As filed with the Securities and Exchange Commission on February 11, 2011
Securities Act File No. 333-[ ]
Investment Company File No. 811-08476
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-2
(Check Appropriate Box or Boxes)
þ    
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 
o     Pre-Effective Amendment No.
 
o     Post-Effective Amendment No.
and/or
þ    
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
 
þ     Amendment No. 14
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
(Exact Name of Registrant as Specified in Charter)
One Corporate Center
Rye, New York 10580-1422

(Address of Principal Executive Offices)
Registrant’s Telephone Number, including Area Code: (800) 422-3554
Bruce N. Alpert
The Gabelli Global Multimedia Trust Inc.
One Corporate Center
Rye, New York 10580-1422
(914) 921-5100

(Name and Address of Agent for Service)
Copies to:
     
Christopher J. Michailoff   Michael R. Rosella, Esq.
Gabelli Funds, LLC   Paul, Hastings, Janofsky & Walker LLP
One Corporate Center   75 East 55th Street
Rye, New York 10580-1422   New York, New York 10022
(914) 921-5100   (212) 318-6000
Approximate date of proposed public offering: From time to time after the effective date of this Registration Statement.
If any securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, as amended, other than securities offered in connection with a dividend reinvestment plan, check the following box. o
It is proposed that this filing will become effective (check appropriate box)
þ When declared effective pursuant to section 8(c).
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
                             
 
              Proposed Maximum     Proposed Maximum        
        Aggregate Amount Being     Offering Price Per     Aggregate Offering     Amount of  
  Title of Securities Being Registered     Registered (1)     Share (1)     Price (1)     Registration Fee  
 
Shares of Common Stock, par value $.001 per share
    100,000     $8.68     $868,000     $100.78  
 
 
(1)   Estimated solely for the purpose of calculating the registration fee as required by Rule 457(c) under the Securities Act of 1933, as amended, based upon the average of the high and low sales prices per share reported on the New York Stock Exchange consolidated reporting system of $8.68 on February 8, 2011.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
Notice to Canadian Residents:
These Securities Have Not Been Approved or Disapproved by Any Securities or Regulatory in Canada. This Offering Will Not Be Made in Any Province of Canada Where It Is Not Permitted by Law.
 
 

 


 

The information in this Prospectus is not complete and may be changed. The Fund may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer, solicitation or sale is not permitted.

SUBJECT TO COMPLETION, DATED FEBRUARY 11, 2011
PRELIMINARY PROSPECTUS
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
[ ] Shares of Common Stock
Issuable Upon Exercise of
Rights to Subscribe for Such Shares
     The Gabelli Global Multimedia Trust Inc. (the “Fund”) is issuing transferable rights (“Rights”) to its shareholders of common stock of record as of [ ] (the “Record Date”). These Rights will allow you to subscribe for new shares of common stock of the Fund (each, a “Share,” and collectively, “Shares”) in an aggregate amount of approximately [ ] Shares (the “Offer”). For every [three] Rights that you receive, you may buy [one new Share] of the Fund plus, in certain circumstances and only if you are a shareholder on the Record Date for the Offer, additional Shares pursuant to an over-subscription privilege. The number of Rights to be issued to a shareholder on the Record Date will be rounded up to the nearest number of Rights evenly divisible by [three]. Fractional shares will not be issued upon the exercise of the Rights. Accordingly, new Shares may be purchased only pursuant to the exercise of Rights in integral multiples of [three].
     The Rights are transferable and will be listed for trading on the New York Stock Exchange (“NYSE”) under the symbol [“GGT RT”] during the course of the Offer. The Fund’s Shares are currently listed, and the Shares issued in this Offer will also be listed, on the NYSE under the symbol “GGT.” On [ ] (the last trading date prior to the Shares trading ex-Rights), the last reported net asset value per Share was $[ ], and the last reported sales price of a Share on the NYSE was $[ ]. The purchase price per Share will be $[ ] (the “Subscription Price”). The Offer will expire at 5:00 p.m., Eastern Time, on [ ], unless the Offer is extended as described in this Prospectus (the “Expiration Date”). Rights acquired in the secondary market may not participate in the over-subscription privilege.
     The Fund is a non-diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund’s primary investment objective is long-term growth of capital, primarily through investment in a portfolio of common stock and other securities of foreign and domestic companies involved in the telecommunications, media, publishing and entertainment industries. Income is a secondary objective of the Fund. Gabelli Funds, LLC (the “Investment Adviser”) serves as investment

 


 

adviser to the Fund. An investment in the Fund is not appropriate for all investors. No assurances can be given that the Fund’s objectives will be achieved. The Fund has outstanding two series of preferred stock which have resulted in a leveraged capital structure. For a discussion of the effects and certain risks associated with the use of leverage, see “Description of Capital Stock — Effects of Leverage” and “Risk Factors and Special Considerations — Leverage Risk.” The address of the Fund is One Corporate Center, Rye, New York 10580-1422, and its telephone number is (914) 921-5070.
Exercising your Rights and investing in the Fund’s Shares involves a high degree of risk and may be considered speculative. Before exercising your Rights and investing in the Fund’s Shares, you should read the discussion of the material risks of investing in the Fund in “Risk Factors and Special Considerations” beginning on page [ ] of the Prospectus. Certain of these risks are summarized in the “Prospectus Summary — Risk Factors and Special Considerations” beginning on page [ ] of the Prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
These securities have not been approved or disapproved by any securities regulatory authority in Canada. This offering will not be made in any province in Canada where it is not permitted by law.
                         
    Estimated                
    Subscription             Estimated  
    Price to the     Estimated Sales     Proceeds to the  
    Public     Load     Fund (1)  
Per Share
  $ _______     None   $ _______  
 
                       
Total
  $ _______     None   $ _______  
 
(1)   Before deduction of expenses incurred by the Fund, estimated at $[ ].
      Shareholders who do not exercise their Rights may, at the completion of the Offer, own a smaller proportional interest in the Fund than if they exercised their Rights. As a result of the Offer, you may experience dilution or accretion of the aggregate net asset value of your Shares depending upon whether the Fund’s net asset value per Share is above or below the subscription price on the Expiration Date. The Fund cannot state precisely the extent of any dilution or accretion at this time because the Fund does not know what the net asset value per Share will be when the Offer expires or what proportion of the Rights will be exercised. The Investment Adviser’s parent company, GAMCO Investors, Inc., and its affiliates (“Affiliated Parties”), may purchase Shares through the primary subscription and the over-subscription privilege. Mr. Mario J. Gabelli, who may be deemed to control the Investment Adviser, or his affiliated entities, may also purchase additional Shares through the primary subscription and over-subscription privilege on the same terms as other shareholders.

 


 

     Please read this Prospectus carefully before investing and retain it for future reference. It contains important information that a prospective investor should know before investing in the Fund.
     A Statement of Additional Information (the “SAI”), dated [ ], containing additional information about the Fund, has been filed with the Securities and Exchange Commission and is incorporated by reference in its entirety into this Prospectus. You may request a free copy of the Fund’s Annual and Semi-Annual Reports, request a free copy of the SAI, the table of contents of which is on page [ ] of this Prospectus, request other information about us, and make shareholder inquiries by calling (800) GABELLI (422-3554), or by writing to the Fund, or obtain a copy (and other information regarding the Fund) from the Securities and Exchange Commission’s website at http://www.sec.gov . Shareholder inquiries should be directed to the Subscription Agent, [ ], at [ ].
The date of this Prospectus is [ ].

 


 

TABLE OF CONTENTS
         
    Page
PROSPECTUS SUMMARY
    1  
FEES AND EXPENSES
    12  
FINANCIAL HIGHLIGHTS
    14  
THE OFFER
    19  
USE OF PROCEEDS
    31  
INVESTMENT OBJECTIVES AND POLICIES
    31  
RISK FACTORS AND SPECIAL CONSIDERATIONS
    39  
HOW THE FUND MANAGES RISK
    48  
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
    50  
MANAGEMENT OF THE FUND
    50  
NET ASSET VALUE
    54  
PORTFOLIO TRANSACTIONS
    56  
DIVIDENDS AND DISTRIBUTIONS
    56  
AUTOMATIC DIVIDEND REINVESTMENT AND VOLUNTARY CASH PURCHASE PLANS
    57  
TAXATION
    59  
DESCRIPTION OF CAPITAL STOCK
    62  
ANTI-TAKEOVER PROVISIONS OF THE FUND’S GOVERNING DOCUMENTS
    69  
CLOSED-END FUND STRUCTURE
    72  
LEGAL PROCEEDINGS
    72  
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
    73  
LEGAL MATTERS
    73  
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    74  
ADDITIONAL INFORMATION
    74  
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
    75  

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The information contained in this Prospectus speaks only as of the date of this Prospectus unless the information specifically indicates that another date applies. No dealer, salesperson or other person has been authorized to give any information or to make any representations other than those contained in this Prospectus in connection with the offer contained herein and, if given or made, such information or representations must not be relied upon as having been authorized by the Fund.
PROSPECTUS SUMMARY
      This summary highlights some information that is described more fully elsewhere in this Prospectus. It may not contain all of the information that is important to you. To understand the Offer fully, you should read the entire document carefully, including the risk factors which can be found on page [ ], under the heading “Risk Factors and Special Considerations.”
The Fund
     The Gabelli Global Multimedia Trust Inc. is a non-diversified, closed-end management investment company organized as a Maryland corporation on May 31, 1994. Throughout this Prospectus, we refer to The Gabelli Global Multimedia Trust Inc. as the “Fund,” or as “we.”
     The Fund’s outstanding shares of common stock, par value $0.001 per share, are listed on the New York Stock Exchange (the “NYSE”) under the symbol “GGT.” As of [December 31, 2010], the net assets of the Fund attributable to its common stock were $[9.19]. As of [December 31, 2010], the Fund had outstanding [13,575,668] shares of common stock; [791,014] shares of 6.00% Series B Cumulative Preferred Stock, liquidation preference $25 per share (the “Series B Preferred”); and [600] shares of Series C Auction Rate Preferred Stock, liquidation preference $25,000 per share (the “Series C Auction Rate Preferred”). The Fund completed its redemption of its 7.92% Tax Advantaged Cumulative Preferred Stock (the “Series A Preferred”) on April 2, 2003. The Series B Preferred and Series C Auction Rate Preferred have the same seniority with respect to distributions and liquidation preference.
Purpose of the Offer
     The Board of Directors of the Fund (the “Board”) has determined that it would be in the best interest of the Fund and its existing shareholders to increase the assets of the Fund so that the Fund may be in a better position to take advantage of investment opportunities that may arise without having to reduce existing Fund holdings. The Offer seeks to reward existing shareholders by giving them the opportunity to purchase additional Shares at a price that may be below market and/or net asset value without incurring any commission or charge. The distribution of the Rights, which themselves may have intrinsic value, will also give non-participating shareholders the potential of receiving a cash payment upon the sale of their Rights, which may be viewed as partial compensation for the possible dilution of their interests in the Fund as a result of the Offer.
     The Board believes that increasing the size of the Fund may result in certain economies of scale which may lower the Fund’s expenses as a proportion of average net assets because the Fund’s fixed costs can be spread over a larger asset base. There can be no assurance that by

 


 

increasing the size of the Fund, the Fund’s expense ratio will be lowered. The Board also believes that a larger number of outstanding Shares and a larger number of beneficial owners of Shares could increase the level of market interest in and visibility of the Fund, and improve the trading liquidity of the Fund’s shares on the NYSE.
Important Terms of the Offer
     
Total number of Shares available for primary subscription
  [ ]
 
   
Number of Rights you will receive for each outstanding Share you own on the Record Date
  [One Right for every one Share*]
 
   
Number of Shares you may purchase with your Rights at the Subscription Price per Share
  One Share for every [three Rights**]
 
   
Subscription Price
  $[ ]
 
*   [The number of Rights to be issued to a shareholder on the Record Date will be rounded up to the nearest number of Rights evenly divisible by three.]
 
**   Holders of Rights on the Record Date may be able to acquire additional Shares pursuant to the over-subscription privilege, if offered, in certain circumstances (as described below).
Shareholder inquiries should be directed to:
[ ]
or Gabelli Funds
(800) GABELLI (422-3554)
Over-Subscription Privilege
     Shareholders on the Record Date (“Record Date Shareholders”) who fully exercise all Rights initially issued to them are entitled to buy those Fund Shares referred to as “primary over-subscription shares,” that were not purchased by other Rights holders. If enough primary over-subscription shares are available, all such requests will be honored in full. If the requests for primary over-subscription shares exceed the primary over-subscription shares available, the available primary over-subscription shares will be allocated pro rata among those fully exercising Record Date Shareholders who over-subscribe based on the number of Rights originally issued to them by the Fund. Shares acquired pursuant to the over-subscription privilege are subject to allotment, which is more fully discussed under “The Offer — Over-Subscription Privilege.” Rights acquired in the secondary market may not participate in the over-subscription privilege.
     In addition, in the event that the Fund’s per Share net asset value on the Expiration Date is equal to or less than the Subscription Price, the Fund, in its sole discretion, may determine to issue additional Shares in an amount of up to [20%] of the Shares issued pursuant to the primary subscription, referred to as “secondary over-subscription shares.” Should the Fund determine to

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issue some or all of the secondary over-subscription shares, they will be allocated only among Record Date Shareholders who submitted over-subscription requests. Secondary over-subscription shares will be allocated pro rata among those fully exercising Record Date Shareholders who over-subscribe based on the number of Rights originally issued to them by the Fund.
Method for Exercising Rights
     Except as described below, subscription certificates evidencing the Rights (“Subscription Certificates”) will be sent to Record Date Shareholders or their nominees. If you wish to exercise your Rights, you may do so in the following ways:
     (1) Complete and sign the Subscription Certificate. Mail it in the envelope provided or deliver it, together with payment in full to [ ] (the “Subscription Agent”) at the address indicated on the Subscription Certificate. Your completed and signed Subscription Certificate and payment must be received by the Expiration Date.
     (2) Contact your broker, banker or trust company, which can arrange on your behalf to deliver your payment and guarantee delivery of a properly completed and executed Subscription Certificate by the close of business on the third business day after the Expiration Date pursuant to a notice of guaranteed delivery. A fee may be charged for this service by your broker, bank or trust company. Your payment and the notice of guaranteed delivery must be received by the Expiration Date.
     Rights holders will have no right to rescind a purchase after the Subscription Agent has received payment either by means of a notice of guaranteed delivery or a check. See “The Offer — Method of Exercise of Rights” and “The Offer — Payment for Shares.”
Sale of Rights
     The Rights are transferable until the Expiration Date and have been admitted for trading on the NYSE. Although no assurance can be given that a market for the Rights will develop, trading in the Rights on the NYSE will begin three Business Days prior to the Record Date and may be conducted until the close of trading on the last NYSE trading day prior to the Expiration Date. The value of the Rights, if any, will be reflected by the market price. Rights may be sold by individual holders or may be submitted to the Subscription Agent for sale. Any Rights submitted to the Subscription Agent for sale must be received by the Subscription Agent on or before [ ], one Business Day prior to the Expiration Date, due to normal settlement procedures. Rights that are sold will not confer any right to acquire any Shares in the primary or secondary over-subscription, and any Record Date Shareholder who sells any Rights will not be eligible to participate in the primary or secondary over-subscription. Trading of the Rights on the NYSE will be conducted on a when-issued basis until and including the date on which the Subscription Certificates are mailed to Record Date shareholders and thereafter, will be conducted on a regular way basis until and including the last NYSE trading day prior to the Expiration Date. The Shares will begin trading ex-Rights two Business Days prior to the Record Date. If the Subscription Agent receives Rights for sale in a timely manner, it will use its best efforts to sell the Rights on the NYSE. The Subscription Agent will also attempt to sell any Rights attributable

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to shareholders whose record addresses are outside the United States and Canada or who have an Army Post Office (“APO”) or Fleet Post Office (“FPO”) address as described below under “Restrictions on Foreign Shareholders” and under “The Offer — Foreign Restrictions” in the Prospectus. Any commissions will be paid by the selling Rights holders. Neither the Fund nor the Subscription Agent will be responsible if Rights cannot be sold and neither has guaranteed any minimum sales price for the Rights. If the Rights can be sold, sales of these Rights will be deemed to have been effected at the weighted average price received by the Subscription Agent on the day such Rights are sold, less any applicable brokerage commissions, taxes and other expenses. For purposes of this Prospectus, a “Business Day” shall mean any day on which trading is conducted on the NYSE.
     Shareholders are urged to obtain a recent trading price for the Rights on the NYSE from their broker, bank, financial advisor or the financial press.
     Banks, broker-dealers and trust companies that hold Shares for the accounts of others are advised to notify those persons that purchase rights in the secondary market that such rights will not participate in the over-subscription privilege.
Offering Fees and Expenses
     Offering expenses incurred by the Fund are estimated to be $[ ].
Restrictions on Foreign Shareholders
     Subscription Certificates will only be mailed to shareholders whose record addresses are within the United States and Canada (other than an APO or FPO address). Shareholders whose addresses are outside the United States and Canada or who have an APO or FPO address and who wish to subscribe to the Offer either in part or in full should contact the Subscription Agent, by written instruction or recorded telephone conversation no later than three Business Days prior to the Expiration Date. The Fund will determine whether the offering may be made to any such shareholder. This offering will not be made in any jurisdiction where it would be unlawful to do so. If the Subscription Agent has received no instruction by the third Business Day prior to the Expiration Date or the Fund has determined that the offering may not be made to a particular shareholder, the Subscription Agent will attempt to sell all of such shareholder’s Rights and remit the net proceeds, if any, to such shareholder. If the Rights can be sold, sales of these Rights will be deemed to have been effected at the weighted average price received by the Subscription Agent on the day the Rights are sold, less any applicable brokerage commissions, taxes and other expenses.
Use of Proceeds
     The Fund estimates the net proceeds of the Offer to be approximately $[ ]. This figure is based on the Subscription Price per Share of $[ ] and assumes all new Shares offered are sold and that the expenses related to the Offer estimated at approximately $[ ] are paid.
     The Investment Adviser anticipates that investment of the proceeds will be made in accordance with the Fund’s investment objectives and policies as appropriate investment

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opportunities are identified, which is expected to be substantially completed in approximately three months; however, the identification of appropriate investment opportunities pursuant to the Investment Adviser’s investment style or changes in market conditions may cause the investment period to extend as long as six months. Pending such investment, the proceeds will be held in high quality short-term debt securities and instruments.
Important Dates to Remember
     Please note that the dates in the table below may change if the Offer is extended.
     
EVENT   DATE
Record Date
  [ ]
 
   
Subscription Period
  [ ] through [ ]**
 
   
Expiration of the Offer*
  [ ]**
 
   
Payment for Guarantees of Delivery Due*
  [ ]**
 
   
Confirmation to Participants
  [ ]**
 
*   A shareholder exercising Rights must deliver by 5:00 p.m., Eastern Time, on [ ] either (a) a Subscription Certificate and payment for Shares or (b) a notice of guaranteed delivery and payment for Shares.
 
**   Unless the Offer is extended to a date no later than [ ].
Investment Objectives and Policies
     The Fund’s primary investment objective is long-term growth of capital, primarily through investment in a portfolio of common stock and other securities of foreign and domestic companies involved in the telecommunications, media, publishing and entertainment industries. Income is a secondary objective of the Fund. Under normal market conditions, the Fund will invest at least 80% of the value of its assets 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”). 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 shareholder approval. The Fund will provide shareholders with notice at least 60 days prior to the implementation of any change in the 80% Policy.
     No assurance can be given that the Fund’s investment objectives will be achieved. See “Investment Objectives and Policies.”
Management and Fees
     Gabelli Funds, LLC serves as the Fund’s investment adviser. The Investment Adviser’s fee is 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

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Investment Adviser an incentive to utilize such leverage. However, the Investment Adviser has agreed to reduce the management fee on the incremental assets attributable to the preferred stock during the fiscal year if the total return of the net asset value of the common shares 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 waive 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 shareholder’s total return. This fee waiver is voluntary and will remain in effect as long as any preferred stock in a series is outstanding. 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. See “Management of the Fund.”
     For the year ended December 31, 2010, the Fund’s total return on the net asset value of the common stock exceeded the stated dividend rate or net swap expense of all outstanding preferred stock. Thus, management fees were accrued on these assets.
     A discussion regarding the basis for the Board’s approval of the continuation of the investment advisory contract of the Fund is available in the Fund’s Semi-Annual Report to shareholders for the six months ended June 30, 2010.
Repurchase of Common Stock
     The Board has authorized the Fund to repurchase up to 1,950,000 shares of its common stock on the open market when the shares are trading at a discount of 5% or more (or such other percentage as the Board may determine from time to time) from the net asset value of the shares. Although the Fund’s Board has authorized such repurchases, the Fund is not required to repurchase its common stock. In total through December 31, 2010, the Fund has repurchased and retired 1,497,033 Shares in the open market at an average investment of $8.26 per Share and at an average discount of approximately 15.33% from its net asset value. Such repurchases are subject to certain notice and other requirements under the 1940 Act. See “Repurchase of Common Stock” in the SAI.
Anti-Takeover Provisions
     Certain provisions of Maryland law and of the Articles of Incorporation, as amended and supplemented, of the Fund (the “Charter”) and the Bylaws of the Fund, as amended from time to time (the “Bylaws” and together with the Charter, the “Governing Documents”), may be regarded as “anti-takeover” provisions. Pursuant to these provisions, only one of the three classes of Directors is elected each year, and the affirmative vote of the holders of 66 2/3% of the Fund’s outstanding shares of each class (voting separately) is required to authorize the

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conversion of the Fund from a closed-end to an open-end investment company. The overall effect of these and other provisions is to render more difficult the accomplishment of a merger with, or the assumption of control by, a principal stockholder. These provisions may have the effect of depriving Fund stockholders of an opportunity to sell their stock at a premium to the prevailing market price. See “Anti-Takeover Provisions of the Fund’s Governing Documents.”
Custodian, Transfer Agent and Dividend Disbursing Agent
     State Street Bank and Trust Company (the “Custodian”), located at 150 Royall Street, Canton, MA 02021, serves as the custodian of the Fund’s assets pursuant to a custody agreement. Under the custody agreement, the Custodian holds the Fund’s assets in compliance with the 1940 Act. For its services, the Custodian will receive a monthly fee based upon the average weekly value of the total assets of the Fund, plus certain charges for securities transactions.
     Computershare Trust Company, N.A. (“Computershare”), located at 250 Royall Street, Canton, Massachusetts 02021, serves as the Fund’s dividend disbursing agent, as agent under the Fund’s automatic dividend reinvestment and voluntary cash purchase plan (the “Plan”), and as transfer agent and registrar for Shares of common stock of the Fund.
Risk Factors and Special Considerations
     The following summarizes some of the matters that you should consider before investing in the Fund through the Offer.
     
Dilution
  Shareholders who do not exercise their Rights may, at the completion of the Offer, own a smaller proportional interest in the Fund than if they exercised their Rights. As a result of the Offer, you may experience dilution in net asset value per Share if the Subscription Price per Share is below the net asset value per Share on the Expiration Date. If the Subscription Price per Share is below the net asset value per Share of the Fund’s Shares on the Expiration Date, you will experience an immediate dilution of the aggregate net asset value of your Shares if you do not participate in the Offer and you will experience a reduction in the net asset value per Share of your Shares whether or not you participate in the Offer. The Fund cannot state precisely the extent of this dilution (if any) if you do not exercise your Rights because the Fund does not know what the net asset value per Share will be when the Offer Expires or what proportion of the Rights will be exercised. Assuming, for example, that all Rights are exercised, the Subscription Price is $[ ] and the

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  Fund’s net asset value per Share at the expiration of the Offer is $[ ], the Fund’s net asset value per Share (after payment of estimated offering expenses) would be reduced by approximately $[ ][( %)] per Share. See “Risk Factors and Special Considerations — Dilution.”
 
   
 
  If you do not wish to exercise your Rights, you should consider selling them as set forth in this Prospectus. The Fund cannot give any assurance, however, that a market for the Rights will develop or that the Rights will have any marketable value.
 
   
Leveraging
  The Fund currently uses, and intends to continue to use, financial leverage for investment purposes by issuing preferred stock. As of [December 31, 2010], the amount of leverage represented approximately [22%] of the Fund’s total assets. 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 for preferred stock. Such volatility may increase the likelihood of the Fund having to sell investments in order to meet its obligations to make distributions on the preferred stock, or to redeem preferred stock when it may be disadvantageous to do so. Also, if the Fund is utilizing leverage, a decline in net asset value could affect the ability of the Fund to make common stock distributions and such a failure to pay dividends or make distributions could result in the Fund ceasing to qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”). See “Investment Objectives and Policies — Leveraging” and “Risk Factors and Special Considerations — Leverage.”
 
   
Market Loss
  Shares of closed-end funds frequently trade at a market price that is less then the value of the net assets attributable to those shares. The possibility that Shares of the Fund will trade at a discount from net asset value or at premiums that

-8-


 

     
 
  are unsustainable over the long term are risks separate and distinct from the risk that the Fund’s net asset value will decrease. The risk of purchasing shares of a closed-end fund that might trade at a discount or unsustainable premium is more pronounced for investors who wish to sell their shares in a relatively short period of time because, for those investors, realization of a gain or loss on their investments is likely to be more dependent upon the existence of a premium or discount than upon portfolio performance. The Fund’s Shares are not subject to redemption. Shareholders desiring liquidity may, subject to applicable securities laws, trade their Shares in the Fund on the NYSE or other markets on which such shares may trade at the then current market value, which may differ from the then current net asset value. See “Risk Factors and Special Considerations — Market Value and Net Asset Value.”
 
   
Share Repurchases
  The Board has authorized the Fund to repurchase up to 1,950,000 Shares on the open market when the Shares are trading at a discount of 5% or more (or such other percentage as the Board may determine from time to time) from the net asset value of the Shares. Although the Fund’s Board has authorized such repurchases, the Fund is not required to repurchase its common stock. In total through December 31, 2010, the Fund has repurchased and retired 1,497,033 Shares in the open market at an average investment of $8.26 per Share and at an average discount of approximately 15.33% from its net asset value. Such repurchases are subject to certain notice and other requirements under the 1940 Act. See “Description of Capital Stock — Repurchase of Common Stock.”
 
   
Anti-Takeover Provisions
  Certain provisions of Maryland law and of the Charter and the Bylaws of the Fund, as amended from time to time (the “Bylaws” and together with the Charter, the “Governing Documents”), may be regarded as “anti-takeover” provisions. Pursuant to these provisions, only one of the three classes of Directors is elected each year, and the affirmative vote of the holders of 66

-9-


 

     
 
  2/3% of the Fund’s outstanding Shares of each class (voting separately) is required to authorize the conversion of the Fund from a closed-end to an open-end investment company. The overall effect of these provisions is to render more difficult the accomplishment of a merger with, or the assumption of control by, a principal stockholder. These and other provisions may have the effect of depriving Fund stockholders of an opportunity to sell their stock at a premium to the prevailing market price. See “Anti-Takeover Provisions of the Fund’s Governing Documents.”
 
   
Non-Diversified Status
  As a non-diversified, closed-end management investment company under the 1940 Act, the Fund may invest a greater portion of its assets in a more limited number of issuers than may a diversified fund, and accordingly, an investment in the Fund may, under certain circumstances, present greater risk to an investor than an investment in a diversified company. See “Risk Factors and Special Considerations—Non-Diversified Status.”
 
   
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 will be more susceptible to factors affecting those particular types of companies, including government regulation, greater price volatility for the overall market, rapid obsolescence of products and services, intense competition and strong market reactions to technological developments. See “Risk Factors and Special Considerations — Industry Concentration Risk.”
 
   
Smaller Companies Risk
  The Fund invests in smaller companies which may benefit from the development of new products and services. These smaller companies may involve greater investment risk than large, established issuers. See “Risk Factors and Special Considerations — Smaller Companies.”
 
   
Foreign Securities
  There is no limitation on the amount of foreign securities in which the Fund may invest.

-10-


 

     
 
  Investing in securities of foreign companies (or foreign governments), which are generally denominated in foreign currencies, may involve certain risks and opportunities 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 revaluation of currencies. See “Risk Factors and Special Considerations — Foreign Securities.”
 
   
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. See “Risk Factors and Special Considerations — Dependence on Key Personnel.”
 
   
Taxation
  The Fund has qualified, and intends to remain qualified, for federal income tax purposes as a regulated investment company. Qualification requires, among other things, compliance by the Fund with certain distribution requirements. The Fund is also, however, subject to certain statutory limitations on distributions on its Shares if the Fund fails to satisfy the 1940 Act’s asset coverage requirements, which could jeopardize the Fund’s ability to meet the regulated investment company distribution requirements. See “Taxation” for a more complete discussion.

-11-


 

FEES AND EXPENSES
The following table sets forth certain fees and expenses of the Fund.
         
Shareholder Transaction Expenses
       
Sales Load (as a percentage of offering price)(1)
      [None]
Offering Expenses Borne by the Fund (as a percentage of offering price)(2)
      [ %]
Voluntary Cash Purchase Plan Purchase Fees(3)
      $[0.75]
Automatic Dividend Reinvestment and Cash Purchase Plan Sales Fees(3)
      $[2.50]
 
       
Annual Expenses (as a percentage of net assets attributable to common shares)
       
Management Fees(4)
      [1.00%]
Interest Payments on Borrowed Funds
      [None]
Dividends on preferred shares(5)
      [ %]
Other Expenses(6)
      [ %]
 
     
Total annual fund operating expenses and dividends on Preferred shares
    [ %]  
Total Annual Expenses
      [ %]
 
     
 
(1)   No sales load will be charged by the Fund in connection with this Offer. However, Rights holders that choose to exercise their Rights through broker-dealers, banks or other nominees may incur a servicing fee charged by such broker-dealer, bank or nominee.
 
(2)   The fees and expenses of the Offer will be borne by the Fund and indirectly by all of its common shareholders, including those who do not exercise their Rights.
 
(3)   Shareholders participating in the Fund’s Automatic Dividend Reinvestment and Voluntary Cash Purchase Plans would pay $[0.75] plus their pro rata share of brokerage commissions per transaction to purchase Shares and $[2.50] plus their pro rata share of brokerage commissions per transaction to sell Shares. See “Automatic Dividend Reinvestment and Voluntary Cash Purchase Plans.”
 
(4)   The Investment Adviser has voluntarily agreed to reduce the management fee on the incremental assets attributable to the preferred stock during the fiscal year if the total return of the net asset value of the Shares 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. The Fund’s total return on the net asset value of the Shares is monitored on a monthly basis to assess whether the total return on the net asset value of the Shares 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, 2010, the Fund’s total return on the net asset value of the Shares exceeded the stated dividend rate or net swap expense of all outstanding preferred stock, and thus management fees were accrued on those assets.
 
(5)   The Dividends on preferred shares represent distributions on the preferred shares outstanding.
 
(6)   Amounts are based on estimated amounts for the Fund’s current fiscal year after giving effect to anticipated net proceeds of the Offer, assuming that all of the Rights are exercised.

-12-


 

                                 
Example   1 Year     3 Years     5 Years     10 Years  
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return:
  $ [ ]     $ [ ]     $ [ ]     $ [ ]  
     The foregoing fee table and example are intended to assist investors in understanding the costs and expenses that an investor in the Fund will bear directly or indirectly.
     The table above and the assumption in the example of a 5% annual return are required by Securities and Exchange Commission (“SEC”) regulations applicable to all management investment companies. THE EXAMPLE AND FEE TABLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RATES OF RETURN. THE ACTUAL EXPENSES OF THE FUND MAY BE GREATER OR LESS THAN THOSE SHOWN. The figures provided under “Other Expenses” are based upon estimated amounts for the current fiscal year. For more complete descriptions of certain of the Fund’s cost and expenses, see “Management of the Fund” in this Prospectus and the SAI.

-13-


 

FINANCIAL HIGHLIGHTS
     The following financial highlights tables are intended to help you under the Fund’s financial performance. The selected data below sets forth the per share operating performance and ratios for the periods presented. The financial information was derived from and should be read in conjunction with the Financial Statements of the Fund and Notes thereto, which are incorporated by reference into this Prospectus and the SAI. The financial information for the fiscal years ended December 31, 2010, 2009, 2008, 2007, and 2006 has been audited by [ ], the Fund’s independent registered public accounting firm, whose unqualified report on such Financial Statements is incorporated by reference into the SAI.
Selected data for a share outstanding throughout each period:
                                         
            Year Ended December 31,        
    2010     2009     2008     2007     2006  
Operating Performance:
                                       
Net asset value, beginning of period
  $ [ ]     $ 5.40     $ 14.39     $ 14.09     $ 11.77  
 
                             
 
                                       
Net investment income
    [ ]       0.05       0.14       0.10       0.29  
Net realized and unrealized gain/(loss) on investments, swap contracts, and foreign currency transactions
    [ ]       2.33       (8.41 )     1.15       2.85  
 
                             
 
                                       
Total from investment operations
    [ ]       2.38       (8.27 )     1.25       3.14  
 
                             
 
                                       
Distributions to Preferred Shareholders: (a)
                                       
Net investment income
    [ ]       (0.02 )     (0.13 )     (0.02 )     (0.07 )
Net realized gain
                      (0.18 )     (0.12 )
Return of capital
    [ ]       (0.07 )     (0.03 )            
 
                             
 
                                       
Total distributions to preferred shareholders
    [ ]       (0.09 )     (0.16 )     (0.20 )     (0.19 )
 
                             
 
                                       
Net Increase/(Decrease) in Net Assets Attributable to Common Shareholders Resulting from Operations
    [ ]       2.29       (8.43 )     1.05       2.95  
 
                             
 
                                       
Distributions to Common Shareholders:
                                       
Net investment income
    [ ]                   (0.08 )     (0.23 )
Net realized gain
    [ ]                   (0.67 )     (0.40 )
Return of capital
    [ ]             (0.57 )     0.00 (f)      
 
                             
 
                                       
Total distributions to common shareholders
    [ ]             (0.57 )     (0.75 )     (0.63 )
 
                             

-14-


 

                                         
            Year Ended December 31,        
    2010     2009     2008     2007     2006  
Fund Share Transactions:
                                       
Increase in net asset value from repurchase of common shares
    [ ]       0.01       0.00 (f)     0.00 (f)     0.00 (f)
Increase in net asset value from repurchase of preferred shares
    [ ]       0.00 (f)     0.01              
Offering expenses charged to paid-in capital
    [ ]                          
 
                             
 
                                       
Total fund share transactions
    [ ]       0.01       0.01       0.00 (f)     0.00 (f)
 
                             
 
                                       
Net Asset Value Attributable to Common Shareholders, End of Period
  $ [ ]     $ 7.70     $ 5.40     $ 14.39     $ 14.09  
 
                             
NAV total return†
    [ ] %     42.59 %     (59.40) %     8.03 %     26.65 %
 
                             
Market value, end of period
  $ [ ]     $ 6.63     $ 4.45     $ 12.89     $ 12.27  
 
                             
Investment total return††
    [ ] %     48.99 %     (62.65) %     11.13 %     27.89 %
 
                             
 
                                       
                                         
            Year Ended December 31,        
    2005     2004     2003     2002     2001  
Operating Performance:
                                       
Net asset value, beginning of period
  $ 12.27     $ 10.56     $ 7.67     $ 10.52     $ 12.21  
 
                             
 
                                       
Net investment income (loss)
    0.16       0.04       (0.03 )     (0.00 )(f)     (0.02 )
Net realized and unrealized gain/(loss) on investments, swap contracts, and foreign currency transactions
    0.09       1.79       3.14       (2.68 )     (1.44 )
 
                             
 
                                       
Total from investment operations
    0.25       1.83       3.11       (2.68 )     (1.46 )
 
                             
 
                                       
Distributions to Preferred Shareholders: (a)
                                       
Net investment income
    (0.03 )     (0.04 )                  
Net realized gain
    (0.13 )     (0.09 )     (0.13 )     (0.17 )     (0.17 )
 
                             
 
                                       
Total distributions to preferred shareholders
    (0.16 )     (0.13 )     (0.13 )     (0.17 )     (0.17 )
 
                             
 
                                       
Net Increase/(Decrease) in Net Assets Attributable to Common Shareholders Resulting from Operations
    0.09       1.70       2.98       (2.85 )     (1.63 )
 
                             
Distributions to Common Shareholders:
                                       
Net investment income
    (0.12 )                       (0.00 )(f)
Net realized gain
    (0.48 )                       (0.06 )
 
                             
 
                                       
Total distributions to common shareholders
    (0.60 )                       (0.06 )
 
                             
 
                                       
Fund Share Transactions:
                                       
Increase in net asset value from repurchase of common shares
    0.01       0.01       0.01       0.00 (f)      

-15-


 

                                         
            Year Ended December 31,        
    2005     2004     2003     2002     2001  
Increase in net asset value from repurchase of preferred shares
          0.00 (f)                  
Offering expenses charged to paid-in capital
    (0.00) (f)           (0.10 )            
 
                             
 
                                       
Total fund share transactions
    0.01       0.01       (0.09 )     0.00 (f)      
 
                             
 
                                       
Net Asset Value Attributable to Common Shareholders, End of Period
  $ 11.77     $ 12.27     $ 10.56     $ 7.67     $ 10.52  
 
                             
NAV total return†
    1.6 %     16.2 %     37.7 %     (27.1) %     (13.3 )%
 
                             
Market value, end of period
  $ 10.15     $ 10.68     $ 9.07     $ 6.40     $ 9.01  
 
                             
Investment total return††
    0.7 %     17.8 %     41.7 %     (29.0) %     (12.1 )%
 
                             
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
FINANCIAL HIGHLIGHTS (Continued)
Selected data for a share outstanding throughout each period:
                                         
  Year Ended December 31,  
    2010     2009     2008     2007     2006  
Ratios and Supplemental Data:
                                       
Net assets including liquidation value of preferred shares, end of period (in 000’s)
  $ [ ]     $ 141,164     $ 122,401     $ 251,334     $ 247,412  
Net assets attributable to common shares, end of period (in 000’s)
  $ [ ]     $ 106,386     $ 75,619     $ 201,506     $ 197,584  
Ratio of net investment income to average net assets attributable to common shares before preferred share distributions
    [ ] %     0.88 %     1.40 %     0.46 %     2.17 %
Ratio of operating expenses to average net assets attributable to common shares before fees waived
    [ ] %     2.46 %     1.89 %            
Ratio of operating expenses to average net assets attributable to common shares net of advisory fee reduction, if any (b)
    [ ] %     2.43 %     1.54 %     1.62 %     1.79 %
Ratio of operating expenses to average net assets including liquidation value of preferred shares before fees waived
    [ ] %     1.70 %     1.40 %            
Ratio of operating expenses to average net assets including liquidation value of preferred shares net of advisory fee reduction, if any (b)
    [ ] %     1.68 %     1.14 %     1.32 %     1.39 %

-16-


 

                                         
  Year Ended December 31,  
    2010     2009     2008     2007     2006  
Portfolio turnover rate †††
    [ ] %     9.6 %     14.5 %     14.5 %     9.8 %
Preferred Stock:
                                       
6.00% Series B Cumulative Preferred Stock
                                       
Liquidation value, end of period (in 000’s)
  $ [ ]     $ 19,778     $ 24,281     $ 24,828     $ 24,828  
Total shares outstanding (in 000’s)
    [ ]       791       971       993       993  
Liquidation preference per share
  $ [ ]     $ 25.00     $ 25.00     $ 25.00     $ 25.00  
Average market value (c)
  $ [ ]     $ 23.53     $ 22.59     $ 24.14     $ 24.12  
Asset coverage per share
  $ [ ]     $ 101.48     $ 65.41     $ 126.10     $ 124.13  
Series C Auction Rate Cumulative Preferred Stock
                                       
Liquidation value, end of period (in 000’s)
  $ [ ]     $ 15,000     $ 22,500     $ 25,000     $ 25,000  
Total shares outstanding (in 000’s)
    [ ]       1       1       1       1  
Liquidation preference per share
  $ [ ]     $ 25,000     $ 25,000     $ 25,000     $ 25,000  
Average market value (d)
  $ [ ]     $ 25,000     $ 25,000     $ 25,000     $ 25,000  
Asset coverage per share
  $ [ ]     $ 101,475     $ 65,411     $ 126,101     $ 124,134  
Asset Coverage (e)
    [ ] %     406 %     262 %     504 %     497 %
                                         
  Year Ended December 31,  
    2005     2004     2003     2002     2001  
Ratios and Supplemental Data:
                                       
Net assets including liquidation value of preferred shares, end of period (in 000’s)
  $ 214,907     $ 223,739     $ 200,195     $ 132,683     $ 181,539  
Net assets attributable to common shares, end of period (in 000’s)
  $ 165,079     $ 173,912     $ 150,195     $ 109,533     $ 150,672  
Ratio of net investment income to average net assets attributable to common shares before preferred share distributions
    1.44 %     0.71 %     (0.36) %     (0.04) %     (0.18) %
Ratio of operating expenses to average net assets attributable to common shares net of advisory fee reduction, if any (b)
    1.55 %     1.87 %     1.81 %     1.46 %     1.34 %
Ratio of operating expenses to average net assets including liquidation value of preferred shares net of advisory fee reduction, if any (b)
    1.20 %     1.41 %     1.35 %     1.18 %     1.13 %
Portfolio turnover rate †††
    12.4 %     7.5 %     10.9 %     16.6 %     25.4 %

-17-


 

                                         
  Year Ended December 31,  
    2005     2004     2003     2002     2001  
Preferred Stock:
                                       
7.92% Cumulative Preferred Stock
                                       
Liquidation value, end of period (in 000’s)
                    $ 23,150     $ 30,867  
Total shares outstanding (in 000’s)
                      926       1,235  
Liquidation preference per share
                    $ 25.00     $ 25.00  
Average market value (c)
                    $ 25.75     $ 25.50  
Asset coverage per share
                    $ 143.29     $ 147.00  
6.00% Series B Cumulative Preferred Stock
                                       
Liquidation value, end of period (in 000’s)
  $ 24,828     $ 24,828     $ 25,000              
Total shares outstanding (in 000’s)
    993       993       1,000              
Liquidation preference per share
  $ 25.00     $ 25.00     $ 25.00              
Average market value (c)
  $ 25.00     $ 24.84     $ 25.28              
Asset coverage per share
  $ 107.83     $ 112.26     $ 100.10              
Series C Auction Rate Cumulative Preferred Stock
                                       
Liquidation value, end of period (in 000’s)
  $ 25,000     $ 25,000     $ 25,000              
Total shares outstanding (in 000’s)
    1       1       1              
Liquidation preference per share
  $ 25,000     $ 25,000     $ 25,000              
Average market value (d)
  $ 25,000     $ 25,000     $ 25,000              
Asset coverage per share
  $ 107,825     $ 112,257     $ 100,097              
Asset Coverage (e)
    431 %     449 %     400 %     573 %     588 %
 
  Based on net asset value per share, adjusted for reinvestment of distributions at prices determined under the Fund’s dividend reinvestment plan.
 
††   Based on market value per share, adjusted for reinvestment of distributions at prices determined under the Fund’s dividend reinvestment plan.
 
†††   Effective in 2008, a change in accounting policy was adopted with regard to the calculation of the portfolio turnover rate to include cash proceeds due to mergers. Had this policy been adopted retroactively, the portfolio turnover rate for the years ended December 31, 2007, 2006, 2005, 2004, 2003, 2002, and 2001 would have been 14.8%, 16.5%, 14.5%, 8.9%, [ ], [ ], and [ ], respectively.
 
(a)   Calculated based upon average common shares outstanding on the record dates throughout the year.
 
(b)   For the years ended December 31, 2008, 2007, 2006, and 2005, the effect of the custodian fee credits was minimal.
 
(c)   Based on weekly prices.
 
(d)   Based on weekly auction prices. Since February 2008, the weekly auctions have failed. Holders that have submitted orders have not been able to sell any or all of their stock in the auctions.
 
(e)   Asset coverage is calculated by combining all series of preferred stock.
 
(f)   Amount represents less than $0.005 per share.

