon physical delivery or upon evidence of
book entry transfer of the collateral to the account of the custodian. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to maintain the adequacy of
the collateral. If the seller defaults and the value of the collateral declines
or if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or limited.
At December 31, 2008, there were no open repurchase agreements.
OPTIONS. The Fund may purchase or write call or put options on securities
or indices. As a writer of put options, the Fund receives a premium at the
outset and then bears the risk of unfavorable changes in the price of the
financial instrument underlying the option. The Fund would incur a loss if the
price of the underlying financial instrument decreases between the date the
option is written and the date on which the option is terminated. The Fund would
realize a gain, to the extent of the premium, if the price of the financial
instrument increases between those dates. If a written call option is exercised,
the premium is added to the proceeds from the sale of the underlying security in
determining whether there has been a realized gain or loss. If a written put
option is exercised, the premium reduces the cost basis of the security.
As a purchaser of put options, the Fund pays a premium for the right to
sell to the seller of the put option the underlying security at a specified
price. The seller of the put has the obligation to purchase the underlying
security upon exercise at the exercise price. If the price of the underlying
security declines, the Fund would realize a gain upon sale or exercise. If the
price of the underlying security increases or stays the same, the Fund would
realize a loss upon sale or at the expiration date, but only to the extent of
the premium paid.
In the case of call options, these exercise prices are referred to as
"in-the-money," "at-the-money," and "out-of-the-money," respectively. The Fund
may write (a) in-the-money call options when the Adviser expects that the price
of the underlying security will remain stable or decline during the option
period, (b) covered at-the-money call options when the Adviser expects that the
price of the underlying security will remain stable, decline or advance
moderately during the option period, and (c) out-of-the-money call options when
the Adviser expects that the premiums received from writing the call option will
be greater than the appreciation in the price of the underlying security above
the exercise price. By writing a call option, the Fund limits its opportunity to
profit from any increase in the market value of the underlying security above
the exercise price of the option. Out-of-the-money, at-the-money, and
in-the-money put options (the reverse of call options as to the relation of
exercise price to market price) may be utilized in the same market environments
that such call options are used in equivalent transactions. At December 31,
2008, the Fund had no investments in options.
SWAP AGREEMENTS. The Fund may enter into equity, contract for difference,
and interest rate swap or cap transactions. The use of swaps and caps is a
highly specialized activity that involves investment techniques and risks
different from those associated with ordinary portfolio transactions. Swap
agreements may involve, to varying degrees, elements of market and counterparty
risk, and exposure to loss in excess of the related amounts reflected in the
Statement of Assets and Liabilities. In an interest rate swap, the Fund would
agree to pay to the other party to the interest rate swap (which is known as the
"counterparty") periodically a fixed rate payment in exchange for the
counterparty agreeing to pay to the Fund periodically a variable rate payment
that is intended to approximate the Fund's variable rate payment obligation on
Series B Preferred Shares. In an interest rate cap, the Fund would pay a premium
to the counterparty and, to the extent that a specified variable rate index
exceeds a predetermined fixed rate, would receive from that counterparty
payments of the difference based on the notional amount of such cap. In a swap,
a set of future cash flows are exchanged between two counterparties. One of
these cash flow streams will typically be based on a reference interest rate
combined with the performance of a notional value of shares of a stock. The
other will be based on the performance of the shares of a stock. Swap and cap
transactions introduce additional risk because the Fund would remain obligated
to pay preferred share dividends when due in accordance with the Statement of
Preferences even if the counterparty defaulted. If there is a default by the
counterparty to a swap contract, the Fund will be limited to contractual
remedies pursuant to the agreements related to the transaction. There is no
assurance that the swap contract counterparties will be able to meet their
obligations pursuant to a swap contract or that, in the event of default, the
Fund will succeed in
13
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
pursuing contractual remedies. The Fund thus assumes the risk that it may be
delayed in or prevented from obtaining payments owed to it pursuant to a swap
contract. The creditworthiness of the swap contract counterparties is closely
monitored in order to minimize this risk. Depending on the general state of
short-term interest rates and the returns on the Fund's portfolio securities at
that point in time, such a default could negatively affect the Fund's ability to
make dividend payments. In addition, at the time a swap or a cap transaction
reaches its scheduled termination date, there is a risk that the Fund will not
be able to obtain a replacement transaction or that the terms of the replacement
will not be as favorable as on the expiring transaction. If this occurs, it
could have a negative impact on the Fund's ability to make dividend payments.
The use of derivative instruments involves, to varying degrees, elements of
market and counterparty risk in excess of the amount recognized below.
Unrealized gains related to swaps are reported as an asset and unrealized
losses are reported as a liability in the Statement of Assets and Liabilities.
The change in value of swaps, including the accrual of periodic amounts of
interest to be paid or received on swaps, is reported as unrealized gains or
losses in the Statement of Operations. A realized gain or loss is recorded upon
payment or receipt of a periodic payment or termination of swap agreements.
The Fund has entered into an interest rate swap agreement with Citibank
N.A. Under the agreement the Fund receives a variable rate of interest and pays
a respective fixed rate of interest on the nominal value of the swap. Details of
the swap at December 31, 2008 are as follows:
NOTIONAL FLOATING RATE* TERMINATION NET UNREALIZED
AMOUNT FIXED RATE (RATE RESET MONTHLY) DATE DEPRECIATION
------------ ---------- -------------------- ----------- --------------
$100,000,000 4.01% 1.90125% 06/02/10 $(3,292,381)
----------
* Based on LIBOR (London Interbank Offered Rate).
Effective March 16, 2008, Bear, Stearns International Limited entered into
a Guaranty Agreement with JPMorgan Chase & Co., whereby JPMorgan Chase & Co.
unconditionally guarantees the due and punctual payment of certain liabilities
of Bear, Stearns International Limited, including the current liabilities of
Bear, Stearns International Limited to the Fund. As of December 31, 2008, the
Fund held a contract for difference swap with Bear, Stearns International
Limited which is covered by the JPMorgan Chase & Co. Guaranty Agreement as of
the date of the report. Details of the swap at December 31, 2008 are as follows:
NOTIONAL EQUITY SECURITY INTEREST RATE/ TERMINATION NET UNREALIZED
AMOUNT RECEIVED EQUITY SECURITY PAID DATE APPRECIATION
--------------------------- ---------------- ------------------------ ----------- --------------
Overnight LIBOR plus
Market Value 40 bps plus Market Value
Appreciation on: Depreciation on:
$1,711,933 (204,800 Shares) Cadbury plc Cadbury plc 02/16/09 $70,517
FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose
of hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin." Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuations in the
value of the contract, which are included in unrealized
appreciation/depreciation on investments and futures contracts. The Fund
recognizes a realized gain or loss when the contract is closed.
There are several risks in connection with the use of futures contracts as
a hedging instrument. The change in value of futures contracts primarily
corresponds with the value of their underlying instruments, which may not
correlate with the change in value of the hedged investments. In addition, there
is the risk that the Fund may not be able to enter into a closing transaction
because of an illiquid secondary market. At December 31, 2008, there were no
open futures contracts.
SECURITIES SOLD SHORT. The Fund may enter into short sale transactions.
Short selling involves selling securities that may or may not be owned and, at
times, borrowing the same securities for delivery to the purchaser, with an
obligation to replace such borrowed securities at a later date. The proceeds
received from short sales are recorded as liabilities and the Fund records an
unrealized gain or loss to the extent of the difference between the proceeds
received and the value of an open short position on the day of determination.
The Fund records a realized gain or loss when the short position is closed out.
By entering into a short sale, the Fund bears the market risk of an unfavorable
change in the price of the security sold short. Dividends on short sales are
recorded as an expense by the Fund on the ex-dividend date and interest expense
is recorded on the accrual basis. The Fund did not hold any short positions as
of December 31, 2008.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency translations. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
14
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The use of forward foreign exchange contracts does not eliminate
fluctuations in the underlying prices of the Fund's portfolio securities, but it
does establish a rate of exchange that can be achieved in the future. Although
forward foreign exchange contracts limit the risk of loss due to a decline in
the value of the hedged currency, they also limit any potential gain that might
result should the value of the currency increase. In addition, the Fund could be
exposed to risks if the counterparties to the contracts are unable to meet the
terms of their contracts. At December 31, 2008, there were no open forward
foreign exchange contracts.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are
maintained in U.S. dollars. Foreign currencies, investments, and other assets
and liabilities are translated into U.S. dollars at the current exchange rates.
Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign
exchange rates and/or changes in market prices of securities have been included
in unrealized appreciation/depreciation on investments and foreign currency
translations. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/loss on investments.
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the 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.
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments, or currency repatriation, a portion of which may be recoverable.
The Fund will accrue such taxes and recoveries as applicable, based upon its
current interpretation of tax rules and regulations that exist in the markets in
which it invests.
