Opinion
on the Financial Statements
We
have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Gabelli Multimedia
Trust Inc. (the “Fund”) as of December 31, 2022, the related statement of operations for the year ended December 31,
2022, the statement of changes in net assets attributable to common stockholders for each of the two years in the period ended
December 31, 2022, including the related notes, and the financial highlights for each of the five years in the period ended December
31, 2022 (collectively referred to as the “financial statements”). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Fund as of December 31, 2022, the results of its operations for
the year then ended, the changes in its net assets attributable to common stockholders for each of the two years in the period
ended December 31, 2022, and the financial highlights for each of the five years in the period ended December 31, 2022 in conformity
with accounting principles generally accepted in the United States of America.
Basis
for Opinion
These
financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the
Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We
conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
Our procedures included confirmation of securities owned as of December 31, 2022, by correspondence with the custodian and broker.
We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers
LLP
New
York, New York
March
1, 2023
We
have served as the auditor of one or more investment companies in the Gabelli Fund Complex since 1986.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Unaudited)
Summary
of Updated Information Regarding the Fund
The
following includes information that is incorporated by reference in the Fund’s Registration Statement and is also a summary
of certain changes during the most recent fiscal year ended December 31, 2022. This information may not reflect all of the changes
that have occurred since you purchased shares of the Fund.
SUMMARY
OF FUND EXPENSES
The
following table shows the Fund’s expenses, which are borne directly or indirectly by holders of the Fund’s common
shares, including preferred shares offering expenses, as a percentage of net assets attributable to common shares. The table is
based on the capital structure of the Fund as of December 31, 2022. The purpose of the table and example below is to help you
understand all fees and expenses that you, as a holder of common shares, would bear directly or indirectly.
| | |
Percentages of Net Assets |
| Annual Expenses | |
Attributable to Common Shares |
| Management Fees(a) | |
1.80% |
| Other Expenses(b) | |
0.69% |
| Total Annual Expenses | |
6.58% |
| Dividends on Preferred Shares(c) | |
4.10% |
| Total Annual Expenses and Dividends on Preferred | |
4.78% |
| | |
|
| (a) | The
Investment Adviser’s fee is 1.00% annually of the Fund’s average weekly net assets. The Fund’s average
weekly net assets will be deemed to be the average weekly value of the Fund’s total assets minus the sum of the Fund’s
liabilities (such liabilities exclude (i) the aggregate liquidation preference of outstanding shares of preferred Shares and accumulated
dividends, if any, on those shares and (ii) the liabilities for any money borrowed). Consequently, because the Fund has preferred
Shares outstanding, the investment management fees and other expenses as a percentage of net assets attributable to common Shares
will be higher than if the Fund did not utilize a leveraged capital structure. |
| (b) | “Other
Expenses” are based on the amounts for the year ended December 31, 2022. |
| (c) | Dividends
on Preferred Stock represent the estimated annual distributions on the existing preferred stock outstanding. |
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
The
following example illustrates the expenses you would pay on a $1,000 investment in common Shares, assuming a 5% annual portfolio
total return.*
| |
|
1
Year |
|
3
Year |
|
5
Year |
|
10
Year |
| Total
Expenses Incurred |
|
$49 |
|
$147 |
|
$245 |
|
$492 |
| |
|
|
|
|
|
|
|
|
| * | The
example should not be considered a representation of future expenses. The example is
based on Total Annual Expenses and Dividends on Preferred Shares shown in the table above
and assumes that the amounts set forth in the table do not change and that all distributions
are reinvested at net asset value. Actual expenses may be greater or less than those
assumed. Moreover, the Fund’s actual rate of return may be greater or less than
the hypothetical 5% return shown in the example. |
The
above example includes Dividends on Preferred Shares. If Dividends on Preferred Shares were not included in the example calculation,
the expenses would be as follows (based on the same assumptions as above).
| |
|
1
Year |
|
3
Year |
|
5
Year |
|
10
Year |
| Total
Expenses Incurred |
|
$21 |
|
$64 |
|
$110 |
|
$236 |
Share
Price Data The Fund’s common stock is listed on the NYSE, under the trading or “ticker” symbol “GGT.”
Currently, the Series E Preferred and Series G Preferred are listed on the NYSE under the symbol “GGT PrE” and “GGT
PrG” respectively. The Series C Auction Rate Preferred is not listed on a stock exchange. Any additional series of fixed
rate preferred stock would also likely be listed on a stock exchange. The Fund’s common shares have historically traded
at a discount to the Fund’s net asset value. Over the past ten years, the Fund’s common shares have traded at a premium
to net asset value as high as 67.80% and a discount as low as (15.90)%. Any additional series of fixed rate preferred shares or
subscription rights issued in the future pursuant to a Prospectus Supplement by the Fund would also likely be listed on the NYSE
American.
The
following table sets forth for the quarters indicated, the high and low sale prices on the NYSE American per share of our common
shares and the net asset value and the premium or discount from net asset value per share at which the common shares were trading,
expressed as a percentage of net asset value, at each of the high and low sale prices provided.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
| |
| |
| |
| |
|
| |
| |
|
| |
| |
| |
| |
Corresponding | |
| |
|
| |
| |
| |
| |
Net Asset | |
Corresponding |
| |
| |
| |
| |
Value | |
Premium or |
| |
| |
Common Share | |
(“NAV”) Per | |
Discount as a % |
| |
| |
Market Price | |
Share | |
of NAV |
| |
Quarter Ended | |
High | |
Low | |
High | |
Low | |
High | |
Low |
| |
March 31, 2021 | |
$10.24 | |
$7.78 | |
$9.76 | |
$8.01 | |
4.91% | |
(2.87)% |
| |
June 30, 2021 | |
$11.19 | |
$9.65 | |
$9.31 | |
$8.85 | |
20.19% | |
9.04% |
| |
September 30, 2021 | |
$11.10 | |
$9.00 | |
$9.16 | |
$8.62 | |
21.23% | |
4.40% |
| |
December 31, 2021 | |
$9.52 | |
$8.39 | |
$8.32 | |
$7.82 | |
14.42% | |
7.28% |
| |
March 31, 2022 | |
$9.33 | |
$7.89 | |
$6.74 | |
$7.23 | |
38.43% | |
9.13% |
| |
June 30, 2022 | |
$9.18 | |
$6.63 | |
$7.35 | |
$5.43 | |
24.90% | |
22.10% |
| |
September 30, 2022 | |
$7.87 | |
$6.07 | |
$4.69 | |
$3.72 | |
67.80% | |
63.17% |
| |
December 31, 2022 | |
$6.62 | |
$5.17 | |
$4.01 | |
$3.89 | |
65.09% | |
32.19% |
The
last reported price for our common shares on December 31, 2022 was $5.35 per share. As of December 31, 2022, the net asset value
per share of the Fund’s common shares was $3.89. Accordingly, the Fund’s common shares traded at a premium to net
asset value of 37.53% on December 31, 2022.
Unresolved
SEC Staff Comments
The
Fund does not believe that there are any material unresolved written comments, received 180 days or more before December 31, 2022
from the Staff of the SEC regarding any of the Fund’s periodic or current reports under the Securities Exchange Act of 1934
or the Investment Company Act of 1940, or its registration statement.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
Selected
data for a common share outstanding throughout each year:
| | |
For the Year Ended December 31, | |
| | |
2017 | | |
2016 | | |
2015 | | |
2014 | | |
2013 | |
| Operating
Performance: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net
asset value, beginning of year | |
$ | 8.13 | | |
$ | 8.36 | | |
$ | 9.81 | | |
$ | 10.90 | | |
$ | 8.22 | |
| Net investment income | |
| 0.01 | | |
| 0.05 | | |
| 0.03 | | |
| 0.05 | | |
| 0.06 | |
| Net
realized and unrealized gain/(loss) on investments and foreign currency transactions | |
| 2.11 | | |
| 0.60 | | |
| (0.49 | ) | |
| 0.42 | | |
| 3.61 | |
| Total
from investment operations | |
| 2.12 | | |
| 0.65 | | |
| (0.46 | ) | |
| 0.47 | | |
| 3.67 | |
| Distributions
to Preferred Shareholders: (a) | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net investment income | |
| (0.00 | )(b) | |
| (0.00 | )(b) | |
| (0.00 | )(b) | |
| (0.00 | )(b) | |
| (0.01 | ) |
| Net
realized gain | |
| (0.08 | ) | |
| (0.05 | ) | |
| (0.05 | ) | |
| (0.06 | ) | |
| (0.06 | ) |
| Total
distributions to preferred shareholders | |
| (0.08 | ) | |
| (0.05 | ) | |
| (0.05 | ) | |
| (0.06 | ) | |
| (0.07 | ) |
| Net
Increase/(Decrease) in Net Assets Attributable to Common Shareholders Resulting from Operations | |
| 2.04 | | |
| 0.60 | | |
| (0.51 | ) | |
| 0.41 | | |
| 3.60 | |
| Distributions
to Common Shareholders: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net investment income | |
| (0.03 | ) | |
| (0.06 | ) | |
| (0.03 | ) | |
| (0.02 | ) | |
| (0.05 | ) |
| Net realized gain | |
| (0.73 | ) | |
| (0.74 | ) | |
| (0.89 | ) | |
| (0.88 | ) | |
| (0.87 | ) |
| Return of capital | |
| (0.12 | ) | |
| (0.03 | ) | |
| (0.02 | ) | |
| (0.15 | ) | |
| — | |
| Total
distributions to common shareholders | |
| (0.88 | ) | |
| (0.83 | ) | |
| (0.94 | ) | |
| (1.05 | ) | |
| (0.92 | ) |
| Fund Share Transactions: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Decrease in net asset
value from common shares issued in rights offering | |
| — | | |
| — | | |
| — | | |
| (0.44 | ) | |
| — | |
| Increase in net asset
value from repurchase of common shares | |
| 0.00 | (b) | |
| — | | |
| — | | |
| — | | |
| — | |
| Increase in net asset
value from common shares issued upon reinvestment of distributions | |
| — | | |
| — | | |
| — | | |
| 0.00 | (b) | |
| 0.00 | (b) |
| Increase in net asset
value from redemption of preferred shares | |
| 0.12 | | |
| — | | |
| | | |
| — | | |
| — | |
| Offering
expenses charged to paid-in capital | |
| (0.07 | ) | |
| — | | |
| (0.00 | )(b) | |
| (0.01 | ) | |
| — | |
| Total Fund share
transactions | |
| 0.05 | | |
| — | | |
| (0.00 | )(b) | |
| (0.45 | ) | |
| 0.00 | (b) |
| Net
Asset Value Attributable to Common Shareholders, End of Year | |
$ | 9.34 | | |
$ | 8.13 | | |
$ | 8.36 | | |
$ | 9.81 | | |
$ | 10.90 | |
| NAV
total return † | |
| 26.50 | % | |
| 7.59 | % | |
| (5.57 | )% | |
| 4.17 | % | |
| 45.77 | % |
| Market value, end
of year | |
$ | 9.20 | | |
$ | 7.24 | | |
$ | 7.50 | | |
$ | 10.01 | | |
$ | 12.40 | |
| Investment
total return †† | |
| 40.21 | % | |
| 7.97 | % | |
| (16.33 | )% | |
| (6.63 | )% | |
| 73.37 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Ratios
to Average Net Assets and Supplemental Data: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net assets including
liquidation value of preferred shares,end of year (in 000’s) | |
$ | 297,503 | | |
$ | 232,399 | | |
$ | 238,049 | | |
$ | 273,307 | | |
$ | 232,399 | |
| Net assets attributable
to common shares, end of year (in 000’s) | |
$ | 227,477 | | |
$ | 197,623 | | |
$ | 203,274 | | |
$ | 238,532 | | |
$ | 197,624 | |
| Ratio of net investment
income/(loss) to average net assets attributable to common shares before preferred share distributions | |
| 0.13 | % | |
| 0.70 | % | |
| 0.33 | % | |
| 0.13 | % | |
| 0.60 | % |
| Ratio of operating expenses
to average net assets attributable to common shares before fees waived/fee reduction | |
| 1.45 | %(c) | |
| 1.49 | %(c)(d) | |
| 1.45 | %(c) | |
| 1.59 | % | |
| 1.55 | % |
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
Selected
data for a common share outstanding throughout each year:
| | |
| | |
| | |
| | |
| | |
| |
| | |
For the Year Ended December 31, | |
| | |
2017 | | |
2016 | | |
2015 | | |
2014 | | |
2013 | |
| Ratios to Average Net Assets and Supplemental Data (Continued): | | |
| | | |
| | | |
| | | |
| | |
| Ratio of operating expenses to average net assets attributable to common shares net of advisory fee reduction, if any | |
| 1.45 | %(c) | |
| 1.49 | %(c)(d) | |
| 1.30 | %(c) | |
| 1.50 | % | |
| 1.55 | % |
| Ratio of operating expenses to average net assets including liquidation value of preferred shares before fees waived/fee reduction | |
| 1.23 | %(c) | |
| 1.27 | %(c)(d) | |
| 1.26 | %(c) | |
| 1.37 | % | |
| 1.29 | % |
| Ratio of operating expenses to average net assets including liquidation value of preferred shares net of advisory fee reduction, if any. | |
| 1.23 | %(c) | |
| 1.27 | %(c)(d) | |
| 1.13 | %(c) | |
| 1.29 | % | |
| 1.29 | % |
| Portfolio turnover rate | |
| 16.8 | % | |
| 10.3 | % | |
| 14.0 | % | |
| 16.0 | % | |
| 12.7 | % |
| Cumulative Preferred Stock: | |
| | | |
| | | |
| | | |
| | | |
| | |
| 6.000% Series B Preferred | |
| | | |
| | | |
| | | |
| | | |
| | |
| Liquidation value, end of year (in 000’s) | |
$ | 19,775 | | |
$ | 19,775 | | |
$ | 19,775 | | |
$ | 19,775 | | |
$ | 19,775 | |
| Total shares outstanding (in 000’s). | |
| 791 | | |
| 791 | | |
| 791 | | |
| 791 | | |
| 791 | |
| Liquidation preference per share. | |
$ | 25.00 | | |
$ | 25.00 | | |
$ | 25.00 | | |
$ | 25.00 | | |
$ | 25.00 | |
| Average market value (e) | |
$ | 26.36 | | |
$ | 26.42 | | |
$ | 25.80 | | |
$ | 25.41 | | |
$ | 25.45 | |
| Asset coverage per share(f) | |
$ | 106.21 | | |
$ | 167.07 | | |
$ | 171.13 | | |
$ | 196.48 | | |
$ | 167.07 | |
| Series C Auction Rate Preferred | |
| | | |
| | | |
| | | |
| | | |
| | |
| Liquidation value, end of year (in 000’s) | |
$ | 250 | | |
$ | 15,000 | | |
$ | 15,000 | | |
$ | 15,000 | | |
$ | 15,000 | |
| Total shares outstanding (in 000’s). | |
| 0 | (g) | |
| 1 | | |
| 1 | | |
| 1 | | |
| 1 | |
| Liquidation preference per share. | |
$ | 25,000 | | |
$ | 25,000 | | |
$ | 25,000 | | |
$ | 25,000 | | |
$ | 25,000 | |
| Liquidation value (h) | |
$ | 25,000 | | |
$ | 25,000 | | |
$ | 25,000 | | |
$ | 25,000 | | |
$ | 25,000 | |
| Asset coverage per share(f) | |
$ | 106,212 | | |
$ | 167,071 | | |
$ | 171,134 | | |
$ | 196,481 | | |
$ | 167,072 | |
| 5.125% Series E Preferred | |
| | | |
| | | |
| | | |
| | | |
| | |
| Liquidation value, end of period (in 000’s). | |
$ | 50,000 | | |
| — | | |
| — | | |
| — | | |
| — | |
| Total shares outstanding (in 000’s). | |
| 2,000 | | |
| — | | |
| — | | |
| — | | |
| — | |
| Liquidation preference per share. | |
$ | 25.00 | | |
| — | | |
| — | | |
| — | | |
| — | |
| Average market value. | |
$ | 24.98 | | |
| — | | |
| — | | |
| — | | |
| — | |
| Asset coverage per share | |
$ | 106.21 | | |
| — | | |
| — | | |
| — | | |
| — | |
| Asset Coverage (i) | |
| 425 | % | |
| 668 | % | |
| 685 | % | |
| 786 | % | |
| 668 | % |
| † | Based
on net asset value per share, adjusted for reinvestment of distributions of net asset
value on the ex-dividend date, including the effect of shares pursuant to the 2014 rights
offering, assuming full subscription by shareholders. |
| †† | Based
on market value per share, adjusted for reinvestment of distributions at prices determined
under the Fund’s dividend reinvestment plan including the effect of shares issued
pursuant to the 2014 rights offering, assuming full subscription by shareholders. |
| (a) | Calculated
based on average common shares outstanding on the record dates throughout the years. |
| (b) | Amount
represents less than $0.005 per share. |
| (c) | The
Fund received credits from a designated broker who agreed to pay certain Fund operating
expenses. For the years ended December 31, 2017, 2016, and 2015, there was no impact
on the expense ratios. |
| (d) | During
the year ended December 31, 2016, the fund received a one time reimbursement of custody
expenses paid in prior years. Had such reimbursement been included in this period, the
annualized expense ratios would have been 1.32% attributable to common shares before
fees waived, 1.32% attributable to common shares net of advisory fee reduction, 1.13%
including liquidation value of preferred shares before fees waived, and 1.13% including
liquidation value of preferred shares net of advisory fee reduction. |
| (e) | Based
on weekly prices. |
| (f) | Asset
coverage per share is calculated by combining all series of preferred shares. |
| (g) | Actual
number of shares outstanding is 10. |
| (h) | Since
February 2008, the weekly auctions have failed. Holders that have submitted orders have
not been able to sell any or all of their shares in the auction. |
| (i) | Asset
coverage is calculated by combining all series of preferred shares. |
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
INVESTMENT
OBJECTIVES AND POLICIES
Investment
Objectives
The
Fund’s primary investment objective is to achieve long-term growth of capital by investing primarily in the common stock
and other securities of foreign and domestic companies involved in the telecommunications, media, publishing, and entertainment
industries. Income is the secondary investment objective. The investment objectives of long-term growth of capital and income
are fundamental policies of the Fund. The Fund’s policy of concentration in companies in the communications industries is
also a fundamental policy of the Fund.
Under
normal market conditions, the Fund will invest at least 80% of the value of its net assets, plus borrowings for investment purposes,
in common stock and other securities, including convertible securities, preferred stock, options, and warrants of companies in
the telecommunications, media, publishing, and entertainment industries (the “80% Policy”). The Fund may invest in
companies of any size market capitalization. The Fund may invest, without limitation, in foreign securities. The Fund may also
invest in securities of companies located in emerging markets.
A
company will be considered to be in these industries if it derives at least 50% of its revenues or earnings from, or devotes at
least 50% of its assets to, the indicated activities or multimedia related activities. The 80% Policy may be changed without stockholder
approval. The Fund will provide stockholders with notice at least sixty days prior to the implementation of any change in the
80% Policy.
The
telecommunications companies in which the Fund may invest are engaged in the development, manufacture, or sale of communications
services or equipment throughout the world, including the following products or services: regular telephone service; wireless
communications services and equipment, including cellular telephone, microwave and satellite communications, paging, and other
emerging wireless technologies; equipment and services for both data and voice transmission, including computer hardware and software;
electronic components and communications equipment; video conferencing; electronic mail; local and wide area networking, and linkage
of data and word processing systems; publishing and information systems; video text and teletext; emerging technologies combining
television, telephone and computer systems; broadcasting, including television and radio, satellite and microwave transmission
and cable television.