-18-


 

THE OFFER
Terms of the Offer
     The Fund is issuing to Record Date Shareholders Rights to subscribe for additional Shares. Each Record Date Shareholder is being issued one transferable Right for each Share owned on the Record Date. The Right entitles the holder to acquire at the Subscription Price one Share for each [three] Rights held rounded up to the nearest number of Rights evenly divisible by [three]. Fractional shares will not be issued upon the exercise of the Rights. Accordingly, Shares may be purchased only pursuant to the exercise of Rights in integral multiples of [three]. In the case of Shares held of record by Cede & Co. (“Cede”), as nominee for the Depository Trust Company (“DTC”), or any other depository or nominee, the number of Rights issued to Cede or such other depository or nominee will be adjusted to permit rounding up (to the nearest number of Rights evenly divisible by [three]) of the Rights to be received by beneficial owners for whom it is the holder of record only if Cede or such other depository or nominee provides to the Fund on or before the close of business on [ ] a written representation to the number of Rights required for such rounding. Rights may be exercised at any time during the period (the “Subscription Period”), which commences on [ ] and ends at 5:00 p.m., Eastern Time, on [ ], unless extended by the Fund to a date not later than [ ], 5:00 p.m., Eastern Time. See “Expiration of the Offer.” The Right to acquire one additional Share for each [three] Rights held during the Subscription Period at the Subscription Price will be referred to in the remainder of this Prospectus as the “Primary Subscription.”
     In addition, any Record Date Shareholder who fully exercises all Rights initially issued to him is entitled to subscribe for Shares available for Primary Subscription (the “Primary Subscription Shares”) that were not otherwise subscribed for by other Rights holders on Primary Subscription. In the event that the Fund’s per Share net asset value on the Expiration Date is equal to or less than the Subscription Price, the Fund, in its sole discretion, would also be able to issue additional Shares in an amount of up to [20%] of the Primary Subscription Shares (the “Secondary Over-Subscription Shares”) to satisfy over-subscription requests in excess of the available Primary Subscription Shares. The entitlement to subscribe for unsubscribed Primary Subscription Shares and any Secondary Over-Subscription Shares is available only to those Record Date Shareholders who fully exercise all Rights initially issued to them and only on the basis of their Record Date holdings and will be referred to in the remainder of this Prospectus as the “Over-Subscription Privilege.” For purposes of determining the maximum number of Shares a Record Date Shareholder may acquire pursuant to the Offer, broker-dealers whose Shares are held of record by Cede, nominee for DTC, or by any other depository or nominee, will be deemed to be the holders of the Rights that are issued to Cede or such other depository or nominee on their behalf. Shares acquired pursuant to the Over-Subscription Privilege are subject to allotment, which is more fully discussed below under “Over-Subscription Privilege.” Rights acquired in the secondary market may not participate in the over-subscription privilege.
     Officers of the Investment Adviser have advised the Fund that the Affiliated Parties, as Record Date Shareholders, have been authorized to purchase Shares through the Primary Subscription and the Over-Subscription Privilege to the extent Shares become available to them in accordance with the Primary Subscription and the allotment provisions of the Over-Subscription Privilege. In addition, Mr. Mario J. Gabelli, individually or his affiliated entities, as

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a Record Date Shareholder, may also purchase Shares through the Primary Subscription and the Over-Subscription Privilege. Such over-subscriptions by Affiliated Parties and Mr. Gabelli may disproportionately increase their already existing ownership, resulting in a higher percentage ownership of outstanding Shares if any Record Date Shareholder fails to fully exercise its Rights. Any Shares acquired, whether by Primary Subscription or the Over-Subscription Privilege, by the Affiliated Parties or Mr. Gabelli, as “affiliates” of the Fund as that term is defined under the Securities Act of 1933, as amended (the “Securities Act”), may only be sold in accordance with Rule 144 under the Securities Act or another applicable exemption or pursuant to an effective registration statement under the Securities Act. In general, under Rule 144, as currently in effect, an “affiliate” of the Fund is entitled to sell, within any three-month period, a number of Shares that does not exceed the greater of 1% of the then outstanding Shares or the average weekly reported trading volume of the Shares during the four calendar weeks preceding such sale. Sales under Rule 144 are also subject to certain restrictions on the manner of sale, to notice requirements and to the availability of current public information about the Fund. In addition, any profit resulting from the sale of Shares so acquired, if the Shares are held for a period of less than six months, will be returned to the Fund.
     Rights will be evidenced by Subscription Certificates. The number of Rights issued to each holder will be stated on the Subscription Certificate delivered to the holder. The method by which Rights may be exercised and Shares paid for is set forth below in “Method of Exercise of Rights” and “Payment for Shares.” A Rights holder will have no right to rescind a purchase after the Subscription Agent has received payment. See “Payment for Shares” below. Shares issued pursuant to an exercise of Rights will be listed on the NYSE.
     The Rights are transferable until the Expiration Date and will be admitted for trading on the NYSE. Assuming a market exists for the Rights, the Rights may be purchased and sold through usual brokerage channels and sold through the Subscription Agent. Although no assurance can be given that a market for the Rights will develop, trading in the Rights on the NYSE will begin three Business Days before the Record Date and may be conducted until the close of trading on the last NYSE trading day prior to the Expiration Date due to normal settlement procedures. Rights that are sold will not confer any right to acquire any Shares in the Over-Subscription Privilege, and any Record Date Shareholder who sells any Rights will not be eligible to participate in the secondary over-subscription (the “Secondary Over-Subscription”). Trading of the Rights on the NYSE will be conducted on a when-issued basis until and including the date on which the Subscription Certificates are mailed to Record Date Shareholders and thereafter, will be conducted on a regular way basis until and including the last NYSE trading day prior to the Expiration Date. The method by which Rights may be transferred is set forth below under “Method of Transferring Rights.” The Shares will begin trading on the NYSE and will begin trading ex-Rights two Business Days prior to the Record Date.
     Nominees who hold the Fund’s Shares for the account of others, such as banks, broker-dealers, or depositories for securities, should notify the respective beneficial owners of such Shares as soon as possible to ascertain such beneficial owners’ intentions and to obtain instructions with respect to the Rights. Nominees should also notify holders purchasing Rights in the secondary market that such Rights may not participate in the Over-Subscription Privilege. If the beneficial owner so instructs, the nominee will complete the Subscription Certificate and submit it to the Subscription Agent with proper payment. In addition, beneficial owners of the

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Shares or Rights held through such a nominee should contact the nominee and request the nominee to effect transactions in accordance with such beneficial owner’s instructions.
Purpose of the Offer
     The Board has determined that it would be in the best interests of the Fund and the shareholders to increase the assets of the Fund available for investment, thereby permitting the Fund to be in a better position to more fully take advantage of investment opportunities that may arise without having to reduce existing Fund holdings. The Offer seeks to reward existing shareholders by giving them the right to purchase additional Shares at a price that may be below market and/or net asset value without incurring any commission charge. The distribution to shareholders of transferable Rights, which themselves may have intrinsic value, will also afford non-subscribing shareholders the potential of receiving a cash payment upon sale of such Rights, receipt of which may be viewed as partial compensation for the possible dilution of their interests in the Fund.
     The Investment Adviser and BNY Mellon Asset Servicing, its sub-administrator (the “Sub-Administrator”), will benefit from the Offer because the Investment Adviser’s fee and the Sub-Administrator’s fee are based on the average net assets of the Fund. See “Management of the Fund.” It is not possible to state precisely the amount of additional compensation the Investment Adviser or Sub-Administrator will receive as a result of the Offer because the proceeds of the Offer will be invested in additional portfolio securities, which will fluctuate in value. However, assuming all Rights are exercised and that the Fund receives the maximum proceeds of the Offer, the annual compensation to be received by the Investment Adviser and the Sub-Administrator would be increased by approximately $[ ] and $[ ], respectively. One of the Fund’s Directors, Mr. Mario J. Gabelli, who voted to authorize the Offer, is an “interested person” of the Investment Adviser within the meaning of the 1940 Act. The Fund’s Board considered that Mr. Gabelli may benefit both directly and indirectly from the Offer because of how he is compensated as a portfolio manager of the Fund, and because of his interest in the Investment Adviser, respectively. See “Management of the Fund” in the SAI. In determining that the Offer was in the best interest of shareholders, the Fund’s Board was cognizant of this benefit as well as the possible participation of the Affiliated Parties and Mr. Gabelli in the Offer as shareholders on the same basis as other shareholders.
     In August 1995 and June 2000, the Fund issued transferable rights to shareholders entitling the holders thereof to subscribe for an aggregate of 2,869,137 and 3,598,938, respectively, of the Shares at the rate of one Share for each three rights held and entitling shareholders to subscribe for any Shares not acquired by exercise of primary subscription rights. The subscription price in the August 1995 offering was $6.50 per Share, representing a discount to the prevailing net asset value of the Shares at the time of the offer of approximately 21.59%, and a discount from market value of the Shares of approximately 16.13%. The subscription price in the June 2000 offering was $13.00 per Share, representing a discount to the prevailing net asset value of the Share at the time of the offer of approximately 30.85%, and a discount from market value of the Shares of approximately 11.11%. Each rights offering was substantially oversubscribed, resulting in the issuance of the maximum number of Shares being offered. The Fund raised $18,649,391 in the 1995 offering, and $46,786,194 in the 2000 offering, while subscriptions remitted to the Fund totaled more than $44,000,000 and

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$86,000,000, respectively. As a percentage of the Shares outstanding on the record date for each offering, more than [80%] participated in the 1995 offering, and more than [80%] participated in the 2000 offering. The foregoing information is historical, and provided for informational purposes only. There is no guarantee or assurance that the Offer will effect similar results.
     The Fund may, in the future and at its discretion, choose to make additional rights offerings from time to time for a number of shares and on terms which may or may not be similar to the Offer. Any such future rights offering will be made in accordance with the 1940 Act. Under the laws of the State of Maryland, the state in which the Fund is incorporated, the Board is authorized to approve rights offerings without obtaining shareholder approval. The staff of the SEC has interpreted the 1940 Act as not requiring shareholder approval of a rights offering at a price below the then current net asset value so long as certain conditions are met, including a good faith determination by the Fund’s Board of Directors that such offering would result in a net benefit to existing shareholders.
Over-Subscription Privilege
     If all of the Rights initially issued are not exercised, any Primary Subscription Shares for which subscriptions have not been received will be offered, by means of the Over-Subscription Privilege, to Record Date Shareholders who have exercised all the Rights initially issued to them and who wish to acquire additional Shares. Record Date Shareholders who exercise all the Rights initially issued to them will have the opportunity to indicate on the Subscription Certificate how many Shares they are willing to acquire pursuant to the Over-Subscription Privilege. If sufficient Primary Subscription Shares remain after the Primary Subscriptions have been exercised, all over-subscription requests will be honored in full. If sufficient Primary Subscription Shares are not available to honor all subscription requests, the Shares will be allocated among those Record Date Shareholders who over-subscribe based on the number of Rights originally issued to them by the Fund. Rights acquired in the secondary market may not participate in the over-subscription privilege.
     In addition, the Board of Directors of the Fund has established a [Pricing Committee] which is authorized, in the event that the Fund’s per Share net asset value on the Expiration Date is at or below the Subscription Price, to direct the Fund to issue Secondary Over-Subscription Shares to satisfy over-subscription requests in excess of the available Primary Subscription Shares in an amount of up to [20%] of the Primary Subscription Shares. Should the [Pricing Committee] determine to issue some or all of these Secondary Over-Subscription Shares, they will be allocated only among Record Date Shareholders that submitted over-subscription requests. Secondary Over-Subscription Shares will be allocated pro rata amount those fully exercising Record Date Shareholders who over-subscribe based on the number of Rights originally issued to them by the Fund. Any Secondary Over-Subscription Shares issued by the Fund, collectively with any Primary Subscription Shares not subscribed for through the Primary Subscription, will be referred to in this Prospectus as the “Excess Shares.”
     The percentage of Excess Shares each over-subscribing Record Date Shareholder may acquire will be rounded down to result in delivery of whole Shares; provided, however, that if a pro rata allocation results in any holder being allocated a greater number of Excess Shares than the holder subscribed for pursuant to the exercise of such holder’s Over-Subscription Privilege,

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then such holder will be allocated only such number of Excess Shares as such holder subscribed for and the remaining Excess Shares will be allocated among all other holders then entitled to receive Excess Shares whose over-subscription requests have not been fully honored. The allocation process may be iterative in order to assure that the total number of Excess Shares is distributed in accordance with the method described above.
     The formula to be used in allocating the Excess Shares is as follows:
         
Shareholder’s Record Date
Position
 
Total Record Date Position
of All Over-Subscribers
  X   Excess Shares
Remaining
     The Fund will not offer or sell any Shares which are not subscribed for under the Primary Subscription or the Over-Subscription Privilege.
The Subscription Price
     The Subscription Price for the Shares to be issued pursuant to the Rights will be $[ ].
     The Fund announced the Offer on [December 9, 2010]. The net asset value per Share at the close of business on [December 8, 2010] (the last date prior to the Fund’s announcement of the Offer), was $[9.19]. The last reported sale price of a Share on the NYSE on that date was $[8.34], representing a [9.25% discount] in relation to the then current net asset value per Share and a [premium] in relation to the Subscription Price.
Sales by Subscription Agent
     Holders of Rights who are unable or do not wish to exercise any or all of their Rights may instruct the Subscription Agent to sell any unexercised Rights. The Subscription Certificates representing the Rights to be sold by the Subscription Agent must be received on or before [ ]. Upon the timely receipt of the appropriate instructions to sell Rights, the Subscription Agent will use its best efforts to complete the sale and will remit the proceeds of sale, net of commissions, to the holders. If the Rights can be sold, sales of the Rights will be deemed to have been effected at the weighted average price received by the Subscription Agent on the day such Rights are sold. The selling Rights holder will pay all brokerage commissions incurred by the Subscription Agent. These sales may be effected by the Subscription Agent through Gabelli & Company, Inc., a registered broker-dealer and an affiliate of the Investment Adviser, at a commission of up to $[0.02] per Right, provided that if the Subscription Agent is able to negotiate a lower brokerage commission with an independent broker, the Subscription Agent will execute these sales through that independent broker. Gabelli & Company, Inc. may also act on behalf of its clients to purchase or sell Rights in the open market and be compensated for its services. The Subscription Agent will automatically attempt to sell any unexercised Rights that remain unclaimed as a result of Subscription Certificates being returned by the postal authorities as undeliverable as of the fourth Business Day prior to the Expiration Date. These sales will be made net of commissions on behalf of the nonclaiming Rights holders. Proceeds

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from those sales will be held by Computershare, in its capacity as the Fund’s transfer agent, for the account of the nonclaiming Rights holder until the proceeds are either claimed or escheated. There can be no assurance that the Subscription Agent will be able to complete the sale of any of these Rights and neither the Fund nor the Subscription Agent has guaranteed any minimum sales price for the Rights. All of these Rights will be sold at the market price, if any, on the NYSE or through an unaffiliated market maker if no market exists on the NYSE.
Method of Transferring Rights
     The Rights evidenced by a single Subscription Certificate may be transferred in whole by endorsing the Subscription Certificate for transfer in accordance with the accompanying instructions. A portion of the Rights evidenced by a single Subscription Certificate (but not fractional Rights) may be transferred by delivering to the Subscription Agent a Subscription Certificate properly endorsed for transfer, with instructions to register the portion of the Rights evidenced thereby in the name of the transferee (and to issue a new Subscription Certificate to the transferee evidencing the transferred Rights). In this event, a new Subscription Certificate evidencing the balance of the Rights will be issued to the Rights holder or, if the Rights holder so instructs, to an additional transferee.
     Holders wishing to transfer all or a portion of their Rights (but not fractional Rights) should allow at least three Business Days prior to the Expiration Date for (i) the transfer instructions to be received and processed by the Subscription Agent, (ii) a new Subscription Certificate to be issued and transmitted to the transferee or transferees with respect to transferred Rights, and to the transferor with respect to retained rights, if any, and (iii) the Rights evidenced by the new Subscription Certificates to be exercised or sold by the recipients thereof. Neither the Fund nor the Subscription Agent shall have any liability to a transferee or transferor of Rights if Subscription Certificates are not received in time for exercise or sale prior to the Expiration Date.
     Except for the fees charged by the Subscription Agent (which will be paid by the Fund as described below), all commissions, fees and other expenses (including brokerage commissions and transfer taxes) incurred in connection with the purchase, sale or exercise of Rights will be for the account of the transferor of the Rights, and none of these commissions, fees or expenses will be paid by the Fund or the Subscription Agent.
     The Fund anticipates that the Rights will be eligible for transfer through, and that the exercise of the Primary Subscription and Over-Subscription Privilege may be effected through, the facilities of DTC.
Expiration of the Offer
     The Offer will expire at 5:00 p.m., Eastern Time, on [ ], unless extended by the Fund to a date not later than [ ], 5:00 p.m., Eastern Time (the “Expiration Date”). Rights will expire on the Expiration Date and thereafter may not be exercised.

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Subscription Agent
     The Subscription Agent is [ ]. The Subscription Agent will receive from the Fund an amount estimated to be $[ ], comprised of the fee for its services and the reimbursement for certain expenses related to the Offer. Inquiries by all holders of Rights should be directed to [ ]. Holders may also consult their brokers or nominees.
Method of Exercise of Rights
     Rights may be exercised directly with the Fund by filling in and signing the reverse side of the Subscription Certificate and mailing it in the envelope provided, or otherwise delivering the completed and signed Subscription Certificate to the Subscription Agent, together with payment for the Shares as described below under “Payment for Shares.” Rights may also be exercised through a Rights holder’s broker, bank or trust company, who may charge the Rights holder a servicing fee in connection with such exercise. Please contact your broker, bank or trust company for specific instructions.
     Completed Subscription Certificates must be received by the Subscription Agent prior to 5:00 p.m., Eastern Time, on the Expiration Date (unless payment is effected by means of a notice of guaranteed delivery as described below under “Payment for Shares”). The Subscription Certificate and payment should be delivered to [ ] at the following address:
     
If By Mail:
  [ ]
 
   
If By Hand:
  [ ]
 
   
If By Overnight Courier:
  [ ]
Payment for Shares
     Holders of Rights who acquire Shares on Primary Subscription or pursuant to the Over-Subscription Privilege may choose between the following methods of payment:
     (1) A subscription will be accepted by the Subscription Agent if, prior to 5:00 p.m., Eastern Time, on the Expiration Date, the Subscription Agent has received a notice of guaranteed delivery by telegram or otherwise from a bank, a trust company, or a NYSE member, guaranteeing delivery of: (i) payment of the full Subscription Price for the Shares subscribed for on the Primary Subscription and any additional Shares subscribed for pursuant to the Over-Subscription Privilege, and (ii) a properly completed and executed Subscription Certificate, which: (1) designates your primary subscription and secondary over-subscription amounts, (2) provides a check (or amount in notice of guaranteed delivery), (3) indicates whether you participate in the Fund’s automatic dividend reinvestment and cash purchase plan and wish to receive a certificate, and (4) indicates whether you want to sell or transfer your rights. The Subscription Agent will not honor a notice of guaranteed delivery if a properly completed and executed Subscription Certificate and full payment is not received by the Subscription Agent by the close of business on the third Business Day after the Expiration Date. The notice of guaranteed delivery may be delivered to the Subscription Agent in the same manner as

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Subscription Certificates at the addresses set forth above, or may be transmitted to the Subscription Agent by facsimile transmission to fax number [ ]; telephone number to confirm receipt [ ].
     (2) Alternatively, a holder of Rights can send the Subscription Certificate together with payment in the form of a check for the Shares subscribed for on Primary Subscription and additional Shares subscribed for pursuant to the Over-Subscription Privilege to the Subscription Agent based on the Subscription Price of $[ ] per Share. To be accepted, the payment, together with the executed Subscription Certificate, must be received by the Subscription Agent at the addresses noted above prior to 5:00 p.m., Eastern Time, on the Expiration Date. The Subscription Agent will deposit all stock purchase checks received by it prior to the final due date into a segregated interest-bearing account pending proration and distribution of Shares. The Subscription Agent will not accept cash as a means of payment for Shares. EXCEPT AS OTHERWISE SET FORTH BELOW, A PAYMENT PURSUANT TO THIS METHOD MUST BE IN UNITED STATES DOLLARS BY MONEY ORDER OR CHECK DRAWN ON A BANK LOCATED IN THE CONTINENTAL UNITED STATES, MUST BE PAYABLE TO THE GABELLI GLOBAL MULTIMEDIA TRUST INC., AND MUST ACCOMPANY AN EXECUTED SUBSCRIPTION CERTIFICATE TO BE ACCEPTED. If the aggregate Subscription Price paid by a Record Date Shareholder is insufficient to purchase the number of Shares that the holder indicates are being subscribed for, or if a Record Date Shareholder does not specify the number of Shares to be purchased, then the Record Date Shareholder will be deemed to have exercised first, the Primary Subscription Rights (if not already fully exercised) and second, the Over-Subscription Privilege to the full extent of the payment tendered. If the aggregate Subscription Price paid by such holder is greater than the Shares he has indicated an intention to subscribe, then the Rights holder will be deemed to have exercised first, the Primary Subscription Rights (if not already fully subscribed) and second, the Over-Subscription Privilege to the full extent of the excess payment tendered.
     Any payment required from a holder of Rights must be received by the Subscription Agent by the Expiration Date, or if the Rights holder has elected to make payment by means of a notice of guaranteed delivery, on the third Business Day after the Expiration Date. Whichever of the two methods of payment described above is used, issuance and delivery of certificates for the Shares purchased are subject to collection of checks and actual payment pursuant to any notice of guaranteed delivery.
     Within ten Business Days following the Expiration Date (the “Confirmation Date”), a confirmation will be sent by the Subscription Agent to each holder of Rights (or, if the Shares are held by Cede or any other depository or nominee, to Cede or such other depository or nominee), showing (i) the number of Shares acquired pursuant to the Primary Subscription, (ii) the number of Excess Shares, if any, acquired pursuant to the Over-Subscription Privilege, (iii) the per Share and total purchase price for the Shares and (iv) any excess to be refunded by the Fund to such holder as a result of payment for Shares pursuant to the Over-Subscription Privilege which the holder is not acquiring. Any payment required from a holder of Rights must be received by the Subscription Agent on the Expiration Date, or if the Rights holder has elected to make payment by means of a notice of guaranteed delivery, on the third Business Day after the Expiration Date. Any excess payment to be refunded by the Fund to a holder of Rights, or to be paid to a holder of

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Rights as a result of sales of Rights on his behalf by the Subscription Agent or exercises by Record Date Shareholders of their Over-Subscription Privileges, and all interest accrued on the holder’s excess payment will be mailed by the Subscription Agent to the holder within fifteen Business Days after the Expiration Date. Interest on the excess payment will accrue through the date that is one Business Day prior to the mail date of the reimbursement check. All payments by a holder of Rights must be in United States dollars by money order or check drawn on a bank located in the continental United States of America and payable to The Gabelli Global Multimedia Trust Inc., except that holders of Rights who are residents of Canada may make payment in U.S. dollars by money order or check drawn on a bank located in Canada.
     A Rights holder will have no right to rescind a purchase after the Subscription Agent has received payment either by means of a notice of guaranteed delivery or a check.
     If a holder of Rights who acquires Shares pursuant to the Primary Subscription or the Over-Subscription Privilege does not make payment of any amounts due, the Fund reserves the right to take any or all of the following actions: (i) find other purchasers for such subscribed-for and unpaid-for Shares; (ii) apply any payment actually received by it toward the purchase of the greatest whole number of Shares which could be acquired by such holder upon exercise of the Primary Subscription or the Over-Subscription Privilege; (iii) sell all or a portion of the Shares purchased by the holder, in the open market, and apply the proceeds to the amounts owed; and (iv) exercise any and all other rights or remedies to which it may be entitled, including, without limitation, the right to set off against payments actually received by it with respect to such subscribed Shares and to enforce the relevant guaranty of payment.
     Nominees who hold Shares for the account of others, such as brokers, dealers or depositories for securities, should notify the respective beneficial owners of the Shares as soon as possible to ascertain such beneficial owners’ intentions and to obtain instructions with respect to the Rights. If the beneficial owner so instructs, the record holder of the Rights should complete Subscription Certificates and submit them to the Subscription Agent with the proper payment. In addition, beneficial owners of Shares or Rights held through such a nominee should contact the nominee and request the nominee to effect transactions in accordance with the beneficial owner’s instructions. Banks, broker-dealers and trust companies that hold Shares for the accounts of others are advised to notify those persons that purchase Rights in the secondary market that such Rights may not participate in the Over-Subscription Privilege.
     THE INSTRUCTIONS ACCOMPANYING THE SUBSCRIPTION CERTIFICATES SHOULD BE READ CAREFULLY AND FOLLOWED IN DETAIL. DO NOT SEND SUBSCRIPTION CERTIFICATES TO THE FUND.
     THE METHOD OF DELIVERY OF SUBSCRIPTION CERTIFICATES AND PAYMENT OF THE SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK OF THE RIGHTS HOLDERS, BUT, IF SENT BY MAIL, IT IS RECOMMENDED THAT THE CERTIFICATES AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR TO 5:00 P.M., EASTERN TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED

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PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS DAYS OR MORE TO CLEAR, YOU ARE STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF A CERTIFIED OR CASHIER’S CHECK OR MONEY ORDER.
     All questions concerning the timeliness, validity, form and eligibility of any exercise of Rights will be determined by the Fund, whose determinations will be final and binding. The Fund, in its sole discretion, may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as it may determine, or reject the purported exercise of any Right. Subscriptions will not be deemed to have been received or accepted until all irregularities have been waived or cured within such time as the Fund determines in its sole discretion. Neither the Fund nor the Subscription Agent will be under any duty to give notification of any defect or irregularity in connection with the submission of Subscription Certificates or incur any liability for failure to give such notification.
Delivery of Stock Certificates
     Certificates representing Shares purchased pursuant to the Primary Subscription will be delivered to subscribers as soon as practicable after the corresponding Rights have been validly exercised and full payment for the Shares has been received and cleared. Certificates representing Shares purchased pursuant to the Over-Subscription Privilege will be delivered to subscribers as soon as practicable after the Expiration Date and after all allocations have been effected. Participants in the Fund’s Automatic Dividend Reinvestment and Voluntary Cash Purchase Plan (the “Plan”) will be issued Rights for these Shares held in their accounts in the Plan. Participants wishing to exercise these Rights must exercise the Rights in accordance with the procedures set forth above in “Method of Exercise of Rights” and “Payment for Shares.” Rights will not be exercised automatically by the Plan. Plan participants exercising their Rights will receive their Primary and Over-Subscription Shares via an uncertificated credit to their existing account. To request a stock certificate, participants in the Plan should check the appropriate box on the Subscription Certificate. These Shares will remain subject to the same investment option as previously selected by the Plan participant.
Foreign Restrictions
     Subscription Certificates will be mailed only to Record Date Shareholders whose addresses are within the United States and Canada (other than an APO or FPO address). Record Date Shareholders whose addresses are outside the United States and Canada or who have an APO or FPO address and who wish to subscribe to the Offer either in part or in full should contact the Subscription Agent by written instruction or recorded telephone conversation no later than three Business Days prior to the Expiration Date. The Fund will determine whether the Offering may be made to any such shareholder. If the Subscription Agent has received no instruction by the third Business Day prior to the Expiration Date or the Fund has determined that the Offering may not be made to a particular shareholder, the Subscription Agent will attempt to sell all of such shareholder’s Rights and remit the net proceeds, if any, to such shareholder. If the Rights can be sold, sales of these Rights will be deemed to have been effected at the weighted average price received by the Subscription Agent on the day the Rights are sold, less any applicable brokerage commissions, taxes and other expenses.

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     Under the securities laws of the Province of Quebec, investors residing in Quebec may, subject to compliance with all applicable regulatory requirements, transfer either the Rights or the Shares to be acquired upon the exercise of these Rights to other subscribers of the Offer, to persons with whom they are related or to persons residing outside of Quebec in a transaction effected on an organized market.
     Under the securities laws of the Province of Ontario, investors residing in Ontario may, subject to compliance with all applicable regulatory requirements, transfer either the Rights or the Shares to be acquired upon the exercise of such Rights: (i) through a dealer registered in Ontario that effects the transaction through the facilities of the NYSE; or (ii) through certain other means as provided under and in compliance with Ontario securities laws.
Federal Income Tax Consequences
     The following is a general summary of the significant federal income tax consequences of the receipt of Rights by a Record Date Shareholder and a subsequent lapse, exercise or sale of such Rights. The discussion also addresses the significant federal income tax consequences to a holder that purchases Rights in a secondary-market transaction ( e.g. , on the NYSE). The discussion is based upon applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), the Treasury Regulations promulgated thereunder and other authorities currently in effect, and does not address state or local tax consequences. Moreover, the discussion assumes that the fair market value of the Rights distributed to all of the Record Date Shareholders will, upon the date of such distribution, be less than 15% of the total fair market value of all of the Shares on such date.
Record Date Shareholders
     For federal income tax purposes, neither the receipt nor the exercise of Rights by a Record Date Shareholder will result in taxable income to such shareholder, and no taxable loss will be realized by a Record Date Shareholder who allows his Rights to expire without exercise. A taxable gain or loss recognized by a Record Date Shareholder upon a sale of a Right will be a capital gain or loss (assuming the Right is held as a capital asset at the time of sale) and will be a short-term capital gain or loss. A Record Date Shareholder’s holding period for a Share acquired upon exercise of a Right (a “New Share”) begins with the date of exercise of the Right. A taxable gain or loss recognized by a Record Date Shareholder upon a sale of a New Share will be a capital gain or loss (assuming the New Share is held as a capital asset at the time of sale) and will be a long-term capital gain or loss if the New Share has been held at the time of sale for more than one year.
     Unless a Record Date Shareholder makes the election described in the following paragraph, his basis for determining gain or loss upon the sale of a Right will be zero and his basis for determining gain or loss upon the sale of a New Share will be equal to the sum of the Subscription Price for the New Share and any servicing fee charged to the shareholder by his broker, bank or trust company. Moreover, unless a Record Date Shareholder makes the election described in the following paragraph, the receipt of a Right and the lapse, sale or exercise thereof will have no effect on the federal income tax basis of those Shares that such shareholder originally owned (“Original Shares”).

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     A Record Date Shareholder may make an election to allocate the federal income tax basis of his Original Shares between such Original Shares and all of the Rights that he receives pursuant to the Offer in proportion to their respective fair market values as of the date of distribution of the Rights. Thus, if such an election is made and the Record Date Shareholder sells or exercises his Rights, the shareholder’s basis in his Original Shares will be reduced by an amount equal to the basis allocated to the Rights. This election is irrevocable and must be made in a statement attached to the shareholder’s federal income tax return for the taxable year in which the Rights are distributed. If an electing Record Date Shareholder exercises his Rights, the basis of his New Shares will be equal to the sum of the Subscription Price for such New Shares (as increased by any servicing fee charged to the shareholder by his broker, bank or trust company) plus the basis allocated to such Rights as described above. Accordingly, Record Date Shareholders should consider the advisability of making the above-described election if they intend to exercise their Rights. However, if an electing Record Date Shareholder does not sell or exercise his Rights, no taxable loss will be realized as a result of the lapse of such Rights and no portion of the shareholder’s basis in his Original Shares will be allocated to the unexercised Rights.
Purchasers of Rights
     For federal income tax purposes, the exercise of Rights by a purchaser who acquires such Rights on the NYSE or in another secondary-market transaction will not result in taxable income to such purchaser, and a taxable loss will be realized by a purchaser who allows his Rights to expire without exercise. Such taxable loss will be a short-term capital loss if the purchaser holds the Rights as capital assets at the time of their expiration. A taxable gain or loss recognized by a purchaser upon a sale of a Right will be a capital gain or loss (assuming the Right is held as a capital asset at the time of sale) and will be a short-term capital gain or loss. A purchaser’s basis for determining gain or loss upon the sale of a New Share acquired through the exercise of a Right will be equal to the sum of the Subscription Price for the New Share plus the purchase price of the Right or Rights that were exercised in order to acquire such New Share (with such Subscription Price and purchase price each being increased by any applicable servicing fees charged to the purchaser by his broker, bank or trust company). A purchaser’s holding period for a New Share acquired upon exercise of a Right begins with the date of exercise of the Right. A taxable gain or loss recognized by a purchaser upon a sale of a New Share will be a capital gain or loss (assuming the New Share is held as a capital asset at the time of sale) and will be a long-term capital gain or loss if the New Share has been held at the time of sale for more than one year.
Employee Plan Considerations
     Rights holders that are employee benefit plans subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or individual retirement accounts (“IRAs”) and other plans, accounts or arrangements that are subject to Section 4975 of the Code (each, a “Benefit Plan,” and collectively, “Benefit Plans”), should be aware that additional contributions of cash in order to exercise Rights may be treated as Benefit Plan contributions and, when taken together with contributions previously made, may subject a Benefit Plan to excise taxes for excess or nondeductible contributions. In the case of Benefit Plans qualified under Section 401(a) of the Code, additional cash contributions could cause the

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maximum contribution limitations of Section 415 of the Code or other qualification rules to be violated. Benefit Plans contemplating making additional cash contributions to exercise Rights should consult with their counsel prior to making such contributions.
     Benefit Plans and other tax exempt entities, including some governmental plans, should also be aware that if they borrow in order to finance their exercise of Rights, or in order to otherwise acquire or hold Shares, they may become subject to the tax on unrelated business taxable income (“UBTI”) under Section 511 of the Code. If any portion of an IRA is used as security for a loan, the portion so used is also treated as distributed to the IRA depositor.
     ERISA contains prudence and diversification requirements and ERISA and the Code contain prohibited transaction rules that may impact the exercise of Rights. The foregoing discussion with respect to Benefit Plans is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and regulations, it is particularly important for Benefit Plans that exercise Rights to consult with their counsel regarding the potential applicability of ERISA, the Code and any other similar laws to such investment.
USE OF PROCEEDS
     The net proceeds of the Offer, assuming all Primary Subscription Shares offered hereby are sold, are estimated to be approximately $[ ], after deducting expenses payable by the Fund estimated at approximately $[ ]. The net proceeds of the Offer, assuming all Secondary Over-Subscription Shares are sold in addition to all Primary Subscription Shares, are estimated to be approximately $[ ], before deducting expenses payable by the Fund estimated to be $[ ]. The Investment Adviser anticipates that investment of the proceeds will be made in accordance with the Fund’s investment objectives and policies as appropriate investment opportunities are identified, which is expected to be substantially completed in approximately [three months]; however, the identification of appropriate investment opportunities pursuant to the Investment Adviser’s investment style or changes in market conditions may cause the investment period to extend as long as [six months]. Pending such investment, the proceeds will he held in [high quality short-term debt securities and instruments].
INVESTMENT OBJECTIVES AND POLICIES
     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. These fundamental policies and the investment limitations described in the SAI under the caption “Investment Restrictions” cannot be changed without the approval of the holders of a majority of the Fund’s outstanding voting securities. Such majority votes require, in each case, the lesser of (i) 67% of the Fund’s applicable shares represented at a meeting at which more than 50% of the Fund’s applicable shares outstanding are represented, whether in person or by proxy, or (ii) more than 50% of the outstanding shares of the applicable class.

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     Under normal market conditions, the Fund will invest at least 80% of the value of its assets in common stock and other securities, including convertible securities, preferred stock, options, and warrants of companies in the telecommunications, media, publishing, and entertainment industries. 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 shareholder approval. The Fund will provide shareholders with notice at least 60 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 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.
     Under normal circumstances, the Fund will invest in securities of issuers located in at least three countries, which may include the United States. 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. For a further discussion of the risks associated with investing in foreign securities and a description of other risks inherent in the Fund’s investment objectives and policies, see “Risk Factors and Special Considerations.”
     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

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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 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.

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     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 no independent limit 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.
     Further information on the investment objectives and policies of the Fund are set forth in the SAI.
Special Investment Methods
      Options . On behalf of the Fund, the Investment Adviser may, subject to guidelines of the Board, 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.

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     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.
     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. See “Investment Objectives and Policies—Investment Practices” in the SAI.
      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 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.
     The Investment Adviser has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act and therefore, is not subject to the registration requirements under the Commodity Exchange Act. Accordingly, the Fund’s investments in derivative instruments are not limited by or subject to regulation under the Commodity Exchange Act or otherwise regulated by the Commodity Futures Trading Commission. Nevertheless, the Fund’s investment restrictions place certain limitations and prohibitions on its ability to purchase or sell commodities or commodity contracts. In addition, investment in futures contracts and related options generally will be limited by the rating agency guidelines applicable to any of the Fund’s outstanding preferred stock.
      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

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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.
      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 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.
See “Risk Factors and Special Considerations—Futures Transactions.”
      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

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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.
     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

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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 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

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generally increases the volatility of returns to the Fund. The Fund currently has two series of preferred stock outstanding: the 6.00% Series B Cumulative Preferred Stock and the Series C Auction Rate Preferred Stock.
     Further information on the investment objectives and policies of the Fund is set forth in the SAI.
      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). The Fund’s investment restrictions are more fully discussed under “Investment Restrictions” in the SAI.
      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, 2010, and 2009, were [ %] and [9.60%], respectively.
RISK FACTORS AND SPECIAL CONSIDERATIONS
     There are a number of risks that an investor should consider in evaluation the Fund. You should read this entire Prospectus and SAI before you decide whether to exercise your Rights. In addition, you should consider the matters set forth below.
Principal Risks Associated with the Fund
Dilution
     If you do not exercise all of your Rights, you may own a smaller proportional interest in the Fund when the Offer is over. In addition, you will experience an immediate dilution of the aggregate net asset value per share of your Shares if you do not participate in the Offer and will experience a reduction in the net asset value per share whether or not you exercise your Rights, if the Subscription Price is below the Fund’s net asset value per Share on the Expiration Date, because:
  the offered Shares are being sold at less than their current net asset value.
  you will indirectly bear the expenses of the Offer.

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  the number of Shares outstanding after the Offer will have increased proportionately more than the increase in the amount of the Fund’s net assets.
     On the other hand, if the Subscription Price is above the Fund’s net asset value per share on the Expiration Date, you may experience an immediate accretion of the aggregate net asset value per share of your Shares even if you do not exercise your Rights and an immediate increase in the net asset value per share of your Shares whether or not you participate in the Offer, because:
  the offered Shares are being sold at more than their current net asset value after deducting the expenses of the Offer.
  the number of Shares outstanding after the Offer will have increased proportionately less than the increase in the amount of the Fund’s net assets.
     Furthermore, if you do not participate in the Over-Subscription Privilege, your percentage ownership may also be diluted. The Fund cannot state precisely the amount of any dilution because it is not known at this time what the net asset value per share will be on the Expiration Date or what proportion of the Rights will be exercised. The impact of the Offer on net asset value per share is shown by the following examples, assuming a $[ ] Subscription Price:
Scenario 1: (assumes net asset value per share is above subscription price) (1)
       
NAV
[ ]  
Subscription Price
[ ]  
Reduction in NAV($) (2)
[ ]  
Reduction in NAV(%)
  [ ]
Scenario 2: (assumes net asset value per share is below subscription price) (1)
     
NAV
[ ]  
Subscription Price
[ ]  
Increase in NAV($) (2)
[ ]  
Increase in NAV(%)
  [ ]
 
(1)   Both examples assume the full Primary Subscription and Secondary Over-Subscription Privilege are exercised. Actual amounts may vary due to rounding.
 
(2)   Assumes $[ ] in estimated offering expenses.

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     If you do not wish to exercise your Rights, you should consider selling them as set forth in this Prospectus. Any cash you receive from selling your Rights should serve as partial compensation for any possible dilution of your interest in the Fund. The Fund cannot give assurance, however, that a market for the Rights will develop or that the Rights will have any marketable value.
Leverage Risk
     The Fund uses financial leverage for investment purposes by issuing preferred stock. The amount of leverage represents approximately [22%] 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, 2010]. 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. Also, if the Fund is utilizing leverage, a decline in net asset value could affect the ability of the Fund to make common stock distribution payments, and such a failure to pay dividends or make distributions could result in the Fund’s ceasing to qualify as a regulated investment company under the Code.
     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.
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

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“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 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 shareholder should take into account the Fund’s investment objectives as well as the shareholder’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

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that will relieve it of any liability for federal income tax to the extent its earnings are distributed to shareholders. 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 [ ], the shares traded at a discount of [ %]. Shareholders desiring liquidity may, subject to applicable securities laws, trade their Fund Shares on the NYSE or other markets on which such shares may trade at the then-current market value, which may differ from the then-current net asset value. Shareholders will incur brokerage or other transaction costs to sell stock.
Lower 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 lower 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

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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 lower 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 lower rated categories is more volatile than that of higher quality securities, and the markets in which such lower 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.
     Lower 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.
     As part of its investment in lower 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.

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     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 lower 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 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.

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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.
     For a further description, see “Investment Objectives and Policies—Investment Practices” in the SAI.
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. For a further description of such investments, see “Investment Objectives and Policies—Investment Practices” in the SAI.
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. Lower 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 lower rated securities and securities of issuers with

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smaller market capitalizations than on higher rated securities and securities of issuers with larger market capitalizations.
Interest Rate Transactions
     The Fund has entered into two interest rate swap transactions with respect to its outstanding Series C Auction Rate Preferred, and may enter into interest rate swap or cap transactions with respect to all or a portion of any future series of Variable Rate Preferred Stock in order to manage the impact on its portfolio of changes in the dividend rate of such stock. The Fund’s 5 year interest rate swap transaction expired on April 1, 2008, and the Fund’s 10 year interest rate swap transaction expires on April 4, 2013. Through these transactions the Fund seeks to obtain the equivalent of a fixed rate for such Variable 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. See “How the Fund Manages Risk—Interest Rate Transactions.”
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.
Loans of Portfolio Securities
     Consistent with applicable regulatory requirements and the Fund’s investment restrictions, the Fund may lend its portfolio securities to securities broker-dealers or financial institutions, provided that such loans are callable at any time by the Fund (subject to notice provisions described in the SAI) and are at all times secured by cash or cash equivalents, which are maintained in a segregated account pursuant to applicable regulations and that are at least equal to the market value, determined daily, of the loaned securities. The advantage of such loans is that the Fund continues to receive the income on the loaned securities while at the same time earning interest on the cash amounts deposited as collateral, which will be invested in short-term obligations. The Fund will not lend its portfolio securities if such loans are not permitted by the laws or regulations of any state in which its shares are qualified for sale. The Fund’s

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loans of portfolio securities will be collateralized in accordance with applicable regulatory requirements.
     For a further description of such loans of portfolio securities, see “Investment Objectives and Policies—Investment Practices—Loans of Portfolio Securities” in the SAI.
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. See “Anti-Takeover Provisions of the Fund’s Governing Documents.”
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. See “Taxation” for a more complete discussion of these and other federal income tax considerations.
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 S&P on its preferred stock. See “Investment Restrictions” in the SAI for a complete list of the fundamental and non-fundamental investment policies of the Fund.
Interest Rate Transactions
     The Fund has entered into two interest rate swap transactions with respect to its outstanding Series C Auction Rate Preferred and may enter into interest rate swap or cap transactions in relation to all or a portion of any future series of Variable Rate Preferred Stock in order to manage the impact on its portfolio of changes in the dividend rate of such stock.

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The Fund’s 5 year interest rate swap transaction expired on April 1, 2008, and the Fund’s 10 year interest rate swap transaction expires on April 4, 2013. Through these transactions, the Fund may, for example, obtain the equivalent of a fixed rate for such Variable 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 Variable 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 Variable 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 Variable 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 Variable 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 Variable 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 Variable 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.

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CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
     This Prospectus and the SAI contain “forward-looking statements.” Forward-looking statements can be identified by the words “may,” “will,” “intend,” “expect,” “estimate,” “continue,” “plan,” “anticipate,” and similar terms and the negative of such terms. By their nature, all forward-looking statements involve risks and uncertainties, and actual results could differ materially from those contemplated by the forward-looking statements. Several factors that could materially affect the Fund’s actual results are the performance of the portfolio of securities the Fund holds, the conditions in the U.S. and international financial and other markets, the price at which the Fund’s Shares will trade in the public markets and other factors discussed in the Fund’s periodic filings with the SEC.
     Actual results could differ materially from those projected or assumed in the forward-looking statements. The Fund’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and are subject to inherent risks and uncertainties, such as those disclosed in the “Risk Factors and Special Considerations “ section of this Prospectus. All forward-looking statements contained or incorporated by reference in this prospectus are made as of the date of this Prospectus. Except for the Fund’s ongoing obligations under the federal securities laws, the Fund does not intend, and it undertakes no obligation, to update any forward-looking statement.
     Currently known risk factors that could cause actual results to differ materially from the Fund’s expectations include, but are not limited to, the factors described in the “Risk Factors and Special Considerations “ section of this Prospectus. You are urged to review carefully that section for a more complete discussion of the risks of an investment in the Fund’s Shares.
MANAGEMENT OF THE FUND
Board of Directors
     The business and affairs of the Fund are managed under the direction of the Fund’s Board (who, with its officers, are described in the SAI). 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 Contract 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
     Gabelli Funds, LLC serves as the Fund’s Investment Adviser pursuant to the Investment Advisory Agreement with the Fund. The Investment Adviser is a New York limited liability company with principal offices located at One Corporate Center, Rye, New York 10580-1422 and is registered under the Investment Advisers Act of 1940, as amended. The Investment Adviser was organized in 1999 and is the successor to Gabelli Fund, Inc., which was organized

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in 1980. As of September 30, 2010, the Investment Adviser acts as a registered investment adviser to 25 management investment companies with aggregate net assets of $16.6 billion. The Investment Adviser, together with the other affiliated investment advisers noted below, had assets under management totaling approximately $30.2 billion as of September 30, 2010. GAMCO Asset Management Inc. (“GAMCO”), an affiliate of the Investment Adviser, acts as investment adviser for individuals, pension trusts, profit sharing trusts and endowments, and as a sub-adviser to management investment companies having aggregate assets of $[12.4 billion] under management as of September 30, 2010. Gabelli Securities, Inc., an affiliate of the Investment Adviser, acts as investment adviser for investment partnerships and entities having aggregate assets of approximately $466 million under management as of September 30, 2010. Teton Advisors, Inc., an affiliate of the Investment Adviser, acts as investment manager to The GAMCO Westwood Funds and separately managed accounts having aggregate assets of approximately $667 million under management as of September 30, 2010.
     The Investment Adviser is a wholly-owned subsidiary of GAMCO Investors, Inc., a New York corporation. Shares of Class A common stock of GAMCO Investors, Inc. is traded on the NYSE under the symbol “GBL.” Mr. Mario J. Gabelli may be deemed a “controlling person” of the Investment Adviser on the basis of his indirect ownership of a majority of GGCP, Inc. (“GGCP”), a private company, which owns a majority of the capital stock of GAMCO Investors, Inc.
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”) 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

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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 shareholders 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, 2010, 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 incentive to utilize such leverage. However, the Investment Adviser has agreed to reduce the management fee on the incremental assets attributable to the preferred stock during the fiscal year if the total return of the net asset value of the common shares 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 waive 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 shareholder’s total return. This fee waiver is voluntary and will remain in effect as long as any preferred stock in a series is outstanding. 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.

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     The Fund’s total return on the net asset value of its common stock is monitored on a monthly basis to assess whether the total return on the net asset value of its common stock exceeds the stated dividend rate or corresponding swap rate of each particular series of outstanding 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 those assets during the fiscal year if it appears probable that the Fund will incur the additional management fee on those assets. For the year ended December 31, 2010, the Fund’s total return on the net asset value of the common stock exceeded the stated dividend rate or corresponding swap rate of all outstanding preferred stock. Thus, management fees were accrued 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 Semi-Annual Report to shareholders for the six months ended June 30, 2010.
     Canadian shareholders 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 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. The SAI contains further information about the Advisory Agreement, including a more complete description of the advisory and expense arrangements, exculpatory and brokerage provisions, as well as information on the brokerage practices of the Fund.

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Portfolio Managers
     Mario J. Gabelli is currently and has been primarily responsible for the day-to-day management of the Fund since its inception. Mr. Gabelli has served as Chairman and Chief Executive Officer of GAMCO Investors, Inc. and its predecessors since 1976. Mr. Gabelli is the Chief Investment Officer — Value Portfolios for the Investment Adviser and GAMCO Asset Management Inc. Mr. Gabelli serves as portfolio manager for several funds in the Gabelli fund family and is a director of several funds in the Gabelli fund family. Because of the diverse nature of Mr. Gabelli’s responsibilities, he will devote less than all of his time to the day-to-day management of the Fund. Mr. Gabelli is also Chief Executive Officer of GGCP, as well as Chairman of the Board of Lynch Interactive Corporation, a multimedia and communication services company.
     Lawrence J. Haverty, Jr., CFA, is the associate portfolio manager of the Fund since 2005. Prior to 2005, Mr. Haverty was a managing director for consumer discretionary research at State Street Research, the Boston-based subsidiary of Metropolitan Life Insurance Company.
     On February 22, 2010, Christopher J. Marangi was added to the investment team of the Fund. Mr. Marangi joined Messrs. Gabelli and Haverty in managing the Fund. Mr. Marangi joined the Investment Adviser as a research analyst in 2003 and currently leads the digital research team covering the global media and telecommunications industries. In addition to currently serving as the associate portfolio manager for the Fund, Mr. Marangi also currently serves as the associate portfolio manager of the Gabelli Value Fund and the Gabelli Asset Fund, each a registered open-end management investment company. Prior to joining the Investment Adviser], Mr. Marangi was an investment banking analyst at J.P. Morgan & Co., after which he was associated with Wellspring Capital Management, a private equity firm.
     The SAI provides additional information about the portfolio managers’ compensation, other accounts managed by the portfolio managers and the portfolio managers’ ownership of securities in the Fund.
Sub-Administrator
     BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”), 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.
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-

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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 such 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.
     Securities and assets for which market quotations are not readily available are fair valued as determined by the Board. Fair valuation methodologies and procedures may include, but are not limited to: analysis and review of available financial and non-financial information about the company; comparisons 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.
     The Fund obtains valuation on the basis of prices provided by one or more pricing services approved by the Board. All other investment assets, including restricted and not readily marketable securities, are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Board.
     In addition, whenever developments in one or more securities markets after the close of the principal markets for one or more portfolio securities and before the time as of which the Fund determines its net asset value would, if such developments had been reflected in such principal markets, likely have had more than a minimal effect on the Fund’s asset value per share, the Fund may fair value such portfolio securities based on available market information as of the time the Fund determines its net asset value.

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PORTFOLIO TRANSACTIONS
     Principal transactions are not entered into with affiliates of the Fund. However, Gabelli & Company, Inc., an affiliate of the Investment Adviser, may execute transactions in the over-the-counter markets on an agency basis and receive a stated commission therefrom. For a more detailed discussion of the Fund’s brokerage allocation practice, see the SAI under “Portfolio Transactions.”
DIVIDENDS AND DISTRIBUTIONS
     The Fund may retain for reinvestment, and pay the resulting federal income taxes on, its net capital gain, if any, although the Fund reserves the authority to distribute its net capital gain in any year. Under the Fund’s current distribution policy, which may be modified at any time by its Board of Directors, the Fund intends to pay, to holders of the Fund’s common stock, a minimum annual distribution of 10% of the average net asset value of the Fund within a calendar year or an amount sufficient to satisfy the minimum distribution requirements of the Code, whichever is greater. The average net asset value of the Fund is based on the average net asset values as of the last day of the four preceding calendar quarters during the year. Distributions of net investment income generally are taxable to shareholders as ordinary income dividends. If, for any calendar year, the total distributions exceed net investment income and net capital gain, the excess will generally be treated as a tax-free return of capital up to the amount of a shareholder’s tax basis in the stock. The amount treated as a tax-free return of capital will reduce a shareholder’s tax basis in the stock, thereby increasing such shareholder’s potential gain or reducing his or her potential loss on the sale of the stock. Any amounts distributed to a shareholder in excess of the basis of the stock will be taxable to the shareholder as capital gain. See “Taxation.”
     In the event the Fund distributes amounts in excess of its net investment income and net capital gain, such distributions will decrease the Fund’s total assets and, therefore, have the likely effect of increasing the Fund’s expense ratio. In addition, in order to make distributions, the Fund might have to sell a portion of its investment portfolio at a time when independent investment judgment might not dictate such action.
     The Fund, along with other registered investment companies advised by the Investment Adviser, has obtained an exemption from Section 19(b) of the 1940 Act and Rule 19b-1 thereunder permitting the Fund to make periodic distributions of long-term capital gains provided that any distribution policy of the Fund with respect to its common stock calls for periodic ( e.g. , quarterly or semi-annually, but in no event more frequently than monthly) distributions in an amount equal to a fixed percentage of the Fund’s average net asset value over a specified period of time or market price per share of common stock at or about the time of distribution or payment of a fixed dollar amount. The exemption also permits the Fund to make distributions with respect to its preferred stock in accordance with such stock’s terms. Common shareholders exercising Rights will not be entitled to receive a distribution under the distribution policy of the Fund with respect to the new Shares issued pursuant to the Offer for the record date of the periodic distribution that is immediately prior to the issuance of such newly issued Shares.

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     If the total distributions required by a periodic pay-out policy exceed the Fund’s net investment income and net capital gain, the excess will be treated as a return of capital. If the Fund’s net investment income (including net short-term capital gains) and net long-term capital gains for any year exceed the amount required to be distributed under a periodic pay-out policy, the Fund generally intends to pay such excess once a year, but may, in its discretion, retain and not distribute net long-term capital gains to the extent of such excess. The Fund reserves the right, but does not currently intend, to retain for reinvestment and pay the resulting U.S. federal income taxes on the excess of its net realized long-term capital gains over its net short-term capital losses, if any. See “Automatic Dividend Reinvestment and Voluntary Cash Purchase Plans.”
AUTOMATIC DIVIDEND REINVESTMENT AND
VOLUNTARY CASH PURCHASE PLANS
Enrollment in the Plan
     It is the policy of 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 shares of common stock 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 stock 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 must submit this request in writing to:
The Gabelli Global Multimedia Trust Inc.
c/o Computershare
P.O. Box 43010
Providence, RI 02940—3010
     Shareholders requesting this cash election must include the shareholder’s name and address as they appear on the share certificate. Shareholders with additional questions regarding the Plan or requesting a copy of the terms of the Plan, may contact Computershare at (800) 336-6983.
     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.