RESTRICTED AND ILLIQUID SECURITIES. The Fund is not subject to an
independent limitation on the amount it may invest in securities for which the
markets are illiquid. Illiquid securities include securities the disposition of
which is subject to substantial legal or contractual restrictions. The sale of
illiquid securities often requires more time and results in higher brokerage
charges or dealer discounts and other selling expenses than does the sale of
securities eligible for trading on national securities exchanges or in the
over-the-counter markets. Restricted securities may sell at a price lower than
similar securities that are not subject to restrictions on resale. Securities
freely saleable among qualified institutional investors under special rules
adopted by the SEC may be treated as liquid if they satisfy liquidity standards
established by the Board. The continued liquidity of such securities is not as
well assured as that of publicly traded securities, and accordingly the Board
will monitor their liquidity.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
CUSTODIAN FEE CREDITS AND INTEREST EXPENSE. When cash balances are
maintained in the custody account, the Fund receives credits which are used to
offset custodian fees. The gross expenses paid under the custody arrangement are
included in custodian fees in the Statement of Operations with the corresponding
expense offset, if any, shown as "custodian fee credits." When cash balances are
overdrawn, the Fund is charged an overdraft fee of 2.00% above the federal funds
rate on outstanding balances. This amount, if any, would be included in
"interest expense" in the Statement of Operations.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to common shareholders are
recorded on the ex-dividend date. Distributions to shareholders are based on
income and capital gains as determined in accordance with federal income tax
regulations, which may differ from income and capital gains as determined under
U.S. generally accepted accounting principles. These differences are primarily
due to differing treatments of income and gains on various investment securities
and foreign currency transactions held by the Fund, timing differences, and
differing characterizations of distributions made by the Fund. Distributions
from net investment income include net realized gains on foreign currency
transactions. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, adjustments are made to
the appropriate capital accounts in the period when the differences arise. These
reclassifications have no impact on the NAV of the Fund. For the year ended
December 31, 2008, reclassifications were made to decrease accumulated net
investment income by $164,319 and to decrease accumulated distributions in
excess of net realized gain on investments, swap contracts, and foreign currency
transactions by $164,319.
15
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Distributions to shareholders of the Fund's 5.875% Series A Cumulative
Preferred Shares, Series B Auction Market Cumulative Preferred Shares, Series C
Auction Market Cumulative Preferred Shares, 6.00% Series D Cumulative Preferred
Shares, and Series E Auction Rate Cumulative Preferred Shares ("Cumulative
Preferred Shares") are recorded on a daily basis and are determined as described
in Note 5.
The tax character of distributions paid during the years ended December 31,
2008 and December 31, 2007 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2008 DECEMBER 31, 2007
-------------------------- --------------------------
COMMON PREFERRED COMMON PREFERRED
------------ ----------- ------------ -----------
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short-term capital gains) ... $ 23,970,465 $22,608,188 $ 62,419,734 $12,332,027
Net long-term capital gains .................. 214,542 45,049 76,853,659 15,183,681
Return of capital ............................ 83,014,490 -- -- --
------------ ----------- ------------ -----------
Total distributions paid ..................... $107,199,497 $22,653,237 $139,273,393 $27,515,708
============ =========== ============ ===========
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for federal income taxes is required.
At December 31, 2008, the Fund had net capital loss carryforwards for
federal income tax purposes of $22,445,283, which are available to reduce future
required distributions of net capital gains to shareholders through 2016.
Under the current tax law, capital losses related to securities and foreign
currency realized after October 31 and prior to the Fund's fiscal year end may
be treated as occurring on the first day of the following year. For the year
ended December 31, 2008, the Fund deferred capital losses of $2,960,639.
At December 31, 2008, the difference between book basis and tax basis
unrealized depreciation was primarily due to deferral of losses from wash sales
for tax purposes and basis adjustments for investments in partnerships.
As of December 31, 2008, the components of accumulated earnings/losses on a
tax basis were as follows:
Accumulated capital loss carryforward .......................... $ (22,445,283)
Net unrealized appreciation on investments and swap contracts .. (369,727,798)
Net unrealized appreciation on foreign currency translations ... 3,119
Post-October capital loss deferral ............................. (2,960,639)
Other temporary differences* ................................... (525,497)
-------------
Total .......................................................... $(395,656,098)
=============
----------
* Other temporary differences are primarily due to basis adjustments due to
investments in hybrid securities and publicly traded partnerships.
The following summarizes the tax cost of investments, swap contracts, and
the related unrealized appreciation/depreciation at December 31, 2008:
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION DEPRECIATION
-------------- ------------ ------------- --------------
Investments ... $1,887,906,198 $106,497,288 $(476,225,086) $(369,727,798)
FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes"
("FIN 48") provides guidance for how uncertain tax positions should be
recognized, measured, presented, and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in the
course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the "more-likely-than-not" threshold
are recorded as a tax benefit or expense in the current year. In accordance with
FIN 48, management has analyzed the Fund's tax positions taken on the federal
and state income tax returns for all open tax years (the current and prior three
tax years) and has concluded that no provision for income tax is required in the
Fund's financial statements. Management's determination regarding FIN 48 may be
subject to review and adjustment at a later date based on factors including, but
not limited to, an on-going analysis of tax laws, regulations, and
interpretations thereof.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. The Fund has an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed weekly and paid monthly,
equal on an annual basis to 1.00% of the value of the Fund's average weekly net
assets including the liquidation value of preferred shares. In accordance with
the Advisory Agreement, the Adviser provides a continuous investment program for
the Fund's portfolio and oversees the administration of all aspects of the
Fund's business and affairs. The Adviser has agreed to reduce the management fee
on the incremental assets attributable to the Preferred Shares if the total
return of the NAV of the common shares of the Fund, including
16
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
distributions and advisory fee subject to reduction, does not exceed the stated
dividend rate or corresponding swap rate of each particular series of the
Preferred Shares for the year.
The Fund's total return on the NAV of the common shares is monitored on a
monthly basis to assess whether the total return on the NAV of the common shares
exceeds the stated dividend rate or corresponding swap rate of each particular
series of Preferred Shares for the period. For the year ended December 31, 2008,
the Fund's total return on the NAV of the common shares did not exceed the
stated dividend rate or corresponding swap rate on any of the outstanding
Preferred Shares. Thus, management fees with respect to the liquidation value of
the preferred share assets were reduced by $4,948,148.
During the year ended December 31, 2008, the Fund paid brokerage
commissions on security trades of $737,066 to Gabelli & Company, Inc. ("Gabelli
& Company"), an affiliate of the Adviser.
The cost of calculating the Fund's NAV per share is a Fund expense pursuant
to the Advisory Agreement between the Fund and the Adviser. During the year
ended December 31, 2008, the Fund paid or accrued $45,000 to the Adviser in
connection with the cost of computing the Fund's NAV.
As per the approval of the Board, the Fund compensates officers of the
Fund, who are employed by the Fund and are not employed by the Adviser (although
the officers may receive incentive based variable compensation from affiliates
of the Adviser) and pays its allocated portion of the cost of the Fund's Chief
Compliance Officer. For the year ended December 31, 2008, the Fund paid or
accrued $215,342, which is included in payroll expenses in the Statement of
Operations.
The Fund pays each Trustee who is not considered to be an affiliated person
an annual retainer of $12,000 plus $1,500 for each Board meeting attended in
person and $500 per telephonic meeting, and they are reimbursed for any out of
pocket expenses incurred in attending meetings. All Board committee members
receive $1,000 per meeting attended. In addition, the Audit Committee Chairman
receives an annual fee of $3,000, the Proxy Voting Committee Chairman receives
an annual fee of $1,500, the Nominating Committee Chairman receives an annual
fee of $2,000, and the Lead Trustee receives an annual fee of $1,000. Trustees
who are directors or employees of the Adviser or an affiliated company receive
no compensation or expense reimbursement from the Fund.
4. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of
securities for the year ended December 31, 2008, other than short-term
securities and U.S Government obligations, aggregated $625,053,238 and
$679,411,774, respectively.
Purchases and sales of U.S. Government obligations for the year ended
December 31, 2008, other than short-term obligations, aggregated $11,516,200 and
$11,360,000, respectively.
5. CAPITAL. The Fund is authorized to issue an unlimited number of common
shares of beneficial interest (par value $0.001). The Board has authorized the
repurchase and retirement of its shares on the open market when the shares are
trading at a discount of 7.5% or more (or such other percentage as the Board may
determine from time to time) from the NAV of the shares. During the year ended
December 31, 2008, the Fund repurchased 300,433 shares of beneficial interest in
the open market at a cost of $3,449,357 and an average discount of approximately
19.07% from its NAV. All shares of beneficial interest repurchased have been
retired.
Transactions in shares of beneficial interest were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2008 DECEMBER 31, 2007
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- -----------
Net decrease from repurchase of common shares .. (300,433) $(3,449,357) (144,100) $(3,091,222)
The Fund's Declaration of Trust, as amended, authorizes the issuance of an
unlimited number of shares of $0.001 par value Cumulative Preferred Shares. The
Cumulative Preferred Shares is senior to the common shares and results in the
financial leveraging of the common shares. Such leveraging tends to magnify both
the risks and opportunities to common shareholders. Dividends on shares of the
Cumulative Preferred Shares are cumulative. The Fund is required by the 1940 Act
and by the Statements of Preferences to meet certain asset coverage tests with
respect to the Cumulative Preferred Shares. If the Fund fails to meet these
requirements and does not correct such failure, the Fund may be required to
redeem, in part or in full, the 5.875% Series A, Series B Auction Market, Series
C Auction Market, 6.00% Series D, and Series E Auction Rate Cumulative Preferred
Shares at redemption prices of $25, $25,000, $25,000, $25, and $25,000,
respectively, per share plus an amount equal to the accumulated and unpaid
dividends whether or not declared on such shares in order to meet these
requirements. Additionally, failure to meet the foregoing asset coverage
requirements could restrict the Fund's ability to pay dividends to common
shareholders and could lead to sales of portfolio securities at inopportune
times. The income received on the Fund's assets may vary in a manner unrelated
to the fixed and variable rates, which could have either a beneficial or
detrimental impact on net investment income and gains available to common
shareholders.
At the Fund's August 15, 2007 Board meeting, the Board approved the filing
of a shelf registration with the SEC which will give the Fund the ability to
offer additional preferred shares. The shelf registration was declared effective
by the SEC on June 17, 2008.
