UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21423
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The Gabelli Dividend & Income Trust
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(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
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(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
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(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
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Date of fiscal year end: December 31, 2004
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Date of reporting period: June 30, 2004
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
THE GABELLI DIVIDEND & INCOME TRUST
ONE CORPORATE CENTER
RYE, NY 10580-1422
(914) 921-5070
WWW.GABELLI.COM
SEMI-ANNUAL REPORT
June 30, 2004
GDV PQ2/04
[LOGO]
THE GABELLI
DIVIDEND &
INCOME TRUST
THE GABELLI DIVIDEND & INCOME TRUST
Semi-Annual Report
June 30, 2004
TO OUR SHAREHOLDERS,
The Gabelli Dividend & Income Trust's ("the Trust") total return during
the second quarter was 0.1% on a net asset value ("NAV") basis, compared to a
1.7% gain for the Standard & Poor's ("S&P") 500 Index. Year to date through June
30, 2004, the Trust's total return was 1.4% on an NAV basis versus a 3.4% gain
for the S&P 500 Index. The Trust's market price declined 7.7% during the second
quarter and 10.2% for the first half of 2004. The Trust's market price on June
30, 2004 was $17.39, which equates to an 8.1% discount to its NAV of $18.93. At
the close of the second quarter, we had invested 74% of the Trust's assets in
common stocks, preferred stocks and corporate bonds, with the balance of 26% in
cash equivalents.
Enclosed are the financial statements and the investment portfolio as of
June 30, 2004.
SHAREHOLDER MEETING -- MAY 10, 2004 -- FINAL RESULTS
The Annual Meeting of Shareholders was held on May 10, 2004 at the
Greenwich Public Library in Greenwich, Connecticut. At that meeting, common
shareholders voting as a single class elected Mario J. Gabelli, Mario d'Urso and
Michael J. Melarkey as Trustees of the Trust. There were 81,405,796 votes,
81,363,900 votes and 81,402,083 votes cast in favor of each Trustee and 982,474
votes, 1,024,370 votes and 986,187 votes were withheld for each Trustee,
respectively.
Anthony J. Colavita, James P. Conn, Frank J. Fahrenkopf, Jr., Karl Otto
Pohl, Salvatore M. Salibello, Edward T. Tokar, Anthonie C. van Ekris and
Salvatore J. Zizza continue to serve in their capacities as Trustees of the
Trust.
We thank you for your participation and appreciate your continued support.
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We have separated the portfolio manager's commentary from the financial
statements and investment portfolio due to new corporate governance regulations
stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that
the content of the portfolio manager's commentary is unrestricted. The financial
statements and investment portfolio are mailed separately. Both the commentary
and the financial statements, including the portfolio of investments, will be
available on our website at www.gabelli.com/funds.
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A description of the Trust's proxy voting policies and procedures and how the
Trust voted proxies relating to portfolio securities during the most recent
12-month period ended June 30, 2004 are available (i) without charge, upon
request, by calling 800-GABELLI (800-422-3554); (ii) by writing to The Gabelli
Funds at One Corporate Center, Rye, NY 10580-1422; and (iii) on the Securities
and Exchange Commission's website at www.sec.gov.
--------------------------------------------------------------------------------
THE GABELLI DIVIDEND & INCOME TRUST
PORTFOLIO OF INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
MARKET
SHARES COST VALUE
----------- ----------- -----------
COMMON STOCKS -- 68.5%
AEROSPACE -- 0.7%
12,000 Goodrich Corp. ..................................... $ 336,523 $ 387,960
850,000 Titan Corp.+ ....................................... 17,505,895 11,033,000
----------- -----------
17,842,418 11,420,960
----------- -----------
AUTOMOTIVE -- 1.7%
555,200 Dana Corp. ......................................... 11,323,289 10,881,920
50,000 General Motors Corp. ............................... 2,359,932 2,329,500
350,000 Genuine Parts Co. .................................. 11,536,889 13,888,000
----------- -----------
25,220,110 27,099,420
----------- -----------
BROADCASTING -- 0.1%
30,000 Grupo Televisa SA, ADR ............................. 1,316,516 1,358,100
12,000 Liberty Corp. ...................................... 585,559 563,400
----------- -----------
1,902,075 1,921,500
----------- -----------
BUSINESS SERVICES -- 0.1%
40,000 Kroll Inc.+ ........................................ 1,468,837 1,475,200
----------- -----------
CONSUMER PRODUCTS -- 1.3%
20,000 Altria Group Inc. .................................. 1,027,149 1,001,000
100,000 Eastman Kodak Co. .................................. 2,584,519 2,698,000
40,000 Gallaher Group plc, ADR ............................ 1,968,423 1,936,000
1,000 Kimberly-Clark Corp. ............................... 54,269 65,880
99,500 Procter & Gamble Co. ............................... 5,148,936 5,416,780
273,800 UST Inc. ........................................... 9,958,167 9,856,800
----------- -----------
20,741,463 20,974,460
----------- -----------
DIVERSIFIED INDUSTRIAL -- 2.2%
200,000 Bouygues SA ........................................ 6,825,795 6,696,434
9,000 Brascan Corp., Cl. A ............................... 210,697 254,160
16,000 Cooper Industries Ltd.,
Cl. A ............................................ 895,875 950,560
230,000 Dow Chemical Co. ................................... 9,240,880 9,361,000
270,000 General Electric Co. ............................... 8,401,589 8,748,000
205,000 Honeywell International Inc. ....................... 6,723,319 7,509,150
100,000 Sonoco Products Co. ................................ 2,400,642 2,550,000
1,000 Textron Inc. ....................................... 51,500 59,350
----------- -----------
34,750,297 36,128,654
----------- -----------
ENERGY AND UTILITIES: INTEGRATED -- 16.5%
12,000 ALLETE Inc. ........................................ 410,955 399,600
10,000 Alliant Energy Corp. ............................... 250,267 260,800
440,000 Ameren Corp. ....................................... 19,834,894 18,902,400
300,000 American Electric
Power Co. Inc. ................................... 8,872,293 9,600,000
20,000 Avista Corp. ....................................... 343,413 368,400
12,000 Burlington Resources Inc. .......................... 417,740 434,160
17,000 Central Vermont Public
Service Corp. .................................... 332,857 348,330
19,000 CH Energy Group Inc. ............................... 906,192 882,360
10,000 Chubu Electric
Power Co. Inc. ................................... 213,256 211,245
12,000 Chugoku Electric
Power Co. Inc. ................................... 209,309 209,724
310,000 Cinergy Corp. ...................................... 11,727,396 11,780,000
20,000 Cleco Corp. ........................................ 349,431 359,600
230,000 CONSOL Energy Inc. ................................. 5,333,755 8,280,000
290,000 Consolidated Edison Inc. ........................... 12,053,721 11,530,400
2,000 Dominion Resources Inc. ............................ 126,277 126,160
376,500 DPL Inc. ........................................... 7,248,858 7,311,630
17,500 DTE Energy Co. ..................................... 667,957 709,450
325,000 Duke Energy Corp. .................................. 6,249,958 6,594,250
285,000 Duquesne Light
Holdings Inc. .................................... 5,104,464 5,503,350
1,500 Empire District Electric Co. ....................... 31,213 30,165
30,000 Enel SpA, ADR ...................................... 1,164,121 1,208,100
145,100 Energy East Corp. .................................. 3,292,295 3,518,675
173,100 FirstEnergy Corp. .................................. 6,043,125 6,475,671
78,000 FPL Group Inc. ..................................... 4,949,739 4,988,100
550,000 Great Plains Energy Inc. ........................... 17,018,921 16,335,000
130,000 Hawaiian Electric
Industries Inc. .................................. 3,002,034 3,393,000
10,000 Hera SpA ........................................... 21,354 21,170
12,000 Hokkaido Electric
Power Co. Inc. ................................... 212,211 213,243
12,000 Hokuriku Electric
Power Co. ........................................ 202,214 201,146
12,000 Kansai Electric
Power Co. Inc. ................................... 217,794 218,742
12,000 Kyushu Electric
Power Co. Inc. ................................... 221,253 223,800
4,000 Maine & Maritimes Corp. ............................ 128,278 128,000
40,000 National Grid Transco
plc, ADR ......................................... 1,588,564 1,566,800
240,000 NiSource Inc. ...................................... 5,015,789 4,948,800
265,000 NSTAR .............................................. 12,603,697 12,688,200
510,000 OGE Energy Corp. ................................... 12,280,693 12,989,700
557,000 Pepco Holdings Inc. ................................ 10,492,679 10,181,960
220,000 Pinnacle West Capital Corp. ........................ 8,566,123 8,885,800
320,000 Progress Energy Inc. ............................... 14,384,854 14,096,000
251,000 Public Service Enterprise
Group Inc. ....................................... 10,641,689 10,047,530
170,000 Scottish Power plc, ADR ............................ 4,881,173 5,016,700
12,000 Shikoku Electric Power
Co. Inc. ......................................... 210,360 211,483
450,000 Southern Co. ....................................... 13,262,037 13,117,500
2,000 TECO Energy Inc. ................................... 27,648 23,980
12,000 Tohoku Electric
Power Co. Inc. ................................... 201,568 202,135
See accompanying notes to financial statements.
