Edgar Filing: GABELLI DIVIDEND & INCOME TRUST

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 811-21423
------------

The Gabelli Dividend & Income Trust
------------------------------------------------
(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, 2006
--------------------

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. ss. 3507.

ITEM 1. REPORTS TO STOCKHOLDERS.

The Report to Shareholders is attached herewith.

THE GABELLI DIVIDEND & INCOME TRUST

Annual Report
December 31, 2006

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, 2006.

COMPARATIVE RESULTS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2006 (A)
----------------------------------------------------

SINCE
INCEPTION
QUARTER 1 YEAR 2 YEAR (11/28/03)
------- ------ ------ ----------

GABELLI DIVIDEND & INCOME TRUST
NAV TOTAL RETURN (B) ........................................ 8.72% 22.85% 15.56% 14.07%
INVESTMENT TOTAL RETURN (C) ................................. 14.62 31.82 17.57 9.48
S&P 500 Index ................................................. 6.69 15.78 10.21 11.95
Dow Jones Industrial Average .................................. 7.31 18.98 10.07 10.66
Nasdaq Composite Index ........................................ 6.95 9.52 5.37 6.99

(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 LESS THAN ONE YEAR ARE NOT
ANNUALIZED. INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT OBJECTIVES,
RISKS, CHARGES, AND EXPENSES OF THE FUND BEFORE INVESTING. THE DOW JONES
INDUSTRIAL AVERAGE IS AN UNMANAGED INDEX OF 30 LARGE CAPITALIZATION STOCKS.
THE S&P 500 AND THE NASDAQ COMPOSITE INDICES ARE UNMANAGED INDICATORS OF
STOCK MARKET PERFORMANCE. DIVIDENDS ARE CONSIDERED REINVESTED EXCEPT FOR
THE NASDAQ COMPOSITE INDEX. YOU CANNOT INVEST DIRECTLY IN AN INDEX.
(b) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN NET ASSET VALUE
PER SHARE ("NAV") 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
January 23, 2007

THE GABELLI DIVIDEND & INCOME TRUST
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)

The following table presents portfolio holdings as a percent of total
investments as of December 31, 2006:

LONG POSITIONS
Financial Services ................................... 15.2%
Energy and Utilities: Oil ............................ 12.6%
Energy and Utilities: Integrated ..................... 11.0%
Repurchase Agreements ................................ 8.4%
Energy and Utilities: Natural Gas .................... 5.7%
Telecommunications ................................... 5.5%
Energy and Utilities: Electric ....................... 5.5%
Food and Beverage .................................... 4.9%
Diversified Industrial ............................... 3.3%
Health Care .......................................... 3.3%
U.S. Treasury Bills .................................. 2.9%
Consumer Products .................................... 2.9%
Specialty Chemicals .................................. 1.8%
Cable and Satellite .................................. 1.4%
Metals and Mining .................................... 1.4%
Equipment and Supplies ............................... 1.3%
Broadcasting ......................................... 1.2%
Real Estate Investment Trusts ........................ 1.1%
Retail ............................................... 1.0%
Publishing ........................................... 0.9%
Automotive: Parts and Accessories .................... 0.9%
Aerospace ............................................ 0.9%
Electronics .......................................... 0.8%
Entertainment ........................................ 0.8%
Hotels and Gaming .................................... 0.7%
Transportation ....................................... 0.7%
Communications Equipment ............................. 0.5%
Business Services .................................... 0.5%
Energy and Utilities ................................. 0.4%
Environmental Services ............................... 0.4%
Wireless Communications .............................. 0.3%
Agriculture .......................................... 0.3%
Energy and Utilities: Water .......................... 0.3%
Paper and Forest Products ............................ 0.3%
Aviation: Parts and Services ......................... 0.2%
Automotive ........................................... 0.2%
Machinery ............................................ 0.2%
Consumer Services .................................... 0.1%
Computer Software and Services ....................... 0.1%
Energy and Utilities: Services ....................... 0.1%
Real Estate .......................................... 0.0%
Closed-End Funds ..................................... 0.0%
Building and Construction ............................ 0.0%
Manufactured Housing and Recreational Vehicles ....... 0.0%
------
100.0%
======
SHORT POSITIONS
Call Options Written ................................. (0.1)%
======

The Gabelli Dividend & Income Trust (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, 2006. 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; or (iii) visiting the SEC's website at
www.sec.gov.

THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006

MARKET
SHARES COST VALUE
------ ---- -----

COMMON STOCKS -- 84.8%
AEROSPACE -- 0.8%
10,000 Goodrich Corp. ..........$ 281,823 $ 455,500
60,000 Kaman Corp. ............. 1,070,150 1,343,400
2,000,000 Rolls-Royce Group plc+ .. 14,847,047 17,533,729
73,400,000 Rolls-Royce Group plc,
Cl. B ................. 139,665 145,871
-------------- --------------
16,338,685 19,478,500
-------------- --------------
AGRICULTURE -- 0.3%
60,000 Archer-Daniels-Midland
Co. .................... 1,022,532 1,917,600
150,000 Delta & Pine Land Co. ... 6,089,060 6,067,500
-------------- --------------
7,111,592 7,985,100
-------------- --------------
AUTOMOTIVE -- 0.2%
3,000 Copart Inc.+ ............ 88,602 90,000
100,000 General Motors Corp. .... 2,825,660 3,072,000
50,000 Navistar International
Corp.+ ................ 1,174,763 1,671,500
-------------- --------------
4,089,025 4,833,500
-------------- --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.9%
100,000 Dana Corp.+ ............. 289,798 139,000
455,000 Genuine Parts Co. ....... 15,537,978 21,580,650
-------------- --------------
15,827,776 21,719,650
-------------- --------------
AVIATION: PARTS AND SERVICES -- 0.2%
50,000 Sequa Corp., Cl. A+ ..... 3,632,221 5,753,000
-------------- --------------
BROADCASTING -- 0.7%
300,000 Clear Channel
Communications Inc. ... 10,589,700 10,662,000
160,000 Univision Communications
Inc., Cl. A+ .......... 5,464,371 5,667,200
-------------- --------------
16,054,071 16,329,200
-------------- --------------
BUILDING AND CONSTRUCTION -- 0.0%
15,000 Layne Christensen Co.+ .. 449,560 492,450
-------------- --------------
BUSINESS SERVICES -- 0.4%
265,000 Aramark Corp., Cl. B .... 8,638,280 8,864,250
-------------- --------------
CABLE AND SATELLITE -- 1.4%
280,000 Cablevision Systems
Corp., Cl. A+ ......... 6,996,028 7,974,400
14,200 Cogeco Inc. ............. 276,997 356,294
325,000 EchoStar Communications
Corp., Cl. A+ ......... 9,804,609 12,359,750
81,734 Liberty Global Inc., Cl. A+ 1,686,985 2,382,546
34,318 Liberty Global Inc., Cl. C+ 760,276 960,904
155,000 Rogers Communications
Inc., Cl. B ........... 3,860,632 9,238,000
50,000 The DIRECTV Group Inc.+ 827,439 1,247,000
-------------- --------------
24,212,966 34,518,894
-------------- --------------