On October 12, 2004, the Fund received net proceeds of $77,280,971 (after
underwriting discounts of $2,520,000 and offering expenses of $199,029) from the
public offering of 3,200,000 shares of 5.875% Series A Cumulative Preferred
Shares. Commencing
17
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 12, 2009 and thereafter, the Fund, at its option, may redeem the 5.875%
Series A Cumulative Preferred Shares in whole or in part at the redemption price
at any time. The Board has authorized the repurchase of Series A Cumulative
Preferred Shares in the open market at prices less than the $25 liquidation
value per share. During the year ended December 31, 2008, the Fund repurchased
and retired 71,584 shares of 5.875% Series A Cumulative Preferred Shares in the
open market at a cost of $1,386,077 and an average discount of approximately
30.39% from its liquidation preference. At December 31, 2008, 3,128,416 shares
of 5.875% Series A Cumulative Preferred Shares were outstanding and accrued
dividends amounted to $76,581.
On October 12, 2004, the Fund received net proceeds of $217,488,958 (after
underwriting discounts of $2,200,000 and offering expenses of $311,042) from the
public offering of 4,000 shares of Series B and 4,800 shares of Series C Auction
Market Cumulative Preferred Shares ("Series B and Series C Shares"),
respectively. The dividend rate, as set by the auction process, which is
generally held every seven days, is expected to vary with short-term interest
rates. Since February 2008, the number of Series B and Series C Shares subject
to bid orders by potential holders has been less than the number of Series B and
Series C Shares subject to sell orders. Therefore, the weekly auctions have
failed, and the dividend rate since then has been the maximum rate. Holders that
have submitted sell orders have not been able to sell any or all of the Series B
or Series C Shares for which they have submitted sell orders. The current
maximum rate for both Series B and Series C Shares is 125 basis points greater
than the seven day Telerate/British Bankers Association LIBOR rate on the day of
such auction. The dividend rates of Series B Shares ranged from 1.575% to 5.500%
during the year ended December 31, 2008. The dividend rates of Series C Shares
ranged from 1.511% to 6.013% during the year ended December 31, 2008. Existing
shareholders may submit an order to hold, bid, or sell such shares on each
auction date. Series B and C Shares shareholders may also trade their shares in
the secondary market. The Fund, at its option, may redeem the Series B and C
Shares in whole or in part at the redemption price at any time. During the year
ended December 31, 2008, the Fund redeemed and retired 400 shares of Series B
and 480 shares of Series C Shares. Shareholders received the redemption price of
$25,000 per share, which was equal to the liquidation preference, together with
any accumulated and unpaid dividends, for each share redeemed. At December 31,
2008, 3,600 and 4,320 shares of the Series B and C Shares were outstanding with
an annualized dividend rate of 1.651% and 1.690% per share and accrued dividends
amounted to $4,128 and $30,420, respectively.
On November 3, 2005, the Fund received net proceeds of $62,617,239 (after
underwriting discounts of $2,047,500 and offering expenses of $335,261) from the
public offering of 2,600,000 shares of 6.00% Series D Cumulative Preferred
Shares. Commencing November 3, 2010 and thereafter, the Fund, at its option, may
redeem the 6.00% Series D Cumulative Preferred Shares in whole or in part at the
redemption price at any time. The Board has authorized the repurchase of Series
D Cumulative Preferred Shares in the open market at prices less than the $25
liquidation value per share. During the year ended December 31, 2008, the Fund
repurchased and retired 23,466 shares of 6.00% Series D Cumulative Preferred
Shares in the open market at a cost of $471,019 and an average discount of
approximately 19.76% from its liquidation preference. At December 31, 2008,
2,576,534 shares of 6.00% Series D Cumulative Preferred Shares were outstanding
and accrued dividends amounted to $64,413.
On November 3, 2005, the Fund received net proceeds of $133,379,387 (after
underwriting discounts of $1,350,000 and offering expenses of $270,613) from the
public offering of 5,400 shares of Series E Auction Rate Cumulative Preferred
Shares ("Series E Shares"). The dividend rate, as set by the auction process,
which is generally held every seven days, is expected to vary with short-term
interest rates. Since February 2008 the number of Series E Shares subject to bid
orders by potential holders has been less than the number of Series E Shares
subject to sell orders. Therefore the weekly auctions have failed, and the
dividend rate since then has been the maximum rate. Holders that have submitted
sell orders have not been able to sell any or all of the Series E Shares for
which they have submitted sell orders. The current maximum rate is 150 basis
points greater than the seven day Telerate/British Bankers Association LIBOR
rate on the day of such auction. The dividend rates of Series E Shares ranged
from 1.770% to 6.778% during the year ended December 31, 2008. Existing
shareholders may submit an order to hold, bid, or sell such shares on each
auction date. Shareholders of the Series E Shares may also trade their shares in
the secondary market. The Fund, at its option, may redeem the Series E Shares in
whole or in part at the redemption price at any time. During the year ended
December 31, 2008, the Fund redeemed and retired 540 shares of Series E Shares.
Shareholders received the redemption price of $25,000 per share, which was equal
to the liquidation preference together, with any accumulated and unpaid
dividends, for each share redeemed. At December 31, 2008, 4,860 shares of Series
E Shares were outstanding with an annualized dividend rate of 1.940% and accrued
dividends amounted to $39,285.
The holders of Cumulative Preferred Shares generally are entitled to one
vote per share held on each matter submitted to a vote of shareholders of the
Fund and will vote together with holders of common shares as a single class. The
holders of Cumulative Preferred Shares voting together as a single class also
have the right currently to elect two Trustees and under certain circumstances
are entitled to elect a majority of the Board of Trustees. In addition, the
affirmative vote of a majority of the votes entitled to be cast by holders of
all outstanding shares of the Preferred Shares, voting as a single class, will
be required to approve any plan of
18
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
reorganization adversely affecting the Preferred Shares, and the approval of
two-thirds of each class, voting separately, of the Fund's outstanding voting
stock must approve the conversion of the Fund from a closed-end to an open-end
investment company. The approval of a majority (as defined in the 1940 Act) of
the outstanding Preferred Shares and a majority (as defined in the 1940 Act) of
the Fund's outstanding voting securities are required to approve certain other
actions, including changes in the Fund's investment objectives or fundamental
investment policies.
6. TRANSACTIONS IN SECURITIES OF AFFILIATED ISSUERS. The 1940 Act defines
affiliated issuers as those in which the Fund's holdings of an issuer represent
5% or more of the outstanding voting securities of the issuer. A summary of the
Fund's transactions in the securities of this issuer during the year ended
December 31, 2008 is set forth below:
PERCENT
NET CHANGE IN VALUE AT OWNED OF
BEGINNING SHARES ENDING UNREALIZED REALIZED DECEMBER 31, SHARES
SHARES SOLD SHARES DEPRECIATION LOSS 2008 OUTSTANDING
--------- ------- ------- ------------- --------- ------------ -----------
Trans-Lux Corp. 293,900 (23,900) 270,000 $(1,498,827) $(110,507) $207,900 13.37%
7. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
8. OTHER MATTERS. On April 24, 2008, the Adviser entered into an administrative
settlement with the SEC to resolve the SEC's inquiry regarding prior frequent
trading activity in shares of the GAMCO Global Growth Fund (the "Global Growth
Fund") by one investor who was banned from the Global Growth Fund in August
2002. In the settlement, the SEC found that the Adviser had violated Section
206(2) of the Investment Advisers Act, Section 17(d) of the 1940 Act, and Rule
17d-1 thereunder and had aided and abetted and caused violations of Section
12(d)(1)(B)(i) of the 1940 Act. Under the terms of the settlement, the Adviser,
while neither admitting nor denying the SEC's findings and allegations, agreed,
among other things, to pay the previously reserved total of $16 million
(including a $5 million penalty), of which at least $11 million will be
distributed to shareholders of the Global Growth Fund in accordance with a plan
to be developed by an independent distribution consultant and approved by the
independent directors of the Global Growth Fund and the staff of the SEC and to
cease and desist from future violations of the above referenced federal
securities laws. The settlement is not expected to impact the Fund and will not
have a material adverse impact on the Adviser or its ability to fulfill its
obligations under the Advisory Agreement. On the same day, the SEC filed a civil
action against the Executive Vice President and Chief Operating Officer of the
Adviser, alleging violations of certain federal securities laws arising from the
same matter. The officer is also an officer of the Global Growth Fund and other
funds in the Gabelli/GAMCO fund complex including the Fund. The officer denies
the allegations and is continuing in his positions with the Adviser and the
funds. The Adviser currently expects that any resolution of the action against
the officer will not have a material adverse impact on the Adviser or its
ability to fulfill its obligations under the Advisory Agreement.
In a separate matter, on January 12, 2009, the SEC issued an administrative
action approving a final settlement of a previously disclosed matter with the
Adviser involving compliance with Section 19(a) of the Investment Company Act of
1940 and Rule 19a-1 thereunder by two closed-end funds. These provisions require
registered investment companies when making a distribution in the nature of a
dividend from sources other than net investment income to contemporaneously
provide written statements to shareholders, which adequately disclose the source
or sources of such distribution. While the two funds sent annual statements and
provided other materials containing this information, the shareholders did not
receive the notices required by Rule 19a-1 with any of the distributions that
were made for 2002 and 2003. The Adviser believes that the funds have been in
compliance with Section 19(a) and Rule 19a-1 since the beginning of 2004. As
part of the settlement, in which the Adviser neither admits nor denies the
findings by the SEC, the Adviser agreed to pay a civil monetary penalty of
$450,000 and to cease and desist from causing violations of Section 19(a) and
Rule 19a-1. In connection with the settlement, the SEC noted the remedial
actions previously undertaken by the Adviser. The staff's notice to the Adviser
did not relate to the Fund.