2
THE GABELLI DIVIDEND & INCOME TRUST
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
MARKET
SHARES COST VALUE
----------- ----------- -----------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES: INTEGRATED (CONTINUED)
10,000 Tokyo Electric
Power Co. Inc. ................................... $ 227,460 $ 226,825
1,000 TXU Corp. .......................................... 28,289 40,510
610,800 Unisource Energy Corp. 15,032,028 .................. 15,178,380
350,000 Westar Energy Inc. ................................. 6,688,493 6,968,500
50,000 Wisconsin Energy Corp. ............................. 1,549,654 1,630,500
150,000 WPS Resources Corp. ................................ 6,859,067 6,952,500
1,250,000 Xcel Energy Inc. ................................... 21,418,131 20,887,500
------------ ------------
263,117,541 266,627,974
------------ ------------
ENERGY AND UTILITIES: NATURAL GAS -- 3.7%
15,000 AGL Resources Inc. ................................. 414,386 435,750
20,000 Atmos Energy Corp. ................................. 491,816 512,000
3,000 Energen Corp. ...................................... 124,550 143,970
447,000 KeySpan Corp. ...................................... 16,221,023 16,404,900
22,000 Kinder Morgan Energy
Partners LP ...................................... 910,803 895,180
15,000 Laclede Group Inc. ................................. 413,864 411,150
300,000 National Fuel Gas Co. .............................. 7,226,378 7,500,000
215,000 Nicor Inc. ......................................... 7,320,919 7,303,550
220,000 ONEOK Inc. ......................................... 4,679,265 4,837,800
250,000 Peoples Energy Corp. ............................... 10,457,701 10,537,500
232,000 SEMCO Energy Inc. .................................. 1,328,548 1,350,240
211,300 Sempra Energy ...................................... 6,081,369 7,275,059
12,000 South Jersey Industries Inc. ....................... 497,736 528,000
19,000 Southwest Gas Corp. ................................ 446,190 458,470
49,200 Vectren Corp. ...................................... 1,194,154 1,234,428
13,632 Western Gas Resources Inc. ......................... 335,755 442,767
------------ ------------
58,144,457 60,270,764
------------ ------------
ENERGY AND UTILITIES: OIL -- 9.3%
1,000 Amerada Hess Corp. ................................. 65,905 79,190
6,000 Anadarko Petroleum Corp. ........................... 325,515 351,600
28,000 Apache Corp. ....................................... 1,167,116 1,219,400
12,000 Baker Hughes Inc. .................................. 431,183 451,800
150,000 BP plc, ADR ........................................ 6,894,243 8,035,500
150,000 ChevronTexaco Corp. ................................ 12,027,641 14,116,500
1,000 Cimarex Energy Co.+ ................................ 28,300 30,230
210,000 ConocoPhillips ..................................... 12,638,305 16,020,900
3,000 Devon Energy Corp. ................................. 182,520 198,000
300,000 Diamond Offshore
Drilling Inc. .................................... 6,478,892 7,149,000
75,000 Eni SpA, ADR ....................................... 6,854,713 7,525,500
190,000 Exxon Mobil Corp. .................................. 7,612,848 8,437,900
152,000 Halliburton Co. .................................... 4,438,269 4,599,520
212,300 Kerr-McGee Corp. ................................... 9,798,336 11,415,371
283,000 Marathon Oil Corp. ................................. 8,736,356 10,708,720
30,000 Murphy Oil Corp. ................................... 1,942,620 2,211,000
85,000 Nabors Industries Ltd.+ ............................ 3,696,719 3,843,700
190,000 Occidental Petroleum
Corp ............................................. 7,528,943 9,197,900
300,000 Repsol YPF SA, ADR ................................. 6,299,340 6,558,000
160,000 Royal Dutch Petroleum Co. .......................... 7,585,140 8,267,200
40,000 Schlumberger Ltd. .................................. 2,128,651 2,540,400
945,000 Statoil ASA, ADR ................................... 10,531,040 12,020,400
100,000 Sunoco Inc. ........................................ 4,897,834 6,362,000
100,000 Total SA, ADR ...................................... 8,864,810 9,608,000
------------ ------------
131,155,239 150,947,731
------------ ------------
ENERGY AND UTILITIES: WATER -- 0.1%
3,000 American States Water Co. .......................... 69,243 69,720
38,000 Aqua America Inc. .................................. 812,206 761,900
1,500 Artesian Resources Corp.,
Cl. A ............................................ 41,584 39,675
2,000 California Water
Service Group .................................... 57,970 55,100
1,000 Connecticut Water
Service Inc. ..................................... 26,688 25,660
2,000 Middlesex Water Co. ................................ 40,085 38,760
2,200 Pennichuck Corp. ................................... 59,981 56,837
14,000 SJW Corp. .......................................... 476,487 476,000
3,000 Southwest Water Co. ................................ 38,059 37,560
22,000 United Utilities plc, ADR .......................... 429,085 420,640
3,000 York Water Co. ..................................... 58,950 55,320
------------ ------------
2,110,338 2,037,172
------------ ------------
ENTERTAINMENT -- 0.6%
400,000 The Walt Disney Co. ................................ 9,232,656 10,196,000
------------ ------------
Equipment and Supplies -- 2.1%
350,000 CNH Global NV ...................................... 6,922,214 7,224,000
370,000 Deere & Co. ........................................ 25,563,057 25,951,800
10,500 Lufkin Industries Inc. ............................. 332,178 335,790
44,000 RPC Inc. ........................................... 636,343 694,760
5,000 Weatherford
International Ltd.+ .............................. 207,060 224,900
------------ ------------
33,660,852 34,431,250
------------ ------------
FINANCIAL SERVICES -- 12.1%
300,000 Alliance Capital Management
Holding LP ....................................... 10,119,503 10,185,000
235,000 American Express Co. ............................... 11,691,402 12,074,300
80,000 American International
Group Inc. ....................................... 5,569,228 5,702,400
255,000 Bank of America Corp. .............................. 19,574,268 21,578,100
361,400 Bank of New York Co. Inc. .......................... 11,720,504 10,654,072
199,000 Bank One Corp. ..................................... 9,701,087 10,149,000
200,000 Charter One Financial Inc. ......................... 8,781,400 8,838,000
340,000 Citigroup Inc. ..................................... 16,810,830 15,810,000
25,000 Deutsche Bank AG, ADR .............................. 2,065,488 1,977,750
See accompanying notes to financial statements.