The
entertainment, media and publishing companies in which the Fund may invest are engaged in providing the following products or
services: the creation, packaging, distribution, and ownership of entertainment programming throughout the world, including pre-recorded
music, feature-length motion pictures, made-for-TV movies, television series, documentaries, animation, game shows, sports programming,
and news programs; live events such as professional sporting events or concerts, theatrical exhibitions, television and radio
broadcasting, satellite and microwave transmission, cable television systems and programming, broadcast and cable networks, wireless
cable television and other emerging distribution technologies; home video, interactive and multimedia programming, including home
shopping and multiplayer games; publishing, including newspapers, magazines and books, advertising agencies and niche advertising
mediums such as in-store or direct mail; emerging technologies combining television, telephone, and computer systems, computer
hardware
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
and
software; and equipment used in the creation and distribution of entertainment programming such as that required in the provision
of broadcast, cable, or telecommunications services.
Investing
in securities of foreign issuers, which generally are denominated in foreign currencies, may involve certain risk and opportunity
considerations not typically associated with investing in domestic companies and could cause the Fund to be affected favorably
or unfavorably by changes in currency exchange rates and revaluations of currencies.
The
Investment Adviser believes that at the present time investment by the Fund in the securities of companies located throughout
the world presents great potential for accomplishing the Fund’s investment objectives. While the Investment Adviser expects
that a substantial portion of the Fund’s portfolio may be invested in the securities of domestic companies, a significant
portion of the Fund’s portfolio may also be comprised of the securities of issuers headquartered outside the United States.
No
assurance can be given that the Fund’s investment objectives will be achieved.
Investment
Methodology of the Fund
In
selecting securities for the Fund, the Investment Adviser normally will consider the following factors, among others:
| ● | the
Investment Adviser’s own evaluations of the private market value (as defined below), cash flow, earnings per share, and
other fundamental aspects of the underlying assets and business of the company; |
| ● | the
potential for capital appreciation of the securities; |
| ● | the
interest or dividend income generated by the securities; |
| ● | the
prices of the securities relative to other comparable securities; |
| ● | whether
the securities are entitled to the benefits of call protection or other protective covenants; |
| ● | the
existence of any anti-dilution protections or guarantees of the security; and |
| ● | the
diversification of the portfolio of the Fund as to issuers. |
The
Investment Adviser’s investment philosophy with respect to equity securities is to identify assets that are selling in
the public market at a discount to their private market value. The Investment Adviser defines private market value as the
value informed purchasers are willing to pay to acquire assets with similar characteristics. The Investment Adviser also
normally evaluates an issuer’s free cash flow and long-term earnings trends. Finally, the Investment Adviser looks for
a catalyst, something indigenous to the company, its industry, or country that will surface additional value.
Certain
Investment Practices
Foreign
Securities. There is no limitation on the amount of foreign securities in which the Fund may invest. Among the foreign securities
in which the Fund may invest are those issued by companies located in developing countries or emerging markets, which are countries
in the initial stages of their industrialization cycles. Investing in the equity and debt markets of developing countries involves
exposure to economic structures that are generally less diverse and less mature, and to political systems that may have less stability
than those of
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developed
countries. The markets of developing countries historically have been more volatile than the markets of the more mature economies
of developed countries, but often have provided higher rates of return to investors.
The
Fund may also invest in the debt securities of foreign governments. Although such investments are not a principal strategy of
the Fund, there is limitation on its ability to invest in the debt securities of foreign governments.
Corporate
Reorganizations. The Fund
may invest without limit in securities of companies for which a tender or exchange offer has been made or announced and in securities
of companies for which a merger, consolidation, liquidation, or similar reorganization proposal has been announced if, in the
judgment of the Investment Adviser, there is a reasonable prospect of capital appreciation significantly greater than the added
portfolio turnover expenses inherent in the short term nature of such transactions. The principal risk is that such offers or
proposals may not be consummated within the time and under the terms contemplated at the time of the investment, in which case,
unless such offers or proposals are replaced by equivalent or increased offers or proposals that are consummated, the Fund may
sustain a loss.
Temporary
Defensive Investments. Subject
to the Fund’s investment restrictions, when a temporary defensive period is believed by the Investment Adviser to be warranted
(“temporary defensive periods”), the Fund may, without limitation, hold cash or invest its assets in securities of
U.S. government sponsored instrumentalities, in repurchase agreements in respect of those instruments, and in certain high grade
commercial paper instruments. During temporary defensive periods, the Fund may also invest up to 10% of the market value of its
total assets in money market mutual funds that invest primarily in securities of U.S. government sponsored instrumentalities and
repurchase agreements in respect of those instruments. Obligations of certain agencies and instrumentalities of the U.S. government,
such as the Government National Mortgage Association, are supported by the “full faith and credit” of the U.S. government;
others, such as those of the Export-Import Bank of the U.S., are supported by the right of the issuer to borrow from the U.S.
Treasury; others, such as those of the Federal National Mortgage Association, are supported by the discretionary authority of
the U.S. government to purchase the agency’s obligations; and still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. No assurance can be given that the U.S. government would
provide financial support to U.S. government sponsored instrumentalities if it is not obligated to do so by law. During temporary
defensive periods, the Fund may be less likely to achieve its secondary investment objective of income.
Special
Investment Methods
Options.
On behalf of the Fund, and
subject to guidelines of the Board, the Investment Adviser may purchase or sell (i.e., write) options on securities, securities
indices and foreign currencies which are listed on a national securities exchange or in the U.S. over-the-counter (“OTC”)
markets as a means of achieving additional return or of hedging the value of the Fund’s portfolio. The Fund may write covered
call options on common stocks that it owns or has an immediate right to acquire through conversion or exchange of other securities
in an amount not to exceed 25% of total assets or invest up to 10% of its total assets in the purchase of put options on common
stocks that the Fund owns or may acquire through the conversion or exchange of other securities that it owns.
A
call option is a contract that gives the holder of the option the right to buy from the writer (seller) of the call option, in
return for a premium paid, the security underlying the option at a specified exercise price at any time during the term of the
option.
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The
writer of the call option has the obligation upon exercise of the option to deliver the underlying security upon payment of the
exercise price during the option period.
A
put option is a contract that gives the holder of the option the right to sell to the writer (seller), in return for the premium,
the underlying security at a specified price during the term of the option. The writer of the put, who receives the premium, has
the obligation to buy the underlying security upon exercise, at the exercise price during the option period.
If
the Fund has written an option, it may terminate its obligation by effecting a closing purchase transaction. This is accomplished
by purchasing an option of the same series as the option previously written. There can be no assurance that a closing purchase
transaction can be effected when the Fund so desires.
An
exchange traded option may be closed out only on an exchange which provides a secondary market for an option of the same series.
Although the Fund will generally purchase or write only those options for which there appears to be an active secondary market,
there is no assurance that a liquid secondary market on an exchange will exist for any particular option.
Limitations
on the Purchase and Sale of Futures Contracts, Certain Options and Swaps. Subject
to the guidelines of the Board, the Fund may engage in “commodity interest” transactions (generally,
transactions in futures, certain options, certain currency transactions and certain types of swaps) only for bona fide
hedging or other permissible transactions in accordance with the rules and regulations of the Commodity Futures Trading
Commission (“CFTC”). Pursuant to amendments by the CFTC to Rule 4.5 under the Commodity Exchange Act
(“CEA”), the Investment Adviser has filed a notice of exemption from registration as a “commodity pool
operator” with respect to the Fund. The Fund and the Investment Adviser are therefore not subject to registration or
regulation as a commodity pool operator under the CEA. Due to the amendments to Rule 4.5 under the CEA, certain trading
restrictions are applicable to the Fund. These trading restrictions permit the Fund to engage in commodity interest
transactions that include (i) “bona fide hedging” transactions, as that term is defined and interpreted by the
CFTC and its staff, without regard to the percentage of the Fund’s assets committed to margin and options premiums and
(ii) non-bona fide hedging transactions, provided that the Fund does not enter into such non-bona fide hedging transactions
if, immediately thereafter, either (a) the sum of the amount of initial margin deposits on the Fund’s existing futures
positions or swaps positions and option or swaption premiums would exceed 5% of the market value of the Fund’s
liquidating value, after taking into account unrealized profits and unrealized losses on any such transactions, or (b) the
aggregate net notional value of the Fund’s commodity interest transactions would exceed 100% of the market value of the
Fund’s liquidating value, after taking into account unrealized profits and unrealized losses on any such transactions.
In addition to meeting one of the foregoing trading limitations, the Fund may not market itself as a commodity pool or
otherwise as a vehicle for trading in the futures, options or swap markets. Therefore, in order to claim the Rule 4.5
exemption, the Fund is limited in its ability to invest in commodity futures, options and certain types of swaps (including
securities futures, broad-based stock index futures and financial futures contracts). As a result, in the future, the Fund
will be more limited in its ability to use these instruments than in the past and these limitations may have a negative
impact on the ability of the Investment Adviser to manage the Fund, and on the Fund’s performance.
Futures
Contracts and Options on Futures. On
behalf of the Fund, the Investment Adviser may, subject to the Fund’s investment restrictions and guidelines of the Board,
purchase and sell financial futures contracts
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and
options thereon which are traded on a commodities exchange or board of trade for certain hedging, yield enhancement, and risk
management purposes. These futures contracts and related options may be on debt securities, financial indices, securities indices,
United States government securities, and foreign currencies. A financial futures contract is an agreement to purchase or sell
an agreed amount of securities or currencies at a set price for delivery in the future.
Forward
Currency Exchange Contracts. Subject
to guidelines of the Board, the Fund may enter into forward foreign currency exchange contracts to protect the value of its portfolio
against future changes in the level of currency exchange rates. The Fund may enter into such contracts on a “spot”
(i.e., cash) basis at the rate then prevailing in the currency exchange market or on a forward basis, by entering into a forward
contract to purchase or sell currency. A forward contract on foreign currency is an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days agreed upon by the parties from the date of the contract at a
price set on the date of the contract. The Fund’s dealings in forward contracts generally will be limited to hedging involving
either specific transactions or portfolio positions. The Fund does not have an independent limitation on its investments in foreign
currency futures contracts and options on foreign currency futures contracts.
Short
Sales. The Fund may from time
to time make short sales of securities, including short sales “against the box.” A short sale is a transaction in
which the Fund sells a security it does not own in anticipation that the market price of that security will decline. A short sale
against the box occurs when the Fund contemporaneously owns, or has the right to obtain at no added cost, securities identical
to those sold short.
The
market value for the securities sold short of any one issuer will not exceed 5% of the Fund’s total assets or 5% of such
issuer’s voting securities. In addition, the Fund may not make short sales or maintain a short position if it would cause
more than 25% of the Fund’s total assets, taken at market value, to be held as collateral for such sales. The Fund may make
short sales against the box without respect to such limitations.
The
Fund may make short sales in order to hedge against market risks when it believes that the price of a security may decline, causing
a decline in the value of a security owned by the Fund or a security convertible into, or exchangeable for, such security, or
when the Fund does not want to sell the security it owns. Such short sale transactions may be subject to special tax rules, one
of the effects of which may be to accelerate income to the Fund. Additionally, the Fund may use short sales in conjunction with
the purchase of a convertible security when it is determined that the convertible security can be bought at a small conversion
premium and has a yield advantage relative to the underlying common stock sold short.
When
the Fund makes a short sale, it will often borrow the security sold short and deliver it to the broker-dealer through which it
made the short sale as collateral for its obligation to deliver the security upon conclusion of the sale. In connection with such
short sales, the Fund may pay a fee to borrow securities or maintain an arrangement with a broker to borrow securities, and is
often obligated to pay over any accrued interest and dividends on such borrowed securities. In a short sale, the Fund does not
immediately deliver the securities sold or receive the proceeds from the sale. The Fund may close out a short position by purchasing
and delivering an equal amount of the securities sold short, rather than by delivering securities already held by the Fund, because
the Fund may want to continue to receive interest and dividend payments on securities in its portfolio that are convertible into
the securities sold short.
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If
the price of the security sold short increases between the time of the short sale and the time that the Fund replaces the borrowed
security, the Fund will incur a loss; conversely, if the price declines, the Fund will realize a capital gain. Any gain will be
decreased, and any loss, increased, by the transaction costs described above. The successful use of short selling may be adversely
affected by imperfect correlation between movements in the price of the security sold short and the securities being hedged.
To
the extent that the Fund engages in short sales, it will provide collateral to the broker-dealer and (except in the case of
short sales against the box) will maintain additional asset coverage in the form of segregated or “earmarked”
assets on the records of the Investment Adviser or with the Fund’s Custodian, consisting of cash, U.S. government
securities, or other liquid securities that is equal to the current market value of the securities sold short, or (in the
case of short sales against the box) will ensure that such positions are covered by offsetting positions, until the Fund
replaces the borrowed security. The Fund will engage in short selling to the extent permitted by the federal securities laws
and rules and interpretations thereunder, subject to the percentage limitations set forth above. To the extent the Fund
engages in short selling in foreign (non-U.S.) jurisdictions, the Fund will do so to the extent permitted by the laws and
regulations of such jurisdiction.
Repurchase
Agreements. The Fund may enter
into repurchase agreements with banks and non-bank dealers of U.S. government securities which are listed as reporting dealers
of the Federal Reserve Bank and which furnish collateral at least equal in value or market price to the amount of their repurchase
obligation.
In
a repurchase agreement, the Fund purchases a debt security from a seller who undertakes to repurchase the security at a specified
resale price on an agreed future date. Repurchase agreements are generally for one business day and generally will not have a
duration of longer than one week. The SEC has taken the position that, in economic reality, a repurchase agreement is a loan by
a fund to the other party to the transaction secured by securities transferred to the fund. The resale price generally exceeds
the purchase price by an amount which reflects an agreed upon market interest rate for the term of the repurchase agreement. The
Fund’s risk is primarily that, if the seller defaults, the proceeds from the disposition of the underlying securities and
other collateral for the seller’s obligation may be less than the repurchase price. If the seller becomes insolvent, the
Fund might be delayed in or prevented from selling the collateral. In the event of a default or bankruptcy by a seller, the Fund
will promptly seek to liquidate the collateral. To the extent that the proceeds from any sale of the collateral upon a default
in the obligation to repurchase are less than the repurchase price, the Fund will experience a loss. If the financial institution
that is a party to the repurchase agreement petitions for bankruptcy or becomes subject to the United States Bankruptcy Code,
the law regarding the rights of the Fund is unsettled. As a result, under extreme circumstances, there may be a restriction on
the Fund’s ability to sell the collateral and the Fund could suffer a loss.
Loans
of Portfolio Securities. To
increase income, the Fund may lend its portfolio securities to securities broker-dealers or financial institutions if: (i) the
loan is collateralized in accordance with applicable regulatory requirements, and (ii) no loan will cause the value of all loaned
securities to exceed 20% of the value of its total assets.
If
the borrower fails to maintain the requisite amount of collateral, the loan automatically terminates and the Fund could use the
collateral to replace the securities while holding the borrower liable for any excess of replacement cost over the value of the
collateral. As with any extension of credit, there are risks of delay in recovery and in
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some
cases even loss of rights in collateral should the borrower of the securities fail financially. While these loans of portfolio
securities will be made in accordance with guidelines approved by the Fund’s Board, there can be no assurance that borrowers
will not fail financially. On termination of the loan, the borrower is required to return the securities to the Fund, and any
gain or loss in the market price during the loan would inure to the Fund. If the counterparty to the loan petitions for bankruptcy
or becomes subject to the United States Bankruptcy Code, the law regarding the Fund’s rights is unsettled. As a result,
under these circumstances, there may be a restriction on the Fund’s ability to sell the collateral and it would suffer a
loss.
Borrowing.
The Fund may borrow money
in accordance with its investment restrictions, including as a temporary measure for extraordinary or emergency purposes. It may
not borrow for investment purposes.
Leveraging.
As provided in the 1940 Act,
and subject to compliance with the Fund’s investment limitations, the Fund may issue senior securities representing stock,
such as preferred stock, so long as immediately following such issuance of stock, its total assets exceed 200% of the amount of
such stock. The use of leverage magnifies the impact of changes in net asset value. For example, a fund that uses 33% leverage
will show a 1.5% increase or decline in net asset value for each 1% increase or decline in the value of its total assets. In addition,
if the cost of leverage exceeds the return on the securities acquired with the proceeds of leverage, the use of leverage will
diminish, rather than enhance, the return to the Fund. The use of leverage generally increases the volatility of returns to the
Fund. The Fund currently has three series of preferred stock outstanding: the Series C Auction Rate Cumulative Preferred Stock,
the Series E Preferred, and the Series G Preferred.
Investment
Restrictions. The Fund
has adopted certain investment restrictions as fundamental policies of the Fund. Under the 1940 Act, a fundamental policy may
not be changed without the vote of a majority, as defined in the 1940 Act, of the outstanding voting securities of the Fund
(voting together as a single class).
Portfolio
Turnover. The Fund will buy
and sell securities to accomplish its investment objective. The investment policies of the Fund may lead to frequent changes in
investments, particularly in periods of rapidly fluctuating interest or currency exchange rates. The portfolio turnover may be
higher than that of other investment companies.
Portfolio
turnover generally involves some expense to the Fund, including brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestment in other securities. The portfolio turnover rate is computed by dividing the
lesser of the amount of the securities purchased or securities sold by the average monthly value of securities owned during the
year (excluding securities whose maturities at acquisition were one year or less). High portfolio turnover may also result in
the realization of substantial net short-term capital gains and any distributions resulting from such gains will be taxable at
ordinary income rates for U.S. federal income tax purposes. The Fund’s portfolio turnover rates for the fiscal years ended
December 31, 2022 and 2022, were 17% and 15%, respectively.
RISK
FACTORS AND SPECIAL CONSIDERATIONS
There
are a number of risks that an investor should consider in evaluating the Fund.
Leverage
Risk. The Fund uses financial leverage for investment purposes by issuing preferred stock. The amount of leverage represents
approximately 44% of the Fund’s Managed Assets (defined as the aggregate net asset value of outstanding shares of common
stock plus assets attributable to outstanding shares of preferred stock, with no deduction for the liquidation preference of such
shares of preferred stock) as of December 31,
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2022.
The Fund’s leveraged capital structure creates special risks not associated with unleveraged funds having similar
investment objectives and policies. These include the possibility of greater loss and the likelihood of higher volatility of
the net asset value of the Fund and the asset coverage. Such volatility may increase the likelihood of the Fund’s
having to sell investments in order to meet dividend payments on the preferred stock, or to redeem preferred stock when it
may be disadvantageous to do so. The Fund may not be permitted to declare dividends or distributions with respect to common
stock or preferred stock, or purchase common stock or preferred stock unless at such time the Fund meets certain asset
coverage requirements. In addition, the Fund may not be permitted to pay distributions on common stock unless all
distributions on preferred stock and/or accrued interest on borrowings have been paid, or set aside for payment. Any
preferred stock currently outstanding or that the Fund issues in the future would subject the Fund to certain asset coverage
requirements under the 1940 Act that could, under certain circumstances, restrict the Fund from making distributions
necessary to qualify as a registered investment company. If the Fund is unable to obtain cash from other sources, the Fund
may fail to qualify as a registered investment company and, thus, may be subject to income tax as an ordinary corporation.
Because the advisory fee paid to the Investment Adviser is calculated on the basis of the Fund’s Managed Assets rather
than only on the basis of net assets attributable to the shares of common stock, the fee may be higher when leverage is
utilized, giving the Investment Adviser an incentive to utilize leverage. However, the Investment Adviser has agreed to
reduce any management fee on the incremental assets attributable to the cumulative preferred stock during the fiscal year
if the total return of the net asset value of the outstanding shares of common stock, including distributions and advisory
fee subject to reduction for that year, does not exceed the stated dividend rate or corresponding swap rate of each
particular series of preferred stock. This fee waiver will not apply to any preferred stock issued from this offering. The
Investment Adviser currently intends that the voluntary advisory fee waiver will remain in effect for as long as the Series C
Auction Rate Preferred Stock, Series E Preferred and Series G Preferred are outstanding. The Investment Adviser, however,
reserves the right to modify or terminate the voluntary advisory fee waiver at any time.
Preferred
Stock Risk. The issuance of preferred stock causes the net asset value and market value of the common stock to become more
volatile. If the dividend rate on the preferred stock approaches the net rate of return on the Fund’s investment portfolio,
the benefit of leverage to the holders of the common stock would be reduced. If the dividend rate on the preferred stock plus
the management fee annual rate of 1.00% (as applicable) exceeds the net rate of return on the Fund’s portfolio, the leverage
will result in a lower rate of return to the holders of common stock than if the Fund had not issued preferred stock.