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     The number of shares of common stock distributed to participants in the Plan in lieu of cash dividends is determined in the following manner. Under the Plan, whenever the market price of the Fund’s common stock is equal to or exceeds net asset value at the time shares are valued for purposes of determining the number of shares equivalent to the cash dividends or capital gains distribution, participants are issued shares of common stock valued at the greater of (i) the net asset value as most recently determined or (ii) 95% of the then current market price of the Fund’s common stock. The valuation date is the dividend or distribution payment date or, if that date is not a NYSE trading day, the next trading day. If the net asset value of the common stock at the time of valuation exceeds the market price of the common stock, participants will receive shares from the 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 stock 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 stock exceeds the then current net asset value.
     The automatic reinvestment of dividends and capital gains distributions will not relieve participants of any income tax which may be payable on such distributions. A participant in the Plan will be treated for federal income tax purposes as having received, on a dividend payment date, a dividend or distribution in an amount equal to the cash the participant could have received instead of shares.
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 common 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 pro rata share of the brokerage commissions. Brokerage charges for such purchases are expected to be less than the usual brokerage charge for such transactions. It is suggested that any voluntary cash payments be sent to Computershare, P.O. Box 43010, Providence, RI 02940—3010 such that Computershare receives such payments approximately 10 days before the 1st and 15th of the month. Funds not received at least five days before the investment date shall be held for investment until the next purchase date. A payment may be withdrawn without charge if notice is received by Computershare at least 48 hours before such payment is to be invested.
     Shareholders wishing to liquidate shares held at Computershare must do so in writing or by telephone. Please submit your request to the above mentioned address or telephone number. Include in your request your name, address, and account number. The cost to liquidate shares is $2.50 per transaction as well as the brokerage commission incurred. Brokerage charges are expected to be less than the usual brokerage charge for such transactions.

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     For more information regarding the Automatic Dividend Reinvestment Plan and Voluntary Cash Purchase Plan, brochures are 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 90 days before the record date for such dividend or distribution. The Plan also may be amended or terminated by Computershare on at least 90 days written notice to participants in the Plan.
TAXATION
     The following discussion is a brief summary of certain U.S. federal income tax considerations affecting the Fund and its shareholders. This discussion reflects applicable tax laws of the United States as of the date of this Prospectus, which tax laws may be changed or subject to new interpretations by the courts or the Internal Revenue Service (the “IRS”) retroactively or prospectively. No attempt is made to present a detailed explanation of all U.S. federal, state, local and foreign tax concerns affecting the Fund and its shareholders (including shareholders owning a large position in the Fund), and the discussions set forth herein do not constitute tax advice. Investors are urged to consult their own tax advisers to determine the tax consequences to them of investing in the Fund.
Taxation of the Fund
     The Fund has elected to be treated and has qualified, and intends to continue to qualify, as a regulated investment company under Subchapter M of the Code. Accordingly, the Fund must, among other things, meet the following requirements regarding the source of its income and the diversification of its assets:
(i)   The Fund must derive in each taxable year at least 90% of its gross income from the following sources, which are referred to herein as “Qualifying Income”: (a) dividends, interest (including tax-exempt interest), payments with respect to certain securities loans, and gains from the sale or other disposition of stock, securities or foreign currencies, or other income (including but not limited to gain from options, futures and forward contracts) derived with respect to its business of investing in such stock, securities or foreign currencies; and (b) interests in publicly traded partnerships that are treated as partnerships for U.S. federal income tax purposes and that derive less than 90% of their gross income from the items described in (a) above (each a “Qualified Publicly Traded Partnership”).
 
(ii)   The Fund must diversify its holdings so that, at the end of each quarter of each taxable year (a) at least 50% of the market value of the Fund’s total assets is represented by cash and cash items, U.S. government securities, the securities of other regulated investment companies 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 Fund’s total assets and not more than 10% of the outstanding voting securities of such issuer and (b) not more than 25% of the market value of the Fund’s total assets is invested in the securities (other than

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    U.S. government securities and the securities of other regulated investment companies) of (I) any one issuer, (II) any two or more issuers of which the Fund holds 20% or more of the voting stock and that are determined to be engaged in the same business or similar or related trades or businesses or (III) any one or more Qualified Publicly Traded Partnerships.
     As a regulated investment company, the Fund generally will not be subject to U.S. federal income tax on income and gains that the Fund distributes to its shareholders, provided that it distributes each taxable year at least the sum of (i) 90% of the Fund’s investment company taxable income (which includes, among other items, dividends, interest and the excess of any net short-term capital gain over net long-term capital loss and other taxable income, other than any net long-term capital gain, reduced by deductible expenses) determined without regard to the deduction for dividends paid and (ii) 90% of the Fund’s net tax-exempt interest (the excess of its gross tax-exempt interest over certain disallowed deductions). The Fund intends to distribute substantially all of such income at least annually. The Fund will be subject to income tax at regular corporation rates on any taxable income or gains that it does not distribute to its shareholders.
     The Code imposes a 4% nondeductible excise tax on the Fund to the extent the Fund does not distribute by the end of any calendar year an amount at least equal to the sum of (i) 98% of its ordinary income (not taking into account any capital gain or loss) for the calendar year and (ii) 98.2% of its capital gain in excess of its capital loss (adjusted for certain ordinary losses) for a one-year period generally ending on October 31 of the calendar year (unless an election is made to use the Fund’s fiscal year). In addition, the minimum amounts that must be distributed in any year to avoid the excise tax will be increased or decreased to reflect any under-distribution or over-distribution, as the case may be, from the previous year. While the Fund intends to distribute any income and capital gain in the manner necessary to minimize imposition of the 4% excise tax, there can be no assurance that sufficient amounts of the Fund’s taxable income and capital gain will be distributed to entirely avoid the imposition of the excise tax. In that event, the Fund will be liable for the excise tax only on the amount by which it does not meet the foregoing distribution requirement.
     If for any taxable year the Fund does not qualify as a regulated investment company, all of its taxable income (including its net capital gain) will be subject to tax at regular corporate rates without any deduction for distributions to shareholders.
Taxation of Shareholders
     Distributions paid to you by the Fund from its net realized long-term capital gains, if any, that the Fund reports as capital gains dividends (“capital gain dividends”) are taxable as long-term capital gains, regardless of how long you have held your shares. All other dividends paid to you by the Fund (including dividends from short-term capital gains) from its current or accumulated earnings and profits (“ordinary income dividends”) are generally subject to tax as ordinary income.
     Special rules apply, however, to ordinary income dividends paid to individuals with respect to taxable years beginning on or before December 31, 2012. If you are an individual, any

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such ordinary income dividend that you receive from the Fund generally will be eligible for taxation at the Federal rates applicable to long-term capital gains (currently at a maximum rate of 15%) to the extent that (i) the ordinary income dividend is attributable to “qualified dividend income” ( i.e. , generally dividends paid by U.S. corporations and certain foreign corporations) received by the Fund, (ii) the Fund satisfies certain holding period and other requirements with respect to the stock on which such qualified dividend income was paid and (iii) you satisfy certain holding period and other requirements with respect to your shares. There can be no assurance as to what portion of the Fund’s ordinary income dividends will constitute qualified dividend income.
     Any distributions you receive that are in excess of the Fund’s current or accumulated earnings and profits will be treated as a tax-free return of capital to the extent of your adjusted tax basis in your shares, and thereafter as capital gain from the sale of shares. The amount of any Fund distribution that is treated as a tax-free return of capital will reduce your adjusted tax basis in your shares, thereby increasing your potential gain or reducing your potential loss on any subsequent sale or other disposition of your shares.
     Dividends and other taxable distributions are taxable to you even if they are reinvested in additional common shares of the Fund. Dividends and other distributions paid by the Fund are generally treated under the Code as received by you at the time the dividend or distribution is made. If, however, the Fund pays you a dividend in January that was declared in the previous October, November or December and you were the shareholder of record on a specified date in one of such months, then such dividend will be treated for tax purposes as being paid by the Fund and received by you on December 31 of the year in which the dividend was declared.
     The Fund will send you information after the end of each year setting forth the amount and tax status of any distributions paid to you by the Fund.
     The sale or other disposition of shares of the Fund will generally result in capital gain or loss to you, and will be long-term capital gain or loss if you have held such shares for more than one year at the time of sale. Any loss upon the sale or exchange of shares held for six months or less will be treated as long-term capital loss to the extent of any capital gain dividends received (including amounts credited as an undistributed capital gain dividend) by you with respect to such shares. Any loss you realize on a sale or exchange of shares will be disallowed if you acquire other shares (whether through the automatic reinvestment of dividends or otherwise) within a 61-day period beginning 30 days before and ending 30 days after your sale or exchange of the shares. In such case, your tax basis in the shares acquired will be adjusted to reflect the disallowed loss.
     The Fund may be required to withhold, for U.S. federal backup withholding tax purposes, a portion of the dividends, distributions and redemption proceeds payable to shareholders who fail to provide the Fund (or its agent) with their correct taxpayer identification number (in the case of individuals, generally, their social security number) or to make required certifications, or who have been notified by the IRS that they are subject to backup withholding. Certain shareholders are exempt from backup withholding. Backup withholding is not an additional tax and any amount withheld may be refunded or credited against your U.S. federal income tax liability, if any, provided that you furnish the required information to the IRS.

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DESCRIPTION OF CAPITAL STOCK
      The following is a brief description of the terms of the Fund’s common stock and preferred stock. This description does not purport to be complete and is qualified by reference to the Fund’s Governing Documents. For complete terms of the common stock and preferred stock, please refer to the actual terms of such series, which are set forth in the Governing Documents.
Common Stock
     The Fund is currently authorized to issue two hundred million (200,000,000) shares, all of which were initially classified and designated as common stock, par value $0.001 per share. The Board has the authority to classify and reclassify any authorized but unissued shares of stock from time to time. Of the Fund’s two hundred million (200,000,000) shares initially classified and designated as common stock, [three million two hundred and fifty thousand (3,250,000)] have been reclassified as preferred stock. Each share within a particular class or series thereof has equal voting, dividend, distribution and liquidation rights. There are no conversion or preemptive rights in connection with any outstanding stock of the Fund. The common stock of the Fund is not redeemable and has no preemptive, conversion or cumulative voting rights. In addition, shares of the Fund’s common stock are fully paid and non-assessable. In the event of liquidation, each share of Fund common stock is entitled to its proportion of the Fund’s assets after payment of debts and expenses and the amounts payable to holders of the Fund’s preferred stock ranking senior to the shares of common stock of the Fund as described below.
     The common stock of the Fund is listed on the NYSE under the symbol “GGT” and began trading November 14, 1994. The average weekly trading volume of the common stock on the NYSE during the period from January 1, 2010 through December 31, 2010 was [24,508] shares. Shares of closed-end investment companies often trade on an exchange at prices lower than net asset value. The Fund’s shares of common stock have traded in the market at both premiums to and discounts from net asset value.
     The following table sets forth for the quarters indicated the high and low closing prices on the NYSE per share of the Fund’s common stock and the net asset value and the premium or discount from net asset value at which the common stock was trading, expressed as a percentage of net asset value, at each of the high and low closing prices provided.
                                                 
                                    Premium (Discount)  
    Market Price     Net Asset Value     as % of NAV  
Period   High     Low     High     Low     High     Low  
Fiscal Year 2008
                                               
Q1
  $ 12.64     $ 9.82     $ 14.19     $ 11.19       (10.923 )%     (12.243 )%
Q2
  $ 11.21     $ 9.21     $ 12.87     $ 9.21       (12.898 )%     (13.845 )%
Q3
  $ 9.56     $ 7.25     $ 10.54     $ 8.70       (9.298 )%     (16.667 )%
Q4
  $ 6.97     $ 3.08     $ 8.73     $ 4.14       (20.160 )%     (25.604 )%
Fiscal Year 2009
                                               
Q1
  $ 4.74     $ 2.51     $ 5.83     $ 3.50       (18.696 )%     (28.286 )%
Q2
  $ 4.76     $ 3.43     $ 6.16     $ 4.58       (22.727 )%     (25.109 )%
Q3
  $ 6.27     $ 4.226     $ 7.42     $ 5.41       (15.499 )%     (21.885 )%
Q4
  $ 6.6301     $ 5.73     $ 7.74     $ 6.99       (14.339 )%     (18.026 )%

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                                    Premium (Discount)  
    Market Price     Net Asset Value     as % of NAV  
Period   High     Low     High     Low     High     Low  
Fiscal Year 2010
                                               
Q1
  $ 7.52     $ 6.20     $ 8.39     $ 7.14       (10.369 )%     (13.165 )%
Q2
  $ 8.25     $ 6.62     $ 9.07     $ 7.23       (9.041 )%     (8.437 )%
Q3
  $ 7.70     $ 6.39     $ 8.39     $ 7.26       (8.224 )%     (11.983 )%
Q4
  $ 8.43     $ 7.59     $ 9.28     $ 8.33       (9.159 )%     (8.884 )%
Repurchase of Common Stock
     The Fund is a closed-end, non-diversified, management investment company and, as such, its shareholders do not, and will not, have the right to redeem their stock. The Fund, however, may repurchase its common stock from time to time as and when it deems such a repurchase advisable. The Fund’s Board has determined that the repurchase of shares of common stock in the open market may be made, from time to time, when such shares are trading at a discount of 5% (or such other percentage as the Board may determine from time to time) or more from net asset value. Pursuant to this authorization the Fund has repurchased and retired in the open market 1,497,033 shares through [December 31, 2010.
     Pursuant to the 1940 Act, the Fund may repurchase its stock on a securities exchange (provided that the Fund has informed its stockholders within the preceding six months of its intention to repurchase such stock), or as otherwise permitted in accordance with Rule 23c-1 under the 1940 Act. Under Rule 23c-1, certain conditions must be met for such repurchases of its stock regarding, among other things, distribution of net income for the preceding fiscal year, asset coverage with respect to the Fund’s senior debt and equity securities, identity of the sellers, price paid, brokerage commissions, prior notice to stockholders of an intention to purchase stock and purchasing in a manner and on a basis which does not discriminate unfairly against the other stockholders through their interest in the Fund. In addition, Rule 23c-1 requires the Fund to file notices of such purchase with the SEC. Any repurchase of common stock by the Fund will also be subject to Maryland corporate law, which generally requires that immediately following such repurchase, the total assets of the Fund must be equal to or greater than the sum of the Fund’s total liabilities plus the aggregate liquidation preference of its outstanding preferred stock.
     When the Fund repurchases its common stock for a price below its net asset value, the net asset value of the common stock that remains outstanding will be enhanced. This does not, however, necessarily mean that the market price of the Fund’s remaining outstanding common stock will be affected, either positively or negatively. Further, interest on any borrowings made to finance the repurchase of common stock will reduce the net income of the Fund.
Preferred Stock
     Currently, [ ] shares of the Fund’s stock have been classified by the Board as preferred stock, par value $0.001 per share. The Fund’s Board may reclassify authorized and unissued shares of the Fund, previously classified as common stock, as preferred stock prior to the completion of any offering. The terms of each series of preferred stock may be fixed by the Board and may materially limit and/or qualify the rights of the holders of the Fund’s common stock. As of [December 31, 2010], the Fund had outstanding [791,014] shares of Series B Preferred and [600] shares of Series C Auction Rate Preferred.
     Dividends on the Series B Preferred accumulate at an annual rate of 6.00% of the liquidation preference of $25 per share, are cumulative from the date of original issuance thereof, and are payable quarterly on March 26, June 26, September 26 and December 26 of each year.

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The Fund’s outstanding Series B Preferred is redeemable at the liquidation preference plus accumulated but unpaid dividends (whether or not earned or declared) at the option of the Fund. The Series B Preferred is listed and traded on the NYSE under the symbol “GGT PrB.”
     Dividends on the Series C Auction Rate Preferred accumulate at a variable rate, usually set at a weekly auction. The liquidation preference of the Series C Auction Rate Preferred is $25,000 per share. The Fund generally may redeem the outstanding Series C Auction Rate Preferred, in whole or in part, at any time other than during a non-call period. The Series C Auction Rate Preferred is not traded on any public exchange.
     If the Fund issues any additional series of preferred stock, it will pay dividends to the holders at either a fixed rate or a rate that will be reset frequently based on short-term interest rates, as described in the Prospectus Supplement accompanying each preferred stock offering.
     Upon a liquidation, dissolution or winding up of the affairs of the Fund (whether voluntary or involuntary), holders of the Fund’s preferred stock will be entitled to receive out of the assets of the Fund available for distribution to shareholders (after payment of claims of the Fund’s creditors but before any distributions with respect to the Fund’s common stock or any other class of capital stock of the Fund ranking junior to the preferred stock as to liquidation payments) an amount per share equal to such share’s liquidation preference plus any accumulated but unpaid distributions (whether or not earned or declared, excluding interest thereon) to the date of distribution, and such shareholders shall be entitled to no further participation in any distribution or payment in connection with such liquidation. Each series of preferred stock ranks on a parity with any other series of preferred stock of the Fund as to the payment of distributions and the distribution of assets upon liquidation, and is junior to the Fund’s obligations with respect to any outstanding senior securities representing debt. The preferred stock carries one vote per share on all matters on which such shares are entitled to vote. The preferred shares are fully paid, non-assessable and have no preemptive, exchange or conversion rights. The Board may by resolution classify or reclassify any authorized but unissued shares of stock of the Fund from time to time by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions or terms or conditions of redemption. The Fund will not issue any class of stock senior to the preferred stock.
     The following table shows: (i) the classes of stock authorized, (ii) the number of shares authorized in each class, and (iii) the number of shares outstanding in each class as of [December 31, 2010].
                 
Title Of Class   Amount Authorized   Amount Outstanding
Common Stock
    196,750,000       13,575,668  
 
               
Series A Preferred
    2,000,000       0  
 
               
Series B Preferred
    1,000,000       791,014  
 
               
Series C Auction Rate
    1,000       600  

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Preferred
     As of [ ], the Fund does not hold any shares of stock for its account.
Restrictions on Dividends and Other Distributions for the Preferred Stock
     So long as any preferred stock is outstanding, the Fund may not pay any dividend or distribution (other than a dividend or distribution paid in common stock or in options, warrants or rights to subscribe for or purchase common stock) in respect of the common stock or call for redemption, redeem, purchase or otherwise acquire for consideration any common stock (except by conversion into or exchange for shares of the Fund ranking junior to the preferred stock as to the payment of dividends or distributions and the distribution of assets upon liquidation), unless:
  the Fund has declared and paid (or provided to the relevant dividend paying agent) all cumulative distributions on the Fund’s outstanding preferred stock due on or prior to the date of such common stock dividend or distribution;
 
  the Fund has redeemed the full number of shares of preferred stock to be redeemed pursuant to any mandatory redemption provision in the Fund’s Governing Documents; and
 
  after making the distribution, the Fund meets applicable asset coverage requirements.
     No full distribution will be declared or made on any series of preferred stock for any dividend period, or part thereof, unless full cumulative distributions due through the most recent dividend payment dates therefor for all outstanding series of preferred stock of the Fund ranking on a parity with such series as to distributions have been or contemporaneously are declared and made. If full cumulative distributions due have not been made on all outstanding preferred stock of the Fund ranking on a parity with such series of preferred stock as to the payment of distributions, any distributions being paid on the preferred stock will be paid as nearly pro rata as possible in proportion to the respective amounts of distributions accumulated but unmade on each such series of preferred stock on the relevant dividend payment date. The Fund’s obligation to make distributions on the preferred stock will be subordinate to its obligations to pay interest and principal, when due, on any senior securities representing debt.
Effects of Leverage
     The holders of the Fund’s preferred shares are entitled to the applicable dividend rate as and when declared. Any return earned in excess of the stated dividend rate would directly benefit holders of shares; however, any shortfall from the stated rate would negatively affect holders of shares. The following table is designed to assist you in understanding the effects of the existing leverage on your investment in the Fund. The table assumes that [791,014] shares of Series B Preferred are issued and outstanding, [600] shares of Series C Auction Rate Preferred are issued and outstanding. The Series B Preferred have an annual dividend rate of $1.50. Dividend rates for the Series C Preferred Shares are cumulative at a rate that may be reset every

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seven days based on the results of an auction. The assumed returns appearing in the table are hypothetical and actual returns may be greater or less than those appearing in the table.
                                         
Assumed return on portfolio (net of expenses)
    (10.00 )%     (5.00 )%     0.00 %     5.00 %     10.00 %
 
                                       
Corresponding return to Common Stockholder
    [ ] %     [ ] %     [ ] %     [ ] %     [ ] %
     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 preferred shares may exceed the income from the portfolio securities purchased with the proceeds from the issuance of preferred shares;
 
  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 shares);
 
  a decline in net asset value could affect the ability of the Fund to make dividend payments on Shares of common stock;
 
  a failure to pay dividends or make distributions on its Shares of common stock could result in the Fund’s ceasing to qualify as a regulated investment company under the Code; and
 
  if the asset coverage for the Fund’s preferred shares declines to less than 200% (as a result of market fluctuations or otherwise), the Fund may be required to sell a portion of its investments when it may be disadvantageous to do so.
     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 preferred shares.
     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

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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.
Voting Rights
     Except as otherwise stated in this Prospectus, specified in the Fund’s Charter or resolved by the Board or as otherwise required by applicable law, holders of preferred stock shall be entitled to one vote per share held on each matter submitted to a vote of the shareholders of the Fund and will vote together with holders of common stock and of any other preferred stock then outstanding as a single class.
     In connection with the election of the Fund’s Directors, holders of the outstanding shares of preferred stock, voting together as a single class, will be entitled at all times to elect two of the Fund’s Directors, and the remaining Directors will be elected by holders of common stock and holders of preferred stock, voting together as a single class. In addition, if: (i) at any time dividends and distributions on outstanding shares of preferred stock are unpaid in an amount equal to at least two full years’ dividends and distributions thereon and sufficient cash or specified securities have not been deposited with the applicable paying agent for the payment of such accumulated dividends and distributions, or (ii) at any time holders of any other series of preferred stock are entitled to elect a majority of the Directors of the Fund under the 1940 Act, or the applicable Articles Supplementary creating such shares, then the number of Directors constituting the Board automatically will be increased by the smallest number that, when added to the two Directors elected exclusively by the holders of preferred stock as described above, would then constitute a simple majority of the Board as so increased by such smallest number. Such additional Directors will be elected by the holders of the outstanding shares of preferred stock, voting together as a single class, at a special meeting of shareholders which will be called as soon as practicable and will be held not less than 10 nor more than 20 days after the mailing date of the meeting notice. If the Fund fails to send such meeting notice or to call such a special meeting, the meeting may be called by any preferred shareholder on like notice. The terms of office of the persons who are Directors at the time of that election will continue. If the Fund thereafter pays, or declares and sets apart for payment in full, all dividends and distributions payable on all outstanding shares of preferred stock for all past dividend periods, or the holders of other series of preferred stock are no longer entitled to elect such additional Directors, the additional voting rights of the holders of the preferred stock as described above will cease, and the terms of office of all of the additional Directors elected by the holders of the preferred stock (but not of the Directors with respect to whose election the holders of common stock were entitled to vote or the two Directors the holders of preferred stock have the right to elect as a separate class in any event) will terminate at the earliest time permitted by law.
     So long as shares of preferred stock are outstanding, the Fund will not, without the affirmative vote of the holders of a majority (as defined in the 1940 Act) of the shares of preferred stock outstanding at the time, voting separately as one class, amend, alter or repeal the provisions of the Fund’s Charter whether by merger, consolidation or otherwise, so as to materially adversely affect any of the rights, preferences or powers expressly set forth in the

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Charter with respect to such shares of preferred stock, unless the Fund obtains written confirmation from the rating agency then rating the preferred stock that such amendment, alteration or repeal would not impair the rating then assigned by such rating agency to the preferred stock, in which case the vote or consent of the holders of the preferred stock is not required. Also, to the extent permitted under the 1940 Act, in the event shares of more than one series of preferred stock are outstanding, the Fund will not approve any of the actions set forth in the preceding sentence which materially adversely affect the rights, preferences or powers expressly set forth in the Charter with respect to such shares of a series of preferred stock differently than those of a holder of shares of any other series of preferred stock without the affirmative vote of the holders of at least a majority of the shares of preferred stock of each series materially adversely affected and outstanding at such time (each such materially adversely affected series voting separately as a class to the extent its rights are affected differently). For purposes of this paragraph, no matter shall be deemed to adversely affect any right, preference or power unless such matter (i) adversely alters or abolishes any preferential right of such series; (ii) creates, adversely alters or abolishes any right in respect of redemption of such series; or (iii) creates or adversely alters (other than to abolish) any restriction on transfer applicable to such series.
     Unless a higher percentage is provided under the Charter or Maryland law, the affirmative vote of a majority of the votes entitled to be cast by holders of outstanding shares of the preferred stock, voting as a separate class, will be required to approve any plan of reorganization adversely affecting the preferred stock. The affirmative vote of the holders of 66 2/3% of the outstanding voting shares of the Fund, and the vote of a majority (as defined in the 1940 Act) of the holders of preferred shares, voting as a single class, is required to authorize the conversion of the Fund from a closed-end to an open-end investment company. Further, unless a higher percentage is provided for under the Charter, the affirmative vote of a majority (as defined in the 1940 Act) of the votes entitled to be cast by holders of outstanding shares of the Fund’s preferred stock, voting together as a single class, will be required to approve any action requiring a vote of security holders under Section 13(a) of the 1940 Act (other than a conversion of the Fund from a closed-end to an open-end investment company), including, among other things, changes in the Fund’s investment objectives or changes in the investment restrictions described as fundamental policies under “Investment Objectives and Policies” in this Prospectus and the SAI, “How the Fund Manages Risk—Investment Restrictions” in this Prospectus and “Investment Restrictions” in the SAI.
     For purposes of this paragraph, except as otherwise required under the 1940 Act, the “vote of the holders of a majority of the outstanding shares of preferred stock” means, in accordance with Section 2(a)(42) of the 1940 Act, the vote, at the annual or a special meeting of the shareholders of the Fund duly called (i) of 66 2/3% or more of the shares of preferred stock present at such meeting, if the holders of more than 50% of the outstanding shares of preferred stock are present or represented by proxy, or (ii) more than 50% of the outstanding shares of preferred stock, whichever is less. The class vote of holders of preferred stock described above in each case will be in addition to a separate vote of the requisite percentage of common stock, and any other preferred stock, voting together as a single class, that may be necessary to authorize the action in question.

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     The calculation of the elements and definitions of certain terms of the rating agency guidelines may be modified by action of the Board without further action by the shareholders if the Board determines that such modification is necessary to prevent a reduction in rating of the shares of preferred stock by Moody’s and/or S&P (or such other rating agency then rating the preferred stock at the request of the Fund), as the case may be, or is in the best interest of the holders of common stock and is not adverse to the holders of preferred stock in view of advice to the Fund by the relevant rating agencies that such modification would not adversely affect its then-current rating of the preferred stock.
     The foregoing voting provisions will not apply to any series of preferred stock if, at or prior to the time when the act with respect to which such vote otherwise would be required will be effected, such stock will have been redeemed or called for redemption and sufficient cash or cash equivalents provided to the applicable paying agent to effect such redemption. The holders of preferred stock will have no preemptive rights or rights to cumulative voting.
ANTI-TAKEOVER PROVISIONS OF THE FUND’S GOVERNING DOCUMENTS
     The Fund presently has provisions in its Governing Documents that could have the effect of limiting:
  the ability of other entities or persons to acquire control of the Fund’s Board;
 
  the Fund’s freedom to engage in certain transactions; or
 
  the ability of the Fund’s Directors or stockholders to amend the Governing Documents or effectuate changes in the Fund’s management.
     These provisions of the Governing Documents of the Fund may be regarded as “anti-takeover” provisions. The Board is divided into three classes, each having a term of three years. Each year the term of one class of Directors will expire. Accordingly, only those Directors in one class may be changed in any one year, and it would require two years to change a majority of the Board. The affirmative vote of a majority of the shares present at a meeting of stockholders duly called and at which a quorum is present is required to elect a Director. A classified Board may have the effect of maintaining the continuity of management and, thus, make it more difficult for the stockholders of the Fund to change the majority of Directors. See “Management of the Fund” in the SAI. A Director of the Fund may be removed only for cause by a vote of a majority of the votes entitled to be cast for the election of Directors of the Fund. In addition, the affirmative vote of the holders of 66 2/3% of the outstanding voting shares of the Fund, and the vote of a majority (as defined in the 1940 Act) of the holders of preferred shares, voting as a single class, is required to authorize the conversion of the Fund from a closed-end to an open-end investment company, or generally to authorize any of the following transactions:
  merger or consolidation of the Fund with or into any other corporation;
 
  issuance of any securities of the Fund to any person or entity for cash;

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  sale, lease or exchange of all or any substantial part of the assets of the Fund to any entity or person (except assets having an aggregate fair market value of less than $1,000,000); or
 
  sale, lease or exchange to the Fund, in exchange for securities of the Fund, of any assets of any entity or person (except assets having an aggregate fair market value of less than $1,000,000);
     if such corporation, person or entity is directly, or indirectly through affiliates, the beneficial owner of more than 5% of the outstanding shares of the Fund. However, such vote would not be required when, under certain circumstances, the Board approves the transaction or when each class of voting securities of the corporation or entity that is the other party to any of the above-listed transactions is (directly or indirectly) majority owned by the Fund.
     The Fund’s Bylaws provide that the affirmative vote of two-thirds of the entire Board of Directors shall be required to approve or declare advisable:
          (1) Any amendment to the Charter to make the Fund’s common stock a “redeemable security” or to convert the Fund, whether by merger or otherwise, from a “closed-end company” to an “open-end company” (as defined in the 1940 Act);
          (2) The liquidation or dissolution of the Fund and any amendment to the Charter to effect any such liquidation or dissolution; or
          (3) Any merger, consolidation, share exchange or sale or exchange of all or substantially all of the assets of the Fund that Maryland law requires be approved by the stockholders of the Fund.
     Further, unless a higher percentage is provided for under the Charter, the affirmative vote of a majority (as defined in the 1940 Act) of the votes entitled to be cast by holders of outstanding shares of the Fund’s preferred stock, voting as a separate class, will be required to approve any plan of reorganization adversely affecting such stock or any action requiring a vote of security holders under Section 13(a) of the 1940 Act, including, among other things, open-ending the Fund and changing the Fund’s investment objectives or changing the investment restrictions described as fundamental policies under “Investment Restrictions” in the SAI.
     Maryland corporations that are subject to the Securities Exchange Act of 1934 (the “1934 Act”) and have at least three outside directors, such as the Fund, may by board resolution elect to become subject to certain corporate governance provisions set forth in the Maryland General Corporation Law, even if such provisions are inconsistent with the corporation’s charter and bylaws. Accordingly, notwithstanding its Governing Documents, under Maryland law, the Fund’s Board may elect by resolution to, among other things:
  require that special meetings of stockholders be called only at the request of stockholders entitled to cast at least a majority of the votes entitled to be cast at such meeting;
 
  provide that the number of Directors shall be fixed only the Board;

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  provide that Directors are subject to removal only by the vote of the stockholders entitled to cast two-thirds of the votes entitled to be cast generally in the election of Directors; and
 
  vest in the Board the sole power to fill any vacancies on the Board, with any Director so elected to serve for the balance of the unexpired term rather than only until the next annual meeting of stockholders.
     The Governing Documents of the Fund presently: (i) require holders of not less than a majority of the votes entitled to be cast to call a special meeting of stockholders; and (ii) provide that the Board shall fix the number of Fund Directors. On November 22, 2010, in accordance with Maryland law, the Fund’s Board elected by resolution and approved Articles Supplementary to vest in the Board the sole power to fill any vacancies on the Board, with any Director so elected to serve for the full term of the directorship in which the vacancy occurred and until his or her successor is duly elected and qualifies.
     Under the Maryland General Corporation Law, if the directors have been divided into classes, unless the charter provides otherwise (which the Charter does not), a director may be removed only for cause by the affirmative vote of a majority of all the votes entitled to be cast generally for the election of directors. The Board could elect in the future to be subject to the provision of Maryland law that would increase the vote required to remove a Director to two-thirds of all the votes entitled to be cast.
     The Fund’s Bylaws provide that, with respect to an annual meeting of stockholders, nominations or persons for election to the Board of Directors and the proposal of business to be considered by stockholders may be made only (1) by or at the direction of the Board of Directors or (2) by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice procedures of the Bylaws. With respect to special meetings of stockholders, only the business specified in the Fund’s notice of the meeting may be brought before the meeting. Nominations of persons for election to the Board of Directors at a special meeting may be made only (1) by or at the direction of the Board of Directors or (2) provided that a special meeting has been called for the purpose of electing directors, by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice provisions of the Bylaws.
     The Fund’s Bylaws provide that special meetings of stockholders may be called by the Board of Directors and certain of the Fund’s officers. Additionally, the Fund’s Bylaws provide that, subject to the satisfaction of certain procedural and informational requirements by the stockholders requesting the meeting, a special meeting of stockholders will be called by the secretary of the Fund upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast at such meeting.
     The provisions of the Governing Documents and Maryland law described above could have the effect of depriving the owners of stock in the Fund of opportunities to sell their shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control of the Fund in a tender offer or similar transaction. The overall effect of these provisions is to render more difficult the accomplishment of a merger or the assumption of control by a principal stockholder.

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     The Governing Documents of the Fund are on file with the SEC.
CLOSED-END FUND STRUCTURE
     The Fund is a non-diversified, closed-end management investment company (commonly referred to as a closed-end fund). Closed-end funds differ from open-end funds (which are generally referred to as mutual funds) in that closed-end funds generally list their shares for trading on a stock exchange and do not redeem their shares at the request of the shareholder. This means that if you wish to sell your shares of a closed-end fund you must trade them on the market like any other stock at the prevailing market price at that time. In a mutual fund, if the shareholder wishes to sell shares of the Fund, the mutual fund will redeem or buy back the shares at “net asset value.” Also, mutual funds generally offer new shares on a continuous basis to new investors, and closed-end funds generally do not. The continuous inflows and outflows of assets in a mutual fund can make it difficult to manage the Fund’s investments. By comparison, closed-end funds are generally able to stay more fully invested in securities that are consistent with their investment objective, to have greater flexibility to make certain types of investments and to use certain investment strategies such as financial leverage and investments in illiquid securities.
     Shares of closed-end funds often trade at a discount to their net asset value. Because of this possibility and the recognition that any such discount may not be in the interest of shareholders, the Fund’s Board might consider from time to time engaging in open-market repurchases, tender offers for shares or other programs intended to reduce a discount. In accordance with determinations made by the Board, the Fund may repurchase its common stock from time to time when it deems such a repurchase advisable. The Fund’s Board has determined that the repurchase of the Fund’s shares of common stock in the open market may be made, from time to time, when such shares are trading at a discount of 5% (or such other percentage as the Board may determine from time to time) or more from net asset value. No guarantee or assurance can be made that any of these actions will be undertaken. Nor is there any guarantee or assurance that such actions, if undertaken, would result in the shares trading at a price equal or close to net asset value per share. The Board might also consider converting the Fund to an open-end mutual fund, which would also require a supermajority vote of the shareholders of the Fund and a separate vote of any outstanding preferred shares. We cannot assure you that the Fund’s common shares will not trade at a discount.
LEGAL PROCEEDINGS
     [On April 24, 2008, the Investment Adviser entered into a settlement with the SEC to resolve an inquiry regarding prior frequent trading activity in shares of the GAMCO Global Growth Fund (the “Global Growth Fund”) by one investor who was banned from the Global Growth Fund in August 2002. In an administrative order that was entered in connection with the settlement, the SEC found that the Investment Adviser had willfully violated Section 206(2) of the Investment Advisers Act of 1940, Section 17(d) of the 1940 Act and Rule 17d-1 thereunder, and had willfully aided and abetted and caused violations of Section 12(d)(1)(B)(i) of the 1940 Act. Under the terms of the settlement, the Investment Adviser, while neither admitting nor denying the SEC’s findings and allegations, paid $16 million (which included a $5 million civil monetary penalty), approximately $12.8 million of which is in the process of being paid to

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shareholders of the Global Growth Fund in accordance with a plan developed by an independent distribution consultant and approved by the independent directors of the Global Growth Fund and acceptable to the staff of the SEC, and agreed to cease and desist from future violations of the above referenced federal securities laws. The SEC’s order also noted the cooperation that the Investment Adviser gave the staff of the SEC. The settlement will not have a material adverse impact on the Investment Adviser or its ability to fulfill its obligations under the Investment Advisory Agreement. On the same day, the SEC filed a civil action against the Executive Vice President and Chief Operating Officer of the Investment Adviser, alleging violations of certain federal securities laws arising from the same matter. The officer is also an officer of the Fund, the Global Growth Fund, and other funds in the Gabelli/GAMCO fund complex. The officer denied the allegations and is continuing in his positions with the Investment Adviser and the funds. The court dismissed certain claims, finding that the SEC was not entitled to pursue various remedies against the officer while leaving one remedy in the event the SEC were able to prove violations of law. The court, in response to a motion by the SEC, subsequently dismissed the remaining remedy without prejudice against the officer, which would allow the SEC to appeal the court’s rulings. On October 29, 2010, the SEC filed its appeal with the U.S. Court of Appeals for the Second Circuit regarding the lower court’s orders. The Investment Adviser currently expects that any resolution of the action against the officer will not have a material adverse impact on the Investment Adviser or its ability to fulfill its obligations under the Investment Advisory Agreement.]
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
     State Street Bank and Trust Company, located at 150 Royall Street, Canton, MA 02021, serves as the custodian of the Fund’s assets pursuant to a custody agreement. Under the custody agreement, the Custodian holds the Fund’s assets in compliance with the 1940 Act. For its services, the Custodian receives a monthly fee based upon the average weekly value of the total assets of the Fund, plus certain charges for securities transactions.
     Computershare Trust Company, N.A., located at 250 Royall Street, Canton, Massachusetts 02021, serves as the Fund’s dividend disbursing agent, as agent under the Fund’s automatic dividend reinvestment and voluntary cash purchase plan and as transfer agent and registrar for Shares of common stock of the Fund.
     Computershare Trust Company, N.A. also serves as the transfer agent, registrar, dividend paying agent and redemption agent with respect to the Series B Preferred.
     The Bank of New York, located at 5 Penn Plaza, 13th Floor, New York, NY 10001, serves as the Fund’s auction agent, transfer agent, registrar, dividend paying agent and redemption agent with respect to the Series C Auction Rate Preferred.
LEGAL MATTERS
     Certain legal matters will be passed on by Paul, Hastings, Janofsky & Walker LLP, 75 East 55th Street, New York, New York 10022 in connection with the Offer.

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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     [ ] serves as the Independent Registered Public Accounting Firm of the Fund and audits the financial statements of the Fund. [ ] is located at [ ].
ADDITIONAL INFORMATION
     The Fund is subject to the informational requirements of the 1934 Act and the 1940 Act and in accordance therewith files, or will file, reports and other information with the SEC. Reports, proxy statements and other information filed by the Fund with the SEC pursuant to the informational requirements of the 1934 Act and the 1940 Act can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Washington, DC 20549. The SEC maintains a web site at http://www.sec.gov containing reports, proxy and information statements and other information regarding registrants, including the Fund, that file electronically with the SEC.
     The Fund’s Shares of common stock are listed on the NYSE. Reports, proxy statements and other information concerning the Fund and filed with the SEC by the Fund will be available for inspection at the NYSE, 20 Broad Street, New York, New York, 10005.
     This Prospectus constitutes part of a Registration Statement filed by the Fund with the SEC under the 1933 Act and the 1940 Act. This Prospectus omits certain of the information contained in the Registration Statement, and reference is hereby made to the Registration Statement and related exhibits for further information with respect to the Fund and the shares offered hereby. Any statements contained herein concerning the provisions of any document are not necessarily complete, and, in each instance, reference is made to the copy of such document filed as an exhibit to the Registration Statement or otherwise filed with the SEC. Each such statement is qualified in its entirety by such reference.

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TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
     An SAI dated as of [ ], has been filed with the SEC and is incorporated by reference in this Prospectus. An SAI may be obtained without charge by writing to the Fund at its address at One Corporate Center, Rye, New York 10580-1422 or by calling the Fund toll-free at (800) GABELLI (422-3554). The Table of Contents of the SAI is as follows:
         
THE FUND
    2  
INVESTMENT OBJECTIVES AND POLICIES
    2  
INVESTMENT RESTRICTIONS
    16  
MANAGEMENT OF THE FUND
    17  
BENEFICIAL OWNERS
    30  
INVESTMENT ADVISER
    31  
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
    34  
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    34  
PORTFOLIO MANAGEMENT
    34  
PORTFOLIO TRANSACTIONS
    39  
TAXATION
    40  
No dealer, salesperson or other person has been authorized to give any information or to make any representations not contained in this Prospectus. If given or made, such information or representation must not be relief upon as having been authorized by the Fund or the Fund’s Investment Adviser. This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any security other than the Shares of common stock offered by this Prospectus, nor does it constitute an offer to sell or the solicitation of an offer to buy Shares of common stock by anyone in any jurisdiction in which such offer or solicitation would be unlawful.

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THE GABELLI GLOBAL
MULTIMEDIA TRUST INC.
[ ] SHARES
OF COMMON STOCK
ISSUABLE UPON EXERCISE OF RIGHTS
TO SUBSCRIBE FOR SUCH SHARES
 
PRELIMINARY PROSPECTUS
 
SUBJECT TO COMPLETION, DATED FEBRUARY 11, 2011

 


 

The information in this Statement of Additional Information is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Statement of Additional Information is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer is not permitted.

THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
One Corporate Center
Rye, New York 10580-1434
STATEMENT OF ADDITIONAL INFORMATION
SUBJECT TO COMPLETION, DATED FEBRUARY 11, 2011
     The Gabelli Global Multimedia Trust Inc. (the “Fund”) is a non-diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund’s primary investment objective is long-term growth of capital, primarily through investment in a portfolio of common stock and other securities of foreign and domestic companies involved in the telecommunications, media, publishing and entertainment industries. Income is a secondary objective of the Fund. The Fund commenced investment operations on November 15, 1994. Gabelli Funds, LLC (the “Investment Adviser”) serves as investment adviser to the Fund.
     This Statement of Additional Information (the “SAI”) does not constitute a prospectus, but should be read in conjunction with the Fund’s Prospectus relating thereto dated [ ], and as it may be supplemented. This SAI does not include all information that a prospective investor should consider before investing in the Fund’s shares, and investors should obtain and read the Fund’s prospectus prior to purchasing such shares. A copy of the Fund’s registration statement, including the Prospectus and any supplement, may be obtained from the Securities and Exchange Commission (the “SEC”) upon payment of the fee prescribed, or inspected at the SEC’s office or via its website (www.sec.gov) at no charge.

 


 

TABLE OF CONTENTS
         
    Page
THE FUND
    2  
INVESTMENT OBJECTIVES AND POLICIES
    2  
INVESTMENT RESTRICTIONS
    16  
MANAGEMENT OF THE FUND
    17  
BENEFICIAL OWNERS
    30  
INVESTMENT ADVISER
    31  
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
    34  
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    34  
PORTFOLIO MANAGEMENT
    34  
PORTFOLIO TRANSACTIONS
    39  
TAXATION
    40  

 


 

     The Prospectus and this SAI omit certain information contained in the registration statement filed with the SEC, Washington D.C. The registration statement may be obtained from the SEC upon payment of the fee prescribed, or inspected at the SEC’s office at no charge.
THE FUND
     The Fund was incorporated in Maryland on May 31, 1994 and is a non-diversified, closed-end management investment company registered under the 1940 Act. The common stock of the Fund is listed and traded on the New York Stock Exchange (the “NYSE”) under the symbol “GGT.” The Fund’s 6.00% Series B Cumulative Preferred Stock (the “Series B Preferred”) is listed and traded on the NYSE under the symbol “GGT PrB.”
INVESTMENT OBJECTIVES AND POLICIES
Investment Objectives
     The Fund’s primary investment objective is long-term growth of capital. Income is a secondary objective. Under normal market conditions, the Fund will invest at least 80% of the value of its assets in common stock and other securities, including convertible securities, preferred stock, options, and warrants of companies in the telecommunications, media, publishing, and entertainment industries. See “Investment Objectives and Policies” in the Prospectus.
     The economic crisis that began to unfold in 2007 continues to manifest itself in nearly all areas of the U.S. economy and has caused dramatic volatility in the financial markets, as well as a significant decrease in the value of many financial institutions, including, in general, a decrease in the value of stocks and bonds. The U.S. government has taken a number of measures to attempt to restore stability to the financial markets and to promote economic recovery. The measures have included various programs to stimulate economic activity, to reform regulatory oversight, to advance various social goals and to provide relief to businesses and individuals suffering from the effects of the economic crisis. There is no guarantee that any of these programs or other efforts will be successful.
Investment Practices
      Special Situations. Subject to the Fund’s policy of investing at least 80% of the value of its assets in companies involved in the telecommunications, media, publishing and entertainment industries, the Fund from time to time may, as a non-principal investment strategy, invest in companies that are determined by the Investment Adviser to possess “special situation” characteristics. In general, a special situation company is a company whose securities are expected to increase in value solely by reason of a development particularly or uniquely applicable to the company. Developments that may create special situations include, among others, a liquidation, reorganization, recapitalization or merger, material litigation, technological breakthrough or new management or management policies. The principal risk associated with investments in special situation companies is that the anticipated development thought to create the special situation may not occur and the investment therefore may not appreciate in value or may decline in value.

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      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 United States 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 United States government sponsored instrumentalities and repurchase agreements in respect of those instruments. Obligations of certain agencies and instrumentalities of the United States government, such as the Government National Mortgage Association, are supported by the “full faith and credit” of the United States government; others, such as those of the Export-Import Bank of the United States, are supported by the right of the issuer to borrow from the United States Treasury; others, such as those of the Federal National Mortgage Association, are supported by the discretionary authority of the United States 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 United States government would provide financial support to United States 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.
      Lower Rated Securities . The Fund may invest up to 10% of its total assets in fixed-income securities rated in the lower rating categories of recognized statistical rating agencies, such as securities rated “CCC” or lower by S&P or “Caa” or lower by Moody’s, or non-rated securities of comparable quality. These debt securities are predominantly speculative and involve major risk exposure to adverse conditions and are often referred to in the financial press as “junk bonds.”
     Generally, such lower rated 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 bonds. In addition, such lower rated securities and comparable unrated securities generally present a higher degree of credit risk. The risk of loss due to default by these issuers is significantly greater because such lower rated 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 lower rated categories is more volatile than that of higher quality securities, and the markets in which such lower rated or unrated securities

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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 market value to respond to changes in the economy or the financial markets.
     Lower rated debt obligations 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 bonds 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 interest currently.
     The Fund may invest in securities of issuers in default. The Fund will invest in securities of issuers in default only when the Investment Adviser believes that such issuers will honor their obligations or emerge from bankruptcy protection and the value of these securities will appreciate. 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 appreciate.
     In addition to using recognized rating agencies and other sources, the Investment Adviser also performs its own analysis 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 might not change their ratings of a particular issue or reflect subsequent events on a timely basis. 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 certain lower rated and comparable unrated securities has in the past experienced a major economic recession. The recession 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. The market for those securities could react in a similar fashion in the event of any future economic recession.
      Options . The Fund may, subject to guidelines of the Board of Directors (the “Board”), purchase or sell ( i.e. , write) options on securities, securities indices and foreign currencies which

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are listed on a national securities exchange or in the United States over-the-counter (“OTC”) markets as a means of achieving additional return or of hedging the value of the Fund’s portfolio.
     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 or currency underlying the option at a specified exercise price at any time during the term of the option. The writer of the call option has the obligation, upon exercise of the option, to deliver the underlying security or currency upon payment of the exercise price during the option period.
     A put option is the reverse of a call option, giving the holder the right, in return for a premium, to sell the underlying security or currency to the writer, at a specified price, and obligating the writer to purchase the underlying security or currency from the holder at that price. The writer of the put, who receives the premium, has the obligation to buy the underlying security or currency 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 that 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.
     A call option is “covered” if the Fund owns the underlying instrument covered by the call or has an absolute and immediate right to acquire that instrument without additional cash consideration upon conversion or exchange of another instrument held in its portfolio (or for additional cash consideration held in a segregated account by its custodian). A call option is also covered if the Fund holds a call on the same instrument as the call written where the exercise price of the call held is (i) equal to or less than the exercise price of the call written or (ii) greater than the exercise price of the call written if the difference is maintained by the Fund in cash, direct obligations of the United States or by its agencies or instrumentalities that are entitled to the full faith and credit of the United States and that, other than United States Treasury Bills, provide for the periodic payment of interest and the full payment of principal at maturity or call for redemption or other high-grade short-term obligations in a segregated account with its custodian. A put option is “covered” if the Fund maintains cash or other high grade short-term obligations with a value equal to the exercise price in a segregated account with its custodian, or else holds a put on the same instrument as the put written where the exercise price of the put held is equal to or greater than the exercise price of the put written. 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. However, once the Fund has been assigned an exercise notice, the Fund will be unable to effect a closing purchase transaction. Similarly, if the Fund is the holder of an option it may liquidate its position by effecting a closing sale transaction. This is accomplished by selling an option of the same series as the option previously purchased. There can be no assurance that either a closing purchase or sale transaction can be effected when the Fund so desires.

