Document ID: SEC-2014-0256-0001
Agency: sec
Document Type: Notice
Title: Applications: Gabelli Dividend and Income Trust, et al.
Posted Date: 2014-02-11T05:00Z

[Federal Register Volume 79, Number 28 (Tuesday, February 11, 2014)]
[Notices]
[Pages 8208-8210]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-02933]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30908; File No. 812-14211]

The Gabelli Dividend & Income Trust, et al.; Notice of 
Application

February 6, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 17(b) of the Investment 
Company Act of 1940 (the ``Act'') requesting an exemption from section 
17(a) of the Act, and for an order under section 17(d) of the Act and 
rule 17d-1 thereunder permitting certain joint transactions.

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    Applicants: The Gabelli Dividend & Income Trust (``Dividend 
Trust''), The Gabelli Global Small and Mid Cap Value Trust (``Global 
Trust'') (each, a ``Fund'' and together, the ``Funds'') and Gabelli 
Funds, LLC (the ``Adviser'').
SUMMARY: Summary of Application: Applicants seek an order to permit 
Dividend Trust to transfer a segment of its assets to Global Trust, a 
newly formed, wholly-owned subsidiary that is a registered closed-end 
investment company, and to distribute the shares of Global Trust common 
stock to the holders of Dividend Trust's common stock.

DATES: Filing Dates: The application was filed on September 11, 2013 
and amended on January 28, 2014.
    Hearing or Notification of Hearing: An order granting the 
application will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on February 27, 2014 and should be accompanied by proof of 
service on the applicants, in the form of an affidavit, or, for 
lawyers, a certificate of service. Hearing requests should state the 
nature of the writer's interest, the reason for the request, and the 
issues contested. Persons who wish to be notified of a hearing may 
request notification by writing to the Commission's Secretary.

ADDRESS: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange 
Commission, 100 F Street NE., Washington, DC, 20549-1090; Applicants: 
Richard T. Prins, Esq., Skadden, Arps, Slate, Meagher & Flom LLP, Four 
Times Square, New York, New York 10036.

FOR FURTHER INFORMATION CONTACT:  Laura J. Riegel, Senior Counsel, at 
(202) 551-6873 or Mary Kay Frech, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION:  The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Applicants' Representations

    1. Dividend Trust, a Delaware statutory trust, is registered under 
the Act as a diversified closed-end management investment company. 
Dividend Trust seeks to provide a high level of total return on its 
assets with an emphasis on dividends and income. Under normal market 
conditions, Dividend Trust invests at least 80% of its assets in 
dividend-paying securities or other income-producing securities, and at 
least 50% of its assets in dividend-paying equity securities. Dividend 
Trust has a non-fundamental policy that limits investment in securities 
of non-United States issuers to 35% of its total assets.
    2. Global Trust was organized as a Delaware statutory trust on 
August 19, 2013 and is wholly-owned by Dividend Trust. Global Trust 
filed a notification of registration on Form N-8A on September 11, 2013 
to register under the Act as a diversified closed-end management 
investment company. Global Trust filed a registration statement under 
the Securities Act of 1933 (the ``1933 Act'') on Form N-14 on September 
11, 2013 (the ``Proxy Statement/Prospectus'') and filed a registration 
statement on Form N-2 on December 10, 2013. Application will be made to 
list Global Trust's common shares for trading on the New York Stock 
Exchange. Global Trust seeks to provide long-term capital growth. Under 
normal market conditions, Global Trust will invest at least 40% of its 
total assets in the equity securities of companies located outside the 
United States and in at least three countries. Unlike Dividend Trust, 
Global Trust may invest without limitation in the equity securities of 
companies located outside the United States.
    3. The Adviser, a New York limited liability company, is registered 
under the Investment Advisers Act of 1940. The Adviser serves, or will 
serve, respectively, as the investment adviser to Dividend Trust and 
Global Trust. Applicants represent that the investment advisory fee 
structure for Global Trust will be the same as the advisory fee 
structure for Dividend Trust.
    4. The board of trustees of Dividend Trust consists of ten 
trustees, five of whom are also trustees of the six member board of 
trustees of Global Trust (each such board of trustees, a ``Board'' and 
collectively, the ``Boards''). Seven trustees on the Board of Dividend 
Trust are not ``interested persons,'' as defined in section 2(a)(19) of 
the Act (the ``Independent Trustees''), and five trustees on the Board 
of Global Trust are Independent Trustees. The President and the 
Treasurer of Dividend Trust hold the same offices with Global Trust.
    5. The Board of Dividend Trust has approved, subject to the 
issuance of the requested relief and subsequent shareholder approval, 
the contribution of a segment of Dividend Trust's assets having a value 
of approximately $100 million to Global Trust, in exchange for