Any
decline in the net asset value of the Fund’s investments would be borne entirely by the holders of common stock. Therefore,
if the market value of the Fund’s portfolio declines, the leverage will result in a greater decrease in net asset value
to the holders of common stock than if the Fund were not leveraged. This greater net asset value decrease will also tend to cause
a greater decline in the market price for the common stock. The Fund might be in danger of failing to maintain the required asset
coverage of the preferred stock or of losing its ratings on the preferred stock or, in an extreme case, the Fund’s current
investment income might not be sufficient to meet the dividend requirements on the preferred stock. In order to counteract such
an event, the Fund might need to liquidate investments in order to fund a redemption of some or all of the preferred stock.
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In
addition, the Fund would pay (and the holders of common stock will bear) all costs and expenses relating to the issuance and ongoing
maintenance of the shares of the preferred stock, including the advisory fees on the incremental assets attributable to such shares.
Holders
of preferred stock may have different interests than holders of common stock and may at times have disproportionate influence
over the Fund’s affairs. Holders of preferred stock, voting separately as a single class, have the right to elect two members
of the Board at all times and in the event dividends become two full years in arrears would have the right to elect a majority
of the Directors until such arrearage is completely eliminated. In addition, preferred stockholders have class voting rights on
certain matters, including changes in fundamental investment restrictions and conversion of the fund to open-end status, and accordingly
can veto any such changes.
Restrictions
imposed on the declarations and payment of dividends or other distributions to the holders of the Fund’s common stock and
preferred stock, both by the 1940 Act and by requirements imposed by rating agencies, might impair the Fund’s ability to
maintain its qualification as a regulated investment company for federal income tax purposes. While the Fund intends to redeem
its preferred stock to the extent necessary to enable the Fund to distribute its income as required to maintain its qualification
as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”), there can be no
assurance that such actions can be effected in time to meet the Code requirements.
Portfolio
Guidelines of Rating Agencies for Preferred Stock
In
order to obtain and maintain attractive credit quality ratings for shares of preferred stock, the Fund must comply with investment
quality, diversification, and other guidelines established by the relevant ratings agencies. These guidelines could affect portfolio
decisions and may be more stringent than those imposed by the 1940 Act.
Effects
of Leverage
The
following table is furnished in response to requirements of the SEC. It is designed to illustrate the effect of leverage on
common stock total return, assuming investment portfolio total returns (comprised of net investment income of the Fund,
realized gains or losses of the Fund and changes in the value of the securities held in the Fund’s portfolio) of -10%,
-5%. 0%, 5% and 10%. These assumed investment portfolio returns are hypothetical figures and are not necessarily indicative
of the investment portfolio returns experienced or expected to be experienced by the Fund. The table further reflects
leverage representing 44% of the Fund’s net assets, the Fund’s current projected blended annual average leverage
dividend or interest rate of 5.13%, a management fee at an annual rate of 1.00% of the liquidation preference of any
outstanding preferred stock and estimated annual incremental expenses attributable to any outstanding preferred stock 0.06%
of the Fund’s net assets attributable to common stock.
| Assumed
Return on Portfolio (Net of Expenses) |
(10.0)% |
(5.0)% |
0.0% |
5.0% |
10.0% |
| Corresponding
Return to Common Shareholder |
(22.93)% |
(13.94)% |
(4.94)% |
4.05% |
13.04% |
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The
following factors associated with leveraging could increase the investment risk and volatility of the price of the shares of common
stock:
| ● | leveraging
exaggerates any increase or decrease in the net asset value of the shares of common stock; |
| ● | the
dividend requirements on the Fund’s shares of preferred stock may exceed the income
from the portfolio securities purchased with the proceeds from the issuance of preferred
stock; |
| ● | a
decline in net asset value results if the investment performance of the additional securities
purchased fails to cover their cost to the Fund (including any dividend requirements
of preferred stock); |
| ● | a
decline in net asset value could affect the ability of the Fund to make dividend payments
on shares of common stock; |
Pursuant
to Section 18 of the 1940 Act, it is unlawful for the Fund, as a registered closed-end investment company, to issue any class
of senior security, or to sell any senior security that it issues, unless it can satisfy certain “asset coverage”
ratios. The asset coverage ratio with respect to a senior security representing indebtedness means the ratio of the value of the
Fund’s total assets (less all liabilities and indebtedness not represented by senior securities) to the aggregate amount
of the Fund’s senior securities representing indebtedness. The asset coverage ratio with respect to a senior security representing
stock means the ratio of the value of the Fund’s total assets (less all liabilities and indebtedness not represented by
senior securities) to the aggregate amount of the Fund’s senior securities representing indebtedness plus the aggregate
liquidation preference of the Fund’s outstanding shares of preferred stock.
If,
as is the case with the Fund, a registered investment company’s senior securities are equity securities, such securities
must have an asset coverage of at least 200% immediately following its issuance. If a registered investment company’s senior
securities represent indebtedness, such indebtedness must have an asset coverage of at least 300% immediately after their issuance.
Subject to certain exceptions, during any period following issuance that the Fund fails to satisfy these asset coverage ratios,
it will, among other things, be prohibited from declaring any dividend or declaring any other distribution in respect of its common
stock except a dividend payable in shares of common stock issued by the Fund. A registered investment company may, to the extent
permitted by the 1940 Act, segregate assets or “cover” transactions in order to avoid the creation of a class of senior
security.
Special
Risks to Holders of Fixed Rate Preferred Stock
Illiquidity
Prior to Exchange Listing. Prior
to the offering, there will be no public market for any additional series of fixed rate preferred stock. In the event any additional
series of fixed rate preferred stock are issued, prior application will have been made to list such shares on a national securities
exchange, which will likely be the NYSE. However, during an initial period, which is not expected to exceed 30 days after the
date of its initial issuance, such shares may not be listed on any securities exchange. During such period, the underwriters may
make a market in such shares, though, they will have no obligation to do so. Consequently, an investment in such shares may be
illiquid during such period.
Market
Price Fluctuation. Shares
of fixed rate preferred stock may trade at a premium to or discount from liquidation value for various reasons, including changes
in interest rates.
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Special
Risks for Holders of Auction Rate Preferred Stock
Auction
Risk. You may not be able
to sell your auction rate preferred stock at an auction if the auction fails, i.e., if more shares of auction rate preferred stock
are offered for sale than there are buyers for those shares. Also, if you place an order (a hold order) at an auction to retain
auction rate preferred stock only at a specified rate that exceeds the rate set at the auction, you will not retain your auction
rate preferred stock. Additionally, if you place a hold order without specifying a rate below which you would not wish to continue
to hold your shares and the auction sets a below market rate, you will receive a lower rate of return on your shares than the
market rate. Finally, the dividend period may be changed, subject to certain conditions and with notice to the holders of the
auction rate preferred stock, which could also affect the liquidity of your investment. Since February 2008, most auction rate
preferred stock, including our Series C Auction Rate Preferred, have had failed auctions and holders of such stock have suffered
reduced liquidity.
Secondary
Market Risk. If you try to
sell your auction rate preferred stock between auctions, you may not be able to sell them for their liquidation preference per
share or such amount per share plus accumulated dividends. If the Fund has designated a special dividend period of more than seven
days, changes in interest rates could affect the price you would receive if you sold your shares in the secondary market. Broker-dealers
that maintain a secondary trading market for the auction rate preferred stock are not required to maintain this market, and the
Fund is not required to redeem auction rate preferred stock if either an auction or an attempted secondary market sale fails because
of a lack of buyers. The auction rate preferred stock will not be registered on a stock exchange. If you sell your auction rate
preferred stock to a broker-dealer between auctions, you may receive less than the price you paid for them, especially when market
interest rates have risen since the last auction or during a special dividend period. Since February 2008, most auction rate preferred
stock, including our Series C Auction Rate Preferred, have had failed auctions and holders of such stock have suffered reduced
liquidity, including the inability to sell such stock in a secondary market.
Special
Risks for Holders of Subscription Rights
There
is a risk that changes in yield or changes in the credit quality of the Fund may result in the underlying preferred stock or common
stock purchasable upon exercise of the subscription rights being less attractive to investors at the conclusion of the subscription
period. This may reduce or eliminate the value of the subscription rights. Investors who receive subscription rights may find
that there is no market to sell rights they do not wish to exercise. Further, if investors exercise only a portion of the rights,
the number of shares of the preferred stock issued may be reduced, and the preferred stock or common stock may trade at less favorable
prices than larger offerings for similar securities.
Common
Stock Distribution Policy Risk
The
Fund has adopted a policy, which may be changed at any time by the Board, of paying a minimum annual distribution of 10% of the
average net asset value of the Fund to common stockholders. In the event the Fund does not generate a total return from dividends
and interest received and net realized capital gains in an amount equal to or in excess of its stated distribution in a given
year, the Fund may return capital as part of such distribution, which may have the effect of decreasing the asset coverage per
share with respect to the Fund’s
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preferred
stock. Distributions on the Fund’s common stock may contain a return of capital. Any return of capital should not be considered
by investors as yield or total return on their investment in the Fund. For the fiscal year ended December 31, 2022, the Fund distributed
a return of capital. Distributions sourced from return of capital should not be considered as dividend yield or the total return
from an investment in the Fund. Stockholders who periodically receive the payment of a dividend or other distribution consisting
of a return of capital may be under the impression that they are receiving net profits when they are not. Stockholders should
not assume that the source of a distribution from the Fund is net profit. The composition of each distribution is estimated based
on the earnings of the Fund as of the record date for each distribution. The actual composition of each of the current year’s
distributions will be based on the Fund’s investment activity through the end of the calendar year.
Industry
Concentration Risk
The
Fund invests a significant portion of its assets in companies in the telecommunications, media, publishing, and entertainment
industries and, as a result, the value of the Fund’s shares is more susceptible to factors affecting those particular types
of companies and those industries, including governmental regulation, a greater price volatility than the overall market, rapid
obsolescence of products and services, intense competition, and strong market reactions to technological developments.
Various
types of ownership restrictions are imposed by the Federal Communications Commission, or FCC, on investment in media companies
and cellular licensees. For example, the FCC’s broadcast and cable multiple-ownership and cross ownership rules, which apply
to the radio, television, and cable industries, provide that investment advisers are deemed to have an “attributable”
interest whenever the adviser has the right to determine how five percent or more of the issued and outstanding voting stock of
a broadcast company or cable system operator may be voted. These rules limit the number of broadcast stations both locally and
nationally that a single entity is permitted to own, operate, or control and prohibit ownership of certain competitive communications
providers in the same location. The FCC also applies limited ownership restrictions on cellular licensees serving rural areas.
An attributable interest in a cellular company arises from the right to control 20% or more of its voting stock.
Attributable
interests that may result from the role of the Investment Adviser and its principals in connection with other funds, managed accounts
and companies may limit the Fund’s ability to invest in certain mass media and cellular companies. In the event that the
Investment Adviser and its affiliates may be deemed to have such an attributable interest, the Board of Directors of the Fund
may delegate, from time to time, to the Fund’s Proxy Voting Committee, voting power over certain shares of securities held
by the Fund in view of these ownership limitations to ensure compliance with certain FCC regulations.
Smaller
Companies
While
the Fund intends to focus on the securities of established suppliers of accepted products and services, the Fund may also invest
in smaller companies which may benefit from the development of new products and services. These smaller companies may present
greater opportunities for capital appreciation, and may also involve greater investment risk than larger, more established companies.
For example, smaller companies may have more limited product lines, market or financial resources, and their securities may trade
less frequently and in lower volume than the securities of larger, more established companies. As a result, the prices of the
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securities
of such smaller companies may fluctuate to a greater degree than the prices of securities of other issuers.
Long-Term
Objective; Not a Complete Investment Program
The
Fund is intended for investors seeking long-term capital growth. The Fund is not meant to provide a vehicle for those who wish
to exploit short-term swings in the stock market. An investment in shares of the Fund should not be considered a complete investment
program. Each stockholder should take into account the Fund’s investment objectives as well as the stockholder’s other
investments when considering an investment in the Fund.
Non-Diversified
Status
The
Fund is classified as a “non-diversified” investment company under the 1940 Act, which means it is not limited
by the 1940 Act in the proportion of its assets that may be invested in the securities of a single issuer. As a
non-diversified investment company, the Fund may invest in the securities of individual issuers to a greater degree than a
diversified investment company. As a result, the Fund may be more vulnerable to events affecting a single issuer and
therefore subject to greater volatility than a fund that is more broadly diversified. Accordingly, an investment in the Fund
may present greater risk to an investor than an investment in a diversified company. To qualify as a “regulated
investment company,” or “RIC,” for purposes of the Code, the Fund has in the past conducted and intends to
conduct its operations in a manner that will relieve it of any liability for federal income tax to the extent its earnings
are distributed to stockholders. To so qualify as a “regulated investment company,” among other requirements, the
Fund will limit its investments so that, at the close of each quarter of the taxable year:
| ● | not
more than 25% of the market value of its total assets will be invested in the securities (other than U.S. government securities
or the securities of other RICs) of a single issuer, any two or more issuers in which the fund owns 20% or more of the voting
securities and which are determined to be engaged in the same, similar, or related trades or businesses or in the securities of
one or more qualified publicly traded partnerships (as defined in the Code); and |
| ● | at
least 50% of the market value of the Fund’s assets will be represented by cash, securities of other regulated investment
companies, U.S. government securities and other securities, with such other securities limited in respect of any one issuer to
an amount not greater than 5% of the value of the its assets and not more than 10% of the outstanding voting securities of such
issuer. |
Market
Value and Net Asset Value
The
Fund is a non-diversified, closed-end management investment company. Shares of closed-end funds are bought and sold in the securities
markets and may trade at either a premium to or discount from net asset value. Listed shares of closed-end investment companies
often trade at discounts from net asset value. This characteristic of shares of a closed-end fund is a risk separate and distinct
from the risk that its net asset value may decrease. The Fund cannot predict whether its listed stock will trade at, below, or
above net asset value. As of December 31, 2022, the shares of common stock traded at a premium of 37.53%. Stockholders desiring
liquidity may, subject to applicable securities laws, trade their Fund common stock on the NYSE or other markets
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on
which such shares may trade at the then-current market value, which may differ from the then-current net asset value. Stockholders
will incur brokerage or other transaction costs to sell stock.
Non-Investment
Grade Securities
The
Fund may invest up to 10% of its total assets in fixed income securities rated below investment grade by recognized
statistical rating agencies or unrated securities of comparable quality. These securities, which may be preferred stock or
debt, are predominantly speculative and involve major risk exposure to adverse conditions. Debt securities that are not rated
or that are rated lower than “BBB” by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.
(“S&P”) or lower than “Baa” by Moody’s are referred to in the financial press as
“junk bonds.”
Generally,
such non-investment grade securities and unrated securities of comparable quality offer a higher current yield than is offered
by higher rated securities, but also: (i) will likely have some quality and protective characteristics that, in the judgment of
the rating organizations, are outweighed by large uncertainties or major risk exposures to adverse conditions, and (ii) are predominantly
speculative with respect to the issuer’s capacity to pay interest and repay principal in accordance with the terms of the
obligation. The market values of certain of these securities also tend to be more sensitive to individual corporate developments
and changes in economic conditions than higher quality securities. In addition, such securities generally present a higher degree
of credit risk. The risk of loss due to default by these issuers is significantly greater because such non-investment grade securities
and unrated securities of comparable quality generally are unsecured and frequently are subordinated to the prior payment of senior
indebtedness. In light of these risks, the Investment Adviser, in evaluating the creditworthiness of an issue, whether rated or
unrated, will take various factors into consideration, which may include, as applicable, the issuer’s operating history,
financial resources and its sensitivity to economic conditions and trends, the market support for the facility financed by the
issue, the perceived ability and integrity of the issuer’s management, and regulatory matters.
In
addition, the market value of securities in non-investment rated categories is more volatile than that of higher quality
securities, and the markets in which such non-investment rated or unrated securities are traded are more limited than those
in which higher rated securities are traded. The existence of limited markets may make it more difficult for the Fund to
obtain accurate market quotations for purposes of valuing its portfolio and calculating its net asset value. Moreover, the
lack of a liquid trading market may restrict the availability of securities for the Fund to purchase and may also have the
effect of limiting the ability of the Fund to sell securities at their fair value in response to changes in the economy or
the financial markets.
Non-investment
grade securities also present risks based on payment expectations. If an issuer calls the obligation for redemption (often a feature
of fixed income securities), the Fund may have to replace the security with a lower yielding security, resulting in a decreased
return for investors. Also, as the principal value of nonconvertible bonds and preferred stocks moves inversely with movements
in interest rates, in the event of rising interest rates, the value of the securities held by the Fund may decline proportionately
more than a portfolio consisting of higher rated securities. Investments in zero coupon bonds may be more speculative and subject
to greater fluctuations in value due to changes in interest rates than bonds that pay regular income streams.
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As
part of its investment in non-investment grade securities, the Fund may invest in securities of issuers in default. The Fund will
make an investment in securities of issuers in default only when the Investment Adviser believes that such issuers will honor
their obligations or emerge from bankruptcy protection under a plan pursuant to which the securities received by the Fund in exchange
for its defaulted securities will have a value in excess of the Fund’s investment. By investing in securities of issuers
in default, the Fund bears the risk that these issuers will not continue to honor their obligations or emerge from bankruptcy
protection or that the value of the securities will not otherwise appreciate.
In
addition to using recognized rating agencies and other sources, the Investment Adviser also performs its own analysis of issues
in seeking investments that it believes to be underrated (and thus higher yielding) in light of the financial condition of the
issuer. Its analysis of issuers may include, among other things, current and anticipated cash flow and borrowing requirements,
value of assets in relation to historical cost, strength of management, responsiveness to business conditions, credit standing,
and current anticipated results of operations. In selecting investments for the Fund, the Investment Adviser may also consider
general business conditions, anticipated changes in interest rates, and the outlook for specific industries.
Subsequent
to its purchase by the Fund, an issue of securities may cease to be rated or its rating may be reduced. In addition, it is possible
that statistical rating agencies may change their ratings of a particular issue to reflect subsequent events. Moreover, such ratings
do not assess the risk of a decline in market value. None of these events will require the sale of the securities by the Fund,
although the Investment Adviser will consider these events in determining whether the Fund should continue to hold the securities.
The
market for non-investment grade and comparable unrated securities has experienced several periods of significantly adverse price
and liquidity, particularly at or around times of economic recessions. Past market recessions have adversely affected the value
of such securities as well as the ability of certain issuers of such securities to repay principal and pay interest thereon or
to refinance such securities. The market for those securities may react in a similar fashion in the future.
Foreign
Securities
Investments
in the securities of foreign issuers involve certain considerations and risks not ordinarily associated with investments in securities
of domestic issuers. Foreign companies are not generally subject to uniform accounting, auditing, and financial standards and
requirements comparable to those applicable to U.S. companies. Foreign securities exchanges, brokers and listed companies may
be subject to less government supervision and regulation than exists in the United States. Dividend and interest income may be
subject to withholding and other foreign taxes, which may adversely affect the net return on such investments. There may be difficulty
in obtaining or enforcing a court judgment abroad. In addition, it may be difficult to effect repatriation of capital invested
in certain countries. In addition, with respect to certain countries, there are risks of expropriation, confiscatory taxation,
political or social instability, or diplomatic developments that could affect assets of the Fund held in foreign countries.
There
may be less publicly available information about a foreign company than a U.S. company. Foreign securities markets may have substantially
less volume than U.S. securities markets and some foreign company securities are less liquid than securities of otherwise comparable
U.S. companies. A portfolio of foreign securities may also be adversely affected by fluctuations in the rates of exchange between
the currencies of different nations
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and
by exchange control regulations. Foreign markets also have different clearance and settlement procedures that could cause the
Fund to encounter difficulties in purchasing and selling securities on such markets and may result in the Fund missing attractive
investment opportunities or experiencing loss. In addition, a portfolio that includes foreign securities can expect to have a
higher expense ratio because of the increased transaction costs on non-U.S. securities markets and the increased costs of maintaining
the custody of foreign securities. The Fund does not have an independent limit on the amount of its assets that it may invest
in the securities of foreign issuers.
