Opinion
on the Financial Statements
We
have audited the accompanying statement of assets and liabilities, including the schedule of investments, of The Gabelli Multimedia
Trust Inc. (the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31,
2020, the statement of changes in net assets attributable to common stockholders for each of the two years in the period ended
December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December
31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for
the year then ended, the changes in its net assets attributable to common stockholders for each of the two years in the period
ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity
with accounting principles generally accepted in the United States of America.
Basis
for Opinion
These
financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the
Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian and brokers;
when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable
basis for our opinion.
/s/PricewaterhouseCoopers
LLP
New
York, New York
February
26, 2021
We
have served as the auditor of one or more investment companies in the Gabelli/GAMCO Fund Complex since 1986.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Unaudited)
Summary
of Updated Information Regarding the Fund
The
following information in this annual report is a summary of certain information about the Fund and changes since the Fund’s
last annual report to shareholders as of December 31, 2019, for the fiscal year ended December 31, 2020. This information may
not reflect all of the changes that have occurred since you invested in the Fund.
Investment
Objective and Strategies.
There
have been no material changes to the Fund’s investment objective or principal investment strategies since the Fund’s
last annual report to shareholders.
Investment
Objective
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.
Under
normal market conditions, the Fund will invest at least 80% of the value of its net assets, plus borrowings for investment purposes,
in common stock and other securities, including convertible securities, preferred stock, options, and warrants of companies in
the telecommunications, media, publishing, and entertainment industries (the “80% Policy “ ). The Fund may invest
in companies of any size market capitalization. The Fund may invest, without limitation, in foreign securities. The Fund may also
invest in securities of companies located in emerging markets.
A
company will be considered to be in these industries if it derives at least 50% of its revenues or earnings from, or devotes at
least 50% of its assets to, the indicated activities or multimedia related activities. The 80% Policy may be changed without stockholder
approval. The Fund will provide stockholders with notice at least sixty days prior to the implementation of any change in the
80% Policy.
The
telecommunications companies in which the Fund may invest are engaged in the development, manufacture, or sale of communications
services or equipment throughout the world, including the following products or services: regular telephone service; wireless
communications services and equipment, including cellular telephone, microwave and satellite communications, paging, and other
emerging wireless technologies; equipment and services for both data and voice transmission, including computer hardware and software;
electronic components and communications equipment; video conferencing; electronic mail; local and wide area networking, and linkage
of data and word processing systems; publishing and information systems; video text and teletext; emerging technologies combining
television, telephone and computer systems; broadcasting, including television and radio, satellite and microwave transmission
and cable television.
The
entertainment, media and publishing companies in which the Fund may invest are engaged in providing the following products or
services: the creation, packaging, distribution, and ownership of entertainment programming throughout the world, including pre-recorded
music, feature-length motion pictures, made-for-TV movies, television series, documentaries, animation, game shows, sports programming,
and news programs; live events such as professional sporting events or concerts, theatrical exhibitions, television and radio
broadcasting, satellite and microwave transmission, cable television systems and programming, broadcast and cable networks, wireless
cable television and other emerging distribution technologies; home video, interactive and multimedia programming, including home
shopping and multiplayer games; publishing, including newspapers, magazines and books, advertising agencies and niche advertising
mediums such as in-store or direct mail; emerging technologies combining television, telephone, and computer systems, computer
hardware and software; and equipment used in the creation and distribution of entertainment programming such as that required
in the provision of broadcast, cable, or telecommunications services.
Investing
in securities of foreign issuers, which generally are denominated in foreign currencies, may involve certain risk and opportunity
considerations not typically associated with investing in domestic companies and could cause the Fund to be affected favorably
or unfavorably by changes in currency exchange rates and revaluations of currencies. 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 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.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
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.
The
Fund may also invest in the debt securities of foreign governments. Although such investments are not a principal strategy of
the Fund, there is limitation on its ability to invest in the debt securities of foreign governments.
Corporate
Reorganizations. The Fund may invest without limit in securities of companies for which a tender or exchange offer has been
made or announced and in securities of companies for which a merger, consolidation, liquidation, or similar reorganization proposal
has been announced if, in the judgment of the Investment Adviser, there is a reasonable prospect of capital appreciation significantly
greater than the added portfolio turnover expenses inherent in the short term nature of such transactions. The principal risk
is that such offers or proposals may not be consummated within the time and under the terms contemplated at the time of the investment,
in which case, unless such offers or proposals are replaced by equivalent or increased offers or proposals that are consummated,
the Fund may sustain a loss.
Temporary
Defensive Investments. Subject to the Fund’s investment restrictions, when a temporary defensive period is believed
by the Investment Adviser to be warranted (“temporary defensive periods”), the Fund may, without limitation, hold
cash or invest its assets in securities of U.S. government sponsored instrumentalities, in repurchase agreements in respect of
those instruments, and in certain high grade commercial paper instruments. During temporary defensive periods, the Fund may also
invest up to 10% of the market value of its total assets in money market mutual funds that invest primarily in securities of U.S.
government sponsored instrumentalities and repurchase agreements in respect of those instruments. Obligations of certain agencies
and instrumentalities of the U.S. government, such as the Government National Mortgage Association, are supported by the “full
faith and credit” of the U.S. government; others, such as those of the Export-Import Bank of the U.S., are supported by
the right of the issuer to borrow from the U.S. Treasury; others, such as those of the Federal National Mortgage Association,
are supported by the discretionary authority of the U.S. government to purchase the agency’s obligations; and still others,
such as those of the Student Loan Marketing Association, are supported only by the credit of the instrumentality. No assurance
can be given that the U.S. government would provide financial support to U.S. government sponsored instrumentalities if it is
not obligated to do so by law. During temporary defensive periods, the Fund may be less likely to achieve its secondary investment
objective of income.
Further
information on the investment objectives and policies of the Fund are set forth in the SAI.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
Special
Investment Methods
Options.
On behalf of the Fund, and subject to guidelines of the Board, the Investment Adviser may purchase or sell (i.e., write) options
on securities, securities indices and foreign currencies which are listed on a national securities exchange or in the U.S. over-the-counter
(“OTC”) markets as a means of achieving additional return or of hedging the value of the Fund’s portfolio. The
Fund may write covered call options on common stocks that it owns or has an immediate right to acquire through conversion or exchange
of other securities in an amount not to exceed 25% of total assets or invest up to 10% of its total assets in the purchase of
put options on common stocks that the Fund owns or may acquire through the conversion or exchange of other securities that it
owns.
A
call option is a contract that gives the holder of the option the right to buy from the writer (seller) of the call option, in
return for a premium paid, the security underlying the option at a specified exercise price at any time during the term of the
option.
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.
Limitations
on the Purchase and Sale of Futures Contracts, Certain Options and Swaps. Subject to the guidelines of the Board, the Fund
may engage in “commodity interest” transactions (generally, transactions in futures, certain options, certain currency
transactions and certain types of swaps) only for bona fide hedging or other permissible transactions in accordance with the rules
and regulations of the Commodity Futures Trading Commission (“CFTC”). Pursuant to amendments by the CFTC to Rule 4.5
under the Commodity Exchange Act (“CEA”), the Investment Adviser has filed a notice of exemption from registration
as a “commodity pool operator” with respect to the Fund. The Fund and the Investment Adviser are therefore not subject
to registration or regulation as a commodity pool operator under the CEA. Due to the amendments to Rule 4.5 under the CEA, certain
trading restrictions are applicable to the Fund. These trading restrictions permit the Fund to engage in commodity interest transactions
that include (i) “bona fide hedging” transactions, as that term is defined and interpreted by the CFTC and its staff,
without regard to the percentage of the Fund’s assets committed to margin and options premiums and (ii) non-bona fide hedging
transactions, provided that the Fund does not enter into such non-bona fide hedging transactions if, immediately thereafter, either
(a) the sum of the amount of initial margin deposits on the Fund’s existing futures positions or swaps positions and option
or swaption premiums would exceed 5% of the market value of the Fund’s liquidating value, after taking into account unrealized
profits and unrealized losses on any such transactions, or (b) the aggregate net notional value of the Fund’s commodity
interest transactions would exceed 100% of the market value of the Fund’s liquidating value, after taking into account unrealized
profits and unrealized losses on any such transactions. In addition to meeting one of the foregoing trading limitations, the Fund
may not market itself as a commodity pool or otherwise as a vehicle for trading in the futures, options or swap markets. Therefore,
in order to claim the Rule 4.5 exemption, the Fund is limited in its ability to invest in commodity futures, options and certain
types of swaps (including securities futures, broad-based stock index futures and financial futures contracts). As a result, in
the future, the Fund will be more limited in its ability to use these instruments than in the past and these limitations may have
a negative impact on the ability of the Investment Adviser to manage the Fund, and on the Fund’s performance.