3
THE GABELLI DIVIDEND & INCOME TRUST
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
MARKET
SHARES COST VALUE
----------- ----------- -----------
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES (CONTINUED)
31,000 Eaton Vance Corp. .................................. $ 1,183,077 $ 1,184,510
240,000 JP Morgan Chase & Co. .............................. 8,605,807 9,304,800
530,000 KeyCorp ............................................ 15,953,881 15,841,700
900 Lloyds TSB Group
plc, ADR ......................................... 27,756 28,692
209,300 MONY Group Inc.+ ................................... 6,509,870 6,551,090
20,000 Morgan Stanley ..................................... 1,059,080 1,055,400
30,000 North Fork
Bancorporation Inc. .............................. 1,096,516 1,141,500
238,500 PNC Financial
Services Group ................................... 12,797,327 12,659,580
1,000 Progressive Corp. .................................. 89,520 85,300
210,000 St. Paul Travelers
Companies Inc. ................................... 8,399,839 8,513,400
10,000 Sterling Bancorp ................................... 275,190 276,200
50,000 T. Rowe Price Group Inc. ........................... 2,455,119 2,520,000
20,000 Unitrin Inc. ....................................... 762,845 852,000
265,000 Wachovia Corp. ..................................... 12,292,962 11,792,500
210,000 Waddell & Reed Financial
Inc., Cl. A ...................................... 4,944,481 4,643,100
260,000 Washington Mutual Inc. ............................. 10,553,406 10,046,400
93,400 Waypoint Financial Corp. ........................... 2,482,979 2,576,906
3,500 Webster Financial Corp. ............................ 155,536 164,570
130,000 Wells Fargo & Co. .................................. 7,427,111 7,439,900
72,500 Wilmington Trust Corp. ............................. 2,609,287 2,698,450
------------ ------------
195,715,299 196,344,620
------------ ------------
FOOD AND BEVERAGE -- 3.5%
400,000 Archer-Daniels-
Midland Co. ...................................... 6,603,428 6,712,000
45,000 Coca-Cola Co. ...................................... 2,278,905 2,271,600
120,000 ConAgra Foods Inc. ................................. 3,217,583 3,249,600
400,200 Dreyer's Grand Ice Cream
Holdings Inc., Cl. A ............................. 30,994,261 31,651,818
50,000 Heinz (H.J.) Co. ................................... 1,822,252 1,960,000
1,000 Kellogg Co. ........................................ 35,550 41,850
250,000 Sara Lee Corp. ..................................... 5,562,239 5,747,500
90,000 Wrigley (Wm.) Jr. Co. .............................. 5,049,681 5,674,500
------------ ------------
55,563,899 57,308,868
------------ ------------
HEALTH CARE -- 2.1%
150,000 Bristol-Myers Squibb Co. ........................... 3,745,475 3,675,000
100,000 CIMA Labs Inc.+ .................................... 3,340,370 3,373,000
70,000 Eli Lilly & Co. .................................... 4,821,972 4,893,700
30,000 Johnson & Johnson .................................. 1,518,214 1,671,000
150,000 Merck & Co. Inc. ................................... 6,680,261 7,125,000
61,000 Owens & Minor Inc. ................................. 1,524,529 1,579,900
40,000 Oxford Health Plans Inc. ........................... 2,192,770 2,201,600
260,000 Pfizer Inc. ........................................ 9,026,009 8,912,800
------------ ------------
32,849,600 33,432,000
------------ ------------
HOTELS AND GAMING -- 1.3%
1,000,000 Hilton Group plc ................................... 4,259,668 5,005,257
500,000 Hilton Hotels Corp. ................................ 8,538,103 9,330,000
91,400 Mandalay Resort Group .............................. 6,193,180 6,273,696
------------ ------------
18,990,951 20,608,953
------------ ------------
METALS AND MINING -- 0.3%
10,000 Arch Coal Inc. ..................................... 314,774 365,900
3,000 Fording Canadian
Coal Trust ....................................... 112,385 126,300
125,000 Freeport-McMoRan
Copper & Gold Inc.,
Cl. B ............................................ 4,615,644 4,143,750
10,000 Massey Energy Co. .................................. 235,475 282,100
5,000 Peabody Energy Corp. ............................... 234,935 279,950
3,000 Westmoreland Coal Co.+ ............................. 52,605 58,350
------------ ------------
5,565,818 5,256,350
------------ ------------
REAL ESTATE INVESTMENT TRUSTS -- 0.3%
37,500 Catellus Development
Corp ............................................. 849,675 924,375
140,000 Keystone Property Trust ............................ 3,342,600 3,364,200
------------ ------------
4,192,275 4,288,575
------------ ------------
RETAIL -- 1.1%
250,000 Albertson's Inc. ................................... 5,748,440 6,635,000
130,000 Blockbuster Inc., Cl. A ............................ 1,965,296 1,973,400
49,600 Ingles Markets Inc., Cl. A ......................... 549,795 554,032
300,000 Safeway Inc.+ ...................................... 6,711,464 7,602,000
50,000 Saks Inc.+ ......................................... 829,848 750,000
------------ ------------
15,804,843 17,514,432
------------ ------------
SATELLITE -- 0.0%
20,000 PanAmSat Corp.+ .................................... 460,252 464,400
------------ ------------
SPECIALTY CHEMICALS -- 1.0%
65,000 Ashland Inc. ....................................... 2,781,776 3,432,650
225,000 E.I. du Pont de Nemours
and Co. .......................................... 9,942,700 9,994,500
140,000 Olin Corp. ......................................... 2,582,194 2,466,800
------------ ------------
15,306,670 15,893,950
------------ ------------
TELECOMMUNICATIONS -- 6.1%
42,000 ALLTEL Corp. ....................................... 2,091,522 2,126,040
550,000 AT&T Corp. ......................................... 10,399,722 8,046,500
800,000 BCE Inc. ........................................... 17,612,964 16,032,000
200,000 BellSouth Corp. .................................... 5,333,936 5,244,000
74,000 BT Group plc, ADR .................................. 2,312,412 2,708,400
180,000 CenturyTel Inc. .................................... 5,307,733 5,407,200
See accompanying notes to financial statements.
