Company: GDV-PK
Filing Date: 2025-08-08
Form Type: N-14
Source: 0001829126-25-006008
Chunk: 103

Company: GABELLI DIVIDEND & INCOME TRUST
Filing Date: 2025-08-08
Form: N-14
Chunk 103
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 cash. Dividends paid by PFICs will not qualify for the reduced tax rates applicable to qualified dividend income, as discussed below under “Taxation of Shareholders.”

Preferred Trust may invest in debt obligations purchased at a discount with the result that Preferred Trust may be required to accrue income for U.S. federal income tax purposes before amounts due under the obligations are paid. Preferred Trust may also invest in securities rated in the medium to lower rating categories of nationally recognized rating organizations, and in unrated securities (“high yield securities”). A portion of the interest payments on such high yield securities may be treated as dividends for certain U.S. federal income tax purposes.

Preferred Trust may invest in preferred securities or other securities the U.S. federal income tax treatment of which may not be clear or may be subject to special rules or to recharacterization by the IRS. To the extent the tax treatment of such securities or the income from such securities differs from the tax treatment expected by Preferred Trust, it could affect the timing or character of income recognized by Preferred Trust, potentially requiring Preferred Trust to purchase or sell securities, or otherwise change its portfolio, in order to comply with the tax rules applicable to RICs under the Code.

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As a result of investing in stock of PFICs or securities purchased at a discount or any other investment that produces income that is not matched by a corresponding cash distribution to Preferred Trust, Preferred Trust could be required to include in current income, income it has not yet received in cash. Any such income would be treated as income earned by Preferred Trust and therefore would be subject to the distribution requirements of the Code. This might prevent Preferred Trust from distributing 90% of its investment company taxable income as is required in order to avoid corporate-level U.S. federal income tax on all of its income, or might prevent Preferred Trust from distributing enough ordinary income and capital gain net income to avoid the imposition of corporate-level income or excise taxes. To avoid this result, Preferred Trust may be required to borrow money or dispose of securities at inopportune times or on unfavorable terms, forgo favorable investments, or take other actions that it would otherwise not take, to be able to make distributions to its shareholders.

If Preferred Trust does not meet the asset coverage requirements of the 1940 Act or that may apply under the terms of any preferred shares or indebtedness that it issues, Preferred Trust may be required to suspend distributions to the holders of the common shares until the asset coverage is restored. Such