RYE, N.Y.–(BUSINESS WIRE)–The Board of Trustees of The Gabelli Global Utility & Income Trust (NYSE MKT:GLU) (the “Fund”) reset the annual dividend rate to 4.00% or $2.00 per share for the Series B Preferred Shares, effective for the eight dividend periods after the dividend period ending December 26, 2019, pursuant to the provisions of its Statement of Preferences.
The Series B Preferred Shares, which trade on the NYSE American under the symbol “GLU Pr B” were issued on December 19, 2018 at $50.00 per share. The Series B Preferred will pay distributions quarterly at an annualized dividend rate of 4.00% of the $50.00 per share liquidation preference for the next eight quarterly dividend periods (“Year 2” and “Year 3”), beginning with the dividend payment on March 26, 2020. At least 30 days prior to the end of Year 3, the Fund’s Board of Trustees will determine and publicly announce a reset fixed dividend rate that will apply for all future quarterly dividend periods. Each reset dividend rate will be determined by the Fund’s Board of Trustees or a committee thereof in its sole discretion, and such rate will be at least 200 basis points over the yield of the ten year U.S. Treasury Note at the date of determination but in no case will the annual dividend rate be less than 4.00% or greater than 7.00%.
The Series B Preferred may be put back to the Fund during the 30-day period prior to each of December 26, 2021 and December 26, 2023 at the liquidation preference of $50.00 per share, plus any accumulated and unpaid dividends. The Series B Preferred will be non-callable for five years from the date of issuance unless the redemption is necessary in the judgment of the Fund’s Board of Trustees to maintain the Fund’s status as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended.
All or part of the distributions may be treated as long-term capital gain or qualified dividend income (or a combination of both) for individuals, each subject to the maximum federal income tax rate, which is currently 20% in taxable accounts for individuals (or less depending on an individual’s tax bracket). In addition, certain U.S. shareholders who are individuals, estates or trusts and whose income exceeds certain thresholds will be required to pay a 3.8% Medicare surcharge on their “net investment income”, which includes dividends received from the Fund and capital gains from the sale or other disposition of shares of the Fund.
Long-term capital gains, qualified dividend income, and ordinary income, if any, will be allocated on a pro-rata basis to all distributions to preferred shareholders for the year. The final determination of the sources of all distributions in 2019 will be made after year end and can vary from the quarterly estimates. All individual shareholders with taxable accounts will receive written notification regarding the components and tax treatment for all 2019 distributions in early 2020 via Form 1099-DIV.
If the Fund does not generate sufficient earnings (dividends and interest income, less expenses, and realized net capital gain) equal to or in excess of the aggregate distributions paid by the Fund to the Preferred Shareholders in a given year, then the amount distributed in excess of the Fund’s earnings would be deemed a return of capital. Since this would be considered a return of a portion of a shareholder’s original investment, it is generally not taxable and would be treated as a reduction in the shareholder’s cost basis.
Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. More information regarding this and other information about the Fund is available by calling 800-GABELLI (800-422-3554) or visiting www.gabelli.com.
The Gabelli Global Utility & Income Trust is a non-diversified, closed-end management investment company with $170 million in total net assets whose primary investment objective is to seek a consistent level of after-tax total return for its investors with an emphasis on tax-advantaged dividend income under current tax law. The Fund is managed by Gabelli Funds, LLC, a subsidiary of GAMCO Investors, Inc. (NYSE:GBL).