4
THE GABELLI DIVIDEND & INCOME TRUST
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
MARKET
SHARES COST VALUE
----------- ------------- ------------
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS (CONTINUED)
20,000 Compania de
Telecomunicaciones de
Chile SA, ADR .................................... $ 235,616 $ 243,800
14,675 Crown Castle
International Corp.+ ............................. 198,319 216,456
80,000 Deutsche Telekom
AG, ADR+ ......................................... 1,415,732 1,416,800
50,000 France Telecom SA, ADR ............................. 1,219,023 1,314,000
240,000 Hellenic Telecommunications
Organization SA, ADR ............................. 1,884,444 1,552,800
100,000 Manitoba Telecom
Services Inc. .................................... 3,413,530 3,382,435
150,000 Qwest Communications
International Inc.+ .............................. 554,860 538,500
300,000 SBC Communications Inc. ............................ 7,416,654 7,275,000
850,000 Sprint Corp. ....................................... 15,268,415 14,960,000
307,000 TDC A/S, ADR ....................................... 5,394,086 5,034,800
12,000 Telecom Corp. of New
Zealand Ltd., ADR ................................ 322,396 357,600
30,000 Telecom Italia SpA, ADR ............................ 935,236 938,700
20,000 Telefonica SA, ADR ................................. 913,342 892,600
143,524 Telefonos de Mexico SA
de CV, Cl. L, ADR ................................ 4,843,123 4,775,057
160,000 Telstra Corp. Ltd., ADR ............................ 2,939,066 2,828,800
160,000 TELUS Corp., Non-
Voting, ADR ...................................... 2,942,901 2,403,431
320,000 Verizon Communications
Inc. ............................................. 10,911,182 11,580,800
-------------- --------------
103,866,214 99,275,719
-------------- --------------
TRANSPORTATION -- 0.2%
10,000 Frontline Ltd. ..................................... 255,550 345,100
2,500 Ship Finance International
Ltd. ............................................. 35,187 37,375
61,400 Teekay Shipping Corp. .............................. 1,601,611 2,295,132
-------------- --------------
1,892,348 2,677,607
-------------- --------------
WIRELESS COMMUNICATIONS -- 2.1%
2,300,000 AT&T Wireless
Services Inc.+ ................................... 31,867,194 32,936,000
31,800 Rogers Wireless
Communications Inc.,
Cl. B+ ........................................... 840,250 860,190
-------------- --------------
32,707,444 33,796,190
-------------- --------------
TOTAL COMMON
STOCKS ............................................ 1,082,261,896 1,110,392,749
-------------- --------------
PREFERRED STOCKS -- 0.1%
CLOSED END FUNDS -- 0.1%
75,000 General American Investors
Co. Inc.,
5.950% Cumulative Pfd. ........................... 1,860,400 1,751,250
-------------- --------------
CONVERTIBLE PREFERRED STOCKS -- 4.5%
AEROSPACE -- 0.1%
8,315 Northrop Grumman Corp.,
7.000% Cv. Pfd., Ser. B .......................... 997,555 1,093,422
-------------- --------------
AUTOMOTIVE -- 0.1%
25,000 General Motors Corp.,
4.500% Cv. Pfd., Ser. A .......................... 645,050 639,000
-------------- --------------
AVIATION: PARTS AND SERVICES -- 0.0%
6,500 Sequa Corp.,
$5.00 Cv. Pfd. ................................... 591,440 632,125
-------------- --------------
BROADCASTING -- 0.7%
268,000 Sinclair Broadcast Group Inc.,
6.000% Cv. Pfd., Ser. D .......................... 12,510,660 11,591,000
-------------- --------------
BUILDING AND CONSTRUCTION -- 0.0%
200 Fleetwood Capital Trust,
6.000% Cv. Pfd.+ ................................. 6,210 9,100
-------------- --------------
BUSINESS SERVICES -- 0.0%
7,200 Allied Waste Industries Inc.,
6.250% Cv. Pfd. .................................. 506,554 513,216
-------------- --------------
CONSUMER PRODUCTS -- 0.4%
138,900 Newell Financial Trust,
5.250% Cv. Pfd. .................................. 6,516,450 6,181,050
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 0.5%
179,400 Owens-Illinois Inc.,
4.750% Cv. Pfd. .................................. 5,956,159 6,029,634
80,502 Smurfit-Stone Container Corp.,
7.000% Cv. Pfd., Ser. A .......................... 2,008,346 1,973,265
1,000 US Steel Corp.,
7.000% Cv. Pfd., Ser. B .......................... 88,510 117,080
-------------- --------------
8,053,015 8,119,979
-------------- --------------
ENERGY AND UTILITIES: ELECTRIC -- 0.5%
160,600 Calpine Capital Trust,
5.750% Cv. Pfd. .................................. 7,981,200 7,809,175
-------------- --------------
ENERGY AND UTILITIES: INTEGRATED -- 0.1%
9,750 Arch Coal Inc.,
5.000% Cv. Pfd. .................................. 733,750 919,912
See accompanying notes to financial statements.
5
THE GABELLI DIVIDEND & INCOME TRUST
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
MARKET
SHARES COST VALUE
----------- ----------- -----------
CONVERTIBLE PREFERRED STOCKS (CONTINUED)
ENERGY AND UTILITIES: INTEGRATED (CONTINUED)
20,000 CMS Energy Corp.,
4.500% Cv. Pfd. (a) .............................. $ 1,069,062 $ 1,135,000
----------- -----------
1,802,812 2,054,912
----------- -----------
ENERGY AND UTILITIES: OIL -- 0.5%
Chesapeake Energy Corp.,
20,000 5.000% Cv. Pfd. .................................. 2,193,750 2,220,000
1,000 6.750% Cv. Pfd. .................................. 85,050 96,400
2,700 6.000% Cv. Pfd. .................................. 194,400 196,425
130,000 El Paso Corp.,
4.750% Cv. Pfd. .................................. 4,680,219 3,633,500
39,615 Hanover Compressor Co.,
7.250% Cv. Pfd. .................................. 1,980,375 1,955,991
----------- -----------
9,133,794 8,102,316
----------- -----------
ENTERTAINMENT -- 0.2%
160,000 Six Flags Inc.,
7.250% Cv. Pfd. .................................. 3,740,806 3,584,000
----------- -----------
Financial Services -- 0.6%
3,920 Doral Financial Corp.,
4.750% Cv. Pfd. (a) .............................. 1,029,000 1,032,920
232,600 National Australia Bank Ltd.,
7.875% Cv. Pfd., Ser.
UNIT ............................................. 8,875,235 8,247,996
5,100 United Fire & Casualty Co.,
6.375% Cv. Pfd., Ser. A .......................... 152,000 186,711
----------- -----------
10,056,235 9,467,627
----------- -----------
HEALTH CARE -- 0.2%
57,436 McKesson Financing Trust,
5.000% Cv. Pfd. .................................. 2,888,529 2,937,851
10,000 Omnicare Inc.,
4.000% Cv. Pfd. .................................. 605,400 620,300
----------- -----------
3,493,929 3,558,151
----------- -----------
METALS AND MINING -- 0.1%
6,000 Phelps Dodge Corp.,
6.750% Cv. Pfd. .................................. 1,002,916 930,000
----------- -----------
REAL ESTATe -- 0.0%
2,100 Equity Office Properties Trust,
5.250% Cv. Pfd., Ser. B .......................... 104,120 105,473
----------- -----------
TELECOMMUNICATIONS -- 0.5%
35,100 Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B .......................... 1,503,978 1,473,498
121,000 Crown Castle
International Corp.,
6.250% Cv. Pfd. .................................. $ 5,568,000 $ 5,384,500
17,460 Emmis Communications Corp.,
6.250% Cv. Pfd., Ser. A .......................... 828,081 772,605
----------- -----------
7,900,059 7,630,603
----------- -----------
TRANSPORTATION -- 0.0%
800 GATX Corp.,
$2.50 Cv. Pfd. ................................... 109,840 100,000
982 Kansas City Southern,
4.250% Cv. Pfd. .................................. 551,884 525,432
----------- -----------
661,724 625,432
----------- -----------
TOTAL CONVERTIBLE
PREFERRED STOCKS .................................. 75,704,529 72,646,581
----------- -----------
PRINCIPAL
AMOUNT
--------
CONVERTIBLE CORPORATE BONDS -- 0.7%
AEROSPACE -- 0.1%
$ 650,000 GenCorp Inc.,
Sub. Deb. Cv.,
5.750%, 04/15/07 ................................. 639,728 689,000
----------- -----------
AGRICULTURE -- 0.1%
750,000 Bunge Ltd. Financial
Corp., Cv.,
3.750%, 11/15/22 ................................. 812,506 989,062
----------- -----------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.0%
500,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ................................. 474,130 495,000
----------- -----------
ELECTRONICS -- 0.2%
650,000 Agere Systems Inc.,
Sub. Deb. Cv.,
6.500%, 12/15/09 ................................. 873,065 757,250
950,000 Trans-Lux Corp.,
Sub. Deb. Cv.,
8.250%, 03/01/12 ................................. 945,647 916,750
2,000,000 Trans-Lux Corp.,
Sub. Deb. Cv.,
7.500%, 12/01/06 ................................. 2,011,026 2,027,500
----------- -----------
3,829,738 3,701,500
----------- -----------
ENTERTAINMENT -- 0.0%
287,000 The Walt Disney Co., Cv.,
2.125%, 04/15/23 ................................. 298,257 309,243
----------- -----------
See accompanying notes to financial statements.