UNITS
------
CLOSED-END FUNDS -- 0.0%
47,125 Bell Aliant Regional
Communications Income
Fund+ (a) ............. 1,278,068 1,089,530
-------------- --------------

SHARES
------
COMMUNICATIONS EQUIPMENT -- 0.0%
20,000 Thomas & Betts Corp.+ ... 629,282 945,600
-------------- --------------

MARKET
SHARES COST VALUE
------ ---- -----

COMPUTER SOFTWARE AND SERVICES -- 0.1%
1,000 Digitas Inc.+ ...........$ 13,360 $ 13,410
100,000 Redback Networks Inc.+ .. 2,527,980 2,494,000
-------------- --------------
2,541,340 2,507,410
-------------- --------------
CONSUMER PRODUCTS -- 2.9%
310,000 Alberto-Culver Co. ...... 10,375,247 6,649,500
10,000 Altria Group Inc. ....... 491,463 858,200
125,000 Avon Products Inc. ...... 3,712,619 4,130,000
40,000 Eastman Kodak Co. ....... 912,574 1,032,000
43,900 Fortune Brands Inc. ..... 3,612,869 3,748,621
188,100 Gallaher Group plc, ADR 11,465,422 16,919,595
55,000 Hanesbrands Inc.+ ....... 1,344,318 1,299,100
350,000 Jacuzzi Brands Inc.+ .... 4,284,975 4,350,500
1,000 Kimberly-Clark Corp. .... 53,184 67,950
180,000 Mattel Inc. ............. 3,029,526 4,078,800
150,000 Procter & Gamble Co. .... 8,110,916 9,640,500
1,000,000 Swedish Match AB ........ 12,209,126 18,697,186
-------------- --------------
59,602,239 71,471,952
-------------- --------------
CONSUMER SERVICES -- 0.1%
100,000 Sabre Holdings Corp.,
Cl. A .................. 3,202,170 3,189,000
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 3.0%
31,000 Banta Corp. ............. 1,127,790 1,128,400
180,000 Bouygues SA ............. 6,242,882 11,554,881
130,000 Cooper Industries Ltd.,
Cl. A ................. 8,259,278 11,755,900
500,000 General Electric Co. .... 16,320,036 18,605,000
275,000 Honeywell International
Inc. .................. 9,524,517 12,441,000
100,000 ITT Corp. ............... 4,506,935 5,682,000
116,000 Sonoco Products Co. ..... 2,882,932 4,414,960
1,000 Textron Inc. ............ 51,500 93,770
1,051,000 Tomkins plc ............. 5,080,148 5,057,139
100,000 Tyco International Ltd. 2,986,250 3,040,000
120,000 WHX Corp.+ .............. 1,191,265 1,014,000
-------------- --------------
58,173,533 74,787,050
-------------- --------------
ELECTRONICS -- 0.8%
40,000 Intel Corp. ............. 819,672 810,000
1,300,000 Symbol Technologies Inc. 19,303,370 19,422,000
-------------- --------------
20,123,042 20,232,000
-------------- --------------
ENERGY AND UTILITIES: ELECTRIC -- 5.5%
30,000 Allegheny Energy Inc.+ .. 438,040 1,377,300
110,000 ALLETE Inc. ............. 3,617,953 5,119,400
310,000 American Electric Power
Co. Inc. .............. 9,600,039 13,199,800
425,000 DPL Inc. ................ 8,553,078 11,806,500
17,500 DTE Energy Co. .......... 667,957 847,175
250,000 Duquesne Light
Holdings Inc. ......... 4,453,647 4,962,500
280,000 Electric Power Development
Co. Ltd. .............. 6,816,389 12,328,894
230,000 FPL Group Inc. .......... 7,915,075 12,516,600
600,000 Great Plains Energy Inc. 18,388,421 19,080,000
550,000 Pepco Holdings Inc. ..... 10,462,409 14,305,500
240,000 Pinnacle West Capital Corp. 9,369,027 12,165,600
450,200 The Southern Co. ........ 13,437,094 16,594,372
330,000 Unisource Energy Corp. .. 8,560,078 12,054,900
-------------- --------------
102,279,207 136,358,541
-------------- --------------
ENERGY AND UTILITIES: INTEGRATED -- 11.0%
12,000 Alliant Energy Corp. .... 305,115 453,240
385,000 Ameren Corp. ............ 17,516,430 20,686,050
50,000 Avista Corp. ............ 926,534 1,265,500
11,000 Black Hills Corp. ....... 335,198 406,340
33,000 CH Energy Group Inc. .... 1,524,587 1,742,400

See accompanying notes to financial statements.

THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2006

MARKET
SHARES COST VALUE
------ ---- -----

COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES: INTEGRATED (CONTINUED)
108,000 Chubu Electric Power Co.
Inc. .................$ 2,458,019 $ 3,230,789
278,000 CONSOL Energy Inc. ...... 9,529,755 8,932,140
200,000 Consolidated Edison Inc. 8,201,972 9,614,000
20,000 Dominion Resources Inc. 1,455,866 1,676,800
680,000 Duke Energy Corp. ....... 16,104,596 22,582,800
430,000 Edison SpA .............. 1,002,090 1,180,648
200,000 El Paso Corp. ........... 2,048,265 3,056,000
100,000 Endesa SA ............... 2,551,597 4,729,721
67,000 Endesa SA, ADR .......... 2,205,794 3,116,840
300,000 Enel SpA ................ 2,324,318 3,094,845
47,000 Enel SpA, ADR ........... 1,839,335 2,425,200
139,500 Energy East Corp. ....... 3,166,127 3,459,600
220,000 FirstEnergy Corp. ....... 7,886,725 13,266,000
130,000 Hawaiian Electric
Industries Inc. ....... 3,060,314 3,529,500
250,000 Hera SpA ................ 552,073 1,085,737
121,500 Hokkaido Electric Power
Co. Inc. .............. 2,282,208 3,103,735
121,500 Hokuriku Electric Power Co. 2,131,359 2,761,712
80,500 Korea Electric Power Corp.,
ADR+ .................. 1,181,180 1,828,155
121,500 Kyushu Electric Power Co.
Inc. .................. 2,374,466 3,205,832
19,000 Maine & Maritimes Corp.+ 545,536 288,515
74,000 MGE Energy Inc. ......... 2,403,212 2,706,920
35,102 National Grid plc, ADR 1,588,562 2,549,107
255,000 NiSource Inc. ........... 5,329,541 6,145,500
605,000 NSTAR ................... 14,447,855 20,787,800
490,000 OGE Energy Corp. ........ 11,799,195 19,600,000
38,000 Ormat Technologies Inc. 570,000 1,399,160
330,000 Progress Energy Inc. .... 14,816,426 16,196,400
190,000 Public Service Enterprise
Group Inc. ............ 11,760,655 12,612,200
174,603 Scottish Power plc, ADR 6,417,653 10,202,053
121,500 Shikoku Electric Power
Co. Inc. .............. 2,264,565 2,894,437
15,000 TECO Energy Inc. ........ 255,758 258,450
121,500 The Chugoku Electric Power
Co. Inc. .............. 2,194,052 2,695,349
30,000 The Empire District
Electric Co. .......... 651,955 740,700
121,500 The Kansai Electric Power
Co. Inc. .............. 2,333,021 3,277,299
108,000 The Tokyo Electric Power
Co. Inc. .............. 2,545,172 3,493,971
121,500 Tohoku Electric Power
Co. Inc. .............. 2,112,763 3,037,372
2,000 TXU Corp. ............... 28,289 108,420
205,000 Vectren Corp. ........... 5,572,873 5,797,400
470,000 Westar Energy Inc. ...... 9,309,271 12,201,200
90,000 Wisconsin Energy Corp. .. 2,844,518 4,271,400
150,000 WPS Resources Corp. ..... 6,859,066 8,104,500
600,000 Xcel Energy Inc. ........ 10,368,749 13,836,000
-------------- --------------
209,982,610 273,637,737
-------------- --------------
ENERGY AND UTILITIES: NATURAL GAS -- 5.7%
8,500 AGL Resources Inc. ...... 231,031 330,735
100,000 Atmos Energy Corp. ...... 2,485,739 3,191,000
14,800 Delta Natural Gas Co. Inc. 374,076 371,184
6,000 Energen Corp. ........... 124,550 281,640
500,000 KeySpan Corp. ........... 18,605,417 20,590,000
20,000 Kinder Morgan Energy
Partners LP ........... 824,553 958,000

MARKET
SHARES COST VALUE
------ ---- -----

450,000 Kinder Morgan Inc. ......$ 46,472,554 $ 47,587,500
300,000 National Fuel Gas Co. ... 7,226,378 11,562,000
215,000 Nicor Inc. .............. 7,320,919 10,062,000
220,000 ONEOK Inc. .............. 5,480,182 9,486,400
300,000 Peoples Energy Corp. .... 12,410,295 13,371,000
300,000 SEMCO Energy Inc.+ ...... 1,686,087 1,830,000
200,000 Sempra Energy ........... 5,955,980 11,208,000
30,000 South Jersey Industries Inc. 657,687 1,002,300
70,000 Southern Union Co. ...... 1,656,784 1,956,500
160,000 Southwest Gas Corp. ..... 3,848,747 6,139,200
60,000 The Laclede Group Inc. .. 1,690,312 2,101,800
-------------- --------------
117,051,291 142,029,259
-------------- --------------
ENERGY AND UTILITIES: OIL -- 12.6%
20,000 Anadarko Petroleum Corp. 650,810 870,400
40,000 Apache Corp. ............ 1,905,219 2,660,400
20,000 Baker Hughes Inc. ....... 759,763 1,493,200
46,900 BG Group plc, ADR ....... 1,893,244 3,209,836
160,000 BP plc, ADR ............. 7,479,063 10,736,000
40,000 Cameron International
Corp.+ ................ 1,103,787 2,122,000
140,000 Chesapeake Energy Corp. 2,429,835 4,067,000
319,888 Chevron Corp. ........... 18,621,240 23,521,365
1,000 Cimarex Energy Co. ...... 28,300 36,500
420,996 ConocoPhillips .......... 21,244,394 30,290,662
78,000 Devon Energy Corp. ...... 3,448,499 5,232,240
290,000 Diamond Offshore Drilling
Inc. .................. 16,562,002 23,182,600
187,500 Eni SpA, ADR ............ 6,854,713 12,615,000
225,000 Exxon Mobil Corp. ....... 10,427,150 17,241,750
75,000 Giant Industries Inc.+ .. 6,027,540 5,621,250
640,000 Halliburton Co. ......... 17,703,558 19,872,000
30,000 Hess Corp. .............. 830,468 1,487,100
290,000 Marathon Oil Corp. ...... 18,953,248 26,825,000
150,000 Murphy Oil Corp. ........ 7,616,994 7,627,500
4,000 Nabors Industries Ltd.+ 97,350 119,120
1,000 Niko Resources Ltd. ..... 57,456 71,474
5,000 Noble Corp. ............. 254,820 380,750
375,000 Occidental Petroleum Corp. 13,320,427 18,311,250
14,000 Oceaneering International
Inc.+ ................. 390,875 555,800
30,000 PetroChina Co. Ltd., ADR 2,256,659 4,223,400
280,000 Repsol YPF SA, ADR ...... 5,930,532 9,660,000
200,000 Royal Dutch Shell plc,
Cl. A, ADR ............ 9,567,840 14,158,000
120,000 Schlumberger Ltd. ....... 3,977,835 7,579,200
1,000 Seitel Inc.+ ............ 1,285 3,575
940,000 Statoil ASA, ADR ........ 13,338,307 24,740,800
200,000 Sunoco Inc. ............. 10,648,406 12,472,000
200,000 Total SA, ADR ........... 8,718,885 14,384,000
90,000 Transocean Inc.+ ........ 5,288,878 7,280,100
-------------- --------------
218,389,382 312,651,272
-------------- --------------
ENERGY AND UTILITIES: SERVICES -- 0.1%
135,000 ABB Ltd., ADR ........... 1,474,605 2,427,300
-------------- --------------
ENERGY AND UTILITIES: WATER -- 0.3%
11,000 American States Water Co. 273,608 424,820
53,333 Aqua America Inc. ....... 873,085 1,214,926
6,000 Artesian Resources Corp.,
Cl. A ................. 113,635 117,960
3,000 California Water Service
Group ................. 94,710 121,200
11,500 Connecticut Water Service
Inc. .................. 276,036 261,625
1,000 Consolidated Water Co. Ltd. 26,770 24,930
6,000 Middlesex Water Co. ..... 111,082 112,380

