UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21969
The Gabelli Global Deal Fund
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
Date of fiscal year end: December 31
Date of reporting period: December 31, 2008
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
(THE GABELLI GLOBAL DEAL FUND LOGO)
THE GABELLI GLOBAL DEAL FUND
Annual Report
December 31, 2008
TO OUR SHAREHOLDERS,
The Sarbanes-Oxley Act requires a fund's principal executive and financial
officers to certify the entire contents of the semi-annual and annual
shareholder reports in a filing with the Securities and Exchange Commission on
Form N-CSR. This certification would cover the portfolio manager's commentary
and subjective opinions if they are attached to or a part of the financial
statements. Many of these comments and opinions would be difficult or impossible
to certify.
Because we do not want our portfolio managers to eliminate their opinions
and/or restrict their commentary to historical facts, we have separated their
commentary from the financial statements and investment portfolio and have sent
it to you separately. Both the commentary and the financial statements,
including the portfolio of investments, will be available on our website at
www.gabelli.com.
Enclosed are the audited financial statements and the investment portfolio
as of December 31, 2008.
COMPARATIVE RESULTS
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2008 (a)
Since
Inception
Quarter 1 Year (01/31/07)
------- ------ ----------
GABELLI GLOBAL DEAL FUND
NAV TOTAL RETURN (b) ................. (2.16)% (4.06)% (0.44)%
INVESTMENT TOTAL RETURN (c) .......... (3.40) (8.39) (11.92)
3 Month U.S. Treasury Bill Index ........ 0.22 2.06 3.47
S&P 500 Index ........................... (21.95) (36.99) (19.82)
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE.
WHEN SHARES ARE SOLD, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA
PRESENTED. VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST
RECENT MONTH END. PERFORMANCE RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED. INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT
OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND BEFORE INVESTING. THE
3 MONTH U.S. TREASURY BILL INDEX IS COMPRISED OF A SINGLE ISSUE PURCHASED
AT THE BEGINNING OF THE MONTH AND HELD FOR A FULL MONTH. AT THE END OF THE
MONTH, THAT ISSUE IS SOLD AND ROLLED INTO THE OUTSTANDING TREASURY BILL
THAT MATURES CLOSEST TO, BUT NOT BEYOND THREE MONTHS FROM THE RE-BALANCING
DATE. TO QUALIFY FOR SELECTION, AN ISSUE MUST HAVE SETTLED ON OR BEFORE THE
RE-BALANCING (MONTH END) DATE. THE S&P 500 INDEX IS AN UNMANAGED INDICATOR
OF STOCK MARKET PERFORMANCE. DIVIDENDS ARE CONSIDERED REINVESTED EXCEPT FOR
THE 3 MONTH U.S. TREASURY BILL INDEX. YOU CANNOT INVEST DIRECTLY IN AN
INDEX.
(b) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN THE NET ASSET
VALUE ("NAV") PER SHARE AND REINVESTMENT OF DISTRIBUTIONS AT NAV ON THE
EX-DIVIDEND DATE AND ARE NET OF EXPENSES. SINCE INCEPTION RETURN IS BASED
ON AN INITIAL NAV OF $19.06.
(c) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN CLOSING MARKET
VALUES ON THE NEW YORK STOCK EXCHANGE AND REINVESTMENT OF DISTRIBUTIONS.
SINCE INCEPTION RETURN IS BASED ON AN INITIAL OFFERING PRICE OF $20.00.
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
February 20, 2009
THE GABELLI GLOBAL DEAL FUND
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total
investments as of December 31, 2008:
U.S. Government Obligations ............... 55.6%
Consumer Products ......................... 9.0%
Energy and Utilities ...................... 8.5%
Health Care ............................... 6.7%
Specialty Chemicals ....................... 5.6%
Financial Services ........................ 4.7%
Media ..................................... 1.5%
Telecommunications ........................ 1.5%
Business Services ......................... 1.2%
Diversified Industrial .................... 1.2%
Computer Software and Services ............ 1.1%
Food and Beverage ......................... 0.9%
Electronics ............................... 0.6%
Environmental Services .................... 0.5%
Entertainment ............................. 0.5%
Hotels and Gaming ......................... 0.3%
Metals and Mining ......................... 0.2%
Computer Hardware ......................... 0.2%
Machinery ................................. 0.1%
Educational Services ...................... 0.1%
Cable and Satellite ....................... 0.0%
Automotive ................................ 0.0%
Retail .................................... 0.0%
Publishing ................................ 0.0%
Restaurants ............................... 0.0%
Agriculture ............................... 0.0%
Materials ................................. 0.0%
Broadcasting .............................. 0.0%
Wireless Communications ................... 0.0%
-----
100.0%
=====
THE GABELLI GLOBAL DEAL FUND (THE "FUND") FILES A COMPLETE SCHEDULE OF
PORTFOLIO HOLDINGS WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") FOR
THE FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH
WAS FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2008. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE SEC'S PUBLIC REFERENCE
ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC REFERENCE
ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12
months ended June 30th, no later than August 31st of each year. A description of
the Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities is available without charge, upon request, by
(i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One
Corporate Center, Rye, NY 10580-1422; and (iii) visiting the SEC's website at
www.sec.gov.
2
THE GABELLI GLOBAL DEAL FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2008
MARKET
SHARES COST VALUE
------------ ------------ ------------
COMMON STOCKS -- 44.2%
AGRICULTURE -- 0.0%
1,000 Provimi SA .................................... $ 17,102 $ 10,078
------------ ------------
AUTOMOTIVE -- 0.0%
54,000 Lear Corp.+ ................................... 175,643 76,140
------------ ------------
BROADCASTING -- 0.0%
3,000 Cumulus Media Inc., Cl. A+ .................... 14,990 7,470
------------ ------------
BUSINESS SERVICES -- 1.2%
8,000 Acxiom Corp. .................................. 97,703 64,880
60,000 Clear Channel Outdoor
Holdings Inc., Cl. A+ ...................... 401,390 369,000
120,000 Diebold Inc. .................................. 4,521,114 3,370,800
10,000 Distribucion y Servicio
D&S SA, ADR ................................ 239,814 241,900
------------ ------------
5,260,021 4,046,580
------------ ------------
CABLE AND SATELLITE -- 0.0%
35,001 Zon Multimedia Servicos de Telecomunicacoes e
Multimedia SGPS SA ......................... 344,060 180,503
------------ ------------
COMPUTER HARDWARE -- 0.2%
65,000 SanDisk Corp.+ ................................ 964,689 624,000
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 1.1%
500 Affiliated Computer
Services Inc., Cl. A+ ...................... 21,184 22,975
2,000 I2 Technologies Inc.+ ......................... 23,260 12,780
50,000 Mentor Graphics Corp.+ ........................ 589,442 258,500
36,000 NDS Group plc, ADR+ ........................... 2,190,034 2,064,240
120,000 Yahoo! Inc.+ .................................. 3,438,228 1,464,000
------------ ------------
6,262,148 3,822,495
------------ ------------
CONSUMER PRODUCTS -- 9.0%
45,000 Harman International Industries Inc. .......... 1,715,187 752,850
12,000 Heelys Inc. ................................... 62,402 27,240
440,000 UST Inc. ...................................... 29,821,257 30,527,200
------------ ------------
31,598,846 31,307,290
------------ ------------
DIVERSIFIED INDUSTRIAL -- 1.2%
510,000 Myers Industries Inc. ......................... 11,294,661 4,080,000
------------ ------------
EDUCATIONAL SERVICES -- 0.1%
15,000 Corinthian Colleges Inc.+ ..................... 115,081 245,550
------------ ------------
ELECTRONICS -- 0.6%
211,700 Alliance Semiconductor Corp. .................. 1,045,832 105,850
92,000 Bel Fuse Inc., Cl. A .......................... 3,114,576 1,659,680
30,000 International Rectifier Corp.+ ................ 494,422 405,000
1,000 Zygo Corp.+ ................................... 8,365 6,910
------------ ------------
4,663,195 2,177,440
------------ ------------
ENERGY AND UTILITIES -- 8.4%
1,000 British Energy Group plc ...................... 14,357 11,121
145,000 Constellation Energy Group Inc. ............... 3,595,128 3,638,050
260,000 Endesa SA ..................................... 12,776,941 10,336,391
179,760 Great Plains Energy Inc. ...................... 4,659,379 3,474,761
2,000 Imperial Energy Corp. plc+ .................... 31,336 35,858
90,000 NorthWestern Corp. ............................ 2,617,770 2,112,300
150,000 NRG Energy Inc.+ .............................. 3,563,910 3,499,500
1,000 Origin Energy Ltd. ............................ 15,738 11,239
MARKET
SHARES COST VALUE
------------ ------------ ------------
220,000 Puget Energy Inc. ............................. $ 6,116,557 $ 5,999,400
100,000 WesternZagros Resources Ltd.+ ................. 303,795 48,603
------------ ------------
33,694,911 29,167,223
------------ ------------
ENTERTAINMENT -- 0.5%
220,000 Take-Two Interactive Software Inc. ............ 5,163,378 1,663,200
------------ ------------
ENVIRONMENTAL SERVICES -- 0.5%
70,000 Republic Services Inc. ........................ 1,754,038 1,735,300
------------ ------------
FINANCIAL SERVICES -- 4.7%
270,000 Nationwide Financial
Services Inc., Cl. A ....................... 13,830,569 14,096,700
150,000 SLM Corp.+ .................................... 4,097,283 1,335,000
10,000 Wells Fargo & Co. ............................. 276,286 294,800
20,002 Willis Group Holdings Ltd. .................... 577,591 497,650
------------ ------------
18,781,729 16,224,150
------------ ------------
FOOD AND BEVERAGE -- 0.9%
15,000 Bull-Dog Sauce Co. Ltd. ....................... 43,145 36,404
79,600 China Huiyuan Juice Group Ltd. ................ 105,609 99,523
100,000 Corn Products International Inc. .............. 2,806,778 2,885,000
2,000 Reddy Ice Holdings Inc. ....................... 19,662 2,880
------------ ------------
2,975,194 3,023,807
------------ ------------
HEALTH CARE -- 6.7%
22,000 ArthroCare Corp.+ ............................. 400,453 104,940
3,000 Biogen Idec Inc.+ ............................. 159,613 142,890
100 CPEX Pharmaceuticals Inc.+ .................... 1,450 975
65,000 Datascope Corp. ............................... 3,347,255 3,395,600
2,000 Enzon Pharmaceuticals Inc.+ ................... 17,870 11,660
6,000 Fresenius Kabi Pharmaceuticals
Holding Inc., CVR+ ......................... 1 2,100
120,000 Genentech Inc.+ ............................... 11,010,683 9,949,200
13,281 Life Technologies Corp.+ ...................... 457,339 309,580
300,000 Mentor Corp. .................................. 9,192,973 9,279,000
------------ ------------
24,587,637 23,195,945
------------ ------------
HOTELS AND GAMING -- 0.3%
78,000 MGM Mirage+ ................................... 4,110,109 1,073,280
------------ ------------
MACHINERY -- 0.1%
57,000 TurboChef Technologies Inc.+ .................. 338,781 279,870
------------ ------------
MATERIALS -- 0.0%
12,500 Intertape Polymer Group Inc.+ ................. 58,500 9,125
------------ ------------
MEDIA -- 1.5%
75,000 APN News & Media Ltd. ......................... 352,064 129,679
315,000 Cablevision Systems Corp., Cl. A .............. 9,633,277 5,304,600
------------ ------------
9,985,341 5,434,279
------------ ------------
METALS AND MINING -- 0.2%
24,000 Alpha Natural Resources Inc.+ ................. 1,151,028 388,560
5,000 Forsys Metals Corp.+ .......................... 21,376 23,815
18,000 Lonmin plc .................................... 636,539 235,763
8,000 Uranium One Inc.+ ............................. 46,412 11,600
5,000 Xstrata plc ................................... 70,231 46,008
------------ ------------
1,925,586 705,746
------------ ------------
See accompanying notes to financial statements.