6
THE GABELLI DIVIDEND & INCOME TRUST
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT COST VALUE
------------ -------------- --------------
CONVERTIBLE CORPORATE BONDS (CONTINUED)
EQUIPMENT AND SUPPLIES -- 0.0%
$ 300,000 Robbins & Myers Inc.,
Sub. Deb. Cv.,
8.000%, 01/31/08 ................................ $ 317,337 $ 317,625
-------------- --------------
FINANCIAL SERVICES -- 0.0%
250,000 AON Corp., Sub. Deb. Cv.,
3.500%, 11/15/12 ................................ 294,047 350,625
-------------- --------------
FOOD AND BEVERAGE -- 0.0%
2,300,000 Parmalat Soparfi SA,
Sub. Deb. Cv.,
6.125%, 05/23/32+ (b) ........................... 1,715,396 262,480
-------------- --------------
HEALTH CARE -- 0.0%
300,000 Quest Diagnostics Inc.,
Sub. Deb. Cv.,
1.750%, 11/30/21 ................................ 306,907 317,250
-------------- --------------
REAL ESTATE -- 0.1%
900,000 Palm Harbor Homes Inc., Cv.,
3.250%, 05/15/24 (a) ............................ 877,016 864,000
-------------- --------------
RETAIL -- 0.0%
375,000 School Specialty Inc.,
Sub. Deb. Cv.,
6.000%, 08/01/08 ................................ 391,753 429,844
-------------- --------------
TRANSPORTATION -- 0.2%
2,700,000 GATX Corp., Cv.,
7.500%, 02/01/07 ................................ 3,114,013 3,105,000
-------------- --------------
TOTAL CONVERTIBLE
CORPORATE BONDS .................................. 13,070,828 11,830,629
-------------- --------------
CORPORATE BONDS -- 0.1%
DIVERSIFIED INDUSTRIAL -- 0.1%
1,000,000 WHX Corp.,
10.500%, 04/15/05 ............................... 937,070 895,000
-------------- --------------
U.S. GOVERNMENT OBLIGATIONS -- 13.8%
224,008,000 U.S. Treasury Bills,
0.933% to 1.297%++,
07/01/04 to 10/14/04 ............................ 223,665,327 223,598,345
-------------- --------------
SHORT-TERM OBLIGATIONS -- 12.3%
REPURCHASE AGREEMENTS -- 12.3%
$100,000,000 ABN Amro, 1.250%,
dated 06/30/04, due 07/01/04,
proceeds at maturity,
$100,003,472 (c) ................................ $ 100,000,000 $ 100,000,000
100,000,000 State Street Bank & Trust Co.,
1.180%, dated 06/30/04,
due 07/01/04,
proceeds at maturity,
$100,003,278 (d) ................................ 100,000,000 100,000,000
-------------- --------------
TOTAL SHORT-TERM
OBLIGATIONS ...................................... 200,000,000 200,000,000
-------------- --------------
TOTAL INVESTMENTS -- 100.0% ....................................... $1,597,500,050 1,621,114,554
==============
LIABILITIES IN EXCESS OF OTHER ASSETS ............................. (12,542,301)
--------------
NET ASSETS -- COMMON STOCK
(84,994,505 common shares outstanding) .......................... $1,608,572,253
==============
NET ASSET VALUE PER COMMON SHARE
($1,608,572,253 / 84,994,505 shares outstanding) ............... $ 18.93
==============
----------
For Federal tax purposes:
Aggregate cost .................................... $1,597,500,050
==============
Gross unrealized appreciation ..................... $ 51,192,401
Gross unrealized depreciation ..................... (27,577,897)
--------------
Net unrealized appreciation ....................... $ 23,614,504
==============
----------
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At June 30,
2004, the Rule 144A securities are considered liquid and the market value
amounted to $3,031,920 or 0.19% of total net assets.
(b) Security in default.
(c) Collateralized by U.S. Treasury Notes, 5.250% to 8.125%, due 08/15/21 to
11/15/28, market value $102,001,941.
(d) Collateralized by U.S. Treasury Note, 7.250%, due 08/15/22, market value
$102,001,623.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR - American Depository Receipt.
See accompanying notes to financial statements.
7
THE GABELLI DIVIDEND & INCOME TRUST
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
ASSETS:
Investments, at value (cost $1,397,500,050) .............. $ 1,421,114,554
Repurchase agreements, at value (cost $200,000,000) ...... 200,000,000
Cash and foreign currency, at value (cost $2,074,978) .... 2,082,168
Receivable for investments sold .......................... 10,624,116
Dividends and interest receivable ........................ 2,637,121
Other assets ............................................. 26,226
---------------
TOTAL ASSETS ............................................. 1,636,484,185
---------------
LIABILITIES:
Dividends payable ........................................ 4,407,834
Payable for investments purchased ........................ 21,327,866
Payable for investment advisory fees ..................... 1,322,834
Other accrued expenses and liabilities ................... 853,398
---------------
TOTAL LIABILITIES ........................................ 27,911,932
---------------
NET ASSETS applicable to 84,994,505
shares outstanding ..................................... $ 1,608,572,253
===============
NET ASSETS CONSIST OF:
Shares of beneficial interest, at par value .............. $ 84,995
Additional paid-in capital ............................... 1,619,984,954
Accumulated distributions in excess of net
investment income ...................................... (35,110,919)
Net unrealized appreciation on investments and
foreign currency transactions .......................... 23,613,223
---------------
TOTAL NET ASSETS ......................................... $ 1,608,572,253
===============
NET ASSET VALUE
($1,608,572,253 / 84,994,505 shares outstanding;
unlimited number of shares authorized
of $0.001 par value) ................................... $18.93
======
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign taxes of $384,347) ............. $ 17,032,540
Interest ................................................. 3,210,784
---------------
TOTAL INVESTMENT INCOME .................................. 20,243,324
---------------
EXPENSES:
Investment advisory fees ................................. 8,074,514
Shareholder communications expenses ...................... 248,636
Shareholder services fees ................................ 93,772
Payroll .................................................. 92,710
Trustees' fees ........................................... 82,760
Legal and audit fees ..................................... 76,101
Custodian fees ........................................... 41,733
Miscellaneous expenses ................................... 78,833
---------------
TOTAL EXPENSES ........................................... 8,789,059
---------------
NET INVESTMENT INCOME .................................... 11,454,265
---------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments ......................... 4,460,909
Net realized gain on foreign currency transactions ....... 741
---------------
Net realized gain on investments and foreign
currency transactions .................................. 4,461,650
---------------
Net change in unrealized appreciation/depreciation
on investments and foreign currency transactions ....... 8,447,341
---------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS ...................... 12,908,991
---------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................................ $ 24,363,256
===============
See accompanying notes to financial statements.