19
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
(hereafter referred to as the "Trust") at December 31, 2008, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2008 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 27, 2009
20
THE GABELLI DIVIDEND & INCOME TRUST
ADDITIONAL FUND INFORMATION (UNAUDITED)
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees. Information pertaining to the Trustees and officers of
the Fund is set forth below. The Fund's Statement of Additional Information
includes additional information about the Fund's Trustees and is available
without charge, upon request, by calling 800-GABELLI (800-422-3554) or by
writing to The Gabelli Dividend & Income Trust at One Corporate Center, Rye, NY
10580-1422.
TERM OF NUMBER OF FUNDS
NAME, POSITION(S) OFFICE AND IN FUND COMPLEX
ADDRESS(1) LENGTH OF 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** 26 Chairman and Chief Executive Officer Director of Morgan Group
Trustee and of GAMCO Investors, Inc. and Chief Holdings, Inc. (holding
Chief Investment Officer Investment Officer - Value Portfolios company); Chairman of the
Age: 66 of Gabelli Funds, LLC and GAMCO Asset Board of LICT Corp.
Management Inc.; Director/Trustee or (multimedia and
Chief Investment Officer of other communication services
registered investment companies in company)
the Gabelli/GAMCO Funds complex;
Chairman and Chief Executive Officer
of GGCP, Inc.
SALVATORE M. SALIBELLO Since 2003* 3 Certified Public Accountant and --
Trustee Managing Partner of the public
Age: 63 accounting firm Salibello & Broder
LLP since 1978
EDWARD T. TOKAR Since 2003* 2 Senior Managing Director of Beacon --
Trustee Trust Company (trust services) since
Age: 61 2004; Chief Executive Officer of
Allied Capital Management LLC
(1977-2004); Vice President of
Honeywell International Inc.
(1977-2004); Director of Teton
Advisors, Inc. (financial services)
(2008-present)
INDEPENDENT TRUSTEES(5):
ANTHONY J. COLAVITA Since 2003*** 36 Partner in the law firm of Anthony J. --
Trustee Colavita, P.C.
Age: 73
JAMES P. CONN Since 2003* 18 Former Managing Director and Chief --
Trustee Investment Officer of Financial
Age: 70 Security Assurance Holdings Ltd.
(insurance holding company)
(1992-1998)
MARIO D'URSO Since 2003** 5 Chairman of Mittel Capital Markets --
Trustee S.p.A. since 2001; Senator in the
Age: 68 Italian Parliament (1996-2001)
FRANK J. FAHRENKOPF, JR. Since 2003*** 6 President and Chief Executive Officer --
Trustee of the American Gaming Association;
Age: 69 Co-Chairman of the Commission on
Presidential Debates; Former Chairman
of the Republican National Committee
(1983-1989)
MICHAEL J. MELARKEY Since 2003** 5 Partner in the law firm of Avansino, Director of Southwest Gas
Trustee Melarkey, Knobel & Mulligan Corporation (natural gas
Age: 59 utility)
ANTHONIE C. VAN EKRIS Since 2003*** 20 Chairman of BALMAC International, --
Trustee Inc. (commodities and futures
Age: 74 trading)
SALVATORE J. ZIZZA Since 2003*** 28 Chairman of Zizza & Co., Ltd. Director of Hollis-Eden
Trustee (consulting) Pharmaceuticals
Age: 63 (biotechnology) and Earl
Scheib, Inc. (automotive
services)
21
THE GABELLI DIVIDEND & INCOME TRUST
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
TERM OF
NAME, POSITION(S) OFFICE AND
ADDRESS(1) LENGTH OF PRINCIPAL OCCUPATION(S)
AND AGE TIME SERVED(2) DURING PAST FIVE YEARS
--------------------------- -------------- -------------------------------------------------------------------------------------
OFFICERS:
BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988
President and an officer of all of the registered investment companies in the Gabelli/GAMCO
Age: 57 Funds complex. Director and President of Teton Advisors, Inc. (formerly Gabelli
Advisers, Inc.) since 1998
CARTER W. AUSTIN Since 2003 Vice President of The Gabelli Equity Trust since 2000, The Gabelli Global Gold,
Vice President Natural Resources & Income Trust since 2005, The Gabelli Global Deal Fund since 2006,
Age: 42 and The Gabelli Healthcare & WellnessRx Trust since 2007; Vice President of Gabelli
Funds, LLC since 1996
PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs at GAMCO Investors, Inc. since 2004; Chief Compliance
Chief Compliance Officer Officer of all of the registered investment companies in the Gabelli/GAMCO Funds
Age: 55 complex; Vice President of Goldman Sachs Asset Management from 2000 through 2004
AGNES MULLADY Since 2006 Vice President of Gabelli Funds, LLC since 2007; Officer of all of the registered
Treasurer and Secretary investment companies in the Gabelli/GAMCO Funds complex; Senior Vice President of
Age: 50 U.S. Trust Company, N.A. and Treasurer and Chief Financial Officer of Excelsior Funds
from 2004 through 2005; Chief Financial Officer of AMIC Distribution Partners from
2002 through 2004
----------------
(1) Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
(2) The Fund's Board of Trustees is divided into three classes, each class
having a term of three years. Each year the term of office of one class
expires and the successor or successors elected to such class serve for a
three year term. The three year term for each class expires as follows:
* - Term expires at the Fund's 2009 Annual Meeting of Shareholders or
until their successors are duly elected and qualified.
** - Term expires at the Fund's 2010 Annual Meeting of Shareholders or
until their successors are duly elected and qualified.
*** - Term expires at the Fund's 2011 Annual Meeting of Shareholders or
until their successors are duly elected and qualified.
Each officer will hold office for an indefinite term until the date he or
she resigns or retires or until his or her successor is elected and
qualified.
(3) "Interested person" of the Fund, as defined in the 1940 Act. Mr. Gabelli is
an "interested person" of the Fund as a result of his employment as an
officer of the Adviser. Mr. Gabelli is also a registered representative of
an affiliated broker-dealer. Mr. Tokar is an "interested person" as a
result of his son's employment by an affiliate of the Adviser. Mr.
Salibello may be considered an "interested person" of the Fund as a result
of being a partner in an accounting firm that provides professional
services to affiliates of the Adviser.
(4) This column includes only directorships of companies required to report to
the SEC under the Securities Exchange Act of 1934, as amended (i.e. public
companies) or other investment companies registered under the 1940 Act.
(5) Trustees who are not interested persons are considered "Independent"
Trustees.
CERTIFICATIONS
The Fund's Chief Executive Officer has certified to the New York Stock
Exchange ("NYSE") that, as of June 17, 2008, he was not aware of any violation
by the Fund of applicable NYSE corporate governance listing standards. The Fund
reports to the SEC on Form N-CSR which contains certifications by the Fund's
principal executive officer and principal financial officer that relate to the
Fund's disclosure in such reports and that are required by Rule 30a-2(a) under
the 1940 Act.
22
THE GABELLI DIVIDEND & INCOME TRUST
INCOME TAX INFORMATION (UNAUDITED)
DECEMBER 31, 2008
CASH DIVIDENDS AND DISTRIBUTIONS
TOTAL AMOUNT ORDINARY LONG-TERM DIVIDEND
PAYABLE RECORD PAID INVESTMENT CAPITAL RETURN OF REINVESTMENT
DATE DATE PER SHARE (A) INCOME (A) GAINS (A) CAPITAL (C) PRICE
-------- -------- ------------- ---------- --------- ----------- ------------
COMMON SHARES
01/25/08 01/16/08 $0.10000 $0.02080 $0.00120 $0.07800 $18.5075
02/25/08 02/14/08 0.10000 0.02080 0.00120 0.07800 18.9636
03/25/08 03/17/08 0.11000 0.02410 0.00010 0.08580 18.1676
04/24/08 04/16/08 0.10000 0.02200 0.00000 0.07800 18.9272
05/23/08 05/15/08 0.10000 0.02200 0.00000 0.07800 19.4711
06/24/08 06/16/08 0.11000 0.02420 0.00000 0.08580 18.2657
07/25/08 07/17/08 0.11000 0.02420 0.00000 0.08580 16.9319
08/25/08 08/15/08 0.11000 0.02420 0.00000 0.08580 16.8740
09/24/08 09/16/08 0.11000 0.02420 0.00000 0.08580 14.6840
10/27/08 10/17/08 0.11000 0.02420 0.00000 0.08580 9.9741
11/21/08 11/13/08 0.11000 0.02420 0.00000 0.08580 8.9659
12/17/08 12/12/08 0.11000 0.02420 0.00000 0.08580 9.9470
-------- -------- -------- --------
$1.28000 $0.27910 $0.00250 $0.99840
5.875% SERIES A CUMULATIVE PREFERRED SHARES
03/26/28 03/18/08 $0.36719 $0.36426 $0.00293
06/26/08 06/19/08 0.36719 0.36719 0.00000
09/26/08 09/19/08 0.36719 0.36719 0.00000
12/26/08 12/18/08 0.36719 0.36719 0.00000
-------- -------- --------
$1.46876 $1.46583 $0.00293
6.000% SERIES D CUMULATIVE PREFERRED SHARES
03/26/28 03/18/08 $0.37500 $0.37200 $0.00300
06/26/08 06/19/08 0.37500 0.37500 0.00000
09/26/08 09/19/08 0.37500 0.37500 0.00000
12/26/08 12/18/08 0.37500 0.37500 0.00000
-------- -------- --------
$1.50000 $1.49700 $0.00300
SERIES B AND C AUCTION MARKET CUMULATIVE AND SERIES E AUCTION RATE CUMULATIVE
PREFERRED SHARES
The Series B Auction Market Cumulative Preferred Shares, Series C Auction
Market Cumulative Preferred Shares, and Series E Auction Rate Cumulative
Preferred Shares pay dividends weekly based on a rate set at auction, usually
held every seven days. The percentage of 2008 distributions derived from
long-term capital gains for the Series B Auction Market Cumulative Preferred
Shares, Series C Auction Market Cumulative Preferred Shares, and Series E
Auction Rate Cumulative Preferred Shares was 0.198%, 0.199%, and 0.198%,
respectively.