Futures
Contracts and Options on Futures. On behalf of the Fund, the Investment Adviser may, subject to the Fund’s investment
restrictions and guidelines of the Board, purchase and sell financial futures contracts and options thereon which are traded on
a commodities exchange or board of trade for certain hedging, yield enhancement, and risk management purposes. These futures contracts
and related options may be on debt securities, financial indices, securities indices, United States government securities, and
foreign currencies. A financial futures contract is an agreement to purchase or sell an agreed amount of securities or currencies
at a set price for delivery in the future.
Forward
Currency Exchange Contracts. Subject to guidelines of the Board, the Fund may enter into forward foreign currency exchange
contracts to protect the value of its portfolio against future changes in the level of currency exchange rates. The Fund may enter
into such contracts on a “spot” (i.e., cash) basis at the rate then prevailing in the currency exchange market or
on a forward basis, by entering into a forward contract to purchase or sell currency. A forward contract on foreign currency is
an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days agreed upon by the
parties from the date of the contract at a price set
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
on
the date of the contract. The Fund’s dealings in forward contracts generally will be limited to hedging involving either
specific transactions or portfolio positions. The Fund does not have an independent limitation on its investments in foreign currency
futures contracts and options on foreign currency futures contracts.
Short
Sales. The Fund may from time to time make short sales of securities, including short sales “against the box.”
A short sale is a transaction in which the Fund sells a security it does not own in anticipation that the market price of that
security will decline. A short sale against the box occurs when the Fund contemporaneously owns, or has the right to obtain at
no added cost, securities identical to those sold short.
The
market value for the securities sold short of any one issuer will not exceed 5% of the Fund’s total assets or 5% of such
issuer’s voting securities. In addition, the Fund may not make short sales or maintain a short position if it would cause
more than 25% of the Fund’s total assets, taken at market value, to be held as collateral for such sales. The Fund may make
short sales against the box without respect to such limitations.
The
Fund may make short sales in order to hedge against market risks when it believes that the price of a security may decline, causing
a decline in the value of a security owned by the Fund or a security convertible into, or exchangeable for, such security, or
when the Fund does not want to sell the security it owns. Such short sale transactions may be subject to special tax rules, one
of the effects of which may be to accelerate income to the Fund. Additionally, the Fund may use short sales in conjunction with
the purchase of a convertible security when it is determined that the convertible security can be bought at a small conversion
premium and has a yield advantage relative to the underlying common stock sold short.
When
the Fund makes a short sale, it will often borrow the security sold short and deliver it to the broker-dealer through which it
made the short sale as collateral for its obligation to deliver the security upon conclusion of the sale. In connection with such
short sales, the Fund may pay a fee to borrow securities or maintain an arrangement with a broker to borrow securities, and is
often obligated to pay over any accrued interest and dividends on such borrowed securities. In a short sale, the Fund does not
immediately deliver the securities sold or receive the proceeds from the sale. The Fund may close out a short position by purchasing
and delivering an equal amount of the securities sold short, rather than by delivering securities already held by the Fund, because
the Fund may want to continue to receive interest and dividend payments on securities in its portfolio that are convertible into
the securities sold short.
If
the price of the security sold short increases between the time of the short sale and the time that the Fund replaces the borrowed
security, the Fund will incur a loss; conversely, if the price declines, the Fund will realize a capital gain. Any gain will be
decreased, and any loss, increased, by the transaction costs described above. The successful use of short selling may be adversely
affected by imperfect correlation between movements in the price of the security sold short and the securities being hedged.
To
the extent that the Fund engages in short sales, it will provide collateral to the broker-dealer and (except in the case of short
sales against the box) will maintain additional asset coverage in the form of segregated or “earmarked” assets on
the records of the Investment Adviser or with the Fund’s Custodian, consisting of cash, U.S. government securities, or other
liquid securities that is equal to the current market value of the securities sold short, or (in the case of short sales against
the box) will ensure that such positions are covered by offsetting positions, until the Fund replaces the borrowed security. The
Fund will engage in short selling to the extent permitted by the federal securities laws and rules and interpretations thereunder,
subject to the percentage limitations set forth above. To the extent the Fund engages in short selling in foreign (non-U.S.) jurisdictions,
the Fund will do so to the extent permitted by the laws and regulations of such jurisdiction.
Repurchase
Agreements. The Fund may enter into repurchase agreements with banks and non-bank dealers of U.S. government securities which
are listed as reporting dealers of the Federal Reserve Bank and which furnish collateral at least equal in value or market price
to the amount of their repurchase obligation.
In
a repurchase agreement, the Fund purchases a debt security from a seller who undertakes to repurchase the security at a specified
resale price on an agreed future date. Repurchase agreements are generally for one business day and generally will not have a
duration of longer than one week. The SEC has taken the position that, in economic reality, a repurchase agreement is a loan by
a fund to the other party to the transaction secured by securities transferred to the fund. The resale price generally exceeds
the purchase price by an amount which reflects an agreed upon market interest rate for the term of the repurchase agreement. The
Fund’s risk is primarily that, if the seller defaults, the proceeds from the disposition of the underlying securities and
other collateral for the seller’s obligation may be less than the repurchase price. If the seller becomes insolvent, the
Fund might be delayed in or prevented from selling the collateral. In the event of a default or bankruptcy by a seller, the Fund
will promptly seek to liquidate the collateral. To the extent that the proceeds from any sale of the collateral upon a default
in the obligation to repurchase are less than the repurchase price, the Fund will experience a loss. If the financial institution
that is a party to the repurchase agreement petitions for bankruptcy or becomes subject to the United States Bankruptcy Code,
the law regarding the rights of the Fund is unsettled. As a result, under extreme circumstances, there may be a restriction on
the Fund’s ability to sell the collateral and the Fund could suffer a loss.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
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 generally increases the volatility
of returns to the Fund. The Fund currently has three series of preferred stock outstanding: the Series C Auction Rate Cumulative
Preferred Stock, the Series E Preferred, and the Series G Preferred.
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, 2019 and 2018, were 17.5% and 20.5%, respectively.
Risk
Factors and Special Considerations
There
are a number of risks that an investor should consider in evaluating the Fund. In addition, you should consider the matters set
forth below.
Leverage
Risk. The Fund uses financial leverage for investment purposes by issuing preferred stock. The Fund’s leveraged capital
structure creates special risks not associated with unleveraged funds having similar investment objectives and policies. These
include the possibility of greater loss and the likelihood of higher volatility of the net asset value of the Fund and the asset
coverage. Such volatility may increase the likelihood of the Fund’s having to sell investments in order to meet dividend
payments on the preferred stock, or to redeem preferred stock when it may be disadvantageous to do so. The Fund may not be permitted
to declare dividends or distributions with respect to common stock or preferred stock, or purchase common stock or preferred stock
unless at such time the Fund meets certain asset coverage requirements. In addition, the Fund may not be permitted to pay distributions
on common stock unless all distributions on preferred stock and/or accrued interest on borrowings have been paid, or set aside
for payment. Any preferred stock currently outstanding or that the Fund issues in the future would subject the Fund to certain
asset coverage requirements under the 1940 Act that could, under certain circumstances, restrict the Fund from making distributions
necessary to qualify as a registered investment company. If the Fund is unable to obtain cash from other sources, the Fund may
fail to qualify as a registered investment company and, thus, may be subject to income tax as an ordinary corporation. Because
the advisory fee paid to the Investment Adviser is calculated on the basis of the Fund’s Managed
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
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.
The Investment Adviser currently intends that the voluntary advisory fee waiver will remain in effect for as long as the Series
C Auction Rate Preferred Stock, Series E Preferred and Series G Preferred are outstanding. The Investment Adviser, however, reserves
the right to modify or terminate the voluntary advisory fee waiver at any time.
Preferred
Stock Risk. The issuance of preferred stock causes the net asset value and market value of the common stock to become more
volatile. If the dividend rate on the preferred stock approaches the net rate of return on the Fund’s investment portfolio,
the benefit of leverage to the holders of the common stock would be reduced. If the dividend rate on the preferred stock plus
the management fee annual rate of 1.00% (as applicable) exceeds the net rate of return on the Fund’s portfolio, the leverage
will result in a lower rate of return to the holders of common stock than if the Fund had not issued preferred stock.