8
THE GABELLI DIVIDEND & INCOME TRUST
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 2004 PERIOD ENDED
(UNAUDITED) DECEMBER 31, 2003(a)
---------------- --------------------
OPERATIONS:
Net investment income/(loss) .......................................................... $ 11,454,265 $ (49,373)
Net realized gain on investments and foreign currency transactions .................... 4,461,650 16,702
Net change in unrealized appreciation on investments and foreign currency transactions 8,447,341 15,165,882
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................................. 24,363,256 15,133,211
--------------- ---------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income ................................................................. (11,454,265) --
Net realized short-term gain on investments and foreign currency transactions ......... (4,472,739) --
Return of capital ..................................................................... (35,110,919)* --
--------------- ---------------
TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS ...................................... (51,037,923) --
--------------- ---------------
TRUST SHARE TRANSACTIONS:
Net increase in net assets from common shares issued in offering ...................... 185,270,000 1,439,300,001
Net decrease from repurchase of common stock .......................................... (1,190,979) --
Offering costs for offering of common shares charged to paid-in capital ............... (482,527) (2,920,000)
--------------- ---------------
NET INCREASE IN NET ASSETS FROM TRUST SHARE TRANSACTIONS .............................. 183,596,494 1,436,380,001
--------------- ---------------
NET INCREASE IN NET ASSETS ............................................................ 156,921,827 1,451,513,212
--------------- ---------------
NET ASSETS:
Beginning of period ................................................................... 1,451,650,426 137,214
--------------- ---------------
End of period ......................................................................... $ 1,608,572,253 $ 1,451,650,426
=============== ===============
----------
(a) The Gabelli Dividend & Income Trust commenced investment operations on
November 28, 2003.
* Based on current earnings and subject to change and recharacterization at
fiscal year end.
See accompanying notes to financial statements.
9
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION. The Gabelli Dividend & Income Trust (the "Trust") is a
closed-end, non-diversified management investment company organized under the
laws of the State of Delaware and registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Trust sold 7,184 shares to Gabelli Funds,
LLC (the "Adviser") for $137,214 on November 18, 2003. Investment operations
commenced on November 28, 2003. See Note 5 for share transactions.
The Trust's investment objective is to provide a high level of total
return on its assets with an emphasis on dividends and income. The Trust will
attempt to achieve its investment objective by investing, under normal market
conditions, at least 80% of its assets in dividend paying securities (such as
common and preferred stock) or other income producing securities (such as fixed
income debt securities and securities that are convertible into equity
securities).
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Trustees (the "Board") so determines, by such other method as the Board
shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by the Adviser.
Portfolio securities primarily traded on foreign markets are generally
valued at the preceding closing values of such securities on their respective
exchanges or if after the close, market conditions change significantly, certain
foreign securities may be fair valued pursuant to procedures established by the
Board. Debt instruments that are not credit impaired with remaining maturities
of 60 days or less are valued at amortized cost, unless the Board determines
such does not reflect the securities' fair value, in which case these securities
will be valued at their fair value as determined by the Board. Debt instruments
having a maturity greater than 60 days for which market quotations are readily
available are valued at the latest average of the bid and asked prices. If there
were no asked prices quoted on such day, the security is valued using the
closing bid price. Futures contracts are valued at the official closing
settlement price of the exchange or board of trade on which the applicable
contract is traded.
Securities and assets for which market quotations are not readily
available are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Board. Fair
valuation methodologies and procedures may include, but are not limited to:
analysis and review of available financial and non-financial information about
the company; comparisons to the valuation and changes in valuation of similar
securities, including a comparison of foreign securities to the equivalent U.S.
dollar value ADR securities at the close of the U.S. exchange; and evaluation of
any other information that could be indicative of the value of the security.
REPURCHASE AGREEMENTS. The Trust may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System or with other brokers or dealers
that meet credit guidelines established by the Adviser and reviewed by the Board
of Trustees. Under the terms of a typical repurchase agreement, a Trust takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and a Trust to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during a Trust's holding period. A
Trust will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 102% of the dollar
amount invested by a Trust in each agreement. The Trust will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the
10
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
adequacy of the collateral. If the seller defaults and the value of the
collateral declines or if bankruptcy proceedings are commenced with respect to
the seller of the security, realization of the collateral by the Trust may be
delayed or limited.
OPTIONS. The Trust may purchase or write call or put options on securities
or indices. As a writer of put options, the Trust receives a premium at the
outset and then bears the risk of unfavorable changes in the price of the
financial instrument underlying the option. The Trust would incur a loss if the
price of the underlying financial instrument decreases between the date the
option is written and the date on which the option is terminated. The Trust
would realize a gain, to the extent of the premium, if the price of the
financial instrument increases or stays the same between those dates.
As a purchaser of put options, the Trust pays a premium for the right to
sell to the seller of the put option the underlying security at a specified
price. The seller of the put has the obligation to purchase the underlying
security upon exercise at the exercise price. If the price of the underlying
security declines, the Trust would realize a gain upon sale or exercise. If the
price of the underlying security increases or stays the same, the Trust would
realize a loss upon sale or at expiration date, but only to the extent of the
premium paid.
In the case of call options, these exercise prices are referred to as
"in-the-money," "at-the-money" and "out-of-the-money," respectively. The Trust
may write (a) in-the-money call options when the Adviser expects that the price
of the underlying security will remain stable or decline moderately during the
option period, (b) at-the-money call options when the Adviser expects that the
price of the underlying security will remain stable or advance moderately during
the option period and (c) out-of-the-money call options when the Adviser expects
that the premiums received from writing the call option plus the appreciation in
market price of the underlying security up to the exercise price will be greater
than the appreciation in the price of the underlying security alone. In these
circumstances, if the market price of the underlying security declines and the
security is sold at this lower price, the amount of any realized loss will be
offset wholly or in part by the premium received. Out-of-the-money, at-the-money
and in-the-money put options (the reverse of call options as to the relation of
exercise price to market price) may be utilized in the same market environments
that such call options are used in equivalent transactions.
The option activity for the Trust for the six months ended June 30, 2004
was as follows:
NUMBER OF
CONTRACTS PREMIUMS
--------- --------
Call options written during the period ...... 5 $ 295
Call options exercised during the period .... (5) (295)
----- -----
Call options outstanding at June 30, 2004 ... -- --
===== =====
FOREIGN CURRENCY TRANSACTIONS. The books and records of the Trust are
maintained in United States (U.S.) dollars. Foreign currencies, investments and
other assets and liabilities are translated into U.S. dollars at the exchange
rates prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated at the exchange rate prevailing
on the respective dates of such transactions. Unrealized gains and losses, which
result from changes in foreign exchange rates and/or changes in market prices of
securities, have been included in unrealized appreciation/depreciation on
investments and foreign currency transactions. Net realized foreign currency
gains and losses resulting from changes in exchange rates include foreign
currency gains and losses between trade date and settlement date on investment
securities transactions, foreign currency transactions and the difference
between the amounts of interest and dividends recorded on the books of the Trust
and the amounts actually received. The portion of foreign currency gains and
losses related to fluctuation in exchange rates between the initial trade date
and subsequent sale trade date is included in realized gain/(loss) on
investments.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for as of the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders
are recorded on the ex-dividend date. Income distributions and capital gain
distributions are determined in accordance with Federal income tax regulations,
which may differ from accounting principles generally accepted in the United
States. These differences are primarily due to differing treatments of income
and gains on various investment securities held by the Trust, timing differences
and differing characterization of distributions made by the Trust.
11
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
For the year ended December 31, 2003, reclassifications were made to
increase accumulated net investment loss for $49,373 and to decrease accumulated
net realized gain on investments for $5,613, with an offsetting adjustment to
additional paid-in capital.
PROVISION FOR INCOME TAXES. The Trust intends to qualify and elect to be
treated as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). It is the Trust's policy 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.
Dividends and interest from non-U.S. sources received by the Trust are
generally subject to non-U.S. withholding taxes at rates ranging up to 30%. Such
withholding taxes may be reduced or eliminated under the terms of applicable
U.S. income tax treaties, and the Trust intends to undertake any procedural
steps required to claim the benefits of such treaties.