A Form 1099-DIV has been mailed to all shareholders of record for the
distributions mentioned above, setting forth specific amounts to be included in
the 2008 tax returns. Ordinary income distributions include net investment
income and realized net short-term capital gains. Ordinary income is reported in
box 1a of Form 1099-DIV. Capital gain distributions are reported in box 2 of
Form 1099-DIV. The long-term gain distribution for the year ended December 31,
2008 is $254,423, or the maximum allowable.
23
THE GABELLI DIVIDEND & INCOME TRUST
INCOME TAX INFORMATION (CONTINUED) (UNAUDITED)
DECEMBER 31, 2008
CORPORATE DIVIDENDS RECEIVED DEDUCTION, QUALIFIED DIVIDEND INCOME, AND U.S.
GOVERNMENT SECURITIES INCOME
In 2008, the Fund paid to common, 5.875% Series A, and 6.00% Series D
Cumulative Preferred shareholders ordinary income dividends of $0.27910,
$1.4658255, and $1.49700 per share, respectively. The Fund paid weekly
distributions to Series B, C, and E preferred shareholders at varying rates
throughout the year, including ordinary income dividends totaling $944.35220,
$966.50741, and $1,044.21367 per share, respectively. For the year ended
December 31, 2008, 76.0% of the ordinary dividend qualified for the dividends
received deduction available to corporations, and 100.00% of the ordinary income
distribution was qualified dividend income. The percentage of ordinary income
dividends paid by the Fund during 2008 derived from U.S. Treasury securities was
1.03%. Such income is exempt from state and local tax in all states. However,
many states, including New York and California, allow a tax exemption for a
portion of the income earned only if a mutual fund has invested at least 50% of
its assets at the end of each quarter of the Fund's fiscal year in U.S.
Government securities. The Fund did not meet this strict requirement in 2008.
The percentage of net assets of U.S. Treasury securities held as of December 31,
2008 was 7.5%.
HISTORICAL DISTRIBUTION SUMMARY
SHORT-TERM LONG-TERM RETURN OF TOTAL ADJUSTMENT
INVESTMENT CAPITAL CAPITAL CAPITAL DISTRIBUTIONS TO COST
INCOME (B) GAINS (B) GAINS (C) (A) BASIS (D)
---------- ---------- ---------- --------- ------------- ----------
COMMON SHARES
2008........................ $0.27910 -- $0.00250 $0.99840 $1.28000 $0.99840
2007........................ 0.50910 $0.23480 0.91610 -- 1.66000 --
2006........................ 0.60798 0.24082 0.69120 -- 1.54000 --
2005........................ 0.45996 0.08568 0.65436 -- 1.20000 --
2004........................ 0.40005 0.10023 0.13893 0.56079 1.20000 0.56079
5.875% SERIES A CUMULATIVE PREFERRED SHARES
2008........................ $1.46583 -- $0.00292 -- $1.46875 --
2007........................ 0.45059 $0.20776 0.81040 -- 1.46875 --
2006........................ 0.57983 0.22967 0.65925 -- 1.46875 --
2005........................ 0.56290 0.10493 0.80092 -- 1.46875 --
2004........................ 0.19150 0.04798 0.06651 -- 0.30599 --
6.000% SERIES D CUMULATIVE PREFERRED SHARES
2008........................ $1.49700 -- $0.00300 -- $1.50000 --
2007........................ 0.46020 $0.21220 0.82760 -- 1.50000 --
2006........................ 0.59215 0.23457 0.67328 -- 1.50000 --
2005........................ 0.08620 0.01610 0.12270 -- 0.22500 --
AUCTION MARKET/RATE CUMULATIVE PREFERRED SHARES
2008 Class B Shares......... $ 944.35220 -- $ 1.87780 -- $ 946.23000 --
2008 Class C Shares......... 966.50741 -- 1.92259 -- 968.43000 --
2008 Class E Shares......... 1,044.21367 -- 2.07633 -- 1,046.29000 --
2007 Class B Shares......... 414.02782 190.66719 743.74499 -- 1,348.44000 --
2007 Class C Shares......... 409.97064 188.64406 735.87530 -- 1,334.49000 --
2007 Class E Shares......... 407.63287 187.65002 731.97711 -- 1,327.26000 --
2006 Class B Shares......... 484.90820 192.07260 551.32920 -- 1228.31000 --
2006 Class C Shares......... 484.32800 191.84250 550.66950 -- 1226.84000 --
2006 Class E Shares......... 483.94880 191.69260 550.23860 -- 1225.88000 --
2005 Class B Shares......... 320.22640 59.69220 455.63150 -- 835.55000 --
2005 Class C Shares......... 324.19300 60.43160 461.27540 -- 845.90000 --
2005 Class E Shares......... 67.54440 12.59070 96.10490 -- 176.24000 --
2004 Class B Shares......... 68.71140 17.21520 23.86340 -- 109.80000 --
2004 Class C Shares......... 70.77030 17.73100 24.57840 -- 113.10000 --
----------
(a) Total amounts may differ due to rounding.
(b) Taxable as ordinary income for federal tax purposes.
(c) Non-taxable.
(d) Decrease in cost basis.
All designations are based on financial information available as of the
date of this annual report and, accordingly, are subject to change. For each
item, it is the intention of the Fund to designate the maximum amount permitted
under the Internal Revenue Code and the regulations thereunder.
24
THE GABELLI DIVIDEND & INCOME TRUST
ANNUAL APPROVAL OF CONTINUANCE OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
During the six months ended December 31, 2008, the Board of Trustees of the
Trust approved the continuation of the investment advisory agreement with the
Adviser for the Trust on the basis of the recommendation by the trustees (the
"Independent Board Members") who are not "interested persons" of the Trust. The
following paragraphs summarize the material information and factors considered
by the Independent Board Members as well as their conclusions relative to such
factors.
1) THE NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY THE ADVISER.
The Independent Board Members considered information regarding the portfolio
managers, the depth of the analyst pool available to the Adviser and the
portfolio managers, the scope of administrative, shareholder, and other services
supervised or provided by the Adviser and the absence of significant service
problems reported to the Board. The Independent Board Members noted the
experience, length of service, and reputation of the portfolio managers.
2) THE PERFORMANCE OF THE FUND, THE ADVISER.
The Independent Board Members reviewed the performance of the Fund over one,
two, and three year periods against a peer group of equity closed-end funds
prepared by Lipper. The Board Members noted the Fund's below average relative
performance for the one year period, average relative performance for the two
year period, and above average performance for the three year period. The Board
Members also noted that the Fund has not achieved its initial goal of earning at
least 9% per year.
3) THE COST OF THE ADVISORY SERVICES AND THE PROFITS TO THE ADVISER AND ITS
AFFILIATES FROM THE RELATIONSHIP WITH THE FUND.
The Independent Board Members reviewed summary data regarding the profitability
of the Fund to the Adviser.
4) THE EXTENT TO WHICH ECONOMIES OF SCALE WILL BE REALIZED AS THE FUND GROWS AND
WHETHER FEE LEVELS REFLECT THOSE ECONOMIES OF SCALE.
The Independent Board Members noted that the Fund was a closed-end fund trading
at a discount to net asset value and accordingly unlikely to achieve growth of
the type that might lead to economies of scale that the shareholders would not
participate in. The Independent Board Members noted that the investment
management fee schedule for the Fund does not take into account any potential
economies of scale that may develop.
5) OTHER FACTORS.
The Independent Board Members compared the expense ratios of the investment
management fee, other expenses, and total expenses of the Fund with similar
expense ratios of the Lipper peer group of equity closed-end value funds and
noted that the Adviser's management fee includes substantially all
administrative services of the Fund as well as investment advisory services. The
Board noted that the Fund was larger than average within the peer group and that
its expense ratios were slightly below average. The Board Members also noted
that the management fee structure was the same as that in effect for most of the
Gabelli funds. The Board Members were presented with, but did not attach
significance to, information comparing the management fee to the fee for other
types of accounts managed by an affiliate of the Adviser.
The Independent Board Members concluded that the Fund enjoyed highly experienced
portfolio management services, good ancillary services, and a favorable
performance record. The Independent Board Members also concluded that the Fund's
expense ratios and the profitability to the Adviser of managing the Fund were
reasonable, and that economies of scale were not a significant factor in their
thinking. The Board Members did not view the potential profitability of
ancillary services as material to their decision. On the basis of the foregoing
and without assigning particular weight to any single conclusion, the
Independent Board Members determined to recommend continuation of the Advisory
Agreement to the full Board of Board Members.
The Annual Meeting of The Gabelli Dividend & Income Trust's shareholders will be
held on Monday, May 18, 2009 at the Greenwich Library in Greenwich, Connecticut.
25
THE GABELLI DIVIDEND & INCOME TRUST
AND YOUR PERSONAL PRIVACY
WHO ARE WE?