See accompanying notes to financial statements.

THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2006

MARKET
SHARES COST VALUE
------ ---- -----

COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES: WATER (CONTINUED)
21,466 Pennichuck Corp. ........$ 417,620 $ 434,257
90,000 SJW Corp. ............... 1,525,458 3,488,400
16,800 Southwest Water Co. ..... 192,169 231,168
5,000 Suez SA ................. 156,718 259,917
168,000 Suez SA, Strips+ ........ 0 2,217
36,000 United Utilities plc,
ADR ................... 774,333 1,105,920
9,000 York Water Co. .......... 115,031 160,920
-------------- --------------
4,950,255 7,960,640
-------------- --------------
ENTERTAINMENT -- 0.6%
8,000 Grupo Televisa SA, ADR .. 79,516 216,080
360,000 Time Warner Inc. ........ 6,128,835 7,840,800
200,000 Vivendi ................. 6,289,470 7,817,306
-------------- --------------
12,497,821 15,874,186
-------------- --------------
ENVIRONMENTAL SERVICES -- 0.4%
200,000 Allied Waste Industries
Inc.+ ................. 2,041,626 2,458,000
11,000 Veolia Environnement .... 304,150 847,997
150,000 Waste Management Inc. ... 4,972,367 5,515,500
-------------- --------------
7,318,143 8,821,497
-------------- --------------
EQUIPMENT AND SUPPLIES -- 1.3%
110,000 CIRCOR International Inc. 2,003,636 4,046,900
30,000 Lufkin Industries Inc. .. 513,283 1,742,400
60,000 Mueller Industries Inc. 2,463,788 1,902,000
420,000 RPC Inc. ................ 1,866,263 7,089,600
300,000 Weatherford International
Ltd.+ ................. 13,213,001 12,537,000
300,000 Xerox Corp.+ ............ 4,332,750 5,085,000
-------------- --------------
24,392,721 32,402,900
-------------- --------------
FINANCIAL SERVICES -- 14.5%
295,000 AllianceBernstein
Holding LP ............ 14,929,826 23,718,000
380,000 American Express Co. .... 16,989,679 23,054,600
300,000 American International
Group Inc. ............ 18,347,321 21,498,000
80,000 Ameriprise Financial Inc. 2,638,721 4,360,000
40,000 Astoria Financial Corp. 1,204,737 1,206,400
410,000 Bank of America Corp. ... 19,164,479 21,889,900
5,000 BlackRock Inc. .......... 387,461 759,500
20,000 Capital One Financial
Corp. ................. 1,464,196 1,536,400
600,000 Citigroup Inc. .......... 29,153,975 33,420,000
210,000 Commerce Bancorp Inc. ... 7,038,752 7,406,700
30,000 Deutsche Bank AG ........ 2,456,595 3,997,200
80,000 Fannie Mae .............. 3,906,030 4,751,200
48,909 Fidelity National Financial
Inc., Cl. A ........... 981,053 1,167,947
21,496 Fidelity National Information
Services Inc. ......... 749,854 861,775
165,000 Fifth Third Bancorp ..... 7,291,050 6,753,450
100,000 First Horizon National Corp. 4,259,774 4,178,000
50,000 Flushing Financial Corp. 930,605 853,500
27,000 Hartford Financial Services
Group Inc. ............ 1,748,090 2,519,370
25,000 Hudson City Bancorp Inc. 336,700 347,000
520,000 JPMorgan Chase & Co. .... 18,950,295 25,116,000
50,000 Legg Mason Inc. ......... 4,462,207 4,752,500
10,000 Lehman Brothers
Holdings Inc. ......... 648,864 781,200
10,000 Marshall & Ilsley Corp. 445,000 481,100
112,000 Merrill Lynch & Co. Inc. 7,495,509 10,427,200
135,000 Morgan Stanley .......... 6,866,538 10,993,050
190,000 New York Community
Bancorp Inc. .......... 3,648,850 3,059,000