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     The Fund will realize a profit from a closing transaction if the price of the transaction is less than the premium received from writing the option or is more than the premium paid to purchase the option; the Fund will realize a loss from a closing transaction if the price of the transaction is more than the premium received from writing the option or is less than the premium paid to purchase the option. Since call option prices generally reflect increases in the price of the underlying security, any loss resulting from the repurchase of a call option may also be wholly or partially offset by unrealized appreciation of the underlying security. Other principal factors affecting the market value of a put or call option include supply and demand, interest rates, the current market price and price volatility of the underlying security and the time remaining until the expiration date. Gains and losses on investments in options depend, in part, on the ability of the Investment Adviser to predict correctly the effect of these factors. The use of options cannot serve as a complete hedge since the price movement of securities underlying the options will not necessarily follow the price movements of the portfolio securities subject to the hedge.
     An option position may be closed out only on an exchange that provides a secondary market for an option of the same series or in a private transaction. 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. In such event, it might not be possible to effect closing transactions in particular options, so the Fund would have to exercise its options in order to realize any profit and would incur brokerage commissions upon the exercise of call options and upon the subsequent disposition of underlying securities for the exercise of put options. If the Fund, as a covered call option writer, is unable to effect a closing purchase transaction in a secondary market, it will not be able to sell the underlying security until the option expires or until the Fund delivers the underlying security upon exercise or otherwise covers the position.
     In addition to options on securities, the Fund may also purchase and sell call and put options on securities indices. A stock index reflects in a single number the market value of many different stocks.
     Relative values are assigned to the stocks included in an index and the index fluctuates with changes in the market values of the stocks. The options give the holder the right to receive a cash settlement during the term of the option based on the difference between the exercise price and the value of the index. By writing a put or call option on a securities index, the Fund is obligated, in return for the premium received, to make delivery of this amount. The Fund may offset its position in the stock index options prior to expiration by entering into a closing transaction on an exchange, or it may let the option expire unexercised.
     Use of options on securities indices entails the risk that trading in the options may be interrupted if trading in certain securities included in the index is interrupted. The Fund will not purchase these options unless the Investment Adviser is satisfied with the development, depth and liquidity of the market and the Investment Adviser believes the options can be closed out.
     Price movements in the portfolio of the Fund may not correlate precisely with the movements in the level of an index and, therefore, the use of options on indices cannot serve as a complete hedge and will depend, in part, on the ability of the Investment Adviser to predict

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correctly movements in the direction of the stock market generally or of a particular industry. Because options on securities indices require settlement in cash, the Fund may be forced to liquidate portfolio securities to meet settlement obligations.
     The Fund may also buy or sell put and call options on foreign currencies. A put option on a foreign currency gives the purchaser of the option the right to sell a foreign currency at the exercise price until the option expires. A call option on a foreign currency gives the purchaser of the option the right to purchase the currency at the exercise price until the option expires. Currency options traded on U.S. or other exchanges may be subject to position limits which may limit the ability of the Fund to reduce foreign currency risk using such options. Over-the-counter options differ from exchange-traded options in that they are two-party contracts with price and other terms negotiated between buyer and seller and generally do not have as much market liquidity as exchange-traded options. Over-the-counter options are considered illiquid securities.
     Although the Investment Adviser will attempt to take appropriate measures to minimize the risks relating to the Fund’s writing of put and call options, there can be no assurance that the Fund will succeed in any option writing program it undertakes.
      Futures Contracts and Options on Futures . A “sale” of a futures contract (or a “short” futures position) means the assumption of a contractual obligation to deliver the assets underlying the contract at a specified price at a specified future time. A “purchase” of a futures contract (or a “long” futures position) means the assumption of a contractual obligation to acquire the assets underlying the contract at a specified price at a specified future time. Certain futures contracts, including stock and bond index futures, are settled on a net cash payment basis rather than by the sale and delivery of the assets underlying the futures contracts. No consideration will be paid or received by the Fund upon the purchase or sale of a futures contract. Initially, the Fund will be required to deposit with the broker an amount of cash or cash equivalents equal to approximately 1% to 10% of the contract amount (this amount is subject to change by the exchange or board of trade on which the contract is traded and brokers or members of such board of trade may charge a higher amount). This amount is known as “initial margin” and is in the nature of a performance bond or good faith deposit on the contract. Subsequent payments, known as “variation margin,” to and from the broker will be made daily as the price of the index or security underlying the futures contracts fluctuates. At any time prior to the expiration of a futures contract, the Fund may close the position by taking an opposite position, which will operate to terminate its existing position in the contract.
     An option on a futures contract gives the purchaser the right, in return for the premium paid, to assume a position in a futures contract at a specified exercise price at any time prior to the expiration of the option. Upon exercise of an option, the delivery of the futures positions by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer’s futures margin account attributable to that contract, which represents the amount by which the market price of the futures contract exceeds, in the case of a call, or is less than, in the case of a put, the exercise price of the option on the futures contract. The potential loss related to the purchase of an option on futures contracts is limited to the premium paid for the option (plus transaction costs). Because the value of the option purchased is fixed at the point of sale, there are no daily cash payments by the purchaser to reflect changes

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in the value of the underlying contract; however, the value of the option does change daily and that change would be reflected in the net assets of the Fund.
     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 on price fluctuations, imperfect correlation between the contracts and the securities being hedged, losses from investing in futures transactions that are potentially unlimited and the segregation requirements described below.
     In the event the Fund sells a put option or enters into long futures contracts, under current interpretations of the 1940 Act, an amount of cash, obligations of the U.S. government and its agencies and instrumentalities or other liquid securities equal to the market value of the contract must be deposited and maintained in a segregated account with the custodian of the Fund to collateralize the positions, thereby ensuring that the use of the contract is unleveraged. For short positions in futures contracts and sales of call options, the Fund may establish a segregated account (not with a futures commission merchant or broker) with cash or liquid securities that, when added to amounts deposited with a futures commission merchant or a broker as margin, equal the market value of the instruments or currency underlying the futures contract or call option or the market price at which the short positions were established.
      Interest Rate Futures Contracts and Options Thereon . The Fund may purchase or sell interest rate futures contracts to take advantage of, or to protect the Fund against fluctuations in interest rates affecting the value of debt securities which the Fund holds or intends to acquire. For example, if interest rates are expected to increase, the Fund might sell futures contracts on debt securities the values of which historically have a high degree of positive correlation to the values of the Fund’s portfolio securities. Such a sale would have an effect similar to selling an equivalent value of the Fund’s portfolio securities. If interest rates increase, the value of the Fund’s portfolio securities will decline, but the value of the futures contracts to the Fund will increase at approximately an equivalent rate, thereby keeping the net asset value of the Fund from declining as much as it otherwise would have. The Fund could accomplish similar results by selling debt securities with longer maturities and investing in debt securities with shorter maturities when interest rates are expected to increase. However, since the futures market may be more liquid than the cash market, the use of futures contracts as a risk management technique allows the Fund to maintain a defensive position without having to sell its portfolio securities.
     Similarly, the Fund may purchase interest rate futures contracts when it is expected that interest rates may decline. The purchase of futures contracts for this purpose constitutes a hedge against increases in the price of debt securities (caused by declining interest rates) which the Fund intends to acquire. Since fluctuations in the value of appropriately selected futures contracts should approximate that of the debt securities that will be purchased, the Fund can take advantage of the anticipated rise in the cost of the debt securities without actually buying them. Subsequently, the Fund can make its intended purchase of the debt securities in the cash market and concurrently liquidate its futures position. To the extent the Fund enters into futures contracts for this purpose, it will maintain, in a segregated asset account with the Fund’s custodian, assets sufficient to cover the Fund’s obligations with respect to such futures contracts,

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which will consist of cash or other liquid securities from its portfolio in an amount equal to the difference between the fluctuating market value of such futures contracts and the aggregate value of the initial margin deposited by the Fund with its custodian with respect to such futures contracts.
     The purchase of a call option on a futures contract is similar in some respects to the purchase of a call option on an individual security. Depending on the pricing of the option compared to either the price of the futures contract upon which it is based or the price of the underlying debt securities, it may or may not be less risky than ownership of the futures contract or underlying debt securities. As with the purchase of futures contracts, when the Fund is not fully invested it may purchase a call option on a futures contract to hedge against a market advance due to declining interest rates.
     The purchase of a put option on a futures contract is similar to the purchase of protective put options on portfolio securities. The Fund will purchase a put option on a futures contract to hedge its portfolio against the risk of rising interest rates and consequent reduction in the value of portfolio securities.
     The writing of a call option on a futures contract constitutes a partial hedge against declining prices of the securities that are deliverable upon exercise of the futures contract. If the futures price at expiration of the option is below the exercise price, the Fund will retain the full amount of the option premium, which provides a partial hedge against any decline that may have occurred in the its portfolio holdings. The writing of a put option on a futures contract constitutes a partial hedge against increasing prices of the securities that are deliverable upon exercise of the futures contract. If the futures price at expiration of the option is higher than the exercise price, the Fund will retain the full amount of the option premium, which provides a partial hedge against any increase in the price of debt securities that it intends to purchase. If a put or call option the Fund has written is exercised, the Fund will incur a loss which will be reduced by the amount of the premium it received. Depending on the degree of correlation between changes in the value of its portfolio securities and changes in the value of its futures positions, the Fund’s losses from options on futures it has written may to some extent be reduced or increased by changes in the value of its portfolio securities.
      Currency Futures and Options Thereon . Generally, foreign currency futures contracts and options thereon are similar to the interest rate futures contracts and options thereon discussed previously. By entering into currency futures and options thereon, the Fund will seek to establish the rate at which it will be entitled to exchange U.S. dollars for another currency at a future time. By selling currency futures, the Fund will seek to establish the number of dollars it will receive at delivery for a certain amount of a foreign currency. In this way, whenever the Fund anticipates a decline in the value of a foreign currency against the U.S. dollar, the Fund can attempt to “lock in” the U.S. dollar value of some or all of the securities held in its portfolio that are denominated in that currency. By purchasing currency futures, the Fund can establish the number of dollars it will be required to pay for a specified amount of a foreign currency in a future month. Thus, if the Fund intends to buy securities in the future and expects the U.S. dollar to decline against the relevant foreign currency during the period before the purchase is effected, the Fund can attempt to lock in the price in U.S. dollars of the securities it intends to acquire.

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     The purchase of options on currency futures will allow the Fund, for the price of the premium and related transaction costs it must pay for the option, to decide whether or not to buy (in the case of a call option) or to sell (in the case of a put option) a futures contract at a specified price at any time during the period before the option expires. If the Investment Adviser, in purchasing an option, has been correct in its judgment concerning the direction in which the price of a foreign currency would move as against the U.S. dollar, the Fund may exercise the option and thereby take a futures position to hedge against the risk it had correctly anticipated or close out the option position at a gain that will offset, to some extent, currency exchange losses otherwise suffered by the Fund. If exchange rates move in a way the Fund did not anticipate, however, the Fund will have incurred the expense of the option without obtaining the expected benefit; any such movement in exchange rates may also thereby reduce, rather than enhance, the Fund’s profits on its underlying securities transactions.
      Securities Index Futures Contracts and Options Thereon . Purchases or sales of securities index futures contracts are used for hedging purposes to attempt to protect the Fund’s current or intended investments from broad fluctuations in stock or bond prices. For example, the Fund may sell securities index futures contracts in anticipation of or during a market decline to attempt to offset the decrease in market value of the its securities portfolio that might otherwise result. If such decline occurs, the loss in value of portfolio securities may be offset, in whole or part, by gains on the futures position. When the Fund is not fully invested in the securities market and anticipates a significant market advance, it may purchase securities index futures contracts in order to gain rapid market exposure that may, in part or entirely, offset increases in the cost of securities that it intends to purchase. As such purchases are made, the corresponding positions in securities index futures contracts will be closed out. The Fund may write put and call options on securities index futures contracts for hedging purposes.
      Limitations on the Purchase and Sale of Futures Contracts and Options on Futures Contracts . The Investment Adviser has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act and therefore is not subject to registration under the Commodity Exchange Act. Accordingly, the Fund’s investments in derivative instruments described in the Prospectus and this SAI are not limited by or subject to regulation under the Commodity Exchange Act or otherwise regulated by the Commodity Futures Trading Commission. Nevertheless, the Fund’s investment restrictions place certain limitations and prohibitions on the Fund’s ability to purchase or sell commodities or commodity contracts. See “Investment Restrictions.” Under these restrictions, the Fund may not enter into futures contracts or options on futures contracts unless (i) the aggregate initial margins and premiums do not exceed 5% of the fair market value of the Fund’s total assets and (ii) the aggregate market value of the Fund’s outstanding futures contracts and the market value of the currencies and futures contracts subject to outstanding options written by the Fund, as the case may be, do not exceed 50% of the market value of the Fund’s total assets. In addition, investment in futures contracts and related options generally will be limited by the rating agency guidelines applicable to any of the Fund’s preferred stock.
      Forward Currency Exchange Contracts . The Fund may engage in currency transactions other than on futures exchanges to protect against future changes in the level of future currency exchange rates. The Fund will conduct such currency exchange transactions either on a “spot” ( i.e. , cash) basis at the rate then prevailing in the currency exchange market or on a forward

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basis, by entering into forward contracts to purchase or sell currency. A forward contract on foreign currency involves 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. Dealing in forward currency exchange will be limited to hedging involving either specific transactions or portfolio positions. Transaction hedging is the purchase or sale of forward currency with respect to specific receivables or payables of the Fund generally arising in connection with the purchase or sale of its portfolio securities and accruals of interest receivable and Fund expenses. Position hedging is the forward sale of currency with respect to portfolio security positions denominated or quoted in that currency or in a currency bearing a high degree of positive correlation to the value of that currency.
     The Fund may not position hedge with respect to a particular currency for an amount greater than the aggregate market value (determined at the time of making any sale of forward currency) of the securities held in its portfolio denominated or quoted in, or currently convertible into, such currency. If the Fund enters into a position hedging transaction, the Fund’s custodian or subcustodian will place cash or other liquid securities in a segregated account of the Fund in an amount equal to the value of the Fund’s total assets committed to the consummation of the given forward contract. If the value of the securities placed in the segregated account declines, additional cash or securities will be placed in the account so that the value of the account will, at all times, equal the amount of the Fund’s commitment with respect to the forward contract.
     At or before the maturity of a forward sale contract, the Fund may either sell a portfolio security and make delivery of the currency, or retain the security and offset its contractual obligations to deliver the currency by purchasing a second contract pursuant to which the Fund will obtain, on the same maturity date, the same amount of the currency which it is obligated to deliver. If the Fund retains the portfolio security and engages in an offsetting transaction, the Fund, at the time of execution of the offsetting transaction, will incur a gain or a loss to the extent that movement has occurred in forward contract prices. Should forward prices decline during the period between the Fund’s entering into a forward contract for the sale of a currency and the date it enters into an offsetting contract for the purchase of the currency, the Fund will realize a gain to the extent the price of the currency it has agreed to purchase is less than the price of the currency it has agreed to sell. Should forward prices increase, the Fund will suffer a loss to the extent the price of the currency it has agreed to purchase exceeds the price of the currency it has agreed to sell. Closing out forward purchase contracts involves similar offsetting transactions.
     The cost to the Fund of engaging in currency transactions varies with factors such as the currency involved, the length of the contract period and the market conditions then prevailing. Because forward transactions in currency exchange are usually conducted on a principal basis, no fees or commissions are involved. The use of foreign currency contracts does not eliminate fluctuations in the underlying prices of the securities, but it does establish a rate of exchange that can be achieved in the future. In addition, although forward currency contracts limit the risk of loss due to a decline in the value of the hedged currency, they also limit any potential gain that might result if the value of the currency increases.

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     If a decline in any currency is generally anticipated by the Investment Adviser, the Fund may not be able to contract to sell the currency at a price above the level to which the currency is anticipated to decline.
      Special Risk Considerations Relating to Futures and Options Thereon . The ability to establish and close out positions in futures contracts and options thereon will be subject to the development and maintenance of liquid markets. Although the Fund generally will purchase or sell only those futures contracts and options thereon for which there appears to be a liquid market, there is no assurance that a liquid market on an exchange will exist for any particular futures contract or option thereon at any particular time.
     In the event no liquid market exists for a particular futures contract or option thereon in which the Fund maintains a position, it will not be possible to effect a closing transaction in that contract or to do so at a satisfactory price and the Fund would have to either make or take delivery under the futures contract or, in the case of a written option, wait to sell the underlying securities until the option expires or is exercised or, in the case of a purchased option, exercise the option. In the case of a futures contract or an option thereon which the Fund has written and which the Fund is unable to close, the Fund would be required to maintain margin deposits on the futures contract or option thereon and to make variation margin payments until the contract is closed.
     Successful use of futures contracts and options thereon and forward contracts by the Fund is subject to the ability of the Investment Adviser to predict correctly movements in the direction of interest and foreign currency rates. If the Investment Adviser’s expectations are not met, the Fund will be in a worse position than if a hedging strategy had not been pursued. For example, if the Fund has hedged against the possibility of an increase in interest rates that would adversely affect the price of securities in its portfolio and the price of such securities increases instead, the Fund will lose part or all of the benefit of the increased value of its securities because it will have offsetting losses in its futures positions. In addition, in such situations, if the Fund has insufficient cash to meet daily variation margin requirements, it may have to sell securities to meet the requirements. These sales may be, but will not necessarily be, at increased prices which reflect the rising market. The Fund may have to sell securities at a time when it is disadvantageous to do so.
      Additional Risks of Foreign Options, Futures Contracts, Options on Futures Contracts and Forward Contracts . Options, futures contracts and options thereon and forward contracts on securities and currencies may be traded on foreign exchanges. Such transactions may not be regulated as effectively as similar transactions in the U.S., may not involve a clearing mechanism and related guarantees, and are subject to the risk of governmental actions affecting trading in, or the prices of, foreign securities. The value of such positions also could be adversely affected by (i) other complex foreign political, legal and economic factors, (ii) lesser availability than in the U.S. of data on which to make trading decisions, (iii) delays in the Fund’s ability to act upon economic events occurring in the foreign markets during non-business hours in the U.S., (iv) the imposition of different exercise and settlement terms and procedures and margin requirements than in the U.S. and (v) lesser trading volume.

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     Exchanges on which options, futures and options on futures are traded may impose limits on the positions that the Fund may take in certain circumstances.
      Risks of Currency Transactions . Currency transactions are also subject to risks different from those of other portfolio transactions. Because currency control is of great importance to the issuing governments and influences economic planning and policy, purchases and sales of currency and related instruments can be adversely affected by government exchange controls, limitations or restrictions on repatriation of currency, and manipulation, or exchange restrictions imposed by governments. These forms of governmental action can result in losses to the Fund if it is unable to deliver or receive currency or monies in settlement of obligations and could also cause hedges it has entered into to be rendered useless, resulting in full currency exposure as well as incurring transaction costs.
      Repurchase Agreements . The Fund may engage in repurchase agreements as set forth in the Prospectus. A repurchase agreement is an instrument under which the purchaser, i.e. , the Fund, acquires a debt security and the seller agrees, at the time of the sale, to repurchase the obligation at a mutually agreed upon time and price, thereby determining the yield during the purchaser’s holding period. This results in a fixed rate of return insulated from market fluctuations during such period. The underlying securities are ordinarily U.S. Treasury or other government obligations or high quality money market instruments. The Fund will require that the value of such underlying securities, together with any other collateral held by the Fund, always equals or exceeds the amount of the repurchase obligations of the counter party. 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 are 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 such 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 which 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 would suffer a loss.
      Loans of Portfolio Securities . Consistent with applicable regulatory requirements and the Fund’s investment restrictions, the Fund may lend its portfolio securities to securities broker-dealers or financial institutions, provided that such loans are callable at any time by the Fund (subject to notice provisions described below), and are at all times secured by cash or cash equivalents, which are maintained in a segregated account pursuant to applicable regulations and that are at least equal to the market value, determined daily, of the loaned securities. The advantage of such loans is that the Fund continues to receive the income on the loaned securities while at the same time earns interest on the cash amounts deposited as collateral, which will be invested in short-term obligations. The Fund will not lend its portfolio securities if such loans are not permitted by the laws or regulations of any state in which its stock is qualified for sale. The Fund’s loans of portfolio securities will be collateralized in accordance with applicable regulatory requirements and no loan will cause the value of all loaned securities to exceed 20%

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of the value of the Fund’s total assets. The Fund’s ability to lend portfolio securities will be limited by the rating agency guidelines applicable to any of the Fund’s outstanding preferred stock.
     A loan may generally be terminated by the borrower on one business day notice, or by the Fund on five business days notice. If the borrower fails to deliver the loaned securities within five days after receipt of notice, the Fund could use the collateral to replace the securities while holding the borrower liable for any excess of replacement cost over collateral. As with any extensions of credit, there are risks of delay in recovery and in some cases even loss of rights in the collateral should the borrower of the securities fail financially. However, these loans of portfolio securities will only be made to firms deemed by the Fund’s management to be creditworthy and when the income which can be earned from such loans justifies the attendant risks. The Board will oversee the creditworthiness of the contracting parties on an ongoing basis. Upon termination of the loan, the borrower is required to return the securities to the Fund. Any gain or loss in the market price during the loan period would inure to the Fund. The risks associated with loans of portfolio securities are substantially similar to those associated with repurchase agreements. Thus, if the counter party to the loan 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 would suffer a loss. When voting or consent rights which accompany loaned securities pass to the borrower, the Fund will follow the policy of calling the loaned securities, to be delivered within one day after notice, to permit the exercise of such rights if the matters involved would have a material effect on the Fund’s investment in such loaned securities. The Fund will pay reasonable finder’s, administrative and custodial fees in connection with a loan of its securities.
      When Issued, Delayed Delivery Securities and Forward Commitments . The Fund may enter into forward commitments for the purchase or sale of securities, including on a “when issued” or “delayed delivery” basis, in excess of customary settlement periods for the type of security involved. In some cases, a forward commitment may be conditioned upon the occurrence of a subsequent event, such as approval and consummation of a merger, corporate reorganization or debt restructuring, i.e. , a when, as and if issued security. When such transactions are negotiated, the price is fixed at the time of the commitment, with payment and delivery taking place in the future, generally a month or more after the date of the commitment. While it will only enter into a forward commitment with the intention of actually acquiring the security, the Fund may sell the security before the settlement date if it is deemed advisable.
     Securities purchased under a forward commitment are subject to market fluctuation, and no interest (or dividends) accrues to the Fund prior to the settlement date. The Fund will segregate with its custodian cash or liquid securities in an aggregate amount at least equal to the amount of its outstanding forward commitments.
      Short Sales . The Fund may 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, at the time of the sale, the Fund owns, or has the immediate and unconditional right to acquire at no additional cost, the identical security.

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     The Fund expects to make short sales both to obtain capital gains from anticipated declines in securities and as a form of hedging to offset potential declines in long positions in the same or similar securities. The short sale of a security is considered a speculative investment technique. Short sales “against the box” may be subject to special tax rules, one of the effects of which may be to accelerate income to the Fund.
     For short sales, the market value of the securities sold short of any one issuer will not exceed either 5% of the Fund’s total assets or 5% of such issuer’s voting securities. The Fund will not make a short sale, if, after giving effect to such sale, the market value of all securities sold short exceeds 25% of the value of its assets or the Fund’s aggregate short sales of a particular class of securities exceeds 25% of the outstanding securities of that class. The Fund may make short sales “against the box” without respect to such limitations.
     When the Fund makes a short sale, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale in order to satisfy its obligation to deliver the security upon conclusion of the sale. The Fund may have to pay a fee to borrow particular securities and is often obligated to pay over any payments received on such borrowed securities. The Fund may close out a short position by purchasing and delivering an equal amount of 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.
     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. Depending on arrangements made with the broker-dealer from which it borrowed the security regarding payment over of any payments received by the Fund on such security, the Fund may not receive any payments (including interest) on its collateral deposited with such broker-dealer. If the price of the security sold short increases between the time of the short sale and the time 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, any loss increased, by the transaction costs described above. Although the Fund’s gain is limited to the price at which it sold the security short, its potential loss is theoretically unlimited.
      Restricted and Illiquid Securities . The Fund may invest up to a total of 15% of its net assets in securities that are subject to restrictions on resale and securities the markets for which are illiquid, including repurchase agreements with more than seven days to maturity. Illiquid securities include securities the disposition of which is subject to substantial legal or contractual restrictions. The sale of illiquid securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than does the sale of securities eligible for trading on national securities exchanges or in the over-the-counter markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. Unseasoned issuers are companies (including predecessors) that have

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operated less than three years. The continued liquidity of such securities may not be as well assured as that of publicly traded securities, and accordingly the Board will monitor their liquidity. The Board will review pertinent factors such as trading activity, reliability of price information and trading patterns of comparable securities in determining whether to treat any such security as liquid for purposes of the foregoing 15% test. To the extent the Board treats such securities as liquid, temporary impairments to trading patterns of such securities may adversely affect the Fund’s liquidity.
     In accordance with pronouncements of the SEC, the Fund may invest in restricted securities that can be traded among qualified institutional buyers under Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), without registration and may treat them as liquid for purposes of the foregoing 15% test if such securities are found to be liquid. The Board has adopted guidelines and delegated to the Investment Adviser, subject to the supervision of the Board, the function of determining and monitoring the liquidity of particular Rule 144A securities.
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 shareholders.
     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

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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 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 shareholders.
     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.
MANAGEMENT OF THE FUND
Directors and Officers
     The business and affairs of the Fund are managed under the direction of its Board, and the day-to-day operations are conducted through or under the direction of its officers.

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     The Board approves all significant agreements between the Fund and the companies that furnish the Fund with services, including agreements with the Investment Adviser, State Street Bank and Trust Company, 150 Royall Street, Canton, MA 02021, the Fund’s custodian (the “Custodian”) and Computershare Trust Company, N.A. (“Computershare”), located at 250 Royall Street, Canton, Massachusetts 02021, which serves as the Fund’s dividend disbursing agent, as agent under the Fund’s automatic dividend reinvestment and voluntary cash purchase plan and as transfer agent and registrar with respect to the common stock of the Fund. The day-to-day operations of the Fund are delegated to the Investment Adviser.
     The names and business addresses of the Directors and principal officers of the Fund are set forth in the following table, together with their positions and their principal occupations during the past five years and, in the case of the Directors, their positions with certain other organizations and companies. Directors who are “interested persons” of the Fund, as defined by the 1940 Act, are listed under the caption “Interested Director.”
                     
                Number of
    Term of   Principal       Portfolios in
Name, Position with the   Office and   Occupation(s)   Other Directorships   Fund Complex
Fund and Age   Length of   During Past Five   Held by Director   Overseen by
Address 1   Time Served 2   Years   During Past Five Years   Director 3
INTERESTED DIRECTOR 4 :
                   
 
                   
Mario J. Gabelli
Chairman and
Chief Investment Officer
Age: 68
  Since 1994*   Chairman and Chief Executive Officer 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 in the Gabelli/GAMCO Funds complex; Chairman and Chief Executive Officer of GGCP, Inc.   Director of Morgan Group Holdings, Inc. (holding company); Chairman of the Board and Chief Executive Officer of LICT Corporation (multimedia and communication services company); Director of CIBL, Inc. (broadcasting and wireless communications).     26  
 
                   
INDEPENDENT DIRECTORS 5 :
                   
 
                   
Anthony J. Colavita 6
Director
Age: 75
  Since 2001*   President of the law firm of Anthony J. Colavita, P.C.       35  
 
                   
James P. Conn 6
Director
Age: 72
  Since 1994*   Former Managing Director and Chief Investment Officer of Financial Security Assurance Holdings Ltd. (insurance holding company) (1992-1998)   Director of First Republic Bank (banking) through January 2008 and LaQuinta Corp. (hotels) through January 2006.     18  

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                Number of
    Term of   Principal       Portfolios in
Name, Position with the   Office and   Occupation(s)   Other Directorships   Fund Complex
Fund and Age   Length of   During Past Five   Held by Director   Overseen by
Address 1   Time Served 2   Years   During Past Five Years   Director 3
Gregory R. Dube
Director
Age: 56
  Since 2010*   Managing Member and Chairman of Roseheart Associates   [ ]     1  
 
                   
Frank J. Fahrenkopf, Jr.
Director
Age: 71
  Since 1999***   President and Chief Executive Officer of the American Gaming Association; Co-Chairman of the Commission on Presidential Debates; Former Chairman of the Republican National Committee (1983-1989)   Director of First Republic Bank (banking) until September 2007.     6  
 
                   
Anthony R. Pustorino Director Age: 85
  Since 1994**   Certified Public Accountant; Professor Emeritus, Pace University   Director of The LGL Group, Inc. (diversified manufacturing).     13  
 
                   
Werner J. Roeder
Director
Age: 70
  Since 1999***   Medical Director of Lawrence Hospital and practicing private physician         22  
 
                   
Salvatore J. Zizza
Director
Age: 65
  Since 1994***   Chairman of Zizza & Co., Ltd. (consulting)   Director of Harbor BioSciences, Inc. (biotechnology); Director of Trans-Lux Corporation (business services); Chief Executive Officer of General Employment Enterprises, Inc. (staffing); Bion Environmental Technologies (technology) (2005-2008); Director of Earl Scheib Inc. (automotive painting) through April 2009.     28  

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Officers 7
         
Name, Position with the Fund,        
Age, and Business   Length of time Served   Principal Occupation(s) During Past Five Years
Bruce N. Alpert
President
Age: 59
  Since 2003   Executive Vice President (since 1999) and Chief Operating Officer (since 1988) of Gabelli Funds, LLC; Director of Teton Advisors, Inc. since 1988, Chairman of Teton Advisors, Inc. from July 2008 through 2010 and President of Teton Advisors, Inc. from 1998 through 2008; Senior Vice President of GAMCO Investors, Inc. since 2008; Officer of all of the registered investment companies in the Gabelli/GAMCO Fund complex since 1988.
 
       
Carter W. Austin
Ombudsman
Age: 44
  Since March 2010   Ombudsman of the Fund since 2010; Vice President of other registered closed-end investment companies in the Gabelli/GAMCO Fund Complex; Vice President of Gabelli Funds, LLC since 1996.
 
       
Peter D. Goldstein
Chief Compliance Officer
Age: 57
  Since 2004 Since March 2010   Director of Regulatory Affairs for GAMCO Investors, Inc. since 2004; Chief Compliance Officer of all of the registered investment companies in the Gabelli/GAMCO Funds Complex.
 
       
Laurissa M. Martire
Vice President
Age: 34
  Since 2004   Vice President of the Fund since 2004; Vice President or Ombudsman of other registered investment companies in the Gabelli/GAMCO Fund Complex; Assistant Vice President of GAMCO Investors, Inc. since 2003.
 
       
Agnes Mullady
Treasurer and Secretary
Age: 52
  Since 2006   President and Chief Operating Officer of the Open-End Fund Division of Gabelli Funds, LLC since September 2010; Senior Vice President of GAMCO Investors, Inc. since 2009; Vice President of Gabelli Funds, LLC since 2007; Officer of all of the registered investment companies in the Gabelli/GAMCO Fund Complex.
 
(1)   Address: One Corporate Center, Rye, NY 10580-1422.
 
(2)   The Fund’s Board 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.
 
(3)   The “Fund Complex” or the “Gabelli/GAMCO Fund Complex” includes all the registered funds that are considered part of the same fund complex as the Fund because they have common or affiliated investment advisers.
 
(4)   “Interested person” of the Fund as defined in the 1940 Act. Mr. Gabelli is considered to be an “interested person” of the Fund because of his affiliation with the Fund’s Investment Adviser and Gabelli & Company, Inc., which executes portfolio transactions for the Fund, and as a controlling shareholder because of the level of his ownership of shares of common stock of the Fund.

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(5)   Directors who are not considered to be “interested persons” of the Fund, as defined in the 1940 Act, are considered to be “Independent” Directors.
 
(6)   As a Director, elected solely by holders of the Fund’s Preferred Stock.
 
(7)   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.
 
*   Term continues until the Fund’s 2013 Annual Meeting of Shareholders and until his successor is duly elected and qualifies.
 
**   Term continues until the Fund’s 2012 Annual Meeting of Shareholders and until his successor is duly elected and qualifies.
 
***   Term continues until the Fund’s 2011 Annual Meeting of Shareholders and until his successor is duly elected and qualifies.
Leadership Structure and Oversight Responsibilities
     Overall responsibility for general oversight of the Fund rests with the Board. The Board has appointed Mr. Conn as the lead Independent Director. The lead Independent Director presides over executive sessions of the Directors and also serves between meetings of the Board as a liaison with service providers, officers, counsel and other Directors on a wide variety of matters including scheduling agenda items for Board meetings. Designation as such does not impose on the lead independent Director any obligations or standards greater than or different from other Directors. The Board has established a Nominating Committee and an Audit Committee to assist the Board in the oversight of the management and affairs of the Fund. The Board also has an ad hoc Proxy Voting Committee that exercises beneficial ownership responsibilities on behalf of the Fund in selected situations. From time to time the Board establishes additional committees or informal working groups, such as pricing committees related to securities offerings by the Fund, to deal with specific matters or assigns one of its members to participate with Directors or directors of other funds in the Gabelli/GAMCO Fund Complex on special committees or working groups that deal with complex-wide matters, such as the multi-fund ad hoc Compensation Committee relating to compensation of the Chief Compliance Officer for all the funds in the Fund Complex and a separate multi-fund Compensation Committee relating to certain officers of the closed-end funds in the Fund Complex.
     All of the Fund’s Directors other than Mr. Gabelli are Independent Directors, and the Board believes they are able to provide effective oversight of the Fund’s service providers. In addition to providing feedback and direction during Board meetings, the Directors meet regularly in executive session and chair all committees of the Board.
     The Fund’s operations entail a variety of risks including investment, administration, valuation and a range of compliance matters. Although the Investment Adviser, the sub-administrator and the officers of the Fund are responsible for managing these risks on a day-to-day basis within the framework of their established risk management functions, the Board also addresses risk management of the Fund through its meetings and those of the committees and

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working groups. In particular, as part of its oversight, the Board reviews with the Investment Adviser at Board meetings the levels and types of risks, including options risk, being undertaken by the Fund, and the Audit Committee discusses the Fund’s risk management and controls with the independent registered public accounting firm engage by the Fund. the Board reviews valuation policies and procedures and the valuations of specific illiquid securities. The Board also receives periodic reports from the Fund’s Chief Compliance Officer regarding compliance matters relating to the Fund and its major service providers, including results of the implementation and testing of the Fund’s and such providers’ compliance programs. The Board’s oversight function is facilitated by management reporting processes that are designed to provide visibility to the Board about the identification, assessment and management of critical risks and controls and policies and procedures use to mitigate those risks. The Board reviews its role in supervising the Fund’s risk management from time to time and may make changes in its discretion at any time.
     The Board has determined that its leadership structure is appropriate for the Fund because it enables the Board to exercise informed and independent judgment over matters under its purview, allocates responsibility among committees in a manner that fosters effective oversight and allows the Board to devote appropriate resources to specific issues in a flexible manner as they arise. The Board periodically reviews its leadership structure as well as its overall structure, composition and functioning and may make changes in its discretion at any time.
Standing Committees of the Board of Directors
      Audit Committee. The role of the Fund’s Audit Committee is to assist the Board of Directors in its oversight of (i) the quality and integrity of the Fund’s financial statement reporting process and the independent audit and review thereof; (ii) the Fund’s accounting and financial reporting policies and practices, its internal controls, and, as appropriate, the internal controls of certain of its service providers; (iii) the Fund’s compliance with legal and regulatory requirements; and (iv) the independent registered public accounting firm’s qualifications, independence, and performance. The Audit Committee also is required to prepare an audit committee report pursuant to the rules of the SEC for inclusion in the Fund’s annual proxy statement. The Audit Committee operates pursuant to the Audit Committee Charter (the “Audit Charter”) that was most recently reviewed and approved by the Board of Directors on [February 24, 2010].
     Pursuant to the Audit Charter, the Audit Committee is responsible for conferring with the Fund’s independent registered public accounting firm, reviewing annual financial statements, approving the selection of the Fund’s independent registered public accounting firm, and overseeing the Fund’s internal controls. The Audit Charter also contains provisions relating to the pre-approval by the Audit Committee of audit and non-audit services to be provided to the Investment Adviser and certain of its affiliates by the Fund’s independent registered public accounting firm. The Audit Committee advises the full Board with respect to accounting, auditing, and financial matters affecting the Fund. As set forth in the Audit Charter, management is responsible for maintaining appropriate systems for accounting and internal control, and the Fund’s independent registered public accounting firm is responsible for planning and carrying out proper audits and reviews. The independent registered public accounting firm is ultimately accountable to the Board of Directors and to the Audit Committee, as

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representatives of shareholders. The independent registered public accounting firm for the Fund reports directly to the Audit Committee.
     In performing its oversight function, at a meeting held on [February 23, 2010], the Audit Committee reviewed and discussed with management of the Fund and the Fund’s independent registered public accounting firm the audited financial statements of the Fund as of and for the fiscal year ended [December 31, 2009], and discussed the audit of such financial statements with the independent registered public accounting firm.
     In addition, the Audit Committee discussed with the independent registered public accounting firm the accounting principles applied by the Fund and such other matters brought to the attention of the Audit Committee by the independent registered public accounting firm as required by Statement of Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1 AU Section 380), as adopted by the Public Company Accounting Oversight Board (United States) in Rule 3200T. The Audit Committee also received from the independent registered public accounting firm the written disclosures and statements required by the SEC’s independence rules, delineating relationships between the independent registered public accounting firm and the Fund, and discussed the impact that any such relationship might have on the objectivity and independence of the independent registered public accounting firm.
     As set forth above, and as more fully set forth in the Audit Charter, the Audit Committee has significant duties and powers in its oversight role with respect to the Fund’s financial reporting procedures, internal control systems, and the independent audit process.
     The Audit Committee is composed of three of the Fund’s Independent Directors, namely Messrs. Pustorino (Chairman), Roeder and Zizza. Each member of the Audit Committee has been determined by the Board of Directors to be financially literate. The Audit Committee met [twice] during the fiscal year ended [December 31, 2010].
      Nominating Committee . The Board of Directors has a Nominating Committee composed of three Independent Directors, names Messrs. Colavita (Chairman), Roeder and Zizza. The Nominating Committee met once during the fiscal year ended December 31, 2009. The Nominating Committee is responsible for identifying and recommending qualified candidates to the Board in the event that a position is vacated or created. The Nominating Committee will consider recommendations by shareholders if a vacancy were to exist. In considering candidates submitted by shareholders, the Nominating Committee will take into consideration the needs of the Board, the qualifications of the candidate, and the interests of shareholders. The Nominating Committee may also take into consideration the number of shares held by the recommending shareholder and the length of time that such shares have been held. To recommend a candidate for consideration by the Nominating Committee, a shareholder must submit the recommendation in writing and must include the following information: (i) the name of the shareholder and evidence of the shareholder’s ownership of shares of the Fund, including the number of shares owned and the length of time of ownership; (ii) the name of the candidate, the candidate’s resume or a listing of his or her qualifications to be a Director of the Fund, and the person’s consent to be named as a Director if selected by the Nominating Committee and nominated by the Board of Directors; and (iii) if requested by the Nominating Committee, a complete and signed director’s questionnaire.

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     The shareholder recommendation and information described above must be sent to the Fund’s Secretary, c/o Gabelli Funds, LLC at One Corporate Center, Rye, NY 10580-1422, and must be received by the Secretary no earlier than 150 days and no later than 120 days before the first anniversary of the date of the proxy statement for the prior year’s annual meeting.
     The Nominating Committee believes that the minimum qualifications for serving as a Director of the Fund are that the individual demonstrate, by significant accomplishment in his or her first, an ability to make a meaningful contribution to the Board of Directors’ oversight of the business and affairs of the Fund and have an impeccable record and reputation for honest and ethical conduct in both his or her professional and personal activities. In addition, the Nominating Committee examines a candidate’s specific experiences and skills, time availability in light of other commitments, potential conflicts of interest, and independence from management of the Fund.
     The Nominating Committee considers the overall composition of the Board, bearing in mind the benefits that may be derived from having members who have a variety of experiences, qualifications, attributes or skills useful in overseeing a publicly-traded, highly-regulated entity such as the Fund. The Fund’s governing documents state that a nominee fro Director shall be at least 21 years of age and not older than such age, if any, as the Directors may determine and shall not be under legal disability. The Directors have not determined a maximum age. The Nominating Committee does not have a formal policy regarding the consideration of diversity in identifying director candidates.
     The Fund does not have a standing compensation committee. For a discussion of experiences, qualifications, attributes or skills supporting the appropriateness of each Director’s service on the Fund’s Board, see the biographical information of the Directors below in the section entitled “Qualification of Board of Directors.”
Qualification of Board of Directors
     The Board believes that each Director’s experience, qualifications, attributes or skills on an individual basis and in combination with those of other Directors lead to the conclusion that each Director should serve in such capacity. Among the attributes or skills common to all Directors are their ability to review critically and to evaluate, question and discuss information provided to them, to interact effectively with the other Directors, the Adviser, the sub-administrator, other service providers, counsel and the Fund’s independent registered public accounting firm, and to exercise effective and independent business judgment in the performance of their duties as Directors. Each Director’s ability to perform his duties effectively has been attained in large part through the Director’s business, consulting or public service positions and through experience from service as a member of the Board and one or more of the other funds in the Gabelli/GAMCO Fund Complex, public companies, or non-profit entities or other organizations as set forth above and below. Each Director’s ability to perform his duties effectively also has been enhanced by his education, professional training and other life experiences.
      Anthony J. Colavita, Esq . Mr. Colavita is a practicing attorney with over 49 years of experience, including the area of business law. He is the Chair of the Fund’s Nominating

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Committee and is a member of the Fund’s Proxy Voting Committee. Mr. Colavita also serves on comparable or other board committees with respect to other funds in the Fund Complex on whose boards he sits. Mr. Colavita also serves as a Trustee of a charitable remainder uni-trust. He formerly served as a Commissioner of the New York State Thruway Authority and as a Commissioner of the New York State Bridge Authority. He served for ten years as the elected Supervisor of the Town of Eastchester, New York, responsible for ten annual municipal budgets of approximately eight million dollars per year. Mr. Colavita formerly served as special counsel to the New York State Assembly for five years and as a Senior Attorney with the New York State Insurance Department. He was also formerly Chairman of the Westchester County Republican Party and the New York State Republican Party. Mr. Colavita received his Bachelor of Arts from Fairfield University and his Juris Doctor from Fordham University School of Law. Mr. Colavita’s education, professional training and experience, and other life experiences, including but not limited to his more than 49 years of experience as an attorney, service on the boards of other funds within the Fund Complex, public service background in state and local government, including several senior legal and other managerial positions, make him highly qualified to serve as a Director of the Fund.
      James P. Conn . Mr. Conn, the lead independent Director of the Fund, is a member of the Fund’s Proxy Voting Committee and also serves on comparable or other board committees with respect to other funds in the Fund Complex on whose boards he sits. He was a senior business executive of an insurance holding company for much of his career, including service as Chief Investment Officer, and has been a director of several public companies in banking and other industries, for some of which he was lead Director and/or Chair of various committees. Mr. Conn received his Bachelor of Science in Business Administration from Santa Clara University. Mr. Conn’s education, professional training and experience, and other life experiences, including but not limited to his experience as a senior business executive in the banking industry, experience as a Chief Investment Officer, and service on the boards of other funds and committees within the Fund Complex, make him highly qualified to serve as a Director of the Fund.
      Gregory R. Dube . Mr. Dube is the founder of Roseheart Associates, a private company that invests in securities and real estate, and has served as managing member and Chairman since its inception in 1997. From 1998 to 2002, Mr. Dube was at Alliance Capital, where he served as the head of the Global High Yield Group from 1999 to 2002. Before joining Alliance Capital, Mr. Dube was a partner at Donaldson, Lufkin & Jenrette, responsible for the Tax-Exempt Capital Markets Division. Mr. Dube has an extensive background in the credit securities markets, including experience with trading and selling credit instruments, including corporate, high-yield, private placement, mortgage, Euro and distressed debt and derivatives. Mr. Dube currently serves on the Advisory Committee of New England Realty Associates Limited Partnership, a partnership engaged in the business of acquiring, developing, holding for investment, operating and selling real estate. Mr. Dube received his A.B. from Harvard College and was a Rhodes Scholar Nominee.
      Frank J. Fahrenkopf, Jr . Mr. Fahrenkopf is the President and Chief Executive Officer of the American Gaming Association (“AGA”), the trade group for the gaming industry. He serves

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on board committees with respect to other funds in the Fund Complex on whose boards he sits. He presently is Co-Chairman of the Commission on Presidential Debates, which is responsible for the widely-viewed Presidential debates during the quadrennial election cycle. Additionally, he serves as a board member of the International Republican Institute (IRI), which he founded in 1984. He served for many years as Chairman of the Pacific Democrat Union and Vice Chairman of the International Democrat Union, a worldwide association of political parties from the United States, Great Britain, France, Germany, Canada, Japan, Australia and 20 other nations. Prior to becoming the AGA’s first chief executive in 1995, Mr. Fahrenkopf was a partner in the law firm of Hogan & Hartson, where he chaired the International Trade Practice Group and specialized in regulatory, legislative, and corporate matters for multinational, foreign and domestic clients. He also served as Chairman of the Republican National Committee for six years during Ronald Reagan’s presidency. He is the former Chairman and remains a member of the Finance Committee of the Culinary Institute of America. He additionally had over 20 years’ experience as a member of the board of directors of a bank and still serves as a member of the Advisory Board of the bank. Mr. Fahrenkopf received his Bachelor of Arts from the University of Nevada, Reno and his Juris Doctor from Boalt Hall School of Law, U.C. Berkeley. Mr. Fahrenkopf’s education, professional training and experience, and other life experiences, including but not limited to his experience as an executive officer of various national and international political and industry committees, partnership in a law firm, his over 20 years of experience as a board member of a bank, and service on the boards of other funds and committees within the Fund Complex, make him highly qualified to serve as a Director of the Fund.
      Mario J. Gabelli . Mr. Gabelli is Chairman of the Board of Directors and Chief Investment Officer of the Fund. He also currently serves as Chairman of the boards of other funds in the Fund Complex. Mr. Gabelli is presently Chairman and Chief Executive Officer of GAMCO Investors, Inc. (“GAMCO”), a NYSE-listed investment advisory firm. In addition, he is Chief Executive Officer of GAMCO Asset Management Inc., an affiliate of the Investment Adviser. He is also the Chief Investment Officer of Value Portfolios of Gabelli Funds, LLC, and GAMCO Asset Management, Inc., which are each asset management subsidiaries of GAMCO. In addition, Mr. Gabelli is Chief Executive Officer and a director and the controlling shareholder of GGCP, Inc., an investment holding company that holds a majority interest in GAMCO. Mr. Gabelli also sits on the boards of other publicly traded companies and private firms, and various charitable foundations and educational institutions, including as a Trustee of Boston College and as a member of the Board of Overseers of Columbia University School of Business. Mr. Gabelli received his Bachelors degree from Fordham University and his Masters of Business Administration from Columbia University School of Business. Mr. Gabelli’s education, professional training and experience, and other life experiences, including, but not limited to, his experience on the boards of many publicly traded companies and private firms, and various charitable foundations and educational institutions, his service as Chairman of other funds within the Fund Complex, and his position as Chief Investment Officer of various funds, make him highly qualified to serve as a Director of the Fund.
      Anthony R. Pustorino . Mr. Pustorino is a Certified Public Accountant and a Professor Emeritus of Pace University and has over 40 years of experience in public accounting. Mr. Pustorino is the Chair of the Fund’s Audit Committee and has been designated the Fund’s Audit Committee Financial Expert. He is also the Chair of the Fund’s Proxy Voting Committee. Mr.

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Pustorino also serves on comparable or other board committees with respect to other funds in the Fund Complex on whose boards he sits. Mr. Pustorino is also Chair of the Audit Committee and a Director of LGL Group, Inc., a diversified manufacturing company. He was previously the President and Shareholder of an accounting firm and a Professor of accounting, at both Fordham University and Pace University. He also served as Chairman of the Board of Directors of the New York State Board for Public Accountancy and of the Certified Public Accountants (“CPA”) Examination Review Board of the National Association of State Board of Accountancy. He was a Member of the Executive Committee and a Vice President of the New York State Society of CPAs, and was a Member of the Council of the American Institute of CPAs. Mr. Pustorino is the recipient of numerous professional and teaching awards. He received a Bachelor of Science in Business from Fordham University and a Masters in Business Administration from New York University. Mr. Pustorino’s education, professional training and experience, and other life experiences, including but not limited to his over 40 years of experience in public accounting, during which he has served as a principal of an accounting firm, professor of accounting, and held executive committee positions with state and national accounting agencies, and service on the boards of other funds and committees within the Fund Complex, make him highly qualified to serve as a Director of the Fund.
      Werner J. Roeder . Dr. Roeder is Vice President of Medical Affairs/Medical Director of Lawrence Hospital Center in Bronxville, New York. He has been a practicing surgeon for over 45 years. As Vice President of Medical Affairs at Lawrence Hospital, he is actively involved in quality, personnel, and financial matters concerning the hospital’s $140 million budget. He is a member of the Fund’s Audit Committee and the Fund’s Nominating Committee and a member of both multi-fund ad hoc Compensation Committees. Dr. Roeder also serves on comparable or other board committees with respect to other funds in the Fund Complex on whose boards he sits. Dr. Roeder is board certified as a surgeon by The American Board of Surgery and presently serves in a consulting capacity to Empire Blue Cross/Blue Shield. He obtained his Doctor in Medicine from New York Medical College. Dr. Roeder’s education, professional training and experience, and other life experiences, including but not limited to his over 45 years of experience as a practicing surgeon, service as an officer of a hospital, consulting services to a national agency and service on the boards of other funds and committees within the Fund Complex, make him highly qualified to serve as a Director of the Fund.
      Salvatore J. Zizza . Mr. Zizza is the Chairman of a consulting firm. He is a member of the Fund’s Audit Committee and the Fund’s Nominating Committee and a member of both multi-fund ad hoc Compensation Committees. Mr. Zizza also serves on comparable or other board committees, including as lead independent director, with respect to other funds in the Fund Complex on whose boards he sits. Besides serving on the boards of many funds within the Fund Complex, he is currently a Director of two other public companies and has previously served on the boards of several other public companies. He also previously served as the Chief Executive of a large construction company which was a NYSE-listed company. Mr. Zizza received his Bachelor of Arts and his Master of Business Administration in Finance from St. John’s University, which also has awarded him an Honorary Doctorate in Commercial Sciences. Mr. Zizza’s education, professional training and experience, and other life experience, including but not limited to his service as director and executive officer of other public companies and his service on the boards of other funds and committees within the Fund Complex, make him highly qualified to serve as a Director of the Fund.