The Gabelli Dividend & Income Trust (the "Fund") is a closed-end management
investment company registered with the Securities and Exchange Commission under
the Investment Company Act of 1940. We are managed by Gabelli Funds, LLC, which
is affiliated with GAMCO Investors, Inc. GAMCO Investors, Inc. is a publicly
held company that has subsidiaries that provide investment advisory or brokerage
services for a variety of clients.
WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A
SHAREHOLDER?
When you purchase shares of the Fund on the New York Stock Exchange, you have
the option of registering directly with our transfer agent in order, for
example, to participate in our dividend reinvestment plan.
- INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include your
name, address, telephone number, social security number, bank account
number, and other information.
- INFORMATION ABOUT YOUR TRANSACTIONS WITH US. This would include information
about the shares that you buy or sell; it may also include information
about whether you sell or exercise rights that we have issued from time to
time. If we hire someone else to provide services--like a transfer
agent-- we will also have information about the transactions that you
conduct through them.
WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT?
We do not disclose any non-public personal information about our customers or
former customers to anyone other than our affiliates, our service providers who
need to know such information, and as otherwise permitted by law. If you want to
find out what the law permits, you can read the privacy rules adopted by the
Securities and Exchange Commission. They are in volume 17 of the Code of Federal
Regulations, Part 248. The Commission often posts information about its
regulations on its website, www.sec.gov.
WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION?
We restrict access to non-public personal information about you to the people
who need to know that information in order to provide services to you or the
Fund and to ensure that we are complying with the laws governing the securities
business. We maintain physical, electronic, and procedural safeguards to keep
your personal information confidential.
TRUSTEES AND OFFICERS
THE GABELLI DIVIDEND & INCOME TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422
TRUSTEES
Mario J. Gabelli, CFA
CHAIRMAN & CHIEF EXECUTIVE OFFICER,
GAMCO INVESTORS, INC.
Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.
James P. Conn
FORMER MANAGING DIRECTOR &
CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Mario d'Urso
FORMER ITALIAN SENATOR
Frank J. Fahrenkopf, Jr.
PRESIDENT & CHIEF EXECUTIVE OFFICER,
AMERICAN GAMING ASSOCIATION
Michael J. Melarkey
ATTORNEY-AT-LAW,
AVANSINO, MELARKEY, KNOBEL & MULLIGAN
Salvatore M. Salibello
CERTIFIED PUBLIC ACCOUNTANT,
SALIBELLO & BRODER, LLP
Edward T. Tokar
SENIOR MANAGING DIRECTOR,
BEACON TRUST COMPANY
Anthonie C. van Ekris
CHAIRMAN, BALMAC INTERNATIONAL, INC.
Salvatore J. Zizza
CHAIRMAN, ZIZZA & CO., LTD.
OFFICERS
Bruce N. Alpert
PRESIDENT
Carter W. Austin
VICE PRESIDENT
Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
Agnes Mullady
TREASURER AND SECRETARY
INVESTMENT ADVISER
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
CUSTODIAN
State Street Bank and Trust Company
COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
TRANSFER AGENT AND REGISTRAR
Computershare Trust Company, N.A.
STOCK EXCHANGE LISTING
5.875% 6.00%
Common Preferred Preferred
---------- --------- ---------
NYSE-Symbol: GDV GDV PrA GDV PrD
Shares Outstanding: 83,528,637 3,128,416 2,576,534
The Net Asset Value per share appears in the Publicly Traded Funds column, under
the heading "General Equity Funds," in Monday's The Wall Street Journal. It is
also listed in Barron's Mutual Funds/Closed End Funds section under the heading
"General Equity Funds."
The Net Asset Value per share may be obtained each day by calling (914) 921-5070
or visiting www.gabelli.com.
For general information about the Gabelli Funds, call 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: WWW.GABELLI.COM, or e-mail us at: closedend@gabelli.com
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may, from time to time, purchase
its common shares in the open market when the Fund's shares are trading at a
discount of 7.5% or more from the net asset value of the shares. The Fund may
also, from time to time, purchase its preferred shares in the open market when
the preferred shares are trading at a discount to the liquidation value.
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 GDV Q4/2008
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
$53,250 for 2007 and $62,700 for 2008.
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 $6,300 for 2007 and $9,145 for 2008. 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 $4,350 for 2007 and $5,000
for 2008. 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 2007 and $0 for 2008.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pre-Approval Policies and Procedures. The Audit Committee ("Committee")
of the registrant is responsible for pre-approving (i) all audit and
permissible non-audit services to be provided by the independent
registered public accounting firm to the registrant and (ii) all
permissible non-audit services to be provided by the independent
registered public accounting firm to the Adviser, Gabelli Funds, LLC,
and any affiliate of Gabelli Funds, LLC ("Gabelli") that provides
services to the registrant (a "Covered Services Provider") if the
independent registered public accounting firm's engagement related
directly to the operations and financial reporting of the registrant.
The Committee may delegate its responsibility to pre-approve any such
audit and permissible non-audit services to the Chairperson of the
Committee, and the Chairperson must report to the Committee, at its
next regularly scheduled meeting after the Chairperson's pre-approval
of such services, his or her decision(s). The Committee may also
establish detailed pre-approval policies and procedures for
pre-approval of such services in accordance with applicable laws,
including the delegation of some or all of the Committee's pre-approval
responsibilities to the other persons (other than Gabelli or the
registrant's officers). Pre-approval by the Committee of any
permissible non-audit services is not required so long as: (i) the
permissible non-audit services were not recognized by the registrant at
the time of the engagement to be non-audit services; and (ii) such
services are promptly brought to the attention of the Committee and
approved by the Committee or Chairperson prior to the completion of the
audit.
(e)(2) The percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) 100%
(c) 100%
(d) N/A
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was zero percent (0%).
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $0 for 2007 and $0 for 2008.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately designated audit committee consisting of the
following members: Frank J. Fahrenkopf, Jr., Anthonie C. van Ekris and Salvatore
J. Zizza.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are attached herewith.
THE VOTING OF PROXIES ON BEHALF OF CLIENTS
Rules 204(4)-2 and 204-2 under the Investment Advisers Act of 1940 and
Rule 30b1-4 under the Investment Company Act of 1940 require investment advisers
to adopt written policies and procedures governing the voting of proxies on
behalf of their clients.
These procedures will be used by GAMCO Asset Management Inc., Gabelli
Funds, LLC, Gabelli Securities, Inc., and Teton Advisors, Inc. (collectively,
the "Advisers") to determine how to vote proxies relating to portfolio
securities held by their clients, including the procedures that the Advisers use
when a vote presents a conflict between the interests of the shareholders of an
investment company managed by one of the Advisers, on the one hand, and those of
the Advisers; the principal underwriter; or any affiliated person of the
investment company, the Advisers, or the principal underwriter. These procedures
will not apply where the Advisers do not have voting discretion or where the
Advisers have agreed to with a client to vote the client's proxies in accordance
with specific guidelines or procedures supplied by the client (to the extent
permitted by ERISA).
I. PROXY VOTING COMMITTEE
The Proxy Voting Committee was originally formed in April 1989 for the
purpose of formulating guidelines and reviewing proxy statements within the
parameters set by the substantive proxy voting guidelines originally published
in 1988 and updated periodically, a copy of which are appended as Exhibit A. The
Committee will include representatives of Research, Administration, Legal, and
the Advisers. Additional or replacement members of the Committee will be
nominated by the Chairman and voted upon by the entire Committee.
Meetings are held as needed basis to form views on the manner in
which the Advisers should vote proxies on behalf of their clients.
In general, the Director of Proxy Voting Services, using the Proxy
Guidelines, recommendations of Institutional Shareholder Corporate Governance
Service ("ISS"), other third-party services and the analysts of Gabelli &
Company, Inc., will determine how to vote on each issue. For non-controversial
matters, the Director of Proxy Voting Services may vote the proxy if the vote is
(1) consistent with the recommendations of the issuer's Board of Directors and
not contrary to the Proxy Guidelines; (2) consistent with the recommendations of
the issuer's Board of Directors and is a non-controversial issue not covered by
the Proxy Guidelines; or (3) the vote is contrary to the recommendations of the
Board of Directors but is consistent with the Proxy Guidelines. In those
instances, the Director of Proxy Voting Services or the Chairman of the
Committee may sign and date the proxy statement indicating how each issue will
be voted.
All matters identified by the Chairman of the Committee, the Director
of Proxy Voting Services or the Legal Department as controversial, taking into
account the recommendations of ISS or other third party services and the
analysts of Gabelli & Company, Inc., will be presented to the Proxy Voting
Committee. If the Chairman of the Committee, the Director of Proxy Voting
Services or the Legal Department has identified the matter as one that (1) is
controversial; (2) would benefit from deliberation by the Proxy Voting
Committee; or (3) may give rise to a conflict of interest between the Advisers
and their clients, the Chairman of the Committee will initially determine what
vote to recommend that the Advisers should cast and the matter will go before
the Committee.
1
A. CONFLICTS OF INTEREST.
The Advisers have implemented these proxy voting procedures in
order to prevent conflicts of interest from influencing their
proxy voting decisions. By following the Proxy Guidelines, as
well as the recommendations of ISS, other third-party services
and the analysts of Gabelli & Company, the Advisers are able
to avoid, wherever possible, the influence of potential
conflicts of interest. Nevertheless, circumstances may arise
in which one or more of the Advisers are faced with a conflict
of interest or the appearance of a conflict of interest in
connection with its vote. In general, a conflict of interest
may arise when an Adviser knowingly does business with an
issuer, and may appear to have a material conflict between its
own interests and the interests of the shareholders of an
investment company managed by one of the Advisers regarding
how the proxy is to be voted. A conflict also may exist when
an Adviser has actual knowledge of a material business
arrangement between an issuer and an affiliate of the Adviser.