The
Fund also may purchase sponsored American Depository Receipts (“ADRs”) or U.S. denominated securities of foreign issuers.
ADRs are receipts issued by United States banks or trust companies in respect of securities of foreign issuers held on deposit
for use in the United States securities markets. While ADRs may not necessarily be denominated in the same currency as the securities
into which they may be converted, many of the risks associated with foreign securities may also apply to ADRs.
Emerging
Markets Risk
The
Fund may invest in securities of issuers whose primary operations or principal trading market is in an “emerging market.”
An “emerging market” country is any country that is considered to be an emerging or developing country by the World
Bank. Investing in securities of companies in emerging markets may entail special risks relating to potential political and economic
instability and the risks of expropriation, nationalization, confiscation or the imposition of restrictions on foreign investment,
the lack of hedging instruments and restrictions on repatriation of capital invested. Emerging securities markets are substantially
smaller, less developed, less liquid and more volatile than the major securities markets. The limited size of emerging securities
markets and limited trading value compared to the volume of trading in U.S. securities could cause prices to be erratic for reasons
apart from factors that affect the quality of the securities. For example, limited market size may cause prices to be unduly influenced
by traders who control large positions. Adverse publicity and investors’ perceptions, whether or not based on fundamental
analysis, may decrease the value and liquidity of portfolio securities, especially in these markets. Other risks include high
concentration of market capitalization and trading volume in a small number of issuers representing a limited number of industries,
as well as a high concentration of investors and financial intermediaries; over-dependence on exports; overburdened infrastructure
and obsolete or unseasoned financial systems; environmental problems; less developed legal systems; and less reliable securities
custodial services and settlement practices.
Special
Risks of Derivative Transactions
Participation
in the options or futures markets and in currency exchange transactions involves investment risks and transaction costs to which
the Fund would not be subject absent the use of these strategies. If the Investment Adviser’s prediction of movements in
the direction of the securities, foreign currency, and interest rate markets are inaccurate, the consequences to the Fund may
leave the Fund in a worse position than if such
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strategies
were not used. Risks inherent in the use of options, foreign currency, futures contracts, and options on futures contracts, securities
indices, and foreign currencies include:
| ● | dependence
on the Investment Adviser’s ability to predict correctly movements in the direction
of interest rates, securities prices, and currency markets; |
| ● | imperfect
correlation between the price of options and futures contracts and options thereon and
movements in the prices of the securities or currencies being hedged; |
| ● | the
fact that skills needed to use these strategies are different from those needed to select
portfolio securities; |
| ● | the
possible absence of a liquid secondary market for any particular instrument at any time; |
| ● | the
possible need to defer closing out certain hedged positions to avoid adverse tax consequences; and |
| ● | the
possible inability of the Fund to purchase or sell a security at a time that otherwise
would be favorable for it to do so, or the possible need for the Fund to sell a security
at a disadvantageous time due to a need for the Fund to maintain “cover”
or to segregate securities in connection with the hedging techniques. |
Futures
Transactions
Futures
and options on futures entail certain risks, including but not limited to the following:
| ● | no
assurance that futures contracts or options on futures can be offset at favorable prices; |
| ● | possible
reduction of the yield of the Fund due to the use of hedging; |
| ● | possible
reduction in value of both the securities hedged and the hedging instrument; |
| ● | possible
lack of liquidity due to daily limits or price fluctuations; |
| ● | imperfect
correlation between the contracts and the securities being hedged; and |
| ● | losses
from investing in futures transactions that are potentially unlimited and the segregation
requirements for such transactions. |
Forward
Currency Exchange Contracts
The
use of forward currency exchange contracts may involve certain risks, including the failure of the counterparty to perform its
obligations under the contract and that the use of forward contracts may not serve as a complete hedge because of an imperfect
correlation between movements in the prices of the contracts and the prices of the currencies hedged or used for cover.
Dependence
on Key Personnel
The
Investment Adviser is dependent upon the expertise of Mr. Mario J. Gabelli in providing advisory services with respect to the
Fund’s investments. If the Investment Adviser were to lose the services of Mr. Gabelli, its ability to service the Fund
could be adversely affected. There can be no assurance that a suitable replacement could be found for Mr. Gabelli in the event
of his death, resignation, retirement, or inability to act on behalf of the Investment Adviser.
Market
Disruption Risk
Certain
events have a disruptive effect on the securities markets, such as terrorist attacks, war and other geopolitical events. The Fund
cannot predict the effects of similar events in the future on the U.S. economy. Non-
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investment
rated securities and securities of issuers with smaller market capitalizations tend to be more volatile than higher rated securities
and securities of issuers with larger market capitalizations so that these events and any actions resulting from them may have
a greater impact on the prices and volatility of non-investment rated securities and securities of issuers with smaller market
capitalizations than on higher rated securities and securities of issuers with larger market capitalizations.
Special
Risks Related to Preferred Securities
There
are special risks associated with the Fund’s investing in preferred securities, including:
| ● | Deferral.
Preferred securities may include provisions that permit the issuer, at its discretion,
to defer dividends or distributions for a stated period without any adverse consequences
to the issuer. If the Fund owns a preferred security that is deferring its dividends
or distributions, the Fund may be required to report income for tax purposes although
it has not yet received such income. |
| ● | Non-Cumulative
Dividends. Some preferred securities are non-cumulative, meaning that the dividends
do not accumulate and need not ever be paid. A portion of the portfolio may include investments
in non-cumulative preferred securities, whereby the issuer does not have an obligation
to make up any arrearages to its stockholders. Should an issuer of a non-cumulative preferred
security held by the Fund determine not to pay dividends or distributions on such security,
the Fund’s return from that security may be adversely affected. There is no assurance
that dividends or distributions on non-cumulative preferred securities in which the Fund
invests will be declared or otherwise made payable. |
| ● | Subordination.
Preferred securities are subordinated to bonds and other debt instruments in an issuer’s
capital structure in terms of priority to corporate income and liquidation payments,
and therefore will be subject to greater credit risk than more senior debt security instruments. |
| ● | Liquidity.
Preferred securities may be substantially less liquid than many other securities,
such as common stocks or U.S. government securities. |
| ● | Limited
Voting Rights. Generally, preferred security holders (such as the Fund) have no voting
rights with respect to the issuing company unless preferred dividends have been in arrears
for a specified number of periods, at which time the preferred security holders may be
entitled to elect a number of directors to the issuer’s board. Generally, once
all the arrearages have been paid, the preferred security holders no longer have voting
rights. |
| ● | Special
Redemption Rights. In certain varying circumstances, an issuer of preferred securities
may redeem the securities prior to a specified date. For instance, for certain types
of preferred securities, a redemption may be triggered by a change in federal income
tax or securities laws. A redemption by the issuer may negatively impact the return of
the security held by the Fund. |
Interest
Rate Transactions
The
Fund may enter into interest rate swap or cap transactions with respect to all or a portion of any series of auction rate preferred
stock in order to manage the impact on its portfolio of changes in the dividend rate of such stock. Through these transactions
the Fund seeks to obtain the equivalent of a fixed rate for such auction rate preferred stock that is lower than the Fund would
have to pay if it issued fixed rate preferred stock. The use of interest rate swaps and caps is a highly specialized activity
that involves certain risks to the Fund including, among others, counterparty risk and early termination risk.
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Investment
Companies
The
Fund may invest in the securities of other investment companies to the extent permitted by law. To the extent the Fund invests
in the common equity of investment companies, the Fund will bear its ratable share of any such investment company’s expenses,
including management fees. The Fund will also remain obligated to pay management fees to the Investment Adviser with respect to
the assets invested in the securities of other investment companies. In these circumstances holders of the Fund’s common
stock will be subject to duplicative investment expenses.
Counterparty
Risk
The
Fund will be subject to credit risk with respect to the counterparties to the derivative contracts purchased by the Fund. If a
counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties,
the Fund may experience significant delays in obtaining any recovery under the derivative contract in bankruptcy or other reorganization
proceeding. The Fund may obtain only a limited recovery or may obtain no recovery in such circumstances.
Management
Risk
The
Fund is subject to management risk because it is an actively managed portfolio. The Investment Adviser will apply investment techniques
and risk analyses in making investment decisions for the Fund, but there can be no guarantee that these will produce the desired
results.
Anti-Takeover
Provisions of the Fund’s Governing Documents
The
Fund’s Governing Documents include provisions that could limit the ability of other entities or persons to acquire control
of the Fund or convert the Fund to an open-end fund.
Status
as a Regulated Investment Company
The
Fund has qualified, and intends to remain qualified, for federal income tax purposes as a regulated investment company under Subchapter
M of the Code. Qualification requires, among other things, compliance by the Fund with certain distribution requirements. Statutory
limitations on distributions on the common stock if the Fund fails to satisfy the 1940 Act’s asset coverage requirements
could jeopardize the Fund’s ability to meet such distribution requirements. The Fund presently intends, however, to purchase
or redeem preferred stock to the extent necessary in order to maintain compliance with such asset coverage requirements.
Health
Crisis Risk
An
outbreak of infectious respiratory illness, COVID-19, caused by a novel coronavirus has resulted in travel restrictions, disruption
of healthcare systems, prolonged quarantines, cancellations, supply chain disruptions, lower consumer demand, layoffs, ratings
downgrades, defaults and other significant economic impacts. Certain markets have experienced temporary closures, extreme volatility,
severe losses, reduced liquidity and increased trading costs. In particular, COVID-19 has resulted in substantial market volatility
and global business disruption, impacting the global economy and the financial health of individual companies in significant and
unforeseen ways. The duration and future impact of COVID-19 are currently unknown, which may exacerbate other types of risks that
apply to the Fund and negatively impact performance and the value of your investment in the Fund,
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it
is not possible to determine the ultimate impact of COVID-19 at this time. Further, the extent and strength of any economic recovery
after the COVID-19 pandemic abates is uncertain and subject to various factors and conditions, including the emergence of other
infectious illness outbreaks that may have similar impacts. Accordingly, an investment in the Fund is subject to an elevated degree
of risk as compared to other market environments.
Market
Risk
Global
economies and financial markets are increasingly interconnected, which increases the likelihood that events or conditions in
one country or region will adversely impact markets or issuers in other countries or regions. Securities in the Fund’s
portfolios may underperform in comparison to securities in general financial markets, a particular financial market, or other
asset classes due to a number of factors, including inflation (or expectations for inflation), deflation (or expectations for
deflation), interest rates, global demand for particular products or resources, market instability, debt crises and
downgrades, embargoes, tariffs, sanctions and other trade barriers, regulatory events, other governmental trade or market
control programs and related geopolitical events. In addition, the value of the Fund’s investments may be negatively
affected by the occurrence of global events such as war, terrorism, environmental disasters, natural disasters or events,
country instability, and infectious disease epidemics or pandemics. For example, the outbreak of COVID 19, a novel
coronavirus disease, has negatively affected economies, markets and individual companies throughout the world, including the
United States. The effects of this pandemic to public health and business and market conditions, including exchange trading
suspensions and closures, may continue to have a significant negative impact on the performance of the Fund’s
investments, increase the Fund’s volatility, exacerbate pre existing political, social and economic risks to the Fund,
and negatively impact broad segments of businesses and populations. The Fund’s operations may be interrupted as a
result, which may contribute to the negative impact on investment performance. In addition, governments, their regulatory
agencies, or self-regulatory organizations may take actions in response to the pandemic that affect the instruments in which
the Fund invests, or the issuers of such instruments, in ways that could have a significant negative impact on the
Fund’s investment performance. The full impact of the COVID 19 pandemic, or other future epidemics or pandemics, is
currently unknown.
Economic
Events and Market Risk
Periods
of market volatility remain, and may continue to occur in the future, in response to various political, social and economic events
both within and outside of the United States. These conditions have resulted in, and in many cases continue to result in, greater
price volatility, less liquidity, widening credit spreads and a lack of price transparency, with many securities remaining illiquid
and of uncertain value. Such market conditions may adversely affect the Fund, including by making valuation of some of the Fund’s
securities uncertain and/or result in sudden and significant valuation increases or declines in the Fund’s holdings.
Risks
resulting from any future debt or other economic crisis could also have a detrimental impact on the global economy, the financial
condition of financial institutions and our business, financial condition, and results of operation. Market and economic disruptions
have affected, and may in the future affect, consumer confidence levels and spending, personal bankruptcy rates, levels of incurrence
and default on consumer debt and home prices, among other factors. To the extent uncertainty regarding the U.S. or global economy
negatively impacts consumer confidence and consumer credit factors, the Fund’s business, financial condition, and results
of
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operations
could be significantly and adversely affected. Downgrades to the credit ratings of major banks could result in increased
borrowing costs for such banks and negatively affect the broader economy. Moreover, Federal Reserve policy, including with
respect to certain interest rates and the decision to end its quantitative easing policy, may also adversely affect the
value, volatility and liquidity of dividend- and interest-paying securities. Market volatility, tariffs, rising interest
rates, and/or a return to unfavorable economic conditions could impair the Fund’s ability to achieve its investment
objective.
There
is an outbreak of a highly contagious form of a novel coronavirus known as “COVID-19.” COVID-19 has been
declared a pandemic by the World Health Organization and, in response to the outbreak, the U.S. Health and Human Services
Secretary has declared a public health emergency in the United States. COVID-19 had a devastating impact on the global
economy, including the U.S. economy, and resulted in a global economic recession. Many states issued orders requiring the
closure of non-essential businesses and/or requiring residents to stay at home. The COVID-19 pandemic and preventative
measures taken to contain or mitigate its spread have caused, and are continuing to cause, business shutdowns, cancellations
of events and travel, significant reductions in demand for certain goods and services, reductions in business activity and
financial transactions, supply chain interruptions and overall economic and financial market instability both globally and in
the United States. Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some
period thereafter. While several countries, as well as certain states, counties, and cities in the United States, began to
relax the early public health restrictions with a view to partially or fully reopening their economies, many cities, both
globally and in the United States, continue to experience, from time to time, surges in the reported number of cases and
hospitalizations related to the COVID-19 pandemic. Increases in cases can and has led to the re-introduction of restrictions
and business shutdowns in certain states, counties, and cities in the United States and globally and could continue to lead
to the re-introduction of such restrictions elsewhere. Additionally, vaccines produced by Moderna and Johnson &
Johnson are currently authorized for emergency use, and in August 2021, the U.S. Food and Drug Administration
(“FDA”) granted full approval to the vaccines produced by Pfizer-BioNTech, which will now be marketed as
Comirnaty. However, it remains unclear how quickly the vaccines will be distributed nationwide and globally or when
“herd immunity” will be achieved and the restrictions that were imposed to slow the spread of the virus will be
lifted entirely. The delay in distributing the vaccines could lead people to continue to self-isolate and not participate in
the economy at pre-pandemic levels for a prolonged period of time. Even after the COVID-19 pandemic subsides, the U.S.
economy and most other major global economies may continue to experience a substantial economic downturn or recession, and
our business and operations, as well as the business and operations of our portfolio companies, could be materially adversely
affected by a prolonged economic downturn or recession in the United States and other major markets. Despite actions of the
U.S. federal government and foreign governments, the uncertainty surrounding the COVID-19 pandemic and other factors has
contributed to significant volatility and declines in the global public equity markets and global debt capital markets,
including the net asset value of the Fund’s shares. These events could have, and/or have had, a significant impact on
the Fund’s performance, net asset value, income, operating results and ability to pay distributions, as well as the
performance, income, operating results and viability of issuers in which it invests. It is virtually impossible to
determine the ultimate impact of COVID-19 at this time. Further, the extent and strength of any economic recovery after the
COVID-19 pandemic abates, including following any “second wave,” “third wave” or other intensifying
of the pandemic, is uncertain
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and
subject to various factors and conditions. Accordingly, an investment in the Fund is subject to an elevated degree of risk as
compared to other market environments.
Inflation
Risk
Inflation
risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the
value of money. As inflation increases, the real value of the Fund’s shares and distributions thereon can decline. Inflation
risk is linked to increases in the prices of goods and services and a decrease in the purchasing power of money. Since the beginning
of 2021, inflation has risen at its highest rate in four decades in the U.S. Inflation may reduce the intrinsic value of an investment
in the Fund.
Political
Risks Relating to Russia's Invasion of Ukraine
Russia
began its invasion of Ukraine in February 2022. The invasion significantly amplified already existing geopolitical tensions among
Russia, Ukraine, Europe, NATO and the United States. Russia’s military invasion of Ukraine, the resulting responses by the
United States and other countries, and the potential for wider conflict has increased volatility and uncertainty in the financial
markets, specifically on companies in the oil and gas sector, finance and resource extraction.
The
ramifications of the hostilities and sanctions, however, may not be limited to Russia. Conflict between Ukraine and Russia is
likely to negatively impact other regional and global economic markets (including Europe, Asia and the United States),
companies in other countries (particularly those that have exposure to Russia and Ukraine) and on various sectors, industries
and markets for securities and commodities globally, such as oil and natural gas and banking.
Regulation
and Government Intervention
Risk
Global
economies and financial markets are increasingly interconnected, which increases the possibility that conditions in one country
or region may adversely affect companies in a different country or region. The global financial crisis has led governments and
regulators around the world to take a number of unprecedented actions designed to support certain financial institutions and segments
of the financial markets that experienced extreme volatility, and in some cases a lack of liquidity. Governments, their regulatory
agencies, or self-regulatory organizations may take actions that the regulation of the issuers in which the Fund invests. Legislation
or regulation may also change the way in which the Fund itself is regulated. Such legislation or regulation could limit or preclude
the Fund’s ability to achieve its investment objective.
Governments
or their agencies may also acquire distressed assets from financial institutions and acquire ownership interests in those institutions.
The implications of government ownership and disposition of these assets are unclear, and such a program may have positive or
negative effects on the liquidity, valuation and performance of the Fund’s portfolio holdings. Furthermore, volatile financial
markets can expose the Fund to greater market and liquidity risk and potential difficulty in valuing portfolio instruments held
by the Fund.
The
SEC and its staff have been engaged in various initiatives and reviews that seek to improve and modernize the regulatory structure
governing investment companies. These efforts have been focused on risk identification and controls in various areas, including
imbedded leverage through the use of derivatives and other trading practices, cyber-security, liquidity, enhanced regulatory and
public reporting requirements and the evaluation of systemic risks. Any new rules, guidance or regulatory initiatives resulting
from these efforts could increase the
The
Gabelli Multimedia Trust Inc.
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Fund Information (Continued) (Unaudited)
Fund’s
expenses and impact its returns to stockholders or, in the extreme case, impact or limit its use of various portfolio management
strategies or techniques and adversely impact the Fund.
In
particular, the U.S. government has proposed and adopted multiple regulations that could have a long-lasting impact on the Funds
and on the mutual fund industry in general. The SEC’s final rules and amendments that modernize reporting and disclosure
and required the implementation of a liquidity risk management program, along with other potential upcoming regulations, could,
among other things, restrict the Funds’ ability to engage in transactions, impact flows into the Funds, and/or increase
overall expenses of the Funds.
The
SEC recently adopted Rule 18f-4 under the 1940 Act, which, effective August 18, 2022, regulates the use of derivatives, short
sales, reverse repurchase agreements and certain other transactions for certain funds registered under the 1940 Act. Among other
things, Rule 18f-4 requires funds that invest in derivative instruments beyond a specified limited amount to apply a value-at-risk
(“VaR”) based limit to their use of certain derivative instruments and financing transactions and to adopt and implement
a derivatives risk management program. Consequently, unless a fund qualifies as a “limited derivatives user” as defined
in Rule 18f-4, the fund has established a comprehensive derivatives risk management program to comply with a VaR based leverage
limit, appointed a derivatives risk manager and will provide additional disclosure both publicly and to the SEC regarding its
derivatives positions. If a fund qualifies as a limited derivatives user, Rule 18f-4 requires the fund to have policies and procedures
to manage its aggregate derivatives risk, which may require the fund to alter, perhaps materially, its use of derivatives, short
sales, and reverse repurchase agreements and similar financing transactions as part of its investment strategies. In connection
with the adoption of Rule 18f-4, the SEC also eliminated the asset segregate framework for covering derivatives and certain financial
instruments arising from SEC and staff guidance.