[[Page 8209]]

shares of Global Trust common stock. It is anticipated that the 
contributed assets will consist largely or exclusively of cash and 
short-term fixed income instruments. All the shares of common stock of 
Global Trust will then be distributed by Dividend Trust as a dividend 
to its common shareholders at an anticipated rate of one (1) share of 
Global Trust common stock for every ten (10) shares held of Dividend 
Trust common stock.\1\ The contribution of the Dividend Trust assets to 
Global Trust and the subsequent distribution of shares of Global Trust 
common stock to Dividend Trust common shareholders are referred to as 
the ``Transaction.'' \2\
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    \1\ This estimate is based on the number of Dividend Trust 
common shares outstanding as of December 31, 2013 and a target 
initial net asset value per share of Global Trust common stock of 
$12.00.
    \2\ No fractional shares of Global Trust common stock will be 
issued as part of the Transaction. The fractional shares to which 
holders of Dividend Trust common stock would otherwise be entitled 
will be aggregated and an attempt to sell them in the open market 
will be made at then-prevailing prices on behalf of such holders, 
and such holders will receive instead a cash payment in the amount 
of their pro rata share of the total sales proceeds.
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    6. The Proxy Statement/Prospectus of the Funds will be used, 
following the issuance of the requested relief, to solicit approval of 
the Dividend Trust shareholders of the Transaction. Prior to the 
effectiveness of the Proxy Statement/Prospectus under the 1933 Act, 
Dividend Trust will purchase shares of Global Trust's common stock in 
consideration of Dividend Trust's contribution to Global Trust of at 
least $100,000 initial net asset value (the ``Seed Capital Shares''), 
in order to satisfy the requirements of section 14(a) of the Act. 
Applicants intend that the Seed Capital Shares will be included in the 
distribution of Global Trust's shares of common stock to the common 
shareholders of Dividend Trust, and, accordingly, will be sold pursuant 
to a registration statement under the 1933 Act.
    7. The Board of Dividend Trust, including all the Independent 
Trustees, concluded that the Transaction will result in the following 
benefits to Dividend Trust common shareholders: (a) shareholders will 
receive shares of an investment company with a different risk-return 
profile than Dividend Trust; (b) shareholders will acquire the shares 
of Global Trust common stock at a much lower transaction cost than is 
typically the case for a newly-organized closed-end equity fund since 
there will be no underwriting discounts or commissions; and (c) 
shareholders will be afforded the opportunity to seek the capital 
growth opportunities presented by substantial foreign securities 
exposure.
    8. The Board of Dividend Trust has been advised by counsel that the 
distribution of common shares of Global Trust to the common 
shareholders of Dividend Trust likely will be a taxable event for 
Dividend Trust common shareholders to some extent and, under certain 
circumstances, also will be a taxable event for Dividend Trust. 
Dividend Trust does not expect that it will recognize significant 
taxable gain on its distribution of Global Trust common shares because 
it does not expect any of the contributed short-term debt securities to 
have a value at the time of their contribution to Global Trust 
significantly in excess of Dividend Trust's tax basis for those 
securities. Further, the Transaction is not expected to increase 
significantly the total amount of taxable distributions received by 
Dividend Trust common shareholders for the year in which the 
Transaction is consummated because Dividend Trust has adopted a policy 
of distributing to shareholders monthly substantially all of its 
taxable income and, accordingly, any taxable income included in the 
distribution of Global Trust common shares would be distributed at some 
point during the year. The Board of Dividend Trust, including all of 
the Independent Trustees, has considered the tax consequences of the 
Transaction and has determined that the benefits of the Transaction 
outweigh any adverse tax consequences to Dividend Trust and its common 
shareholders, particularly because such adverse tax consequences are 
expected to be minimal.
    9. The costs of organizing Global Trust and effecting the 
distribution of Global Trust's shares to Dividend Trust's common 
shareholders, including the fees and expenses of counsel and 
accountants and printing, listing and registration fees, the costs of 
soliciting shareholder approval of the Transaction, and the costs 
incurred in connection with the application for relief, are estimated 
to be approximately $750,000, and will be borne by Dividend Trust. 
Global Trust will incur operating expenses on an ongoing basis, 
including legal, auditing, transfer agency, and custodian expenses 
that, when aggregated with the fees payable by Dividend Trust for 
similar services after the distribution, will likely exceed the fees 
and expenses currently payable by Dividend Trust for those services. 
The Board of Dividend Trust, including all of the Independent Trustees, 
concluded that it is appropriate for Dividend Trust to bear the 
Transaction's costs inasmuch as the benefits of the Transaction will be 
for Dividend Trust's common shareholders and because absorption of such 
expenses will eliminate any deficit in the net asset value of Global 
Trust common shares in comparison to the amount of the distribution, 
which may support the pricing of Global Trust common shares in trading 
on the New York Stock Exchange. It is not expected that the Transaction 
will have a significant effect on the annual expenses of Dividend Trust 
as a percentage of its assets.