Any
decline in the net asset value of the Fund’s investments would be borne entirely by the holders of common stock. Therefore,
if the market value of the Fund’s portfolio declines, the leverage will result in a greater decrease in net asset value
to the holders of common stock than if the Fund were not leveraged. This greater net asset value decrease will also tend to cause
a greater decline in the market price for the common stock. The Fund might be in danger of failing to maintain the required asset
coverage of the preferred stock or of losing its ratings on the preferred stock or, in an extreme case, the Fund’s current
investment income might not be sufficient to meet the dividend requirements on the preferred stock. In order to counteract such
an event, the Fund might need to liquidate investments in order to fund a redemption of some or all of the preferred stock.
In
addition, the Fund would pay (and the holders of common stock will bear) all costs and expenses relating to the issuance and ongoing
maintenance of the shares of the preferred stock, including the advisory fees on the incremental assets attributable to such shares.
Holders
of preferred stock may have different interests than holders of common stock and may at times have disproportionate influence
over the Fund’s affairs. Holders of preferred stock, voting separately as a single class, have the right to elect two members
of the Board at all times and in the event dividends become two full years in arrears would have the right to elect a majority
of the Directors until such arrearage is completely eliminated. In addition, preferred stockholders have class voting rights on
certain matters, including changes in fundamental investment restrictions and conversion of the fund to open-end status, and accordingly
can veto any such changes.
Restrictions
imposed on the declarations and payment of dividends or other distributions to the holders of the Fund’s common stock and
preferred stock, both by the 1940 Act and by requirements imposed by rating agencies, might impair the Fund’s ability to
maintain its qualification as a regulated investment company for federal income tax purposes. While the Fund intends to redeem
its preferred stock to the extent necessary to enable the Fund to distribute its income as required to maintain its qualification
as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”), there can be no
assurance that such actions can be effected in time to meet the Code requirements.
Portfolio
Guidelines of Rating Agencies for Preferred Stock. In order to obtain and maintain attractive credit quality ratings for shares
of preferred stock, the Fund must comply with investment quality, diversification, and other guidelines established by the relevant
ratings agencies. These guidelines could affect portfolio decisions and may be more stringent than those imposed by the 1940 Act.
Pursuant
to Section 18 of the 1940 Act, it is unlawful for the Fund, as a registered closed-end investment company, to issue any class
of senior security, or to sell any senior security that it issues, unless it can satisfy certain “asset coverage”
ratios. The asset coverage ratio with respect to a senior security representing indebtedness means the ratio of the value of the
Fund’s total assets (less all liabilities and indebtedness not represented by senior securities) to the aggregate amount
of the Fund’s senior securities representing indebtedness. The asset coverage ratio with respect to a senior security representing
stock means the ratio of the value of the Fund’s total assets (less all liabilities and indebtedness not represented by
senior securities) to the aggregate amount of the Fund’s senior securities representing indebtedness plus the aggregate
liquidation preference of the Fund’s outstanding shares of preferred stock.
If,
as is the case with the Fund, a registered investment company’s senior securities are equity securities, such securities
must have an asset coverage of at least 200% immediately following its issuance. If a registered investment company’s senior
securities represent indebtedness, such indebtedness must have an asset coverage of at least 300% immediately after their issuance.
Subject to certain exceptions, during any period following issuance that the Fund fails to satisfy these asset coverage ratios,
it will, among other things, be prohibited from declaring any dividend or declaring any other distribution in respect of its common
stock except a dividend payable in shares of common stock issued by the Fund. A registered investment company may, to the extent
permitted by the 1940 Act, segregate assets or “cover” transactions in order to avoid the creation of a class of senior
security.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
Special
Risks to Holders of Fixed Rate Preferred Stock
Market
Price Fluctuation. Shares of fixed rate preferred stock may trade at a premium to or discount from liquidation value for various
reasons, including changes in interest rates.
Special
Risks for Holders of Auction Rate Preferred Stock
Auction
Risk. You may not be able to sell your auction rate preferred stock at an auction if the auction fails, i.e., if more shares
of auction rate preferred stock are offered for sale than there are buyers for those shares. Also, if you place an order (a hold
order) at an auction to retain auction rate preferred stock only at a specified rate that exceeds the rate set at the auction,
you will not retain your auction rate preferred stock. Additionally, if you place a hold order without specifying a rate below
which you would not wish to continue to hold your shares and the auction sets a below market rate, you will receive a lower rate
of return on your shares than the market rate. Finally, the dividend period may be changed, subject to certain conditions and
with notice to the holders of the auction rate preferred stock, which could also affect the liquidity of your investment. Since
February 2008, most auction rate preferred stock, including our Series C Auction Rate Preferred, have had failed auctions and
holders of such stock have suffered reduced liquidity.
Secondary
Market Risk. If you try to sell your auction rate preferred stock between auctions, you may not be able to sell them for their
liquidation preference per share or such amount per share plus accumulated dividends. If the Fund has designated a special dividend
period of more than seven days, changes in interest rates could affect the price you would receive if you sold your shares in
the secondary market. Broker-dealers that maintain a secondary trading market for the auction rate preferred stock are not required
to maintain this market, and the Fund is not required to redeem auction rate preferred stock if either an auction or an attempted
secondary market sale fails because of a lack of buyers. The auction rate preferred stock will not be registered on a stock exchange.
If you sell your auction rate preferred stock to a broker-dealer between auctions, you may receive less than the price you paid
for them, especially when market interest rates have risen since the last auction or during a special dividend period. Since February
2008, most auction rate preferred stock, including our Series C Auction Rate Preferred, have had failed auctions and holders of
such stock have suffered reduced liquidity, including the inability to sell such stock in a secondary market.
Special
Risks for Holders of Subscription Rights
There
is a risk that changes in yield or changes in the credit quality of the Fund may result in the underlying preferred stock or common
stock purchasable upon exercise of the subscription rights being less attractive to investors at the conclusion of the subscription
period. This may reduce or eliminate the value of the subscription rights. Investors who receive subscription rights may find
that there is no market to sell rights they do not wish to exercise. Further, if investors exercise only a portion of the rights,
the number of shares of the preferred stock issued may be reduced, and the preferred stock or common stock may trade at less favorable
prices than larger offerings for similar securities.
Common
Stock Distribution Policy Risk
The
Fund has adopted a policy, which may be changed at any time by the Board, of paying a minimum annual distribution of 10% of the
average net asset value of the Fund to common stockholders. In the event the Fund does not generate a total return from dividends
and interest received and net realized capital gains in an amount equal to or in excess of its stated distribution in a given
year, the Fund may return capital as part of such distribution, which may have the effect of decreasing the asset coverage per
share with respect to the Fund’s preferred stock. Distributions on the Fund’s common stock may contain a return of
capital. Any return of capital should not be considered by investors as yield or total return on their investment in the Fund.
Distributions sourced from return of capital should not be considered as dividend yield or the total return from an investment
in the Fund. Stockholders who periodically receive the payment of a dividend or other distribution consisting of a return of
capital may be under the impression that they are receiving net profits when they are not. Stockholders should not assume that
the source of a distribution from the Fund is net profit. The composition of each distribution is estimated based on the earnings
of the Fund as of the record date for each distribution. The actual composition of each of the current year’s distributions
will be based on the Fund’s investment activity through the end of the calendar year.
Industry
Concentration Risk
The
Fund invests a significant portion of its assets in companies in the telecommunications, media, publishing, and entertainment
industries and, as a result, the value of the Fund’s shares is more susceptible to factors affecting those particular types
of companies and those industries, including governmental regulation, a greater price volatility than the overall market, rapid
obsolescence of products and services, intense competition, and strong market reactions to technological developments.
Various
types of ownership restrictions are imposed by the Federal Communications Commission, or FCC, on investment in media companies
and cellular licensees. For example, the FCC’s broadcast and cable multiple-ownership and cross ownership rules, which apply
to the radio, television, and cable industries, provide that investment advisers are deemed to have an “attributable”
interest whenever the adviser
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
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 stockholder should take into account the Fund’s investment objectives as well as the stockholder’s other
investments when considering an investment in the Fund.
Non-Diversified
Status
The
Fund is classified as a “non-diversified” investment company under the 1940 Act, which means it is not limited by
the 1940 Act in the proportion of its assets that may be invested in the securities of a single issuer. As a non-diversified investment
company, the Fund may invest in the securities of individual issuers to a greater degree than a diversified investment company.