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Beneficial Ownership of Shares Held in the Fund and the Fund Complex for Each Director
     Set forth in the table below is the dollar range of equity securities in the Fund beneficially owned by each Director and the aggregate dollar range of equity securities in the Fund complex beneficially owned by each Director.
         
        Aggregate Dollar Range of Equity
        Securities in all Registered Investment
    Dollar Range of Equity   Companies in the Gabelli Fund
Name of Director   Securities in the Fund (1)   Complex (1)(2)
Interested Director
       
Mario J. Gabelli
  E   E
 
       
Independent Directors
       
Anthony J. Colavita
  C   E
James P. Conn
  E   E
Gregory R. Dube**
  none   none
Frank J. Fahrenkopf, Jr.
  A   B
Anthony R. Pustorino
  C   E
Werner J. Roeder
  A   E
Salvatore J. Zizza
  C   E
 
*   Key to Dollar Ranges:
 
A.   None
 
B.   $1 — $10,000
 
C.   $10,001 — $50,000
 
D.   $50,001 — $100,000
 
E.   over $100,000
 
    All shares were valued as of December 31, 2010.
 
**   Mr. Dube was elected to the Board of Directors at the Fund’s Annual Meeting of Shareholders (the “Meeting”) held on June 23, 2010. The certified results of the Meeting were issued by the inspector of elections on July 1, 2010.
 
(1)   This information has been furnished by each Director as of December 31, 2010. “Beneficial Ownership” is determined in accordance with Rule 16a-1(a)(2) of the Securities Exchange Act of 1934, as amended (the “1934 Act”).
 
(2)   The term “Family of Investment Companies” includes two or more, registered funds that share the same investment adviser or principal underwriter and hold themselves out to investors as related companies for purposes of investment and investor services. Currently the registered funds that comprise the “Fund Complex” are identical to those that comprise the “Family of Investment Companies.”
Remuneration of Directors and Officers
     The Fund pays each Director who is not affiliated with the Investment Adviser or its affiliates a fee of $6,000 per year plus $500 per Board meeting attended, including standing Committee meetings, together with the Director’s actual out-of-pocket expenses relating to his attendance at such meetings. In addition, the lead Independent Director receives an annual fee of $1,000, the Audit Committee Chairman receives an annual fee of $3,000 and the Nominating Committee Chairman receives an annual fee of $2,000. A Director may receive a single meeting

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fee, allocated among the participating funds, for participation in certain meetings on behalf of multiple funds. The aggregate remuneration (not including out-of-pocket expenses) paid by the Fund to such Directors during the fiscal year ended December 31, 2010 amounted to $105,409. During the fiscal year ended December 31, 2010, the Directors of the Fund met fifteen times, eleven of which were special meetings of Directors. Each Director then serving in such capacity attended at least 75% of the meetings of Directors and of any Committee of which he is a member.
     The following table sets forth certain information regarding the compensation of the Directors by the Fund and executive officers, if any, who were compensated by the Fund rather than the Investment Adviser, for the fiscal year ended December 31, 2010.
Compensation Table for the Fiscal Year Ended December 31, 2010
                 
            Aggregate Compensation  
            From the Fund and  
    Aggregate Compensation     Fund Complex  
Name of Person and Position   From the Fund     Paid to Directors*  
Interested Director:
               
Mario J. Gabelli
  $ 0     $ 0 (26)
Director and Chief Investment Officer
               
Independent Directors:
               
Thomas E. Bratter 1
  $ 8,750     $ 43,500 [ ]
Director
               
Anthony J. Colavita
  $ 16,111     $ 254,500 (35)
Director
               
James P. Conn
  $ 15,875     $ 144,500 (18)
Director
               
Gregory R. Dube 2
  $ 4,000     $ 4,000 (1)
Director
               
Frank J. Fahrenkopf, Jr.
  $ 14,600     $ 73,500 (6)
Director
               
Anthony R. Pustorino
  $ 17,462     $ 164,500 (13)
Director
               
 
               
Werner J. Roeder
  $ 13,000     $ 120,500 (22)
Director
               
 
               
Salvatore J. Zizza
  $ 15,611     $ 212,000 (28)
Director
               
 
1   Mr. Bratter served on the Board of Directors until June 23, 2010.
 
2   Mr. Dube was elected to the Board of Directors on June 23, 2010.
 
*   Represents the total compensation paid to such persons during the fiscal year ended December 31, 2010 by investment companies (including the Fund) or portfolios thereof from which such person receives compensation that are considered part of the same fund complex as the Fund because they have common or affiliated investment advisers. The number in parentheses represents the number of such investment companies and portfolios.

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Code of Ethics
     The Fund and the Investment Adviser have adopted a code of ethics (the “Code of Ethics”) under Rule 17j-1 under the 1940 Act. The Code of Ethics permits personnel, subject to the Code of Ethics and its restrictive provisions, to invest in securities, including securities that may be purchased or held by the Fund. The Code of Ethics can be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-551-8090. The Code of Ethics is also available on the EDGAR Database on the SEC’s website at http://www.sec.gov . Copies of the Code of Ethics may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC’s Public Reference Section, Washington, D.C. 20549-0102.
Proxy Voting Policies and Procedures
     The Fund has adopted the proxy voting policies and procedures of the Investment Adviser and has directed the Investment Adviser to vote all proxies relating to the Fund’s voting securities in accordance with such procedures. A copy of the Fund’s proxy voting policies and procedures is attached as Appendix A.
     Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling (800) 422-3554 or on the SEC’s website at http://www.sec.gov .
BENEFICIAL OWNERS
     The following table sets forth the beneficial ownership by each person (including any group) known to the Fund to be deemed the beneficial owner of more than 5% of the outstanding shares of common stock of the Fund as of [ ]:
         
Name and Address   Amount of Shares and   Percent of
of Beneficial Owner   Nature of Ownership   Class
[ ]
  [ ]   [ %]
     [As of [ ], there were no persons known to the Fund to be beneficial owners of more than 5% of the Fund’s outstanding shares of preferred stock.]
     [As of [ ], the Directors and Officers of the Fund as a group beneficially owned approximately 4% of the outstanding shares of the Fund’s common stock and less than 1% of the outstanding shares of the Fund’s Series B Preferred.]

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INVESTMENT ADVISER
Investment Management
     Gabelli Fund, LLC serves as the Fund’s Investment Adviser pursuant to the Investment Advisory Agreement with the Fund. The Investment Adviser is a New York limited liability company with principal offices located at One Corporate Center, Rye, New York 10580-1422 and is registered under the Investment Advisers Act of 1940, as amended. The Investment Adviser was organized in 1999 and is the successor to Gabelli Fund, Inc., which was organized in 1980. As of September 30, 2010, the Investment Adviser acts as a registered investment adviser to 25 management investment companies with aggregate net assets of $16.6 billion. The Investment Adviser, together with the other affiliated investment advisers noted below, had assets under management totaling approximately $30.2 billion as of September 30, 2010. GAMCO Asset Management Inc. (“GAMCO”), an affiliate of the Investment Adviser, acts as investment adviser for individuals, pension trusts, profit sharing trusts and endowments, and as a sub-adviser to management investment companies having aggregate assets of $[12.4 billion] under management as of September 30, 2010. Gabelli Securities, Inc., an affiliate of the Investment Adviser, acts as investment adviser for investment partnerships and entities having aggregate assets of approximately $466 million under management as of September 30, 2010. Teton Advisors, Inc., an affiliate of the Investment Adviser, acts as investment manager to The GAMCO Westwood Funds and separately managed accounts having aggregate assets of approximately $667 million under management as of September 30, 2010.
     The Investment Adviser is a wholly-owned subsidiary of GAMCO Investors, Inc., a New York corporation. Shares of Class A common stock of GAMCO Investors, Inc. are traded on the NYSE under the symbol “GBL.” Mr. Mario J. Gabelli may be deemed a “controlling person” of the Investment Adviser on the basis of his indirect ownership of a majority of GGCP, Inc. (“GGCP”), a private company, which owns a majority of the capital stock of GAMCO Investors, Inc.
Advisory Agreement
     Affiliates of the Investment Adviser may, in the ordinary course of their business, acquire for their own account or for the accounts of their advisory clients, significant (and possibly controlling) positions in the securities of companies that may also be suitable for investment by the Fund. The securities in which the Fund might invest may thereby be limited to some extent. For instance, many companies in the past several years have adopted so-called “poison pill” or other defensive measures designed to discourage or prevent the completion of non-negotiated offers for control of the company. Such defensive measures may have the effect of limiting the shares of the company that might otherwise be acquired by the Fund if the affiliates of the Investment Adviser or their advisory accounts have or acquire a significant position in the same securities. However, the Investment Adviser does not believe that the investment activities of its affiliates will have a material adverse effect upon each the Fund in seeking to achieve its investment objectives. Securities purchased or sold pursuant to contemporaneous orders entered on behalf of the investment company accounts of the Investment Adviser or the advisory accounts managed by its affiliates for their unaffiliated clients are allocated pursuant to principles believed to be fair and not disadvantageous to any such accounts. In addition, all such

-31-


 

orders are accorded priority of execution over orders entered on behalf of accounts in which the Investment Adviser or its affiliates have a substantial pecuniary interest. The Fund may on occasion give advice or take action with respect to other clients that differs from the actions taken with respect to the Fund. The Fund may invest in the securities of companies that are investment management clients of GAMCO Asset Management Inc. In addition, portfolio companies or their officers or directors may be minority shareholders of the Investment Adviser or its affiliates.
     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, places orders to purchase and sell securities on behalf of the Fund and manages its other business and affairs, all subject to the supervision and direction of the Fund’s 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 the Fund’s shareholders and supervising the calculation of the net asset value of its shares. All expenses of computing the net asset value of the Fund, including any equipment or services obtained solely for the purpose of pricing shares or valuing its investment portfolio, will be an expense of the Fund under its Advisory Agreement unless the Investment Adviser voluntarily assumes responsibility for such expense. During fiscal year [2010], the Fund paid or accrued $[45,000] to the Investment Adviser 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 incentive to utilize such leverage. However, the Investment Adviser has agreed to reduce the management fee on the incremental assets attributable to the preferred stock during the fiscal year if the total return of the net asset value of the common shares 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 waive 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 shareholder’s total return. This fee waiver is voluntary and will remain in effect as long as any preferred stock in a series is outstanding. 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.

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     For the fiscal years ended December 31, 2010, 2009 and 2008, the Fund paid for advisory and administrative services rendered to the Fund, and the Investment Adviser waived fees and/or reimbursed expenses of the Fund under the Advisory Agreement as follows:
December 31, 2010
         
Fees Paid        
(after waivers)   Waivers   Reimbursements
$[ ]   $[ ]  
December 31, 2009
         
Fees Paid        
(after waivers)   Waivers   Reimbursements
$[ ]   $[ ]  
December 31, 2008
         
Fees Paid        
(after waivers)   Waivers   Reimbursements
$[ ]   $[ ]  
     The Advisory Agreement provides that in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard for 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. The Advisory Agreement was initially approved by the Board at a meeting held on April 6, 1994 and was approved most recently by the Board on May 19, 2010. The Advisory Agreement terminates automatically on its assignment and may be terminated without penalty on 60 days’ written notice at the option of either party thereto or by a vote of a majority (as defined in the 1940 Act) of the Fund’s outstanding shares.
     A discussion regarding the basis of the Board’s approval of the Advisory Agreement is available in the Fund’s Semi-Annual Report to shareholders for the six months ended June 30, 2010.

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CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
     State Street Bank and Trust Company (the “Custodian”), located at 150 Royall Street, Canton, MA 02021, serves as the custodian of the Fund’s assets pursuant to a custody agreement. Under the custody agreement, the Custodian holds the Fund’s assets in compliance with the 1940 Act. For its services, the Custodian receives a monthly fee based upon the average weekly value of the total assets of the Fund, plus certain charges for securities transactions.
     Computershare Trust Company, N.A., located at 250 Royall Street, Canton, Massachusetts 02021, serves as the Fund’s dividend disbursing agent, as agent under the Fund’s automatic dividend reinvestment and voluntary cash purchase plan and as transfer agent and registrar for Shares of common stock of the Fund.
     Computershare Trust Company, N.A. also serves as the transfer agent, registrar, dividend paying agent and redemption agent with respect to the Series B Preferred.
     The Bank of New York, located at 5 Penn Plaza, 13th Floor, New York, NY 10001, serves as the Fund’s auction agent, transfer agent, registrar, dividend paying agent and redemption agent with respect to the Series C Auction Rate Preferred.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     [ ] serves as the Independent Registered Public Accounting Firm of the Fund and audits the financial statements of the Fund. [ ] is located at [ ].
PORTFOLIO MANAGEMENT
Other Accounts Managed
     The information below lists other accounts for which each portfolio manager was primarily responsible for the day-to-day management during the year ended December 31, 2010, for Messrs. Gabelli, Haverty and Marangi.
                                     
                        # of Accounts    
                        Managed with   Total Assets with
Name of       Total of Accounts           Advisory Fee Based   Advisory Fee Based
Portfolio Managers   Type of Accounts   Managed   Total Assets   on Performance   on Performance
Mario J. Gabelli  
Registered Investment Companies:
    26     $ 17.0 B     6     $ 4.1 B
   
Other Pooled Investment Vehicles:
    16     $ 478.4 M     14     $ 470.6 M
   
Other Accounts:
    1,702     $ 14.4 B     9     $ 1.9 B
Lawrence J. Haverty,Jr.  
Registered Investment Companies:
    0     $ 0       0     $ 0  
   
Other Pooled Investment Vehicles:
    0     $ 0       0     $ 0  
   
Other Accounts:
    5     $ 5.8 M     0     $ 0  
Christopher J. Marangi  
Registered Investment Companies:
    2     $ 3.3 B     0     $ 0  
   
Other Pooled Investment Vehicles:
    0     $ 0       0     $ 0  
   
Other Accounts:
    3     $ 698.7 K     0     $ 0  

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Potential Conflicts of Interest
     Actual or apparent conflicts of interest may arise when the portfolio managers also have 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 may manage more than one account, they may not be able to formulate as complete a strategy or identify equally attractive investment opportunities for each of those accounts as if they were to devote substantially more attention to the management of only one account.
      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 need to be allocated among these accounts or other accounts managed primarily by other portfolio managers of the Investment Adviser and its affiliates.
      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 exercise 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 transactions, or both, to the detriment of one or more other accounts.
      Selection of Broker/Dealers. A portfolio manager may be able to select or influence the selection of the brokers and dealers that are used to execute securities transactions for the Fund or accounts that they supervise. In addition to providing execution of trades, some brokers and dealers provide portfolio managers with brokerage and research services which may result in the payment of higher brokerage fees than might otherwise be available. These services may be more beneficial to certain funds or accounts of the Adviser and its affiliates than to others. Although the payment of brokerage commissions is subject to the requirement that the Investment Adviser determine in good faith that the commissions are reasonable in relation to the value of the brokerage and research services provided to the Fund, a portfolio manager’s decision as to the selection of brokers and dealers could yield disproportionate costs and benefits among the Fund or other accounts that the Investment Adviser and its affiliates manage. In addition, with respect to certain types of accounts (such as pooled investment vehicles and other accounts managed for organizations and individuals) the Investment Adviser may be limited by the client concerning the selection of brokers or may be instructed to direct trades to particular brokers. In these cases, the Investment Adviser or its affiliates may place separate, non-simultaneous transactions in the same security for the Fund and another account that may

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temporarily affect the market price of the security or the execution of the transaction, or both, to the detriment of the Fund or the other accounts.
      Variation in Compensation. A conflict of interest may arise where the financial or other benefits available to a portfolio manager differ among the accounts that they manage. If the structure of the Investment 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 investment interests or in which the Investment Adviser or its affiliates have investment interests. Similarly, the desire to maintain assets under management or to enhance a portfolio manager’s performance record or to derive other rewards, financial or otherwise, could influence the portfolio managers in affording preferential treatment to those accounts that could most significantly benefit the portfolio managers.
     The Investment Adviser and the Fund have adopted compliance policies and procedures that are designed to address the various conflicts of interest that may arise for the Investment Adviser and its staff members. However, there is no guarantee that such policies and procedures will be able to detect and address every situation in which an actual or potential conflict may arise.
Portfolio Manager Compensation
     Mr. Gabelli receives incentive-based variable compensation based on a percentage of net revenues received by the Investment 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 the Fund. Five closed-end registered investment companies (including the Fund) managed by Mr. Gabelli have arrangements whereby the Investment Adviser will only receive its investment advisory fee attributable to the liquidation value of outstanding preferred stock (and Mr. Gabelli would only receive his percentage of such advisory fee) if certain performance levels are met. Additionally, he receives similar incentive based variable compensation for managing other accounts within the firm and its affiliates. This method of compensation is based on the premise that superior long-term performance in managing a portfolio should be rewarded with higher compensation as a result of growth of assets through appreciation and net investment activity. The level of compensation is not determined with specific reference to the performance of any account against any specific benchmark. One of the other registered investment companies managed by Mr. Gabelli has a performance (fulcrum) fee arrangement for which his compensation is adjusted up or down based on the performance of the investment company relative to an index. Mr. Gabelli manages other accounts with performance fees. Compensation for managing these accounts has two components. One component is based on a percentage of net revenues to the investment adviser for managing the account. The second component is based on absolute performance of the account, with respect to which a percentage of such performance fee is paid to Mr. Gabelli. As an executive officer of the Investment Adviser’s parent company, GBL, Mr. Gabelli also receives ten percent (10%) of the net operating profits of the parent company. He receives no base salary, no annual bonus, and no stock options.

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     The compensation of the other portfolio managers for the Fund is reviewed annually and structured to enable the Investment 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 stock options or restricted stock awards, and incentive-based variable compensation based on a percentage of net revenue received by the Investment 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 Investment 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
     As reported to the Fund, the information in the following table reflects beneficial ownership by the portfolio managers of Shares as of December 31, 2010:
     
Name of Portfolio Manager   Dollar Range of Equity Securities in the Fund* (1)
Mario J. Gabelli
  G
Lawrence J. Haverty
  E
Christopher J. Marangi
  A
 
*   Key to Dollar Ranges
 
A.   None
 
B.   $1 — $10,000
 
C.   $10,001 — $50,000
 
D.   $50,001 — $100,000
 
E.   $100,001 — $500,000
 
F.   $500,001 — $1,000,000
 
G.   over $1,000,000
 
(1)   “Beneficial Ownership” is determined in accordance with Rule 16a-1(a)(2) promulgated under the 1934 Act.
Portfolio Holdings Information
     Employees of the Investment Adviser and its affiliates will often have access to information concerning the portfolio holdings of the Fund. The Fund and the Investment Adviser have adopted policies and procedures that require all employees to safeguard proprietary

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information of the Fund, which includes information relating to the Fund’s portfolio holdings as well as portfolio trading activity of the Investment Adviser with respect to the Fund (collectively, “Portfolio Holdings Information”). In addition, the Fund and the Investment Adviser have adopted policies and procedures providing that Portfolio Holdings Information may not be disclosed except to the extent that it is (a) made available to the general public by posting on the Fund’s website or filed as a part of a required filing on Form N-Q or N-CSR or (b) provided to a third party for legitimate business purposes or regulatory purposes, that has agreed to keep such data confidential under forms approved by the Investment Adviser’s legal department or outside counsel, as described below. The Investment Adviser will examine each situation under (b) with a view to determine that release of the information is in the best interest of the Fund and its shareholders and, if a potential conflict between the Investment Adviser’s interests and the Fund’s interests arises, to have such conflict resolved by the Chief Compliance Officer or the independent Board. These policies further provide that no officer of the Fund or employee of the Investment Adviser shall communicate with the media about the Fund without obtaining the advance consent of the Chief Executive Officer, Chief Operating Officer, or General Counsel of the Investment Adviser.
     Under the foregoing policies, the Fund currently may disclose Portfolio Holdings Information in the circumstances outlined below. Disclosure generally may be either on a monthly or quarterly basis with no time lag in some cases and with a time lag of up to 60 days in other cases (with the exception of proxy voting services which require a regular download of data):
(1)    To regulatory authorities in response to requests for such information and with the approval of the Chief Compliance Officer of the Fund;
 
(2)    To mutual fund rating and statistical agencies and to persons performing similar functions where there is a legitimate business purpose for such disclosure and such entity has agreed to keep such data confidential at least until it has been made public by the Investment Adviser;
 
(3)    To service providers of the Fund, as necessary for the performance of their services to the Fund and to the Board; the Fund’s anticipated service providers are its administrator, transfer agent, custodian, independent registered public accounting firm, and legal counsel;
 
(4)    To firms providing proxy voting and other proxy services, provided such entity has agreed to keep such data confidential until at least it has been made public by the Investment Adviser;
 
(5)    To certain broker dealers, investment advisers, and other financial intermediaries for purposes of their performing due diligence on the Fund and not for dissemination of this information to their clients or use of this information to conduct trading for their clients. Disclosure of Portfolio Holdings Information in these circumstances requires the broker, dealer, investment adviser, or financial intermediary to agree to keep such information confidential and is further subject to prior approval of the Chief Compliance Officer of the Fund and to reporting to the Board at the next quarterly meeting; and

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(6)    To consultants for purposes of performing analysis of the Fund, which analysis (but not the Portfolio Holdings Information) may be used by the consultant with its clients or disseminated to the public, provided that such entity shall have agreed to keep such information confidential until at least it has been made public by the Investment Adviser.
     Disclosures made pursuant to a confidentiality agreement are subject to periodic confirmation by the Chief Compliance Officer of the Fund that the recipient has utilized such information solely in accordance with the terms of the agreement. Neither the Fund nor the Investment Adviser, nor any of the Investment Adviser’s affiliates will accept on behalf of itself, its affiliates, or the Fund any compensation or other consideration in connection with the disclosure of portfolio holdings of the Fund. The Board will review such arrangements annually with the Fund’s Chief Compliance Officer.
PORTFOLIO TRANSACTIONS
     Subject to policies established by the Board, the Investment Adviser is responsible for placing purchase and sale orders and the allocation of brokerage on behalf of the Fund. Transactions in equity securities are in most cases effected on U.S. stock exchanges and involve the payment of negotiated brokerage commissions. In general, there may be no stated commission in the case of securities traded in over-the-counter markets, but the prices of those securities may include undisclosed commissions or mark-ups. Principal transactions are not entered into with affiliates of the Fund. However, Gabelli & Company may execute transactions in the over-the-counter markets on an agency basis and receive a stated commission therefrom. To the extent consistent with applicable provisions of the 1940 Act and the rules and exemptions adopted by the SEC thereunder, as well as other regulatory requirements, the Fund’s Board has determined that portfolio transactions may be executed through Gabelli & Company and its broker-dealer affiliates if, in the judgment of the Investment Adviser, the use of those broker-dealers is likely to result in price and execution at least as favorable as those of other qualified broker-dealers, and if, in particular transactions, the affiliated broker-dealers charge the Fund a rate consistent with that charged to comparable unaffiliated customers in similar transactions. The Fund has no obligations to deal with any broker or group of brokers in executing transactions in portfolio securities. In executing transactions, the Investment Adviser seeks to obtain the best price and execution for the Fund, taking into account such factors as price, size of order, difficulty of execution and operational facilities of the firm involved and the firm’s risk in positioning a block of securities. While the Investment Adviser generally seeks reasonably competitive commission rates, the Fund does not necessarily pay the lowest commission available.
     Subject to obtaining the best price and execution, brokers who provide supplemental research, market and statistical information, or other services ( e.g. , wire services) to the Investment Adviser or its affiliates may receive orders for transactions by the Fund. The term “research, market and statistical information” includes advice as to the value of securities, and advisability of investing in, purchasing or selling securities, and the availability of securities or purchasers or sellers of securities, and furnishing analyses and reports concerning issues, industries, securities, economic factors and trends, portfolio strategy and the performance of accounts. Information so received will be in addition to and not in lieu of the services required

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to be performed by the Investment Adviser under the Advisory Agreement and the expenses of the Investment Adviser will not necessarily be reduced as a result of the receipt of such supplemental information. Such information may be useful to the Investment Adviser and its affiliates in providing services to clients other than the Fund, and not all such information is used by the Investment Adviser in connection with the Fund. Conversely, such information provided to the Investment Adviser and its affiliates by brokers and dealers through whom other clients of the Investment Adviser and its affiliates effect securities transactions may be useful to the Investment Adviser in providing services to the Fund.
     Although investment decisions for the Fund are made independently from those of the other accounts managed by the Investment Adviser and its affiliates, investments of the kind made by the Fund may also be made for those other accounts. When the same securities are purchased for or sold by the Fund and any of such other accounts, it is the policy of the Investment Adviser and its affiliates to allocate such purchases and sales in a manner deemed fair and equitable over time to all of the accounts, including the Fund.
     For the fiscal years ended December 31, 2008, December 31, 2009 and December 31, 2010, the Fund paid a total of $[116,669], $[49,813] and $[47,477], respectively, in brokerage commissions, of which Gabelli & Company and its affiliates received, $[61,722], $[29,661] and $[28,929], respectively. The amount received by Gabelli & Company and its affiliates from the Fund in respect of brokerage commissions for the fiscal year ended December 31, 2010 represented approximately [60.93%] of the aggregate dollar amount of brokerage commissions paid by the Fund for such period and approximately [36.26%] of the aggregate dollar amount of transactions by the Fund for such period.
TAXATION
     The following discussion is a brief summary of certain U.S. federal income tax considerations affecting the Fund and its shareholders. This discussion reflects applicable tax laws of the United States as of the date of this SAI, which tax laws may be changed or subject to new interpretations by the courts or the Internal Revenue Service (the “IRS) retroactively or prospectively. No attempt is made to present a detailed explanation of all U.S. federal, state, local and foreign tax concerns affecting the Fund and its shareholders (including shareholders owning a large position in the Fund), and the discussions set forth herein do not constitute tax advice. Investors are urged to consult their own tax advisers to determine the tax consequences to them of investing in the Fund.
Taxation of the Fund
     The Fund has qualified and intends to continue to qualify, as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”) (a “RIC”). Accordingly, the Fund will, among other things, (i) derive in each taxable year at least 90% of its gross income from (a) dividends, interest (including tax-exempt interest), payments with respect to certain securities loans, and gains from the sale or other disposition of stock, securities or foreign currencies, or other income (including but not limited to gain from options, futures and forward contracts) derived with respect to its business of investing in such stock, securities or currencies and (b) net income derived from interests in certain publicly traded

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partnerships that are treated as partnerships for U.S. federal income tax purposes and that derive less than 90% of their gross income from the items described in (a) above (each a “Qualified Publicly Traded Partnership”); and (ii) diversify its holdings so that, at the end of each quarter of each taxable year (a) at least 50% of the value of its total assets is represented by cash and cash items, U.S. government securities, the securities of other regulated investment companies 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 Fund’s total assets and not more than 10% of the outstanding voting securities of such issuer and (b) not more than 25% of the value of the Fund’s total assets is invested in the securities of (I) any one issuer (other than U.S. government securities and the securities of other RICs), (II) any two or more issuers in which the Fund owns more than 20% or more of the voting stock and that are determined to be engaged in the same business or similar or related trades or businesses or (III) any one or more Qualified Publicly Traded Partnerships.
     The investments of the Fund in partnerships, including Qualified Publicly Traded Partnerships, may result in the Fund being subject to state, local, or foreign income, franchise or withholding tax liabilities.
     As a RIC, the Fund generally is not or will not be, as the case may be, subject to U.S. federal income tax on income and gains that it distributes each taxable year to shareholders, if it distributes at least 90% of the sum of the Fund’s (i) investment company taxable income (which includes, among other items, dividends, interest and the excess of any net short-term capital gain over net long-term capital loss and other taxable income, other than any net long-term capital gain, reduced by deductible expenses) determined without regard to the deduction for dividends paid and (ii) its net tax-exempt interest (the excess of its gross tax-exempt interest over certain disallowed deductions). The Fund intends to distribute at least annually substantially all of such income.
     Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4% excise tax at the Fund level. To avoid the tax, the Fund must distribute during each calendar year an amount at least equal to the sum of (i) 98% of its ordinary income (not taking into account any capital gain or loss) for the calendar year, (ii) 98.2% of its capital gain in excess of its capital loss (adjusted for certain ordinary losses) for a one-year period generally ending on October 31 of the calendar year (unless an election is made to use the fund’s fiscal year), and (iii) certain undistributed amounts from previous years on which a fund paid no federal income tax. While the Fund intends to distribute any income and capital gain in the manner necessary to minimize imposition of the 4% excise tax, there can be no assurance that sufficient amounts of the Fund’s taxable income and capital gain will be distributed to avoid entirely the imposition of the tax. In that event, the Fund will be liable for the tax only on the amount by which it does not meet the foregoing distribution requirement.
     A distribution will be treated as paid during the calendar year if it is paid during the calendar year or declared by the Fund in October, November or December of the year, payable to shareholders of record on a date during such a month and paid by the Fund during January of the following year. Any such distributions paid during January of the following year will be deemed to be received no later than December 31 of the year the distributions are declared, rather than when the distributions are received.

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     If the Fund were unable to satisfy the 90% distribution requirement or otherwise were to fail to qualify as a RIC in any year, it would be taxed in the same manner as an ordinary corporation and distributions to the Fund’s shareholders would not be deductible by the Fund in computing its taxable income. To qualify again to be taxed as a RIC in a subsequent year, the Fund would be required to distribute to its shareholders its earnings and profits attributable to non-RIC years. In addition, if the Fund failed to qualify as a RIC for a period greater than two taxable years, then the Fund would be required to elect to recognize and pay tax on any net built-in gain (the excess of aggregate gain, including items of income, over aggregate loss that would have been realized if the Fund had been liquidated) or, alternatively, be subject to taxation on such built-in gain recognized for a period of ten years, in order to qualify as a RIC in a subsequent year.
     Gain or loss on the sales of securities by the Fund will generally be long-term capital gain or loss if the securities have been held by the Fund for more than one year. Gain or loss on the sale of securities held for one year or less will be short-term capital gain or loss.
     Foreign currency gain or loss on non-U.S. dollar-denominated securities and on any non-U.S. dollar-denominated futures contracts, options and forward contracts that are not section 1256 contracts (as defined below) generally will be treated as ordinary income and loss.
     Investments by the Fund in certain “passive foreign investment companies” (“PFICs”), as defined in the Code, could subject the Fund to federal income tax (including interest charges) on certain distributions or dispositions with respect to those investments which cannot be eliminated by making distributions to shareholders. Elections may be available to the Fund to mitigate the effect of this tax provided that the PFIC complies with certain reporting requirements, but such elections generally accelerate the recognition of income without the receipt of cash. Dividends paid by PFICs will not qualify for the reduced tax rates discussed below under “Taxation of Shareholders.”
     The Fund may invest in debt obligations purchased at a discount with the result that the Fund may be required to accrue income for U.S. federal income tax purposes before amounts due under the obligations are paid. The Fund 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.
     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 the Fund, the Fund could be required to include in current income, income it has not yet received. Any such income would be treated as income earned by the Fund and therefore would be subject to the distribution requirements of the Code. This might prevent the Fund from distributing 90% of its investment company taxable income as is required in order to avoid Fund-level federal income taxation on all of its income, or might prevent the Fund from distributing enough ordinary income and capital gain net income to avoid completely the imposition of the excise tax. To avoid this result, the Fund may be required to borrow money or dispose of securities to be able to make distributions to its shareholders.

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     If the Fund does not meet the asset coverage requirements of the 1940 Act and the Articles Supplementary, the Fund will be required to suspend distributions to the holders of common stock until the asset coverage is restored. Such a suspension of distributions might prevent the Fund from distributing 90% of its investment company taxable income as is required in order to avoid fund-level federal income taxation on all of its income, or might prevent the fund from distributing enough income and capital gain net income to avoid completely imposition of the excise tax.
     Certain of the Fund’s investment practices are subject to special and complex U.S. federal income tax provisions that may, among other things, (i) disallow, suspend or otherwise limit the allowance of certain losses or deductions, (ii) convert lower taxed long-term capital gains into higher taxed short-term capital gains or ordinary income, (iii) convert ordinary loss or a deduction into capital loss (the deductibility of which is more limited), (iv) cause a fund to recognize income or gain without a corresponding receipt of cash, (v) adversely affect the time as to when a purchase or sale of stock or securities is deemed to occur, (vi) adversely alter the characterization of certain complex financial transactions and (vii) produce income that will not qualify as good income for purposes of the 90% annual gross income requirement described above. The Fund will monitor its transactions and may make certain tax elections to mitigate the effect of these rules and prevent disqualification of the fund as a regulated investment company.
Foreign Taxes
     Since the Fund may invest in foreign securities, income from such securities may be subject to non-U.S. taxes. The Fund expects to invest less than 35% of its total assets in foreign securities. As long as the Fund continues to invest less than 35% of its assets in foreign securities it will not be eligible to elect to “pass-through” to shareholders of a fund the ability to use the foreign tax deduction or foreign tax credit for foreign taxes paid with respect to qualifying taxes.
Taxation of Shareholders
     The Fund will determine either to distribute or to retain for reinvestment all or part of its net capital gain. If any such gain is retained, the Fund will be subject to a tax of 35% of such amount. In that event, the Fund expects to designate the retained amount as undistributed capital gain in a notice to its shareholders, each of whom (i) will be required to include in income for tax purposes as long-term capital gain its share of such undistributed amounts, (ii) will be entitled to credit its proportionate share of the tax paid by the Fund against its federal income tax liability and to claim refunds to the extent that the credit exceeds such liability and (iii) will increase its basis in its shares of the Fund by an amount equal to 65% of the amount of undistributed capital gain included in such shareholder’s gross income.
     Distributions paid by the Fund from its investment company taxable income, which includes net short-term capital gain, generally are taxable as ordinary income to the extent of the Fund’s earnings and profits. Such distributions, if reported by the Fund, may, however, qualify (provided holding period and other requirements are met by the Fund and its shareholders) (i) for the dividends received deduction available to corporations, but only to the extent that the Fund’s income consists of dividend income from U.S. corporations and (ii) for taxable years beginning on or before December 31, 2012, as qualified dividend income eligible for the reduced maximum

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federal tax rate to individuals of generally 15% (currently 0% for individuals in lower tax brackets) to the extent that the Fund receives qualified dividend income. Qualified dividend income is, in general, dividend income from taxable domestic corporations and certain qualified foreign corporations ( e.g. , generally, foreign corporations incorporated in a possession of the United States or in certain countries with a qualifying comprehensive tax treaty with the United States, or whose shares with respect to which such dividend is paid is readily tradable on an established securities market in the United States). A qualified foreign corporation does not include a foreign corporation which for the taxable year of the corporation in which the dividend was paid, or the preceding taxable year, is a PFIC. If the Fund engages in certain securities lending transactions, the amount received by the Fund that is the equivalent of the dividends paid by the issuer on the securities loaned will not be eligible for qualified dividend income treatment. Distributions of net capital gain reported as capital gain distributions, if any, are taxable to shareholders at rates applicable to long-term capital gain, whether paid in cash or in shares, and regardless of how long the shareholder has held the Fund’s shares. Capital gain distributions are not eligible for the dividends received deduction. The maximum federal tax rate on net long-term capital gain of individuals is currently 15% (0% for individuals in lower brackets). The maximum rate on long-term capital gain is scheduled to rise to 20% for gains realized in taxable years beginning after December 31, 2012. Unrecaptured Section 1250 gain distributions, if any, will be subject to a 25% tax. Distributions in excess of the Fund’s earnings and profits will first reduce the adjusted tax basis of a holder’s shares and, after such adjusted tax basis is reduced to zero, will constitute capital gain to such holder (assuming the shares are held as a capital asset). Investment company taxable income (other than qualified dividend income) will currently be taxed at a maximum rate of 35%. For corporate taxpayers, both investment company taxable income and net capital gain are taxed at a maximum rate of 35%.
     If an individual receives a dividend that is eligible for qualified dividend income treatment, and such dividend constitutes an “extraordinary dividend,” any loss on the sale or exchange of shares in respect of which the extraordinary dividend was paid, then the loss will be long-term capital loss to the extent of such extraordinary dividend. An “extraordinary dividend” for this purpose is generally a dividend (i) in an amount greater than or equal to 5% of the taxpayer’s tax basis (or trading value) in a share of stock, aggregating dividends with ex-dividend dates within an 85-day period or (ii) in an amount greater than 20% of the taxpayer’s tax basis (or trading value) in a share of stock, aggregating dividends with ex-dividend dates within a 365-day period.
     The IRS currently requires that a registered investment company that has two or more classes of stock allocate to each such class proportionate amounts of each type of its income (such as ordinary income, capital gains, dividends qualifying for the dividends received deduction (“DRD”) and qualified dividend income) based upon the percentage of total dividends paid out of current or accumulated earnings and profits to each class for the tax year. Accordingly, the Fund intends each year to allocate capital gain dividends, dividends qualifying for the DRD and dividends that constitute qualified dividend income, if any, between its common stock and preferred stock in proportion to the total dividends paid out of current or accumulated earnings and profits to each class with respect to such tax year. Distributions in excess of the Fund’s current and accumulated earnings and profits, if any, however, will not be allocated proportionately among the common stock and preferred stock. Since the Fund’s current and accumulated earnings and profits will first be used to pay dividends on its preferred stock,

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distributions in excess of such earnings and profits, if any, will be made disproportionately to holders of common stock.
     Shareholders may be entitled to offset their capital gain distributions (but not distributions eligible for qualified dividend income treatment) with capital loss. There are a number of statutory provisions affecting when capital loss may be offset against capital gain, and limiting the use of loss from certain investments and activities. Accordingly, shareholders with capital loss are urged to consult their tax advisers.
     The price of stock purchased at any time may reflect the amount of a forthcoming distribution. Those purchasing stock just prior to a distribution will receive a distribution which will be taxable to them even though it represents in part a return of invested capital.
     Certain types of income received by the Fund from real estate investment trusts (“REITs”), real estate mortgage investment conduits (“REMICs”), taxable mortgage pools or other investments may cause the Fund to designate some or all of its distributions as “excess inclusion income.” To Fund shareholders such excess inclusion income may (1) constitute taxable income, as “unrelated business taxable income” (“UBTI”) for those shareholders who would otherwise be tax-exempt such as individual retirement accounts, 401(k) accounts, Keogh plans, pension plans and certain charitable entities; (2) not be offset by other taxable deductions for tax purposes; (3) not be eligible for reduced U.S. withholding for non-U.S. shareholders even from tax treaty countries; and (4) cause the Fund to be subject to tax if certain “disqualified organizations” as defined by the Code are fund shareholders.
     Upon a sale, exchange, redemption or other disposition of stock, a shareholder will generally realize a taxable gain or loss equal to the difference between the amount of cash and the fair market value of other property received and the shareholder’s adjusted tax basis in the stock. Such gain or loss will be treated as long-term capital gain or loss if the shares have been held for more than one year. Any loss realized on a sale or exchange will be disallowed to the extent the shares disposed of are replaced by substantially identical shares within a 61-day period beginning 30 days before and ending 30 days after the date that the shares are disposed of. In such a case, the basis of the shares acquired will be adjusted to reflect the disallowed loss.
     Any loss realized by a shareholder on the sale of Fund shares held by the shareholder for six months or less will be treated for tax purposes as a long-term capital loss to the extent of any capital gain distributions received by the shareholder (or amounts credited to the shareholder as an undistributed capital gain) with respect to such shares.
     Ordinary income distributions and capital gain distributions also may be subject to state and local taxes. Shareholders are urged to consult their own tax advisers regarding specific questions about federal (including the application of the alternative minimum tax rules), state, local or foreign tax consequences to them of investing in the Fund.
     Shareholders will receive, if appropriate, various written notices after the close of each of the Fund’s taxable years regarding the U.S. federal income tax status of certain dividends, distributions and deemed distributions that were paid (or that are treated as having been paid) by the Fund to its shareholders during the preceding taxable year.

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     If a shareholder recognizes a loss with respect to the Fund’s shares of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder, the shareholder must file with the IRS a disclosure statement on Form 8886. Direct shareholders of portfolio securities are in many cases exempted from this reporting requirement, but under current guidance, shareholders of a regulated investment company are not exempted. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer’s treatment of the loss is proper. Shareholders should consult their tax advisors to determine the applicability of these regulations in light of their individual circumstances.
     Dividends paid or distributions made by the Fund to shareholders who are non-resident aliens or foreign entities (“foreign investors”) are generally subject to withholding tax at a 30% rate or a reduced rate specified by an applicable income tax treaty to the extent derived from investment income and short-term capital gains. In order to obtain a reduced rate of withholding, a foreign investor will be required to provide an IRS Form W-8BEN certifying its entitlement to benefits under a treaty. The withholding tax does not apply to regular dividends paid or distributions made to a foreign investor who provides a Form W-8ECI, certifying that the dividends or distributions are effectively connected with the foreign investor’s conduct of a trade or business within the United States. Instead, the effectively connected dividends or distributions will be subject to regular U.S. income tax as if the foreign investor were a U.S. shareholder. A non-U.S. corporation receiving effectively connected dividends or distributions may also be subject to additional “branch profits tax” imposed at a rate of 30% (or lower treaty rate). A foreign investor who fails to provide an IRS Form W-8BEN or other applicable form may be subject to backup withholding at the appropriate rate.
     In general, United States federal withholding tax will not apply to any gain or income realized by a foreign investor in respect of any distributions of net long-term capital gains over net short-term capital losses, exempt-interest dividends, or upon the sale or other disposition of shares of the Fund.
Backup Withholding
     The Fund may be required to withhold U.S. federal income tax on all taxable distributions and redemption proceeds payable to non-corporate shareholders who fail to provide the Fund with their correct taxpayer identification number or to make required certifications, or who have been notified by the IRS that they are subject to backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be refunded or credited against such shareholder’s U.S. federal income tax liability, if any, provided that the required information is furnished to the IRS.
     The foregoing is a general and abbreviated summary of the applicable provisions of the Code and Treasury regulations presently in effect. For the complete provisions, reference should be made to the pertinent Code sections and the Treasury regulations promulgated thereunder. The Code and the Treasury regulations are subject to change by legislative, judicial or administrative action, either prospectively or retroactively. Persons considering an investment in shares of the Fund should consult their own tax advisers regarding the purchase, ownership and disposition of shares of the Fund.

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Financial Statements
     The audited financial statements included in the annual report to the Fund’s shareholders for the year ended [December 31, 2010], together with the report of [ ] are incorporated herein by reference to the Fund’s annual report. All other portions of the annual report are not incorporated herein by reference and are not part of the registration statement.

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APPENDIX A
GAMCO INVESTORS, INC. AND AFFILIATES
THE VOTING OF PROXIES ON BEHALF OF CLIENTS
Rules 204(4)-2 and 204-2 under the Investment Advisers Act of 1940 and Rule 30b1-4 under the Investment Company Act of 1940 require investment advisers to adopt written policies and procedures governing the voting of proxies on behalf of their clients.
These procedures will be used by GAMCO Asset Management Inc., Gabelli Funds, LLC, Gabelli Securities, Inc., and Teton Advisors, Inc. (collectively, the “Advisers”) to determine how to vote proxies relating to portfolio securities held by their clients, including the procedures that the Advisers use when a vote presents a conflict between the interests of the shareholders of an investment company managed by one of the Advisers, on the one hand, and those of the Advisers; the principal underwriter; or any affiliated person of the investment company, the Advisers, or the principal underwriter. These procedures will not apply where the Advisers do not have voting discretion or where the Advisers have agreed to with a client to vote the client’s proxies in accordance with specific guidelines or procedures supplied by the client (to the extent permitted by ERISA).
I. Proxy Voting Committee
The Proxy Voting Committee was originally formed in April 1989 for the purpose of formulating guidelines and reviewing proxy statements within the parameters set by the substantive proxy voting guidelines originally published in 1988 and updated periodically, a copy of which are appended as Exhibit A. The Committee will include representatives of Research, Administration, Legal, and the Advisers. Additional or replacement members of the Committee will be nominated by the Chairman and voted upon by the entire Committee.
Meetings are held as needed basis to form views on the manner in which the Advisers should vote proxies on behalf of their clients.
In general, the Director of Proxy Voting Services, using the Proxy Guidelines, recommendations of Institutional Shareholder Corporate Governance Service (“ISS”), other third-party services and the analysts of Gabelli & Company, Inc., will determine how to vote on each issue. For non-controversial matters, the Director of Proxy Voting Services may vote the proxy if the vote is (1) consistent with the recommendations of the issuer’s Board of Directors and not contrary to the Proxy Guidelines; (2) consistent with the recommendations of the issuer’s Board of Directors and is a non-controversial issue not covered by the Proxy Guidelines; or (3) the vote is contrary to the recommendations of the Board of Directors but is consistent with the Proxy Guidelines. In those instances, the Director of Proxy Voting Services or the Chairman of the Committee may sign and date the proxy statement indicating how each issue will be voted.

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All matters identified by the Chairman of the Committee, the Director of Proxy Voting Services or the Legal Department as controversial, taking into account the recommendations of ISS or other third party services and the analysts of Gabelli & Company, Inc., will be presented to the Proxy Voting Committee. If the Chairman of the Committee, the Director of Proxy Voting Services or the Legal Department has identified the matter as one that (1) is controversial; (2) would benefit from deliberation by the Proxy Voting Committee; or (3) may give rise to a conflict of interest between the Advisers and their clients, the Chairman of the Committee will initially determine what vote to recommend that the Advisers should cast and the matter will go before the Committee.
      A. Conflicts of Interest.
The Advisers have implemented these proxy voting procedures in order to prevent conflicts of interest from influencing their proxy voting decisions. By following the Proxy Guidelines, as well as the recommendations of ISS, other third-party services and the analysts of Gabelli & Company, the Advisers are able to avoid, wherever possible, the influence of potential conflicts of interest. Nevertheless, circumstances may arise in which one or more of the Advisers are faced with a conflict of interest or the appearance of a conflict of interest in connection with its vote. In general, a conflict of interest may arise when an Adviser knowingly does business with an issuer, and may appear to have a material conflict between its own interests and the interests of the shareholders of an investment company managed by one of the Advisers regarding how the proxy is to be voted. A conflict also may exist when an Adviser has actual knowledge of a material business arrangement between an issuer and an affiliate of the Adviser.
In practical terms, a conflict of interest may arise, for example, when a proxy is voted for a company that is a client of one of the Advisers, such as GAMCO Asset Management Inc. A conflict also may arise when a client of one of the Advisers has made a shareholder proposal in a proxy to be voted upon by one or more of the Advisers. The Director of Proxy Voting Services, together with the Legal Department, will scrutinize all proxies for these or other situations that may give rise to a conflict of interest with respect to the voting of proxies.
      B. Operation of Proxy Voting Committee
For matters submitted to the Committee, each member of the Committee will receive, prior to the meeting, a copy of the proxy statement, any relevant third party research, a summary of any views provided by the Chief Investment Officer and any recommendations by Gabelli & Company, Inc. analysts. The Chief Investment Officer or the Gabelli & Company, Inc. analysts may be invited to present their viewpoints. If the Director of Proxy Voting Services or the Legal Department believe that the matter before the committee is one with respect to which a conflict of interest may exist between the Advisers and their clients, counsel will provide an opinion to the Committee concerning the conflict. If the matter is one in which the interests of the clients of one or more of Advisers may diverge, counsel will so advise and the Committee may make different recommendations as to different clients. For any matters where the recommendation may trigger appraisal rights, counsel will provide an opinion concerning the likely risks and merits of such an appraisal action.

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Each matter submitted to the Committee will be determined by the vote of a majority of the members present at the meeting. Should the vote concerning one or more recommendations be tied in a vote of the Committee, the Chairman of the Committee will cast the deciding vote. The Committee will notify the proxy department of its decisions and the proxies will be voted accordingly.
Although the Proxy Guidelines express the normal preferences for the voting of any shares not covered by a contrary investment guideline provided by the client, the Committee is not bound by the preferences set forth in the Proxy Guidelines and will review each matter on its own merits. Written minutes of all Proxy Voting Committee meetings will be maintained. The Advisers subscribe to ISS, which supplies current information on companies, matters being voted on, regulations, trends in proxy voting and information on corporate governance issues.
If the vote cast either by the analyst or as a result of the deliberations of the Proxy Voting Committee runs contrary to the recommendation of the Board of Directors of the issuer, the matter will be referred to legal counsel to determine whether an amendment to the most recently filed Schedule 13D is appropriate.
II. Social Issues and Other Client Guidelines
If a client has provided special instructions relating to the voting of proxies, they should be noted in the client’s account file and forwarded to the proxy department. This is the responsibility of the investment professional or sales assistant for the client. In accordance with Department of Labor guidelines, the Advisers’ policy is to vote on behalf of ERISA accounts in the best interest of the plan participants with regard to social issues that carry an economic impact. Where an account is not governed by ERISA, the Advisers will vote shares held on behalf of the client in a manner consistent with any individual investment/voting guidelines provided by the client. Otherwise the Advisers will abstain with respect to those shares.
III. Client Retention of Voting Rights
If a client chooses to retain the right to vote proxies or if there is any change in voting authority, the following should be notified by the investment professional or sales assistant for the client.
  Operations
 
  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

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any security, the Proxy Voting Department will provide each Board Member (or Committee member) with a copy of the proxy statement together with any other relevant information including recommendations of ISS or other third-party services.
IV. 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 had 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-US markets may also give rise to a number of administrative issues to prevent the Advisers 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. 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-US markets, we vote client proxies on a best efforts basis.
V. Voting Records
The Proxy Voting Department will retain a record of matters voted upon by the Advisers for their clients. The Advisers will supply information on how 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 . Question should we post the proxy voting records for the funds on the website.
The Advisers’ proxy voting records will be retained in compliance with Rule 204-2 under the Investment Advisers Act.
VI. Voting Procedures
1. Custodian banks, outside brokerage firms and clearing firms are responsible for forwarding proxies directly to the Advisers.