3
THE GABELLI GLOBAL DEAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2008
MARKET
SHARES COST VALUE
--------------- ------------ ------------
COMMON STOCKS (CONTINUED)
PUBLISHING -- 0.0%
136,000 SCMP Group Ltd. ............................... $ 48,079 $ 45,274
------------ ------------
RESTAURANTS -- 0.0%
1,000 Landry's Restaurants Inc. ..................... 19,730 11,600
------------ ------------
RETAIL -- 0.0%
4,000 Genesco Inc.+ ................................. 95,360 67,680
------------ ------------
SPECIALTY CHEMICALS -- 5.5%
70,012 Ashland Inc. .................................. 1,064,851 735,826
12,000 Ciba Holding AG+ .............................. 547,909 536,665
150,000 Ciba Holding AG ............................... 6,419,759 6,764,692
320 Mitsubishi Chemical Holdings Corp. ............ 2,566 1,387
178,000 Rohm and Haas Co. ............................. 13,074,483 10,998,620
------------ ------------
21,109,568 19,037,190
------------ ------------
TELECOMMUNICATIONS -- 1.5%
989,600 Asia Satellite Telecommunications
Holdings Ltd. .............................. 2,220,762 970,421
60,000 BCE Inc. ...................................... 1,279,049 1,229,400
300,000 Centennial Communications Corp.+ .............. 2,344,627 2,418,000
80,000 Portugal Telecom SGPS SA ...................... 865,316 675,007
------------ ------------
6,709,754 5,292,828
------------ ------------
WIRELESS COMMUNICATIONS -- 0.0%
3,000 Wayfinder System AB+ .......................... 4,226 4,477
------------ ------------
TOTAL COMMON STOCKS ........................... 192,072,357 153,548,520
------------ ------------
PRINCIPAL
AMOUNT
---------------
CONVERTIBLE CORPORATE BONDS -- 0.1%
SPECIALTY CHEMICALS -- 0.1%
$ 600,000 Ferro Corp., Cv.,
6.500%, 08/15/13 ........................... 308,446 293,250
------------ ------------
CORPORATE BONDS -- 0.1%
ENERGY AND UTILITIES -- 0.1%
500,000 Texas Competitive Electric
Holdings Co. LLC, (STEP),
10.500%, 11/01/15 (a) ...................... 310,524 357,500
------------ ------------
PRINCIPAL MARKET
AMOUNT COST VALUE
--------------- ------------ ------------
U.S. GOVERNMENT OBLIGATIONS -- 55.6%
U.S. TREASURY CASH MANAGEMENT BILLS -- 6.3%
$ 22,017,000 U.S. Treasury Cash Management Bills,
0.137% to 0.223%++,
04/29/09 to 06/24/09 ....................... $ 22,002,679 $ 22,001,125
------------ ------------
U.S. TREASURY BILLS -- 43.0%
149,411,000 U.S. Treasury Bills,
0.020% to 1.924%++,
01/02/09 to 06/25/09 ....................... 149,355,207 149,365,893
------------ ------------
U.S. TREASURY NOTES -- 6.3%
21,405,000 U.S. Treasury Note,
4.500%, 04/30/09 ........................... 21,635,143 21,714,388
------------ ------------
TOTAL U.S. GOVERNMENT OBLIGATIONS ............. 192,993,029 193,081,406
------------ ------------
TOTAL INVESTMENTS -- 100% ....................................... $385,684,356 347,280,676
============
FORWARD FOREIGN EXCHANGE CONTRACTS
(Unrealized appreciation) .................................... 83,236
------------
OTHER ASSETS AND LIABILITIES (NET) .............................. (3,707,381)
------------
NET ASSETS -- COMMON SHARES
(21,211,510 common shares outstanding) ....................... $343,656,531
============
NET ASSET VALUE PER COMMON SHARE
($343,656,531 / 21,211,510 shares outstanding) ............... $ 16.20
============
PRINCIPAL SETTLEMENT UNREALIZED
AMOUNT DATE APPRECIATION
--------------- ------------ ------------
FORWARD FOREIGN EXCHANGE CONTRACTS -- 0.0%
E6,271,159 Deliver Euros in exchange FOR USD 8,717,207 ... 01/30/09 $ 83,236
============
----------
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At December
31, 2008, the market value of the Rule 144A security amounted to $357,500
or 0.10% of total investments.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depositary Receipt
CVR Contingent Value Right
STEP Step coupon bond. The rate disclosed is that in effect at December 31,
2008.
% OF
MARKET MARKET
GEOGRAPHIC DIVERSIFICATION VALUE VALUE
-------------------------- ------ ------------
North America ............ 93.4% $324,344,296
Europe ................... 6.2 21,400,552
Latin America ............ 0.3 1,212,322
Asia/Pacific ............. 0.1 285,715
Japan .................... 0.0 37,791
----- ------------
Total Investments ........ 100.0% $347,280,676
===== ============
See accompanying notes to financial statements.
4
THE GABELLI GLOBAL DEAL FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2008
ASSETS:
Investments, at value (cost $385,684,356) ................. $347,280,676
Cash ...................................................... 517,724
Deposit at broker ......................................... 13,521
Receivable for investments sold ........................... 12,826,094
Unrealized appreciation on forward foreign
exchange contracts ..................................... 83,236
Unrealized appreciation on swap contracts ................. 228
Dividends and interest receivable ......................... 335,874
Deferred offering expense ................................. 7,860
Prepaid expense ........................................... 14,809
------------
TOTAL ASSETS .............................................. 361,080,022
------------
LIABILITIES:
Foreign currency, at value (cost $480,534) ................ 470,969
Payable for investments purchased ......................... 16,630,016
Unrealized depreciation on swap contracts ................. 12,047
Payable for investment advisory fees ...................... 145,244
Payable for payroll expenses .............................. 27,145
Payable for accounting fees ............................... 7,500
Other accrued expenses .................................... 130,570
------------
TOTAL LIABILITIES ......................................... 17,423,491
------------
NET ASSETS applicable to 21,211,510
shares outstanding ..................................... $343,656,531
============
NET ASSETS CONSIST OF:
Paid-in capital, at $0.001 par value ...................... $383,708,851
Accumulated distributions in excess of net
investment income ...................................... (71,417)
Accumulated distributions in excess of net realized gain
on investments, swap contracts, securities sold short,
and foreign currency transactions ...................... (1,656,803)
Net unrealized depreciation on investments ................ (38,403,680)
Net unrealized depreciation on swap contracts ............. (11,819)
Net unrealized appreciation on foreign
currency translations .................................. 91,399
------------
NET ASSETS ................................................ $343,656,531
============
NET ASSET VALUE PER COMMON SHARE:
($343,656,531 / 21,211,510 shares outstanding;
unlimited number of shares authorized) .................... $ 16.20
============
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2008
INVESTMENT INCOME:
Dividends (net of foreign taxes of $106,548) .............. $ 3,220,766
Interest .................................................. 3,051,791
------------
TOTAL INVESTMENT INCOME ................................... 6,272,557
------------
EXPENSES:
Investment advisory fees .................................. 1,865,897
Shareholder communications expenses ....................... 150,021
Payroll expenses .......................................... 125,918
Trustees' fees ............................................ 76,611
Custodian fees ............................................ 61,274
Accounting fees ........................................... 45,000
Interest expense .......................................... 44,836
Legal and audit fees ...................................... 33,000
Shareholder services fees ................................. 11,366
Miscellaneous expenses .................................... 72,518
------------
TOTAL EXPENSES ............................................ 2,486,441
Less: Custodian fee credits ............................... (29,400)
------------
NET EXPENSES .............................................. 2,457,041
------------
NET INVESTMENT INCOME ..................................... 3,815,516
------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS,
SWAP CONTRACTS, SECURITIES SOLD SHORT, AND FOREIGN CURRENCY:
Net realized gain on investments .......................... 5,528,077
Net realized loss on swap contracts ....................... (1,626,236)
Net realized loss on securities sold short ................ (6,183)
Net realized gain on foreign currency transactions ........ 669,301
------------
Net realized gain on investments, swap contracts,
securities sold short, and foreign currency
transactions ........................................... 4,564,959
------------
Net change in unrealized appreciation/(depreciation):
on investments ......................................... (23,627,226)
on swap contracts ...................................... 292,375
on securities sold short ............................... 5,363
on foreign currency translations ....................... (114,129)
------------
Net change in unrealized appreciation/(depreciation) on
investments, swap contracts, securities sold short,
and foreign currency translations ...................... (23,443,617)
------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS,
SWAP CONTRACTS, SECURITIES SOLD SHORT, AND FOREIGN
CURRENCY ............................................... (18,878,658)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ...... $(15,063,142)
============
See accompanying notes to financial statements.
5
THE GABELLI GLOBAL DEAL FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED PERIOD ENDED
DECEMBER 31, 2008 DECEMBER 31, 2007 (a)
----------------- ---------------------
OPERATIONS:
Net investment income .................................................. $ 3,815,516 $ 7,799,851
Net realized gain on investments, swap contracts, securities sold short,
and foreign currency transactions ................................... 4,564,959 20,614,306
Net change in unrealized appreciation/(depreciation) on investments,
swap contracts, securities sold short, and foreign currency
translations ........................................................ (23,443,617) (14,880,483)
------------ ------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........ (15,063,142) 13,533,674
------------ ------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income .................................................. (3,731,489) (6,348,376)
Net realized gain ...................................................... (9,244,580) (19,198,407)
Return of capital ...................................................... (21,029,267) --
------------ ------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS ............................. (34,005,336) (25,546,783)
------------ ------------
FUND SHARE TRANSACTIONS:
Net increase in net assets from common shares issued in offering
and reinvestment of distributions ................................... -- 406,953,927
Net decrease from repurchase of common shares .......................... (1,292,018) (173,799)
Offering costs for common shares charged to paid-in-capital ............ -- (850,000)
------------ ------------
NET INCREASE/(DECREASE) IN NET ASSETS FROM FUND SHARE TRANSACTIONS ..... (1,292,018) 405,930,128
------------ ------------
NET INCREASE/(DECREASE) IN NET ASSETS .................................. (50,360,496) 393,917,019
NET ASSETS:
Beginning of period .................................................... 394,017,027 100,008
------------ ------------
End of period (including undistributed net investment income of $0 and
$691,417, respectively) ............................................. $343,656,531 $394,017,027
============ ============
----------
(a) The Gabelli Global Deal Fund commenced investment operations on January 31,
2007.
See accompanying notes to financial statements.
6
THE GABELLI GLOBAL DEAL FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT
THE PERIOD:
YEAR ENDED PERIOD ENDED
DECEMBER 31, 2008 DECEMBER 31, 2007(d)
----------------- -------------------
OPERATING PERFORMANCE:
Net asset value, beginning of period................................ $ 18.50 $ 19.06(e)
-------- --------
Net investment income (a)........................................... 0.18 0.37
Net realized and unrealized gain/(loss) on investments,
swap contracts, securities sold short, and foreign
currency transactions............................................ (0.89) 0.27
-------- --------
Total from investment operations.................................... (0.71) 0.64
-------- --------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income............................................... (0.18) (0.30)
Net realized gain................................................... (0.43) (0.90)
Return of capital................................................... (0.99) --
-------- --------
Total distributions to common shareholders.......................... (1.60) (1.20)
======== ========
FUND SHARE TRANSACTIONS:
Increase in net asset value from common share
transactions..................................................... 0.01 0.00(f)
-------- --------
NET ASSET VALUE, END OF PERIOD...................................... $ 16.20 $ 18.50
======== ========
Net asset value total return........................................ (4.06)% 3.35%+
======== ========
Market value, end of period......................................... $ 13.14 $ 15.96
======== ========
Total investment return............................................. (8.39)% (14.55)%++
======== ========
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA:
Net assets end of period (in 000's).................................... $343,657 $394,017
Ratio of net investment income to average net assets................ 1.02% 2.12%(g)
Ratio of operating expenses to average net assets (b)(c)............ 0.67% 0.64%(g)
Portfolio turnover rate............................................. 334% 177%+++
----------
+ Based on net asset value per share at commencement of operations of $19.06
per share, adjusted for reinvestment of distributions at the asset value
per share on the ex-dividend dates. Total return for a period of less than
one year is not annualized.
++ Based on market value per share at initial public offering of $20.00 per
share, adjusted for reinvestments of distributions at prices obtained under
the Fund's dividend reinvestment plan. Total return for a period of less
than one year is not annualized.