As a result, the Fund may be more vulnerable to events affecting a single issuer and therefore subject to greater volatility than
a fund that is more broadly diversified. Accordingly, an investment in the Fund may present greater risk to an investor than an
investment in a diversified company. To qualify as a “regulated investment company,” or “RIC,” for purposes
of the Code, the Fund has in the past conducted and intends to conduct its operations in a manner that will relieve it of any
liability for federal income tax to the extent its earnings are distributed to stockholders. To so qualify as a “regulated
investment company,” among other requirements, the Fund will limit its investments so that, at the close of each quarter
of the taxable year:
|
|
●
|
not
more than 25% of the market value of its total assets will be invested in the securities
(other than U.S. government securities or the securities of other RICs) of a single issuer,
any two or more issuers in which the fund owns 20% or more of the voting securities and
which are determined to be engaged in the same, similar, or related trades or businesses
or in the securities of one or more qualified publicly traded partnerships (as defined
in the Code); and
|
|
|
●
|
at
least 50% of the market value of the Fund’s assets will be represented by cash,
securities of other regulated investment companies, U.S. government securities and other
securities, with such other securities limited in respect of any one issuer to an amount
not greater than 5% of the value of the its assets and not more than 10% of the outstanding
voting securities of such issuer.
|
Market
Value and Net Asset Value
The
Fund is a non-diversified, closed-end management investment company. Shares of closed-end funds are bought and sold in the securities
markets and may trade at either a premium to or discount from net asset value. Listed shares of closed-end investment companies
often trade at discounts from net asset value. This characteristic of shares of a closed-end fund is a risk separate and distinct
from the risk that its net asset value may decrease. The Fund cannot predict whether its listed stock will trade at, below, or
above net asset value. As of December 31, 2019, the shares of common stock traded at a premium of 1.13%. Stockholders desiring
liquidity may, subject to applicable securities laws, trade their Fund common stock 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. Stockholders will incur
brokerage or other transaction costs to sell stock.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
Non-Investment
Grade Securities
The
Fund may invest up to 10% of its total assets in fixed income securities rated below investment grade by recognized statistical
rating agencies or unrated securities of comparable quality. These securities, which may be preferred stock or debt, are predominantly
speculative and involve major risk exposure to adverse conditions. Debt securities that are not rated or that are rated lower
than “BBB” by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) or
lower than “Baa” by Moody’s are referred to in the financial press as “junk bonds.”
Generally,
such non-investment grade securities and unrated securities of comparable quality offer a higher current yield than is offered
by higher rated securities, but also: (i) will likely have some quality and protective characteristics that, in the judgment of
the rating organizations, are outweighed by large uncertainties or major risk exposures to adverse conditions, and (ii) are predominantly
speculative with respect to the issuer’s capacity to pay interest and repay principal in accordance with the terms of the
obligation. The market values of certain of these securities also tend to be more sensitive to individual corporate developments
and changes in economic conditions than higher quality securities. In addition, such securities generally present a higher degree
of credit risk. The risk of loss due to default by these issuers is significantly greater because such non-investment grade securities
and unrated securities of comparable quality generally are unsecured and frequently are subordinated to the prior payment of senior
indebtedness. In light of these risks, the Investment Adviser, in evaluating the creditworthiness of an issue, whether rated or
unrated, will take various factors into consideration, which may include, as applicable, the issuer’s operating history,
financial resources and its sensitivity to economic conditions and trends, the market support for the facility financed by the
issue, the perceived ability and integrity of the issuer’s management, and regulatory matters.
In
addition, the market value of securities in non-investment rated categories is more volatile than that of higher quality securities,
and the markets in which such non-investment rated or unrated securities are traded are more limited than those in which higher
rated securities are traded. The existence of limited markets may make it more difficult for the Fund to obtain accurate market
quotations for purposes of valuing its portfolio and calculating its net asset value. Moreover, the lack of a liquid trading market
may restrict the availability of securities for the Fund to purchase and may also have the effect of limiting the ability of the
Fund to sell securities at their fair value in response to changes in the economy or the financial markets.
Non-investment
grade securities also present risks based on payment expectations. If an issuer calls the obligation for redemption (often a feature
of fixed income securities), the Fund may have to replace the security with a lower yielding security, resulting in a decreased
return for investors. Also, as the principal value of nonconvertible bonds and preferred stocks moves inversely with movements
in interest rates, in the event of rising interest rates, the value of the securities held by the Fund may decline proportionately
more than a portfolio consisting of higher rated securities. Investments in zero coupon bonds may be more speculative and subject
to greater fluctuations in value due to changes in interest rates than bonds that pay regular income streams.
As
part of its investment in non-investment grade securities, the Fund may invest in securities of issuers in default. The Fund will
make an investment in securities of issuers in default only when the Investment Adviser believes that such issuers will honor
their obligations or emerge from bankruptcy protection under a plan pursuant to which the securities received by the Fund in exchange
for its defaulted securities will have a value in excess of the Fund’s investment. By investing in securities of issuers
in default, the Fund bears the risk that these issuers will not continue to honor their obligations or emerge from bankruptcy
protection or that the value of the securities will not otherwise appreciate.
In
addition to using recognized rating agencies and other sources, the Investment Adviser also performs its own analysis of issues
in seeking investments that it believes to be underrated (and thus higher yielding) in light of the financial condition of the
issuer. Its analysis of issuers may include, among other things, current and anticipated cash flow and borrowing requirements,
value of assets in relation to historical cost, strength of management, responsiveness to business conditions, credit standing,
and current anticipated results of operations. In selecting investments for the Fund, the Investment Adviser may also consider
general business conditions, anticipated changes in interest rates, and the outlook for specific industries.
Subsequent
to its purchase by the Fund, an issue of securities may cease to be rated or its rating may be reduced. In addition, it is possible
that statistical rating agencies may change their ratings of a particular issue to reflect subsequent events. Moreover, such ratings
do not assess the risk of a decline in market value. None of these events will require the sale of the securities by the Fund,
although the Investment Adviser will consider these events in determining whether the Fund should continue to hold the securities.
The
market for non-investment grade and comparable unrated securities has experienced several periods of significantly adverse price
and liquidity, particularly at or around times of economic recessions. Past market recessions have adversely affected the value
of such securities as well as the ability of certain issuers of such securities to repay principal and pay interest thereon or
to refinance such securities. The market for those securities may react in a similar fashion in the future.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
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.
Emerging
Markets Risk
The
Fund may invest in securities of issuers whose primary operations or principal trading market is in an “emerging market.”
An “emerging market” country is any country that is considered to be an emerging or developing country by the World
Bank. Investing in securities of companies in emerging markets may entail special risks relating to potential political and economic
instability and the risks of expropriation, nationalization, confiscation or the imposition of restrictions on foreign investment,
the lack of hedging instruments and restrictions on repatriation of capital invested. Emerging securities markets are substantially
smaller, less developed, less liquid and more volatile than the major securities markets. The limited size of emerging securities
markets and limited trading value compared to the volume of trading in U.S. securities could cause prices to be erratic for reasons
apart from factors that affect the quality of the securities. For example, limited market size may cause prices to be unduly influenced
by traders who control large positions. Adverse publicity and investors’ perceptions, whether or not based on fundamental
analysis, may decrease the value and liquidity of portfolio securities, especially in these markets. Other risks include high
concentration of market capitalization and trading volume in a small number of issuers representing a limited number of industries,
as well as a high concentration of investors and financial intermediaries; over-dependence on exports; overburdened infrastructure
and obsolete or unseasoned financial systems; environmental problems; less developed legal systems; and less reliable securities
custodial services and settlement practices.
Special
Risks of Derivative Transactions
Participation
in the options or futures markets and in currency exchange transactions involves investment risks and transaction costs to which
the Fund would not be subject absent the use of these strategies. If the Investment Adviser’s prediction of movements in
the direction of the securities, foreign currency, and interest rate markets are inaccurate, the consequences to the Fund may
leave the Fund in a worse position than if such 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
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
|
|
●
|
the
possible inability of the Fund to purchase or sell a security at a time that otherwise
would be favorable for it to do so, or the possible need for the Fund to sell a security
at a disadvantageous time due to a need for the Fund to maintain “cover”
or to segregate securities in connection with the hedging techniques.
|
Futures
Transactions
Futures
and options on futures entail certain risks, including but not limited to the following:
|
|
●
|
no
assurance that futures contracts or options on futures can be offset at favorable prices;
|
|
|
●
|
possible
reduction of the yield of the Fund due to the use of hedging;
|
|
|
●
|
possible
reduction in value of both the securities hedged and the hedging instrument;
|
|
|
●
|
possible
lack of liquidity due to daily limits or price fluctuations;
|
|
|
●
|
imperfect
correlation between the contracts and the securities being hedged; and
|
|
|
●
|
losses
from investing in futures transactions that are potentially unlimited and the segregation
requirements for such transactions.
|
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. Non-investment rated securities and securities
of issuers with smaller market capitalizations tend to be more volatile than higher rated securities and securities of issuers
with larger market capitalizations so that these events and any actions resulting from them may have a greater impact on the prices
and volatility of non-investment rated securities and securities of issuers with smaller market capitalizations than on higher
rated securities and securities of issuers with larger market capitalizations.