In practical terms, a conflict of interest may arise, for
example, when a proxy is voted for a company that is a client
of one of the Advisers, such as GAMCO Asset Management Inc. A
conflict also may arise when a client of one of the Advisers
has made a shareholder proposal in a proxy to be voted upon by
one or more of the Advisers. The Director of Proxy Voting
Services, together with the Legal Department, will scrutinize
all proxies for these or other situations that may give rise
to a conflict of interest with respect to the voting of
proxies.
B. OPERATION OF PROXY VOTING COMMITTEE
For matters submitted to the Committee, each member of the
Committee will receive, prior to the meeting, a copy of the
proxy statement, any relevant third party research, a summary
of any views provided by the Chief Investment Officer and any
recommendations by Gabelli & Company, Inc. analysts. The Chief
Investment Officer or the Gabelli & Company, Inc. analysts may
be invited to present their viewpoints. If the Director of
Proxy Voting Services or the Legal Department believe that the
matter before the committee is one with respect to which a
conflict of interest may exist between the Advisers and their
clients, counsel will provide an opinion to the Committee
concerning the conflict. If the matter is one in which the
interests of the clients of one or more of Advisers may
diverge, counsel will so advise and the Committee may make
different recommendations as to different clients. For any
matters where the recommendation may trigger appraisal rights,
counsel will provide an opinion concerning the likely risks
and merits of such an appraisal action.
2
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
3
In the event that the Board of Directors (or a Committee thereof) of
one or more of the investment companies managed by one of the Advisers has
retained direct voting control over any security, the Proxy Voting Department
will provide each Board Member (or Committee member) with a copy of the proxy
statement together with any other relevant information including recommendations
of ISS or other third-party services.
IV. VOTING RECORDS
The Proxy Voting Department will retain a record of matters voted upon
by the Advisers for their clients. The Advisers will supply information on how
an account voted its proxies upon request.
A letter is sent to the custodians for all clients for which the
Advisers have voting responsibility instructing them to forward all proxy
materials to:
[Adviser name]
Attn: Proxy Voting Department
One Corporate Center
Rye, New York 10580-1433
The sales assistant sends the letters to the custodians along with the
trading/DTC instructions. Proxy voting records will be retained in compliance
with Rule 204-2 under the Investment Advisers Act.
V. VOTING PROCEDURES
1. Custodian banks, outside brokerage firms and clearing firms are responsible
for forwarding proxies directly to the Advisers.
Proxies are received in one of two forms:
o Shareholder Vote Authorization Forms ("VAFs") - Issued by Broadridge
Financial Solutions, Inc. ("Broadridge") VAFs must be voted through the
issuing institution causing a time lag. Broadridge is an outside service
contracted by the various institutions to issue proxy materials.
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
4. Upon receipt of instructions from the proxy committee (see Administrative),
the votes are cast and recorded for each account on an individual basis.
Records have been maintained on the Proxy Edge system. The system is backed up
regularly.
Proxy Edge records include:
Security Name and Cusip Number
Date and Type of Meeting (Annual, Special, Contest)
Client Name
Adviser or Fund Account Number
Directors' Recommendation
How GAMCO voted for the client on each issue
5. VAFs are kept alphabetically by security. Records for the current proxy
season are located in the Proxy Voting Department office. In preparation for the
upcoming season, files are transferred to an offsite storage facility during
January/February.
6. Shareholder Vote Authorization Forms issued by Broadridge are always sent
directly to a specific individual at Broadridge.
7. If a proxy card or VAF is received too late to be voted in the conventional
matter, every attempt is made to vote on one of the following manners:
o VAFs can be faxed to Broadridge 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 Broadridge:
The back of the VAF is stamped indicating that we wish to vote in person.
The forms are then sent overnight to Broadridge. Broadridge issues individual
legal proxies and sends them back via overnight (or the Adviser can pay
messenger charges). A lead-time of at least two weeks prior to the meeting is
needed to do this. Alternatively, the procedures detailed below for banks not
using Broadridge may be implemented.
5
o Banks and brokerage firms issuing proxies directly:
The bank is called and/or faxed and a legal proxy is requested.
All legal proxies should appoint:
"REPRESENTATIVE OF [ADVISER NAME] WITH FULL POWER OF SUBSTITUTION."
b) The legal proxies are given to the person attending the meeting along with
the following supplemental material:
o A limited Power of Attorney appointing the attendee an Adviser
representative.
o A list of all shares being voted by custodian only. Client names and
account numbers are not included. This list must be presented, along with
the proxies, to the Inspectors of Elections and/or tabulator at least
one-half hour prior to the scheduled start of the meeting. The tabulator
must "qualify" the votes (i.e. determine if the vote have previously been
cast, if the votes have been rescinded, etc. vote have previously been
cast, etc.).
o A sample ERISA and Individual contract.
o A sample of the annual authorization to vote proxies form.
o A copy of our most recent Schedule 13D filing (if applicable).
6
APPENDIX A
PROXY GUIDELINES
PROXY VOTING GUIDELINES
GENERAL POLICY STATEMENT
It is the policy of GAMCO INVESTORS, INC. to vote in the best economic interests
of our clients. As we state in our Magna Carta of Shareholders Rights,
established in May 1988, we are neither FOR nor AGAINST management. We are for
shareholders.
At our first proxy committee meeting in 1989, it was decided that each proxy
statement should be evaluated on its own merits within the framework first
established by our Magna Carta of Shareholders Rights. The attached guidelines
serve to enhance that broad framework.
We do not consider any issue routine. We take into consideration all of our
research on the company, its directors, and their short and long-term goals for
the company. In cases where issues that we generally do not approve of are
combined with other issues, the negative aspects of the issues will be factored
into the evaluation of the overall proposals but will not necessitate a vote in
opposition to the overall proposals.
7
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.
8
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.
9
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.
10
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.
11
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.
12
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
13
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.
14
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
PORTFOLIO MANAGERS
Mr. Mario J. Gabelli, CFA, is primarily responsible for the day-to-day
management of The Gabelli Dividend & Income Trust, (the Trust). Mr. Gabelli has
served as Chairman, Chief Executive Officer, and Chief Investment Officer-Value
Portfolios of GAMCO Investors, Inc. and its affiliates since their organization.
Additionally, Barbara G. Marcin serves as Senior Portfolio Manager for the
Trust. Ms. Marcin joined GAMCO Investors, Inc. in 1999 to manage larger
capitalization value style portfolios.
MANAGEMENT OF OTHER ACCOUNTS
The table below shows the number of other accounts managed by the Portfolio
Managers and the total assets in each of the following categories: registered
investment companies, other paid investment vehicles and other accounts. For
each category, the table also shows the number of accounts and the total assets
in the accounts with respect to which the advisory fee is based on account
performance.
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Total Assets
No. of Accounts in Accounts
Total where Advisory where Advisory
Name of Portfolio Type of No. of Accounts Total Fee is Based on Fee is Based
Manager Accounts Managed Assets Performance on Performance
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
1. Mario J. Gabelli Registered 24 9.0B 6 1.9B
Investment
Companies:
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Other Pooled 22 355.1M 19 316.4M
Investment
Vehicles:
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Other Accounts: 2,049 8.1B 6 994.1M
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
2. Barbara G. Marcin Registered 3 329.5M 0 0
Investment
Companies:
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Other Pooled 1 5.4M 1 5.4M
Investment
Vehicles:
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Other Accounts: 20 79M 0 0
------------------------- ------------------- ------------------- -------------- ----------------- ----------------
POTENTIAL CONFLICTS OF INTEREST
As reflected above, the Portfolio Managers manage accounts in addition to the
Trust. Actual or apparent conflicts of interest may arise when a Portfolio
Manager also has day-to-day management responsibilities with respect to one or
more other accounts. These potential conflicts include:
ALLOCATION OF LIMITED TIME AND ATTENTION. As indicated above, the Portfolio
Managers manage multiple accounts. As a result, he/she will not be able to
devote all of their time to the management of the Trust. The Portfolio Managers,
therefore, may not be able to formulate as complete a strategy or identify
equally attractive investment opportunities for each of those accounts as might
be the case if he/she were to devote all of their attention to the management of
only the Trust.
ALLOCATION OF LIMITED INVESTMENT OPPORTUNITIES. As indicated above, the
Portfolio Managers manage managed accounts with investment strategies and/or
policies that are similar to the Trust. In these cases, if the Portfolio Manager
identifies an investment opportunity that may be suitable for multiple accounts,
a Fund may not be able to take full advantage of that opportunity because the
opportunity may be allocated among all or many of these accounts or other
accounts managed primarily by other Portfolio Managers of the Adviser, and their
affiliates. In addition, in the event a Portfolio Manager determines to purchase
a security for more than one account in an aggregate amount that may influence
the market price of the security, accounts that purchased or sold the security
first may receive a more favorable price than accounts that made subsequent
transactions.
SELECTION OF BROKER/DEALERS. Because of Mr. Gabelli's position with the
Distributor and his indirect majority ownership interest in the Distributor, he
may have an incentive to use the Distributor to execute portfolio transactions
for a Fund.
PURSUIT OF DIFFERING STRATEGIES. At times, the Portfolio Managers may determine
that an investment opportunity may be appropriate for only some of the accounts
for which he/she exercises investment responsibility, or may decide that certain
of the funds or accounts should take differing positions with respect to a
particular security. In these cases, the Portfolio Manager may execute differing
or opposite transactions for one or more accounts which may affect the market
price of the security or the execution of the transaction, or both, to the
detriment of one or more other accounts.