+++ Effective in 2008, a change in accounting policy was adopted with regard to
the calculation of the portfolio turnover rate to include cash proceeds due
to mergers. Had this policy been adopted retroactively, the portfolio
turnover rate for the period ended December 31, 2007 would have been 411%.
(a) Per share amounts have been calculated using the average shares outstanding
method.
(b) The ratio does not include a reduction of expenses for custodian fee
credits on cash balances maintained with the custodian. Including such
custodian fee credits, the expense ratios for the year ended December 31,
2008 and the period ended December 31, 2007 would have been 0.66% and
0.63%, respectively.
(c) The Fund incurred interest expense during the year ended December 31, 2008
and the period ended December 31, 2007. If interest expense had not been
incurred, the ratios of operating expenses to average net assets would have
been 0.65% and 0.62%, respectively.
(d) The Gabelli Global Deal Fund commenced investment operations on January 31,
2007.
(e) The beginning of period NAV reflects a $0.04 reduction for costs associated
with the initial public offering.
(f) Amount represents less than $0.005 per share.
(g) Annualized.
See accompanying notes to financial statements.
7
THE GABELLI GLOBAL DEAL FUND
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. The Gabelli Global Deal Fund (the "Fund") is a non-diversified
closed-end management investment company organized as a Delaware statutory trust
on October 17, 2006 and registered under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Fund sold 5,236 shares to Gabelli Funds, LLC (the
"Adviser") for $100,008 on December 22, 2006. Investment operations commenced on
January 31, 2007 upon the settlement of the sale of 18,750,000 shares of
beneficial interest in the amount of $357,375,000 (net of underwriting fees and
expenses of $17,625,000). In addition, on March 9, 2007, the Fund issued
2,500,000 shares of beneficial interest in the amount of $47,650,000 (net of
underwriting fees and expenses of $2,350,000) in conjunction with the exercise
of the underwriters' overallotment option. The Adviser agreed to pay all the
Fund's organizational costs and the amount by which the Fund's offering costs
(other than the underwriting fees) exceed $0.04 per common share.
The Fund's primary investment objective is to achieve absolute returns in
various market conditions without excessive risk of capital. The Fund will seek
to achieve its objective by investing primarily in merger arbitrage transactions
and, to a lesser extent, in corporate reorganizations involving stubs,
spin-offs, and liquidations. Under normal market conditions, the Fund will
invest at least 80% of its assets in securities or hedging arrangements relating
to companies involved in corporate transactions or reorganizations, giving rise
to the possibility of realizing gains upon or within relatively short periods of
time after the completion of such transactions or reorganizations.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with United States ("U.S.") generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Trustees (the "Board") so determines, by such other method as the Board
shall determine in good faith to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by the Adviser.
Portfolio securities primarily traded on a foreign market are generally
valued at the preceding closing values of such securities on the relevant
market, but may be fair valued pursuant to procedures established by the Board
if market conditions change significantly after the close of the foreign market
but prior to the close of business on the day the securities are being valued.
Debt instruments with remaining maturities of 60 days or less that are not
credit impaired are valued at amortized cost, unless the Board determines such
amount does not reflect the securities' fair value, in which case these
securities will be fair valued as determined by the Board. Debt instruments
having a maturity greater than 60 days for which market quotations are readily
available are valued at the average of the latest bid and asked prices. If there
were no asked prices quoted on such day, the security is valued using the
closing bid price. Futures contracts are valued at the closing settlement price
of the exchange or board of trade on which the applicable contract is traded.
Securities and assets for which market quotations are not readily available
are fair valued as determined by the Board. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available
financial and non-financial information about the company; comparisons with the
valuation and changes in valuation of similar securities, including a comparison
of foreign securities with the equivalent U.S. dollar value American Depositary
Receipt ("ADR") securities at the close of the U.S. exchange; and evaluation of
any other information that could be indicative of the value of the security.
Statement of Financial Accounting Standard No. 157, "Fair Value
Measurements" ("SFAS 157") clarifies the definition of fair value for financial
reporting, establishes a framework for measuring fair value, and requires
additional disclosures about the use of fair value measurements. The three
levels of the fair value hierarchy under SFAS 157 are described below:
- Level 1 - quoted prices in active markets for identical securities;
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, Interest rates, prepayment speeds, credit
risk, etc.); and
- Level 3 - significant unobservable inputs (including the Fund's
determinations as to the fair value of investments).
8
THE GABELLI GLOBAL DEAL FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The inputs or methodology used for valuing securities are not necessarily
an indication of the risk associated with investing in those securities. The
summary of the Fund's investments and other financial instruments, by inputs
used to value the Fund's investments as of December 31, 2008 is, as follows:
OTHER FINANCIAL OTHER FINANCIAL
INVESTMENTS IN INSTRUMENTS INSTRUMENTS
SECURITIES (UNREALIZED (UNREALIZED
(MARKET VALUE) APPRECIATION)* DEPRECIATION)*
VALUATION INPUTS ASSETS ASSETS LIABILITIES
---------------- -------------- --------------- ---------------
Level 1 - Quoted Prices $153,548,519 -- --
Level 2 - Other Significant Observable
Inputs 193,732,157 $83,464 $(12,047)
------------ ------- --------
Total $347,280,676 $83,464 $(12,047)
============ ======= ========
There were no Level 3 investments held at December 31, 2007 or 2008.
---------
* Other financial instruments are derivative instruments not reflected in the
Schedule of Investments, such as futures, forwards, and swaps which are
valued at the unrealized appreciation/depreciation on the investment.
In March 2008, The Financial Accounting Standards Board (The "FASB") issued
Statement of Financial Accounting Standard No. 161, "Disclosures about
Derivative Instruments and Hedging Activities" ("SFAS 161") that is effective
for fiscal years beginning after November 15, 2008. SFAS 161 is intended to
improve financial reporting for derivative instruments by requiring enhanced
disclosure that enables investors to understand how and why an entity uses
derivatives, how derivatives are accounted for, and how derivative instruments
affect an entity's results of operations and financial position. Management is
currently evaluating the implications of SFAS 161 on the Fund's financial
statement disclosures.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System, or with other brokers or
dealers that meet credit guidelines established by the Adviser and reviewed by
the Board. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
It is the policy of the Fund to always receive and maintain securities as
collateral whose market value, including accrued interest, are at least equal to
102% of the dollar amount invested by the Fund in each agreement. The Fund will
make payment for such securities only upon physical delivery or upon evidence of
book entry transfer of the collateral to the account of the custodian. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to maintain the adequacy of
the collateral. If the seller defaults and the value of the collateral declines
or if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or limited.
At December 31, 2008, there were no open repurchase agreements.
SWAP AGREEMENTS. The Fund may enter into equity and contract for difference
swap transactions. The use of swaps and caps is a highly specialized activity
that involves investment techniques and risks different from those associated
with ordinary portfolio transactions. In a swap, a set of future cash flows are
exchanged between two counterparties. One of these cash flow streams will
typically be based on a reference interest rate combined with the performance of
a notional value of shares of a stock. The other will be based on the
performance of the shares of a stock. There is no assurance that the swap
contract counterparties will be able to meet their obligations pursuant to a
swap contract or that, in the event of default, the Fund will succeed in
pursuing contractual remedies. The Fund thus assumes the risk that it may be
delayed in or prevented from obtaining payments owed to it pursuant to a swap
contract. The creditworthiness of the swap contract counterparties is closely
monitored in order to minimize this risk. Depending on the general state of
short-term interest rates and the returns on the Fund's portfolio securities at
that point in time, such a default could negatively affect the Fund's ability to
make dividend payments. In addition, at the time a swap transaction reaches its
scheduled termination date, there is a risk that the Fund will not be able to
obtain a replacement transaction or that the terms of the replacement will not
be as favorable as on the expiring transaction. If this occurs, it could have a
negative impact on the Fund's ability to make dividend payments.
The use of derivative instruments involves, to varying degrees, elements of
market and counterparty risk in excess of the amount recognized below.
Unrealized gains related to swaps are reported as an asset and unrealized
losses are reported as a liability in the Statement of Assets and Liabilities.
The change in value of swaps, including the accrual of periodic amounts of
interest to be paid or received on swaps, is reported as unrealized gains or
losses in the Statement of Operations. A realized gain or loss is recorded upon
payment or receipt of a periodic payment or termination of swap agreements.
9
THE GABELLI GLOBAL DEAL FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Effective March 16, 2008, Bear, Stearns International Limited entered into
a Guaranty Agreement with JPMorgan Chase & Co., whereby JPMorgan Chase & Co.
unconditionally guarantees the due and punctual payment of certain liabilities
of Bear, Stearns International Limited, including the current liabilities of
Bear, Stearns International Limited to the Fund. As of December 31, 2008, the
Fund held contract for difference swaps with Bear, Stearns International Limited
which are covered by the JPMorgan Chase & Co. Guaranty Agreement as of the date
of the report. Details of the swaps at December 31, 2008 are as follows:
NET UNREALIZED
NOTIONAL EQUITY SECURITY INTEREST RATE/ TERMINATION APPRECIATION
AMOUNT RECEIVED EQUITY SECURITY PAID DATE (DEPRECIATION)
-------- ---------------------------- -------------------------------- ----------- --------------
Market Value Overnight LIBOR plus 40 bps plus
Appreciation on: Market Value Depreciation on:
$ 24,269 (100,000 Shares) Gulf Keystone Petroleum Ltd. Gulf Keystone Petroleum Ltd. 03/17/09 $ (193)
756,983 (360,000 Shares) Chloride Group plc Chloride Group plc 04/15/09 (11,854)
4,494 (1,000 Shares) J Sainsbury plc J Sainsbury plc 09/15/09 228
--------
$(11,819)
========
FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose
of hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin." Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuations in the
value of the contract, which are included in unrealized
appreciation/depreciation on investments and futures contracts. The Fund
recognizes a realized gain or loss when the contract is closed.
There are several risks in connection with the use of futures contracts as
a hedging instrument. The change in value of futures contracts primarily
corresponds with the value of their underlying instruments, which may not
correlate with the change in value of the hedged investments. In addition, there
is the risk that the Fund may not be able to enter into a closing transaction
because of an illiquid secondary market. At December 31, 2008, there were no
open futures contracts.
SECURITIES SOLD SHORT. The Fund may enter into short sale transactions.
Short selling involves selling securities that may or may not be owned and, at
times, borrowing the same securities for delivery to the purchaser, with an
obligation to replace such borrowed securities at a later date. The proceeds
received from short sales are recorded as liabilities and the Fund records an
unrealized gain or loss to the extent of the difference between the proceeds
received and the value of an open short position on the day of determination.
The Fund records a realized gain or loss when the short position is closed out.
By entering into a short sale, the Fund bears the market risk of an unfavorable
change in the price of the security sold short. Dividends on short sales are
recorded as an expense by the Fund on the ex-dividend date and interest expense
is recorded on the accrual basis. At December 31, 2008, there were no securities
sold short.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency translations. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate
fluctuations in the underlying prices of the Fund's portfolio securities, but it
does establish a rate of exchange that can be achieved in the future. Although
forward foreign exchange contracts limit the risk of loss due to a decline in
the value of the hedged currency, they also limit any potential gain that might
result should the value of the currency increase. In addition, the Fund could be
exposed to risks if the counterparties to the contracts are unable to meet the
terms of their contracts. Forward foreign exchange contracts at December 31,
2008 are reflected in the Schedule of Investments.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are
maintained in U.S. dollars. Foreign currencies, investments, and other assets
and liabilities are translated into U.S. dollars at the current exchange rates.
Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign
exchange rates and/or changes in market prices of securities have been included
in unrealized appreciation/depreciation on investments and foreign currency
translations. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the purchase trade date and subsequent sale trade date is
included in realized gain/loss on investments.
10
THE GABELLI GLOBAL DEAL FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments, or currency repatriation, a portion of which may be recoverable.
The Fund will accrue such taxes and recoveries as applicable, based upon its
current interpretation of tax rules and regulations that exist in the markets in
which it invests.
CONCENTRATION RISKS. The Fund may invest a high percentage of its assets in
specific sectors of the market in order to achieve a potentially greater
investment return. As a result, the Fund may be more susceptible to economic,
political, and regulatory developments in a particular sector of the market,
positive or negative, and may experience increased volatility to the Fund's NAV
and a magnified effect in its total return.