Special
Risks Related to Preferred Securities
There
are special risks associated with the Fund’s investing in preferred securities, including:
|
|
●
|
Deferral.
Preferred securities may include provisions that permit the issuer, at its discretion,
to defer dividends or distributions for a stated period without any adverse consequences
to the issuer. If the Fund owns a preferred security that is deferring its dividends
or distributions, the Fund may be required to report income for tax purposes although
it has not yet received such income.
|
|
|
●
|
Non-Cumulative
Dividends. Some preferred securities are non-cumulative, meaning that the dividends
do not accumulate and need not ever be paid. A portion of the portfolio may include investments
in non-cumulative preferred securities, whereby the issuer does not have an obligation
to make up any arrearages to its stockholders. Should an issuer of a non-cumulative preferred
security held by the Fund determine not to pay dividends or distributions on such security,
the Fund’s return from that security may be adversely affected. There is no assurance
that dividends or distributions on non-cumulative preferred securities in which the Fund
invests will be declared or otherwise made payable.
|
|
|
●
|
Subordination.
Preferred securities are subordinated to bonds and other debt instruments in an issuer’s
capital structure in terms of priority to corporate income and liquidation payments,
and therefore will be subject to greater credit risk than more senior debt security instruments.
|
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
|
|
●
|
Liquidity.
Preferred securities may be substantially less liquid than many other securities, such
as common stocks or U.S. government securities.
|
|
|
●
|
Limited
Voting Rights. Generally, preferred security holders (such as the Fund) have no voting
rights with respect to the issuing company unless preferred dividends have been in arrears
for a specified number of periods, at which time the preferred security holders may be
entitled to elect a number of directors to the issuer’s board. Generally, once
all the arrearages have been paid, the preferred security holders no longer have voting
rights.
|
|
|
●
|
Special
Redemption Rights. In certain varying circumstances, an issuer of preferred securities
may redeem the securities prior to a specified date. For instance, for certain types
of preferred securities, a redemption may be triggered by a change in federal income
tax or securities laws. A redemption by the issuer may negatively impact the return of
the security held by the Fund.
|
Interest
Rate Transactions
The
Fund may enter into interest rate swap or cap transactions with respect to all or a portion of any series of auction rate preferred
stock in order to manage the impact on its portfolio of changes in the dividend rate of such stock. Through these transactions
the Fund seeks to obtain the equivalent of a fixed rate for such auction rate preferred stock that is lower than the Fund would
have to pay if it issued fixed rate preferred stock. The use of interest rate swaps and caps is a highly specialized activity
that involves certain risks to the Fund including, among others, counterparty risk and early termination risk. 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.
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 “Certain Provisions of the Fund’s Governing Documents and
Maryland Law.”
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.
Economic
Events and Market Risk
Periods
of market volatility remain, and may continue to occur in the future, in response to various political, social and economic events
both within and outside of the United States. These conditions have resulted in, and in many cases continue to result in, greater
price volatility, less liquidity, widening credit spreads and a lack of price transparency, with many securities remaining illiquid
and of uncertain value. Such market conditions may adversely affect the Fund, including by making valuation of some of the Fund’s
securities uncertain and/or result in sudden and significant valuation increases or declines in the Fund’s holdings.
Risks
resulting from any future debt or other economic crisis could also have a detrimental impact on the global economy, the financial
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
condition
of financial institutions and our business, financial condition, and results of operation. Market and economic disruptions have
affected, and may in the future affect, consumer confidence levels and spending, personal bankruptcy rates, levels of incurrence
and default on consumer debt and home prices, among other factors. To the extent uncertainty regarding the U.S. or global economy
negatively impacts consumer confidence and consumer credit factors, the Fund’s business, financial condition, and results
of operations could be significantly and adversely affected. Downgrades to the credit ratings of major banks could result in increased
borrowing costs for such banks and negatively affect the broader economy. Moreover, Federal Reserve policy, including with respect
to certain interest rates and the decision to end its quantitative easing policy, may also adversely affect the value, volatility
and liquidity of dividend- and interest-paying securities. Market volatility, tariffs, rising interest rates, and/or a return
to unfavorable economic conditions could impair the Fund’s ability to achieve its investment objective. An outbreak of infectious
respiratory illness caused by a novel coronavirus known as COVID-19 was first detected in China in December 2019 and has now been
detected globally. This coronavirus has resulted in travel restrictions, closed international borders, enhanced health screenings
at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines,
cancellations, supply chain disruptions, and lower consumer demand, as well as general concern and uncertainty. The impact of
COVID-19, and other infectious illness outbreaks that may arise in the future, could adversely affect the economies of many nations
or the entire global economy, individual issuers and capital markets in ways that cannot necessarily be foreseen. In addition,
the impact of infectious illnesses in emerging market countries may be greater due to generally less established healthcare systems.
Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in
certain countries or globally. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty.
Regulation
and Government Intervention Risk
Global
economies and financial markets are increasingly interconnected, which increases the possibility that conditions in one country
or region may adversely affect companies in a different country or region. The global financial crisis has led governments and
regulators around the world to take a number of unprecedented actions designed to support certain financial institutions and segments
of the financial markets that experienced extreme volatility, and in some cases a lack of liquidity. Governments, their regulatory
agencies, or self-regulatory organizations may take actions that the regulation of the issuers in which the Fund invests. Legislation
or regulation may also change the way in which the Fund itself is regulated. Such legislation or regulation could limit or preclude
the Fund’s ability to achieve its investment objective.
Governments
or their agencies may also acquire distressed assets from financial institutions and acquire ownership interests in those institutions.
The implications of government ownership and disposition of these assets are unclear, and such a program may have positive or
negative effects on the liquidity, valuation and performance of the Fund’s portfolio holdings. Furthermore, volatile financial
markets can expose the Fund to greater market and liquidity risk and potential difficulty in valuing portfolio instruments held
by the Fund.
Moreover,
the SEC and its staff are reportedly engaged in various initiatives and reviews that seek to improve and modernize the regulatory
structure governing investment companies. These efforts appear to be focused on risk identification and controls in various areas,
including embedded leverage through the use of derivatives and other trading practices, cybersecurity, liquidity, enhanced regulatory
and public reporting requirements and the evaluation of systemic risks. Any new rules, guidance or regulatory initiatives resulting
from these efforts could increase the Fund’s expenses and impact its returns to shareholders or, in the extreme case, impact
or limit its use of various portfolio management strategies or techniques and adversely impact the Fund.
In
particular, the U.S. government has proposed and adopted multiple regulations that could have a long-lasting impact on the Fund
and on the mutual fund industry in general. The SEC’s final rules and amendments that modernize reporting and disclosure
and required the implementation of a liquidity risk management program, along with other potential upcoming regulations, could,
among other things, restrict the Fund’s ability to engage in transactions, impact flows into the Fund and/or increase overall
expenses of the Fund. The Board designated and approved a liquidity committee (“Liquidity Committee”) to administer
the Fund’s liquidity risk management program and related procedures, various aspects of which went into effect in December
2018 and June 2019.
In
addition, the SEC, Congress, various exchanges and regulatory and self-regulatory authorities, both domestic and foreign, have
undertaken reviews of the use of derivatives by registered investment companies, which could affect the nature and extent of instruments
used by the Funds. For example, the SEC recently re-proposed a new regulatory framework for registered investment companies’
use of derivatives. While the full extent of the aggregate impact of these regulations is still unclear, these regulations and
actions may adversely affect both the Fund and the instruments in which such Fund invests and its ability to execute its investment
strategy. Similarly, regulatory developments in other countries may have an unpredictable and adverse impact on the Fund.
In
the aftermath of the global financial crisis, there appears to be a renewed popular, political and judicial focus on finance related
consumer protection. Financial institution practices are also subject to greater scrutiny and criticism generally. In the case
of transactions between financial institutions and the general public, there may be a greater tendency toward strict interpretation
of terms and legal rights in favor of the consuming public, particularly where there is a real or perceived disparity in risk
allocation and/or where consumers are perceived as not having had an opportunity to exercise informed consent to the transaction.