Applicants' Legal Analysis

    1. Applicants request an order under section 17(b) of the Act 
granting an exemption from section 17(a) of the Act and under section 
17(d) of the Act and rule 17d-1 thereunder permitting certain joint 
transactions.
    2. Section 17(a) of the Act generally prohibits sales or purchases 
of securities between a registered investment company and an affiliated 
person. Section 2(a)(3) of the Act defines an ``affiliated person'' of 
another person to include (a) any person directly or indirectly owning, 
controlling, or holding with power to vote 5% or more of the 
outstanding voting securities of the other person, (b) any person 5% or 
more of whose voting securities are directly or indirectly owned 
controlled or held with the power to vote by the other person, and (c) 
any person directly or indirectly controlling, controlled by, or under 
common control with, the other person. Dividend Trust may be viewed as 
an affiliated person of Global Trust under section 2(a)(3) because 
Dividend Trust will own 100 percent of the Global Trust's voting 
securities until the consummation of the Transaction. Dividend Trust 
and Global Trust also may be viewed as affiliated persons of each other 
to the extent that they may be deemed to be under the common control of 
the Adviser. As a result of the affiliation between Dividend Trust and 
Global Trust, section 17(a) would prohibit the Transaction.
    3. Applicants request an exemption pursuant to section 17(b) of the 
Act from the provisions of section 17(a) in order to permit applicants 
to effect the Transaction. Section 17(b) authorizes the Commission to 
issue such an exemptive order if the Commission finds that the terms of 
the proposed transaction are fair and reasonable and do not involve 
overreaching on the part of any persons concerned, and the proposed 
transaction is consistent with the policy of each registered investment 
company and the general purposes of the Act.
    4. Applicants assert that the terms of the Transaction, including 
the