MERGER ARBITRAGE RISK. The principal risk associated with the Fund's
investment strategy is that certain of the proposed reorganizations in which the
Fund invests may involve a longer time frame than originally contemplated or be
renegotiated or terminated, in which case losses may be realized. The Fund
invests all or a portion of its assets to seek short-term capital appreciation.
This can be expected to increase the portfolio turnover rate and cause increased
brokerage commission costs.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
CUSTODIAN FEE CREDITS AND INTEREST EXPENSE. When cash balances are
maintained in the custody account, the Fund receives credits which are used to
offset custodian fees. The gross expenses paid under the custody arrangement are
included in custodian fees in the Statement of Operations with the corresponding
expense offset, if any, shown as "custodian fee credits." When cash balances are
overdrawn, the Fund is charged an overdraft fee equal to 110% of the 90 day
Treasury Bill rate on outstanding balances. This amount, if any, would be
included in "interest expense" in the Statement of Operations.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders are recorded
on the ex-dividend date. Distributions to shareholders are based on income and
capital gains as determined in accordance with federal income tax regulations,
which may differ from income and capital gains as determined under U.S.
generally accepted accounting principles. These differences are primarily due to
differing treatments of income and gains on various investment securities and
foreign currency transactions held by the Fund, timing differences, and
differing characterizations of distributions made by the Fund. Distributions
from net investment income include net realized gains on foreign currency
transactions. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, adjustments are made to
the appropriate capital accounts in the period when the differences arise. These
reclassifications have no impact on the NAV of the Fund. For the year ended
December 31, 2008, reclassifications were made to decrease accumulated
distributions in excess of net investment income by $846,861 and decrease
accumulated distributions in excess of net realized gain on investments, swap
contracts, securities sold short, and foreign currency transactions by $846,861.
The tax character of distributions paid during the years ended December 31,
2008 and December 31, 2007 was as follows:
YEAR ENDED DECEMBER 31,
-------------------------
2008 2007
----------- -----------
DISTRIBUTIONS PAID FROM
Ordinary income
(inclusive of short-term capital gains) .. $12,976,069 $25,546,783
Return of capital ........................... 21,029,267 --
----------- -----------
Total distributions paid .................... $34,005,336 $25,546,783
=========== ===========
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for federal income taxes is required.
Under the current tax law, capital losses related to securities and foreign
currency realized after October 31 and prior to the Fund's fiscal year end may
be treated as occurring on the first day of the following year. For the year
ended December 31, 2008, the Fund deferred capital losses of $31,504.
11
THE GABELLI GLOBAL DEAL FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At December 31, 2008, the difference between book basis and tax basis
unrealized depreciation was primarily due to deferral of losses from wash sales
for tax purposes and swap accrual adjustments.
As of December 31, 2008, the components of accumulated earnings/losses on a
tax basis were as follows:
Net unrealized depreciation on investments .............. $(40,028,979)
Net unrealized depreciation on securities sold short, and
foreign currency translations ........................ (3,656)
Post-October capital loss deferral ...................... (31,504)
Other temporary differences* ............................ 11,819
------------
Total ................................................ $(40,052,320)
============
----------
* Other temporary differences are primarily due to mark-to-market adjustments
on investments in swap contracts.
The following summarizes the tax cost of investments, swap contracts, and
the related unrealized appreciation/depreciation at December 31, 2008:
UNREALIZED UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION DEPRECIATION
------------ ------------ ------------ --------------
Investments ...... $387,321,474 $1,953,798 $(41,994,596) $(40,040,798)
FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes"
("FIN 48") provides guidance for how uncertain tax positions should be
recognized, measured, presented, and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in the
course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the "more-likely-than-not" threshold
are recorded as a tax benefit or expense in the current year. In accordance with
FIN 48, management has analyzed the Fund's tax positions taken on the federal
and state income tax returns for all open tax years (the current and prior three
tax years) and has concluded that no provision for income tax is required in the
Fund's financial statements. Management's determination regarding FIN 48 may be
subject to review and adjustment at a later date based on factors including, but
not limited to, an on-going analysis of tax laws, regulations, and
interpretations thereof.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. The Fund has entered into an
investment advisory agreement (the "Advisory Agreement") with the Adviser which
provides that the Fund will pay the Adviser a base fee, computed weekly and paid
monthly, equal on an annual basis to 0.50% of the value of the Fund's average
weekly managed assets. Managed assets consist of all of the assets of the Fund
without deduction for borrowings, repurchase transactions, and other leveraging
techniques, the liquidation value of any outstanding preferred shares, or other
liabilities except for certain ordinary course expenses. In addition, the Fund
may pay the Adviser an annual performance fee at a calendar year end if the
Fund's total return on its managed assets during the year exceeds the total
return of the 3 Month U.S. Treasury Bill Index (the "T-Bill Index") during the
same period. For every four basis points that the Fund's total return exceeds
the T-Bill Index, the Fund will accrue weekly and pay annually one basis point
performance fee up to a maximum performance fee of 150 basis points. Under the
performance fee arrangement, the annual rate of the total fees paid to the
Adviser can range from 0.50% to 2.00% of the average weekly managed assets. For
the year ended December 31, 2008, the Fund did not accrue a performance fee to
the Adviser. In accordance with the Advisory Agreement, the Adviser provides a
continuous investment program for the Fund's portfolio and oversees the
administration of all aspects of the Fund's business and affairs.
During the year ended December 31, 2008, the Fund paid brokerage
commissions on security trades of $331,046 to Gabelli & Company, Inc. ("Gabelli
& Company"), an affiliate of the Adviser.
The cost of calculating the Fund's NAV per share is a Fund expense pursuant
to the Advisory Agreement between the Fund and the Adviser. During the year
ended December 31, 2008, the Fund paid or accrued $45,000 to the Adviser in
connection with the cost of computing the Fund's NAV.
As per the approval of the Board, the Fund compensates officers who are
employed by the Fund and are not employed by the Adviser (although the officers
may receive incentive based variable compensation from affiliates of the
Adviser) and pays its allocated portion of the cost of the Fund's Chief
Compliance Officer. For the year ended December 31, 2008, the Fund paid or
accrued $125,918, which is included in payroll expenses in the Statement of
Operations.
The Fund pays each Trustee who is not considered to be an affiliated person
an annual retainer of $6,000 plus $1,000 for each Board meeting attended in
person ($500 if attended telephonically) and they are reimbursed for any out of
pocket expenses incurred in attending meetings. All Board committee members
receive $500 per meeting attended. In addition, the Audit Committee Chairman
receives an annual fee of $3,000, the Nominating Committee Chairman receives an
annual fee of $2,000, and the Lead Trustee receives an annual fee of $1,000.
Trustees who are directors or employees of the Adviser or an affiliated company
receive no compensation or expense reimbursement from the Fund.
4. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the year ended December 31, 2008, other than short-term securities and U.S.
Government obligations, aggregated $656,699,353 and $738,242,853, respectively.
12
THE GABELLI GLOBAL DEAL FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Purchases and proceeds from the sales of U.S. Government obligations for
the year ended December 31, 2008, other than short-term obligations, aggregated
$43,543,854 and $45,125,299, respectively.
5. CAPITAL. The Fund is authorized to issue an unlimited number of common shares
of beneficial interest (par value $0.001). The Board has authorized the
repurchase of its shares on the open market when the shares are trading at a
discount of 7.5% or more (or such other percentage as the Board may determine
from time to time) from the NAV of the shares. During the year ended December
31, 2008, the Fund repurchased 89,100 shares of its common stock in the open
market at a cost of $1,292,018 and an average discount of approximately 16.2%
from its NAV. All shares of common stock repurchased have been retired.
Transactions in shares of beneficial interest were as follows:
YEAR ENDED PERIOD ENDED
DECEMBER 31, 2008 DECEMBER 31, 2007 (a)
----------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ------------ ----------- ------------
Initial seed capital ................. -- 5,236 $ 100,008
Shares issued in offering
(net of underwriting fees and
offering costs) ................... -- -- 21,250,000 405,025,000
Shares issued upon reinvestment of
distributions ...................... -- -- 55,874 1,078,927
Shares repurchased ................... (89,100) $(1,292,018) (10,500) (173,799)
------- ----------- ---------- ------------
Net increase/(decrease) .............. (89,100) $(1,292,018) 21,300,610 $406,030,136
======= =========== ========== ============
----------
(a) The Gabelli Global Deal Fund commenced investment operations on January 31,
2007.
At the Fund's February 19, 2008 Board meeting, the Board approved the
filing of a shelf registration with the SEC which will give the Fund the ability
to offer preferred shares, notes, or subscription rights to purchase preferred
shares. The shelf registration was declared effective by the SEC on August 6,
2008. At the Fund's August 20, 2008 Board meeting, the Board approved a Rights
Offering for Series A Cumulative Callable Preferred Shares ("Preferred Shares").
One transferable Right was issued for each common share of the Fund held on
December 19, 2008, the Record Date. These Rights allowed common shareholders to
subscribe to Preferred Shares of the Fund.
6. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
7. OTHER MATTERS. On April 24, 2008, the Adviser entered into an administrative
settlement with the SEC to resolve the SEC's inquiry regarding prior frequent
trading activity in shares of the GAMCO Global Growth Fund (the "Global Growth
Fund") by one investor who was banned from the Global Growth Fund in August
2002. In the settlement, the SEC found that the Adviser had violated Section
206(2) of the Investment Advisers Act, Section 17(d) of the 1940 Act, and Rule
17d-1 thereunder and had aided and abetted and caused violations of Section
12(d)(1)(B)(i) of the 1940 Act. Under the terms of the settlement, the Adviser,
while neither admitting nor denying the SEC's findings and allegations, agreed,
among other things, to pay the previously reserved total of $16 million
(including a $5 million penalty), of which at least $11 million will be
distributed to shareholders of the Global Growth Fund in accordance with a plan
to be developed by an independent distribution consultant and approved by the
independent directors of the Global Growth Fund and the staff of the SEC and to
cease and desist from future violations of the above referenced federal
securities laws. The settlement is not expected to impact the Fund and will not
have a material adverse impact on the Adviser or its ability to fulfill its
obligations under the Advisory Agreement. On the same day, the SEC filed a civil
action against the Executive Vice President and Chief Operating Officer of the
Adviser, alleging violations of certain federal securities laws arising from the
same matter. The officer is also an officer of the Global Growth Fund and other
funds in the Gabelli/GAMCO fund complex including the Fund. The officer denies
the allegations and is continuing in his positions with the Adviser and the
funds. The Adviser currently expects that any resolution of the action against
the officer will not have a material adverse impact on the Adviser or its
ability to fulfill its obligations under the Advisory Agreement.
In a separate matter, on January 12, 2009, the SEC issued an administrative
action approving a final settlement of a previously disclosed matter with the
Adviser involving compliance with Section 19(a) of the Investment Company Act of
1940 and Rule 19a-1 thereunder by two closed-end funds. These provisions require
registered investment companies when making a distribution in the nature of a
dividend from sources other than net investment income to contemporaneously
provide written statements to shareholders, which adequately disclose the source
or sources of such distribution. While the two funds sent annual statements and
provided other materials containing this information, the shareholders did not
receive the notices required by Rule 19a-1 with any of the distributions that
were made for 2002 and 2003. The Adviser believes that the funds have been in
compliance with Section 19(a) and Rule 19a-1 since the beginning of 2004. As
part of the settlement, in which the Adviser neither admits nor denies the
findings by the SEC, the Adviser agreed to pay a civil monetary penalty of
$450,000 and to cease and desist from causing violations of Section 19(a) and
Rule 19a-1. In connection with the settlement, the SEC noted the remedial
actions previously undertaken by the Adviser. The staff's notice to the Adviser
did not relate to the Fund.
8. SUBSEQUENT EVENT. On February 6, 2009, the Fund received net proceeds of
$95,532,040 (after offering expenses of $480,060) from a rights offering of
1,920,242 shares of 8.50% Series A Cumulative Callable Preferred Shares.