In the event of conflicting interests between retail investors
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
holding
shares of an open-end investment company such as the Fund and a large financial institution, a court may similarly seek to strictly
interpret terms and legal rights in favor of retail investors.
The
Trump administration has called for substantial changes to U.S. fiscal and tax policies, including comprehensive corporate and
individual tax reform. In addition, the Trump administration has called for significant changes to U.S. trade, healthcare, immigration,
foreign, and government regulatory policy. In this regard, there is significant uncertainty with respect to legislation, continued
operation of the U.S. government, regulation, and government policy at the federal level, as well as the state and local levels.
Recent events have created a climate of heightened uncertainty and introduced new and difficult-to-quantify macroeconomic and
political risks with potentially far-reaching implications. There has been a corresponding meaningful increase in the uncertainty
surrounding interest rates, inflation, foreign exchange rates, trade volumes, and fiscal and monetary policy. To the extent the
U.S. Congress or Trump administration implements changes to U.S. policy, those changes may impact, among other things, the U.S.
and global economy, international trade and relations, unemployment, immigration, corporate taxes, healthcare, the U.S. regulatory
environment, inflation, and other areas. Although it is impossible to predict the impact, if any, of these changes to the Fund’s
business, they may adversely affect the Fund’s business, financial condition, operating results and cash flows.
The
Fund may be affected by governmental action in ways that are not foreseeable, and there is a possibility that such actions could
have a significant adverse effect on the Fund and its ability to achieve its investment objectives.
Special
Risks Related to Cyber Security
The
Fund and its service providers are susceptible to cyber security risks that include, among other things, theft, unauthorized monitoring,
release, misuse, loss, destruction, or corruption of confidential and highly restricted data; denial of service attacks; unauthorized
access to relevant systems, compromises to networks or devices that the Fund and its service providers use to service the Fund’s
operations; or operational disruption or failures in the physical infrastructure or operating systems that support the Fund and
its service providers. Cyber attacks against or security breakdowns of the Fund or its service providers may adversely impact
the Fund and its shareholders, potentially resulting in, among other things, financial losses; the inability of Fund shareholders
to transact business and the Fund to process transactions; inability to calculate the Fund’s NAV; violations of applicable
privacy and other laws; regulatory fines, penalties, reputational damage, reimbursement, or other compensation costs; and/or additional
compliance costs. The Fund may incur additional costs for cyber security risk management and remediation purposes. In addition,
cyber security risks may also impact issuers of securities in which the Fund invests, which may cause the Fund’s investment
in such issuers to lose value. There can be no assurance that the Fund or its service providers will not suffer losses relating
to cyber attacks or other information security breaches in the future.
Senior
Securities / leverage As of December 31, 2020, the Fund uses leverage through the issuance of preferred stock.
Effects
of Leverage
The
following information is furnished in response to requirements of the SEC. It is designed to, among other things, illustrate the
effects of leverage through the use of senior securities, as that term is defined under Section 18 of the 1940 Act, on Common
Share total return, assuming investment portfolio total returns (consisting of income and changes in the value of investments
held in a Fund’s portfolio) of -10%, -5%, 0%, 5% and 10%. The table below reflects the Fund’s continued use of Preferred
Stock, as of December 31, 2020 as a percentage of total managed assets (including assets attributable to such leverage), the estimated
annual effective Preferred Stock dividend rate and interest expense rate payable by the Fund on such instruments (based on market
conditions as of December 31, 2020), and the annual return that the Fund’s portfolio must experience (net of expenses) in
order to cover such costs. The information below does not reflect the Fund’s use of certain other forms of economic leverage
achieved through the use of other instruments or transactions not considered to be senior securities under the 1940 Act, such
as derivative instruments.
The
assumed investment portfolio returns in the table below are hypothetical figures and are not necessarily indicative of the investment
portfolio returns experienced or expected to be experienced by the Fund. Your actual returns may be greater or less than those
appearing below.
|
Preferred
Shares as a Percentage of Total Managed Assets (Including Assets Attributable to Preferred Shares and Reverse Repurchase Agreements)
|
|
|
32.70
|
%
|
|
Estimated
Annual Effective Preferred Share Dividend Rate
|
|
|
5.11
|
%
|
|
Annual
Return Fund Portfolio Must Experience (net of expenses) to Cover Estimated Annual Effective Preferred Share Dividend Rate
|
|
|
1.67
|
%
|
|
Common
Share Total Return for (10.00)% Assumed Portfolio Total Return
|
|
|
(17.82
|
%)
|
|
Common
Share Total Return for (5.00)% Assumed Portfolio Total Return
|
|
|
(10.40
|
%)
|
|
Common
Share Total Return for 0.00% Assumed Portfolio Total Return
|
|
|
(2.97
|
%)
|
|
Common
Share Total Return for 5.00% Assumed Portfolio Total Return
|
|
|
4.46
|
%
|
|
Common
Share Total Return for 10.00% Assumed Portfolio Total Return
|
|
|
11.89
|
%
|
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
Common
Stock total return is composed of two elements — the distributions paid by a Fund to holders of Common Stock (the amount
of which is largely determined by the net investment income of the Fund after paying dividend payments on any preferred stock
issued by the Fund and expenses on any forms of leverage outstanding) and gains or losses on the value of the securities and other
instruments the Fund owns. As required by SEC rules, the table assumes that a Fund is more likely to suffer capital losses than
to enjoy capital appreciation. For example, to assume a total return of 0%, a Fund must assume that the income it receives on
its investments is entirely offset by losses in the value of those investments. This table reflects hypothetical performance of
the Fund’s portfolio and not the actual performance of the Fund’s Common Stock, the value of which is determined by
market forces and other factors. Should the Fund elect to add additional leverage to its portfolio, any benefits of such additional
leverage cannot be fully achieved until the proceeds resulting from the use of such leverage have been received by the Fund and
invested in accordance with the Fund’s investment objectives and policies. As noted above, the Fund’s willingness
to use additional leverage, and the extent to which leverage is used at any time, will depend on many factors, including, among
other things, the Fund’s assessment of the yield curve environment, interest rate trends, market conditions and other factors.
SUMMARY
OF FUND EXPENSES
The
following table is intended to assist you in understanding the various costs and expenses directly or indirectly associated with
investing in shares of common stock, as a percentage of net assets attributable to common stock. All expenses of the Fund will
be borne, directly or indirectly, by the common stockholders. Amounts are for the current fiscal year.
|
Annual
Expenses
|
|
Percentages
of Net Assets
Attributable to Common Shares
|
|
Management
Fees(a)
|
|
1.49%
|
|
Other
Expenses
|
|
0.39%
|
|
Total
Annual Expenses
|
|
1.88%
|
|
Dividends
on Preferred Stock(b)
|
|
2.48%
|
|
Total
Annual Expenses and Dividends on Preferred Stock
|
|
4.36%
|
|
|
(a)
|
The
Investment Adviser’s fee is 1.00% annually of the Fund’s average weekly net
assets. The Fund’s average weekly net assets will be deemed to be the average weekly
value of the Fund’s total assets minus the sum of the Fund’s liabilities
(such liabilities exclude (i) the aggregate liquidation preference of outstanding shares
of preferred stock and accumulated dividends, if any, on those shares and (ii) the liabilities
for any money borrowed). Consequently, because the Fund has preferred stock outstanding,
the investment management fees and other expenses as a percentage of net assets attributable
to common stock will be higher than if the Fund did not utilize a leveraged capital structure.
|
|
|
(b)
|
Dividends
on Preferred Stock represent the estimated annual distributions on the existing preferred
stock outstanding.
|
The
following example illustrates the expenses you would pay on a $1,000 investment in common stock, assuming a 5% annual portfolio
total return.*
|
|
1
Year
|
|
3
Years
|
|
5
Years
|
|
10
Years
|
|
Total
Expenses Incurred
|
$44
|
|
$132
|
|
$221
|
|
$450
|
*The
example should not be considered a representation of future expenses. The example is based on Total Annual Expenses and Dividends
on Preferred Stock shown in the table above and assumes that the amounts set forth in the table do not change and that all distributions
are reinvested at net asset value. Actual expenses may be greater or less than those assumed. Moreover, the Fund’s actual
rate of return may be greater or less than the hypothetical 5% return shown in the example.