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consideration to be paid or received, are fair and reasonable and do 
not involve overreaching by any person concerned. Applicants state that 
the proposed contribution by Dividend Trust of a portion of its assets 
to Global Trust in exchange for shares of Global Trust common stock 
will be based on the fair value of such assets computed as of the close 
of trading on the New York State Exchange on a business day to be 
selected by the Board of Dividend Trust (such business day, the 
``Valuation Date''), in the same manner as for purposes of the daily 
net asset valuation for Dividend Trust. The Transaction will occur 
after the close of trading on the New York Stock Exchange on the 
Valuation Date. Applicants anticipate that such assets will consist 
largely or exclusively of cash and short-term fixed income instruments 
and thus will pose no issues with respect to valuation. Shares of 
Global Trust common stock distributed by Dividend Trust in the 
Transaction will be valued based on the value of Global Trust's assets. 
``Value'' for those purposes will be determined in accordance with the 
provisions of section 2(a)(41) of the Act and rule 2a-4 under the Act.
    5. With respect to the Transaction, each Board, including a 
majority of the Independent Trustees, determined that participation in 
the Transaction is in the best interests of Dividend Trust or Global 
Trust, as applicable, and that the interests of the existing 
shareholders of Dividend Trust or Global Trust, as applicable, will not 
be diluted as a result of the Transaction. These findings, and the 
basis upon which the findings were made, will be recorded fully in the 
minute book of Dividend Trust or Global Trust, as applicable.
    6. Applicants state that the Transaction will be consistent with 
the stated investment policies of Dividend Trust and Global Trust as 
disclosed to shareholders. The distribution of shares of Global Trust 
common stock will not initially change the position of Dividend Trust's 
shareholders with respect to the underlying investments that they then 
own. The Proxy Statement/Prospectus will be used to solicit the 
approval of Dividend Trust's shareholders of the Transaction at a vote 
to take place following the issuance of the requested order. Dividend 
Trust's shareholders will have the opportunity to vote on the 
Transaction after having received disclosure concerning the 
Transaction.
    7. Applicants also seek an order under section 17(d) of the Act and 
rule 17d-1 under the Act. Section 17(d) and rule 17d-1 prohibit 
affiliated persons from participating in joint arrangements with a 
registered investment company unless authorized by the Commission. In 
passing on applications for these orders, rule 17d-1 provides that the 
Commission will consider whether the participation of the investment 
company is consistent with the provisions, policies and purposes of the 
Act, and the extent to which the participation is on a basis different 
from or less advantageous than that of the other participants. 
Applicants request an order pursuant to rule 17d-1 to the extent that 
the participation of applicants in the Transaction may be deemed to 
constitute a prohibited joint transaction.
    8. Applicants state that the Transaction will not place any of 
Dividend Trust, Global Trust, or existing shareholders of Dividend 
Trust in a position less advantageous than that of any other person. 
The value of Dividend Trust's assets transferred to Global Trust (and 
the shares of Global Trust common stock received in return) will be 
based on the fair value of such assets computed as of the close of 
trading on the New York Stock Exchange on the Valuation Date in 
accordance with the requirements of the Act and pursuant to valuation 
procedures adopted by the Board of Dividend Trust. The shares of Global 
Trust common stock will be distributed to Dividend Trust's common 
shareholders, leaving the shareholders in the same investment posture 
immediately following the Transaction as before, subject only to 
changes in market price of the underlying assets subsequent to the 
Transaction.
    9. Applicants assert that the Transaction has been proposed in 
order to benefit the shareholders of Dividend Trust as well as Global 
Trust. Applicants state that neither the Adviser nor any other 
affiliated person of Dividend Trust or Global Trust will receive 
additional fees solely as a result of the Transaction. In addition, 
applicants state that although it is possible that the creation of 
Global Trust may benefit the Adviser by providing it with an additional 
managed fund, the Board of Dividend Trust has determined that such 
result does not supply a benefit that could not have otherwise been 
achieved through an initial public offering of a global equity 
securities fund and that such benefit is both marginal and hypothetical 
because the assets of Dividend Trust to be contributed to Global Trust 
pursuant to the Transaction represent only approximately 5.0% of 
Dividend Trust's net assets as of December 31, 2013. In addition, by 
creating Global Trust through the Transaction, Dividend Trust is 
effectively enabling its common shareholders to receive securities 
without the costs associated with a public offering.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-02933 Filed 2-10-14; 8:45 am]
BILLING CODE 8011-01-P