13
THE GABELLI GLOBAL DEAL FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of
The Gabelli Global Deal Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of The Gabelli Global Deal Fund (the "Fund"), as of
December 31, 2008, and the related statement of operations for the year then
ended and the statement of changes in net assets and financial highlights for
each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2008, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Gabelli Global Deal Fund at December 31, 2008, the results of its operations for
the year then ended and the changes in its net assets and the financial
highlights for each of the periods indicated therein, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
February 24, 2009
14
THE GABELLI GLOBAL DEAL FUND
ADDITIONAL FUND INFORMATION (UNAUDITED)
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees. Information pertaining to the Trustees and officers of
the Fund is set forth below. The Fund's Statement of Additional Information
includes additional information about the Fund's Trustees and is available
without charge, upon request, by calling 800-GABELLI (800-422-3554) or by
writing to The Gabelli Global Deal Fund at One Corporate Center, Rye, NY
10580-1422.
TERM OF NUMBER OF
OFFICE AND FUNDS IN FUND
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS(1) TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED(2) TRUSTEE DURING PAST FIVE YEARS HELD BY TRUSTEE(4)
--------------------------- ------------- ------------- ------------------------------------------- ------------------------
INTERESTED TRUSTEES(3):
MARIO J. GABELLI Since 2006** 26 Chairman and Chief Executive Officer of Director of Morgan Group
Trustee and GAMCO Investors, Inc. and Chief Investment Holdings, Inc. (holding
Chief Investment Officer Officer - Value Portfolios of Gabelli company); Chairman of
Age: 66 Funds, LLC and GAMCO Asset Management Inc.; the Board of LICT Corp.
Director/Trustee or Chief Investment (multimedia and
Officer of other registered investment communication services
companies in the Gabelli/GAMCO company)
Funds complex; Chairman and Chief Executive
Officer of GGCP, Inc.
EDWARD T. TOKAR Since 2006*** 2 Senior Managing Director of Beacon Trust --
Trustee Company since 2004; Chief Executive
Age: 61 Officer of Allied Capital Management LLC
(1997-2004); Vice President - Investments
of Honeywell International Inc.
(1977-2004); Director of Teton Advisors,
Inc. (financial services) (2008-present)
NON-INTERESTED TRUSTEES(5):
ANTHONY J. COLAVITA Since 2006*** 36 Partner in the law firm of Anthony J. --
Trustee Colavita, P.C.
Age: 73
James P. Conn Since 2006* 18 Former Managing Director and Chief --
Trustee Investment Officer of Financial Security
Age: 70 Assurance Holdings Ltd. (insurance holding
company) (1992-1998)
CLARENCE A. DAVIS Since 2006* 2 Former Chief Executive Officer of Nestor, Director of Oneida Ltd.
Trustee Inc. (2007-2009); Former Chief Operating (kitchenware)
Age: 67 Officer (2000-2005) and Chief Financial
Officer (1999-2000) of the American
Institute of Certified Public Accountants
MARIO D'URSO Since 2006** 5 Chairman of Mittel Capital Markets S.p.A. --
Trustee since 2001
Age: 68
ARTHUR V. FERRARA Since 2006* 8 Former Chairman of the Board and Chief --
Trustee Executive Officer of The Guardian Life
Age: 78 Insurance Company of America (1992-1995)
MICHAEL J. MELARKEY Since 2006** 5 Partner in the law firm of Avansino, Director of Southwest
Trustee Melarkey, Knobel & Mulligan Gas Corporation (natural
Age: 59 gas utility)
SALVATORE J. ZIZZA Since 2006*** 28 Chairman of Zizza & Co., Ltd. (consulting) Director of Hollis-Eden
Trustee Pharmaceuticals
Age: 63 (biotechnology);
Director of Earl Scheib,
Inc. (automotive
services)
15
THE GABELLI GLOBAL DEAL FUND
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
TERM OF
NAME, POSITION(S) OFFICE AND
ADDRESS(1) LENGTH OF PRINCIPAL OCCUPATION(S)
AND AGE TIME SERVED(2) DURING PAST FIVE YEARS
------------------ -------------- -------------------------------------------------------------------
OFFICERS:
BRUCE N. ALPERT Since 2006 Executive Vice President and Chief Operating Officer of Gabelli
President Funds, LLC since 1988 and an officer of all of the registered
Age: 57 investment companies in the Gabelli/GAMCO Funds complex; Director
and President of Teton Advisors, Inc. (formerly Gabelli Advisers,
Inc.) since 1998
CARTER W. AUSTIN Since 2006 Vice President of The Gabelli Equity Trust Inc. since 2000, The
Vice President Gabelli Dividend & Income Trust since 2003, The Gabelli Global
Age: 42 Gold, Natural Resources & Income Trust since 2005; and The Gabelli
Healthcare & Wellness(Rx) Trust since 2007; Vice President of
Gabelli Funds, LLC since 1996
PETER D. GOLDSTEIN Since 2006 Director of Regulatory Affairs at GAMCO Investors, Inc. since 2004;
Chief Compliance Chief Compliance Officer of all of the registered investment
Officer companies in the Gabelli/GAMCO Funds complex; Vice President of
Age: 55 Goldman Sachs Asset Management (2000-2004)
SHEILA J. MOORE Since 2006 Assistant Vice President of The Gabelli Global Deal Fund since
Assistant Vice 2006; Adjunct professor in Economics and Finance, Woodbury
President and University, Burbank, CA prior to 2006
Ombudsman
Age: 61
AGNES MULLADY Since 2006 Vice President of Gabelli Funds, LLC since 2007; Officer of all of
Treasurer and the registered investment companies in the Gabelli/GAMCO Funds
Secretary complex; Senior Vice President of U.S. Trust Company, N.A. and
Age: 50 Treasurer and Chief Financial Officer of Excelsior Funds
(2004-2005); Chief Financial Officer of AMIC Distribution Partners
(2002-2004)
DAVID I. SCHACHTER Since 2006 Vice President of The Gabelli Utility Trust since 1999 and The
Vice President Gabelli Global Utility & Income Trust since 2004; Vice President of
Age: 55 Gabelli & Company, Inc. since 1999; and The Gabelli Healthcare &
WellnessRx Trust since 2007
----------
(1) Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
(2) The Fund's Board of Trustees is divided into three classes, each class
having a term of three years. Each year the term of office of one class
expires and the successor or successors elected to such class serve for a
three year term. The three year term for each class expires as follows:
* - Term expires at the Fund's 2011 Annual Meeting of Shareholders or until
their successors are duly elected and qualified.
** - Term expires at the Fund's 2009 Annual Meeting of Shareholders or until
their successors are duly elected and qualified.
*** - Term expires at the Fund's 2010 Annual Meeting of Shareholders or until
their successors are duly elected and qualified.
Each officer will hold office for an indefinite term until the date he or
she resigns or retires or until his or her successor is elected and
qualified.
(3) "Interested person" of the Fund as defined in the 1940 Act. Mr. Gabelli is
considered an "interested person" of the Fund because of his affiliation
with the Investment Adviser and with Gabelli & Company, Inc., which is a
principal underwriter for the Fund's common shares and is expected to
execute portfolio transactions for the Fund. Mr. Tokar is considered an
"interested person" of the Fund as a result of his son's employment by an
affiliate of the Adviser.
(4) This column includes only directorships of companies required to report to
the SEC under the Securities Exchange Act of 1934, as amended (i.e. public
companies) or other investment companies registered under the 1940 Act.
(5) Trustees who are not interested persons are considered "Independent"
Trustees.
16
THE GABELLI GLOBAL DEAL FUND
INCOME TAX INFORMATION (Unaudited)
DECEMBER 31, 2008
CASH DIVIDENDS AND DISTRIBUTIONS
TOTAL AMOUNT ORDINARY
PAYABLE RECORD PAID INVESTMENT RETURN OF
DATE DATE PER SHARE INCOME (a) CAPITAL (b)
-------- -------- ------------ ---------- -----------
COMMON SHARES
03/25/08 03/17/08 $0.40000 $0.16960 $0.23040
06/24/08 06/16/08 0.40000 0.16960 0.23040
09/24/08 09/16/08 0.40000 0.16960 0.23040
12/17/08 12/12/08 0.40000 0.16960 0.23040
-------- -------- ---------
$1.60000 $0.67840 $0.92160
A Form 1099-DIV has been mailed to all shareholders of record for the
distributions mentioned above, setting forth specific amounts to be included in
the 2007 tax returns. Ordinary income distributions include net investment
income and realized net short-term capital gains. Ordinary income is reported in
box 1a of Form 1099-DIV. Long-term capital gain distributions are reported in
box 2a of Form 1099-DIV.
CORPORATE DIVIDENDS RECEIVED DEDUCTION, QUALIFIED DIVIDEND INCOME, AND U.S.
TREASURY SECURITIES INCOME
The Fund paid to common shareholders ordinary income dividends of $1.60 per
share in 2008. For the period ended December 31, 2008, 17.82% of the ordinary
dividends qualified for the dividend received deduction available to
corporations, and 23.56% of the ordinary income distributions were qualified
dividend income. The percentage of ordinary income dividends paid by the Fund
during 2008 derived from U.S. Treasury securities was 5.34%. Such income is
exempt from state and local tax in all states. However, many states, including
New York and California, allow a tax exemption for a portion of the income
earned only if a mutual fund has invested at least 50% of its assets at the end
of each quarter of its fiscal year in U.S. Government securities. The Fund did
not meet this strict requirement in 2008. The percentage of net assets of U.S.
Government securities held as of December 31, 2008 was 55.6%.
HISTORICAL DISTRIBUTION SUMMARY
COMMON SHARES
SHORT-TERM
INVESTMENT CAPITAL RETURN OF TOTAL ADJUSTMENT TO
INCOME (a) GAIN (a) CAPITAL (b) DISTRIBUTIONS COST BASIS
---------- ---------- ----------- ------------- -------------
2008 ....... $0.2508 $0.4276 $0.9216 $1.60000 $0.92160
2007 ....... 0.2982 0.9018 -- 1.20000 --
----------
(a) Taxable as ordinary income for Federal tax purposes.
(b) Non-taxable.
All designations are based on financial information available as of the
date of this annual report and, accordingly, are subject to change. For each
item, it is the intention of the Fund to designate the maximum amount permitted
under the Internal Revenue Code and the regulations thereunder.
The Annual Meeting of The Gabelli Global Deal Fund's shareholders will be held
on Monday, May 18, 2009 at the Greenwich Library in Greenwich, Connecticut.
17
THE GABELLI GLOBAL DEAL FUND
CONSIDERATION OF INVESTMENT ADVISORY AGREEMENT WITH GABELLI FUNDS, LLC
(UNAUDITED)
At its meeting on November 19, 2008, the Board of Trustees ("Board") of the Fund
approved the investment advisory agreement with the Adviser for the Fund on the
basis of the recommendation by the trustees who are not "interested persons" of
the Fund (the "Independent Board Members"). The following paragraphs summarize
the material information and factors considered by the Independent Board Members
as well as their conclusions relative to such factors.
NATURE, EXTENT, AND QUALITY OF SERVICES. The Independent Board Members
considered information regarding the Fund's portfolio management team, the team
leader, the depth of the analyst pool available to the Adviser and portfolio
team, the scope of services provided by the Adviser, and its track record in
providing similar services to other open-end and closed-end funds. The
Independent Board Members noted the experience, length of service, and
reputation of the portfolio team, including in the merger arbitrage area.
INVESTMENT PERFORMANCE. The Independent Board Members reviewed information
regarding the investment performance of the Fund since inception in comparison
with a group of global closed-end funds. The Independent Board Members noted
that the Fund's performance in comparison with this group was excellent.
However, they also noted that the peer group comparison was of limited
usefulness, as the peer group did not contain any other funds engaged primarily
in arbitrage activities.
PROFITABILITY. The Independent Board Members reviewed summary data regarding the
profitability of the Fund to the Adviser and the Independent Board Members also
noted that the fulcrum fee was designed so that the Adviser would likely
experience higher than average profitability if the Fund substantially
outperformed the T-Bill Index but that the performance to date did not entitle
the Adviser to any additional fee.
ECONOMIES OF SCALE. The Independent Board Members noted that after completion of
the initial offering meaningful economies of scale could not occur in the
absence of secondary offerings.
SHARING OF ECONOMIES OF SCALE. The Independent Board Members noted that the
investment management fee for the Fund did not take into account any potential
economies of scale that might develop.