The
above example includes Dividends on Preferred Stock. If Dividends on Preferred Stock were not included in the example calculation,
the expenses would be as follows (based on the same assumptions as above).
|
|
1
Year
|
|
3
Years
|
|
5
Years
|
|
10
Years
|
|
Total
Expenses Incurred
|
$19
|
|
$59
|
|
$101
|
|
$219
|
Share
Price Data
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 NYSE closing prices provided.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
|
|
|
Market
Price
|
|
Corresponding
NAV
|
|
Premium
Discount
as a % of NAV
|
|
Quarter
Ended
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
03/31/2019
|
|
$8.68
|
|
$7.05
|
|
$8.22
|
|
$7.10
|
|
5.59%
|
|
(0.70%)
|
|
06/30/2019
|
|
$8.53
|
|
$7.76
|
|
$8.38
|
|
$7.71
|
|
1.79%
|
|
0.64%
|
|
09/30/2019
|
|
$8.68
|
|
$8.07
|
|
$8.07
|
|
$7.48
|
|
7.55%
|
|
7.88%
|
|
12/31/2019
|
|
$8.33
|
|
$7.87
|
|
$7.92
|
|
$7.78
|
|
5.17%
|
|
1.15%
|
|
03/31/2020
|
|
$8.36
|
|
$3.42
|
|
$7.91
|
|
$4.04
|
|
5.68%
|
|
(15.34%)
|
|
06/30/2020
|
|
$7.53
|
|
$4.77
|
|
$6.92
|
|
$4.43
|
|
8.81%
|
|
7.67%
|
|
09/30/2020
|
|
$7.40
|
|
$6.43
|
|
$7.46
|
|
$6.26
|
|
(0.80%)
|
|
2.71%
|
|
12/31/2020
|
|
$8.29
|
|
$6.16
|
|
$7.98
|
|
$6.44
|
|
3.88%
|
|
(4.34%)
|
Portfolio
Managers
There
were no changes to the portfolio management team during the year ended December 31, 2020.
AUTOMATIC
DIVIDEND REINVESTMENT
AND
VOLUNTARY CASH PURCHASE PLANS
Under
the Fund’s Automatic Dividend Reinvestment Plan and Voluntary Cash Purchase Plan (the “Plan”), a shareholder
whose shares of common stock are registered in his or her own name will have all distributions reinvested automatically by Computershare
Trust Company, N.A. (“Computershare”), which is an agent under the Plan, unless the shareholder elects to receive
cash. Distributions with respect to shares registered in the name of a broker-dealer or other nominee (that is, in “street
name”) will be reinvested by the broker or nominee in additional shares under the Plan, unless the service is not provided
by the broker or nominee or the shareholder elects to receive distributions in cash. Investors who own shares of common stock
registered in street name should consult their broker-dealers for details regarding reinvestment. All distributions to investors
who do not participate in the Plan will be paid by check mailed directly to the record holder by Computershare as dividend-disbursing
agent.
Enrollment
in the Plan
It
is the policy of The Gabelli Multimedia Trust Inc. (the “Fund”) to automatically reinvest dividends payable to common
shareholders. As a “registered” shareholder you automatically become a participant in the Fund’s Automatic Dividend
Reinvestment Plan (the “Plan”). The Plan authorizes the Fund to credit 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 may submit this request through the Internet, by telephone or in writing to:
The
Gabelli Multimedia Trust Inc.
c/o
Computershare
P.O.
Box 505000
Louisville,
KY 40233-5000
Telephone:
(800) 336-6983
Website:
www.computershare.com/investor
Shareholders
requesting this cash election must include the shareholder’s name and address as they appear on the Fund’s records.
Shareholders with additional questions regarding the Plan or requesting a copy of the terms of the Plan may contact Computershare
at the website or telephone number above.
If
your shares are held in the name of a broker, bank, or nominee, you should contact such institution. If such institution is not
participating in the Plan, your account will be credited with a cash dividend. In order to participate in the Plan through such
institution, it may be necessary for you to have your shares taken out of “street name” and re-registered in your
own name. Once registered in your own name your distributions will be automatically reinvested. Certain brokers participate in
the Plan. Shareholders holding shares in “street name” at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must contact their broker to make this change.
The
number of shares of common stock distributed to participants in the Plan in lieu of cash dividends is determined in the following
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
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 New York Stock Exchange (“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 shares at the then current market price. Shareholders may send an amount from $250 to $10,000. Computershare will
use these funds to purchase shares in the open market on or about the 1st and 15th of each month. Computershare will charge each
shareholder who participates $0.75, plus a per share fee (currently $0.02 per share). Per share fees include any applicable brokerage
commissions Computershare is required to pay and fees for such purchases are expected to be less than the usual fees for such
transactions. It is suggested that any voluntary cash payments be sent to Computershare, P.O. Box 6006, Carol Stream, IL 60197-6006
such that Computershare receives such payments approximately two business days before the 1st and 15th of the month. Funds not
received at least two business days before the investment date shall be held for investment until the next purchase date. A payment
may be withdrawn without charge if notice is received by Computershare at least two business days before such payment is to be
invested.
Shareholders
wishing to liquidate shares held at Computershare may do so through the Internet, in writing or by telephone to the above-mentioned
website, address or telephone number. Include in your request your name, address, and account number. Computershare will sell
such shares through a broker-dealer selected by Computershare within 5 business days of receipt of the request. The sale price
will equal the weighted average price of all shares sold through the Plan on the day of the sale, less applicable fees. Participants
should note that Computershare is unable to accept instructions to sell on a specific date or at a specific price. The cost to
liquidate shares is $2.50 per transaction as well as the per share fee (currently $0.10 per share) Per share fees include any
applicable brokerage commissions Computershare is required to pay and are expected to be less than the usual fees for such transactions.
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 30 days before the record date for such
dividend or distribution. The Plan also may be amended or terminated by Computershare on at least 30 days written notice to participants
in the Plan.
Unresolved
Staff Comments
The
Fund does not believe that there are any material unresolved written comments, received 180 days or more before September 30,
2020 from the Staff of the SEC regarding any of the Fund’s periodic or current reports under the Securities Exchange Act
or the Investment Company Act, or its registration statement.