As of December 31, 2003, the components of accumulated earnings/(losses)
on a tax basis were as follows:
Accumulated net gains on investments ....................... $ 11,507
Net unrealized appreciation on investments ................. 15,160,655
Net unrealized appreciation on foreign currency transactions 4,809
-----------
Total accumulated gain ..................................... $15,176,971
===========
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. The Trust has entered into an
investment advisory agreement (the "Advisory Agreement") with the Adviser which
provides that the Trust will pay the Adviser on the first business day of each
month a fee for the previous month equal on an annual basis to 1.00% of the
value of the Trust's average weekly net assets. In accordance with the Advisory
Agreement, the Adviser provides a continuous investment program for the Trust's
portfolio and oversees the administration of all aspects of the Trust's business
and affairs.
During the six months ended June 30, 2004, Gabelli & Company, Inc.
received $1,267,222 in brokerage commissions as a result of executing agency
transactions in portfolio securities on behalf of the Trust.
The cost of calculating the Trust's net asset value per share is a Trust
expense pursuant to the Investment Advisory Agreement between the Trust and the
Adviser. During the six months ended June 30, 2004, the Trust reimbursed the
Adviser $17,400 in connection with the cost of computing the Trust's net asset
value.
4. PORTFOLIO SECURITIES. Cost of purchases and proceeds from sales of
securities, other than short-term securities, for the six months ended June 30,
2004 aggregated $804,148,561 and $105,013,125, respectively.
5. CAPITAL. The Trust is authorized to issue an unlimited number of common
shares of beneficial interest, par value $.001 per share. The Board of Trustees
of the Trust has authorized the repurchase of its shares on the open market when
the shares are trading at a discount of 7.5% or more (or such other percentage
as the Board of Trustees may determine from time to time) from the net asset
value of the shares. During the six months ended June 30, 2004, the Trust
repurchased 68,700 shares of beneficial interest in the open market at a cost of
$1,190,979 and an average discount of approximately 8.48% from its net asset
value. All shares of beneficial interest repurchased have been retired.
Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED
JUNE 30, 2004 PERIOD ENDED
(UNAUDITED) DECEMBER 31, 2003 (a)
-------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- -------------- -------------- --------------
Initial seed capital, November 18, 2003 -- -- 7,184 $ 137,214
Shares issued in offering ............. 9,700,000 $ 184,787,473 75,356,021 1,436,380,001
Shares repurchased .................... (68,700) (1,190,979) -- --
--------- -------------- ---------- --------------
Net increase .......................... 9,631,300 $ 183,596,494 75,363,205 $1,436,517,215
========= ============== ========== ==============
----------
(a) The Gabelli Dividend & Income Trust commenced investment operations on
November 28, 2003.
12
THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
6. OTHER MATTERS. On October 7, 2003, the Fund's Adviser received a subpoena
from the Attorney General of the State of New York requesting information on
mutual fund shares trading practices. The Adviser has also received requests for
information from the SEC regarding mutual fund trading practices and valuation
of portfolio securities. The Adviser has responded to the requests. The Fund
does not believe that these matters will have a material adverse effect on the
Fund's financial position or the results of its operations.
7. INDEMNIFICATIONS. The Trust enters into contracts that contain a variety of
indemnifications. The Trust's maximum exposure under these arrangements is
unknown. However, the Trust has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A DIVIDEND & INCOME TRUST SHARE OF BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT EACH PERIOD:
SIX MONTHS ENDED
JUNE 30, 2004 PERIOD ENDED
(UNAUDITED) DECEMBER 31, 2003 (a)
---------------- ---------------------
OPERATING PERFORMANCE:
Net asset value, beginning of period ..................................... $ 19.26 $ 19.06(b)
------------- -------------
Net investment income (loss) ............................................. 0.14 --
Net realized and unrealized gain on investments .......................... 0.16 0.20
------------- -------------
Total from investment operations ......................................... 0.30 0.20
------------- -------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income .................................................... (0.14) --
Net realized gain on investments ......................................... (0.05) --
Return of capital ........................................................ (0.41)*** --
------------- -------------
Total distributions to common stock shareholders ......................... (0.60) --
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Decrease in net asset value from common stock share transactions ......... (0.02) --
Offering costs for common shares charged to paid-in capital .............. (0.01) --
------------- -------------
(0.03) --
------------- -------------
Net Asset Value, end of period ........................................... $ 18.93 $ 19.26
============= =============
Net asset value total return* ............................................ 1.4% 1.0%
============= =============
Market value, end of period .............................................. $ 17.39 $ 20.00
============= =============
Total investment return** ................................................ (10.2)% 0.0%
============= =============
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ..................................... $ 1,608,572 $ 1,451,650
Ratio of net investment income (loss) to average net assets .............. 1.41%(c) (0.04)%(c)
Ratio of operating expenses to average net assets ........................ 1.09%(c) 1.38%(c)
Portfolio turnover rate .................................................. 11.3% 0.4%
----------
(a) The Gabelli Dividend & Income Trust commenced investment operations on
November 28, 2003.
(b) The beginning NAV includes a $0.04 reduction for costs associated with the
initial public offering.
(c) Annualized.
* Based on net asset value per share at commencement of operations of $19.06
per share. Total return for the period of less than one year is not
annualized.
** Based on market value per share at initial public offering of $20.00 per
share. Total return for the period of less than one year is not
annualized.
*** Based on current earnings and subject to change and recharacterization at
fiscal year end.
See accompanying notes to financial statements.
13
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLAN
ENROLLMENT IN THE PLAN
It is the Policy of The Gabelli Dividend & Income Trust ("Dividend &
Income Trust") to automatically reinvest dividends. As a "registered"
shareholder you automatically become a participant in the Dividend & Income
Trust's Automatic Dividend Reinvestment Plan (the "Plan"). The Plan authorizes
the Dividend & Income Trust to issue shares to participants upon an income
dividend or a capital gains distribution regardless of whether the shares are
trading at a discount or a premium to net asset value. All distributions to
shareholders whose shares are registered in their own names will be
automatically reinvested pursuant to the Plan in additional shares of the
Dividend & Income Trust. Plan participants may send their stock certificates to
EquiServe Trust Company ("EquiServe") to be held in their dividend reinvestment
account. Registered shareholders wishing to receive their distribution in cash
must submit this request in writing to:
The Gabelli Dividend & Income Trust
c/o EquiServe
P.O. Box 43011
Providence, RI 02940-3011
Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan or requesting a copy of the terms of the
Plan may contact EquiServe at (800) 336-6983.
SHAREHOLDERS WISHING TO LIQUIDATE REINVESTED SHARES held at EquiServe must
do so in writing or by telephone. Please submit your request to the above
mentioned address or telephone number. Include in your request your name,
address and account number. The cost to liquidate shares is $2.50 per
transaction as well as the brokerage commission incurred. Brokerage charges are
expected to be less than the usual brokerage charge for such transactions.
If your shares are held in the name of a broker, bank or nominee, you
should contact such institution. If such institution is not participating in the
Plan, your account will be credited with a cash dividend. In order to
participate in the Plan through such institution, it may be necessary for you to
have your shares taken out of "street name" and re-registered in your own name.
Once registered in your own name your dividends will be automatically
reinvested. Certain brokers participate in the Plan. Shareholders holding shares
in "street name" at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must
contact their broker to make this change.