SERVICE AND COST COMPARISONS. The Independent Board Members reviewed the Fund's
expense ratios and found them to be lower than the peer group average. They also
compared the structure of the investment management fee with the fees for other
funds managed by the Adviser and selected private arbitrage funds as to which
information was available.
CONCLUSIONS. The Independent Board Members concluded that the Fund enjoyed
highly experienced portfolio management services and good ancillary services.
The Independent Board Members determined that the reference index chosen for the
fulcrum fee structure was appropriate inasmuch as arbitrage performance is often
measured against risk free returns, that the rate of profit sharing built into
the formula was fair, that the maximum fee was not unreasonable (particularly in
light of the requirement of earning the higher returns necessary for higher fee
levels net of the higher fees) and that the one year measuring period was
sufficient and consistent with the short-term nature of the Fund's investment
program. The Independent Board Members also concluded that the fee was
structured in a favorable manner to investors in relation to the performance of
the Fund and in relation to other arbitrage funds of which they were aware. The
Board concluded that the profitability of the Fund to the Adviser was reasonable
in view of the performance necessary to achieve any particular level of
profitability and that economies of scale and potential additional profit to the
Adviser and its affiliates from portfolio execution services were not material
to their decision. On the basis of the foregoing and without assigning
particular weight to any single conclusion, the Independent Board Members
determined to recommend approval of the investment management agreement to the
full board.
In considering the Agreement, the Independent Board Members did not identify any
factor as all important or all controlling and instead considered these factors
collectively in light of the Fund's surrounding circumstances. Based on this
review, it was the judgment of the Independent Board Members that shareholders
had received satisfactory absolute and relative performance at reasonable fees
and, therefore, re-approval of the Agreement was in the best interests of the
Fund and its shareholders. As a part of its decision making process, the
Independent Board Members noted that the Adviser has managed the Fund since its
inception, and the Independent Board Members believe that a long-term
relationship with a capable, conscientious adviser is in the best interests of
the Fund. The Independent Board Members considered, generally, that shareholders
invested in the Fund knowing that the Adviser managed the Fund and knowing its
investment management fee schedule. As such, the Independent Board Members
considered, in particular, whether the Adviser managed the Fund in accordance
with its investment objectives and policies as disclosed to shareholders. The
Independent Board Members concluded that the Fund was managed by the Adviser
consistent with its investment objectives and policies.
18
(GRAPHIC)
TRUSTEES AND OFFICERS
THE GABELLI GLOBAL DEAL FUND
ONE CORPORATE CENTER, RYE, NY 10580-1422
TRUSTEES
Mario J. Gabelli, CFA
CHAIRMAN & CHIEF EXECUTIVE OFFICER,
GAMCO INVESTORS, INC.
Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.
James P. Conn
FORMER MANAGING DIRECTOR &
CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Clarence A. Davis
FORMER CHIEF EXECUTIVE OFFICER,
NESTOR, INC.
Mario d'Urso
FORMER ITALIAN SENATOR
Arthur V. Ferrara
FORMER CHAIRMAN & CHIEF EXECUTIVE OFFICER,
GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
Michael J. Melarkey
ATTORNEY-AT-LAW,
AVANSINO, MELARKEY, KNOBEL & MULLIGAN
Edward T. Tokar
SENIOR MANAGING DIRECTOR,
BEACON TRUST COMPANY
Salvatore J. Zizza
CHAIRMAN, ZIZZA & CO., LTD.
OFFICERS
Bruce N. Alpert
PRESIDENT
Carter W. Austin
VICE PRESIDENT
Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
Sheila J. Moore
ASSISTANT VICE PRESIDENT & OMBUDSMAN
Agnes Mullady
TREASURER AND SECRETARY
David I. Schachter
VICE PRESIDENT
INVESTMENT ADVISER
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
CUSTODIAN
The Bank of New York Mellon
COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
TRANSFER AGENT AND REGISTRAR
American Stock Transfer and Trust Company
STOCK EXCHANGE LISTING
Common
----------
NYSE-Symbol: GDL
Shares Outstanding: 21,211,510
The Net Asset Value per share appears in the Publicly Traded Funds column, under
the heading "Specialized Equity Funds," in Monday's The Wall Street Journal. It
is also listed in Barron's Mutual Funds/Closed End Funds section under the
heading "Specialized Equity Funds."
The Net Asset Value per share may be obtained each day by calling (914) 921-5070
or visiting www.gabelli.com.
For general information about the Gabelli Funds, call 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: WWW.GABELLI.COM, or e-mail us at: closedend@gabelli.com
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may, from time to time, purchase
its common shares in the open market when the Fund's shares are trading at a
discount of 7.5% or more from the net asset value of the shares.
THE GABELLI GLOBAL DEAL FUND
ONE CORPORATE CENTER, RYE, NY 10580-1422
PHONE: 800-GABELLI (800-422-3554)
FAX: 914-921-5118 INTERNET: WWW.GABELLI.COM
E-MAIL: CLOSEDEND@GABELLI.COM GDL Q4/2008
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, and that relates to any
element of the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, that relates to one or
more of the items set forth in paragraph (b) of this item's
instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's Board of
Directors has determined that Salvatore J. Zizza is qualified to serve as an
audit committee financial expert serving on its audit committee and that he is
"independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$28,000 for 2007 and $28,000 for 2008.
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0 for 2007 and $0 for 2008.
TAX FEES
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $0 for 2007 and $4,000
for 2008. Tax fees represent tax compliance services provided in
connection with the review of the Registrant's tax returns.
ALL OTHER FEES
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are
$0 for 2007 and $0 for 2008.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pre-Approval Policies and Procedures. The Audit Committee
("Committee") of the registrant is responsible for pre-approving (i)
all audit and permissible non-audit services to be provided by the
independent auditors to the registrant and (ii) all permissible
non-audit services to be provided by the independent auditors to the
Adviser, Gabelli Funds, LLC, and any affiliate of Gabelli Funds, LLC
("Gabelli") that provides services to the registrant (a "Covered
Services Provider") if the independent auditors' engagement related
directly to the operations and financial reporting of the registrant.
The Committee may delegate its responsibility to pre-approve any such
audit and permissible non-audit services to the Chairperson of the
Committee, and the Chairperson must report to the Committee, at its
next regularly scheduled meeting after the Chairperson's pre-approval
of such services, his or her decision(s). The Committee may also
establish detailed pre-approval policies and procedures for
pre-approval of such services in accordance with applicable laws,
including the delegation of some or all of the Committee's
pre-approval responsibilities to the other persons (other than Gabelli
or the registrant's officers). Pre-approval by the Committee of any
permissible non-audit services is not required so long as: (i) the
permissible non-audit services were not recognized by the registrant
at the time of the engagement to be non-audit services; and (ii) such
services are promptly brought to the attention of the Committee and
approved by the Committee or Chairperson prior to the completion of
the audit.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are
as follows:
(b) Not applicable
(c) 100%
(d) Not applicable
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was zero percent (0%).
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen
by another investment adviser), and any entity controlling, controlled
by, or under common control with the adviser that provides ongoing
services to the registrant for each of the last two fiscal years of
the registrant was $65,000 for 2007 and $4,000 for 2008.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately designated audit committee consisting of the
following members: Vincent D. Enright, Clarence Davis and Salvatore J. Zizza.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are attached herewith.
THE VOTING OF PROXIES ON BEHALF OF CLIENTS
Rules 204(4)-2 and 204-2 under the Investment Advisers Act of 1940 and
Rule 30b1-4 under the Investment Company Act of 1940 require investment advisers
to adopt written policies and procedures governing the voting of proxies on
behalf of their clients.
These procedures will be used by GAMCO Asset Management Inc., Gabelli
Funds, LLC, Gabelli Securities, Inc., and Teton Advisors, Inc. (collectively,
the "Advisers") to determine how to vote proxies relating to portfolio
securities held by their clients, including the procedures that the Advisers use
when a vote presents a conflict between the interests of the shareholders of an
investment company managed by one of the Advisers, on the one hand, and those of
the Advisers; the principal underwriter; or any affiliated person of the
investment company, the Advisers, or the principal underwriter. These procedures
will not apply where the Advisers do not have voting discretion or where the
Advisers have agreed to with a client to vote the client's proxies in accordance
with specific guidelines or procedures supplied by the client (to the extent
permitted by ERISA).
I. PROXY VOTING COMMITTEE
The Proxy Voting Committee was originally formed in April 1989 for the
purpose of formulating guidelines and reviewing proxy statements within the
parameters set by the substantive proxy voting guidelines originally published
in 1988 and updated periodically, a copy of which are appended as Exhibit A. The
Committee will include representatives of Research, Administration, Legal, and
the Advisers. Additional or replacement members of the Committee will be
nominated by the Chairman and voted upon by the entire Committee.
Meetings are held as needed basis to form views on the manner in
which the Advisers should vote proxies on behalf of their clients.
In general, the Director of Proxy Voting Services, using the Proxy
Guidelines, recommendations of Institutional Shareholder Corporate Governance
Service ("ISS"), other third-party services and the analysts of Gabelli &
Company, Inc., will determine how to vote on each issue. For non-controversial
matters, the Director of Proxy Voting Services may vote the proxy if the vote is
(1) consistent with the recommendations of the issuer's Board of Directors and
not contrary to the Proxy Guidelines; (2) consistent with the recommendations of
the issuer's Board of Directors and is a non-controversial issue not covered by
the Proxy Guidelines; or (3) the vote is contrary to the recommendations of the
Board of Directors but is consistent with the Proxy Guidelines. In those
instances, the Director of Proxy Voting Services or the Chairman of the
Committee may sign and date the proxy statement indicating how each issue will
be voted.
All matters identified by the Chairman of the Committee, the Director
of Proxy Voting Services or the Legal Department as controversial, taking into
account the recommendations of ISS or other third party services and the
analysts of Gabelli & Company, Inc., will be presented to the Proxy Voting
Committee. If the Chairman of the Committee, the Director of Proxy Voting
Services or the Legal Department has identified the matter as one that (1) is
controversial; (2) would benefit from deliberation by the Proxy Voting
Committee; or (3) may give rise to a conflict of interest between the Advisers
and their clients, the Chairman of the Committee will initially determine what
vote to recommend that the Advisers should cast and the matter will go before
the Committee.
1
A. CONFLICTS OF INTEREST.
The Advisers have implemented these proxy voting procedures in
order to prevent conflicts of interest from influencing their
proxy voting decisions. By following the Proxy Guidelines, as
well as the recommendations of ISS, other third-party services
and the analysts of Gabelli & Company, the Advisers are able
to avoid, wherever possible, the influence of potential
conflicts of interest. Nevertheless, circumstances may arise
in which one or more of the Advisers are faced with a conflict
of interest or the appearance of a conflict of interest in
connection with its vote. In general, a conflict of interest
may arise when an Adviser knowingly does business with an
issuer, and may appear to have a material conflict between its
own interests and the interests of the shareholders of an
investment company managed by one of the Advisers regarding
how the proxy is to be voted. A conflict also may exist when
an Adviser has actual knowledge of a material business
arrangement between an issuer and an affiliate of the Adviser.
In practical terms, a conflict of interest may arise, for
example, when a proxy is voted for a company that is a client
of one of the Advisers, such as GAMCO Asset Management Inc. A
conflict also may arise when a client of one of the Advisers
has made a shareholder proposal in a proxy to be voted upon by
one or more of the Advisers. The Director of Proxy Voting
Services, together with the Legal Department, will scrutinize
all proxies for these or other situations that may give rise
to a conflict of interest with respect to the voting of
proxies.
B. OPERATION OF PROXY VOTING COMMITTEE
For matters submitted to the Committee, each member of the
Committee will receive, prior to the meeting, a copy of the
proxy statement, any relevant third party research, a summary
of any views provided by the Chief Investment Officer and any
recommendations by Gabelli & Company, Inc. analysts. The Chief
Investment Officer or the Gabelli & Company, Inc. analysts may
be invited to present their viewpoints. If the Director of
Proxy Voting Services or the Legal Department believe that the
matter before the committee is one with respect to which a
conflict of interest may exist between the Advisers and their
clients, counsel will provide an opinion to the Committee
concerning the conflict. If the matter is one in which the
interests of the clients of one or more of Advisers may
diverge, counsel will so advise and the Committee may make
different recommendations as to different clients. For any
matters where the recommendation may trigger appraisal rights,
counsel will provide an opinion concerning the likely risks
and merits of such an appraisal action.