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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 (see Administrative), the votes are cast and recorded for each account on an individual basis.
Records have been maintained on the Proxy Edge system.
Proxy Edge records include:
     Security Name and Cusip Number
     Date and Type of Meeting (Annual, Special, Contest)
     Client Name
     Adviser or Fund Account Number
     Directors’ Recommendation
     How 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.

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  In some circumstances VIFs can be faxed 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.

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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

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  Qualifications
 
  Nominating committee in place
 
  Number of outside directors on the board
 
  Attendance at meetings
 
  Overall performance
Selection of Auditors
In general, we support the Board of Directors’ recommendation for auditors.
Blank Check Preferred Stock
We oppose the issuance of blank check preferred stock.
Blank check preferred stock allows the company to issue stock and establish dividends, voting rights, etc. without further shareholder approval.
Classified Board
A classified board is one where the directors are divided into classes with overlapping terms. A different class is elected at each annual meeting.
While a classified board promotes continuity of directors facilitating long range planning, we feel directors should be accountable to shareholders on an annual basis. We will look at this proposal on a case-by-case basis taking into consideration the board’s historical responsiveness to the rights of shareholders.
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.

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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.

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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

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Golden parachutes are severance payments to top executives who are terminated or demoted after a takeover.
We support any proposal that would assure management of its own welfare so that they may continue to make decisions in the best interest of the company and shareholders even if the decision results in them losing their job. We do not, however, support excessive golden parachutes. Therefore, each proposal will be decided on a case-by- case basis.
Note: Congress has imposed a tax on any parachute that is more than three times the executive’s average annual compensation
Anti-Greenmail Proposals
We do not support greenmail. An offer extended to one shareholder should be extended to all shareholders equally across the board.
Limit Shareholders’ Rights to Call Special Meetings
We support the right of shareholders to call a special meeting.
Consideration of Nonfinancial Effects of a Merger
This proposal releases the directors from only looking at the financial effects of a merger and allows them the opportunity to consider the merger’s effects on employees, the community, and consumers.
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

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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:
  State of Incorporation
 
  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:

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  Dilution of voting power or earnings per share by more than 10%.
 
  Kind of stock to be awarded, to whom, when and how much.
 
  Method of payment.
 
  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.
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 and Say When on Pay
We will generally abstain from advisory votes on executive compensation (Say on Pay) and will also abstain from votes on the frequency of voting on executive compensation (Say When on Pay). In those instances when we believe that it is in our clients’ best interest, we may cast a vote for or against executive compensation and/or the frequency of votes on executive compensation.

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PART C — OTHER INFORMATION
ITEM 25.   FINANCIAL STATEMENTS AND EXHIBITS
1. Financial Statements
Part A — Financial Highlights.
Part B — Unaudited financial statements for the period ended June 30, 2010, are incorporated by reference herein to the Fund’s semi-annual report for the period ended June 30, 2010. Audited financial statements for the period ended December 31, 2009, are incorporated by reference herein to the Fund’s annual report for the period ended December 31, 2009.
2. Exhibits
  (a)(1)     Articles of Incorporation 1
 
  (a)(2)    Articles Supplementary for the 7.92% Cumulative Preferred Stock 2
 
  (a)(3)    Articles Supplementary for the 6.00% Series B Cumulative Preferred Stock 3
 
  (a)(4)    Articles of Amendment to the Articles Supplementary Creating and Fixing the Rights of 6.00% Series B Cumulative Preferred Stock 4
 
  (a)(5)    Articles Supplementary for the Series C Auction Rate Cumulative Preferred Stock 3
 
  (a)(6)    Articles of Amendment to the Articles Supplementary Creating and Fixing the Rights of Series C Auction Rate Cumulative Preferred Stock 4
 
  (a)(7)    Articles Supplementary for the election of Section 3-804(c) of the Maryland General Corporation Law 4
 
  (b)   Amended and Restated Bylaws 5
 
  (c)   Not applicable
 
  (d)   Specimen Stock Certificate:
 
  (d)(1)     7.92% Cumulative Preferred Stock 6
 
  (d)(2)    6.00% Series B Cumulative Preferred Stock 3
 
  (d)(3)     Series C Auction Rate Cumulative Preferred Stock 3
 
  (d)(4)    Form of Subscription Certificate 7
 
  (d)(5)    Form of Notice of Guaranteed Delivery 7
 
  (d)(6)    Form of DTC Participant Over-Subscription Exercise Form 7
 
  (d)(7)    Form of Nominee Holder Over-Subscription Certification 7
 
  (d)(8)    Form of Subscription, Distribution and Escrow Agency Agreement 7
 
  (e)   Automatic Dividend Reinvestment and Voluntary Cash Purchase Plan 8
 
  (f)   Not applicable
 
  (g)   Investment Advisory Agreement between Registrant and Gabelli Funds, LLC 8
 
  (h)   Not applicable
 
  (i)   Not applicable
 
  (j)(1)    Custodian Contract between Registrant and State Street Bank and Trust Company 9
 
  (j)(2)    Amendment to Custodian Contract between Registrant and State Street Bank and Trust Company 8
 
  (j)(3)     Custodian Fee Schedule between Registrant and State Street Bank and Trust Company 9
 
1   Incorporated by reference from the Registrant’s Registration Statement on Form N-2, File Nos. 033-60407 and 811-08476, as filed with the Securities and Exchange Commission on June 20, 1995.
 
2   Incorporated by reference from Amendment No. 1 to the Registrant’s Registration Statement on Form N-2, File Nos. 333-25487 and 811-08476, as filed with the Securities and Exchange Commission on May 23, 1997.
 
3   Incorporated by reference from the Registrant’s Registration Statement on Form N-2, File Nos. 333-102755 and 811-08476, as filed with the Securities and Exchange Commission on March 21, 2003.
 
4   Filed herewith.
 
5   Incorporated by reference from the Registrant’s Current Report on Form 8-K, File No. 811-8476, as filed with the Securities and Exchange Commission on November 29, 2010.
 
6   Incorporated by reference from the Registrant’s Registration Statement on Form N-2, File Nos. 333-25487 and 811-08476, as filed with the Securities and Exchange Commission on April 18, 1997.
 
7   To be filed by amendment.
 
8   Incorporated by reference from the Registrant’s Registration Statement on Form N-2, File Nos. 333-33514 and 811-08476, as filed with the Securities and Exchange Commission on June 2, 2000.
 
9   Incorporated by reference from Amendment No. 1 to the Registrant’s Registration Statement on Form N-2, File Nos. 033-60407 and 811-8476, as filed with the Securities and Exchange Commission on August 7, 1995.

 


 

 
  (k)(1)    Registrar, Transfer Agency and Service Agreement between Registrant and State Street Bank and Trust Company 9
 
  (k)(2)     Transfer Agent and Registrar Services Closed-End Fund Fee Agreement for Registrant 8
 
  (l)(1)    Consent of Paul, Hastings, Janofsky and Walker LLP 7
 
  (l)(2)    Opinion and Consent of Venable LLP 7
 
  (m)   Not applicable
 
  (n)(1)    Consent of Independent Registered Public Accounting Firm 7
 
  (n)(2)    Powers of Attorney 10
 
  (n)(3)    Powers of Attorney 11
 
  (o)   Not applicable
 
  (p)   Not applicable
 
  (q)   Not applicable
 
  (r)   Codes of Ethics of the Registrant and the Investment Adviser 8
ITEM 26. Marketing Arrangements
     Not applicable.
ITEM 27. Other Expenses of Issuance and Distribution
     The following table sets forth the estimated expenses to be incurred in connection with the offering described in this Registration Statement:
     
SEC registration fees
  $[ ] *
New York Stock Exchange listing fee
  $[ ] *
Printing and engraving expenses
  $[ ] *
Accounting fees
  $[ ] *
Legal fees
  $[ ] *
Blue Sky fees
  $[ ] *
Miscellaneous
  $[ ] *
Total
  $[ ] *
 
*     To be furnished by amendment.
ITEM 28. Persons Controlled by or Under Common Control with Registrant
     None.
ITEM 29. Number of Holders of Securities as of December 31, 2010
         
    Number of Record
Title of Class   Holders
Common Stock
    13,575,668  
6.00% Series B Cumulative Preferred Stock
    791,014  
Series C Auction Rate Cumulative Preferred Stock
    600  
ITEM 30. Indemnification
     Subject to limitations imposed by the 1940 Act, the Registrant’s charter limits the liability of the Registrant’s directors and officers to the Registrant and its stockholders to the fullest extent permitted by Maryland law. Under Maryland law, Maryland corporations may limit their directors’ and officers’ liability for money damages to the corporation and its stockholders except to the extent (i) that it is proved that a director or officer actually received an improper benefit or profit
 
10   Incorporated by reference from the Registrant’s Registration Statement on Form N-2, File Nos. 333-102755 and 811-08476, as filed with the Securities and Exchange Commission on March 18, 2003.
 
11   Incorporated by reference from the Registrant’s Registration Statement on Form N-2, File No. 811-08476, as filed with the Securities and Exchange Commission on February 27, 2008.

 


 

in money, property or services, in which case such director or officer may be liable for the amount of the benefit or profit actually received or (ii) that a judgment or other final adjudication adverse to a director or officer is entered in a proceeding based on a finding that such director’s or officer’s action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding.
     The Registrant’s Bylaws require the indemnification of, and expenses to be advanced on behalf of, directors and officers, among others, to the fullest extent permitted by Maryland law, subject to the limitations imposed by the 1940 Act. Under Maryland law, corporations may indemnify present and past directors and officers, or officers of another corporation that serve at the request of the indemnifying corporation, against judgments, penalties, fines, settlements and reasonable expenses (including attorneys’ fees) actually incurred in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, in which they are made parties by reason of being or having been directors or officers, unless it is proved that (i) the act or omission of the director or officer was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty, (ii) the director or officer actually received an improper personal benefit in money, property or services or (iii) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. However, under Maryland law, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that personal benefit was improperly received, unless in either case a court orders indemnification and then only for expenses. Maryland law requires a corporation (unless its charter provides otherwise, which the Registrant’s charter does not) to indemnify present and past directors and officers who are successful, on the merits or otherwise, in the defense of any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, against reasonable expenses (including attorneys’ fees) incurred in connection with such proceeding.
     Insofar as indemnification for liability arising under the Securities Act of 1933, as amended (“Securities Act”), may be permitted to directors, officers and controlling persons of Registrant pursuant to the foregoing provisions, or otherwise, Registrant has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a director, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
ITEM 31. Business and Other Connections of Investment Adviser
     The Investment Adviser, a limited liability company organized under the laws of the State of New York, acts as investment adviser to the Registrant. The Registrant is fulfilling the requirement of this Item 31 to provide a list of the officers and directors of the Investment Adviser, together with information as to any other business, profession, vocation or employment of a substantial nature engaged in by the Investment Adviser or those officers and directors during the past two years, by incorporating by reference the information contained in the Form ADV of the Investment Adviser filed with the commission pursuant to the Investment Advisers Act of 1940 (Commission File No. 801-26202).
ITEM 32. Location of Accounts and Records
     The accounts and records of the Registrant are maintained in part at the office of the Investment Adviser at One Corporate Center, Rye, New York 10580-1434, in part at the offices of the Custodian, State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy, Massachusetts 02171, at the offices of the Fund’s sub-administrator, BNY Mellon Investment Servicing (US) Inc., 760 Moore Road, King of Prussia, Pennsylvania 19406, and in part at the offices of Computershare Trust Company, N.A., 250 Royall Street, Canton, Massachusetts 02021.
ITEM 33. Management Services
     Not applicable.
ITEM 34. Undertakings
     (1) The Registrant hereby undertakes to suspend the offering of its shares until it amends its prospectus if (a) subsequent to the effective date of this Registration Statement, the net asset value declines more than ten percent from its net

 


 

asset value as of the effective date of the Registration Statement or (b) the net asset value increases to an amount greater than its net proceeds as stated in the prospectus.
     (2) Not applicable.
     (3) Not applicable.
     (4) Not applicable.
     (5)(a) For the purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of the Registration Statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant under Rule 497(h) under the Securities Act shall be deemed to be part of the Registration Statement as of the time it was declared effective.
     (5)(b) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof.
     (6) The Registrant undertakes to send by first class mail or other means designed to ensure equally prompt delivery, within two business days of receipt of a written or oral request, any Statement of Additional Information.

 


 

SIGNATURES
     Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Rye, and State of New York, on the 11th day of February, 2011.
         
 
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
 
 
  By:   /s/ Bruce N. Alpert   
    Bruce N. Alpert   
    President   
 
     Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
         
SIGNATURE   CAPACITY   DATE
 
       
*
 
  Director, Chairman and   February 11, 2011 
Mario J. Gabelli
  Chief Investment Officer    
 
       
/s/ Bruce N. Alpert
 
  President   February 11, 2011 
Bruce N. Alpert
       
 
       
/s/ Agnes Mullady
 
  Treasurer and Secretary   February 11, 2011 
Agnes Mullady
       
 
       
*
 
  Director   February 11, 2011 
Anthony J. Colavita
       
 
       
*
 
  Director   February 11, 2011 
James P. Conn
       
 
       
 
 
  Director    
Gregory R. Dube
       
 
       
*
 
  Director   February 11, 2011 
Frank J. Fahrenkopf, Jr.
       
 
         
  *  By:   /s/ Bruce N. Alpert  
    Bruce N. Alpert (attorney-in-fact)   
       

 


 

         
         
*
 
  Director   February 11, 2011 
Anthony R. Pustorino
       
 
       
*
 
Werner J. Roeder
  Director   February 11, 2011 
 
       
*
 
  Director   February 11, 2011 
Salvatore J. Zizza
       
 
         
  *  By:   /s/ Bruce N. Alpert  
    Bruce N. Alpert (attorney-in-fact)   
       

 


 

         
EXHIBIT INDEX
     
Exhibit   Caption
(a)(4)
  Articles of Amendment to the Articles Supplementary Creating and Fixing the Rights of 6.00% Series B Cumulative Preferred Stock
 
   
(a)(6)
  Articles of Amendment to the Articles Supplementary Creating and Fixing the Rights of Series C Auction Rate Cumulative Preferred Stock
 
   
(a)(7)
  Articles Supplementary for the election of Section 3-804(c) of the Maryland General Corporation Law

 

Exhibit (a)(4)
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
ARTICLES OF AMENDMENT TO THE
ARTICLES SUPPLEMENTARY
CREATING AND FIXING THE RIGHTS OF
6.00% SERIES B CUMULATIVE PREFERRED STOCK
     The Gabelli Global Multimedia Trust Inc., a Maryland corporation (hereinafter called the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of the State of Maryland that:
     FIRST: Article I of the Articles Supplementary Creating and Fixing the Rights of 6.00% Series B Cumulative Preferred Stock (“Articles Supplementary”) is hereby amended by inserting the definition of “Bank Loans”:
Bank Loans ” means direct purchases of, assignments of, participations in and other interests in (a) any bank loan or (b) any loan made by an investment bank, investment fund or other financial institution, provided that such loan under this clause (b) is similar to those typically made, syndicated, purchased or participated by a commercial bank or institutional loan investor in the ordinary course of business.
     SECOND: Article I of the Articles Supplementary is hereby amended by inserting the definition of “Business Development Company”:
Business Development Company ” (BDCs) means a type of closed-end fund regulated under the 1940 Act whose shares are typically listed for trading on a U.S. securities exchange. BDCs are publicly-traded funds that typically invest in and lend to small and medium-sized private and certain public companies that may not have access to public equity markets for capital raising. BDCs invest in such diverse industries as healthcare, chemical and manufacturing, technology and service companies.
     THIRD: Article I of the Articles Supplementary is hereby amended by inserting the definition of “Discount Factor”:
Discount Factor ” means (a) so long as Moody’s is rating the Series B Preferred Stock at the Corporation’s request, the Moody’s Discount Factor, or (b) any applicable discount factor established by any Other Rating Agency, whichever is applicable.
     FOURTH: Article I of the Articles Supplementary is hereby amended by inserting the definition of “Fitch”:
Fitch ” means Fitch Ratings.
     FIFTH: Article I of the Articles Supplementary is hereby amended by inserting the definition of “Foreign Currency Transactions”:

 


 

Foreign Currency Transactions ” means any technique used by the Corporation to hedge its exposure to foreign currencies, including forward foreign currency exchange contracts.
     SIXTH: Article I of the Articles Supplementary is hereby amended by inserting the definition of “Foreign Sovereign Debt”:
Foreign Sovereign Debt ” means debt issued by a national government other than the United States.
     SEVENTH: Article I of the Articles Supplementary is hereby amended by deleting the definition of “Market Value” in its entirety and inserting in lieu thereof the following:
Market Value ” means the market value of an asset of the Corporation as computed as follows: (i) Equity securities listed or traded on a nationally recognized securities exchange or traded in the U.S. over-the-counter market where trades are reported contemporaneously and for which market quotations are readily available, are valued at the last quoted sale or a market’s official closing price at the close of the exchange’s or other market’s regular trading hours, as of or prior to the time and day as of which such value is being determined. Portfolio securities traded on more than one national securities exchange or market are valued according to the broadest and most representative market as determined by the Adviser. If there has been no sale on the day the valuation is made, the securities are valued at the closing bid price on the principal market for such security on such day. If no asked prices are quoted on such day, then the security is valued at the closing bid price on the principal market for such security on such day. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price. (ii) Debt instruments are valued based upon (a) the basis of prices provided by a pricing service or (b) the lower of the value set forth in bids from two independent dealers in securities, one of which bids will be in writing.
     EIGHTH: Article I of the Articles Supplementary is hereby amended by inserting the definition of “Master Limited Partnership Securities”:
Master Limited Partnership Securities ” means the following securities, restricted or unrestricted, issued by a Master Limited Partnership (MLP) or an affiliate of an MLP: (1) common units, (2) convertible subordinated units, (3) I-Shares, (4) I-units and (5) debt securities.
     NINTH: Article I of the Articles Supplementary is hereby amended by inserting the definition of “Moody’s Derivatives Transactions”:
Moody’s Derivatives Transactions ” means, for so long as any Series B Preferred Stock is rated by Moody’s, the Corporation may, notwithstanding the limitations in paragraph 6 of Article II, buy or sell financial futures contracts, write, purchase or sell call options on financial futures contracts or purchase put options on financial futures contracts or write call options on portfolio securities, swaps and securities lending unless it receives written confirmation from Moody’s that engaging in such transactions would impair the ratings then assigned to the preferred stock by Moody’s, subject to the following limitations:

- 2 -


 

     (a)  Futures and call options: For purposes of the Basic Maintenance Amount, futures held by the Corporation and call options sold by the Corporation shall not be included as Moody’s Eligible Assets. However, such assets shall be valued at Market Value by subtracting the good faith margin and the maximum daily trading variance as of a Valuation Date. For call options purchased by the Corporation, the Market Value of the call option will be included as Moody’s Eligible Assets subject to a Moody’s Discount Factor mutually agreed to between the Corporation and Moody’s based on the characteristics of the option contract such as its maturity and the underlying security of the contract.
     (b)  Securities lending: To increase income, the Corporation 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. For purposes of calculating the Basic Maintenance Amount, such securities lent shall be included as Moody’s Eligible Assets with the appropriate Moody’s Discount Factor applied to such lent security. The obligation to return such collateral shall not be included as an obligation/liability for purposes of calculating the Basic Maintenance Amount. However, the Corporation may reinvest cash collateral for securities lent in conformity with its investment objectives and policies and the provisions of these Articles Supplementary. In such event, the Corporation may reinvest cash collateral to the extent that securities lending collateral received is invested by the Corporation in assets that otherwise would be Moody’s Eligible Assets and the value of such assets exceeds the amount of the Corporation’s Moody’s Eligible Assets by applying the applicable Moody’s Discount Factor to this amount and adding the product to total Moody’s Eligible Assets. Conversely, if the value of assets in which securities lending collateral has been invested is less then the amount of the Corporation’s obligation to return the collateral on a Valuation Date, such difference shall be included as an obligation/liability of the Corporation for purposes of calculating the Basic Maintenance Amount. Collateral received by the Corporation in a securities lending transaction and maintained by the Corporation in the form received shall not be included as a Moody’s Eligible Asset for purposes of calculating the Basic Maintenance Amount.
     (c)  Interest rate swaps: Only the cumulative unsettled profit and loss from an interest rate swap transaction will be calculated when determining the Basic Maintenance Amount. If the Corporation has an outstanding gain from an interest rate swap transaction on a Valuation Date, the gain will be included as a Moody’s Eligible Asset subject to the Moody’s Discount Factor on the counterparty to the interest rate swap transaction. If the Corporation has an outstanding liability from an interest rate swap transaction on a Valuation Date, the Corporation will subtract the outstanding liability from the total Moody’s Eligible Assets in calculating the Basic Maintenance Amount.
     If not otherwise provided for in (a)-(c) above, derivative instruments will be included as Moody’s Eligible Assets subject to a Moody’s Discount Factor as mutually agreed to between the Corporation and Moody’s.
     TENTH: Article I of the Articles Supplementary is hereby amended by deleting the definition of “Moody’s Discount Factor” in its entirety and inserting in lieu thereof the following:

- 3 -


 

Moody’s Discount Factor ” means, with respect to a Moody’s Eligible Asset specified below, the following applicable number:
     (a)  Corporate debt securities : The percentage determined by reference to the rating on such asset with reference to the remaining term to maturity of such asset, in accordance with the table set forth below (non convertibles).
                                                         
    Moody’s Rating Category  
Term to Maturity of Corporate                                          
Debt Security (1)   Aaa     Aa     A     Baa     Ba     B     Unrated 2  
1 year or less
    109 %     112 %     115 %     118 %     137 %     150 %     250 %
1-2 years
    115       118       122       125       146       160       250  
2-3 years
    120       123       127       131       153       168       250  
3-4 years
    126       129       133       138       161       176       250  
4-5 years
    132       135       139       144       168       185       250  
5-7 years
    139       143       147       152       179       197       250  
7-10 years
    145       150       155       160       189       208       250  
10-15 years
    150       155       160       165       196       216       250  
15-20 years
    150       155       160       165       196       228       250  
20-30 years
    150       155       160       165       196       229       250  
Greater than 30 years
    165       173       181       189       205       240       250  
 
(1)   The Moody’s Discount Factors above for corporate debt securities shall also be applied to any interest rate swap or cap, in which case the rating of the counterparty shall determine the appropriate rating category.
 
(2)   Unless conclusions regarding liquidity risk as well as estimates of both the probability and severity of default for the Corporation’s assets can be derived from other sources, securities rated below B by Moody’s and unrated securities, which are securities rated by neither Moody’s, S&P nor Fitch, are limited to 10% of Moody’s Eligible Assets. If a corporate debt security is unrated by Moody’s, S&P or Fitch, the Corporation will use the percentage set forth under “Unrated” in this table. Ratings assigned by S&P or Fitch are generally accepted by Moody’s at face value. However, adjustments to face value may be made to particular categories of credits for which the S&P and/or Fitch rating does not seem to approximate a Moody’s rating equivalent. Split rated securities assigned by S&P and Fitch will be accepted at the lower of the two ratings.
For corporate debt securities that do not pay interest in U.S. dollars, the fund sponsor will contact Moody’s to obtain the applicable currency conversion rates.
     (b)  Preferred stock : The Moody’s Discount Factor for taxable preferred stock shall be:
         
Aaa
    150 %
Aa
    155 %
A
    160 %
Baa
    165 %
Ba
    196 %
B
    216 %
<B or Not Rated
    250 %
Middle Market Bank Non-cumulative perpetual preferreds
    476 %
Investment Grade DRD Preferred Stock
    165 %
Non-Investment Grade DRD Preferred Stock
    216 %

- 4 -


 

For non-cumulative preferred stock, the Discount Factor should be amplified by 110%.
  (c)   Common stock :
             
Common Stocks (1)   Large Cap   Mid Cap   Small Cap
7 week exposure period
  200%   205%   220%
 
(1)   Market cap for large-cap stocks are $10 billion and up, mid-cap stocks range between $2 billion and $10 billion, and small-cap stocks are $2 billion and below.
  (d)   Convertible securities (including convertible preferreds) :
                         
            Non-    
    Investment   Investment    
Delta   Grade   Grade   Unrated
.00 — .40   Use Corporate Debt Securities Table     250 %
.41 — .80
    192 %     226 %     250 %
.81 — 1.00
    195 %     229 %     250 %
With respect to “structured synthetic convertible” securities, the discount factors above should be grossed up by an additional 20% of the base discount percentage.
  (e)   Common stock, preferred stock and corporate debt securities of REITs :
  a.   For common stock and preferred stock of real estate investment trusts (“REITs”), the Moody’s Discount Factor shall be the percentage specified in the table set forth below:
         
    Moody’s Discount
    Factor
common stock of REITs
    154 %
preferred stock of REITs
       
with a Moody’s, S&P or Fitch rating (including a Senior Implied Rating):
    154 %
without a Moody’s, S&P or Fitch rating (including a Senior Implied Rating):
    208 %
  b.   Notwithstanding the above, a Moody’s Discount Factor of 250% will be applied: (a) to those assets in a single NAREIT industry category/sector which exceed 30% of Moody’s Eligible Assets but are not greater than 35% of Moody’s Eligible Assets; (b) if dividends on such securities have not been paid consistently (either quarterly or annually) over the previous three years, or for such shorter time period that such securities have been outstanding; or

- 5 -


 

(c) if the market capitalization (including common stock and preferred stock) of an issuer is below $500 million.
  c.   For corporate debt securities of REITs, apply the Moody’s Discount Factors listed above under Corporate debt securities.
     (f)  Short-Term Instruments : The Moody’s Discount Factor applied to short-term portfolio securities, including without limitation corporate debt securities and Short-Term Money Market Instruments will be (1) 100%, so long as such portfolio securities mature or have a demand feature at par exercisable within the Moody’s Exposure Period and are rated Aaa or at least Prime-1, V-Mig1 , or equivalent, or be a rated money-market fund; and (2) 115%, so long as such portfolio securities do not mature within the Moody’s Exposure Period or have a demand feature at par not exercisable within the Moody’s Exposure Period. A Moody’s Discount Factor of 100% will be applied to cash.
     (g)  U.S. Government Obligations and U.S. Treasury Strips :
                 
    U.S.    
    Government   U.S. Treasury
    Obligations   Strips Discount
Remaining Term to Maturity   Discount Factor   Factor
1 year or less
    107 %     107 %
1 — 2 years
    113       115  
2 — 3 years
    118       121  
3 — 4 years
    123       128  
4 — 5 years
    128       135  
5 — 7 years
    135       147  
7 — 10 years
    141       163  
10 — 15 years
    146       191  
15 — 20 years
    154       218  
20 — 30 years
    154       244  
     (h)  Foreign Sovereign Debt :
  a.   Debt denominated in US$:

- 6 -


 

                                                         
                                                    Below B
            Moody's Sovereign Debt Rating           &
Term to Maturity(2)   Aaa   Aa   A   Baa   Ba   B   Unrated
1 year or less
    109 %     112 %     115 %     118 %     137 %     150 %     250 %
2 years or less (but longer than 1 year)
    115       118       122       125       146       160       250  
3 years or less (but longer than 2 years)
    120       123       127       131       153       168       250  
4 years or less (but longer than 3 years)
    126       129       133       138       161       176       250  
5 years or less (but longer than 4 years)
    132       135       139       144       168       185       250  
7 years or less (but longer than 5 years)
    139       143       147       152       179       197       250  
10 years or less (but longer than 7 years)
    145       150       155       160       189       208       250  
15 years or less (but longer than 10 years)
    150       155       160       165       196       216       250  
20 years or less (but longer than 15 years)
    150       155       160       165       196       228       250  
30 years or less (but longer than 20 years)
    150       155       160       165       196       229       250  
Greater than 30 years
    165       173       181       189       205       240       250  
  b.   For sovereign debt denominated in non-U.S. currency apply additional Currency Discount Factor:
         
Foreign Currency   Currency Discount Factor
CAD Canadian Dollar
    107 %
EUR Euro
    111 %
GBP British Pound
    115 %
JPY Japanese Yen
    116 %
AUD Australian Dollar
    113 %
HKD Hong Kong Dollar
    140 %
NZD New Zealand Dollar
    114 %

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Foreign Currency   Currency Discount Factor
NOK Norway Kroner
    111 %
SEK Sweden Kronor
    113 %
THB Thailand Baht
    295 %
KRW South Korea Won
    295 %
TWD Taiwan New Dollars
    135 %
SGD Singapore Dollars
    135 %
IDR Indonesia Rupiahs
    315 %
INR India Rupees
    170 %
MYR Malaysia Ringgits
    170 %
CZK Czech Republic Koruny
    200 %
PHP Philippines Pesos
    200 %
HUF Hungary Forint
    200 %
PLN Poland Zlotych
    200 %
SKK Slovakia Koruny
    200 %
TRY Turkey New Lira
    200 %
RUB Russia Rubles
    200 %
ZAR South Africa Rand
    200 %
CLP Chile Pesos
    200 %
MXN Mexico Pesos
    200 %
COP Columbia Pesos
    200 %
BRL Brazil Reais
    200 %
(1) If the Corporation invests in a security denominated in a currency other than that found in the above table, contact Moody’s to obtain the applicable Currency Discount Factor for such security.
     (i)  Foreign non-sovereign debt : The Moody’s Discount Factor applied to non-sovereign debt obligations will be (A) in the case of a non-sovereign debt obligation denominated in U.S. dollars, 250%, and (B) in the case of a non-U.S. sovereign debt obligation

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denominated in a foreign currency, 250% multiplied by the Currency Discount Factor for such foreign currency.
     (j) Rule 144A securities : The Moody’s Discount Factor applied to Rule 144A Securities for Rule 144A Securities whose terms include rights to registration under the 1933 Act within one year and Rule 144A Securities which do not have registration rights within one year will be 120% and 130%, respectively, of the Moody’s Discount Factor which would apply were the securities registered under the 1933 Act.
     (k)  Catastrophe bonds : The Moody’s Discount Factor applied to catastrophe bonds will be 475%.
     (l)  Bank loans : The Moody’s Discount Factor applied to senior bank loans (“Senior Loans”) shall be the percentage specified in accordance with the table set forth below (or such lower percentage as Moody’s may approve in writing from time to time):
                                 
                            Caa and below
                            (including
Moody’s Rating Category           distressed and
Type of Loan   Aaa-A   Baa and Ba (1)   B (1)   unrated) (1)
Senior Loans greater than $250 MM
    118 %     136 %     149 %     250 %
non-Senior Loans greater than $250 MM
    128 %     146 %     159 %     250 %
loans less than $250 MM
    138 %     156 %     169 %     270 %
Second Lien Bank Loans
    168 %     185 %     200 %     270 %
Third & Fourth Lien
    218 %     240 %     260 %     351 %
Bank Loans
                               
 
(1)   If a Senior Loan is not rated by any of Moody’s, S&P or Fitch, the Corporation will use the applicable percentage set forth under the column entitled “Caa and below (including distressed and unrated)” in the table above. Ratings assigned the S&P and/or Fitch are generally accepted by Moody’s at face value. However, adjustments to face value may be made to particular categories of securities for which the ratings by S&P and/or Fitch do not seem to approximate a Moody’s rating equivalent. Split rated securities assigned by S&P and Fitch (i.e., these rating agencies assign different rating categories to the security) will be accepted at the lower of the two ratings.
     (m) Master Limited Partnerships (MLP) — The Moody’s Discount Factor applied to master limited partnerships shall be applied in accordance with the table set forth below:
         
MLP Sector (1)   Discount Factor
Large-cap MLPs
    170 %
Mid and Small-cap MLPs
       
Natural Resources (Oil, Gas, Energy)
    292 %

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MLP Sector (1)   Discount Factor
Coal and Minerals
    301 %
Mortgage Real Estate
    291 %
Income Real Estate
    302 %
Miscellaneous
    342 %
 
(1)   Restricted MLPs will be increased by 120%.
The Moody’s Discount Factor for any Moody’s Eligible Asset other than the securities set forth above will be the percentage provided in writing by Moody’s.
     ELEVENTH: Article I of the Articles Supplementary is hereby amended by inserting the definition of “Moody’s Diversification Limitations”:
Moody’s Diversification Limitations ” means, with respect to qualifying for inclusion in Moody’s Eligible Assets, the following diversification and issue size requirements:
                         
    MAXIMUM SINGLE   MAXIMUM SINGLE   MINIMUM ISSUE SIZE
RATINGS(1)   ISSUER(2), (3)   INDUSTRY(3), (4)   ($ IN MILLIONS)(5)
Aaa
    100 %     100 %   $ 100  
Aa
    20       60       100  
A
    10       40       100  
CS(6), Baa
    6       20       100  
Ba
    4       12       50 (7)
B1-B2(8)
    3       8       50 (7)
B3 or below(8)
    2       5       50 (7)
 
(1)   Refers to the securities of the portfolio holding.
 
(2)   Companies subject to common ownership of 25% or more are considered as one issuer.
 
(3)   Percentages represent a portion of the aggregate Market Value of portfolio.
 
(4)   Industries are determined according to Moody’s Industry Classifications, as defined herein.
 
(5)   Except for preferred stock, which has a minimum issue size of $50 million, and mortgage pass throughs issued by Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Government National Mortgage Association, which has no minimum issue size.
 
(6)   CS refers to common stock, which is diversified independently from its ratings level.
 
(7)   Portfolio holdings from issues ranging from $50 million to $100 million are limited to 20% of the Corporation’s total assets.
 
(8)   Securities of the portfolio holdings rated B or below by Moody’s or the equivalent by another nationally recognized statistical rating organization (“NRSRO”) or not rated shall be considered to be Moody’s Eligible Assets only to the extent the Market Value of such securities does not exceed 10%of the portfolio Market Value; provided, however, that if the Market Value of such securities exceeds 10% of the portfolio Market Value, a portion of such securities (selected by the Corporation) shall not be considered Moody’s Eligible Assets, so that the Market Value of such securities (excluding such portion) does not exceed 10% of the portfolio Market Value.
     TWELFTH: Article I of the Articles Supplementary is hereby amended by deleting the definition of “Moody’s Eligible Assets” in its entirety and inserting in lieu thereof the following:
Moody’s Eligible Assets ” means:

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     (a) Cash (including interest and dividends due on assets rated (A) Baa3 or higher by Moody’s or the equivalent by another NRSRO if the payment date is within five (5) Business Days of the Valuation Date, (B) A2 or higher by Moody’s or the equivalent by another NRSRO if the payment date is within thirty days of the Valuation Date, and (C) Al or higher by Moody’s or the equivalent by another NRSRO if the payment date is within the Moody’s Exposure Period) and receivables for Moody’s Eligible Assets sold if the receivable is due within five (5) Business Days of the Valuation Date, and if the trades which generated such receivables are (A) settled through clearinghouse firms with respect to which the Corporation has received prior written authorization from Moody’s or (B) (1) with counterparties having a Moody’s long-term debt rating of at least Baa3 or the equivalent by another NRSRO or (2) with counterparties having a Moody’s Short Term Money Market Instrument rating of at least P-1 or the equivalent by another NRSRO;
     (b) Short Term Money Market Instruments, so long as (A) such securities are rated at least P-1 or the equivalent by another NRSRO, (B) in the case of demand deposits, time deposits and overnight funds, the supporting entity is rated at least A2 or the equivalent by another NRSRO, or (C) in all other cases, the supporting entity (1) is rated A2 or the equivalent by another NRSRO and the security matures within one month, (2) is rated Al or the equivalent by another NRSRO and the security matures within three months or (3) is rated at least Aa3 or the equivalent by another NRSRO and the security matures within six months; provided, however, that for purposes of this definition, such instruments (other than commercial paper rated by S&P and not rated by Moody’s) need not meet any otherwise applicable S&P rating criteria;
     (c) U.S. Government Obligations (including U.S. Treasury Strips);
     (d) Rule 144A securities;
     (e) Common stocks (A) (1) which are traded on a nationally recognized stock exchange or in the over-the-counter market, (2) if cash dividend paying, pay cash dividends in U.S. dollars and (3) which may be sold without restriction by the Corporation; provided, however, that (y) common stock which, while a Moody’s Eligible Asset owned by the Corporation, ceases paying any regular cash dividend will no longer be considered a Moody’s Eligible Asset until 71 days after the date of the announcement of such cessation, unless the issuer of the common stock has senior debt securities rated at least A3 by Moody’s and (z) the aggregate Market Value of the Corporation’s holdings of the common stock of any issuer in excess of 4% in the case of utility common stock and 6% in the case of non-utility common stock of the aggregate Market Value of the Corporation’s holdings shall not be Moody’s Eligible Assets, (B) which are securities denominated in any currency other than the U.S. dollar or securities of issuers formed under the laws of jurisdictions other than the United States, its states and the District of Columbia for which there are ADRs or their equivalents which are traded in the United States on exchanges or over-the-counter and are issued by banks formed under the laws of the United States, its states or the District of Columbia or (C) which are securities of issuers formed under the laws of jurisdictions other than the United States (and in existence for at least five years) for which no ADRs are traded; provided, however, that the aggregate Market Value of the Corporation’s holdings of securities denominated in currencies other than the U.S. dollar and ADRs in excess of(l) 6% of the aggregate Market Value of the outstanding shares of common stock of such issuer thereof or (2) in excess of 10% of the Market Value of the

- 11 -


 

Corporation’s Moody’s Eligible Assets with respect to issuers formed under the laws of any single such non-U.S. jurisdiction other than Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland and the United Kingdom, shall not be a Moody’s Eligible Asset;
     (f) Loans;
     (g) Corporate debt securities (including foreign non-sovereign debt and catastrophe bonds) if (A) such securities are rated by Moody’s or another NRSRO; (B) such securities provide for the periodic payment of interest in cash in U.S. dollars, euros or other currencies in which the Corporation is permitted to invest; (C) such securities have been registered under the 1933 Act or are restricted as to resale under federal securities laws but are eligible for resale pursuant to Rule l44A under the 1933 Act as determined by the Corporation’s investment manager or portfolio manager acting pursuant to procedures approved by the Board of Directors, except that such securities that are not subject to U.S. federal securities laws shall be considered Moody’s Eligible Assets if they are publicly traded; and (D) such securities are not subject to extended settlement.
          Notwithstanding the foregoing limitations, corporate debt securities and loans rated by neither Moody’s, S&P nor Fitch shall be considered to be Moody’s Eligible Assets to the extent such securities are issued by entities which (i) have not filed for bankruptcy within the past three years, (ii) are current on all principal and interest in their fixed income obligations, (iii) are current on all preferred stock dividends, and (iv) possess a current, unqualified auditor’s report without qualified, explanatory language;
     (h) Foreign Sovereign Debt so long as the issuing country has a Currency Discount Factor as set out in the definition of Moody’s Discount Factor in these Articles Supplementary. Foreign Sovereign Debt issued by a country without a Currency Discount Factor as set out in the definition of Moody’s Discount Factor in these Articles Supplementary can only be approved as a Moody’s Eligible Asset after review and confirmation by Moody’s;
     (i) Asset-backed securities: If (A) such securities are rated at least Baa by Moody’s or at least BBB by S&P or Fitch, (B) the securities are part of an issue that is $250 million or greater, or the issuer of such securities has a total of $500 million or greater of asset-backed securities outstanding at the time of purchase of the securities by the Corporation and (C) the expected average life of the securities is not greater than 4 years;
     (j) Collateralized debt obligations;
     (k) Preferred stocks if (A) dividends on such preferred stock are cumulative, (B) such securities provide for the periodic payment of dividends thereon in cash in U.S. dollars or euros and do not provide for conversion or exchange into, or have warrants attached entitling the holder to receive, equity capital at any time over the respective lives of such securities, (C) the issuer of such a preferred stock has common stock listed on either the New York Stock Exchange or NYSE Amex Equities, (D) the issuer of such a preferred stock has a senior debt rating from Moody’s of Baa1 or higher or a preferred stock rating from Moody’s of Baa3 or higher and (E) such preferred stock has paid consistent cash dividends in U.S. dollars or euros over the last three

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years or has a minimum rating of A1 (if the issuer of such preferred stock has other preferred issues outstanding that have been paying dividends consistently for the last three years, then a preferred stock without such a dividend history would also be eligible). In addition, the preferred stocks must have the following diversification requirements: (X) the preferred stock issue must be greater than $50 million and (Y) the minimum holding by the Corporation of each issue of preferred stock is $500,000 and the maximum holding of preferred stock of each issue is $5 million. In addition, preferred stocks issued by transportation companies will not be considered Moody’s Eligible Assets;
     (l) Convertible securities (including convertible preferred stock), provided that (A) the issuer of common stock must have a Moody’s senior unsecured debt of Caa or better, or a rating of CCC or better by S&P or Fitch, (B) the common stocks must be traded on the New York Stock Exchange, NYSE Amex Equities, or the NASDAQ, (C) dividends must be paid in U.S. dollars, (D) the portfolio of convertible bonds must be diversified as set forth in the table set forth below and (E) the company shall not hold shares exceeding the average weekly trading volume during the preceding month;
     (m) Common stock, preferred stock or any debt security of REITs or real estate companies;
     (n) Pooled investment vehicles including Business Development Companies, Master Limited Partnerships Securities, Private Investment Companies and Registered Investment Companies;
     (o) Foreign Currency Transactions;
     (p) Moody’s Derivatives Transactions; and
     (q) Financial contracts, as such term is defined in Section 3(c)(2)(B)(ii) of the 1940 Act and other securities or assets not otherwise provided for in this definition, but only upon receipt by the Corporation of a letter from Moody’s specifying any conditions on including such financial contract or other securities or assets in Moody’s Eligible Assets and assuring the Corporation that including such financial contract or other securities or assets in the manner so specified would not affect the credit rating assigned by Moody’s to the Series B Preferred Stock.
     THIRTEENTH: Article I of the Articles Supplementary is hereby amended by inserting the definition of “Moody’s Exposure Period”:
Moody’s Exposure Period ” means the period commencing on a given Valuation Date and ending 49 days thereafter.
     FOURTEENTH: Article I of the Articles Supplementary is hereby amended by deleting the definition of “Moody’s Industry Classifications” in its entirety and inserting in lieu thereof the following:
Moody’s Industry Classifications ” means, for the purposes of determining Moody’s Eligible Assets, each of the following industry classifications (or such other classifications as Moody’s may from time to time approve for application to the Series B Preferred Stock):

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  1.   Aerospace and Defense: Major Contractor, Subsystems, Research, Aircraft Manufacturing, Arms, and Ammunition
 
  2.   Automobile: Automobile Equipment, Auto-Manufacturing, Auto Parts Manufacturing, Personal Use Trailers, Motor Homes, Dealers
 
  3.   Banking: Bank Holding, Savings and Loans, Consumer Credit, Small Loan, Agency, Factoring, Receivables
 
  4.   Beverage, Food and Tobacco: Beer and Ale, Distillers, Wines and Liquors, Distributors, Soft Drink Syrup, Bottlers, Bakery, Mill Sugar, Canned Foods, Corn Refiners, Dairy Products, Meat Products, Poultry Products, Snacks, Packaged Foods, Candy, Gum, Seafood, Frozen Food, Cigarettes, Cigars, Leaf/Snuff, Vegetable Oil
 
  5.   Buildings and Real Estate: Brick, Cement, Climate Controls, Contracting, Engineering, Construction, Hardware, Forest Products (building-related only), Plumbing, Roofing, Wallboard, Real Estate, Real Estate Development, REITs, Land Development
 
  6.   Chemicals, Plastics and Rubber: Chemicals (non-agricultural), Industrial Gases, Sulfur, Plastics, Plastic Products, Abrasives, Coatings, Paints, Varnish, Fabricating
 
  7.   Containers, Packaging and Glass: Glass, Fiberglass, Containers made of: Glass, Metal, Paper, Plastic, Wood or Fiberglass
 
  8.   Personal and Non-Durable Consumer Products (Manufacturing Only): Soaps, Perfumes, Cosmetics, Toiletries, Cleaning Supplies, School Supplies
 
  9.   Diversified/Conglomerate Manufacturing
 
  10.   Diversified/Conglomerate Service
 
  11.   Diversified Natural Resources, Precious Metals and Minerals: Fabricating, Distribution
 
  12.   Ecological: Pollution Control, Waste Removal, Waste Treatment and Waste Disposal
 
  13.   Electronics: Computer Hardware, Electric Equipment, Components, Controllers, Motors, Household Appliances, Information Service Communicating Systems, Radios, TVs, Tape Machines, Speakers, Printers, Drivers, Technology
 
  14.   Finance: Investment Brokerage, Leasing, Syndication, Securities
 
  15.   Farming and Agriculture: Livestock, Grains, Produce, Agriculture Chemicals, Agricultural Equipment, Fertilizers
 
  16.   Grocery: Grocery Stores, Convenience Food Stores
 
  17.   Healthcare, Education and Childcare: Ethical Drugs, Proprietary Drugs, Research, Health Care Centers, Nursing Homes, HMOs, Hospitals, Hospital Supplies, Medical Equipment
 
  18.   Home and Office Furnishings, House wares, and Durable Consumer Products: Carpets, Floor Coverings, Furniture, Cooking, Ranges
 
  19.   Hotels, Motels, Inns and Gaming
 
  20.   Insurance: Life, Property and Casualty, Broker, Agent, Surety
 
  21.   Leisure, Amusement, Motion Pictures, Entertainment: Boating, Bowling, Billiards, Musical Instruments, Fishing, Photo Equipment, Records, Tapes, Sports, Outdoor Equipment (Camping), Tourism, Resorts, Games, Toy Manufacturing, Motion Picture Production Theaters, Motion Picture Distribution

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  22.   Machinery (Non-Agricultural, Non-Construction, Non-Electronic): Industrial, Machine Tools, and Steam Generators
 
  23.   Mining, Steel, Iron and Non-Precious Metals: Coal, Copper, Lead, Uranium, Zinc, Aluminum, Stainless Steel, Integrated Steel, Ore Production, Refractories, Steel Mill Machinery, Mini-Mills, Fabricating, Distribution and Sales of the foregoing
 
  24.   Oil and Gas: Crude Producer, Retailer, Well Supply, Service and Drilling
 
  25.   Printing, Publishing, and Broadcasting: Graphic Arts, Paper, Paper Products, Business Forms, Magazines, Books, Periodicals, Newspapers, Textbooks, Radio, T.V., Cable Broadcasting Equipment
 
  26.   Cargo Transport: Rail, Shipping, Railroads, Rail-car Builders, Ship Builders, Containers, Container Builders, Parts, Overnight Mail, Trucking, Truck Manufacturing, Trailer Manufacturing, Air Cargo, Transport
 
  27.   Retail Stores: Apparel, Toy, Variety, Drugs, Department, Mail Order Catalog, Showroom
 
  28.   Telecommunications: Local, Long Distance, Independent, Telephone, Telegraph, Satellite, Equipment, Research, Cellular
 
  29.   Textiles and Leather: Producer, Synthetic Fiber, Apparel Manufacturer, Leather Shoes
 
  30.   Personal Transportation: Air, Bus, Rail, Car Rental
 
  31.   Utilities: Electric, Water, Hydro Power, Gas
 
  32.   Diversified Sovereigns: Semi-sovereigns, Canadian Provinces, Supra-national Agencies
The Corporation will use SIC codes in determining which industry classification is applicable to a particular investment in consultation with the Independent Accountant and Moody’s, to the extent the Corporation considers necessary.
     FIFTEENTH: Article I of the Articles Supplementary is hereby amended by inserting the definition of “Private Investment Companies”:
Private Investment Companies ” means investment companies that are structured to be exempt under the 1940 Act.
     SIXTEENTH: Article I of the Articles Supplementary is hereby amended by inserting the definition of “Rating Agency”:
     “ Rating Agency ” means Moody’s as long as such rating agency is then rating the Series B Preferred Stock at the Corporation’s request or any other rating agency then rating the Series B Preferred Stock at the Corporation’s request.
     SEVENTEENTH: Article I of the Articles Supplementary is hereby amended by inserting the definition of “Registered Investment Company”:
Registered Investment Company ” means an investment company, such as an open-end or closed-end mutual fund, which files a registration statement with the Commission and meets all requirements of the 1940 Act.