In
response to the current economic environment, the Biden administration may call for an increased popular, political and judicial
focus on finance related consumer protection. Financial institution practices are also subject to greater scrutiny and criticism
generally. In the case of transactions between financial institutions and the general public, there may be a greater tendency
toward strict interpretation of terms and legal rights in favor of the consuming public, particularly where there is a real or
perceived disparity in risk allocation and/or where consumers are perceived as not having had an opportunity to exercise informed
consent to the transaction. In the event of conflicting interests between retail investors holding shares of an open-end investment
company such as the Funds and a large financial institution, a court may similarly seek to strictly interpret terms and legal
rights in favor of retail investors.
As
of the date of this annual shareholders’ report, the Democratic Party controls the executive branch of government and the
Senate by a narrow margin, and the Republican Party controls the House of Representatives. Changes in federal policy, including
tax policies, and at regulatory agencies occur over time through policy and personnel changes following elections, which lead
to changes involving the level of oversight and focus on the financial services industry or the tax rates paid by corporate entities.
The nature, timing and economic and political effects of potential changes to the current legal and regulatory framework affecting
markets remain highly uncertain. Uncertainty surrounding future changes may adversely affect the Fund’s operating environment
and therefore its investment performance.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
In
addition, the tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Act”) made substantial changes
to the Code. Among those changes were a significant permanent reduction in the generally applicable corporate tax rate, changes
in the taxation of individuals and other non-corporate taxpayers that generally but not universally reduce their taxes on a temporary
basis subject to “sunset” provisions, the elimination or modification of various previously allowed deductions (including
substantial limitations on the deductibility of interest and, in the case of individuals, the deduction for personal state and
local taxes), certain additional limitations on the deduction of net operating losses, certain preferential rates of taxation
on certain dividends and certain business income derived by non-corporate taxpayers in comparison to other ordinary income recognized
by such taxpayers, and significant changes to the international tax rules. The effect of these, and the many other changes made
in the Act is subject to developing guidance and its full effects may be highly uncertain, both in terms of their direct effect
on the taxation of an investment in the Fund’s shares and their indirect effect on the value of the Fund’s assets,
the Fund’s shares or market conditions generally. Furthermore, many of the provisions of the Act will require guidance through
the issuance of Treasury regulations in order to assess their effect. There may be a substantial delay before such Treasury regulations
are promulgated, increasing the uncertainty as to the ultimate effect of the statutory amendments on the Fund. It is also likely
that there will be technical corrections legislation proposed with respect to the Act, the effect of which cannot be predicted
and may be adverse to the Fund or the Fund’s shareholders.
In
addition, certain of the Fund’s investments may provide exposure to coupon rates that are based on the London
Interbank Offered Rate (“LIBOR”), the Secured Overnight Financing Rate (“SOFR”), Euro Interbank
Offered Rate and other similar types of reference rates (each, a “Reference Rate”). These Reference Rates are
generally intended to represent the rate at which contributing banks may obtain short-term borrowings within certain
financial markets. Most maturities and currencies of LIBOR were phased out at the end of 2021, with the remaining ones to be
phased out on June 30, 2023. These events and any additional regulatory or market changes may have an adverse impact on the
Fund or its investments, including increased volatility or illiquidity in markets for instruments that rely on LIBOR. There
remains uncertainty regarding the impact of the transition from LIBOR or the Fund and the financial markets generally. SOFR
has been selected by a committee established by the Board of Governors of the Federal Reserve System and the Federal Reserve
Bank of New York to replace LIBOR as a Reference Rate in the United States and U.S. law requires that contracts without a
practicable LIBOR alternative default to SOFR plus a set spread beginning in mid-2023. SOFR is a secured, nearly risk-free
rate, while LIBOR is an unsecured rate that includes an element of bank credit risk. In addition, SOFR is strictly an
overnight rate, while LIBOR historically has been published for various maturities, ranging from overnight to one year. Thus,
LIBOR may be expected to be higher than SOFR, and the spread between the two is likely to widen in times of market stress.
Certain existing contracts provide for a spread adjustment when transitioning to SOFR from LIBOR, but there is no assurance
that it will provide adequate compensation.
Other
countries have undertaken similar initiatives to identify replacement Reference Rates for LIBOR in their respective markets. However,
there are obstacles to converting certain existing investments and transactions to a new Reference Rate, as well as risks associated
with using a new Reference Rate with respect to new investments and transactions. There remains uncertainty regarding the impact
of the transition from LIBOR on the Fund and the financial markets generally, and the termination of certain Reference Rates presents
risk to the Fund. The transition process, or the failure of an industry to transition, could lead to increased volatility and
illiquidity in markets for instruments that currently rely on LIBOR to determine interest rates and a reduction in
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
the
values of some LIBOR-based investments. Since the usefulness of LIBOR as a benchmark could deteriorate during the transition
period, these effects could occur prior to June 30, 2023. Further, U.S. issuers are currently not obligated to include any
particular fallback language in transaction documents for new issuances of LIBOR-linked securities. In addition, the
alternative reference or benchmark rate may be an ineffective substitute, potentially resulting in prolonged adverse market
conditions for the Fund. The elimination of a Reference Rate or any other changes or reforms to the determination or
supervision of Reference Rates could have an adverse impact on the market for or value of any securities or payments linked
to those Reference Rates and other financial obligations held by the Fund or on its overall financial conditions or results
of operations. Any substitute Reference Rate and any pricing adjustments imposed by a regulator or by counterparties or
otherwise may adversely affect the Fund’s performance and/or NAV. At this time, it is not possible to completely
identify or predict the effect of any such changes, any establishment of alternative Reference Rates or any other reforms to
Reference Rates that may be enacted in the UK or elsewhere.
The Fund may be affected by governmental action in ways that are
not foreseeable, and there is a possibility that such actions could have a significant adverse effect on the Fund and its
ability to achieve its investment objectives.
Special
Risks Related to Cybersecurity
The
Fund and its service providers are susceptible to cybersecurity risks that include, among other things, theft, unauthorized monitoring,
release, misuse, loss, destruction, or corruption of confidential and highly restricted data; denial of service attacks; unauthorized
access to relevant systems, compromises to networks or devices that the Fund and its service providers use to service the Fund’s
operations; or operational disruption or failures in the physical infrastructure or operating systems that support the Fund and
its service providers. Cyberattacks against or security breakdowns of the Fund or its service providers may adversely impact the
Fund and its shareholders, potentially resulting in, among other things, financial losses; the inability of Fund shareholders
to transact business and the Fund to process transactions; inability to calculate the Fund’s NAV; violations of applicable
privacy and other laws; regulatory fines, penalties, reputational damage, reimbursement, or other compensation costs; and/or additional
compliance costs. The Fund may incur additional costs for cyber security risk management and remediation purposes. In addition,
cybersecurity risks may also impact issuers of securities in which the Fund invests, which may cause the Fund’s investment
in such issuers to lose value. There can be no assurance that the Fund or its service providers will not suffer losses relating
to cyberattacks or other information security breaches in the future.
HOW
THE FUND MANAGES RISK
Investment
Restrictions
The
Fund has adopted certain investment limitations designed to limit investment risk and maintain portfolio diversification. These
limitations are fundamental and may not be changed without the approval of the holders of a majority, as defined in the 1940 Act,
of the outstanding shares of common stock and preferred stock voting together as a single class. The Fund may become subject to
guidelines that are more limiting than the investment restrictions set forth above in order to obtain and maintain ratings from
Moody’s or Fitch Ratings (“Fitch”) on its preferred stock.
The
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Additional
Fund Information (Continued) (Unaudited)
Interest
Rate Transactions
The
Fund may enter into interest rate swap or cap transactions in relation to all or a portion of any series of auction rate preferred
stock in order to manage the impact on its portfolio of changes in the dividend rate of such stock. Through these transactions,
the Fund may, for example, obtain the equivalent of a fixed rate for such auction rate preferred stock that is lower than the
Fund would have to pay if it issued fixed rate preferred stock.
The
use of interest rate swaps and caps is a highly specialized activity that involves investment techniques and risks different
from those associated with ordinary portfolio security transactions. In an interest rate swap, the Fund would agree to pay 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 its auction rate preferred stock. In an interest rate cap,
the Fund would pay a premium to the counterparty to the interest rate cap and, to the extent that a specified variable rate
index exceeds a predetermined fixed rate, would receive from the counterparty payments of the difference based on the
notional amount of such cap. Interest rate swap and cap transactions introduce additional risk because the Fund would remain
obligated to pay preferred stock dividends or distributions when due in accordance with the Articles Supplementary of the
relevant series of the auction rate preferred stock even if the counterparty defaulted. 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 or distribution payments on the auction rate preferred
stock. In addition, at the time an interest rate swap or 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 or distribution payments on the auction rate preferred stock. To the extent there is a decline in interest rates,
the value of the interest rate swap or cap could decline, resulting in a decline in the asset coverage for the shares
of auction rate preferred stock. A sudden and dramatic decline in interest rates may result in a significant decline in the
asset coverage. Under the Articles Supplementary for each series of the preferred stock, if the Fund fails to maintain the
required asset coverage on the outstanding preferred stock or fails to comply with other covenants, the Fund may be required
to redeem some or all of these shares. The Fund generally may redeem any series of auction rate preferred stock, in whole or
in part, at its option at any time (usually on a dividend or distribution payment date), other than during a non-call period.
Such redemption would likely result in the Fund seeking to terminate early all or a portion of any swap or cap transactions.
Early termination of a swap could result in a termination payment by the Fund to the counterparty, while early termination of
a cap could result in a termination payment to the Fund.
The
Fund will usually enter into swaps or caps on a net basis; that is, the two payment streams will be netted out in a cash settlement
on the payment date or dates specified in the instrument, with the Fund receiving or paying, as the case may be, only the net
amount of the two payments. The Fund intends to segregate cash or liquid securities having a value at least equal to the value
of the Fund’s net payment obligations under any swap transaction, marked to market daily. The Fund will monitor any such
swap with a view to ensuring that the Fund remains in compliance with all applicable regulatory investment policy and tax requirements.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
INVESTMENT
RESTRICTIONS
The
Fund operates under the following restrictions that constitute fundamental policies that cannot be changed without the
affirmative vote of the holders of a majority of the outstanding voting securities of the Fund (as defined in the 1940 Act).
Such a majority is defined as the lesser of (i) 67% or more of the shares present at a meeting of stockholders, if the
holders of 50% of the outstanding shares of the Fund are present or represented by proxy or (ii) more than 50% of the
outstanding shares of the Fund. All percentage limitations set forth below apply immediately after a purchase or initial
investment and any subsequent change in any applicable percentage resulting from market fluctuations does not require
elimination of any security from the portfolio. The Fund may not:
1.
Invest 25% or more of its total assets, taken at market value at the time of each investment, in the securities of issuers in
any particular industry other than the telecommunications, media, publishing, and entertainment industries. This restriction does
not apply to investments in U.S. government securities.
2.
Purchase securities of other investment companies, except in connection with a merger, consolidation, acquisition, or reorganization,
if more than 10% of the market value of the total assets of the Fund would be invested in securities of other investment companies,
more than 5% of the market value of the total assets of the Fund would be invested in the securities of any one investment company
or the Fund would own more than 3% of any other investment company’s securities; provided, however, this restriction will
not apply to securities of any investment company organized by the Fund that are to be distributed pro rata as a dividend to its
stockholders.
3.
Purchase or sell commodities or commodity contracts except that the Fund may purchase or sell futures contracts and related options
thereon if immediately thereafter (i) no more than 5% of its total assets are invested in margins and premiums and (ii) the aggregate
market value of its outstanding futures contracts and market value of the currencies and futures contracts subject to outstanding
options written by the Fund do not exceed 50% of the market value of its total assets. The Fund may not purchase or sell real
estate, provided that the Fund may invest in securities secured by real estate or interests therein or issued by companies which
invest in real estate or interests therein.
4.
Purchase any securities on margin, except that the Fund may obtain such short-term credit as may be necessary for the clearance
of purchases and sales of portfolio securities.
5.
Make loans of money, except by the purchase of a portion of publicly distributed debt obligations in which the Fund may invest,
and repurchase agreements with respect to those obligations, consistent with its investment objectives and policies. The Fund
reserves the authority to make loans of its portfolio securities to financial intermediaries in an aggregate amount not exceeding
20% of its total assets. Any such loans will only be made upon approval of, and subject to any conditions imposed by, the Board.
Because these loans would at all times be fully collateralized, the risk of loss in the event of default of the borrower should
be slight.
6.
Borrow money, except that the Fund may borrow from banks and other financial institutions on an unsecured basis, in an amount
not exceeding 10% of its total assets, to finance the repurchase of its shares. The Fund also may borrow money on a secured basis
from banks as a temporary measure for extraordinary or emergency
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
purposes.
Temporary borrowings may not exceed 5% of the value of the total assets of the Fund at the time the loan is made. The Fund may
pledge up to 10% of the lesser of the cost or value of its total assets to secure temporary borrowings. The Fund will not borrow
for investment purposes. Immediately after any borrowing, the Fund will maintain asset coverage of not less than 300% with respect
to all borrowings. While the borrowing of the Fund exceeds 5% of its respective total assets, the Fund will make no further purchases
of securities, although this limitation will not apply to repurchase transactions as described above.
7.
Underwrite securities of other issuers except insofar as the Fund may be deemed an underwriter under the Securities Act of 1933,
as amended, in selling portfolio securities; provided, however, this restriction will not apply to securities of any investment
company organized by the Fund that are to be distributed pro rata as a dividend to its stockholders.
8.
Invest more than 15% of its total assets in illiquid securities, such as repurchase agreements with maturities in excess of seven
days, or securities that at the time of purchase have legal or contractual restrictions on resale.
9.
Issue senior securities, except to the extent permitted by applicable law.
With
respect to (1) above, the Fund invests 25% or more of its total assets in the securities of issuers in the telecommunications,
media, publishing and entertainment industries.
The
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Additional
Fund Information (Unaudited) (Continued)
MANAGEMENT
OF THE FUND
Directors
and Officers
The
business and affairs of the Fund are managed under the direction of the Fund’s Board of Directors Information pertaining
to the Directors and Officers of the Fund is set forth below. The Fund’s Statement of Additional Information includes additional
information about the Fund’s Directors and is available without charge, upon request, by calling 800-GABELLI (800-422-3554)
or by writing to The Gabelli Multimedia Trust Inc. at One Corporate Center, Rye, NY 10580-1422.
Name,
Position(s)
Address1
and Year of Birth |
|
Term
of Office
and
Length of
Time Served2 |
|
Number
of
Funds
in Fund
Complex
Overseen
by Director |
|
Principal
Occupation(s)
During Past Five Years |
|
Other
Directorships
Held by Director3 |
| |
|
|
|
|
|
|
|
|
| INTERESTED
DIRECTORS4: |
|
|
|
|
|
|
| |
|
|
|
|
|
|
Mario
J. Gabelli, CFA
Director and Chief
Investment Officer
1942 |
|
Since
1994*** |
|
31 |
|
Chairman,
Chief Executive Officer, and Chief Investment Officer– Value Portfolios of GAMCO Investors, Inc. and Chief Investment
Officer – Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management, Inc.; Director/ Trustee or Chief Investment
Officer of other registered investment companies within the Gabelli Fund Complex; Chief Executive Officer of GGCP, Inc.; Executive
Chairman of Associated Capital Group, Inc. |
|
Director
of Morgan Group Holding, Co. (holding company) (2001-2019); Chairman of the Board and Chief Executive Officer of LICT Corp.
(multimedia and communication services company); Director of CIBL, Inc. (broadcasting and wireless communications); Director
of ICTC Group Inc. (communications) (2013-2018) |
| |
|
|
|
|
|
|
|
|
Christopher
J. Marangi,
CFA
Director
1974 |
|
Since
2013*** |
|
5 |
|
Managing
Director and Co-Chief Investment Officer of the Value team of GAMCO Investors, Inc.; Portfolio Manager for Gabelli Funds,
LLC and GAMCO Asset Management Inc. |
|
— |
| |
|
|
|
|
|
|
|
|
| INDEPENDENT
DIRECTORS5: |
|
|
|
|
|
|
| |
|
|
|
|
|
|
Calgary
Avansino
Director
1975 |
|
Since
2021*** |
|
5 |
|
Chief
Executive Officer, Glamcam (2018- 2020) |
|
Trustee,
Cate School; Trustee, the E.L. Wiegand Foundation; Member, the Common Sense Media Advisory Council |
| |
|
|
|
|
|
|
|
|
John
Birch6
Director
1950 |
|
Since
2019** |
|
8 |
|
Partner,
The Cardinal Partners Global; Chief Operating Officer of Sentinel Asset Management and Chief Financial Officer and Chief Risk
Officer of Sentinel Group Funds (2005-2015) |
|
— |
| |
|
|
|
|
|
|
|
|
Elizabeth
C. Bogan
Director
1944 |
|
Since
1990** |
|
12 |
|
Senior
Lecturer in Economics at Princeton University |
|
— |
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Unaudited) (Continued)
Name,
Position(s)
Address1
and Year of Birth |
|
Term
of Office
and
Length of
Time Served2 |
|
Number
of
Funds
in Fund
Complex
Overseen
by Director |
|
Principal
Occupation(s)
During Past Five Years |
|
Other
Directorships
Held by Director3 |
| |
|
|
|
|
|
|
|
|
Anthony
S. Colavita6,7
Director
1961 |
|
Since
2018*** |
|
22 |
|
Attorney,
Anthony S. Colavita, P.C., Supervisor, Town of Eastchester, NY |
|
— |
| |
|
|
|
|
|
|
|
|
James
P. Conn7
Director
1938 |
|
Since
1994** |
|
23 |
|
Former
Managing Director and Chief Investment Officer of Financial Security Assurance Holdings Ltd. (1992-1998) |
|
— |
| |
|
|
|
|
|
|
|
|
Frank
J. Fahrenkopf, Jr.6
Director
1939 |
|
Since
1999* |
|
11 |
|
Co-Chairman
of the Commission on Presidential Debates; Former President and Chief Executive Officer of the American Gaming Association
(1995-2013); Former Chairman of the Republican National Committee (1983- 1989) |
|
Director
of First Republic Bank (banking); Director of Eldorado Resorts, Inc. (casino entertainment company) |
| |
|
|
|
|
|
|
|
|
Kuni
Nakamura
Director
1968 |
|
Since
2012** |
|
36 |
|
President
of Advanced Polymer, Inc. (chemical manufacturing company); President of KEN Enterprises, Inc. (real estate); Trustee on Long
Island University Board of Trustees; Trustee on Fordham Preparatory School Board of Trustees |
|
— |
| |
|
|
|
|
|
|
|
|
Werner
J. Roeder6
Director
1940 |
|
Since
1999* |
|
20 |
|
Retired
physician; Former Vice President of Medical Affairs (Medical Director) of New York Presbyterian/Lawrence Hospital (1999-2014) |
|
— |
| |
|
|
|
|
|
|
|
|
Salvatore
J. Zizza8
Director
1945 |
|
Since
1994* |
|
34 |
|
President
of Zizza & Associates Corp. (private holding company); Chairman of Bergen Cove Realty Inc. (residential real estate) |
|
Director
and Chairman of Trans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals)
(2009-2018); Retired Chairman of BAM (semiconductor and aerospace manufacturing) |
| |
|
|
|
|
|
|
|
|
Daniel
E. Zucchi9
Director
1940 |
|
Since
2019* |
|
3 |
|
President
of Zucchi & Associates (general business consulting); Senior Vice President of Hearst Corp. (1984-1995) |
|
Cypress
Care LLC (health care) (2001-2009); Director, PMV Consumer Acquisition Corp. |
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Unaudited) (Continued)
Name,
Position(s)
Address1
and Year of Birth |
|
Term
of Office
and Length of
Time Served2 |
|
Principal
Occupation(s)
During Past Five Years |
| |
|
|
|
|
| OFFICERS: |
|
|
|
|
| |
|
|
|
|
John
C. Ball
President and
Treasurer
1976 |
|
Since
2017 |
|
Officer
of registered investment companies within the Gabelli Fund Complex since 2017; Vice President and Assistant Treasurer of AMG
Funds, 2014-2017; Chief Executive Officer, G.distributors, LLC since December 2020 |
| |
|
|
|
|
Peter
Goldstein
Secretary and Vice
President
1953 |
|
Since
2020 |
|
General
Counsel, GAMCO Investors, Inc. and Chief Legal Officer, Associated Capital Group, Inc. since 2021; General Counsel and Chief
Compliance Officer, Buckingham Capital Management, Inc. (2012-2020); Chief Legal Officer and Chief Compliance Officer, The
Buckingham Research Group, Inc. (2012-2020) |
| |
|
|
|
|
Richard
J. Walz
Chief Compliance
Officer
1959 |
|
Since
2013 |
|
Chief
Compliance Officer of registered investment companies within the Fund Complex since 2013 |
| |
|
|
|
|
Carter
W. Austin
Vice President and
Ombudsman
1966 |
|
Since
2010 |
|
Vice
President and/or Ombudsman of closed-end funds within the Gabelli Fund Complex; Senior Vice President (since 2015) and Vice
President (1996-2015) of Gabelli Funds, LLC |
| |
|
|
|
|
Laurissa
M. Martire
Vice President
1976 |
|
Since
2004 |
|
Vice
President and/or Ombudsman of closed-end funds within the Gabelli Fund Complex; Senior Vice President (since 2019) and other
positions (2003-2019) of GAMCO Investors, Inc. |
| 1 | Address:
One Corporate Center, Rye, NY 10580-1422, unless otherwise noted. |
| 2 | The
Fund’s Board of Directors 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 2023 Annual Meeting of Stockholders or until their successors
are duly elected and qualified. |
| ** | Term
expires at the Fund’s 2024 Annual Meeting of Stockholders or until their successors
are duly elected and qualified. |
| *** | Term
expires at the Fund’s 2025 Annual Meeting of Stockholders 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 | 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. |
| 4 | “Interested
person” of the Fund, as defined in the 1940 Act. Messrs. Gabelli and Marangi are
each considered an “interested person” because of their affiliation with
Gabelli Funds, LLC, which acts as the Fund’s investment adviser. |
| 5 | Directors
who are not interested persons are considered “Independent” Directors. |
| 6 | Mr.