MARKET
SHARES COST VALUE
------ ---- -----

40,000 NewAlliance Bancshares
Inc. ..................$ 583,393 $ 656,000
210,000 PNC Financial Services
Group Inc. ............ 11,239,980 15,548,400
300,000 Popular Inc. ............ 6,498,829 5,385,000
227,259 Regions Financial Corp. 7,434,245 8,499,486
333,620 Sovereign Bancorp Inc. .. 7,060,840 8,470,612
25,050 Sterling Bancorp ........ 521,827 493,485
100,000 T. Rowe Price Group Inc. 3,368,235 4,377,000
100,000 TD Banknorth Inc. ....... 3,224,821 3,228,000
60,000 The Allstate Corp. ...... 3,220,720 3,906,600
361,400 The Bank of New York Co.
Inc. .................. 11,720,504 14,228,318
4,000 The Progressive Corp. ... 89,520 96,880
290,000 The St. Paul Travelers
Companies Inc. ........ 10,913,064 15,570,100
5,000 Unitrin Inc. ............ 187,486 250,550
15,214 Valley National Bancorp 378,568 403,323
260,000 Wachovia Corp. .......... 12,485,619 14,807,000
425,000 Waddell & Reed Financial
Inc., Cl. A ........... 9,455,341 11,628,000
10,000 Washington Mutual Inc. .. 391,600 454,900
3,500 Webster Financial Corp. 155,536 170,520
450,000 Wells Fargo & Co. ....... 13,331,455 16,002,000
85,200 Wilmington Trust Corp. .. 3,043,530 3,592,884
167,000 Zions Bancorporation .... 11,735,797 13,767,480
-------------- --------------
293,537,071 361,425,530
-------------- --------------
FOOD AND BEVERAGE -- 4.9%
170,000 Anheuser-Busch
Companies Inc. ........ 7,796,934 8,364,000
50,000 Campbell Soup Co. ....... 1,495,352 1,944,500
185,000 ConAgra Foods Inc. ...... 4,599,660 4,995,000
3,000 Davide Campari-Milano
SpA ................... 29,681 29,741
300,000 General Mills Inc. ...... 14,568,199 17,280,000
200,000 Groupe Danone ........... 20,845,823 30,308,230
140,000 H.J. Heinz Co. .......... 5,019,306 6,301,400
1,000 Kellogg Co. ............. 35,550 50,060
50,000 Kraft Foods Inc., Cl. A 1,563,386 1,785,000
500,000 Parmalat SpA+ ........... 1,885,518 2,151,673
339,450 Parmalat SpA, GDR+ (a) .. 981,615 1,459,228
220,000 PepsiAmericas Inc. ...... 4,486,668 4,615,600
20,000 PepsiCo Inc. ............ 1,220,070 1,251,000
1,150,000 Sara Lee Corp. .......... 19,378,592 19,584,500
290,000 The Coca-Cola Co. ....... 12,717,402 13,992,500
100,000 The Hershey Co. ......... 5,333,855 4,980,000
62,000 Wm. Wrigley Jr. Co. ..... 2,976,799 3,206,640
3,000 Wm. Wrigley Jr. Co., Cl. B 167,630 154,200
5,000 YAKULT HONSHA Co. Ltd. .. 146,317 143,691
-------------- --------------
105,248,357 122,596,963
-------------- --------------
HEALTH CARE -- 3.1%
120,000 Bristol-Myers Squibb Co. 2,910,742 3,158,400
120,000 Caremark Rx Inc. ........ 6,725,028 6,853,200
185,000 Eli Lilly & Co. ......... 10,654,198 9,638,500
90,000 IMS Health Inc. ......... 2,266,881 2,473,200
220,000 Merck & Co. Inc. ........ 8,376,601 9,592,000
60,000 Owens & Minor Inc. ...... 1,517,872 1,876,200
900,000 Pfizer Inc. ............. 25,071,359 23,310,000
10,500 Serono SA ............... 9,477,209 9,427,165
120,000 Wyeth ................... 5,532,945 6,110,400
46,000 Zimmer Holdings Inc.+ ... 2,917,502 3,605,480
-------------- --------------
75,450,337 76,044,545
-------------- --------------
HOTELS AND GAMING -- 0.7%
62,600 Aztar Corp.+ ............ 2,782,702 3,406,692
50,000 Harrah's Entertainment Inc. 3,787,443 4,136,000

See accompanying notes to financial statements.

THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2006

MARKET
SHARES COST VALUE
------ ---- -----

COMMON STOCKS (CONTINUED)
HOTELS AND GAMING (CONTINUED)
100,000 Hilton Hotels Corp. .....$ 1,701,949 $ 3,490,000
705,882 Ladbrokes plc ........... 9,246,474 5,780,651
-------------- --------------
17,518,568 16,813,343
-------------- --------------
MACHINERY -- 0.2%
150,000 CNH Global NV ........... 2,953,366 4,095,000
-------------- --------------
MANUFACTURED HOUSING AND RECREATIONAL VEHICLES -- 0.0%
1,100 Skyline Corp. ........... 42,889 44,242
-------------- --------------
METALS AND MINING -- 1.4%
50,000 Alcoa Inc. .............. 1,527,886 1,500,500
10,000 Alliance Holdings GP LP 230,523 197,600
20,000 Arch Coal Inc. .......... 314,774 600,600
8,000 BHP Billiton Ltd., ADR .. 217,549 318,000
3,000 Fording Canadian Coal Trust 32,950 62,250
100,000 Freeport-McMoRan Copper
& Gold Inc., Cl. B .... 3,495,728 5,573,000
10,000 Massey Energy Co. ....... 235,475 232,300
25,000 Peabody Energy Corp. .... 353,789 1,010,250
200,000 Phelps Dodge Corp. ...... 22,682,394 23,944,000
1,000 Rio Tinto plc, ADR ...... 127,360 212,490
3,000 Westmoreland Coal Co.+ .. 52,605 59,010
-------------- --------------
29,271,033 33,710,000
-------------- --------------
PAPER AND FOREST PRODUCTS -- 0.3%
200,000 International Paper Co. 6,863,452 6,820,000
-------------- --------------
PUBLISHING -- 0.9%
135,000 Dow Jones & Co. Inc. .... 5,111,401 5,130,000
38,500 Idearc Inc.+ ............ 1,111,123 1,103,025
1,000,000 The Reader's Digest
Association Inc. ...... 16,148,627 16,700,000
-------------- --------------
22,371,151 22,933,025
-------------- --------------
REAL ESTATE -- 0.0%
12,000 Brookfield Asset Management
Inc., Cl. A ........... 186,196 578,160
-------------- --------------
REAL ESTATE INVESTMENT TRUSTS -- 1.1%
250,000 Columbia Equity Trust Inc. 4,707,290 4,777,500
448,000 Equity Office Properties
Trust ................. 21,508,090 21,580,160
1,000 Primaris Retail Real Estate
Investment Trust ...... 16,729 16,190
30,000 Reckson Associates Realty
Corp. ................. 1,281,510 1,368,000
-------------- --------------
27,513,619 27,741,850
-------------- --------------
RETAIL -- 1.0%
150,000 Ingles Markets Inc.,
Cl. A ................. 1,703,529 4,468,500
410,000 Safeway Inc. ............ 8,674,488 14,169,600
22,000 Saks Inc. ............... 395,507 392,040
310,000 Sally Beauty Holdings Inc.+ 3,837,420 2,418,000
80,000 SUPERVALU Inc. .......... 2,385,810 2,860,000
-------------- --------------
16,996,754 24,308,140
-------------- --------------
SPECIALTY CHEMICALS -- 1.8%
5,000 Arkema, ADR+ ............ 269,656 256,676
292,100 Ashland Inc. ............ 18,299,079 20,207,478
140,000 E.I. du Pont de Nemours
& Co. ................. 5,905,751 6,819,400
230,000 Ferro Corp. ............. 4,473,023 4,758,700
100,000 MacDermid Inc. .......... 3,416,000 3,410,000
100,000 Olin Corp. .............. 1,826,860 1,652,000