The number of shares of Common Stock distributed to participants in the
Plan in lieu of cash dividends is determined in the following manner. Under the
Plan, whenever the market price of the Dividend & Income Trust's Common Stock is
equal to or exceeds net asset value at the time shares are valued for purposes
of determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued shares of Common Stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current market price of the Dividend & Income Trust's Common Stock. The
valuation date is the dividend or distribution payment date or, if that date is
not a New York Stock Exchange trading day, the next trading day. If the net
asset value of the Common Stock at the time of valuation exceeds the market
price of the Common Stock, participants will receive shares from the Dividend &
Income Trust valued at market price. If the Dividend & Income Trust should
declare a dividend or capital gains distribution payable only in cash, EquiServe
will buy Common Stock in the open market, or on the New York Stock Exchange or
elsewhere, for the participants' accounts, except that EquiServe will endeavor
to terminate purchases in the open market and cause the Dividend & Income Trust
to issue shares at net asset value if, following the commencement of such
purchases, the market value of the Common Stock exceeds the then current net
asset value.
The automatic reinvestment of dividends and capital gains distributions
will not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for Federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.
The Dividend & Income Trust reserves the right to amend or terminate the
Plan as applied to any voluntary cash payments made and any dividend or
distribution paid subsequent to written notice of the change sent to the members
of the Plan at least 90 days before the record date for such dividend or
distribution. The Plan also may be amended or terminated by EquiServe on at
least 90 days' written notice to participants in the Plan.
VOLUNTARY CASH PURCHASE PLAN
The Voluntary Cash Purchase Plan is yet another vehicle for our
shareholders to increase their investment in the Dividend & Income Trust. In
order to participate in the Voluntary Cash Purchase Plan, shareholders must have
their shares registered in their own name.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to EquiServe for investments in the Dividend & Income
Trust's shares at the then current market price. Shareholders may send an amount
from $250 to $10,000. EquiServe will use these funds to purchase shares in the
open market on or about the 1st and 15th of each month. EquiServe will charge
each shareholder who participates $0.75, plus a pro rata share of the brokerage
commissions. Brokerage charges for such purchases are expected to be less than
the usual brokerage charge for such transactions. It is suggested that any
voluntary cash payments be sent to EquiServe, P.O. Box 43011, Providence, RI
02940-3011 such that EquiServe receives such payments approximately 10 days
before the 1st and 15th of the month. Funds not received at least five days
before the investment date shall be held for investment until the next purchase
date. A payment may be withdrawn without charge if notice is received by
EquiServe at least 48 hours before such payment is to be invested.
For more information regarding the Dividend Reinvestment Plan and
Voluntary Cash Purchase Plan, brochures are available by calling (914) 921-5070
or by writing directly to the Dividend & Income Trust.
14
TRUSTEES AND OFFICERS
THE GABELLI DIVIDEND & INCOME TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422
TRUSTEES
Mario J. Gabelli, CFA
CHAIRMAN AND CHIEF INVESTMENT OFFICER,
GABELLI ASSET MANAGEMENT INC.
Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.
James P. Conn
FORMER MANAGING DIRECTOR AND CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Mario d'Urso
CHAIRMAN, MITTEL CAPITAL MARKETS SPA
Frank J. Fahrenkopf, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER,
AMERICAN GAMING ASSOCIATION
Michael J. Melarkey
ATTORNEY-AT-LAW,
AVANSINO, MELARKEY, KNOBEL & MULLIGAN
Karl Otto Pohl
FORMER PRESIDENT, DEUTSCHE BUNDESBANK
Salvatore M. Salibello
CERTIFIED PUBLIC ACCOUNTANT,
SALIBELLO & BRODER
Edward T. Tokar
SENIOR MANAGING DIRECTOR, BEACON TRUST COMPANY
Anthonie C. van Ekris
MANAGING DIRECTOR, BALMAC INTERNATIONAL, INC.
Salvatore J. Zizza
CHAIRMAN, HALLMARK ELECTRICAL SUPPLIES CORP.
OFFICERS
Bruce N. Alpert
PRESIDENT
Carter W. Austin
VICE PRESIDENT
Matthew A. Hultquist
VICE PRESIDENT & OMBUDSMAN
James E. McKee
SECRETARY
Richard C. Sell, Jr.
TREASURER
INVESTMENT ADVISER
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
CUSTODIAN
State Street Bank and Trust Company
COUNSEL
Skadden, Arps, Slate, Meagher & Flom, LLP
TRANSFER AGENT AND REGISTRAR
EquiServe Trust Company
STOCK EXCHANGE LISTING
Common
------
NYSE-Symbol: GDV
Shares Outstanding: 84,994,505
The Net Asset Value appears in the Publicly Traded Funds column, under the
heading "General Equity Funds," in Sunday's The New York Times and in Monday's
The Wall Street Journal. It is also listed in Barron's Mutual Funds/Closed End
Funds section under the heading "General Equity Funds."
The Net Asset Value may be obtained each day by calling (914) 921-5071.
--------------------------------------------------------------------------------
For general information about the Gabelli Funds, call 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: WWW.GABELLI.COM or e-mail us at: closedend@gabelli.com
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Dividend & Income Trust may, from time
to time, purchase its shares in the open market when the Dividend & Income Trust
shares are trading at a discount of 7.5% or more from the net asset value of the
shares.
--------------------------------------------------------------------------------
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
=============================================================================================================================
(D) MAXIMUM NUMBER (0R
(C) TOTAL NUMBER OF SHARES APPROXIMATE DOLLAR VALUE) OF SHARES
(A) TOTAL NUMBER (B) AVERAGE (OR UNITS) PURCHASED AS PART (0R UNITS) THAT MAY YET BE
OF SHARES (OR PRICE PAID PER OF PUBLICLY ANNOUNCED PLANS PURCHASED UNDER THE PLANS OR
PERIOD UNITS) PURCHASED SHARE (OR UNIT) OR PROGRAMS PROGRAMS
=============================================================================================================================
Month #1 Common - N/A Common - N/A Common - N/A Common - 85,063,205
01/01/04
through 01/31/04 Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
=============================================================================================================================
Month #2 Common - N/A Common - N/A Common - N/A Common - 85,063,205
02/01/04
through 02/29/04 Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
=============================================================================================================================
Month #3 Common - N/A Common - N/A Common - N/A Common - 85,063,205
03/01/04
through 03/31/04 Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
=============================================================================================================================
Month #4 Common purchased by Common purchased Common - N/A Common - 85,063,205
04/01/04 an affiliate - by an affiliate -
through 04/30/04 162,600 $18.6306 Preferred - N/A Preferred - N/A
Preferred - N/A Preferred - N/A
=============================================================================================================================
Month #5 Common purchased by Common purchased Common - N/A Common - 85,063,205
05/01/04 an affiliate - by an affiliate -
through 05/31/04 100,000 $17.0518 Preferred - N/A Preferred - N/A
Preferred - N/A Preferred - N/A
=============================================================================================================================
Month #6 Common - 68,700 Common - $17.3355 Common - 68,700 Common - 85,063,205 - 68,700 =
06/01/04 84,994,505
through 06/30/04 Preferred - N/A Preferred - N/A Preferred - N/A
Preferred - N/A
=============================================================================================================================
Total Common - 68,700 Common - $17.3355 Common - 68,700 N/A
Common purchased by Common purchased by Preferred - N/A
an affiliate - an affiliate -
262,600 $18.0294
Preferred - N/A Preferred - N/A
=============================================================================================================================
a. The date each plan or program was announced - The notice of the potential
repurchase of common 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.
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 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Trustees, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a)(1) Not applicable.
(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(a) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Gabelli Dividend & Income Trust
-----------------------------------------------------
By (Signature and Title)* /s/ BRUCE N. ALPERT
-----------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date September 7, 2004
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ BRUCE N. ALPERT
-----------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date SEPTEMBER 7, 2004
----------------------------------------------------------------------------
By (Signature and Title)* /s/ RICHARD C. SELL, JR.
-----------------------------------------------------
Richard C. Sell, Jr., Principal Financial Officer
and Treasurer
Date September 7, 2004
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.