Fitch Affirms Gabelli Fund Auction Pfd Ratings at 'AA' Following Spin-Off

Fitch Ratings has affirmed the 'AA' ratings assigned to $319.5 million of auction preferred shares issued by Gabelli Dividend & Income Trust (NYSE: GDV) following a spin-off transaction that was completed on June 23, 2014. Fitch concurrently affirms the 'AA' ratings assigned to $137.5 million in aggregate auction preferred shares outstanding by the three other Gabelli equity closed-end funds listed below. All funds are managed by Gabelli Funds, LLC as investment adviser.

Gabelli Equity Trust Inc. (NYSE: GAB)

-- $72,000,000 of auction rate cumulative preferred stock (ARPS), series C;

-- $28,000,000 of ARPS, series E.

Gabelli Multimedia Trust Inc. (NYSE: GGT)

-- $15,000,000 of ARPS, series C.

Gabelli Utility Trust (NYSE: GUT)

-- $22,500,000 of auction market preferred shares (AMPS), series B.

Gabelli Dividend & Income Trust. (NYSE: GDV)

-- $90,000,000 of AMPS, series B;

-- $108,000,000 of AMPS, series C;

-- $121,500,000 of ARPS, series E.

Fitch ratings above speak only to the auction preferred shares outstanding by each fund. Fitch has not reviewed or assigned ratings to the retail fixed-rate preferred shares outstanding by the funds ($234.1 million in GAB, $139.8 million in GDV, $19.8 million in GGT and $28.8 million in GUT).

GDV FUND SPIN-OFF

On June 23, 2014, GDV contributed approximately $100 million of its assets (previously held in U.S. Treasury bills) to The Gabelli Global Small and Mid Cap Value Trust (NYSE: GGZ), a newly established equity closed-end fund. As discussed in the Asset Coverage section below, there was no material impact on GDV's asset coverage for the rated preferred shares. As a result of the spin-off, GDV common shareholders will receive 1 common share of GGZ for every 10 common shares owned of GDV.

KEY RATING DRIVERS

The 'AA' long-term ratings primarily reflect:

--Sufficient asset coverage provided to the preferred shares as calculated per the funds' over-collateralization (OC) tests;

--The structural protections afforded by mandatory collateral maintenance and de-leveraging provisions in the event of asset coverage declines;

--The legal and regulatory parameters that govern the funds' operations;

--The capabilities of Gabelli Funds, LLC as investment adviser.

The 'AA' ratings address credit risk only and do not speak to the liquidity of the preferred shares on the secondary market.

FUND PROFILES

The funds are closed-end management investment companies regulated by the 1940 Act. As of May 31, 2014, the funds invest primarily in equity securities of U.S.-based companies and to a lesser extent in foreign-based companies.

GAB's primary objective is long-term growth of capital with income as a secondary objective. GAB top equity investments were in broadcasting, media and cable companies and industrial/manufacturing companies. GGT's investment objective is long-term growth of capital, with income as a secondary objective. GGT's top equity investments were in broadcasting, media and cable companies, and computer and electronics companies. GUT's primary objective is long-term growth of capital and income. The fund's top equity investments were in utilities (power), energy (oil & gas); and computer and electronics companies. GDV's investment objective is to seek a high level of total return on its assets with an emphasis on dividends and income. The fund's top equity investments were in energy (oil & gas); food, beverage and tobacco; and industrial/manufacturing.

FUND LEVERAGE

As of May 31, 2014, leverage ratios were approximately 19%, 15%, 17% and 18% for GAB, GGT, GUT and GDV, respectively. The funds have both Fitch-rated auction preferred and non-Fitch rated retail preferred outstanding. Asset coverage and structural protections for the Fitch-rated preferred stock is described below.

ASSET COVERAGE

The funds' asset coverage ratio (pro forma for GDV incorporating the effect of the spin-off) as calculated in accordance with the Fitch total and net OC tests (Fitch OC tests) per the 'AA' rating guidelines outlined in Fitch's closed-end fund criteria, were in excess of 100%. These are the minimum asset coverage threshold required by the funds' governing documents.

The Fitch OC tests calculate standardized asset coverage by applying haircuts to portfolio holdings based on riskiness and diversification of the assets and measuring their ability to cover both on and off-balance sheet liabilities at the assigned 'AA' stress level.

The funds' asset coverage ratio, as calculated in accordance with the Investment Company Act of 1940 (1940 Act) at current market value, were in excess of 200%. This is the minimum asset coverage threshold required by the funds' governing documents.

There was no material adverse impact on GDV asset coverage as a result of the spin-off.

STRUCTURAL PROTECTIONS

Compliance with the Fitch OC and Asset Coverage tests is tested periodically. The fund manager is expected to cure any breach by altering the composition of the portfolio toward assets with lower discount factors (for Fitch OC breaches), or by reducing leverage in a sufficient amount (for all other breaches) within a pre-specified time period.

For Fitch OC and asset coverage tests, the maximum market value exposure (i.e. valuation, cure and redemption) that preferred shareholders would be exposed to before cure or redemption is approximately 30 and 113 calendar days, respectively.

THE ADVISER

Gabelli Funds, LLC is the funds' investment advisor, responsible for the funds' overall investment strategies, day-to-day operations, and their implementation. Gabelli Funds, LLC has approximately $26 billion of assets under management as of March 31, 2014. GAMCO Investors, Inc. (NYSE: GBL) is the parent company of the investment adviser.

RATINGS SENSITIVITY

The rating assigned to the preferred shares may be sensitive to material changes in the leverage composition, portfolio quality or market risk of the fund, as described above. A material adverse deviation from Fitch guidelines for any key rating driver could cause the rating to be lowered by Fitch.

For additional information about Fitch closed-end fund ratings guidelines, please review the criteria referenced below, which can be found on Fitch's website.

To receive forthcoming complimentary closed-end fund research from Fitch, opt-in at the following link: http://pages.fitchemail.fitchratings.com/FAMCEFBlankOptin/

Additional information is available at 'www.fitchratings.com'.

The sources of information used to assess this rating were the public domain and GAMCO Investors, Inc.

Applicable Criteria and Related Research:

--'Rating Closed-End Fund Debt and Preferred Stock' (Aug. 14, 2013);

--'MLP Closed-End Funds: A Capital Structure Case Study' (Dec. 2, 2013);

--'2014 Outlook: U.S. Closed-End Fund Leverage' (Jan. 14, 2014);

--'Use of Leverage in U.S. Closed-End Funds (Slidedeck Apr-2014)' (May 1, 2014);

--'Fitch: US Closed-End Funds Pick Up Steam in Private Placements' (June 2, 2014).

Applicable Criteria and Related Research:

Rating Closed-End Fund Debt and Preferred Stock

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=716220

MLP Closed-End Funds: A Capital Structure Case Study

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=723839

2014 Outlook: U.S. Closed-End Fund Leverage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=730159

Use of Leverage in U.S. Closed-End Funds (Slidedeck Apr-2014)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=747937

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=835977

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