Fahrenkopf’s daughter, Lesle. F. Foley, and Mr. Colavita’s father, Anthony
J. Colavita, serve as directors of other funds in the Fund Complex, and Mr. Birch is
a director of Gabelli Merger Plus+ Trust Plc and GAMCO International SICAV, which may
be deemed to be controlled by Mario J. Gabelli and/or affiliates and, in that event,
would be deemed to be under common control with the Fund’s Adviser. |
| 7 | This
Director is elected solely by and represents the stockholders of the preferred stock
issued by this Fund. |
| 8 | Mr.
Zizza is an independent director of Gabelli International Ltd., which may be deemed to
be controlled by Mario J. Gabelli and/or affiliates and in that event would be deemed
to be under common control with the Fund’s Adviser. On September 9, 2015, Mr. Zizza
entered into a settlement with the SEC to resolve an inquiry relating to an alleged violation
regarding the making of false statements or omissions to the accountants of a company
concerning a related party transaction. The company in question is not an affiliate of,
nor has any connection to, the Fund. Under the terms of the settlement, Mr. Zizza, without
admitting or denying the SEC’s findings and allegation, paid $150,000 |
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Unaudited) (Continued)
and
agreed to cease and desist committing or causing any future violations of Rule 13b2-2 of the Securities Exchange Act of 1934,
as amended. The Board has discussed this matter and has determined that it does not disqualify Mr. Zizza from serving as an Independent
Director.
| 9 | Mr.
Zucchi is a director of PMV Consumer Acquisition Corp., which may be deemed to be controlled
by Mario J. Gabelli and/or affiliates and in that event would be deemed to be under common
control with the Fund’s Adviser. |
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
General
The
business and affairs of the Fund are managed under the direction of the Fund’s Board. The Board decides upon matters of
general policy and reviews the actions of the Investment Adviser, Gabelli Funds, LLC, located at One Corporate Center, Rye, New
York 10580-1422, and the Sub-Administrator (as defined below). Pursuant to an Investment Advisory Agreement with the Fund, the
Investment Adviser, under the supervision of the Fund’s Board, provides a continuous investment program for the Fund’s
portfolio; provides investment research and makes and executes recommendations for the purchase and sale of securities; and provides
all facilities and personnel, including officers required for its administrative management and pays the compensation of all officers
and Directors of the Fund who are its affiliates.
The
Investment Adviser
The
Investment Adviser, a New York limited liability company and registered investment adviser under the Investment Advisers Act
of 1940, as amended, serves as an investment adviser to registered investment companies with combined aggregate net assets
approximating $18.5 billion as of December 31, 2022. The Investment Adviser is a wholly owned subsidiary of GAMCO Investors,
Inc. (“GAMI”), a New York corporation, whose Class A Common Stock is traded on the OTCQX under the symbol,
“GAMI.” Mr. Mario J. Gabelli may be deemed a “controlling person” of the Investment Adviser on the
basis of his controlling interest in GAMI. Mr. Gabelli owns a majority of the stock of GGCP, Inc. (“GGCP”), which
holds a majority of the capital stock and voting power of GAMI. The Investment Adviser has several affiliates that provide
investment advisory services: GAMCO Asset Management, Inc., a wholly owned subsidiary of GAMI, acts as investment adviser for
individuals, pension trusts, profit sharing trusts, and endowments, and as a sub-adviser to certain third party investment
funds, which include registered investment companies, having assets under management of approximately $10.7 billion as of
December 31, 2022; Teton Advisors, Inc. and its wholly owned investment adviser, Keeley Teton Advisers, LLC, with assets
under management of approximately $1.4 billion as of September 30, 2022, acts as investment advisers to The TETON Westwood
Funds, the KEELEY Funds, and separately managed accounts; Gabelli & Company Investment Advisers, Inc. (formerly, Gabelli
Securities, Inc.), a wholly-owned subsidiary of Associated Capital Group, Inc. (“Associated Capital”), acts as
investment adviser for certain alternative investment products, consisting primarily of risk arbitrage and merchant banking
limited partnerships and offshore companies, with assets under management of approximately $1.8 billion as of December 31,
2022; Teton Advisors, Inc. was spun off by GAMI in March 2009 and is an affiliate of GAMI by virtue of Mr.
Gabelli’s ownership of GGCP, the principal stockholder of Teton Advisors, Inc., as of December 31, 2022. Effective
December 31, 2021, Teton Advisors, Inc. completed a reorganization by transferring its entire advisory business, operations
and personnel to a new wholly-owned subsidiary, Teton Advisors, LLC. Teton Advisors, Inc. is now the holding company and
parent of the new adviser. The ownership of the parent company is unchanged and the consummation of the reorganization did
not result in a change of its control. Associated Capital was spun off from GAMI on November 30, 2015, and is an affiliate of
GAMI by virtue of Mr. Gabelli’s ownership of GGCP, the principal stockholder of Associated Capital.
Payment
of Expenses
The
Investment Adviser is obligated to pay expenses associated with providing the services contemplated by the Investment Advisory
Agreement between the Fund and the Investment Adviser (the “Advisory Agreement”)
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
including
compensation of and office space for its officers and employees connected with investment and economic research, trading and investment
management and administration of the Fund, as well as the fees of all Directors of the Fund who are affiliated with the Investment
Adviser. The Fund pays all other expenses incurred in its operation including, among other things, expenses for legal and independent
accountants’ services, costs of printing proxies, stock certificates and stockholder reports, charges of the custodian,
any subcustodian and transfer and dividend paying agent, expenses in connection with its respective automatic dividend reinvestment
and voluntary cash purchase plan, SEC fees, fees and expenses of unaffiliated Directors, accounting and pricing costs, including
costs of calculating the net asset value of the Fund, membership fees in trade associations, fidelity bond coverage for its officers
and employees, Directors’ and officers’ errors and omission insurance coverage, interest, brokerage costs, taxes,
stock exchange listing fees and expenses, expenses of qualifying its shares for sale in various states, litigation and other extraordinary
or non-recurring expenses, and other expenses properly payable by the Fund. In addition to the fees of the Investment Adviser,
the Fund is responsible for the payment of all its other expenses incurred in the operation of the Fund, which include, among
other things, expenses for legal and independent accountant’s services, stock exchange listing fees, expenses relating to
the offering of preferred stock, rating agency fees, costs of printing proxies, stock certificates and stockholder reports, charges
of the Custodian, charges of Computershare, SEC fees, fees and expenses of unaffiliated Directors, accounting and printing costs,
the Fund’s pro rata portion of membership fees in trade organizations, fidelity bond coverage for the Fund’s officers
and employees, interest, brokerage costs, taxes, expenses of qualifying the Fund for sale in various states, expenses of personnel
performing stockholder servicing functions, litigation and other extraordinary or non-recurring expenses and other expenses properly
payable by the Fund.
Advisory
Agreement
Under
the terms of the Advisory Agreement, the Investment Adviser manages the portfolio of the Fund in accordance with its stated
investment objectives and policies, makes investment decisions for the Fund, and places orders to purchase and sell
securities on behalf of the Fund and manages the Fund’s other business and affairs, all subject to the supervision and
direction of its Board. In addition, under the Advisory Agreement, the Investment Adviser oversees the administration of all
aspects of the Fund’s business and affairs and provides, or arranges for others to provide, at the Investment
Adviser’s expense, certain enumerated services, including maintaining the Fund’s books and records, preparing
reports to its stockholders and supervising the calculation of the net asset value of its stock. All expenses of computing
the Fund’s net asset value, including any equipment or services obtained solely for the purpose of pricing shares of
stock or valuing the Fund’s investment portfolio, will be an expense of the Fund under the Advisory Agreement unless
the Investment Adviser voluntarily assumes responsibility for such expense. During the fiscal year ended December 31, 2022,
the Fund reimbursed the Investment Adviser $45,000 in connection with the cost of computing the Fund’s net asset
value.
The
Advisory Agreement combines investment advisory and administrative responsibilities in one agreement. For services rendered
by the Investment Adviser on behalf of the Fund under the Advisory Agreement, the Fund pays the Investment Adviser a fee
computed weekly and paid monthly, equal on an annual basis to 1.00% of the Fund’s average weekly net assets including
the liquidation value of preferred stock. The fee paid by the Fund may be higher when leverage in the form of preferred stock
is utilized, giving the Investment Adviser an
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
incentive
to utilize such leverage. However, the Investment Adviser has agreed to reduce the management fee on the incremental assets attributable
to the currently outstanding Series C Auction Rate Preferred Stock during the fiscal year if the total return of the net asset
value of the common stock of the Fund, including distributions and advisory fees subject to reduction for that year, does not
exceed the stated dividend rate or corresponding swap rate of each particular series of preferred stock for the period. In other
words, if the effective cost of the leverage for any series of preferred stock exceeds the total return (based on net asset value)
on the Fund’s common stock, the Investment Adviser will reduce that portion of its management fee on the incremental assets
attributable to the leverage for that series of preferred stock to mitigate the negative impact of the leverage on the common
stockholder’s total return. The Investment Adviser currently intends that the voluntary advisory fee waiver will remain
in effect for as long as the Series C Auction Rate Cumulative Preferred Stock are outstanding. This fee waiver will not apply
to any preferred stock issued from this offering. The Investment Adviser, however, reserves the right to modify or terminate the
voluntary advisory fee waiver at any time. The Fund’s total return on the net asset value of the common stock is monitored
on a monthly basis to assess whether the total return on the net asset value of the common stock exceeds the stated dividend rate
or corresponding swap rate of each particular series of preferred stock for the period. The test to confirm the accrual of the
management fee on the assets attributable to each particular series of preferred stock is annual. The Fund will accrue for the
management fee on these assets during the fiscal year if it appears probable that the Fund will incur the management fee on those
additional assets. For the year ended December 31, 2022, the Fund’s total return on the net asset value of the common stock
exceeded the stated dividend rate of the outstanding preferred stock. Thus, management fees were earned on these assets.
The
Advisory Agreement provides that in the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of
its obligations and duties thereunder, the Investment Adviser is not liable for any error or judgment or mistake of law or for
any loss suffered by the Fund. As part of the Advisory Agreement, the Fund has agreed that the name “Gabelli” is the
Investment Adviser’s property, and that in the event the Investment Adviser ceases to act as an investment adviser to the
Fund, the Fund will change its name to one not including “Gabelli.”
Pursuant
to its terms, the Advisory Agreement will remain in effect with respect to the Fund from year to year if approved annually: (i)
by the Fund’s Board or by the holders of a majority of the Fund’s outstanding voting securities and (ii) by a majority
of the Directors who are not “interested persons” (as defined in the 1940 Act) of any party to the Advisory Agreement,
by vote cast in person at a meeting called for the purpose of voting on such approval. A discussion regarding the basis of the
Board’s approval of the Advisory Agreement is available in the Fund’s semiannual report to stockholders for the six
months ended June 30, 2022.
Canadian
stockholders should note, to the extent applicable, that there may be difficulty enforcing any legal rights against the Investment
Adviser because it is resident outside Canada and all of its assets are situated outside Canada.
Selection
of Securities Brokers
The
Advisory Agreement contains provisions relating to the selection of securities brokers to effect the portfolio transactions of
the Fund. Under those provisions, the Investment Adviser may: (i) direct Fund portfolio brokerage to Gabelli & Company, Inc.
(“Gabelli & Company”) or other broker-dealer affiliates of the Investment Adviser
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
and
(ii) pay commissions to brokers other than Gabelli & Company that are higher than might be charged by another qualified broker
to obtain brokerage and/or research services considered by the Investment Adviser to be useful or desirable for its investment
management of the Fund and/or its other advisory accounts or those of any investment adviser affiliated with it. Sub-Administrator.
BNY
Mellon Investment Servicing (US) Inc. (“BNY Mellon”) (the “Sub-Administrator”), with its principal
office located at 760 Moore Road, King of Prussia, Pennsylvania 19406, serves as sub-administrator for the Fund. The
Sub-Administrator provides certain administrative services necessary for the Fund’s operations which do not include the
investment advisory and portfolio management services provided by the Investment Adviser. For these services and the related
expenses borne by BNY Mellon, the Investment Adviser pays a prorated monthly fee at the annual rate of 0.0275% of the first
$10 billion of the aggregate average net assets of the Fund and all other funds advised by the Investment Adviser or its
affiliate Teton Advisors, Inc., and administered by BNY Mellon, 0.0125% of the aggregate average net assets exceeding $10
billion, and 0.01% of the aggregate average net assets in excess of $15 billion.
Portfolio
Managers
Mario
J. Gabelli, CFA, is Chairman of the Board of Directors of the Fund. Mr. Gabelli is Chief Executive Officer, and Chief
Investment Officer – Value Portfolios of GAMI, a NYSE-listed asset manager and financial services company. He is the
Chief Investment Officer of Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc., each of which are asset
management subsidiaries of GAMI. In addition, Mr. Gabelli is Chief Executive Officer, Chief Investment Officer, a director,
and the controlling stockholder of GGCP, a private company that holds a majority interest in GAMI, and the Chairman of MJG
Associates, Inc., which acts as an investment manager of various investment funds and other accounts. He is Executive
Chairman of Associated Capital, a public company that provides alternative management and institutional research services,
and is a majority-owned subsidiary of GGCP. Mr. Gabelli serves as Overseer of the Columbia University Graduate School of
Business and as a trustee of Boston College and Roger Williams University. He serves as a director of the Winston Churchill
Foundation, The E.L. Wiegand Foundation, The American-Italian Cancer Foundation, and The Foundation for Italian Art and
Culture. He is Chairman of the Gabelli Foundation, Inc., a Nevada private charitable trust. Mr. Gabelli serves as
Co-President of Field Point Park Association, Inc. Mr. Gabelli received his Bachelor’s degree from Fordham University,
M.B.A from Columbia Business School, and honorary Doctorates from Fordham University and Roger
Williams University.
Christopher
J. Marangi, a Managing Director of GAMI and Co-Chief Investment Officer of GAMI’s Value team, became a portfolio
manager of the Fund in July 2013. Mr. Marangi joined Gabelli in 2003 as a research analyst. He currently manages several
funds within the Gabelli/GAMCO/Teton fund family (“Gabelli/GAMCO/Teton Fund Complex” or “Fund
Complex”) and serves as a portfolio manager on GAMCO Asset Management Inc.’s institutional and high net worth
separate accounts team. Mr. Marangi graduated magna cum laude and Phi Beta Kappa with a B.A. in Political Economy from
Williams College and holds an M.B.A. with honors from Columbia Business School.
Sub-Administrator
BNY
Mellon Investment Servicing (US) Inc. (“BNY Mellon” or the “Sub-Administrator”), with its principal office
located at 760 Moore Road, King of Prussia, Pennsylvania 19406, serves as sub-administrator for the Fund.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
The
Sub-Administrator provides certain administrative services necessary for the Fund’s operations which do not include
the investment and portfolio management services provided by the Investment Adviser. For these services and the related
expenses borne by the Sub-Administrator, the Investment Adviser pays an annual fee based on the value of the aggregate
average daily net assets of all funds under its administration managed by the Investment Adviser, GAMCO and Teton Advisors,
Inc. as follows: 0.0275% - first $10 billion, 0.0125% - exceeding $10 billion but less than $15 billion, 0.01% - over $15
billion but less than $20 billion and 0.008% - over $20 billion.
Portfolio
Transactions
Principal
transactions are not entered into with affiliates of the Fund. However, G.research an affiliate of the Investment Adviser,
may execute portfolio transactions on stock exchanges and in the over-the-counter markets on an agency basis and receive a
stated commission therefrom.
NET
ASSET VALUE
For
purposes of determining the Fund’s net asset value per share, 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 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 Investment 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. U.S. government obligations with maturities
greater than 60 days are normally valued using a model that incorporates market observable data such as reported sales of similar
securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations.
Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract
is traded.
Occasionally,
reliable market quotations are not readily available (such as for certain restricted or unlisted securities and private placements)
for securities and other assets may not be reliably priced (such as in the case of trade suspensions or halts, price movement
limits set by certain foreign markets, and thinly traded or illiquid securities), or there may be events affecting the value of
foreign securities or other securities held by the Fund that occur when regular trading or foreign or other exchanges are closed,
but before trading on the NYSE is
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
closed.
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 the Board pursuant to Rule 2a-5. 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.
Attempts
to determine the fair value of securities introduce an element of subjectivity to the pricing of securities. As a result, the
price of a security determined through fair valuation techniques may differ from the price quoted or published by other
sources and may not accurately reflect the market value of the security when trading resumes.
Control
Share Acquisitions
On
February 16, 2023 the Fund elected, by resolution unanimously adopted by the Board of Directors of the Fund in accordance with
Section 3-702(c)(4) of the MGCL, to be subject to the Maryland Control Share Acquisition Act (the “Control Share Act”),
effective immediately. The Control Share Act only applies to acquisitions of Fund shares on or after February 16, 2023.
Under
the MGCL, the Control Share Act provides that a holder of control shares of a Maryland corporation acquired in a control share
acquisition has no voting rights with respect to those shares except to the extent approved by a vote of two-thirds of the votes
entitled to be cast on the matter. Shares owned by the acquiror, by officers or by directors who are employees of the corporation
are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated with all
other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of
voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors
within one of the following ranges of voting power:
●
one-tenth or more but less than one-third;
●
one-third or more but less than a majority; or
● a majority or more of all voting power.
The
requisite shareholder approval must be obtained each time an acquiror crosses one of the thresholds of voting power set forth
above. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained
shareholder approval. A control share acquisition means the acquisition of issued and outstanding control shares, subject to certain
exceptions.