2
Each matter submitted to the Committee will be determined by the vote
of a majority of the members present at the meeting. Should the vote concerning
one or more recommendations be tied in a vote of the Committee, the Chairman of
the Committee will cast the deciding vote. The Committee will notify the proxy
department of its decisions and the proxies will be voted accordingly.
Although the Proxy Guidelines express the normal preferences for the
voting of any shares not covered by a contrary investment guideline provided by
the client, the Committee is not bound by the preferences set forth in the Proxy
Guidelines and will review each matter on its own merits. Written minutes of all
Proxy Voting Committee meetings will be maintained. The Advisers subscribe to
ISS, which supplies current information on companies, matters being voted on,
regulations, trends in proxy voting and information on corporate governance
issues.
If the vote cast either by the analyst or as a result of the
deliberations of the Proxy Voting Committee runs contrary to the recommendation
of the Board of Directors of the issuer, the matter will be referred to legal
counsel to determine whether an amendment to the most recently filed Schedule
13D is appropriate.
II. SOCIAL ISSUES AND OTHER CLIENT GUIDELINES
If a client has provided special instructions relating to the voting of
proxies, they should be noted in the client's account file and forwarded to the
proxy department. This is the responsibility of the investment professional or
sales assistant for the client. In accordance with Department of Labor
guidelines, the Advisers' policy is to vote on behalf of ERISA accounts in the
best interest of the plan participants with regard to social issues that carry
an economic impact. Where an account is not governed by ERISA, the Advisers will
vote shares held on behalf of the client in a manner consistent with any
individual investment/voting guidelines provided by the client. Otherwise the
Advisers will abstain with respect to those shares.
III. CLIENT RETENTION OF VOTING RIGHTS
If a client chooses to retain the right to vote proxies or if there is
any change in voting authority, the following should be notified by the
investment professional or sales assistant for the client.
- Operations
- Legal Department
- Proxy Department
- Investment professional assigned to the account
3
In the event that the Board of Directors (or a Committee thereof) of
one or more of the investment companies managed by one of the Advisers has
retained direct voting control over any security, the Proxy Voting Department
will provide each Board Member (or Committee member) with a copy of the proxy
statement together with any other relevant information including recommendations
of ISS or other third-party services.
IV. VOTING RECORDS
The Proxy Voting Department will retain a record of matters voted upon
by the Advisers for their clients. The Advisers will supply information on how
an account voted its proxies upon request.
A letter is sent to the custodians for all clients for which the
Advisers have voting responsibility instructing them to forward all proxy
materials to:
[Adviser name]
Attn: Proxy Voting Department
One Corporate Center
Rye, New York 10580-1433
The sales assistant sends the letters to the custodians along with the
trading/DTC instructions. Proxy voting records will be retained in compliance
with Rule 204-2 under the Investment Advisers Act.
V. VOTING PROCEDURES
1. Custodian banks, outside brokerage firms and clearing firms are responsible
for forwarding proxies directly to the Advisers.
Proxies are received in one of two forms:
o Shareholder Vote Authorization Forms ("VAFs") - Issued by Broadridge
Financial Solutions, Inc. ("Broadridge") VAFs must be voted through the
issuing institution causing a time lag. Broadridge is an outside service
contracted by the various institutions to issue proxy materials.
o Proxy cards which may be voted directly.
2. Upon receipt of the proxy, the number of shares each form represents is
logged into the proxy system according to security.
3. In the case of a discrepancy such as an incorrect number of shares, an
improperly signed or dated card, wrong class of security, etc., the issuing
custodian is notified by phone. A corrected proxy is requested. Any arrangements
are made to insure that a proper proxy is received in time to be voted
(overnight delivery, fax, etc.). When securities are out on loan on record date,
the custodian is requested to supply written verification.
4
4. Upon receipt of instructions from the proxy committee (see Administrative),
the votes are cast and recorded for each account on an individual basis.
Records have been maintained on the Proxy Edge system. The system is backed up
regularly.
Proxy Edge records include:
Security Name and Cusip Number
Date and Type of Meeting (Annual, Special, Contest)
Client Name
Adviser or Fund Account Number
Directors' Recommendation
How GAMCO voted for the client on each issue
5. VAFs are kept alphabetically by security. Records for the current proxy
season are located in the Proxy Voting Department office. In preparation for the
upcoming season, files are transferred to an offsite storage facility during
January/February.
6. Shareholder Vote Authorization Forms issued by Broadridge are always sent
directly to a specific individual at Broadridge.
7. If a proxy card or VAF is received too late to be voted in the conventional
matter, every attempt is made to vote on one of the following manners:
o VAFs can be faxed to Broadridge up until the time of the meeting. This is
followed up by mailing the original form.
o When a solicitor has been retained, the solicitor is called. At the
solicitor's direction, the proxy is faxed.
8. In the case of a proxy contest, records are maintained for each opposing
entity.
9. Voting in Person
a) At times it may be necessary to vote the shares in person. In this case, a
"legal proxy" is obtained in the following manner:
o Banks and brokerage firms using the services at Broadridge:
The back of the VAF is stamped indicating that we wish to vote in person.
The forms are then sent overnight to Broadridge. Broadridge issues individual
legal proxies and sends them back via overnight (or the Adviser can pay
messenger charges). A lead-time of at least two weeks prior to the meeting is
needed to do this. Alternatively, the procedures detailed below for banks not
using Broadridge may be implemented.
5
o Banks and brokerage firms issuing proxies directly:
The bank is called and/or faxed and a legal proxy is requested.
All legal proxies should appoint:
"REPRESENTATIVE OF [ADVISER NAME] WITH FULL POWER OF SUBSTITUTION."
b) The legal proxies are given to the person attending the meeting along with
the following supplemental material:
o A limited Power of Attorney appointing the attendee an Adviser
representative.
o A list of all shares being voted by custodian only. Client names and
account numbers are not included. This list must be presented, along with
the proxies, to the Inspectors of Elections and/or tabulator at least
one-half hour prior to the scheduled start of the meeting. The tabulator
must "qualify" the votes (i.e. determine if the vote have previously been
cast, if the votes have been rescinded, etc. vote have previously been
cast, etc.).
o A sample ERISA and Individual contract.
o A sample of the annual authorization to vote proxies form.
o A copy of our most recent Schedule 13D filing (if applicable).
6
APPENDIX A
PROXY GUIDELINES
PROXY VOTING GUIDELINES
GENERAL POLICY STATEMENT
It is the policy of GAMCO INVESTORS, INC. to vote in the best economic interests
of our clients. As we state in our Magna Carta of Shareholders Rights,
established in May 1988, we are neither FOR nor AGAINST management. We are for
shareholders.
At our first proxy committee meeting in 1989, it was decided that each proxy
statement should be evaluated on its own merits within the framework first
established by our Magna Carta of Shareholders Rights. The attached guidelines
serve to enhance that broad framework.
We do not consider any issue routine. We take into consideration all of our
research on the company, its directors, and their short and long-term goals for
the company. In cases where issues that we generally do not approve of are
combined with other issues, the negative aspects of the issues will be factored
into the evaluation of the overall proposals but will not necessitate a vote in
opposition to the overall proposals.
7
BOARD OF DIRECTORS
The advisers do not consider the election of the Board of Directors a routine
issue. Each slate of directors is evaluated on a case-by-case basis.
Factors taken into consideration include:
o Historical responsiveness to shareholders
This may include such areas as:
-Paying greenmail
-Failure to adopt shareholder resolutions receiving a majority of
shareholder votes
o Qualifications
o Nominating committee in place
o Number of outside directors on the board
o Attendance at meetings
o Overall performance
SELECTION OF AUDITORS
In general, we support the Board of Directors' recommendation for auditors.
BLANK CHECK PREFERRED STOCK
We oppose the issuance of blank check preferred stock.
Blank check preferred stock allows the company to issue stock and establish
dividends, voting rights, etc. without further shareholder approval.
CLASSIFIED BOARD
A classified board is one where the directors are divided into classes with
overlapping terms. A different class is elected at each annual meeting.
While a classified board promotes continuity of directors facilitating long
range planning, we feel directors should be accountable to shareholders on an
annual basis. We will look at this proposal on a case-by-case basis taking into
consideration the board's historical responsiveness to the rights of
shareholders.
8
Where a classified board is in place we will generally not support attempts to
change to an annually elected board.
When an annually elected board is in place, we generally will not support
attempts to classify the board.
INCREASE AUTHORIZED COMMON STOCK
The request to increase the amount of outstanding shares is considered on a
case-by-case basis.
Factors taken into consideration include:
o Future use of additional shares
-Stock split
-Stock option or other executive compensation plan
-Finance growth of company/strengthen balance sheet
-Aid in restructuring
-Improve credit rating
-Implement a poison pill or other takeover defense
o Amount of stock currently authorized but not yet issued or reserved for
stock option plans
o Amount of additional stock to be authorized and its dilutive effect
We will support this proposal if a detailed and verifiable plan for the use of
the additional shares is contained in the proxy statement.
CONFIDENTIAL BALLOT
We support the idea that a shareholder's identity and vote should be treated
with confidentiality.
However, we look at this issue on a case-by-case basis.
In order to promote confidentiality in the voting process, we endorse the use of
independent Inspectors of Election.
9
CUMULATIVE VOTING
In general, we support cumulative voting.
Cumulative voting is a process by which a shareholder may multiply the number of
directors being elected by the number of shares held on record date and cast the
total number for one candidate or allocate the voting among two or more
candidates.
Where cumulative voting is in place, we will vote against any proposal to
rescind this shareholder right.
Cumulative voting may result in a minority block of stock gaining representation
on the board. When a proposal is made to institute cumulative voting, the
proposal will be reviewed on a case-by-case basis. While we feel that each board
member should represent all shareholders, cumulative voting provides minority
shareholders an opportunity to have their views represented.
DIRECTOR LIABILITY AND INDEMNIFICATION
We support efforts to attract the best possible directors by limiting the
liability and increasing the indemnification of directors, except in the case of
insider dealing.
EQUAL ACCESS TO THE PROXY
The SEC's rules provide for shareholder resolutions. However, the resolutions
are limited in scope and there is a 500 word limit on proponents' written
arguments. Management has no such limitations. While we support equal access to
the proxy, we would look at such variables as length of time required to
respond, percentage of ownership, etc.
FAIR PRICE PROVISIONS
Charter provisions requiring a bidder to pay all shareholders a fair price are
intended to prevent two-tier tender offers that may be abusive. Typically, these
provisions do not apply to board-approved transactions.
10
We support fair price provisions because we feel all shareholders should be
entitled to receive the same benefits.
Reviewed on a case-by-case basis.
GOLDEN PARACHUTES
Golden parachutes are severance payments to top executives who are terminated or
demoted after a takeover.
We support any proposal that would assure management of its own welfare so that
they may continue to make decisions in the best interest of the company and
shareholders even if the decision results in them losing their job. We do not,
however, support excessive golden parachutes. Therefore, each proposal will be
decided on a case-by-case basis.
NOTE: CONGRESS HAS IMPOSED A TAX ON ANY PARACHUTE THAT IS MORE THAN THREE TIMES
THE EXECUTIVE'S AVERAGE ANNUAL COMPENSATION.
ANTI-GREENMAIL PROPOSALS
We do not support greenmail. An offer extended to one shareholder should be
extended to all shareholders equally across the board.
LIMIT SHAREHOLDERS' RIGHTS TO CALL SPECIAL MEETINGS
We support the right of shareholders to call a special meeting.
CONSIDERATION OF NONFINANCIAL EFFECTS OF A MERGER
This proposal releases the directors from only looking at the financial effects
of a merger and allows them the opportunity to consider the merger's effects on
employees, the community, and consumers.
11
As a fiduciary, we are obligated to vote in the best economic interests of our
clients. In general, this proposal does not allow us to do that. Therefore, we
generally cannot support this proposal.
Reviewed on a case-by-case basis.
MERGERS, BUYOUTS, SPIN-OFFS, RESTRUCTURINGS
Each of the above is considered on a case-by-case basis. According to the
Department of Labor, we are not required to vote for a proposal simply because
the offering price is at a premium to the current market price. We may take into
consideration the long term interests of the shareholders.