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     EIGHTEENTH: Article I of the Articles Supplementary is hereby amended by deleting the definition of “Short-Term Money Market Instruments” in its entirety and inserting in lieu thereof the following:
Short-Term Money Market Instruments ” means the following types of instruments if, on the date of purchase or other acquisition thereof by the Corporation, the remaining term to maturity thereof is not in excess of 180 days (or 270 days for instruments rated at least Aaa for purposes of determining Moody’s Eligible Assets):
  (i)   commercial paper rated either F-1 by Fitch or A-1 by S&P if such commercial paper matures in 30 days or P-1 by Moody’s and either F-1+ by Fitch or A-1 + by S&P if such commercial paper matures in over 30 days;
 
  (ii)   demand or time deposits in, and banker’s acceptances and certificates of deposit of, (A) a depository institution or trust company incorporated under the laws of the United States of America or any state thereof or the District of Columbia or (B) a United States branch office or agency of a foreign depository institution (provided that such branch office or agency is subject to banking regulation under the laws of the United States, any state thereof or the District of Columbia);
 
  (iii)   overnight funds;
 
  (iv)   U.S. Government Obligations and Government Securities; and
 
  (v)   Eurodollar demand or time deposits in, or certificates of deposit of, the head office or the London branch office of a depository institution or trust company if the certificates of deposit, if any, and the long-term unsecured debt obligations (other than such obligations the ratings of which are based on the credit of a person or entity other than such depository institution or trust company) of such depository institution or trust company that have (1) credit ratings on each Valuation Date of at least P-1 from Moody’s and either F-1+ from Fitch or A-1+ from S&P, in the case of commercial paper or certificates of deposit, and (2) credit ratings on each Valuation Date of at least Aa3 from Moody’s and either AA from Fitch or AA- from S&P, in the case of long-term unsecured debt obligations; provided, however, that in the case of any such investment that matures in no more than one Business Day from the date of purchase or other acquisition by the Corporation, all of the foregoing requirements shall be applicable except that the required long-term unsecured debt credit rating of such depository institution or trust company from Moody’s, Fitch and S&P shall be at least A2, A-2 and A, respectively; and provided further, however, that the foregoing credit rating requirements shall be deemed to be met with respect to a depository institution or trust company if (I) such depository institution or trust company is the principal depository institution in a holding company system, (2) the

- 16 -


 

      certificates of deposit, if any, of such depository institution or trust company are not rated on any Valuation Date below P-1 by Moody’s, F-1+ by Fitch or A-1+ by S&P and there is no long-term rating, and (3) the holding company shall meet all of the foregoing credit rating requirements (including the preceding proviso in the case of investments that mature in no more than one Business Day from the date of purchase or other acquisition by the Corporation); and provided further, that the interest receivable by the Corporation shall not be subject to any withholding or similar taxes.
     NINETEENTH: Article I of the Articles Supplementary is hereby amended by inserting the definition of “U.S. Government Securities”:
U.S. Government Securities ” mean securities that are direct obligations of, and obligations the timely payment of principal and interest on which is fully guaranteed by, the United States or any agency or instrumentality of the United States, the obligations of which are backed by the full faith and credit of the United States and in the form of conventional bills, bonds and notes.
     TWENTIETH: Article I of the Articles Supplementary is hereby amended by deleting the definition of “Valuation Date” in its entirety and inserting in lieu thereof the following:
Valuation Date ” means the last Business Day of each month, or for purposes of determining whether the Corporation is maintaining the Basic Maintenance Amount, each business day commencing with the Date of Original Issue.
     TWENTY-FIRST: Article II.5(a)(ii)(C) of the Articles Supplementary is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:
(C) As soon as practicable after the last Valuation Date of each fiscal year of the Corporation on which a Basic Maintenance Report is required to be delivered, the Corporation will deliver to Moody’s an Accountant’s Confirmation regarding the accuracy of the calculations made by the Corporation in such Basic Maintenance Report.
     TWENTY-SECOND: The amendments set forth in these Articles of Amendment were duly approved by the Board of Directors of the Corporation in accordance with Article III of the Articles Supplementary and the Maryland General Corporation Law. No stock entitled to be voted on the matter was outstanding or subscribed for at the time of the approval of the amendments set forth in these Articles of Amendment.
     TWENTY-THIRD: The amendments contemplated by these Articles of Amendment do not increase the authorized stock of the Corporation or the aggregate par value thereof.

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     The undersigned President of The Gabelli Global Multimedia Trust Inc., who executed these Articles of Amendment on behalf of the Corporation, hereby acknowledges, in the name and on behalf of the Corporation, that these Articles of Amendment are the corporate act of the Corporation and states further, under the penalties of perjury, that to the best of his knowledge, information and belief, the matters and facts set forth herein with respect to authorization and approval are true in all material respects.
     IN WITNESS WHEREOF, The Gabelli Global Multimedia Trust Inc. has caused these Articles of Amendment to be signed in its name and on its behalf by its President and witnessed by its Secretary as of this 29 day of May, 2009.
             
WITNESS:
  THE GABELLI GLOBAL MULTIMEDIA
TRUST INC.
 
           
By:
  /s/ Agnes Mullady   By:   /s/ Bruce N. Alpert
 
           
 
  Name: Agnes Mullady       Name: Bruce N. Alpert
 
  Title: Secretary       Title: President

Exhibit (a)(6)
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
ARTICLES OF AMENDMENT TO THE
ARTICLES SUPPLEMENTARY
CREATING AND FIXING THE RIGHTS OF
SERIES C AUCTION RATE CUMULATIVE PREFERRED STOCK
     The Gabelli Global Multimedia Trust Inc., a Maryland corporation (hereinafter called the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of the State of Maryland that:
     FIRST: Article I.3(b) of the Articles Supplementary Creating and Fixing the Rights of Series C Auction Rate Cumulative Preferred Stock (“Articles Supplementary”) is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:
(b) In the event of a redemption of Series C Preferred Stock pursuant to paragraph 3(a) above, the Corporation will have filed or will file a notice of its intention to redeem with the Commission, in either case so as to provide at least the minimum notice required under Rule 23c-2 under the 1940 Act or any successor provision (such Rule 23c-2 notice shall be provided to S&P as soon as practicable after the notice is filed with the Commission so long as S&P is rating the Series C Preferred Stock at the Corporation’s request). In addition, the Corporation shall deliver a notice of redemption to the Auction Agent (the “ Notice of Redemption ”) containing the information set forth below (i) in the case of an optional redemption pursuant to paragraph 3(a)(i) above, one Business Day prior to the giving of notice to the Holders and (ii) in the case of a mandatory redemption pursuant to paragraph 3(a)(ii) above, on or prior to the 7th day preceding the Mandatory Redemption Date. The Auction Agent will use its reasonable efforts to provide telephonic, electronic or written notice to each Holder of any shares of Series C Preferred Stock called for redemption not later than the close of business on the Business Day immediately following the day on which the Corporation determines the shares to be redeemed (or, during a Default Period with respect to such shares, not later than the close of business on the Business Day immediately following the day on which the Auction Agent receives Notice of Redemption from the Corporation). The Auction Agent shall confirm a telephonic notice in writing not later than the close of business on the third Business Day preceding the date fixed for redemption by providing the Notice of Redemption to each Holder of shares called for redemption, the Paying Agent (if different from the Auction Agent) and the Securities Depository. Notice of Redemption will be addressed to the Holders of Series C Preferred Stock at their addresses appearing on the share records of the Corporation. Such Notice of Redemption will set forth (s) the date fixed for redemption, (t) the number or percentage of shares of Series C Preferred Stock to be redeemed, (u) the CUSIP number(s) of such shares, (v) the Redemption Price (specifying the amount of accumulated dividends to be included therein), (w) the place or places where such shares are to be redeemed, (x) that dividends on the shares to be redeemed will cease to accumulate on such date fixed for redemption, (y) the provision of these Articles Supplementary under which redemption shall be made, and (z) in the case of a redemption pursuant to paragraph 3(a)(i), any conditions precedent to such redemption. If fewer than all the Outstanding shares of Series C Preferred Stock held by any Holder are to be redeemed, the Notice of Redemption mailed to such Holder shall also specify the number or percentage of shares of Series C Preferred Stock to be redeemed from such Holder. No defect in the Notice of

 


 

Redemption or in the transmittal or mailing thereof will affect the validity of the redemption proceedings, except as required by applicable law.
     SECOND: Article I.9(a)(ii)(A) of the Articles Supplementary is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:
(A) For so long as the Series C Preferred Stock is rated by Moody’s and/or S&P at the Corporation’s request, the Corporation shall maintain, on each Valuation Date, Eligible Assets having an Adjusted Value at least equal to the Basic Maintenance Amount, as of such Valuation Date. Upon any failure to maintain Eligible Assets having an Adjusted Value at least equal to the Basic Maintenance Amount, the Corporation shall use all commercially reasonable efforts to re-attain Eligible Assets having an Adjusted Value at least equal to the Basic Maintenance Amount on or prior to the Basic Maintenance Amount Cure Date, by altering the composition of its portfolio or otherwise.
     THIRD: Article I.9(a)(ii)(B) of the Articles Supplementary is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:
(B) On or before 5:00 P.M., New York City time, on the third Business Day after a Valuation Date on which the Corporation fails to satisfy the Basic Maintenance Amount, and on the third Business Day after the Basic Maintenance Amount Cure Date with respect to such Valuation Date, the Corporation shall complete and deliver to each Rating Agency (if either S&P or Moody’s is then rating the Series C Preferred Stock at the Corporation’s request) a Basic Maintenance Report as of the date of such failure or such Basic Maintenance Amount Cure Date, as the case may be, which will be deemed to have been delivered to such Rating Agency if such Rating Agency receives a copy or facsimile or other electronic transcription or transmission thereof (via facsimile or electronic mail solely in the case of S&P if S&P is then rating the Series C Preferred Stock at the Corporation’s request) and on the same day the Corporation mails or sends to such Rating Agency for delivery on the next Business Day the full Basic Maintenance Report. The Corporation shall also deliver a Basic Maintenance Report to (1) Moody’s and S&P as of each Valuation Date, in each case on or before the fifth Business Day after such day, (2) upon reasonable request by such Rating Agency and (3) any day the Common Stock and Series C Preferred Stock are redeemed. A failure by the Corporation to deliver a Basic Maintenance Report pursuant to the preceding sentence shall be deemed to be delivery of a Basic Maintenance Report indicating the Discounted Value for all assets of the Corporation is less than the Basic Maintenance Amount, as of the relevant Valuation Date.
     FOURTH: Article I.9(a)(ii)(C) of the Articles Supplementary is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:
(C) As soon as practicable after the last Valuation Date of each fiscal year of the Corporation on which a Series C Preferred Basic Maintenance Report is required to be delivered, the Corporation will deliver to the relevant Rating Agency (if either S&P or Moody’s is then rating the Series C Preferred Shares at the Corporation’s request) an Accountant’s Confirmation regarding the accuracy of the calculations made by the Corporation in such Series C Preferred Basic Maintenance Report. The Corporation also shall cause the Independent Accountant to

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provide an Accountant’s Confirmation to S&P if and when requested by S&P for any Valuation Date, as soon as practicable after such request.
     FIFTH: Article I.9(a)(ii)(D) of the Articles Supplementary is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:
(D) If any Accountant’s Confirmation delivered pursuant to paragraph (C) of this paragraph 9(a)(ii) shows an error was made in the Basic Maintenance Report with respect to such Basic Maintenance Amount Cure Date, or does not agree with the Corporation’s calculation of the Basic Maintenance Report for a particular Valuation Date for which such Accountant’s Confirmation was required to be delivered’s or shows that a lower aggregate Discounted Value for the aggregate Eligible Assets in respect of any Rating Agency than was determined by the Corporation, the calculation or determination made by such Independent Accountant shall be final and conclusive and shall be binding on the Corporation, and the Corporation shall accordingly amend and deliver the Basic Maintenance Report to the relevant Rating Agency (if either S&P or Moody’s is then rating the Series C Preferred Stock) promptly following receipt by the Corporation of such Accountant’s Confirmation. If any Accountant’s Confirmation shows that an error was made in any such report, the calculation or determination made by the Corporation’s Independent Accountant will be conclusive and binding on the Corporation; provided, however, any errors shown in the Accountant’s Confirmation filed on an annual basis shall not be deemed to be a failure to maintain the Basic Maintenance Amount on any prior Valuation Dates, The Accountant’s Confirmations referred to above will confirm, based on the Independent Accountant’s review, (i) the mathematical accuracy of the calculations reflected in the Basic Maintenance Amount and (ii) that the Corporation determined whether the Corporation had, at such Valuation Date, Eligible Assets with an aggregate Discounted Value at least equal to the Basic Maintenance Amount in accordance with these Articles Supplementary.
     SIXTH: Article I.9(a)(ii)(E) of the Articles Supplementary is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:
(E) The Corporation will provide S&P annually a copy of its pricing procedures used in determining the Market Value of the Corporation’s assets.
     SEVENTH: Article I.9(a)(ii)(G) of the Articles Supplementary is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:
(G) On or before 5:00 p.m., New York City time, on the third Business Day after either (1) the Corporation shall have redeemed Series C Preferred Stock or (2) the ratio of the Discounted Value of Eligible Assets in respect of any Rating Agency to the Basic Maintenance Amount is less than or equal to 110%, the Corporation shall complete and deliver in electronic format to, in the case of clause (1), each Rating Agency, or, in the case of clause (2), any relevant Rating Agency, a Basic Maintenance Report as of the date of either such event.
     EIGHTH: Article I.9(d) of the Articles Supplementary is hereby deleted.

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     NINTH: Article I.11(b) of the Articles Supplementary is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:
(b) So long as any Series C Preferred Stock is Outstanding and S&P is rating such Series C Preferred Stock at the Corporation’s request, the Corporation will not, unless it has received written confirmation that any such transaction would not impair the rating then assigned by S&P to such Series C Preferred Stock, engage in any one or more of the following transactions:
               (i) purchase or sell futures contracts; write, purchase or sell options on futures contracts; or write put options (except covered put options) or call options (except covered call options) on securities owned by the Corporation (collectively, “Hedging Transactions”), except subject to the following limitations:
               (A) for each net long or short position in Hedging Transactions, the Corporation will maintain in a segregated account with the Corporation’s custodian an amount of cash or readily marketable securities having a value, when added to any amounts on deposit with the Corporation’s futures commission merchants or brokers as margin or premium for such position, at least equal to the market value of the Corporation’s potential obligations on such position, marked-to-market on a daily basis, in each case as and to the extent required by the applicable rules or orders of the Commission or by interpretations of the Commission’s staff;
               (B) the Corporation will not engage in any Hedging Transaction which would cause the Corporation at the time of such transaction to own or have sold the lesser of(l) outstanding futures contracts, in aggregate, based on the Standard & Poor’s 500 Index, the Dow Jones Industrial Average, the Russell 2000 Index, the Wilshire 5000 Index, the NASDAQ Composite Index and the New York Stock Exchange Composite Index (or any component of any of the forgoing) exceeding in number 50% of the market value of the Corporation’s total assets or (2) outstanding futures contracts based on any of the aforementioned indices exceeding in number 10% of the average number of daily traded futures contracts based on such index in the 30 days preceding the time of effecting such transaction as reported by The Wall Street Journal;
               (C) the Corporation will engage in closing transactions to close out any outstanding futures contract which the Corporation owns or has sold or any outstanding option thereon owned by the Corporation in the event (1) the Corporation does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the Basic Maintenance Amount on two consecutive Valuation Dates and (2) the Corporation is required to pay variation margin on the second such Valuation Date;
               (D) the Corporation will engage in a closing transaction to close out any outstanding futures contract or option thereon at least one week prior to the delivery date under the terms of the futures contract or option thereon unless the corporation holds the securities deliverable under such terms; and
               (E) when the Corporation writes a futures contract or option thereon, either the amount of margin posted by the Corporation (in the case of a futures contract) or the marked-to-market value of the Corporation’s obligation (in the case of a put option written by the Corporation) shall be treated as a liability of the Corporation for purposes of calculating the

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Basic Maintenance Amount, or, in the event the Corporation writes a futures contract or option thereon which requires delivery of an underlying security and the Corporation does not wish to treat its obligations with respect thereto as a liability for purposes of calculating the Basic Maintenance Amount, it shall hold such underlying security in its portfolio and shall not include such security to the extent of such contract or option as an S&P Eligible Asset.
               (ii) borrow money, except for the purpose of clearing securities transactions if (A) the Basic Maintenance Amount would continue to be satisfied after giving effect to such borrowing and (B) such borrowing (1) is privately arranged with a bank or other person and is not intended to be publicly distributed or (2) is for “temporary purposes,” and is in an amount not exceeding 5 percent of the market value of the total assets of the Corporation at the time of the borrowing; for purposes of the foregoing, “temporary purposes” means that the borrowing is to be repaid within sixty days and is not to be extended or renewed;
               (iii) engage in any short sales of equity securities (other than short sales against the box) unless the Corporation maintains in a segregated account with the Corporation’s custodian an amount of cash or other readily market-able securities having a market value, when added to any amounts on deposit with the Corporation’s broker as collateral for its obligation to replace the securities borrowed and sold short, at least equal to the current market value of securities sold short, marked-to-market on a daily basis;
               (iv) utilize any pricing service other than FT Interactive Data, Reuters, Telekurs, Bloomberg Financial Markets, J.J. Kenny Pricing Service, Merrill Lynch Securities Pricing Service or Bridge Data Corp, Bear Stearns Pricing Direct and any pricing service then permitted by S&P; or enter into any reverse repurchase agreement, other than with a counterparty that is rated at least A-1+ by S&P.
(c) So long as the shares Series C Preferred Stock are Outstanding, the Corporation may issue and sell shares of one or more other series of Preferred Stock constituting a series of a class of senior securities of the Corporation representing stock under Section 18 of the 1940 Act in addition to the Series C Preferred Stock and other Preferred Stock then Outstanding, provided that (i) the Corporation shall, immediately after giving effect to the issuance of such additional shares of Preferred Stock and to its receipt and application of the proceeds thereof (including, without limitation, to the Redemption of Preferred Stock for which a Notice of Redemption has been mailed prior to such issuance), have an “asset coverage” for all senior securities which are stock, as defined in Section 18(h) of the 1940 Act, of at least 200% of the Series C Preferred Stock and all other Preferred Stock of the Corporation then Outstanding, and (ii) no such additional Preferred Stock (including any additional Series C Preferred Stock) shall have any preference or priority over any other Preferred Stock of the Corporation upon the distribution of the assets of the Corporation or in respect of the payment of dividends.
     TENTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “‘AA’ Financial Composite Commercial Paper Rate” in its entirety and inserting in lieu thereof the following;
“‘AA’ Financial Composite Commercial Paper Rate” on any date means

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(i) the interest equivalent of the 7-day rate, in the case of a Dividend Period of seven days or shorter; for Dividend Periods greater than 7 days but fewer than or equal to 31 days, the 30-day rate; for Dividend Periods greater than 31 days but fewer than or equal to 61 days, the 60-day rate; for Dividend Periods greater than 61 days but fewer than or equal to 91 days, the 90 day rate; for Dividend Periods greater than 91 days but fewer than or equal to 270 days, the rate described in (ii) below; for Dividend Periods greater than 270 days, the Treasury Index Rate; on commercial paper on behalf of issuers whose corporate bonds are rated “AA” by S&P, or the equivalent of such rating by another nationally recognized rating agency, as announced by the Federal Reserve Bank of New York for the close of business on the Business Day immediately preceding such date; or (ii) if the Federal Reserve Bank of New York does not make available such a rate, then the arithmetic average of the interest equivalent of such rates on commercial paper placed on behalf of such issuers, as quoted on a discount basis or otherwise by the Commercial Paper Dealers to the Auction Agent for the close of business on the Business Day immediately preceding such date (rounded to the next highest .001 of 1%). If any Commercial Paper Dealer does not quote a rate required to determine the “AA” Financial Composite Commercial Paper Rate, such rate shall be determined on the basis of the quotations (or quotation) furnished by the remaining Commercial Paper Dealers (or Dealer), if any, or, if there are no such Commercial Paper Dealers, by the Auction Agent pursuant to instructions from the Corporation. For purposes of this definition, (A) “ Commercial Paper Dealers ” shall mean (1) Salomon Smith Barney Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Goldman Sachs & Co.; (2) in lieu of any thereof, its respective Affiliate or successor; and (3) in the event that any of the foregoing shall cease to quote rates for commercial paper of issuers of the sort described above, in substitution therefor, a nationally recognized dealer in commercial paper of such issuers then making such quotations selected by the Corporation, and (B) “interest equivalent” of a rate stated on a discount basis for commercial paper of a given number of days’ maturity shall mean a number equal to the quotient (rounded upward to the next higher one- thousandth of 1%) of (1) such rate expressed as a decimal, divided by (2) the difference between (x) 1.00 and (y) a fraction, the numerator of which shall be the product of such rate expressed as a decimal, multiplied by the number of days in which such commercial paper shall mature and the denominator of which shall be 360.
     ELEVENTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Agency Mortgage Collateral”:
“Agency Mortgage Collateral” means certificates guaranteed by U.S. Government Agencies (e.g. Federal National Mortgage Association (“FNMA”), Government National Mortgage Association (“GNMA”) and Federal Home Loan Mortgage Corporation (“FHLMC”)) for timely payment of interest and full and ultimate payment of principal. Agency Mortgage Collateral also evidences undivided interests in pools of level-payment, fixed, variable, or adjustable rate, fully amortizing loans that are secured by first liens on one - to four-family residences residential properties (or in the case of Plan B FHLMC certificates, five or more units primarily designed for residential use).
     TWELFTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Annual Valuation Date” in its entirety.

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     THIRTEENTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Auction Agent” in its entirety and inserting in lieu thereof the following:
“Auction Agent” means The Bank of New York Mellon unless and until another commercial bank, trust company, or other financial institution appointed by a resolution of the Board of Directors enters into an agreement with the Corporation to follow the Auction Procedures for the purpose of determining the Applicable Rate.
     FOURTEENTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Bank Loans” :
“Bank Loans” means direct purchases of, assignments of, participations in and other interests in (a) any bank loan or (b) any loan made by an investment bank, investment fund or other financial institution, provided that such loan under this clause (b) is similar to those typically made, syndicated, purchased or participated by a commercial bank or institutional loan investor in the ordinary course of business.
     FIFTEENTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Basic Maintenance Amount” in its entirety and inserting in lieu thereof the following:
“Basic Maintenance Amount” means as of any Valuation Date, the dollar amount equal to (a) the sum of (i) the product of the number of shares of each class or series of Preferred Stock Outstanding on such Valuation Date multiplied, in the case of each such series or class, by the per share Liquidation Preference applicable to each such series or class; (ii) to the extent not included in (i) the aggregate amount of cash dividends (whether or not earned or declared) that will have accumulated for each Outstanding share of Preferred Stock from the most recent applicable dividend payment date to which dividends have been paid or duly provided for (or, in the event the Basic Maintenance Amount is calculated on a date prior to the initial Dividend Payment Date with respect to a class or series of the Preferred Stock, then from the Date of Original Issue of such shares) through the Valuation Date plus all dividends to accumulate on the Preferred Stock then Outstanding during the 70 days following such Valuation Date or, if less, during the number of days following such Valuation Date that shares of Preferred Stock called for redemption are scheduled to remain Outstanding at the applicable rate or default rate then in effect with respect to such shares; (iii) the Corporation’s other liabilities due and payable as of such Valuation Date (except that dividends and other distributions payable by the Corporation on Common Stock shall not be included as a liability) and such liabilities projected to become due and payable by the Corporation during the 90 days following such Valuation Date (excluding liabilities for investments to be purchased and for dividends and other distributions not declared as of such Valuation Date); and (iv) any current liabilities of the Corporation as of such Valuation Date to the extent not reflected in any of (a)(i) through (a)(iii) (including, without limitation, and immediately upon determination, any amounts due and payable by the Corporation pursuant to reverse repurchase agreements and any payables for assets purchased as of such Valuation Date) less (b) (i) the Adjusted Value of any of the Corporation’s assets or (ii) the face value of any of the Corporation’s assets if, in the case of both (b)(i) and (b)(ii), such

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assets are either cash or evidences of indebtedness which mature prior to or on the date of redemption or repurchase of shares of Preferred Stock or payment of another liability and are either U.S. Government Obligations or evidences of indebtedness which have a rating assigned by Moody’s of at least Aaa, P-1, VMIG-1 or MIG-1 and by S&P of at least AAA, SP-1+ or A-1+, and are irrevocably held by the Corporation’s custodian bank in a segregated account or deposited by the Corporation with the dividend-disbursing agent or Paying Agent, as the case may be, for the payment of the amounts needed to redeem or repurchase Preferred Stock subject to redemption or repurchase or any of (a)(ii) through (a)(iv); and provided that in the event the Corporation has repurchased Preferred Stock and irrevocably segregated or deposited assets as described above with its custodian bank, the dividend-disbursing agent or Paying Agent for the payment of the repurchase price the Corporation may deduct 100% of the Liquidation Preference of such Preferred Stock to be repurchased from (a) above. Basic Maintenance Amount shall, for the purposes of these Articles Supplementary, have a correlative meaning with respect to any other class or series of Preferred Stock.
     SIXTEENTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Basic Maintenance Amount Cure Date” in its entirety and inserting in lieu thereof the following.
“Basic Maintenance Amount Cure Date” means 10 Business Days following a Valuation Date, such date being the last day upon which the Corporation’s failure to comply with paragraph 9(a)(ii)(A) of Article I of these Articles Supplementary could be cured.
     SEVENTEENTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Basic Maintenance Test” in its entirety and inserting in lieu thereof the following.
“Basic Maintenance Test” means a test which is met if the lower of the aggregate Discounted Values of the Moody’s Eligible Assets or the S&P Eligible Assets if both Moody’s and S&P are then rating the Series C Preferred Stock at the request of the Corporation, or the Eligible Assets of whichever of Moody’s or S&P is then doing so if only one of Moody’s or S&P is then rating the Series C Preferred Stock at the request of the Corporation, meets or exceeds the Basic Maintenance Amount.
     EIGHTEENTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Basic Maintenance Report” or “Report” in its entirety and inserting in lieu thereof the following:
“Basic Maintenance Report” or “Report” means, with respect to the Series C Preferred Stock, a report prepared by the Administrator which sets forth, as of the related Valuation Date, Moody’s Eligible Assets and S&P Eligible Assets sufficient to meet or exceed the Basic Maintenance Amount, the Market Value and Discounted Value thereof (seriatim and in the aggregate), and the Basic Maintenance Amount, and shall, for the purposes of these Articles Supplementary, have a correlative meaning with respect to any other class or series of Preferred Stock.

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     NINETEENTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Business Development Company”:
“Business Development Company” (BDCs) means a type of closed-end fund regulated under the 1940 Act whose shares are typically listed for trading on a U.S. securities exchange. BDCs are publicly-traded funds that typically invest in and lend to small and medium-sized private and certain public companies that may not have access to public equity markets for capital raising. BDCs invest in such diverse industries as healthcare, chemical and manufacturing, technology and service companies.
     TWENTIETH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Collateralized Mortgage Obligations”:
“Collateralized Mortgage Obligations” means publicly issued instruments rated ‘AAA’ by S&P. No more than 25% of the total market value of collateral may be from one private sector issuer.
     TWENTY-FIRST: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Conventional Mortgage”:
“Conventional Mortgage” means a mortgage in which the interest rate does not change during the entire term of the loan.
     TWENTY-SECOND: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Convertible Corporate Indebtedness”:
“Convertible Corporate Indebtedness” means evidences of indebtedness other than Deposit Assets, U.S. Government Securities and Municipal Obligations that are convertible into or exchangeable or exercisable for stock of a corporation and that satisfy the following conditions: (i) such evidence of indebtedness is rated at least CCC by S&P; and (ii) if such evidence of indebtedness is rated BBB or lower by S&P, the market capitalization of the issuer of such evidence of indebtedness is at least $100 million.
     TWENTY-THIRD: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Date of Original Issue” in its entirety and inserting in lieu thereof the following:
“Date of Original Issue” means with respect to any share of Series C Preferred Stock, the date on which the Corporation originally issues such share.
     TWENTY-FOURTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Deposit Assets” in its entirety and inserting in lieu thereof the following:
“Deposit Assets” means cash and any obligations or securities, including Short Term Money Market Instruments that are Eligible Assets, rated at least AAA or A-1+ by S&P, except that, for

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purposes of optional redemption, such obligations or securities will be considered “Deposit Assets” only if they also are rated at least P-1 by Moody’s.
     TWENTY-FIFTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Discount Factor” in its entirety and inserting in lieu thereof the following:
“Discount Factor” means (a) so long as each of Moody’s and S&P is rating the Series C Preferred Stock at the Corporation’s request, the Moody’s Discount Factor or S&P Discount Factor, as applicable, or (b) any applicable discount factor established by any Other Rating Agency, whichever is applicable.
     TWENTY-SIXTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Eligible Assets” in its entirety and inserting in lieu thereof the following:
“Eligible Assets” means Moody’s Eligible Assets (if Moody’s is then rating the Series C Preferred Stock at the request of the Corporation), S&P Eligible Assets (if S&P is then rating the Series C Preferred Stock at the request of the Corporation), and/or Other Rating Agency Eligible Assets, whichever is applicable.
     TWENTY-SEVENTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “FHA Mortgage”:
“FHA Mortgage” means a mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA).
     TWENTY-EIGHTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Fitch Discount Factor” in its entirety.
     TWENTY-NINTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Fitch Diversification Limitations” in its entirety.
     THIRTIETH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Fitch Eligible Assets” in its entirety.
     THIRTY-FIRST: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Fitch Exposure Period” in its entirety.
     THIRTY-SECOND: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Fitch Hedging Transactions” in its entirety.
     THIRTY-THIRD: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Fitch Industry Classifications” in its entirety.

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     THIRTY-FOURTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Hedging Transactions”:
“Hedging Transactions” has the meaning set forth in paragraph 11(b)(i) of Article I of these Articles Supplementary.
     THIRTY-FIFTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “High Yield Securities”:
“High Yield Securities” means Municipal Obligations not rated by S&P but rated equivalent to BBB or lower by another NRSRO, rated BB+ or lower by S&P or not rated.
     THIRTY-SIXTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Foreign Currency Transactions”:
“Foreign Currency Transactions” means any technique used by the Corporation to hedge its exposure to foreign currencies, including forward foreign currency exchange contracts.
     THIRTY-SEVENTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Foreign Sovereign Debt”:
“Foreign Sovereign Debt” means debt issued by a national government other than the United States.
     THIRTY-EIGHTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Market Value” in its entirety and inserting in lieu thereof the following:
“Market Value” means the market value of an asset of the Corporation as computed as follows: (i) Equity securities listed or traded on a nationally recognized securities exchange or traded in the U.S. over-the-counter market where trades are reported contemporaneously and for which market quotations are readily available, are valued at the last quoted sale or a market’s official closing price at the close of the exchange’s or other market’s regular trading hours, as of or prior to the time and day as of which such value is being determined. Portfolio securities traded on more than one national securities exchange or market are valued according to the broadest and most representative market as determined by the Adviser. If there has been no sale on the day the valuation is made, the securities are valued at the closing bid price on the principal market for such security on such day. If no asked prices are quoted on such day, then the security is valued at the closing bid price on the principal market for such security on such day. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price. (ii) Debt instruments are valued based upon (a) the basis of prices provided by a pricing service or (b) the lower of the value set forth in bids from two independent dealers in securities, one of which bids will be in writing.
     THIRTY-NINTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Master Limited Partnership Securities”:

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“Master Limited Partnership Securities” means the following securities, restricted or unrestricted, issued by a Master Limited Partnership (MLP) or an affiliate of an MLP: (1) common units, (2) convertible subordinated units, (3) I-Shares, (4)I-units and (5) debt securities.
     FORTIETH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Maximum Rate” in its entirety and inserting in lieu thereof the following:
“Maximum Rate” means, on any date on which the Applicable Rate is determined, the applicable percentage of (i) in the case of a dividend period of 184 days or less, the “AA” Financial Composite Commercial Paper Rate on the date of such Auction determined as set forth below based on the lower of the credit ratings assigned to the Series C Preferred by Moody’s and S&P subject to upward but not downward adjustment in the discretion of the Board of Directors after consultation with the Broker-Dealers; provided that immediately following any such increase the Corporation would be in compliance with the Basic Maintenance Amount or (ii) in the case of a dividend period of longer than 184 days, the Treasury Index Rate.
         
Moody’s Credit Rating   S&P Credit Rating   Applicable Percentage
Aa3 or higher   AA- or higher   150%
A3 to A1   A- to A+   175%
Baa3 to Baa1   BBB- to BBB+   250%
Below Baa3   Below BBB-   275%
     FORTY-FIRST: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Moody’s Derivatives Transactions”:
“Moody’s Derivatives Transactions” means, for so long as any Series C Preferred Stock is rated by Moody’s, the Corporation may, notwithstanding the limitations in paragraph 10 of this Article I, buy or sell financial futures contracts, write, purchase or sell call options on financial futures contracts or purchase put options on financial futures contracts or write call options on portfolio securities, swaps and securities lending unless it receives written confirmation from Moody’s that engaging in such transactions would impair the ratings then assigned to the preferred stock by Moody’s, subject to the following limitations:
          (a) Futures and call options : For purposes of the Basic Maintenance Amount, futures held by the Corporation and call options sold by the Corporation shall not be included as Moody’s Eligible Assets. However, such assets shall be valued at Market Value by subtracting the good faith margin and the maximum daily trading variance as of a Valuation Date. For call options purchased by the Corporation, the Market Value of the call option will be included as Moody’s Eligible Assets subject to a Moody’s Discount Factor mutually agreed to between the Corporation and Moody’s based on the characteristics of the option contract such as its maturity and the underlying security of the contract.
          (b) Securities lending : To increase income, the Corporation 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. For purposes of

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calculating the Basic Maintenance Amount, such securities lent shall be included as Moody’s Eligible Assets with the appropriate Moody’s Discount Factor applied to such lent security. The obligation to return such collateral shall not be included as an obligation/liability for purposes of calculating the Basic Maintenance Amount. However, the Corporation may reinvest cash collateral for securities lent in conformity with its investment objectives and policies and the provisions of these Articles Supplementary. In such event, the Corporation may reinvest cash collateral to the extent that securities lending collateral received is invested by the Corporation in assets that otherwise would be Moody’s Eligible Assets and the value of such assets exceeds the amount of the Corporation’s Moody’s Eligible Assets by applying the applicable Moody’s Discount Factor to this amount and adding the product to total Moody’s Eligible Assets. Conversely, if the value of assets in which securities lending collateral has been invested is less then the amount of the Corporation’s obligation to return the collateral on a Valuation Date, such difference shall be included as an obligation/liability of the Corporation for purposes of calculating the Basic Maintenance Amount. Collateral received by the Corporation in a securities lending transaction and maintained by the Corporation in the form received shall not be included as a Moody’s Eligible Asset for purposes of calculating the Basic Maintenance Amount.
          (c) Interest rate swaps : Only the cumulative unsettled profit and loss from an interest rate swap transaction will be calculated when determining the Basic Maintenance Amount. If the Corporation has an outstanding gain from an interest rate swap transaction on a Valuation Date, the gain will be included as a Moody’s Eligible Asset subject to the Moody’s Discount Factor on the counterparty to the interest rate swap transaction. If the Corporation has an outstanding liability from an interest rate swap transaction on a Valuation Date, the Corporation will subtract the outstanding liability from the total Moody’s Eligible Assets in calculating the Basic Maintenance Amount.
          If not otherwise provided for in (a)-(c) above, derivative instruments will be included as Moody’s Eligible Assets subject to a Moody’s Discount Factor as mutually agreed to between the Corporation and Moody’s.
     FORTY-SECOND: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Moody’s Discount Factor” in its entirety and inserting in lieu thereof the following:
“Moody’s Discount Factor” means, with respect to a Moody’s Eligible Asset specified below, the following applicable number:
          (a) Corporate debt securities : The percentage determined by reference to the rating on such asset with reference to the remaining term to maturity of such asset, in accordance with the table set forth below (non convertibles).

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Term to Maturity of Corporate
Debt
  Moody’s Rating Category
Security (1)   Aaa   Aa   A   Baa   Ba   B   Unrated 2
 1 year or less
    109 %     112 %     115 %     118 %     137 %     150 %     250 %
 1 — 2 years
    115       118       122       125       146       160       250  
 2 — 3 years
    120       123       127       131       153       168       250  
 3 — 4 years
    126       129       133       138       161       176       250  
 4 — 5 years
    132       135       139       144       168       185       250  
 5 — 7 years
    139       143       147       152       179       197       250  
 7 — 10 years
    145       150       155       160       189       208       250  
 10 — 15 years
    150       155       160       165       196       216       250  
 15 — 20 years
    150       155       160       165       196       228       250  
 20 — 30 years
    150       155       160       165       196       229       250  
Greater than 30 years
    165       173       181       189       205       240       250  
 
(1)   The Moody’s Discount Factors above for corporate debt securities shall also be applied to any interest rate swap or cap, in which case the rating of the counterparty shall determine the appropriate rating category.
 
(2)   Unless conclusions regarding liquidity risk as well as estimates of both the probability and severity of default for the Corporation’s assets can be derived from other sources, securities rated below B by Moody’s and unrated securities, which are securities rated by neither Moody’s, S&P nor Fitch, are limited to 10% of Moody’s Eligible Assets. If a corporate debt security is unrated by Moody’s, S&P or Fitch, the Corporation will use the percentage set forth under “Unrated” in this table. Ratings assigned by S&P or Fitch are generally accepted by Moody’s at face value. However, adjustments to face value may be made to particular categories of credits for which the S&P and/or Fitch rating does not seem to approximate a Moody’s rating equivalent. Split rated securities assigned by S&P and Fitch will be accepted at the lower of the two ratings.
For corporate debt securities that do not pay interest in U.S. dollars, the fund sponsor will contact Moody’s to obtain the applicable currency conversion rates.
          (b) Preferred stock : The Moody’s Discount Factor for taxable preferred stock shall be:
         
Aaa
    150 %
Aa
    155 %
A
    160 %
Baa
    165 %
Ba
    196 %

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B
    216 %
<B or Not Rated
    250 %
Middle Market Bank Non-cumulative perpetual preferreds
    476 %
Investment Grade DRD Preferred Stock
    165 %
Non-Investment Grade DRD Preferred Stock
    216 %
          For non-cumulative preferred stock, the Discount Factor should be amplified by 110%.
          (c) Common stock :
                         
Common Stocks (1)   Large Cap   Mid Cap   Small Cap
7 week exposure period
    200 %     205 %     220 %
 
(1)   Market cap for large-cap stocks are $10 billion and up, mid-cap stocks range between $2 billion and $10 billion, and small-cap stocks are $2 billion and below.
          (d) Convertible securities (including convertible preferreds) :
                         
            Non-    
    Investment   Investment    
Delta   Grade   Grade   Unrated
.00 — .40   Use Corporate Debt Securities Table     250 %
.41 — .80
    192 %     226 %     250 %
.81 — 1.00
    195 %     229 %     250 %
With respect to “structured synthetic convertible” securities, the discount factors above should be grossed up by an additional 20% of the base discount percentage.

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     (e) Common stock, preferred stock and corporate debt securities of REITs :
          a. For common stock and preferred stock of real estate investment trusts (“REITs”), the Moody’s Discount Factor shall be the percentage specified in the table set forth below:
         
    Moody’s Discount
    Factor
common stock of REITs
    154 %
 
preferred stock of REITs
       
 
with a Moody’s, S&P or Fitch rating (including a Senior Implied Rating):
    154 %
 
without a Moody’s, S&P or Fitch rating (including a Senior Implied Rating):
    208 %
     b. Notwithstanding the above, a Moody’s Discount Factor of 250% will be applied: (a) to those assets in a single NAREIT industry category/sector which exceed 30% of Moody’s Eligible Assets but are not greater than 35% of Moody’s Eligible Assets; (b) if dividends on such securities have not been paid consistently (either quarterly or annually) over the previous three years, or for such shorter time period that such securities have been outstanding; or (c) if the market capitalization (including common stock and preferred stock) of an issuer is below $500 million.
     c. For corporate debt securities of REITs, apply the Moody’s Discount Factors listed above under Corporate debt securities.
          (f) Short-Term Instruments : The Moody’s Discount Factor applied to short-term portfolio securities, including without limitation corporate debt securities and Short-Term Money Market Instruments will be (1) 100%, so long as such portfolio securities mature or have a demand feature at par exercisable within the Moody’s Exposure Period and are rated Aaa or at least Prime-1, V-Mig1, or equivalent, or be a rated money-market fund; and (2) 115%, so long as such portfolio securities do not mature within the Moody’s Exposure Period or have a demand feature at par not exercisable within the Moody’s Exposure Period. A Moody’s Discount Factor of 100% will be applied to cash.

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          (g)  U.S. Government Obligations and U.S. Treasury Strips;
                 
    U.S. Government    
    Obligations   U.S. Treasury Strips
Remaining Term to Maturity   Discount Factor   Discount Factor
 1 year or less
    107 %     107 %
 1 — 2 years
    113       115  
 2 — 3 years
    118       121  
 3 — 4 years
    123       128  
 4 — 5 years
    128       135  
 5 — 7 years
    135       147  
 7 — 10 years
    141       163  
 10 — 15 years
    146       191  
 15 — 20 years
    154       218  
 20 — 30 years
    154       244  
          (h) Foreign Sovereign Debt:
     a. Debt denominated in US$:

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Moody’s Sovereign Debt
Rating
                                                         
                                                    Below B
                                                    &
Term to Maturity(2)   Aaa   Aa   A   Baa   Ba   B   Unrated
1 year or less
    109 %     112 %     115 %     118 %     137 %     150 %     250 %
2 years or less (but longer than 1 year)
    115       118       122       125       146       160       250  
3 years or less (but longer than 2 years)
    120       123       127       131       153       168       250  
4 years or less (but longer than 3 years)
    126       129       133       138       161       176       250  
5 years or less (but longer than 4 years)
    132       135       139       144       168       185       250  
7 years or less (but longer than 5 years)
    139       143       147       152       179       197       250  
10 years or less (but longer than 7 years)
    145       150       155       160       189       208       250  
15 years or less (but longer than 10 years)
    150       155       160       165       196       216       250  
20 years or less (but longer than 15 years)
    150       155       160       165       196       228       250  
30 years or less (but longer than 20 years)
    150       155       160       165       196       229       250  
Greater than 30 years
    165       173       181       189       205       240       250  
     b. For sovereign debt denominated in non-U.S. currency apply additional Currency Discount Factor:

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    Currency Discount
Foreign Currency   Factor
CAD Canadian Dollar
    107 %
EUR Euro
    111 %
GBP British Pound
    115 %
JPY Japanese Yen
    116 %
AUD Australian Dollar
    113 %
HKD Hong Kong Dollar
    140 %
NZD New Zealand Dollar
    114 %
NOK Norway Kroner
    111 %
SEK Sweden Kronor
    113 %
THB Thailand Baht
    295 %
KRW South Korea Won
    295 %
TWD Taiwan New Dollars
    135 %
SGD Singapore Dollars
    135 %
IDR Indonesia Rupiahs
    315 %
INR India Rupees
    170 %
MYR Malaysia Ringgits
    170 %
CZK Czech Republic Koruny
    200 %
PHP Philippines Pesos
    200 %
HUF Hungary Forint
    200 %
PLN Poland Zlotych
    200 %
SKK Slovakia Koruny
    200 %
TRY Turkey New Lira
    200 %
RUB Russia Rubles
    200 %
ZAR South Africa Rand
    200 %
CLP Chile Pesos
    200 %
MXN Mexico Pesos
    200 %
COP Columbia Pesos
    200 %
BRL Brazil Reais
    200 %

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(1)   If the Corporation invests in a security denominated in a currency other than that found in the above table, contact Moody’s to obtain the applicable Currency Discount Factor for such security.
          (i) Foreign non-sovereign debt : The Moody’s Discount Factor applied to non-sovereign debt obligations will be (A) in the case of a non-sovereign debt obligation denominated in U.S. dollars, 250%, and (B) in the case of a non-U.S. sovereign debt obligation denominated in a foreign currency, 250% multiplied by the Currency Discount Factor for such foreign currency.
          (j) Rule 144A securities : The Moody’s Discount Factor applied to Rule 144A Securities for Rule 144A Securities whose terms include rights to registration under the Securities Act within one year and Rule 144A Securities which do not have registration rights within one year will be 120% and 130%, respectively, of the Moody’s Discount Factor which would apply were the securities registered under the Securities Act.
          (k) Catastrophe bonds : The Moody’s Discount Factor applied to catastrophe bonds will be 475%.
          (l) Bank loans : The Moody’s Discount Factor applied to senior bank loans (“Senior Loans”) shall be the percentage specified in accordance with the table set forth below (or such lower percentage as Moody’s may approve in writing from time to time:
                                 
                            Caa and below
                            (including
Moody’s Rating Category           distressed and
Type of Loan   Aaa-A   Baa and Ba (1)   B (1)   unrated) (1)
Senior Loans greater than $250 MM
    118 %     136 %     149 %     250 %
non-Senior Loans greater than $250 MM
    128 %     146 %     159 %     250 %
loans less than $250 MM
    138 %     156 %     169 %     270 %
Second Lien Bank Loans
    168 %     185 %     200 %     270 %
Third & Fourth Lien Bank Loans
    218 %     240 %     260 %     351 %

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(1)   If a Senior Loan is not rated by any of Moody’s, S&P or Fitch, the Corporation will use the applicable percentage set forth under the column entitled “Caa and below (including distressed and unrated)” in the table above. Ratings assigned the S&P and/or Fitch are generally accepted by Moody’s at face value. However, adjustments to face value may be made to particular categories of securities for which the ratings by S&P and/or Fitch do not seem to approximate a Moody’s rating equivalent. Split rated securities assigned by S&P and Fitch (i.e., these rating agencies assign different rating categories to the security) will be accepted at the lower of the two ratings.
                (m) Master Limited Partnerships (MLP)—The Moody’s Discount Factor applied to master limited partnerships shall be applied in accordance with the table set forth below:
         
MLP Sector (1)   Discount Factor
Large-cap MLPs
    170 %
Mid and Small-cap MLPs
       
Natural Resources (Oil, Gas, Energy)
    292 %
Coal and Minerals
    301 %
Mortgage Real Estate
    291 %
Income Real Estate
    302 %
Miscellaneous
    342 %
 
(1)   Restricted MLPs will be increased by 120%.
The Moody’s Discount Factor for any Moody’s Eligible Asset other than the securities set forth above will be the percentage provided in writing by Moody’s.
     FORTY-THIRD: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “ Moody’s Diversification Limitations ”:
Moody’s Diversification Limitations ” means, with respect to qualifying for inclusion in Moody’s Eligible Assets, the following diversification and issue size requirements:
                         
            MAXIMUM SINGLE   MINIMUM ISSUE SIZE
RATINGS(1)   MAXIMUM SINGLE ISSUER(2), (3)   INDUSTRY(3), (4)   ($ IN MILLIONS)(5)
Aaa
    100 %     100 %     $100  
Aa
    20       60       100  
A
    10       40       100  
CS(6), Baa
    6       20       100  
Ba
    4       12       50 (7)
B1-B2(8)
    3       8       50 (7)
B3 or below(8)
    2       5       50 (7)

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(1)   Refers to the securities of the portfolio holding.
 
(2)   Companies subject to common ownership of 25% or more are considered as one issuer.
 
(3)   Percentages represent a portion of the aggregate Market Value of portfolio.
 
(4)   Industries are determined according to Moody’s Industry Classifications, as defined herein.
 
(5)   Except for preferred stock, which has a minimum issue size of $50 million, and mortgage pass throughs issued by Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Government National Mortgage Association, which has no minimum issue size.
 
(6)   CS refers to common stock, which is diversified independently from its ratings level.
 
(7)   Portfolio holdings from issues ranging from $50 million to $100 million are limited to 20% of the Corporation’s total assets.
 
(8)   Securities of the portfolio holdings rated B or below by Moody’s or the equivalent by another nationally recognized statistical rating organization (“NRSRO”) or not rated shall be considered to be Moody’s Eligible Assets only to the extent the Market Value of such securities does not exceed 10% of the portfolio Market Value; provided, however, that if the Market Value of such securities exceeds 10% of the portfolio Market Value, a portion of such securities (selected by the Corporation) shall not be considered Moody’s Eligible Assets, so that the Market Value of such securities (excluding such portion) does not exceed 10% of the portfolio Market Value.
     FORTY-FOURTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “ Moody’s Eligible Assets ” in its entirety and inserting in lieu thereof the following:
     “ Moody’s Eligible Assets ” means:
     (a) Cash (including interest and dividends due on assets rated (A) Baa3 or higher by Moody’s or the equivalent by another NRSRO if the payment date is within five (5) Business Days of the Valuation Date, (B) A2 or higher by Moody’s or the equivalent by another NRSRO if the payment date is within thirty days of the Valuation Date, and (C) A1 or higher by Moody’s or the equivalent by another NRSRO if the payment date is within the Moody’s Exposure Period) and receivables for Moody’s Eligible Assets sold if the receivable is due within five (5) Business Days of the Valuation Date, and if the trades which generated such receivables are (A) settled through clearinghouse firms with respect to which the Corporation has received prior written authorization from Moody’s or (B) (1) with counterparties having a Moody’s long-term debt rating of at least Baa3 or the equivalent by another NRSRO or (2) with counterparties having a Moody’s Short Term Money Market Instrument rating of at least P-1 or the equivalent by another NRSRO;
     (b) Short Term Money Market Instruments, so long as (A) such securities are rated at least P-1 or the equivalent by another NRSRO, (B) in the case of demand deposits, time deposits and overnight funds, the supporting entity is rated at least A2 or the equivalent by another NRSRO, or (C) in all other cases, the supporting entity (1) is rated A2 or the equivalent by another NRSRO and the security matures within one month, (2) is rated A1 or the equivalent by another NRSRO and the security matures within three months or (3) is rated at least Aa3 or the equivalent by another NRSRO and the security matures within six months; provided, however, that for purposes of this definition, such instruments (other than commercial paper rated by S&P and not rated by Moody’s) need not meet any otherwise applicable S&P rating criteria;
     (c) U.S. Government Obligations (including U.S. Treasury Strips);

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     (d) Rule 144A securities;
     (e) Common stocks (A) (1) which are traded on a nationally recognized stock exchange or in the over-the-counter market, (2) if cash dividend paying, pay cash dividends in U.S. dollars and (3) which may be sold without restriction by the Corporation; provided, however, that (y) common stock which, while a Moody’s Eligible Asset owned by the Corporation, ceases paying any regular cash dividend will no longer be considered a Moody’s Eligible Asset until 71 days after the date of the announcement of such cessation, unless the issuer of the common stock has senior debt securities rated at least A3 by Moody’s and (z) the aggregate Market Value of the Corporation’s holdings of the common stock of any issuer in excess of 4% in the case of utility common stock and 6% in the case of non-utility common stock of the aggregate Market Value of the Corporation’s holdings shall not be Moody’s Eligible Assets, (B) which are securities denominated in any currency other than the U.S. dollar or securities of issuers formed under the laws of jurisdictions other than the United States, its states and the District of Columbia for which there are ADRs or their equivalents which are traded in the United States on exchanges or over-the-counter and are issued by banks formed under the laws of the United States, its states or the District of Columbia or (C) which are securities of issuers formed under the laws of jurisdictions other than the United States (and in existence for at least five years) for which no ADRs are traded; provided, however, that the aggregate Market Value of the Corporation’s holdings of securities denominated in currencies other than the U.S. dollar and ADRs in excess of (1) 6% of the aggregate Market Value of the outstanding shares of common stock of such issuer thereof or (2) in excess of 10% of the Market Value of the Corporation’s Moody’s Eligible Assets with respect to issuers formed under the laws of any single such non-U.S. jurisdiction other than Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland and the United Kingdom, shall not be a Moody’s Eligible Asset;
     (f) Loans;
     (g) Corporate debt securities (including foreign non-sovereign debt and catastrophe bonds) if(A) such securities are rated by Moody’s or another NRSRO; (B) such securities provide for the periodic payment of interest in cash in U.S. dollars, euros or other currencies in which the Corporation is permitted to invest; (C) such securities have been registered under the Securities Act or are restricted as to resale under federal securities laws but are eligible for resale pursuant to Rule 144A under the 1933 Act as determined by the Corporation’s investment manager or portfolio manager acting pursuant to procedures approved by the Board of Directors, except that such securities that are not subject to U.S. federal securities laws shall be considered Moody’s Eligible Assets if they are publicly traded; and (D) such securities are not subject to extended settlement;
     Notwithstanding the foregoing limitations, corporate debt securities and loans rated by neither Moody’s, S&P nor Fitch shall be considered to be Moody’s Eligible Assets to the extent such securities are issued by entities which (i) have not filed for bankruptcy within the past three years, (ii) are current on all principal and interest in their fixed income obligations, (iii) are current on all preferred stock dividends, and (iv) possess a current, unqualified auditor’s report without qualified, explanatory language;
     (h) Foreign Sovereign Debt so long as the issuing country has a Currency Discount Factor as set out in the definition of Moody’s Discount Factor in these Articles Supplementary.