VARIATION IN COMPENSATION. A conflict of interest may arise where the financial
or other benefits available to the Portfolio Manager differs among the accounts
that he/she manages. If the structure of the Adviser's management fee or the
Portfolio Manager's compensation differs among accounts (such as where certain
accounts pay higher management fees or performance-based management fees), the
Portfolio Manager may be motivated to favor certain accounts over others. The
Portfolio Manager also may be motivated to favor accounts in which they have an
investment interest, or in which the Adviser, or their affiliates have
investment interests. Similarly, the desire to maintain assets under management
or to enhance a Portfolio Manager's performance record or to derive other
rewards, financial or otherwise, could influence the Portfolio Manager in
affording preferential treatment to those accounts that could most significantly
benefit the Portfolio Manager. For example, as reflected above, if the Portfolio
Manager manages accounts which have performance fee arrangements, certain
portions of his/her compensation will depend on the achievement of performance
milestones on those accounts. The Portfolio Manager could be incented to afford
preferential treatment to those accounts and thereby be subject to a potential
conflict of interest.
The Adviser, and the Funds have adopted compliance policies and procedures that
are designed to address the various conflicts of interest that may arise for the
Adviser and their staff members. However, there is no guarantee that such
policies and procedures will be able to detect and prevent every situation in
which an actual or potential conflict may arise.
COMPENSATION STRUCTURE FOR MARIO J. GABELLI
Mr. Gabelli receives incentive-based variable compensation based on a percentage
of net revenues received by the Adviser for managing the Trust. Net revenues are
determined by deducting from gross investment management fees the firm's
expenses (other than Mr. Gabelli's compensation) allocable to this Trust. Five
closed-end registered investment companies (including this Trust) managed by Mr.
Gabelli have arrangements whereby the Adviser will only receive its investment
advisory fee attributable to the liquidation value of outstanding preferred
stock (and Mr. Gabelli would only receive his percentage of such advisory fee)
if certain performance levels are met. Additionally, he receives similar
incentive based variable compensation for managing other accounts within the
firm and its affiliates. This method of compensation is based on the premise
that superior long-term performance in managing a portfolio should be rewarded
with higher compensation as a result of growth of assets through appreciation
and net investment activity. The level of compensation is not determined with
specific reference to the performance of any account against any specific
benchmark. One of the other registered investment companies managed by Mr.
Gabelli has a performance (fulcrum) fee arrangement for which his compensation
is adjusted up or down based on the performance of the investment company
relative to an index. Mr. Gabelli manages other accounts with performance fees.
Compensation for managing these accounts has two components. One component is
based on a percentage of net revenues to the investment adviser for managing the
account. The second component is based on absolute performance of the account,
with respect to which a percentage of such performance fee is paid to Mr.
Gabelli. As an executive officer of the Adviser's parent company, GBL, Mr.
Gabelli also receives ten percent of the net operating profits of the parent
company. He receives no base salary, no annual bonus, and no stock options.
COMPENSATION STRUCTURE FOR BARBARA G. MARCIN
The compensation of Ms. Marcin for the Trust is structured to enable the Adviser
to attract and retain highly qualified professionals in a competitive
environment. The Portfolio Manager receives a compensation package that includes
a minimum draw or base salary, equity-based incentive compensation via awards of
stock options, and incentive based variable compensation based on a percentage
of net revenue received by the Adviser for managing the Trust to the extent that
the amount exceeds a minimum level of compensation. Net revenues are determined
by deducting from gross investment management fees certain of the firm's
expenses (other than the Portfolio Managers' compensation) allocable to the
Trust (the incentive-based variable compensation for managing other accounts is
also based on a percentage of net revenues to the investment adviser for
managing the account). This method of compensation is based on the premise that
superior long-term performance in managing a portfolio should be rewarded with
higher compensation as a result of growth of assets through appreciation and net
investment activity. The level of equity-based incentive and incentive-based
variable compensation is based on an evaluation by the Adviser's parent, GBL, of
quantitative and qualitative performance evaluation criteria. This evaluation
takes into account, in a broad sense, the performance of the accounts managed by
the Portfolio Manager, but the level of compensation is not determined with
specific reference to the performance of any account against any specific
benchmark. Generally, greater consideration is given to the performance of
larger accounts and to longer term performance over smaller accounts and
short-term performance.
OWNERSHIP OF SHARES IN THE FUND
Mario Gabelli and Barbara Marcin owned over $1,000,000 and $0 - $10,000 of
shares, respectively, of the Trust as of December 31, 2008.
(B) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
============= ========================= ============================= =========================== =============================
(C) TOTAL NUMBER OF (D) MAXIMUM NUMBER (OR
SHARES (OR UNITS) APPROXIMATE DOLLAR VALUE) OF
(A) TOTAL NUMBER OF PURCHASED AS PART OF SHARES (OR UNITS) THAT MAY
SHARES (OR UNITS) (B) AVERAGE PRICE PAID PER PUBLICLY ANNOUNCED PLANS YET BE PURCHASED UNDER THE
PERIOD PURCHASED SHARE (OR UNIT) OR PROGRAMS PLANS OR PROGRAMS
============= ========================= ============================= =========================== =============================
Month #1 Common - N/A Common - N/A Common - N/A Common - 83,792,037
07/01/08
through Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 3,200,000
07/31/08
Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,600,000
============= ========================= ============================= =========================== =============================
============= ========================= ============================= =========================== =============================
Month #2 Common - 10,000 Common - $17.1433 Common - 10,000 Common - 83,792,037 -
08/01/08 10,000 = 83,782,037
through
08/31/08 Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 3,200,000
Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,600,000
============= ========================= ============================= =========================== =============================
============= ========================= ============================= =========================== =============================
Month #3 Common - N/A Common - N/A Common - N/A Common - 83,782,037
09/01/08
through Preferred Series A - Preferred Series A - Preferred Series A - Preferred Series A - 3,200,000
09/30/08 1,000 $21.0833 1,000 - 1,000 = 3,199,000
Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,600,000
============= ========================= ============================= =========================== =============================
============= ========================= ============================= =========================== =============================
Month #4 Common - 144,300 Common - $10.5299 Common - 144,300 Common - 83,782,037 - 144,300
10/01/08 = 83,637,737
through
10/31/08 Preferred Series A - Preferred Series A - Preferred Series A - Preferred Series A - 3,199,000
38,714 $19.2514 38,714 - 19.2514 = 3,160,286
Preferred Series D - Preferred Series D - Preferred Series D - Preferred Series D - 2,600,000
15,211 $20.3691 15,211 - 15,211 = 2,584,789
============= ========================= ============================= =========================== =============================
============= ========================= ============================= =========================== =============================
Month #5 Common - 104,700 Common - $10.0008 Common - 104,700 Common - 83,637,737 - 104,700
11/01/08 = 83,533,037
through
11/30/08 Preferred Series A - Preferred Series A - Preferred Series A - Preferred Series A - 3,160,286
15,841 $20.1519 15,841 - 15,841 = 3,144,445
Preferred Series D - Preferred Series D - Preferred Series D - 2,895 Preferred Series D - 2,584,789
2,895 $22.0900 - 2,895 = 2,581,894
============= ========================= ============================= =========================== =============================
============= ========================= ============================= =========================== =============================
Month #6 Common - 4,400 Common - $9.8461 Common - 4,400 Common - 83,528,637
12/01/08
through Preferred Series A - Preferred Series A - Preferred Series A - Preferred Series A - 3,144,445
12/31/08 16,029 $20.0692 16,029 - 16,029 = 3,128,416
Preferred Series D - Preferred Series D - Preferred Series D - 5,360 Preferred Series D - 2,581,894
5,360 $21.0422 - 5,360 = 2,576,534
============= ========================= ============================= =========================== =============================
============= ========================= ============================= =========================== =============================
Total Common - 263,400 Common - $10.3819 Common - 37,033 N/A
Preferred Series A - Preferred Series A - Preferred Series A -
71,584 $19.3629 71,584
Preferred Series D - Preferred Series D - Preferred Series D -
23,466 $20.0724 23,466
============= ========================= ============================= =========================== =============================
Footnote columns (c) and (d) of the table, by disclosing the following
information in the aggregate for all plans or programs publicly announced:
a. The date each plan or program was announced - The notice of the
potential repurchase of common and preferred shares occurs quarterly in
the Fund's quarterly report in accordance with Section 23(c) of the
Investment Company Act of 1940, as amended.
b. The dollar amount (or share or unit amount) approved - Any or all
common shares outstanding may be repurchased when the Fund's common
shares are trading at a discount of 7.5% or more from the net asset
value of the shares. Any or all preferred shares outstanding may be
repurchased when the Fund's preferred shares are trading at a discount
to the liquidation value of $25.00.
c. The expiration date (if any) of each plan or program - The Fund's
repurchase plans are ongoing.
d. Each plan or program that has expired during the period covered by the
table - The Fund's repurchase plans are ongoing.
e. Each plan or program the registrant has determined to terminate prior
to expiration, or under which the registrant does not intend to make
further purchases. - The Fund's repurchase plans are ongoing.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Trustees, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Gabelli Dividend & Income Trust
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By (Signature and Title)* /s/ Bruce N. Alpert
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Bruce N. Alpert, Principal Executive Officer
Date 3/9/09
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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 3/9/09
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By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady,
Principal Financial Officer and Treasurer
Date 3/9/09
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* Print the name and title of each signing officer under his or her signature.