A
person who has made or proposes to make a control share acquisition may compel the board of directors of the corporation to call
a special meeting of shareholders to be held within 50 days of demand to consider the voting rights of the shares. The right to
compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay
the expenses of the meeting. If no request for a meeting is made, the corporation may itself present the question at any shareholders
meeting.
If
voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required
by the statute, then the corporation may redeem for fair value any or all of the control
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
shares,
except those for which voting rights have previously been approved. The right of the corporation to redeem control shares is subject
to certain conditions and limitations, including, compliance with the 1940 Act. Fair value is determined, without regard to the
absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or of any
meeting of shareholders at which the voting rights of the shares are considered and not approved. If voting rights for control
shares are approved at a shareholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote,
all other shareholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights
may not be less than the highest price per share paid by the acquiror in the control share acquisition.
The
Control Share Act does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party
to the transaction or (b) to acquisitions approved or exempted by the charter or bylaws of the corporation. In connection with
the Fund’s election to be subject to the Control Share Act, the Fund’s Board of Directors amended the Fund’s
bylaws to exempt the Fund’s preferred stock from the Control Share Act. This exemption applies to the Fund’s outstanding
preferred stock and to any preferred stock it may issue in the future.
THE
GABELLI MULTIMEDIA TRUST INC.
INCOME
TAX INFORMATION (Unaudited)
December
31, 2022
Cash
Dividends and Distributions
| |
| |
| |
Ordinary | |
Long
Term | |
| |
Total
Amount | |
Dividend |
| |
Payable | |
Record | |
Investment | |
Capital | |
Return
of | |
Paid | |
Reinvestment |
| |
Date | |
Date | |
Income
(a) | |
Gains | |
Capital
(b) | |
Per
Share (c) | |
Price |
| Common
Stock | |
| |
| |
| |
| |
| |
|
| |
03/24/22 | |
03/17/22 | |
— | |
— | |
$0.22000 | |
$0.22000 | |
$8.75900 |
| |
06/23/22 | |
06/15/22 | |
— | |
— | |
0.22000 | |
0.22000 | |
6.78300 |
| |
09/23/22 | |
09/16/22 | |
— | |
— | |
0.22000 | |
0.22000 | |
5.95650 |
| |
12/16/22 | |
12/09/22 | |
— | |
— | |
0.22000 | |
0.22000 | |
6.22000 |
| |
| |
| |
— | |
— | |
$0.88000 | |
$0.88000 | |
|
| 5.125% Series E Cumulative Preferred Stock |
| |
| |
| |
| |
|
| |
03/28/22 | |
03/21/22 | |
— | |
— | |
$0.3203125 | |
$0.3203125 | |
|
| |
06/27/22 | |
06/17/22 | |
— | |
— | |
$0.3203125 | |
0.3203125 | |
|
| |
09/26/22 | |
09/19/22 | |
— | |
— | |
$0.3203125 | |
0.3203125 | |
|
| |
12/27/22 | |
12/19/22 | |
— | |
— | |
$0.3203125 | |
0.3203125 | |
|
| |
| |
| |
— | |
— | |
$1.2812500 | |
$1.2812500 | |
|
| 5.125% Series G Cumulative Preferred Stock |
| |
| |
| |
| |
|
| |
03/28/22 | |
03/21/22 | |
— | |
— | |
$0.3203125 | |
$0.3203125 | |
|
| |
06/27/22 | |
06/17/22 | |
— | |
— | |
0.3203125 | |
0.3203125 | |
|
| |
09/26/22 | |
09/19/22 | |
— | |
— | |
0.3203125 | |
0.3203125 | |
|
| |
12/27/22 | |
12/19/22 | |
— | |
— | |
0.3203125 | |
0.3203125 | |
|
| |
| |
| |
— | |
— | |
$1.2812500 | |
$1.2812500 | |
|
A
Form 1099-DIV has been mailed to all shareholders of record for the distributions mentioned above, setting forth specific amounts
to be included in your 2022 tax returns. Ordinary income distributions include net investment income and realized net short term
capital gains, if any. Ordinary income is reported in box 1a of Form 1099-DIV. Capital gain distributions are reported in box
2a of Form 1099-DIV.
Series
C Auction Rate Cumulative Preferred Stock
Auction
Rate Preferred Stock pays dividends weekly based on the maximum rate. The distributions derived from long term gains for the Auction
Rate Series C Cumulative Preferred Stock were $0.00.
Corporate
Dividends Received Deduction, Qualified Dividend Income, and U.S. Government Securities Income
The
Fund paid to common, 5.125% Series E Cumulative Preferred, and 5.125% Series G Cumulative Preferred shareholders ordinary income
dividends, including short term capital gains, of $0.00, $0.00, and $0.00, respectively, per share in 2022. The Fund paid weekly
distributions to Series C Auction Rate Cumulative Preferred shareholders at varying rates throughout the year, including an ordinary
income dividend totaling $0.00 per share in 2022. For the fiscal year ended December 31, 2022, 0.00% of the ordinary dividend
qualified for the dividends received deduction available to corporations, 0.00% of the ordinary income distribution was deemed
qualified dividend income, and 0.00% of the ordinary income distribution was qualified interest income. The Fund designates 0.00%
of the short term capital gain dividends distributed during the fiscal year ended December 31, 2022, as qualified short term gain
pursuant to the American Jobs creation Act of 2004. The percentage of ordinary income dividends paid by the Fund during 2021 derived
from U.S. Treasury securities was 0.00%. 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 2022. The percentage of U.S. Government securities held as of December 31, 2022 was 14.6%.
THE
GABELLI MULTIMEDIA TRUST INC.
INCOME
TAX INFORMATION (Unaudited) (Continued)
December
31, 2022
Historical
Distribution Summary
| | |
| |
Short Term | |
Long Term | |
| |
| |
Adjustment |
| | |
Investment | |
Capital | |
Capital | |
Return of | |
Total | |
to Cost |
| | |
Income
(a) | |
Gains
(a) | |
Gains | |
Capital
(b) | |
Distributions
(c) | |
Basis
(d) |
| Common Shares | |
| |
| |
| |
| |
| |
|
| 2022 | |
– | |
– | |
– | |
$0.88000 | |
$0.88000 | |
$0.88000 |
| 2021 | |
$0.06720 | |
$0.00120 | |
$0.60640 | |
0.20520 | |
0.88000 | |
0.20520 |
| 2020 | |
0.02040 | |
0.05160 | |
0.76080 | |
0.04720 | |
0.88000 | |
0.04720 |
| 2019 | |
0.11360 | |
0.04450 | |
0.67310 | |
0.04880 | |
0.88000 | |
0.04880 |
| 2018 | |
0.01105 | |
0.02757 | |
0.86138 | |
– | |
0.90000 | |
– |
| 2017 | |
0.03060 | |
0.00300 | |
0.72872 | |
0.11768 | |
0.88000 | |
0.11768 |
| 2016 | |
0.06168 | |
0.00268 | |
0.73753 | |
0.02811 | |
0.83000 | |
0.02811 |
| 2015 | |
0.03269 | |
0.02999 | |
0.85399 | |
0.02333 | |
0.94000 | |
0.02333 |
| 2014
(e) | |
0.01978 | |
0.00107 | |
0.88350 | |
0.14565 | |
1.05000 | |
0.14565 |
| 2013 | |
0.05193 | |
0.10631 | |
0.76176 | |
– | |
0.92000 | |
– |
| 5.760% Series A Cumulative Preferred Shares |
| |
| |
| |
|
| 2019 | |
$0.20497 | |
$0.08036 | |
$1.21467 | |
– | |
$1.50000 | |
– |
| 2018 | |
0.01840 | |
0.04600 | |
1.43560 | |
– | |
1.50000 | |
– |
| 2017 | |
0.06023 | |
0.00586 | |
1.43390 | |
– | |
1.50000 | |
– |
| 2016 | |
0.11520 | |
0.00520 | |
1.37960 | |
– | |
1.50000 | |
– |
| 2015 | |
0.05350 | |
0.04908 | |
1.39742 | |
– | |
1.50000 | |
– |
| 2014 | |
0.03280 | |
0.00160 | |
1.46560 | |
– | |
1.50000 | |
– |
| 2013 | |
0.08480 | |
0.17320 | |
1.24200 | |
– | |
1.50000 | |
– |
| Series C Auction Rate Cumulative Preferred Stock |
| |
| |
| |
|
| 2022 | |
– | |
– | |
– | |
$737.88000 | |
$737.88000 | |
$737.88000 |
| 2021 | |
$2.95600 | |
$0.05812 | |
$26.68587 | |
– | |
29.70000 | |
– |
| 2020 | |
4.33392 | |
10.89238 | |
160.82370 | |
– | |
176.05000 | |
– |
| 2019 | |
129.95266 | |
50.95236 | |
770.25498 | |
– | |
951.16000 | |
– |
| 2018 | |
10.16619 | |
25.32982 | |
791.50399 | |
– | |
827.00000 | |
– |
| 2017 | |
17.61700 | |
1.71529 | |
419.38771 | |
– | |
438.72000 | |
– |
| 2016 | |
13.43109 | |
0.58542 | |
160.60349 | |
– | |
174.62000 | |
– |
| 2015 | |
1.55581 | |
1.42712 | |
40.63707 | |
– | |
43.62000 | |
– |
| 2014 | |
0.68296 | |
0.03701 | |
30.51003 | |
– | |
31.23000 | |
– |
| 2013 | |
1.74961 | |
3.58224 | |
25.66814 | |
– | |
30.99999 | |
– |
| 5.125% Series E Cumulative Preferred Stock |
| |
| |
| |
|
| 2022 | |
– | |
– | |
– | |
$1.28125 | |
$1.28125 | |
$1.28125 |
| 2021 | |
$0.12752 | |
$0.00251 | |
$1.15122 | |
– | |
1.28125 | |
– |
| 2020 | |
0.03154 | |
0.07927 | |
1.17044 | |
– | |
1.28125 | |
– |
| 2019 | |
0.17507 | |
0.06864 | |
1.03753 | |
– | |
1.28125 | |
– |
| 2018 | |
0.01575 | |
0.03924 | |
1.22626 | |
– | |
1.28125 | |
– |
| 2017 | |
0.01286 | |
0.00125 | |
0.30620 | |
– | |
0.32031 | |
– |
| 5.125% Series G Cumulative Preferred Stock |
| |
| |
| |
|
| 2022 | |
– | |
– | |
– | |
$1.28125 | |
$1.28125 | |
$1.28125 |
| 2021 | |
$0.12752 | |
$0.00251 | |
$1.15122 | |
– | |
1.28125 | |
– |
| 2020 | |
0.03207 | |
0.08059 | |
1.18994 | |
– | |
1.30260 | |
– |
| (a) | Taxable
as ordinary income for Federal tax purposes. |
THE
GABELLI MULTIMEDIA TRUST INC.
INCOME
TAX INFORMATION (Unaudited) (Continued)
December
31, 2022
| (c) | Total
amounts may differ due to rounding. |
| (d) | Decrease
in cost basis. |
| (e) | On
November 6, 2017, the Fund also distributed Rights equivalent to $0.14 per common share
based upon full subscription of all issued shares. |
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.
AUTOMATIC
DIVIDEND REINVESTMENT
AND
VOLUNTARY CASH PURCHASE PLANS
Under
the Fund’s Automatic Dividend Reinvestment Plan and Voluntary Cash Purchase Plan (the “Plan”), a shareholder
whose shares of common s tock are registered in his or her own name will have all distributions reinvested automatically by Computershare
Trust Company, N.A. (“Computershare”),
which is an agent under the Plan, unless the shareholder elects to receive cash. Distributions with respect to shares registered
in the name of a broker-dealer or other nominee (that is, in “street name”) will be reinvested by the broker or nominee
in additional shares under the Plan, unless the service is not provided by the broker or nominee or the shareholder elects to
receive distributions in cash. Investors who own shares of common stock registered in street name should consult their broker-dealers
for details regarding reinvestment. All distributions to investors who do not participate in the Plan will be paid by check mailed
directly to the record holder by Computershare
as dividend-disbursing agent.
Enrollment
in the Plan
It
is the policy of The Gabelli Multimedia
Trust Inc. (the “Fund”)
to automatically reinvest dividends payable to common shareholders. As a “registered” shareholder you automatically
become a participant in the Fund’s Automatic Dividend Reinvestment Plan (the “Plan”). The Plan authorizes the
Fund to credit common 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 Fund. Plan participants may
send their common shares certificates to Computershare
Trust Company, N.A. ("Computershare") to
be held in their dividend reinvestment account. Registered shareholders wishing to receive their distributions in cash may submit
this request through the Internet,
by telephone or in writing to:
The
Gabelli Multimedia Trust Inc.
c/o
Computershare
P.O.
Box 505000
Louisville,
KY 40233-5000
Telephone:
(800) 336-6983
Website: www.computershare.com/investor
Shareholders
requesting this cash election must include the shareholder’s name and address as they appear on the Fund’s records.
Shareholders with additional questions regarding the Plan or requesting a copy of the terms of the Plan, may contact Computershare
at the website or telephone number above.
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 distributions 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 stocks
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 Fund’s
common shares is equal to or exceeds net asset value at the time shares are valued for purposes of determining the number of shares
equivalent to the cash dividends or capital gains distribution, participants are issued shares of common stocks
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 Fund’s common stocks
The valuation date is the dividend
or distribution payment date or, if that date is not a New York Stock Exchange (“NYSE”) trading day, the next trading
day. If the net asset value of the common stocks
at the time of valuation exceeds
the market price of the common stocks,
participants will receive shares from the Fund valued at market price. If the Fund should declare a dividend or capital gains
distribution payable only in cash, Computershare
will buy shares of common stocks
in the open market, or on the NYSE
or elsewhere, for the participants’ accounts, except that Computershare
will endeavor to terminate purchases
in the open market and cause the Fund to issue shares at net asset value if, following the commencement of such purchases, the
market value of the common stocks
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.
AUTOMATIC
DIVIDEND REINVESTMENT
AND
VOLUNTARY CASH PURCHASE PLANS
(Continued)
Voluntary
Cash Purchase Plan
The
Voluntary Cash Purchase Plan is yet another vehicle for our shareholders to increase their investment in the Fund. 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 Computershare
for investments in the Fund’s
shares at the then current market price. shareholders may send an amount from $250 to $10,000. Computershare
will use these funds to purchase
shares in the open market on or about the 1st and 15th of each month. Computershare
will charge each shareholder who
participates $0.75, plus a per share fee (currently $0.02 per share). Per share fees include any applicable brokerage commissions
Computershare is required to pay and fees for such purchases are expected to be less than the usual fees for such transactions.
It is suggested that any voluntary cash payments be sent to Computershare, P.O. Box 6006, Carol Stream, IL 60197-6006 such that
Computershare receives
such payments approximately two business days before the 1st and 15th of the month. Funds not received at least two business 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 Computershare
at least two business days before
such payment is to be invested.
Shareholders
wishing to liquidate shares held at Computershare
may do so through the Internet,
in writing or by telephone to the above-mentioned website, address or telephone number. Include in your request your name, address,
and account number. Computershare will sell such shares through a broker-dealer selected by Computershare within 5 business days
of receipt of the request. The sale price will equal the weighted average price of all shares sold through the Plan on the day
of the sale, less applicable fees. Participants should note that Computershare is unable to accept instructions to sell on a specific
date or at a specific price. The cost to liquidate shares is $2.50 per transaction as well as the per share fee (currently $0.10
per share) Per share fees include any applicable brokerage commissions Computershare is required to pay and are expected to be
less than the usual fees for such transactions.
More
information regarding the Automatic Dividend Reinvestment Plan and Voluntary Cash Purchase Plan is available by calling (914)
921-5070 or by writing directly to the Fund.
The
Fund 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 30 days before the record date for such
dividend or distribution. The Plan also may be amended or terminated by Computershare on at least 30 days written notice to participants
in the Plan.
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page was intentionally left blank.
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THE
GABELLI MULTIMEDIA TRUST INC.
One
Corporate Center
Rye,
NY 10580-1422
Portfolio
Management Team Biographies
Mario
J. Gabelli, CFA,
is Chairman, Chief Executive Officer, and Chief Investment Officer - Value Portfolios of GAMCO Investors, Inc. that he
founded in 1977, and Chief Investment Officer - Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. He is
also Executive Chairman of Associated Capital Group, Inc. Mr. Gabelli is a summa cum laude graduate of Fordham University and
holds an MBA degree from Columbia Business School and Honorary Doctorates from Fordham University and Roger Williams
University.
Christopher
J. Marangi joined Gabelli
in 2003 as a research analyst. Currently he is a Managing Director and Co-Chief Investment Officer for GAMCO Investors, Inc.’s
Value team. In addition, he serves as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Fund Complex.
Mr. Marangi graduated magna cum laude and Phi Beta Kappa with a BA in Political Economy from Williams College and holds an MBA
degree with honors from Columbia Business School.
The
Net Asset Value per share appears in the Publicly Traded Funds column, under the heading “Specialized 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 “Specialized Equity Funds.”
The
Net Asset Value per share may be obtained each day by calling (914) 921-5070 or visiting www.gabelli.com.
The
NASDAQ symbol for the Net Asset Value is “XGGTX.”
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 5% or more from
the net asset value of the shares. The Fund may also, from time to time, purchase its preferred shares in the open market when
the preferred shares are trading at a discount to the liquidation value.
Item
7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
The
Proxy Voting Policies are attached herewith.
SECTION
HH
The
Voting of Proxies on Behalf of Clients
(This
section pertains to all affiliated SEC registered investment advisers)
Rule
206(4)-6 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 & Company Investment Advisers, 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 on an as needed basis to form views on the manner in which the Advisers should vote proxies on behalf of their clients.
In
general, the Director of Proxy Voting Services, using the Proxy Guidelines, and the analysts of GAMCO Investors, Inc. (“GBL”),
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 the analysts of GBL, 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.
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 and the analysts of GBL, 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, a
summary of any views provided by the Chief Investment Officer and any recommendations by GBL analysts. The Chief Investment Officer or
the GBL 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 may 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 the Advisers may diverge, counsel may so advise and the Committee may make different recommendations as to different clients.
For any matters where the recommendation may trigger appraisal rights, counsel may provide an opinion concerning the likely risks and
merits of such an appraisal action.
Each
matter submitted to the Committee will be determined by the vote of a majority of the members present at the meeting. Should the vote
concerning one or more recommendations be tied in a vote of the Committee, the Chairman of the Committee will cast the deciding vote.
The Committee will notify the proxy department of its decisions and the proxies will be voted accordingly.
Although
the Proxy Guidelines express the normal preferences for the voting of any shares not covered by a contrary investment guideline provided
by the client, the Committee is not bound by the preferences set forth in the Proxy Guidelines and will review each matter on its own
merits. The Advisers subscribe to Institutional Shareholder Services Inc (“ISS”) and Glass Lewis & Co., LLC (“Glass
Lewis”), which supply current information on companies, matters being voted on, regulations, trends in proxy voting and information
on corporate governance issues. The information provided by ISS and GL is for informational purposes only.
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 may 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 and the Advisers have accepted 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 may abstain with respect to those shares.
Specific
to the Gabelli ESG Fund and the Gabelli Love Our Planet & People ETF, the Proxy Voting Committee will rely on the advice of the portfolio
managers of the Gabelli ESG Fund and the Gabelli Love Our Planet & People ETF to provide voting recommendations on the securities
held in the portfolios.
| 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
-
Proxy Department
-
Investment professional assigned to the account
In
the event that the Board of Directors (or a Committee thereof) of one or more of the investment companies managed by one of the Advisers
has retained direct voting control over any security, the Proxy Voting Department will provide each Board Member (or Committee member)
with a copy of the proxy statement together with any other relevant information.
| IV. | Proxies
of Certain Non-U.S. Issuers |
Proxy
voting in certain countries requires “share-blocking.” Shareholders wishing to vote their proxies must deposit their shares
shortly before the date of the meeting with a designated depository. During the period in which the shares are held with a depository,
shares that will be voted at the meeting cannot be sold until the meeting has taken place and the shares are returned to the clients’
custodian. Absent a compelling reason to the contrary, the Advisers believe that the benefit to the client of exercising the vote is
outweighed by the cost of voting and therefore, the Advisers will not typically vote the securities of non-U.S. issuers that require
share-blocking.