MARKET
SHARES COST VALUE
------ ---- -----

170,000 The Dow Chemical Co. ....$ 6,827,194 $ 6,789,800
18,146 Tronox Inc., Cl. B ...... 186,196 286,525
-------------- --------------
41,203,759 44,180,579
-------------- --------------
TELECOMMUNICATIONS -- 4.9%
400,000 AT&T Inc. ............... 9,871,847 14,300,000
550,000 BCE Inc. ................ 11,932,643 14,850,000
200,000 BellSouth Corp. ......... 5,331,371 9,422,000
74,000 BT Group plc, ADR ....... 2,312,412 4,431,860
2,000 CenturyTel Inc. ......... 58,989 87,320
50,000 Compania de
Telecomunicaciones de
Chile SA, ADR ......... 607,686 401,500
100,000 Deutsche Telekom AG, ADR 1,796,995 1,820,000
42,000 Embarq Corp. ............ 1,625,738 2,207,520
55,000 France Telecom SA, ADR .. 1,338,443 1,523,500
210,000 Hellenic Telecommunications
Organization SA, ADR+ 1,644,219 3,181,500
200,000 Portugal Telecom SGPS SA 2,318,352 2,597,849
90,000 Qwest Communications
International Inc.+ ... 275,142 753,300
840,000 Sprint Nextel Corp. ..... 16,438,020 15,867,600
15,000 Telecom Corp. of New
Zealand Ltd., ADR ..... 383,908 403,800
200,000 Telecom Italia SpA, ADR 5,741,078 6,026,000
26,000 Telefonica SA, ADR ...... 1,107,367 1,657,500
250,000 Telefonos de Mexico SAB de
CV, Cl. L, ADR ........ 4,164,902 7,065,000
130,000 Telstra Corp. Ltd., ADR 2,392,135 2,129,400
68,000 TELUS Corp., ADR ........ 1,168,993 3,033,949
770,000 Verizon Communications
Inc. .................. 26,666,967 28,674,800
100,000 Vodafone Group plc, ADR 2,184,580 2,778,000
-------------- --------------
99,361,787 123,212,398
-------------- --------------
TRANSPORTATION -- 0.4%
4,000 Frontline Ltd. .......... 137,211 127,400
216,000 GATX Corp. .............. 5,739,871 9,359,280
24,000 Golden Ocean Group Ltd.+ 14,400 42,918
4,250 Ship Finance International
Ltd. .................. 96,012 100,980
30,000 Teekay Shipping Corp. ... 1,007,822 1,308,600
-------------- --------------
6,995,316 10,939,178
-------------- --------------
WIRELESS COMMUNICATIONS -- 0.3%
14,000 Crown Castle International
Corp.+ ................ 226,237 452,200
110,000 United States Cellular
Corp.+ ................ 5,022,195 7,654,900
3,000 Vimpel-Communications,
ADR+ .................. 91,155 236,850
-------------- --------------
5,339,587 8,343,950
-------------- --------------
TOTAL
COMMON STOCKS .......... 1,691,093,127 2,110,147,321
-------------- --------------

CONVERTIBLE PREFERRED STOCKS -- 2.1%
AEROSPACE -- 0.1%
8,315 Northrop Grumman Corp.,
7.000% Cv. Pfd., Ser. B 997,555 1,105,895
-------------- --------------
AUTOMOTIVE -- 0.0%
16,000 General Motors Corp.,
4.500% Cv. Pfd., Ser. A 415,435 404,480
-------------- --------------
BROADCASTING -- 0.0%
20,460 Emmis Communications Corp.,
6.250% Cv. Pfd., Ser. A 960,081 864,333
-------------- --------------

See accompanying notes to financial statements.

THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2006

MARKET
SHARES COST VALUE
------ ---- -----

CONVERTIBLE PREFERRED STOCKS (CONTINUED)
BUILDING AND CONSTRUCTION -- 0.0%
200 Fleetwood Capital Trust,
6.000% Cv. Pfd. .......$ 6,210 $ 5,900
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 0.3%
179,400 Owens-Illinois Inc.,
4.750% Cv. Pfd. ....... 5,956,159 6,637,800
80,000 Smurfit-Stone Container Corp.,
7.000% Cv. Pfd., Ser. A 1,996,122 1,916,000
-------------- --------------
7,952,281 8,553,800
-------------- --------------
ENERGY AND UTILITIES -- 0.4%
5,000 Chesapeake Energy Corp.,
5.000% Cv. Pfd. (a) ... 512,500 645,312
20,000 CMS Energy Corp.,
4.500% Cv. Pfd., Ser. B 1,069,063 1,770,000
130,000 El Paso Corp. Capital Trust I,
4.750% Cv. Pfd., Ser. C 4,680,219 5,044,000
40,000 Hanover Compressor
Capital Trust,
7.250% Cv. Pfd. ....... 1,999,452 2,260,000
-------------- --------------
8,261,234 9,719,312
-------------- --------------
ENTERTAINMENT -- 0.1%
113,000 Six Flags Inc.,
7.250% Cv. Pfd., Ser. B 2,637,802 2,519,900
-------------- --------------
FINANCIAL SERVICES -- 0.7%
2,000 Doral Financial Corp.,
4.750% Cv. Pfd. ....... 284,670 193,000
210,000 National Australia Bank Ltd.,
7.875% Cv. Pfd. ....... 7,994,365 10,815,000
137,000 Newell Financial Trust I,
5.250% Cv. Pfd. ....... 6,428,812 6,473,250
-------------- --------------
14,707,847 17,481,250
-------------- --------------
HEALTH CARE -- 0.0%
10,000 Omnicare Inc.,
4.000% Cv. Pfd., Ser. B 605,400 537,400
-------------- --------------
REAL ESTATE INVESTMENT TRUSTS -- 0.0%
2,100 Equity Office Properties Trust,
5.250% Cv. Pfd., Ser. B 104,120 141,781
-------------- --------------
TELECOMMUNICATIONS -- 0.4%
50,000 Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B 2,118,418 2,300,000
121,000 Crown Castle International
Corp.,
6.250% Cv. Pfd. ....... 5,568,000 6,715,500
-------------- --------------
7,686,418 9,015,500
-------------- --------------
TRANSPORTATION -- 0.1%
1,500 GATX Corp.,
$2.50 Cv. Pfd. ........ 199,475 333,750
982 Kansas City Southern,
4.250% Cv. Pfd. ....... 551,884 970,297
-------------- --------------
751,359 1,304,047
-------------- --------------
TOTAL CONVERTIBLE
PREFERRED STOCKS ....... 45,085,742 51,653,598
-------------- --------------

PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ---- -----

CONVERTIBLE CORPORATE BONDS -- 1.8%
AEROSPACE -- 0.0%
$ 1,000,000 GenCorp Inc., Sub. Deb. Cv.,
5.750%, 04/15/07 ......$ 998,594 $ 1,038,750
-------------- --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.0%
500,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ...... 485,710 475,000
-------------- --------------
BROADCASTING -- 0.5%
100,000 Lin Television Corp.,
Sub. Deb. Cv.,
2.500%, 05/15/33 ...... 91,610 94,250
13,000,000 Sinclair Broadcast Group Inc.,
Sub. Deb. Cv.,
6.000%, 09/15/12 ...... 10,895,456 11,960,000
-------------- --------------
10,987,066 12,054,250
-------------- --------------
BUSINESS SERVICES -- 0.1%
2,103,000 Trans-Lux Corp.,
Sub. Deb. Cv.,
8.250%, 03/01/12 ...... 2,034,879 2,050,425
-------------- --------------
COMMUNICATIONS EQUIPMENT -- 0.5%
10,000,000 Agere Systems Inc.,
Sub. Deb. Cv.,
6.500%, 12/15/09 ...... 10,056,336 10,225,000
2,000,000 TriQuint Semiconductor Inc.,
Sub. Deb. Cv.,
4.000%, 03/01/07 ...... 1,995,165 1,995,000
-------------- --------------
12,051,501 12,220,000
-------------- --------------
ENTERTAINMENT -- 0.1%
1,500,000 The Walt Disney Co., Cv.,
2.125%, 04/15/23 ...... 1,513,108 1,830,000
-------------- --------------
FINANCIAL SERVICES -- 0.0%
250,000 AON Corp., Deb. Cv.,
3.500%, 11/15/12 ...... 263,084 414,063
-------------- --------------
HEALTH CARE -- 0.2%
4,000,000 ICOS Corp., Sub. Deb. Cv.,
2.000%, 07/01/23 ...... 3,934,736 3,945,000
-------------- --------------
REAL ESTATE -- 0.0%
Palm Harbor Homes Inc., Cv.,
100,000 3.250%, 05/15/24 ...... 84,584 85,000
1,000,000 3.250%, 05/15/24 (a) .. 973,644 850,000
-------------- --------------
1,058,228 935,000
-------------- --------------
TELECOMMUNICATIONS -- 0.2%
6,000,000 Nortel Networks Corp., Cv.,
4.250%, 09/01/08 ...... 5,827,886 5,835,000
-------------- --------------
TRANSPORTATION -- 0.2%
3,000,000 GATX Corp., Cv.,
7.500%, 02/01/07 ...... 3,021,233 3,836,250
-------------- --------------
TOTAL CONVERTIBLE
CORPORATE BONDS ........ 42,176,025 44,633,738
-------------- --------------

See accompanying notes to financial statements.

THE GABELLI DIVIDEND & INCOME TRUST
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2006

MARKET
SHARES COST VALUE
------ ---- -----

WARRANTS -- 0.0%
FOOD AND BEVERAGE -- 0.0%
650 Parmalat SpA, GDR,
expire 12/31/15+
(a)(b) ...............$ 0 $ 0
-------------- --------------
PRINCIPAL
AMOUNT
--------

SHORT-TERM OBLIGATIONS -- 11.3%
REPURCHASE AGREEMENTS -- 8.4%
$125,000,000 Barclays Capital Inc.,
4.800%, dated 12/29/06,
due 01/03/07, proceeds
at maturity,
$125,083,333 (c) ..... 125,000,000 125,000,000
85,000,000 Daiwa Securities America Inc.,
4.820%, dated 12/29/06,
due 01/03/07, proceeds
at maturity,
$85,056,903 (d) ...... 85,000,000 85,000,000
-------------- --------------
210,000,000 210,000,000
-------------- --------------
U.S. TREASURY BILLS -- 2.9%
72,785,000 U.S. Treasury Bills,
4.900% to 5.219%++,
01/18/07 to 04/26/07(e) 71,932,185 71,932,911
-------------- --------------
TOTAL SHORT-TERM
OBLIGATIONS ............ 281,932,185 281,932,911
-------------- --------------

TOTAL INVESTMENTS -- 100.0% ..........$2,060,287,079 2,488,367,568
==============

CALL OPTIONS WRITTEN
(Premiums received $1,898,621) ................... (2,118,928)

OTHER ASSETS AND LIABILITIES (NET) ................. (167,514)

PREFERRED STOCK
(5,814,200 preferred shares outstanding) ......... (500,000,000)
--------------

NET ASSETS -- COMMON SHARES
(83,973,170 common shares outstanding) ........... $1,986,081,126
==============
NET ASSET VALUE PER COMMON SHARE
($1,986,081,126 / 83,973,170 shares outstanding) $23.65
======