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Foreign Sovereign Debt issued by a country without a Currency Discount Factor as set out in the definition of Moody’s Discount Factor in these Articles Supplementary can only be approved as a Moody’s Eligible Asset after review and confirmation by Moody’s;
     (i) Asset-backed securities: If(1) such securities are rated at least Baa by Moody’s or at least BBB by S&P or Fitch, (2) the securities are part of an issue that is $250 million or greater, or the issuer of such securities has a total of $500 million or greater of asset-backed securities outstanding at the time of purchase of the securities by the Corporation and (3) the expected average life of the securities is not greater than 4 years;
     (j) Collateralized debt obligations;
     (k) Preferred stocks if (A) dividends on such preferred stock are cumulative, (B) such securities provide for the periodic payment of dividends thereon in cash in U.S. dollars or euros and do not provide for conversion or exchange into, or have warrants attached entitling the holder to receive, equity capital at any time over the respective lives of such securities, (C) the issuer of such a preferred stock has common stock listed on either the New York Stock Exchange or NYSE Amex Equities, (D) the issuer of such a preferred stock has a senior debt rating from Moody’s of Baal or higher or a preferred stock rating from Moody’s of Baa3 or higher and (E) such preferred stock has paid consistent cash dividends in U.S. dollars or euros over the last three years or has a minimum rating of Al (if the issuer of such preferred stock has other preferred issues outstanding that have been paying dividends consistently for the last three years, then a preferred stock without such a dividend history would also be eligible). In addition, the preferred stocks must have the following diversification requirements: (X) the preferred stock issue must be greater than $50 million and (Y) the minimum holding by the Corporation of each issue of preferred stock is $500,000 and the maximum holding of preferred stock of each issue is $5 million. In addition, preferred stocks issued by transportation companies will not be considered Moody’s Eligible Assets;
     (l) Convertible securities (including convertible preferred stock), provided that (A) the issuer of common stock must have a Moody’s senior unsecured debt of Caa or better, or a rating of CCC or better by S&P or Fitch, (B) the common stocks must be traded on the New York Stock Exchange, NYSE Amex Equities, or the NASDAQ, (C) dividends must be paid in U.S. dollars, (D) the portfolio of convertible bonds must be diversified as set forth in the table set forth below and (E) the company shall not hold shares exceeding the average weekly trading volume during the preceding month;
     (m) Common stock, preferred stock or any debt security of REITs or real estate companies;
     (n) Pooled investment vehicles including Business Development Companies, Master Limited Partnerships Securities, Private Investment Companies and Registered Investment Companies;
     (o) Foreign Currency Transactions;
     (p) Moody’s Derivatives Transactions; and
Financial contracts, as such term is defined in Section 3(c)(2)(B)(ii) of the 1940 Act and other securities or assets not otherwise provided for in this definition, but only upon receipt by the Corporation of a letter from Moody’s specifying any conditions on including such financial

- 24 -


 

contract or other securities or assets in Moody’s Eligible Assets and assuring the Corporation that including such financial contract or other securities or assets in the manner so specified would not affect the credit rating assigned by Moody’s to the Series C Preferred Stock.
     FORTY-FIFTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Moody’s Hedging Transactions” in its entirety.
     FORTY-SIXTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Moody’s Exposure Period” :
“Moody’s Exposure Period” means the period commencing on a given Valuation Date and ending 49 days thereafter.
     FORTY-SEVENTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Moody’s Industry Classification” in its entirety and inserting in lieu thereof the following:
“Moody’s Industry Classifications” means, for the purposes of determining Moody’s Eligible Assets, each of the following industry classifications (or such other classifications as Moody’s may from time to time approve for application to the Series C Preferred Stock):
  1.   Aerospace and Defense: Major Contractor, Subsystems, Research, Aircraft Manufacturing, Arms, and Ammunition
 
  2.   Automobile: Automobile Equipment, Auto-Manufacturing, Auto Parts Manufacturing, Personal Use Trailers, Motor Homes, Dealers
 
  3.   Banking: Bank Holding, Savings and Loans, Consumer Credit, Small Loan, Agency, Factoring, Receivables
 
  4.   Beverage, Food and Tobacco: Beer and Ale, Distillers, Wines and Liquors, Distributors, Soft Drink Syrup, Bottlers, Bakery, Mill Sugar, Canned Foods, Corn Refiners, Dairy Products, Meat Products, Poultry Products, Snacks, Packaged Foods, Candy, Gum, Seafood, Frozen Food, Cigarettes, Cigars, Leaf/Snuff, Vegetable Oil
 
  5.   Buildings and Real Estate: Brick, Cement, Climate Controls, Contracting, Engineering, Construction, Hardware, Forest Products (building-related only), Plumbing, Roofing, Wallboard, Real Estate, Real Estate Development, REITs, Land Development
 
  6.   Chemicals, Plastics and Rubber: Chemicals (non-agricultural), Industrial Gases, Sulfur, Plastics, Plastic Products, Abrasives, Coatings, Paints, Varnish, Fabricating
 
  7.   Containers, Packaging and Glass: Glass, Fiberglass, Containers made of: Glass, Metal, Paper, Plastic, Wood or Fiberglass
 
  8.   Personal and Non-Durable Consumer Products (Manufacturing Only): Soaps, Perfumes, Cosmetics, Toiletries, Cleaning Supplies, School Supplies
 
  9.   Diversified/Conglomerate Manufacturing
 
  10.   Diversified/Conglomerate Service
 
  11.   Diversified Natural Resources, Precious Metals and Minerals: Fabricating, Distribution
 
  12.   Ecological: Pollution Control, Waste Removal, Waste Treatment and Waste Disposal
 
  13.   Electronics: Computer Hardware, Electric Equipment, Components, Controllers, Motors, Household Appliances, Information Service Communicating Systems, Radios, TVs, Tape Machines, Speakers, Printers, Drivers, Technology

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  14.   Finance: Investment Brokerage, Leasing, Syndication, Securities
 
  15.   Farming and Agriculture: Livestock, Grains, Produce, Agriculture Chemicals, Agricultural Equipment, Fertilizers
 
  16.   Grocery: Grocery Stores, Convenience Food Stores
 
  17.   Healthcare, Education and Childcare: Ethical Drugs, Proprietary Drugs, Research, Health Care Centers, Nursing Homes, HMOs, Hospitals, Hospital Supplies, Medical Equipment
 
  18.   Home and Office Furnishings, House wares, and Durable Consumer Products: Carpets, Floor Coverings, Furniture, Cooking, Ranges
 
  19.   Hotels, Motels, Inns and Gaming
 
  20.   Insurance: Life, Property and Casualty, Broker, Agent, Surety
 
  21.   Leisure, Amusement, Motion Pictures, Entertainment: Boating, Bowling, Billiards, Musical Instruments, Fishing, Photo Equipment, Records, Tapes, Sports, Outdoor Equipment (Camping), Tourism, Resorts, Games, Toy Manufacturing, Motion Picture Production Theaters, Motion Picture Distribution
 
  22.   Machinery (Non-Agricultural, Non-Construction, Non-Electronic): Industrial, Machine Tools, and Steam Generators
 
  23.   Mining, Steel, Iron and Non-Precious Metals: Coal, Copper, Lead, Uranium, Zinc, Aluminum, Stainless Steel, Integrated Steel, Ore Production, Refractories, Steel Mill Machinery, Mini-Mills, Fabricating, Distribution and Sales of the foregoing
 
  24.   Oil and Gas: Crude Producer, Retailer, Well Supply, Service and Drilling
 
  25.   Printing, Publishing, and Broadcasting: Graphic Arts, Paper, Paper Products, Business Forms, Magazines, Books, Periodicals, Newspapers, Textbooks, Radio, T.V., Cable Broadcasting Equipment
 
  26.   Cargo Transport: Rail, Shipping, Railroads, Rail-car Builders, Ship Builders, Containers, Container Builders, Parts, Overnight Mail, Trucking, Truck Manufacturing, Trailer Manufacturing, Air Cargo, Transport
 
  27.   Retail Stores: Apparel, Toy, Variety, Drugs, Department, Mail Order Catalog, Showroom
 
  28.   Telecommunications: Local, Long Distance, Independent, Telephone, Telegraph, Satellite, Equipment, Research, Cellular
 
  29.   Textiles and Leather: Producer, Synthetic Fiber, Apparel Manufacturer, Leather Shoes
 
  30.   Personal Transportation: Air, Bus, Rail, Car Rental
 
  31.   Utilities: Electric, Water, Hydro Power, Gas
 
  32.   Diversified Sovereigns: Semi-sovereigns, Canadian Provinces, Supra-national Agencies
     The Corporation will use SIC codes in determining which industry classification is applicable to a particular investment in consultation with the Independent Accountant and Moody’s, to the extent the Corporation considers necessary.
     FORTY-EIGHTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Mortgage Pass-Through Certificates”:
“Mortgage Pass-Through Certificates” means publicly-issued instruments maintaining at least AA- ratings by S&P. Certificates evidence proportional, undivided interests in pools of whole residential mortgage loans. Pass-through certificates backed by pools of convertible adjustable rate mortgages (ARMs) are acceptable as eligible collateral at 5 points above the levels established for pass-through certificates backed by fixed or non-convertible ARM pools.

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     FORTY-NINTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Other Rating Agency” in its entirety and inserting in lieu thereof the following:
“Other Rating Agency” means any rating agency other than Moody’s or S&P then providing a rating for the Series C Preferred Stock at the request of the Corporation.
     FIFTIETH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Paying Agent” in its entirety and inserting in lieu thereof the following:
“Paying Agent” means The Bank of New York Mellon unless and until another entity appointed by a resolution of the Board of Directors enters into an agreement with the Corporation to serve as paying agent, which paying agent may be the same as the Auction Agent and, with respect to any other class or series of Preferred Stock, the Person appointed by the Corporation as dividend- disbursing or paying agent with respect to such class or series.
     FIFTY-FIRST: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Private Investment Companies” :
“Private Investment Companies” means investment companies that are structured to be exempt under the 1940 Act.
     FIFTY-SECOND: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Rating Agency” in its entirety and inserting in lieu thereof the following:
“Rating Agency” means Moody’s and S&P as long as such rating agency is then rating the Series C Preferred Stock at the Corporation’s request or any other rating agency then rating the Series C Preferred Stock at the Corporation’s request.
     FIFTY-THIRD: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “Registered Investment Company” :
“Registered Investment Company” means an investment company, such as an open-end or closed-end mutual fund, Which files a registration statement with the Commission and meets all requirements of the 1940 Act.
     FIFTY-FOURTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “Registrar” in its entirety and inserting in lieu thereof the following:
“Registrar” means The Bank of New York Mellon, unless and until another entity appointed by a resolution of the Board of Directors enters into an agreement with the Corporation to serve as registrar.
     FIFTY-FIFTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “S&P” in its entirety and inserting in lieu thereof the following:

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“S&P” means Standard and Poor’s Rating Services and its successors at law.
          FIFTY-SIXTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “S&P Discount Factor” :
      “S&P Discount Factor” means:
         
    Discount Factor for
Type of S&P Eligible Asset   AAA Rating
Common Stocks (including ADRs) 1
       
Small cap stocks
    236.13 %
Mid cap stocks
    190.13 %
Large cap stocks
    174.94 %
DRD Eligible Preferred Stock with a senior or preferred stock rating of at least BBB
    312.57 %
Non-DRD Eligible Preferred Stock with a senior or preferred stock rating of at least BBB
    201.36 %
DRD Eligible Preferred Stock with a senior or preferred stock rating below BBB
    317.57 %
Non-DRD Eligible Preferred Stock with a senior or preferred stock rating below BBB-
    206.36 %
Convertible bonds rated AAA to AAA-
    161.53 %
Convertible bonds rated AA+ to AA-
    168.00 %
Convertible bonds rated A+ to A-
    174.46 %
Convertible bonds rated BBB+ to BBB-
    180.93 %
Convertible bonds rated BB+ to BB-
    187.39 %
 
1   Market cap for large-cap stocks are $10 billion and up, mid-cap stocks range between $2 billion and $10 billion, and small-cap stocks are $2 billion and below.

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    Discount Factor for
Type of S&P Eligible Asset   AAA Rating
Convertible bonds rated B+ to B
    193.86 %
Convertible bonds rated CCC
    200.32 %
Short-Term Money Market Instruments with maturities of 180 days or less
    104.2 %
Short-Term Money Market Instruments with maturities of between 181 and 360 days
    113.3 %
U.S. Government Securities (52 week Treasury Bills)
    106.1 %
U.S. Government Securities (Two-Year Treasury Notes)
    109.8 %
U.S. Government Securities (Five-Year Treasury Notes)
    115.8 %
U.S. Government Securities (Ten-Year Treasury Notes)
    122.6 %
U.S. Government Securities (Thirty-Year Treasury Bonds)
    128.0 %
Agency Mortgage Collateral (Fixed 15-Year)
    130.2 %
Agency Mortgage Collateral (Fixed 30-Year)
    132.8 %
Agency Mortgage Collateral (ARM 1/1)
    122.7 %
Agency Mortgage Collateral (ARM 3/1)
    123.3 %
Agency Mortgage Collateral (ARM 5/1)
    123.7 %
Agency Mortgage Collateral (ARM 10/1 )
    123.9 %
Bank Loans (S&P Loan Category A)
    117.79 %
Bank Loans (S&P Loan Category B)
    125.47 %
Bank Loans (S&P Loan Category C)
    154.08 %
Bank Loans (S&P Loan Category D)
    178.25 %
Corporate Bonds rated at least AAA
    109.6 %
Corporate Bonds rated at least AA+
    111.0 %

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    Discount Factor for
Type of S&P Eligible Asset   AAA Rating
Corporate Bonds rated at least AA
    112.4 %
Corporate Bonds rated at least AA-
    113.7 %
Corporate Bonds rated at least A+
    115.3 %
Corporate Bonds rated at least A
    116.4 %
Corporate Bonds rated at least A-
    117.7 %
Corporate Bonds rated at least BBB+
    119.9 %
Corporate Bonds rated at least BBB
    121.5 %
Corporate Bonds rated at least BBB-
    123.3 %
Corporate Bonds rated at least BB+
    136.4 %
Corporate Bonds rated at least BB
    136.6 %
Corporate Bonds rated at least BB-
    140.6 %
Corporate Bonds rated at least B+
    157.3 %
Corporate Bonds rated at least B
    171.3 %
Corporate Bonds rated at least B-
    187.9 %
Corporate Bonds rated at least CCC+
    193.7 %
Corporate Bonds rated at least CCC
    230.2 %
Corporate Bonds rated at least CCC-
    299.1 %
Cash and Cash Equivalents
    100 %
Municipal Obligations rated AAA
    143.39 %
Municipal Obligations rated AA
    146.39 %
Municipal Obligations rated A
    152.39 %
Municipal Obligations rated BBB
    155.11 %

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    Discount Factor for
Type of S&P Eligible Asset   AAA Rating
Municipal Obligations rated BB
    175.11 %
Municipal Obligations rated B
    195.11 %
Municipal Obligations rated CCC
    215.10 %
Unrated Municipal Obligations
    220.00 %
Common Stock of REITs and other real estate companies
    152.82 %
Mortgage Pass-Through Certificates 15-yr
    132.0 %
Mortgage Pass-Through Certificates 30-yr
    134.6 %
Mortgage Pass-Through Certificates 1/1
    126.3 %
Mortgage Pass-Through Certificates 3/1
    126.8 %
Mortgage Pass-Through Certificates 5/1
    127.2 %
Mortgage Pass-Through Certificates 10/1
    127.5 %
Conventional/FHA/VA Mortgages and Whole Loans 15-year
    134.1 %
Conventional/FHA/VA Mortgages and Whole Loans 30-year
    136.7 %
Conventional/FHA/VA Mortgages and Whole Loans 1/1
    130.3 %
Conventional/FHA/VA Mortgages and Whole Loans 3/1
    131.5 %
Conventional/FHA/VA Mortgages and Whole Loans 5/1
    131.5 %
Conventional/FHA/VA Mortgages and Whole Loans 10/1
    131.5 %
Collateralized Mortgage Obligations (WAL less than 5-years)
    135.0 %
Collateralized Mortgage Obligations (WAL more than 5-years and more than 10-years)
    145.0 %
FHA-Insured Multifamily Loans
    190.0 %

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    Discount Factor for
Type of S&P Eligible Asset   AAA Rating
Asset-Backed Securities (ABS) (Automobile loans and fixed-rate credit card receivables with a weighted average life (WAL) less than 5-years)
    130.0 %
ABS (Automobile loans and fixed-rate credit card receivables with WAL more than 5-yr and less than 10 years)
    140.0 %
ABS (Floating-rate credit cards)
    113.3 %
Notwithstanding the foregoing, the S&P Discount Factor for short-term Municipal Obligations will be 115% so long as such Municipal Obligations are rated A-1 + or SP-1 + by S&P and mature or have a demand feature exercisable within 30 days or less, or 123% so long as such Municipal Obligations are rated A-1 or SP-1 by S&P and mature or have a demand feature exercisable in 30 days or less, or 125% if such Municipal Obligations are not rated by S&P but are rated equivalent to A-1 + or SP-1+ by another NRSRO, on a case by case basis; provided, however, that any such non-S&P rated short-term Municipal Obligations which have demand features exercisable within 30 days or less must be backed by a letter of credit, liquidity facility or guarantee from a bank or other financial institution with a short-term rating of at least A-1+ from S&P; and further provided that such non-S&P rated short-term Municipal Obligations may comprise no more than 50% of short-term Municipal Obligations that qualify as S&P Eligible Assets; provided, however, that Municipal Obligations not rated by S&P but rated equivalent to BBB or lower by another NRSRO, rated BB+ or lower by S&P or non-rated (such Municipal Obligations are hereinafter referred to as “High Yield Securities”) may comprise no more than 20% of the short-term Municipal Obligations that qualify as S&P Eligible Assets; (i) the S&P Discount Factor for Receivables for Municipal Obligations Sold (as defined below) that are due in more than five Business Days from such Valuation Date will be the S&P Discount Factor applicable to the Municipal Obligations sold; (ii) no S&P Discount Factor will be applied to cash or to Receivables for Municipal Obligations Sold if such receivables are due within five Business Days of such Valuation Date; and (iii) in the case of any Municipal Obligation that is not rated by S&P but qualifies as an S&P Eligible Asset pursuant to clause (iii) of that definition, such Municipal Obligation will be deemed to have an S&P rating one full rating category lower than the S&P rating category that is the equivalent of the rating category in which such Municipal Obligation is placed by a NRSRO. “Receivables for Municipal Obligations Sold,” for purposes of calculating S&P Eligible Assets as of any Valuation Date, means the book value of receivables for Municipal Obligations sold as of or prior to such Valuation Date. The Corporation may adopt S&P Discount Factors for Municipal Obligations other than Municipal Obligations, provided that S&P advises the Corporation in writing that such action will not adversely affect its then current rating on the Series C Preferred. For purposes of the foregoing, Anticipation Notes (i.e., notes that will be paid with the proceeds from subsequent bond issues, from tax revenue or other revenue anticipated to be received by a government entity) rated SP-1+ or, if not rated by S&P, equivalent to A-1+ or SP-1+ by another NRSRO, on a case by case basis, which do not mature or have a demand feature at par exercisable in 30 days and which do not have a long-term rating, shall be considered to be short-term Municipal Obligations.

- 32 -


 

     The S&P Discount Factor applied to cash, cash equivalents and demand deposits in an “A-1+” rated institution will be 100%. “A-1+” rated commercial paper, with maturities no greater then 30 calendar days and held instead of cash until maturity is valued at 100%. Securities with next-day maturities invested in “A-1 +” rated institutions are considered cash equivalents and are valued at 100%. Securities maturing in 181 to 360 calendar days are valued at 114.2%.
     The S&P Discount Factor for shares of unrated affiliated money market funds (money market mutual funds meeting the requirements of Rule 2a-7 under the 1940 Act) used as “sweep” vehicles will be 110%. Money market funds rated “AAAm” will be discounted at the appropriate level as dictated by the S&P Exposure Period. No S&P Discount Factor will be applied to money market funds rated AAAm by S&P with effective next day maturities.
     Receivables due within five business days of a Valuation Date will be treated as cash and are valued at 100%.
     Receivables that are due in more than five business days of a Valuation Date qualify as an S&P Eligible Asset at a value no greater than the settlement price discounted at the applicable credit rating and/or exposure period discount factor.
For purposes of determining the discount factors applicable to Municipal Obligation collateral not rated by S&P, the collateral will carry an S&P rating one full rating category lower than the equivalent S&P rating.
     FIFTY-SEVENTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “S&P Eligible Assets”:
“S&P Eligible Assets” means:
(a) Deposit Assets;
(b) U.S. Government Securities and U.S. Government Agencies;
(c) Corporate Bonds/Indebtedness. Evidences of indebtedness other than Deposit Assets, U.S. Government Securities and Municipal Obligations that are not convertible into or exchangeable or exercisable for stock of a corporation (except to the extent of ten percent (10%) in the case of a share exchange or tender offer) (“Other Debt”) and that satisfy all of the following conditions:
  (i)   no more than 10% of the Other Debt may be unrated;
 
  (ii)   the remaining term to maturity of such Other Debt shall not exceed thirty (30) years;
 
  (iii)   and such Other Debt must provide for periodic interest payments in cash over the life of the security;

- 33 -


 

  (iv)   the issuer of such evidences of indebtedness files periodic financial statements with the Commission; provided, however, non-rated evidences of such indebtedness or issuers of Other Debt may not constitute more than 10% of the Corporation’s Other Debt;
(d) Convertible Corporate Indebtedness.
(e) Agency Mortgage Collateral. The following conditions apply for Agency Mortgage Collateral:
  (i)   For GNMA certificates backed by pools of graduated payment mortgages, levels are 20 points above established levels;
 
  (ii)   Qualifying “large pool” FNMA mortgage-backed securities and FHLMC participation certificates are acceptable as eligible collateral. The eligible fixed-rate programs include FNMA MegaPools, FNMA Majors, FHLMC Multilender Swaps, and FHLMC Giant certificates. Eligible ARMs programs include nonconvertible FNMA ARM MegaPools and FHLMC weighted average coupon ARM certificates. Eligible FHLMC Giant programs exclude interest-only and principal only stripped securities;
 
  (iii)   FNMA certificates backed by multifamily ARMs pegged to the 11th District Cost of Funds Index are acceptable as eligible collateral at 5 points above established levels; and
 
  (iv)   Multiclass REMICs issued by FNMA and FHLMC are acceptable as eligible collateral at the collateral levels established for CMOs.
(f) Mortgage Pass-Through Certificates.
(g) Mortgage-Backed Securities (i.e., debt obligations that represent claims to cash flows from pools of mortgage loans).
  (i)   Mortgage Pass-Through Certificates are publicly issued instruments rated at least ‘AA-’ by S&P. Pass-throughs backed by pools of convertible adjustable-rate mortgages (ARMs) are discounted at an additional five percentage points above the levels established for pass-throughs backed by fixed or non-conventional ARM pools.
 
  (ii)   Fixed-Rate and Adjustable-rate mortgage collateral (Conventional/FHA/VA and Whole Loans) Pool must consist of at least 100 loans each secured by single-family, one-unit, detached primary residence. 25% of the total pool may have an LTV greater than 80% but less than or equal to 90%. 10% may have an original LTV of no greater than 95%. Loans with LTV greater than 80%

- 34 -


 

      must have a ‘AA’ rated primary mortgage insurance. 25% may have balances between $400,000 and $600,000, provided the maximum size of any loan is appropriate with respect to the market area of the originator. 10% of the pool may represent condominiums that are four stories or less. High LTVs, high loan balance, and condominiums, in aggregate, should not exceed 35% of the pool.
 
  (iii)   FHAA-Insured Multifamily Loans must have a minimum principal balance of $100,000 and have at least a one-year remaining maturity. The aggregate market value of any one loan may not exceed 5% of the aggregate market value of the portfolio. Such loans should be initially included in minimum blocks of $5 million. Project loans must have at least a 90% occupancy rate at the time the loan is pledged. After 90 days defaulted mortgage loans must be valued at zero. A loan in default should be liquidated or substituted within a 90-day period.
 
  (iv)   Collateralized Mortgage Obligations;
(h) Rule 144A Securities;
(i) Senior Loans, provided, however, that the initial issue amount (facility size) is at least $100 million. The minimum accepted holding size (notional amount) of any given loan not rated by S&P, Moody’s or Other Rating Agency is at least $1 million, provided, that participation loans are limited to not more than 10% of the aggregate value of the S&P Eligible Asset. For loans rated by S&P, Moody’s or Other Rating Agency, there is no minimum accepted holding size. Senior Loan Participations and non-Senior Loans will qualify as S&P Eligible Assets only up to an aggregate maximum of 15% of the Corporation’s total assets. These levels apply to U.S. lenders only; any international loans are excluded.
(j) Preferred stocks that satisfy all of the following conditions:
  (i)   The preferred stock issue has a senior rating from S&P, or the preferred issue must be rated. In the case of Yankee preferred stock, the issuer should have an S&P senior rating of at least BBB-, or the preferred issue must be rated at least BBB-.
 
  (ii)   The issuer, or if the issuer is a special purpose corporation, its parent, is listed on either the New York Stock Exchange, the NYSE Amex Equities or NASDAQ if the traded par amount is less than $1,000. If the traded par amount is $1,000 or more exchange listing is not required.
 
  (iii)   The collateral pays cash dividends denominated in U.S. dollars.

- 35 -


 

  (iv)   Private placements under Rule 144A with registration rights are S&P Eligible Assets.
 
  (v)   The minimum market capitalization of eligible issuers is $100 million.
(k) Restrictions for floating-rate preferred stock:
  (i)   Holdings must be limited to preferred stock with a dividend period of less than or equal to 49 days, except for a new issue, where the first dividend period may be up to 64 days.
 
  (ii)   The floating-rate preferred stock may not have been subject to a failed auction.
(l) Restrictions for adjustable- or auction-rate preferred stock:
  (i)   The total fair market value of adjustable-rate preferred stock held in the portfolio may not exceed 10% of eligible assets.
(m) Concentration Limits:
  (i)   Total issuer exposure in preferred stock of any one issuer is limited to 10% of the fair market value of S&P Eligible Assets.
 
  (ii)   Preferred stock rated below B- (including non-rated preferred stock) are limited to no more than 15% of the fair market value of the S&P Eligible Assets.
 
  (iii)   Add 5 points to over-collateralization level for issuers with a senior rating or preferred stock rating of less than BBB-.
 
  (iv)   Add 10 point to over-collateralization level of issuers with no senior rating, preferred stock rating or dividend history.
(n) Common Stocks (including ADRs). Common stocks that satisfy all of the following conditions:
  (i)   Each stock must have a minimum market capitalization of at least $100 million.
 
  (ii)   Restricted stocks (144A securities) or any pink sheet stocks (generally, stocks that are not carried in daily over-the-counter newspaper listings) are ineligible.
 
  (iii)   The issuer may not hold any equity unless it has been listed on an exchange or traded for more than one year and one quarter, or 15 months (eligible stock exchanges are the New York Stock

- 36 -


 

      Exchange, NYSE Amex Equities, Philadelphia Stock Exchange, Boston Stock Exchange, Washington Stock Exchange, Midwest Stock Exchange, NASDAQ, and National Market Quotations).
 
  (iv)   The collateral is owned by the Corporation, or the trustee or collateral agent has a first perfected priority security interest in the collateral. (For S&P’s perfection of Security Interest Criteria, see Legal Criteria For Structured Finance Transactions, October 2006.)
Note: Add 20 percentage points to the overcollateralization level for common stock that do not meet the requirement of item (m)(iv) above.
(o) Municipal Obligations. A Municipal Obligation owned by the Corporation that (i) is interest bearing and pays interest at least semi-annually; (ii) is payable with respect to principal and interest in U.S. Dollars; (iii) has an original issuance size of $10 million or greater and any securities with an issuance size of under $10 million must be rated ‘AA’ or better by S&P; or, if not rated by S&P but rated AAA by another NRSRO, on a case by case basis; (iv) except for Inverse Floaters (i.e., a bond or other type of debt whose coupon rate has an inverse relationship to interest rates), is not part of a private placement of Municipal Obligations; (v) is issued by any of the 50 states of the United States, its territories, and their subdivisions, counties, cities, towns, villages, and school districts; by agencies such as authorities and special districts created by the states; and by certain federally sponsored agencies such as local housing authorities. Payments made on these bonds are exempt from federal income taxes and are generally exempt from state and local taxes in the state of issuance; and (vi) fifty percent of the aggregate fair market value of the pledged pool may be rated by a NRSRO other than S&P. Notwithstanding the foregoing limitations:
  (i)   Municipal Obligations (excluding Escrow Bonds) of any one issuer or guarantor (excluding bond insurers) rated at least “BBB” by S&P or “A” by another NRSRO shall be considered S&P Eligible Assets only to the extent the Market Value of such Municipal Obligations (including short-term Municipal Obligations) does not exceed 10% of the aggregate Market Value of S&P Eligible Assets, provided that either (i) 2% is added to the S&P Discount Factor for every 1% by which the Market Value for any issuer exceeds 5%, up to a maximum of 10% or (ii) 10% is added to the S&P Discount Factor for any issuer that exceeds 5% of the aggregate S&P Eligible Assets. High Yield Securities of any one issuer shall be considered to be S&P Eligible Assets only to the extent the Market Value of such Municipal Obligations does not exceed 5% of the aggregate Market Value of S&P Eligible Assets;
 
  (ii)   Municipal Obligations not rated by S&P shall be considered S&P Eligible Assets only to the extent the Market Value of such Municipal Obligations does not exceed 50% of the aggregate

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      Market Value of S&P Eligible Assets; provided, however, that High Yield Securities shall be considered S&P Eligible Assets only to the extent the Market Value of such Municipal Obligations does not exceed 20% of the aggregate Market Value of S&P Eligible Assets; and
 
  (iii)   Municipal Obligations issued by issuers in any one state or territory will be considered S&P Eligible Assets only to the extent the Market Value of such Municipal Obligations does not exceed 25% of the aggregate Market Value of S&P Eligible Assets; or
(p) Asset Backed Securities. Receivables-backed tranches are publicly issued with a rating of “AA” or higher by S&P, trenches are current interest-bearing, fixed- or floating-rate, and are backed by automobile loans or credit card (fixed-rate only) receivables with an original issuance size of at least $200 million. No more than 25% of the total market value of the collateral can be from one private sector issuer. With respect to floating-rate credit card receivables, not more than 25% of the collateral may be from one investment-grade private sector issuer. No more than 10% of the market value of the collateral may be from one noninvestment-grade private sector issuer.
(q) Escrow Bonds (i.e., a type of municipal obligation backed by escrow funds designed to make payments as outlined in the security’s original indenture) may comprise 100% of the Corporation’s S&P Eligible Assets. Bonds that are legally defeased and secured by direct U.S. Government Securities are not required to meet any minimum issuance size requirement. Bonds that are economically defeased or secured by other U.S. agency paper must meet the minimum issuance size requirement for the Corporation described above. Bonds initially rated or re-rated as an Escrow Bond by another NRSRO are limited to 50% of the Corporation’s S&P Eligible Assets, and carry one full rating lower than the equivalent S&P rating for purposes of determining the applicable discount factors. Bonds economically defeased and either initially rated or re-rated by S&P or another NRSRO are assigned that same rating level as its debt issuer, and will remain in its original industry category.
The Corporation’s portfolio must consist of no less than 20 issues representing no less than 10 industries as determined by the S&P Global Industry Classification System.
Any asset of the Corporation that does not have an S&P Discount Factor will be valued at $0.00.
     FIFTY-EIGHTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “S&P Exposure Period” :
“S&P Exposure Period” means the sum of (i) that number of days from the last Valuation Date on which the Corporation’s Discounted Value of S&P Eligible Assets were greater than the Basic Maintenance Amount to the Valuation Date on which the Corporation’s Discounted Value of S&P Eligible Assets failed to exceed the Basic Maintenance Amount, (ii) the maximum

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number of days following a Valuation Date that the Corporation has under these Article Supplementary to cure any failure to maintain a Discounted Value of S&P Eligible Assets at least equal to the Basic Maintenance Amount, and (iii) the maximum number of days the Corporation has to effect a mandatory redemption under these Articles Supplementary.
          FIFTY-NINTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “S&P Hedging Transactions” :
      “S&P Hedging Transactions” means for so long as any Series C Preferred are rated by S&P, the Corporation will not purchase or sell futures contracts, write, purchase or sell options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P that engaging in such transactions will not impair the ratings then assigned to Series C Preferred by S&P, except that the Corporation may, notwithstanding any limitations in paragraph 10 of this Article I, purchase or sell futures contracts and engage in swaps, caps, floors, and collars, reverse repurchase or repurchase agreements, short sales, write, purchase or sell put and call options on such contracts (collectively, “S&P Hedging Transactions”), subject to the following limitations:
     Futures and Options
  (a)   S&P Hedging Transactions may not exceed the notional value of the Preferred Stock that is outstanding;
 
  (b)   the Corporation will engage in closing transactions to close out any outstanding futures contract which the Corporation owns or has sold or any outstanding option thereon owned by the Corporation in the event (A) the Corporation does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the Basic Maintenance Amount on two consecutive Valuation Dates and (B) the Corporation is required to pay variation margin on the second such Valuation Date;
 
  (c)   the Corporation will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Corporation holds the securities deliverable under such terms or the contract or option is to be settled in cash; and
 
  (d)   when the Corporation writes a futures contract or option thereon, it will either maintain an amount of cash, cash equivalents or liquid securities in a segregated account with the Corporation’s custodian, so that the amount so segregated plus the amount of initial margin and variation margin held in the account of or on behalf of the Corporation’s broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Corporation writes a futures contract

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      or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio.
Credit Default Swaps entered into according to International Swap Dealers Association (‘ISDA’) standards if premiums not paid in advance will be counted as a liability for purpose of the asset coverage test; the Corporation is not the seller of credit protection.
Interest Rate Swaps
  (a)   the Corporation may engage in interest rate swaps if it is accordance to International Swap Dealers Association (‘ISDA’) standards,
 
  (b)   the counterparty to the swap transaction has a minimum short-term rating of ‘A-1’ or equivalent by S&P, or, if the counterparty does not have a short-term rating, the counterparty’s minimum senior unsecured long-term debt rating is ‘A-’, or equivalent by S&P, or higher,
 
  (c)   The original aggregate notional amount of the interest rate swap transaction or transactions is not to be greater than the liquidation preference of the Preferred Stock,
 
  (d)   The interest rate swap transaction will be marked-to-market weekly by the swap counterparty. If the Corporation fails to maintain an aggregate discounted value at least equal to the basic maintenance amount on two consecutive Valuation Dates then the agreement shall terminate immediately,
 
  (e)   For the purpose of calculating the asset coverage test, 90% of any positive mark-to-market valuation of the Corporation’s rights will be S&P Eligible Assets, and 100% of any negative mark-to-market valuation of the Corporation’s rights will be included in the calculation of the Basic Maintenance Amount,
 
  (f)   The Corporation must maintain liquid assets with a value at least equal to the net amount of the excess, if any, of the Corporation’s obligations over its entitlement with respect to each swap. If the swap agreement is not on a net basis, it must maintain liquid and unencumbered assets with a value at least equal to the full amount of the Corporation’s accrued obligations under the agreement. For caps and floors, the Corporation must maintain liquid assets with a value at least equal to the Corporation’s obligations with respect to such caps or floors.
Short Sales

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The Corporation may engage in short sales of securities or short sales against the box if:
  (a)   the Corporation segregates liquid and unencumbered assets in an amount that when combined with the amount of collateral deposited with the broker in connection with the short sale equals the current market value of the security sold short or if the Corporation enters into a short sale against the box, it is required to segregate securities equivalent in kind and amount to the securities sold short and is required to hold such securities while the short sale is outstanding.
 
  (b)   The transaction will be marked-to-market daily by the counterparty.
Margin Purchase
  (a)   the Corporation segregates liquid and unencumbered assets in an amount that when combined with the amount of collateral deposited with the broker in connection with the margin purchase equals the current net obligation of the Corporation.
 
  (b)   The transaction will be marked-to-market daily by the counterparty.
Reverse Repurchase Agreement
The Corporation may engage in reverse repurchase agreements if:
  (a)   the counterparty is rated at least A-/A-1 and the agreement matures in 30 days or less, or
 
  (b)   the counterparty must be rated AA-/A-1+ if the transaction matures in more than 30 days but less than 183 days,
 
  (c)   and the securities are marked-to-market daily by the counterparty.
For purposes of determining whether the Corporation has S&P Eligible Assets with a Discounted Value that equals or exceeds the Basic Maintenance Amount, the Discounted Value of cash or securities held for the payment of initial margin or variation margin shall be zero and the aggregate settlement value of the transaction shall be reduced by an amount equal to the S&P Discount Factor for that asset.
The Corporation’s obligations to any counterparty under an S&P Hedging Transaction shall be counted as a liability that is senior to the preferred in calculating the Basic Maintenance Amount.

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     SIXTIETH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “ S&P Industry Classifications ”:
     “ S&P Industry Classifications ” means for the purpose of determining S&P Eligible Assets, each of the following industry classifications (as defined by the S&P Global Industry Classification System):
     
Aerospace & Defense
  Industrial Conglomerates
Air Freight and Logistics Airlines
  Insurance
Automobiles
  Internet & Catalog Retail
Automobile Components
  Internet Software & Services
Beverages
  IT Services
Biotechnology
  Leisure Equipment & Products
Building Products
  Machinery
Cable
  Marine
Capital Markets
  Media
Computers & Peripherals
  Metals & Mining
Commercial Banks
  Office Electronics
Commercial Services & Supplies
  Oil & Gas
Communications Equipment
  Packaging and Containers
Construction & Engineering
  Paper & Forest Products
Consumer Finance
  Personal Products
Containing & Packaging
  Pharmaceuticals
Distributors
  Real Estate
Diversified Financial Services
  Retail
Diversified Telecommunication Services
  Road & Rail
Electric Utilities
  Software
Electrical Equipment
  Specialty Retail
Electronic Equipment & Instrument
  Semiconducters and Semi Conducter
Energy Equipment & Services
  Equipment
Food & Staples Retailing
  Textiles, Apparel and Luxury Goods
Food Products
  Thrift & Mortgage Finance
Gas Utilities
  Tobacco
Healthcare Equipment & Supplies
  Trading Companies & Distributors
Healthcare Providers & Services
  Transportation and Infrastructure
Hotels, Restaurants & Leisure
  Transportation Utilities
Household Durables
  Water Utilities
Household Products
  Wireless Telecommunication Services
The Corporation will use its discretion in determining which industry classification is applicable to a particular investment in consultation with its Independent Accountant and S&P, to the extent the Corporation considers necessary.

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     SIXTY-FIRST: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “ S&P Loan Category ”:
S&P Loan Category ” means the following four categories (and, for purposes of this categorization, the Market Value of an S&P Eligible Asset trading at par is equal to $1.00):
  a.   “S&P Loan Category A” means Performing Senior Loans which have a Market Value greater than $0.90;
 
  b.   “S&P Loan Category B” means Performing Senior Loans which have a Market Value greater than or equal to $0.85 but equal to or less than $0.90;
 
  c.   “S&P Loan Category C” means non-Performing Senior Loans which have a Market Value greater than $0.85;
 
  d.   “S&P Loan Category D” means:
  (i)   Performing Senior Loans which have a Market Value less than $.85; and
 
  (ii)   Non-Performing Senior Loans which have a Market Value less than or equal to $.85.
  e.   “Performing” means that no default as to the payment of principal or interest has occurred and is continuing.
     SIXTY-SECOND: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “ Senior Loan ”:
Senior Loan ” means any secured Bank Loan that is not subordinated by its terms to any other indebtedness of the borrower.
     SIXTY-THIRD: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “ Senior Loan Participation ”:
Senior Loan Participation ” means participations by the Corporation in a lender’s portion of a Bank Loan where the Corporation has a contractual relationship with such lender and not the borrower.
     SIXTY-FOURTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “ Short-Term Money Market Instrument ” in its entirety and inserting in lieu thereof the following:
Short-Term Money Market Instrument ” means the following types of instruments if, on the date of purchase or other acquisition thereof by the Corporation, the remaining term to maturity thereof is not in excess of 180 days (or 270 days for instruments rated at least Aaa for purposes

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of determining Moody’s Eligible Assets); or 360 days for purposes of determining S&P’s Eligible Assets:
  (i)   commercial paper rated either F-1 by Fitch or A-1 by S&P if such commercial paper matures in 30 days or P-1 by Moody’s and either F-1 + by Fitch or A-1+ by S&P if such commercial paper matures in over 30 days;
 
  (ii)   demand or time deposits in, and banker’s acceptances and certificates of deposit of, (A) a depository institution or trust company incorporated under the laws of the United States of America or any state thereof or the District of Columbia or (B) a United States branch office or agency of a foreign depository institution (provided that such branch office or agency is subject to banking regulation under the laws of the United States, any state thereof or the District of Columbia);
 
  (iii)   overnight funds;
 
  (iv)   U.S. Government Obligations and Government Securities; and
 
  (v)   Eurodollar demand or time deposits in, or certificates of deposit of, the head office or the London branch office of a depository institution or trust company if the certificates of deposit, if any, and the long-term unsecured debt obligations (other than such obligations the ratings of which are based on the credit of a person or entity other than such depository institution or trust company) of such depository institution or trust company that have (1) credit ratings on each Valuation Date of at least P-1 from Moody’s and either F-1+ from Fitch or A-1+ from S&P, in the case of commercial paper or certificates of deposit, and (2) credit ratings on each Valuation Date of at least Aa3 from Moody’s and either AA from Fitch or AA- from S&P, in the case of long-term unsecured debt obligations; provided, however, that in the case of any such investment that matures in no more than one Business Day from the date of purchase or other acquisition by the Corporation, all of the foregoing requirements shall be applicable except that the required long-term unsecured debt credit rating of such depository institution or trust company from Moody’s, Fitch and S&P shall be at least A2, A-2 and A, respectively; and provided further, however, that the foregoing credit rating requirements shall be deemed to be met with respect to a depository institution or trust company if (1) such depository institution or trust company is the principal depository institution in a holding company system, (2) the certificates of deposit, if any, of such depository institution or trust company are not rated on any Valuation Date below P-1 by Moody’s, F-1+ by Fitch or A-1+ by S&P and there is no long-term rating, and (3) the holding company shall meet all of the foregoing credit rating requirements (including the preceding proviso in the case of investments that mature in no more than one Business Day from the date of purchase or other

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      acquisition by the Corporation); and provided further, that the interest receivable by the Corporation shall not be subject to any withholding or similar taxes.
     SIXTY-FIFTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “ Transfer Agent ” in its entirety and inserting in lieu thereof the following:
Transfer Agent ” means The Bank of New York Mellon, unless and until another entity appointed by a resolution of the Board of Directors enters into an agreement with the Corporation to serve as transfer agent.
     SIXTY-SIXTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “ U.S. Government Securities ”:
U.S. Government Securities ” mean securities that are direct obligations of, and obligations the timely payment of principal and interest on which is fully guaranteed by, the United States or any agency or instrumentality of the United States, the obligations of which are backed by the full faith and credit of the United States and in the form of conventional bills, bonds and notes.
     SIXTY-SEVENTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “ VA Mortgage ”:
VA Mortgage ” means a mortgage qualifying under the mortgage loan program established by the United States Department of Veterans Affairs to help veterans and their families obtain home financing.
     SIXTY-EIGHTH: Article I.13 of the Articles Supplementary is hereby amended by deleting the definition of “ Valuation Date ” in its entirety and inserting in lieu thereof the following:
Valuation Date ” means the last Business Day of each month, or for purposes of determining whether the Corporation is maintaining the Basic Maintenance Amount, each Business Day commencing with the Date of Original Issue.
     SIXTY-NINTH: Article I.13 of the Articles Supplementary is hereby amended by inserting the definition of “ Whole Loan ”:
“Whole Loan” means an investment representing an original mortgage loan from a loan representing a participation with one or more lenders.
     SEVENTIETH: Article II.5(e) of the Articles Supplementary is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:
(e) If, as a result of the procedures described in paragraph 5(a)(v) any Potential Holder would be entitled or required to purchase less than a whole share of Series C Preferred Stock on any Auction Date, the Auction Agent shall, in such manner as it shall determine in its sole

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discretion, allocate Series C Preferred Stock for purchase among Potential Holders so that only whole shares are purchased on such Auction Date as a result of such procedures by any Potential Holder, even if such allocation results in one or more Potential Holders not purchasing Series C Preferred Stock on such Auction Date.
     SEVENTY-FIRST: The amendments set forth in these Articles of Amendment were duly approved by the Board of Directors of the Corporation in accordance with Article III of the Articles Supplementary and the Maryland General Corporation Law. No stock entitled to be voted on the matter was outstanding or subscribed for at the time of the approval of the amendments set forth in these Articles of Amendment.
     SEVENTY-SECOND: The amendments contemplated by these Articles of Amendment do not increase the authorized stock of the Corporation or the aggregate par value thereof.
[Remainder of page intentionally left blank]

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         The undersigned President of The Gabelli Global Multimedia Trust Inc., who executed these Articles of Amendment on behalf of the Corporation, hereby acknowledges, in the name and on behalf of the Corporation, that these Articles of Amendment are the corporate act of the Corporation and states further, under the penalties of perjury, that to the best of his knowledge, information and belief, the matters and facts set forth herein with respect to authorization and approval are true in all material respects.
         IN WITNESS WHEREOF, The Gabelli Global Multimedia Trust Inc. has caused these Articles of Amendment to be signed in its name and on its behalf by its President and witnessed by its Secretary as of this 29 day of May, 2009.
             
WITNESS:   THE GABELLI GLOBAL MULTIMEDIA
TRUST INC.
 
By:  /s/ Agnes Mullady   By:  /s/ Bruce N. Alpert
  Name:  Agnes Mullady     Name:  Bruce N. Alpert
  Title: Secretary     Title: President

 

Exhibit (a)(7)
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
ARTICLES SUPPLEMENTARY
     The Gabelli Global Multimedia Trust Inc., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland (the “SDAT”), that:
     FIRST: Under a power contained in Title 3, Subtitle 8 of the Maryland General Corporation Law (the “MGCL”), and in accordance with resolutions duly adopted by the Board of Directors of the Corporation (the “Board of Directors”) at a meeting duly called and held, the Corporation elects, notwithstanding any provision in its charter or Bylaws to the contrary, to be subject to Section 3-804(c) of the MGCL, the repeal of which may be effected only as authorized by Section 3-802(b)(3) of the MGCL.
     SECOND: The election to become subject to Section 3-804(c) of the MGCL has been approved by the Board of Directors in the manner and by the vote required by law.
     THIRD: The undersigned officer of the Corporation acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned officer acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
[SIGNATURE PAGE FOLLOWS]

 


 

     IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed under seal in its name and on its behalf by its President and attested by its Secretary on this 22nd day of November, 2010.
             
ATTEST:
      THE GABELLI GLOBAL
MULTIMEDIA TRUST INC.
   
 
           
/s/ Agnes Mullady
      /s/ Bruce Alpert (SEAL)
 
           
Name: Agnes Mullady
Title: Secretary
      Name: Bruce Alpert
Title: President
   

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