MILITARY ISSUES
Shareholder proposals regarding military production must be evaluated on a
purely economic set of criteria for our ERISA clients. As such, decisions will
be made on a case-by-case basis.
In voting on this proposal for our non-ERISA clients, we will vote according to
the client's direction when applicable. Where no direction has been given, we
will vote in the best economic interests of our clients. It is not our duty to
impose our social judgment on others.
NORTHERN IRELAND
Shareholder proposals requesting the signing of the MacBride principles for the
purpose of countering the discrimination of Catholics in hiring practices must
be evaluated on a purely economic set of criteria for our ERISA clients. As
such, decisions will be made on a case-by-case basis.
In voting on this proposal for our non-ERISA clients, we will vote according to
client direction when applicable. Where no direction has been given, we will
vote in the best economic interests of our clients. It is not our duty to impose
our social judgment on others.
12
OPT OUT OF STATE ANTI-TAKEOVER LAW
This shareholder proposal requests that a company opt out of the coverage of the
state's takeover statutes. Example: Delaware law requires that a buyer must
acquire at least 85% of the company's stock before the buyer can exercise
control unless the board approves.
We consider this on a case-by-case basis. Our decision will be based on the
following:
o State of Incorporation
o Management history of responsiveness to shareholders
o Other mitigating factors
POISON PILL
In general, we do not endorse poison pills.
In certain cases where management has a history of being responsive to the needs
of shareholders and the stock is very liquid, we will reconsider this position.
REINCORPORATION
Generally, we support reincorporation for well-defined business reasons. We
oppose reincorporation if proposed solely for the purpose of reincorporating in
a state with more stringent anti-takeover statutes that may negatively impact
the value of the stock.
STOCK OPTION PLANS
Stock option plans are an excellent way to attract, hold and motivate directors
and employees. However, each stock option plan must be evaluated on its own
merits, taking into consideration the following:
o Dilution of voting power or earnings per share by more than 10%
o Kind of stock to be awarded, to whom, when and how much
o Method of payment
o Amount of stock already authorized but not yet issued under existing stock
option plans
13
SUPERMAJORITY VOTE REQUIREMENTS
Supermajority vote requirements in a company's charter or bylaws require a level
of voting approval in excess of a simple majority of the outstanding shares. In
general, we oppose supermajority-voting requirements. Supermajority requirements
often exceed the average level of shareholder participation. We support
proposals' approvals by a simple majority of the shares voting.
LIMIT SHAREHOLDERS RIGHT TO ACT BY WRITTEN CONSENT
Written consent allows shareholders to initiate and carry on a shareholder
action without having to wait until the next annual meeting or to call a special
meeting. It permits action to be taken by the written consent of the same
percentage of the shares that would be required to effect proposed action at a
shareholder meeting.
Reviewed on a case-by-case basis.
14
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
PORTFOLIO MANAGER
Mr. Mario J. Gabelli, CFA, is primarily responsible for the day-to-day
management of The Gabelli Global Deal Fund, (the Fund). Mr. Gabelli has served
as Chairman, Chief Executive Officer, and Chief Investment Officer -Value
Portfolios of GAMCO Investors, Inc. and its affiliates since their organization.
MANAGEMENT OF OTHER ACCOUNTS
The table below shows the number of other accounts managed by Mario J. Gabelli
and the total assets in each of the following categories: registered investment
companies, other paid investment vehicles and other accounts. For each category,
the table also shows the number of accounts and the total assets in the accounts
with respect to which the advisory fee is based on account performance.
No. of Total Assets
Accounts in Accounts
where where
Name of Portfolio Total Advisory Fee Advisory Fee
Manager or Type of No. of Accounts Total is Based on is Based on
Team Member Accounts Managed Assets Performance Performance
-------------------- --------------- --------------- ------ ------------ ------------
1. Mario J. Gabelli Registered 24 10.2B 6 3.1B
Investment
Companies:
Other Pooled 22 355.1M 19 316.4M
Investment
Vehicles:
Other Accounts: 2,049 8.1B 6 994.1M
POTENTIAL CONFLICTS OF INTEREST
As reflected above, Mr. Gabelli manages accounts in addition to the Fund. Actual
or apparent conflicts of interest may arise when a Portfolio Manager also has
day-to-day management responsibilities with respect to one or more other
accounts. These potential conflicts include:
ALLOCATION OF LIMITED TIME AND ATTENTION. As indicated above, Mr. Gabelli
manages multiple accounts. As a result, he will not be able to devote all of his
time to management of the Fund. Mr. Gabelli, therefore, may not be able to
formulate as complete a strategy or identify equally attractive investment
opportunities for each of those accounts as might be the case if he were to
devote all of his attention to the management of only the Fund.
ALLOCATION OF LIMITED INVESTMENT OPPORTUNITIES. As indicated above, Mr. Gabelli
manages managed accounts with investment strategies and/or policies that are
similar to the Fund. In these cases, if the he identifies an investment
opportunity that may be suitable for multiple accounts, a Fund may not be able
to take full advantage of that opportunity because the opportunity may be
allocated among all or many of these accounts or other accounts managed
primarily by other Portfolio Managers of the Adviser, and their affiliates. In
addition, in the event Mr. Gabelli determines to purchase a security for more
than one account in an aggregate amount that may influence the market price of
the security, accounts that purchased or sold the security first may receive a
more favorable price than accounts that made subsequent transactions.
SELECTION OF BROKER/DEALERS. Because of Mr. Gabelli's position with the
Distributor and his indirect majority ownership interest in the Distributor, he
may have an incentive to use the Distributor to execute portfolio transactions
for a Fund.
PURSUIT OF DIFFERING STRATEGIES. At times, Mr. Gabelli may determine that an
investment opportunity may be appropriate for only some of the accounts for
which he exercises investment responsibility, or may decide that certain of the
funds or accounts should take differing positions with respect to a particular
security. In these cases, he may execute differing or opposite transactions for
one or more accounts which may affect the market price of the security or the
execution of the transaction, or both, to the detriment of one or more other
accounts.
VARIATION IN COMPENSATION. A conflict of interest may arise where the financial
or other benefits available to Mr. Gabelli differ among the accounts that he
manages. If the structure of the Adviser's management
fee or the Portfolio Manager's compensation differs among accounts (such as
where certain accounts pay higher management fees or performance-based
management fees), the Portfolio Manager may be motivated to favor certain
accounts over others. The Portfolio Manager also may be motivated to favor
accounts in which he has an investment interest, or in which the Adviser, or
their affiliates have investment interests. Similarly, the desire to maintain
assets under management or to enhance a Portfolio Manager's performance record
or to derive other rewards, financial or otherwise, could influence the
Portfolio Manager in affording preferential treatment to those accounts that
could most significantly benefit the Portfolio Manager. For example, as
reflected above, if Mr. Gabelli manages accounts which have performance fee
arrangements, certain portions of his compensation will depend on the
achievement of performance milestones on those accounts. Mr. Gabelli could be
incented to afford preferential treatment to those accounts and thereby by
subject to a potential conflict of interest.
The Adviser, and the Funds have adopted compliance policies and procedures that
are designed to address the various conflicts of interest that may arise for the
Adviser and their staff members. However, there is no guarantee that such
policies and procedures will be able to detect and prevent every situation in
which an actual or potential conflict may arise.
COMPENSATION STRUCTURE FOR MARIO J. GABELLI
Mr. Gabelli receives incentive-based variable compensation based on a percentage
of net revenues received by the Adviser for managing the Fund. Net revenues are
determined by deducting from gross investment management fees the firm's
expenses (other than Mr. Gabelli's compensation) allocable to this Fund. Five
closed-end registered investment companies managed by Mr. Gabelli have
arrangements whereby the Adviser will only receive its investment advisory fee
attributable to the liquidation value of outstanding preferred stock (and Mr.
Gabelli would only receive his percentage of such advisory fee) if certain
performance levels are met. Additionally, he receives similar incentive based
variable compensation for managing other accounts within the firm and its
affiliates. This method of compensation is based on the premise that superior
long-term performance in managing a portfolio should be rewarded with higher
compensation as a result of growth of assets through appreciation and net
investment activity. The level of compensation is not determined with specific
reference to the performance of any account against any specific benchmark. One
of the other registered investment companies managed by Mr. Gabelli has a
performance (fulcrum) fee arrangement for which his compensation is adjusted up
or down based on the performance of the investment company relative to an index.
Mr. Gabelli manages other accounts with performance fees. Compensation for
managing these accounts has two components. One component is based on a
percentage of net revenues to the investment adviser for managing the account.
The second component is based on absolute performance of the account, with
respect to which a percentage of such performance fee is paid to Mr. Gabelli. As
an executive officer of the Adviser's parent company, GBL, Mr. Gabelli also
receives ten percent of the net operating profits of the parent company. He
receives no base salary, no annual bonus, and no stock options.
OWNERSHIP OF SHARES IN THE FUND
Mario Gabelli owned over $1,000,000 of the Fund as of December 31, 2008.
(B) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
(c) TOTAL NUMBER OF (d) MAXIMUM NUMBER (OR
SHARES (OR UNITS) APPROXIMATE DOLLAR VALUE) OF
(a) TOTAL NUMBER OF PURCHASED AS PART OF SHARES (OR UNITS) THAT MAY
SHARES (OR UNITS) (b) AVERAGE PRICE PAID PUBLICLY ANNOUNCED YET BE PURCHASED UNDER THE
PERIOD PURCHASED PER SHARE (OR UNIT) PLANS OR PROGRAMS PLANS OR PROGRAMS
-------- ------------------- ---------------------- -------------------- ----------------------------
Month #1 Common - 20,000 Common - $15.0524 Common - 20,000 Common - 21,270,610 -
07/01/08 20,000 = 21,250,610
through
07/31/08 Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
Month #2 Common - N/A Common - N/A Common - N/A Common - 21,250,610
08/01/08
through Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
08/31/08
Month #3 Common - 20,000 Common - $14.3466 Common - 20,000 Common - 21,250,610 -
09/01/08 20,000 = 21,230,610
through
09/30/08 Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
Month #4 Common - 19,100 Common - $12.3775 Common - 19,100 Common - 21,230,610 -
10/01/08 19,100 = 21,211,510
through
10/31/08 Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
Month #5 Common - N/A Common - N/A Common - N/A Common - 21,211,510
11/01/08
through Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
11/30/08
Month #6 Common - N/A Common - N/A Common - N/A Common - 21,211,510
12/01/08
through Preferred - N/A Preferred - N/A Preferred - N/A Preferred - N/A
12/31/08
Total Common - 59,100 Common - $13.9322 Common - 59,100 N/A
Preferred - N/A Preferred - N/A Preferred - N/A
Footnote columns (c) and (d) of the table, by disclosing the following
information in the aggregate for all plans or programs publicly announced:
a. The date each plan or program was announced - The notice of the potential
repurchase of common and preferred shares occurs quarterly in the Fund's
quarterly report in accordance with Section 23(c) of the Investment Company
Act of 1940, as amended.
b. The dollar amount (or share or unit amount) approved - Any or all common
shares outstanding may be repurchased when the Fund's common shares are
trading at a discount of 7.5% or more from the net asset value of the
shares.
Any or all preferred shares outstanding may be repurchased when the Fund's
preferred shares are trading at a discount to the liquidation value of
$25.00.
c. The expiration date (if any) of each plan or program - The Fund's
repurchase plans are ongoing.
d. Each plan or program that has expired during the period covered by the
table - The Fund's repurchase plans are ongoing.
e. Each plan or program the registrant has determined to terminate prior to
expiration, or under which the registrant does not intend to make further
purchases. - The Fund's repurchase plans are ongoing.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Gabelli Global Deal Fund
By (Signature and Title)* /s/ Bruce N. Alpert
----------------------------------------
Bruce N. Alpert, Principal Executive
Officer
Date 3/9/09
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Bruce N. Alpert
----------------------------------------
Bruce N. Alpert, Principal Executive
Officer
Date 3/9/09
By (Signature and Title)* /s/ Agnes Mullady
----------------------------------------
Agnes Mullady, Principal Financial
Officer and Treasurer
Date 3/9/09
* Print the name and title of each signing officer under his or her signature.