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
|
Financial Highlights 2011-2015
|
|
|
|
|
For
the Year Ended December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
Operating
Performance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
asset value, beginning of year
|
|
$
|
9.81
|
|
|
$
|
10.90
|
|
|
$
|
8.22
|
|
|
$
|
7.48
|
|
|
$
|
9.17
|
|
|
Net investment income
|
|
|
0.03
|
|
|
|
0.05
|
|
|
|
0.06
|
|
|
|
0.13
|
|
|
|
0.04
|
|
|
Net
realized and unrealized gain/(loss) on investments and foreign currency transactions
|
|
|
(0.49
|
)
|
|
|
0.42
|
|
|
|
3.61
|
|
|
|
1.48
|
|
|
|
0.00
|
(a)
|
|
Total
from investment operations
|
|
|
(0.46
|
)
|
|
|
0.47
|
|
|
|
3.67
|
|
|
|
1.61
|
|
|
|
0.04
|
|
|
Distributions
to Preferred Shareholders: (b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.00
|
)(a)
|
|
|
(0.00
|
)(a)
|
|
|
(0.01
|
)
|
|
|
(0.03
|
)
|
|
|
—
|
|
|
Net
realized gain
|
|
|
(0.05
|
)
|
|
|
(0.06
|
)
|
|
|
(0.06
|
)
|
|
|
(0.04
|
)
|
|
|
(0.07
|
)
|
|
Total
distributions to preferred shareholders
|
|
|
(0.05
|
)
|
|
|
(0.06
|
)
|
|
|
(0.07
|
)
|
|
|
(0.07
|
)
|
|
|
(0.07
|
)
|
|
Net
Increase/(Decrease) in Net Assets Attributable to Common Shareholders Resulting from Operations
|
|
|
(0.51
|
)
|
|
|
0.41
|
|
|
|
3.60
|
|
|
|
1.54
|
|
|
|
(0.03
|
)
|
|
Distributions
to Common Shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.03
|
)
|
|
|
(0.02
|
)
|
|
|
(0.05
|
)
|
|
|
(0.07
|
)
|
|
|
—
|
|
|
Net realized gain
|
|
|
(0.89
|
)
|
|
|
(0.88
|
)
|
|
|
(0.87
|
)
|
|
|
(0.08
|
)
|
|
|
(0.24
|
)
|
|
Return of capital
|
|
|
(0.02
|
)
|
|
|
(0.15
|
)
|
|
|
—
|
|
|
|
(0.65
|
)
|
|
|
(0.63
|
)
|
|
Total
distributions to common shareholders
|
|
|
(0.94
|
)
|
|
|
(1.05
|
)
|
|
|
(0.92
|
)
|
|
|
(0.80
|
)
|
|
|
(0.87
|
)
|
|
Fund Share Transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in net asset value
from common shares issued in rights offering
|
|
|
—
|
|
|
|
(0.44
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.76
|
)
|
|
Increase in net asset value
from repurchase of common shares
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.00
|
(a)
|
|
|
0.00
|
(a)
|
|
Increase in net asset value from common shares
issued upon reinvestment of distributions
|
|
|
—
|
|
|
|
0.00
|
(a)
|
|
|
0.00
|
(a)
|
|
|
—
|
|
|
|
—
|
|
|
Offering
expenses charged to paid-in capital
|
|
|
(0.00
|
)(a)
|
|
|
(0.01
|
)
|
|
|
—
|
|
|
|
(0.00
|
)(a)
|
|
|
(0.03
|
)
|
|
Total Fund share transactions
|
|
|
(0.00
|
)(a)
|
|
|
(0.45
|
)
|
|
|
0.00
|
(a)
|
|
|
0.00
|
(a)
|
|
|
(0.79
|
)
|
|
Net
Asset Value Attributable to Common Shareholders, End of Year
|
|
$
|
8.36
|
|
|
$
|
9.81
|
|
|
$
|
10.90
|
|
|
$
|
8.22
|
|
|
$
|
7.48
|
|
|
NAV
total return †
|
|
|
(5.57
|
)%
|
|
|
4.17
|
%
|
|
|
45.77
|
%
|
|
|
22.29
|
%
|
|
|
(0.13
|
)%
|
|
Market value, end of
year
|
|
$
|
7.50
|
|
|
$
|
10.01
|
|
|
$
|
12.40
|
|
|
$
|
7.85
|
|
|
$
|
6.24
|
|
|
Investment
total return ††
|
|
|
(16.33
|
)%
|
|
|
(6.63
|
)%
|
|
|
73.37
|
%
|
|
|
40.00
|
%
|
|
|
(10.35
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios
to Average Net Assets and Supplemental Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets including liquidation
value of preferred shares, end of year (in 000’s)
|
|
$
|
238,049
|
|
|
$
|
273,307
|
|
|
$
|
232,399
|
|
|
$
|
182,899
|
|
|
$
|
169,977
|
|
|
Net assets attributable
to common shares, end of year (in 000’s)
|
|
$
|
203,274
|
|
|
$
|
238,532
|
|
|
$
|
197,624
|
|
|
$
|
148,124
|
|
|
$
|
135,202
|
|
|
Ratio of net investment
income/(loss) to average net assets attributable to common shares before preferred share distributions
|
|
|
0.33
|
%
|
|
|
0.13
|
%
|
|
|
0.60
|
%
|
|
|
1.68
|
%
|
|
|
(0.11
|
)%
|
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
|
|
|
For
the Year Ended December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
Ratios to Average Net Assets and Supplemental
Data (Continued):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of operating expenses to average net assets attributable
to common shares before fees waived/fee reduction
|
|
|
1.45
|
%(c)
|
|
|
1.59
|
%
|
|
|
1.55
|
%
|
|
|
1.84
|
%(d)
|
|
|
2.59
|
%
|
|
Ratio of operating expenses to average net assets attributable to
common shares net of advisory fee reduction, if any
|
|
|
1.30
|
%(c)
|
|
|
1.50
|
%
|
|
|
1.55
|
%
|
|
|
1.84
|
%(d)
|
|
|
2.34
|
%
|
|
Ratio of operating expenses to average net assets including liquidation
value of preferred shares before fees waived/fee reduction
|
|
|
1.26
|
%(c)
|
|
|
1.37
|
%
|
|
|
1.29
|
%
|
|
|
1.48
|
%(e)
|
|
|
2.08
|
%
|
|
Ratio of operating expenses to average net assets including liquidation
value of preferred shares net of advisory fee reduction, if any
|
|
|
1.13
|
%(c)
|
|
|
1.29
|
%
|
|
|
1.29
|
%
|
|
|
1.48
|
%(e)
|
|
|
1.88
|
%
|
|
Portfolio turnover rate
|
|
|
14.0
|
%
|
|
|
16.0
|
%
|
|
|
12.7
|
%
|
|
|
7.9
|
%
|
|
|
14.4
|
%
|
|
Preferred Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.00% Series B Cumulative Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidation value, end of year (in 000’s)
|
|
$
|
19,775
|
|
|
$
|
19,775
|
|
|
$
|
19,775
|
|
|
$
|
19,775
|
|
|
$
|
19,775
|
|
|
Total shares outstanding (in 000’s)
|
|
|
791
|
|
|
|
791
|
|
|
|
791
|
|
|
|
791
|
|
|
|
791
|
|
|
Liquidation preference per share
|
|
$
|
25.00
|
|
|
$
|
25.00
|
|
|
$
|
25.00
|
|
|
$
|
25.00
|
|
|
$
|
25.00
|
|
|
Average market value (f)
|
|
$
|
25.80
|
|
|
$
|
25.41
|
|
|
$
|
25.45
|
|
|
$
|
25.73
|
|
|
$
|
25.38
|
|
|
Asset coverage per share(g)
|
|
$
|
171.13
|
|
|
$
|
196.48
|
|
|
$
|
167.07
|
|
|
$
|
131.49
|
|
|
$
|
122.20
|
|
|
Series C Auction Rate Cumulative Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidation value, end of year (in 000’s)
|
|
$
|
15,000
|
|
|
$
|
15,000
|
|
|
$
|
15,000
|
|
|
$
|
15,000
|
|
|
$
|
15,000
|
|
|
Total shares outstanding (in 000’s)
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
Liquidation preference per share
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
Liquidation value (h)
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
Asset coverage per share(g)
|
|
$
|
171,134
|
|
|
$
|
196,481
|
|
|
$
|
167,072
|
|
|
$
|
131,486
|
|
|
$
|
122,197
|
|
|
Asset Coverage (i)
|
|
|
685
|
%
|
|
|
786
|
%
|
|
|
668
|
%
|
|
|
526
|
%
|
|
|
489
|
%
|
|
†
|
For
the years ended 2015, 2014, and 2013 based on net asset value per share, adjusted for reinvestment of distributions of net
asset value on the ex-dividend date. The years ended 2012 and 2011, were based on net asset value per share, adjusted for
reinvestment of distributions at prices determined under the Fund’s dividend reinvestment plan including the effect
of shares issued pursuant to 2014 and 2011 rights offerings, assuming full subscription by shareholders.
|
|
††
|
Based
on market value per share, adjusted for reinvestment of distributions at prices determined under the Fund’s dividend
reinvestment plan including the effect of shares issued pursuant to 2014 and 2011 rights offerings, assuming full subscription
by shareholders.
|
|
(a)
|
Amount
represents less than $0.005 per share.
|
|
(b)
|
Calculated
based on average common shares outstanding on the record dates throughout the periods.
|
|
(c)
|
The
Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the year ended December
31, 2015, there was no impact on the expense ratios.
|
|
(d)
|
These
ratios do not include a reduction for insurance recovery of $300,000 and the prior period adjustment to legal expenses of
$227,762. Had these amounts been included, the ratios for the year ended December 31, 2012 would have been 1.47%.
|
|
(e)
|
These
ratios do not include a reduction for insurance recovery of $300,000 and the prior period adjustment to legal expenses of
$227,762. Had these amounts been included, the ratios for the year ended December 31, 2012 would have been 1.18%.
|
|
(f)
|
Based
on weekly prices.
|
|
(g)
|
Asset
coverage per share is calculated by combining all series of preferred shares.
|
|
(h)
|
Since
February 2008, the weekly auctions have failed. Holders that have submitted orders have not been able to sell any or all of
their shares in the auctions.
|
|
(i)
|
Asset
coverage is calculated by combining all series of preferred shares.
|
The
Gabelli Multimedia Trust Inc.
Additional
Fund Information (Continued) (Unaudited)
The
business and affairs of the Fund are managed under the direction of the Fund’s Board of Directors. Information pertaining
to the Directors and officers of the Fund is set forth below. The Fund’s Statement of Additional Information includes additional
information about the Fund’s Directors and is available without charge, upon request, by calling 800-GABELLI (800-422-3554)
or by writing to The Gabelli Multimedia Trust Inc. at One Corporate Center, Rye, NY 10580-1422.