In
addition, voting proxies of issuers in non-U.S. markets may also give rise to a number of administrative issues or give rise to circumstances
under which voting would impose a cost (real or implied) on its client which may cause the Advisers to abstain from voting such proxies.
For example, the Advisers may receive the notices for shareholder meetings without adequate time to consider the proposals in the proxy
or after the cut-off date for voting. Other markets require the Advisers to provide local agents with power of attorney prior to implementing
their respective voting instructions on the proxy. Other markets may require disclosure of certain ownership information in excess of
what is required to vote in the U.S. market. Although it is the Advisers’ policies to vote the proxies for its clients for which
they have proxy voting authority, in the case of issuers in non-U.S. markets, we vote client proxies on a best efforts basis.
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 they voted a client’s proxy upon request from the client.
The
complete voting records for each registered investment company (the “Fund”) that is managed by the Advisers will be filed
on Form N-PX for the twelve months ended June 30th, no later than August 31st of each year. A description of the Fund’s proxy voting
policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i)
calling 800-GABELLI (800-422-3554); (ii) writing to Gabelli Funds, LLC at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting
the SEC’s website at www.sec.gov.
The
Advisers’ proxy voting records will be retained in compliance with Rule 204-2 under the Investment Advisers Act.
1.
Custodian banks, outside brokerage firms and clearing firms are responsible for forwarding proxies directly to the Advisers.
Proxies
are received in one of two forms:
| ● | Shareholder
Vote Instruction Forms (“VIFs”) - Issued by Broadridge Financial Solutions, Inc.
(“Broadridge”). Broadridge is an outside service contracted by the various institutions
to issue proxy materials. |
| ● | Proxy
cards which may be voted directly. |
2.
Upon receipt of the proxy, the number of shares each form represents is logged into the proxy system, electronically or manually, according
to security.
3.
Upon receipt of instructions from the proxy committee, the votes are cast and recorded for each account.
Records
have been maintained on the ProxyEdge system.
ProxyEdge
records include:
Security
Name and CUSIP Number
Date
and Type of Meeting (Annual, Special, Contest)
Directors’
Recommendation (if any)
How
the Adviser voted for the client on item
4.
VIFs 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.
5.
If a proxy card or VIF is received too late to be voted in the conventional matter, every attempt is made to vote including:
| ● | When
a solicitor has been retained, the solicitor is called. At the solicitor’s direction,
the proxy is faxed or sent electronically. |
| ● | In
some circumstances VIFs can be faxed or sent electronically to Broadridge up until the time
of the meeting. |
6.
In the case of a proxy contest, records are maintained for each opposing entity.
7.
Voting in Person
a)
At times it may be necessary to vote the shares in person. In this case, a “legal proxy” is obtained in the following manner:
| ● | Banks
and brokerage firms using the services at Broadridge: |
Broadridge
is notified that we wish to vote in person. Broadridge issues individual legal proxies and sends them back via email or overnight (or
the Adviser can pay messenger charges). A lead-time of at least two weeks prior to the meeting is needed to do this. Alternatively, the
procedures detailed below for banks not using Broadridge may be implemented.
| ● | Banks
and brokerage firms issuing proxies directly: |
The
bank is called and/or faxed and a legal proxy is requested.
All
legal proxies should appoint:
“Representative
of [Adviser name] with full power of substitution.”
b)
The legal proxies are given to the person attending the meeting along with the limited power of attorney.
Appendix
A
Proxy
Guidelines
PROXY
VOTING GUIDELINES
General
Policy Statement
It
is the policy of GAMCO Investors, Inc, and its affiliated advisers (collectively “the Advisers”) to vote in the best economic
interests of our clients. As we state in our Magna Carta of Shareholders Rights, established in May 1988, we are neither for nor
against management. We are for shareholders.
At
our first proxy committee meeting in 1989, it was decided that each proxy statement should be evaluated on its own merits within the
framework first established by our Magna Carta of Shareholders Rights. The attached guidelines serve to enhance that broad framework.
We
do not consider any issue routine. We take into consideration all of our research on the company, its directors, and their short and
long-term goals for the company. In cases where issues that we generally do not approve of are combined with other issues, the negative
aspects of the issues will be factored into the evaluation of the overall proposals but will not necessitate a vote in opposition to
the overall proposals.
Board
of Directors
We
do not consider the election of the Board of Directors a routine issue. Each slate of directors is evaluated on a case-by-case basis.
Factors
taken into consideration include:
| ● | Historical
responsiveness to shareholders |
This
may include such areas as:
-Paying
greenmail
-Failure
to adopt shareholder resolutions receiving a majority of shareholder votes
| ● | Nominating
committee in place |
| ● | Number
of outside directors on the board |
Selection
of Auditors
In
general, we support the Board of Directors’ recommendation for auditors.
Blank
Check Preferred Stock
We
oppose the issuance of blank check preferred stock.
Blank
check preferred stock allows the company to issue stock and establish dividends, voting rights, etc. without further shareholder approval.
Classified
Board
A
classified board is one where the directors are divided into classes with overlapping terms. A different class is elected at each annual
meeting.
While
a classified board promotes continuity of directors facilitating long range planning, we feel directors should be accountable to shareholders
on an annual basis. We will look at this proposal on a case-by-case basis taking into consideration the board’s historical responsiveness
to the rights of shareholders.
Where
a classified board is in place we will generally not support attempts to change to an annually elected board.
When an annually
elected board is in place, we generally will not support attempts to classify the board.
Increase
Authorized Common Stock
The
request to increase the amount of outstanding shares is considered on a case-by-case basis.
Factors
taken into consideration include:
| ● | Future
use of additional shares |
-Stock
split
-Stock
option or other executive compensation plan
-Finance
growth of company/strengthen balance sheet
-Aid
in restructuring
-Improve
credit rating
-Implement
a poison pill or other takeover defense
| ● | Amount
of stock currently authorized but not yet issued or reserved for stock option plans |
| ● | Amount
of additional stock to be authorized and its dilutive effect |
We will support
this proposal if a detailed and verifiable plan for the use of the additional shares is contained in the proxy statement.
Confidential
Ballot
We support
the idea that a shareholder’s identity and vote should be treated with confidentiality.
However, we
look at this issue on a case-by-case basis.
In order to
promote confidentiality in the voting process, we endorse the use of independent Inspectors of Election.
Cumulative
Voting
In
general, we support cumulative voting.
Cumulative
voting is a process by which a shareholder may multiply the number of directors being elected by the number of shares held on record
date and cast the total number for one candidate or allocate the voting among two or more candidates.
Where
cumulative voting is in place, we will vote against any proposal to rescind this shareholder right.
Cumulative
voting may result in a minority block of stock gaining representation on the board. When a proposal is made to institute cumulative voting,
the proposal will be reviewed on a case-by-case basis. While we feel that each board member should represent all shareholders, cumulative
voting provides minority shareholders an opportunity to have their views represented.
Director
Liability and Indemnification
We
support efforts to attract the best possible directors by limiting the liability and increasing the indemnification of directors, except
in the case of insider dealing.
Equal
Access to the Proxy
The SEC’s
rules provide for shareholder resolutions. However, the resolutions are limited in scope and there is a 500 word limit on proponents’
written arguments. Management has no such limitations. While we support equal access to the proxy, we would look at such variables as
length of time required to respond, percentage of ownership, etc.
Fair
Price Provisions
Charter
provisions requiring a bidder to pay all shareholders a fair price are intended to prevent two-tier tender offers that may be abusive.
Typically, these provisions do not apply to board-approved transactions.
We
support fair price provisions because we feel all shareholders should be entitled to receive the same benefits.
Reviewed on
a case-by-case basis.
Golden
Parachutes
Golden
parachutes are severance payments to top executives who are terminated or demoted after a takeover.
We
support any proposal that would assure management of its own welfare so that they may continue to make decisions in the best interest
of the company and shareholders even if the decision results in them losing their job. We do not, however, support excessive golden parachutes.
Therefore, each proposal will be decided on a case-by- case basis.
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.
Reviewed on
a case-by-case basis.
Consideration
of Nonfinancial Effects of a Merger
This proposal
releases the directors from only looking at the financial effects of a merger and allows them the opportunity to consider the merger’s
effects on employees, the community, and consumers.
As a fiduciary,
we are obligated to vote in the best economic interests of our clients. In general, this proposal does not allow us to do that. Therefore,
we generally cannot support this proposal.
Reviewed on
a case-by-case basis.
Mergers,
Buyouts, Spin-Offs, Restructurings
Each of the
above is considered on a case-by-case basis. According to the Department of Labor, we are not required to vote for a proposal simply
because the offering price is at a premium to the current market price. We may take into consideration the long term interests of the
shareholders.
Military
Issues
Shareholder
proposals regarding military production must be evaluated on a purely economic set of criteria for our ERISA clients. As such, decisions
will be made on a case-by-case basis.
In voting
on this proposal for our non-ERISA clients, we will vote according to the client’s direction when applicable. Where no direction
has been given, we will vote in the best economic interests of our clients. It is not our duty to impose our social judgment on others.
Northern
Ireland
Shareholder
proposals requesting the signing of the MacBride principles for the purpose of countering the discrimination of Catholics in hiring practices
must be evaluated on a purely economic set of criteria for our ERISA clients. As such, decisions will be made on a case-by-case basis.
In
voting on this proposal for our non-ERISA clients, we will vote according to client direction when applicable. Where no direction has
been given, we will vote in the best economic interests of our clients. It is not our duty to impose our social judgment on others.
Opt
Out of State Anti-Takeover Law
This
shareholder proposal requests that a company opt out of the coverage of the state’s takeover statutes. Example: Delaware law requires
that a buyer must acquire at least 85% of the company’s stock before the buyer can exercise control unless the board approves.
We
consider this on a case-by-case basis. Our decision will be based on the following:
| ● | Management
history of responsiveness to shareholders |
| ● | Other
mitigating factors |
Poison
Pill
In
general, we do not endorse poison pills.
In
certain cases where management has a history of being responsive to the needs of shareholders and the stock is very liquid, we will reconsider
this position.
Reincorporation
Generally,
we support reincorporation for well-defined business reasons. We oppose reincorporation if proposed solely for the purpose of reincorporating
in a state with more stringent anti-takeover statutes that may negatively impact the value of the stock.
Stock
Incentive Plans
Director
and Employee Stock incentive plans are an excellent way to attract, hold and motivate directors and employees. However, each incentive
plan must be evaluated on its own merits, taking into consideration the following:
| ● | Dilution
of voting power or earnings per share by more than 10%. |
| ● | Kind
of stock to be awarded, to whom, when and how much. |
| ● | Amount
of stock already authorized but not yet issued under existing stock plans. |
| ● | The
successful steps taken by management to maximize shareholder value. |
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.
Reviewed
on a case-by-case basis.
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.
“Say-on-Pay”
/ “Say-When-on-Pay” / “Say-on-Golden-Parachutes”
Required under
the Dodd-Frank Act; these proposals are non-binding advisory votes on executive compensation. We will generally vote with the Board
of Directors’ recommendation(s) on advisory votes on executive compensation (“Say-on-Pay”), advisory votes on the frequency
of voting on executive compensation (“Say-When-on-Pay”) and advisory votes relating to extraordinary transaction executive
compensation (“Say-on-Golden-Parachutes”). In those instances when we believe that it is in our clients’ best
interest, we may abstain or vote against executive compensation and/or the frequency of votes on executive compensation and/or extraordinary
transaction executive compensation advisory votes.
Proxy
Access
Proxy access
is a tool used to attempt to promote board accountability by requiring that a company’s proxy materials contain not only the names
of management nominees, but also any candidates nominated by long-term shareholders holding at least a certain stake in the company.
We will review proposals regarding proxy access on a case-by-case basis taking into account the provisions of the proposal, the company’s
current governance structure, the successful steps taken by management to maximize shareholder value, as well as other applicable factors.
Item
8. Portfolio Managers of Closed-End Management Investment Companies.
PORTFOLIO
MANAGERS
Mario
J. Gabelli, CFA, is Chairman, Chief Executive Officer, and Chief Investment Officer – Value Portfolios of GAMCO Investors, Inc.
that he founded in 1977, and Chief Investment Officer – Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.
He is also Executive Chairman of the Board of Directors of Associated Capital Group, Inc. Mr. Gabelli is a summa cum laude graduate of
Fordham University and holds an MBA degree from Columbia Business School, and Honorary Doctorates from Fordham University and Roger Williams
University.
Christopher
J. Marangi joined Gabelli in 2003 as a research analyst. He currently serves as Co-Chief Investment Officer of GAMCO Investors, Inc.’s
Value team and a portfolio manager of Gabelli Funds, LLC. He manages several funds within the Gabelli/GAMCO Fund Complex. Mr. Marangi
graduated magna cum laude and Phi Beta Kappa with a BA in Political Economy from Williams College and holds an MBA with honors from Columbia
Business School.
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 as of December 31, 2022. 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.
Name of Portfolio
Manager |
Type
of
Accounts |
Total
No.
of Accounts
Managed |
Total
Assets |
No.
of
Accounts
where
Advisory Fee
is Based on
Performance |
Total
Assets in
Accounts
where Advisory
Fee is Based on
Performance |
| Mario
J. Gabelli, CFA |
Registered
Investment Companies: |
22 |
$16.3
billion |
4 |
$5.0
billion |
| |
Other
Pooled Investment Vehicles: |
7 |
$1.0
billion |
7 |
$937
million |
| |
Other
Accounts: |
881 |
$6.1
billion |
0 |
$0 |
| Christopher
J. Marangi |
Registered
Investment Companies: |
8 |
$6.7
billion |
2 |
$4.5
billion |
| |
Other
Pooled Investment Vehicles: |
1 |
$4.1
million |
0 |
$0 |
| |
Other
Accounts: |
275 |
$1.2
billion |
0 |
$0 |
POTENTIAL
CONFLICTS OF INTEREST
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. Because the portfolio managers manage many accounts, they 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 they were to devote
all of their attention to the management of only a few accounts.
ALLOCATION
OF LIMITED INVESTMENT OPPORTUNITIES. If the portfolio managers identify an investment opportunity that may be suitable for multiple
accounts, the 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.
SELECTION
OF BROKER/DEALERS. Because of Mr. Gabelli’s indirect majority ownership interest in G.research, LLC, he may have an incentive
to use G.research 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 they exercises investment responsibility, or may decide that certain of these accounts should take differing
positions with respect to a particular security. In these cases, the portfolio managers 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 of their accounts.
VARIATION
IN COMPENSATION. A conflict of interest may arise where the financial or other benefits available to the portfolio manager differ
among the accounts that they manage. 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
managers may be motivated to favor certain accounts over others. The portfolio managers also may be motivated to favor accounts in which
they have an investment interest, or in which the Adviser, or its affiliates have investment interests. In Mr. Gabelli’s case,
the Adviser’s compensation and expenses for the Fund are marginally greater as a percentage of assets than for certain other accounts
and are less than for certain other accounts managed by Mr. Gabelli, while his personal compensation structure varies with near-term
performance to a greater degree in certain performance fee based accounts than with on-performance based accounts. In addition, he has
investment interests in several of the funds managed by the Adviser and its affiliates.
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
Fund. Net revenues are determined by deducting from gross investment management fees the firm’s expenses (other than Mr. Gabelli’s
compensation) allocable to this Fund. Four closed-end registered investment companies (including this Fund) 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 closed-end 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 PORTFOLIO MANAGERS OF THE ADVISER OTHER THAN MARIO GABELLI
The
compensation of the Portfolio Managers for the Fund is structure to enable the Adviser to attract and retain highly qualified professionals
in a competitive environment. The Portfolio Managers receive a compensation package that includes a minimum draw or base salary, equity-based
incentive compensation via awards of restricted stock, and incentive-based variable compensation based on a percentage of net revenue
received by the Adviser for managing a Fund 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 respective Portfolio Manager’s
compensation) allocable to the respective Fund (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
J. Gabelli and Christopher J. Marangi each owned over $1,000,000 and $1-$10,000, respectively, of shares of the Trust as of December
31, 2022.
(b) Not
applicable.
Item
9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
REGISTRANT
PURCHASES OF EQUITY SECURITIES
| Period
|
(a)
Total Number of
Shares (or Units)
Purchased |
(b)
Average Price Paid
per Share (or Unit) |
(c)
Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs |
(d)
Maximum Number (or
Approximate Dollar Value)
of Shares (or Units) that
May Yet Be Purchased
Under the Plans or
Programs |
Month
#1
07/01/2022 through 07/31/2022 |
Common
– N/A
Preferred Series G – N/A
Preferred Series E – N/A
|
Common
– N/A
Preferred Series G – N/A
Preferred Series E – N/A
|
Common
– N/A
Preferred Series G – N/A
Preferred Series E – N/A
|
Common
– 27,535,751
Preferred Series G – 1,990,201 Preferred Series E – 1,996,700
|
Month
#2
08/01/2022 through
08/31/2022
|
Common
– N/A
Preferred Series G – N/A
Preferred Series E – N/A
|
Common
– N/A
Preferred Series G – N/A
Preferred Series E – N/A
|
Common
– N/A
Preferred Series G – N/A
Preferred Series E – N/A
|
Common
– 27,535,751
Preferred Series G – 1,990,201 Preferred Series E – 1,996,700
|
Month
#3
09/01/2022 through 09/30/2022 |
Common
– N/A
Preferred Series G – 1,351
Preferred Series E – 3,522
|
Common
– N/A
Preferred Series G - $22.50
Preferred Series E – $22.66
|
Common
– N/A
Preferred Series G – 1,351
Preferred Series E – 3,522
|
Common
– 27,603,071
Preferred Series G – 1,990,201 - 1,351 =1,988,850 Preferred Series E – 1,996,700
- 3,522 = 1,993,178
|
Month
#4
10/01/2022 through 10/31/2022 |
Common
– N/A
Preferred Series G – 19,004
Preferred Series E – 9,597
|
Common
– N/A
Preferred Series G – $22.26
Preferred Series E – $22.37
|
Common
– N/A
Preferred Series G – 19,004
Preferred Series E – 9,597
|
Common
– 27,603,071
Preferred Series G – 1,988,850 - 19,004 = 1,969,846 Preferred Series E – 1,993,178
- 9,597 = 1,983,581
|
Month
#5
11/01/2022 through 11/30/2022 |
Common
– N/A
Preferred Series G – 90,297
Preferred Series E – 27,385
|
Common
– N/A
Preferred Series G – $23.70
Preferred Series E – $23.64
|
Common
– N/A
Preferred Series G – 90,297
Preferred Series E – 27,385
|
Common
– 27,603,071
Preferred Series G – 1,969,846 - 90,297 = 1,879,549 Preferred Series E – 1,983,581
-27,385 = 1,956,196
|
Month
#6
12/01/2022 through 12/31/2022 |
Common
– N/A
Preferred Series G – 258,046
Preferred Series E – 143,650
|
Common
– N/A
Preferred Series G – $24.05
Preferred Series E – $24.00
|
Common
– N/A
Preferred Series G – 258,046
Preferred Series E – 143,650
|
Common
– 27,703,508
Preferred Series G – 1,879,549 - 258,046 = 1,621,503 Preferred Series E – 1,956,196
- 143,650 = 1,812,546
|
| Total |
Common
– N/A
Preferred Series G – 368,698
Preferred Series E – 184,154
|
Common
– N/A
Preferred Series G – $23.44
Preferred Series E – $23.44
|
Common
– N/A
Preferred Series G – 368,698
Preferred Series E – 184,154
|
N/A
|
Footnote
columns (c) and (d) of the table, by disclosing the following information in the aggregate for all plans or programs publicly announced:
| a. | The
date each plan or program was announced – The notice of the potential repurchase of
common and preferred shares
occurs semiannually in the Fund’s reports to shareholders 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 Directors,
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.