OPTION CONTRACTS WRITTEN -- (0.1)%
NUMBER OF EXPIRATION DATE/ MARKET
CONTRACTS EXERCISE PRICE VALUE
--------- -------------- -----
CALL OPTIONS WRITTEN -- (0.1)%
500 AllianceBernstein
Holding LP ................. Jan. 07/75 $ 282,500
100 AllianceBernstein
Holding LP ................. Jan. 07/80 16,500
2,000 AT&T Inc. .................... Jan. 07/30 1,160,000
220 FirstEnergy Corp. ............ Jan. 07/55 123,200
500 Freeport-McMoRan Copper
& Gold Inc., Cl. B ......... Jan. 07/55 105,000
500 JPMorgan Chase & Co. ......... Jan. 07/45 170,000
500 Marathon Oil Corp. ........... Jan. 07/90 195,000
500 Royal Dutch Shell plc,
Cl. A, ADR ................. Jan. 07/75 3,750
500 Safeway Inc. ................. Jan. 07/35 32,500
75 Sprint Nextel Corp. .......... Jan. 07/20 975
136 The Southern Co. ............. Jan. 07/35 28,560
13 Xcel Energy Inc. ............. Jan. 07/22.5 943
----------
TOTAL CALL OPTIONS WRITTEN
(Premiums received $1,898,621) $2,118,928
==========

-------------
(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, 2006, the market value of Rule 144A securities amounted to
$4,044,070 or 0.16% of total investments. Except as noted in (b), these
securities are liquid.
(b) At December 31, 2006, the Fund held an investment in a restricted and
illiquid security amounting to $0 or 0.00% of total investments, which
was valued under methods approved by the Board, as follows:
12/31/06
ACQUISITION ACQUISITION ACQUISITION CARRYING VALUE
SHARES ISSUER DATE COST PER UNIT
------ ------ -------- ------- --------

650 Parmalat SpA, GDR warrants
expire 12/31/15 11/09/05 $0.0 $0.0000

(c) Collateralized by $90,925,000 U.S. Treasury Bond, 8.875%, due 02/15/19,
market value $127,500,000.
(d) Collateralized by $87,909,000 U.S. Treasury Bills, 5.987%, due 03/29/07,
market value $86,700,251.
(e) Securities, or a portion thereof, with a value of $4,933,080 are pledged as
collateral for options written.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depository Receipt
GDR Global Depository Receipt

% OF
MARKET MARKET
VALUE VALUE
------ --------
GEOGRAPHIC DIVERSIFICATION
North America ....................... 84.2% $2,094,269,296
Europe .............................. 11.3 282,227,958
Latin America ....................... 2.1 50,670,878
Japan ............................... 1.6 40,173,081
Asia/Pacific ........................ 0.8 21,026,355
------ --------------
Total Investments ................... 100.0% $2,488,367,568
====== ==============

See accompanying notes to financial statements.

THE GABELLI DIVIDEND & INCOME TRUST

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2006

ASSETS:
Investments, at value (cost $1,850,287,079) ......... $2,278,367,568
Repurchase agreements, at value (cost $210,000,000) 210,000,000
Deposit at broker ................................... 3,463,102
Cash ................................................ 1,190
Receivable for investments sold ..................... 9,083,606
Dividends and interest receivable ................... 3,415,605
Unrealized appreciation on swap contracts ........... 3,155,309
Prepaid expense ..................................... 81,138
--------------
TOTAL ASSETS ........................................ 2,507,567,518
--------------
LIABILITIES:
Options written (premium received $1,898,621) ....... 2,118,928
Distributions payable ............................... 7,907,229
Payable for investments purchased ................... 4,199,798
Payable for investment advisory fees ................ 6,695,667
Payable for payroll expenses ........................ 41,816
Payable for accounting fees ......................... 7,501
Other accrued expenses .............................. 515,453
--------------
TOTAL LIABILITIES ................................... 21,486,392
--------------
PREFERRED STOCK:
Series A Cumulative Preferred Stock (5.875%, $25
liquidation value, $0.001 par value, 3,200,000 shares
authorized with 3,200,000 shares issued and
outstanding) ....................................... 80,000,000
Series B Cumulative Preferred Stock (Auction Market,
$25,000 liquidation value, $0.001 par value, 4,000
shares authorized with 4,000 shares issued
and outstanding) ................................... 100,000,000
Series C Cumulative Preferred Stock (Auction Market,
$25,000 liquidation value, $0.001 par value, 4,800
shares authorized with 4,800 shares issued and
outstanding) ....................................... 120,000,000
Series D Cumulative Preferred Stock (6.00%, $25
liquidation value, $0.001 par value, 2,600,000 shares
authorized with 2,600,000 shares issued and
outstanding) ....................................... 65,000,000
Series E Cumulative Preferred Stock (Auction Rate,
$25,000 liquidation value, $0.001 par value, 5,400
shares authorized with 5,400 shares issued and
outstanding) ...................................... 135,000,000
--------------
TOTAL PREFERRED STOCK ............................... 500,000,000
--------------
NET ASSETS ATTRIBUTABLE TO
COMMON SHAREHOLDERS ............................... $1,986,081,126
==============
NET ASSETS ATTRIBUTABLE TO COMMON
SHAREHOLDERS CONSIST OF:
Paid-in capital, at $0.001 par value ................ $1,544,021,347
Accumulated net investment income ................... 12,027,863
Accumulated distributions in excess of net realized gain
on investments, written options, swap contracts,
futures contracts, securities sold short, and
foreign currency transactions ..................... (982,356)
Net unrealized appreciation on investments .......... 428,080,489
Net unrealized depreciation on written options ...... (220,307)
Net unrealized appreciation on swap contracts ....... 3,155,309
Net unrealized depreciation on foreign
currency translations ............................. (1,219)
--------------
NET ASSETS .......................................... $1,986,081,126
==============
NET ASSET VALUE PER COMMON SHARE
($1,986,081,126 / 83,973,170 shares outstanding;
unlimited number of shares authorized) .............. $23.65
======

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006

INVESTMENT INCOME:
Dividends (net of foreign taxes of $1,155,606) ...... $ 76,478,017
Interest ............................................ 22,721,712
------------
TOTAL INVESTMENT INCOME ............................. 99,199,729
------------
EXPENSES:
Investment advisory fees ............................ 23,657,922
Auction agent fees .................................. 900,746
Shareholder communications expenses ................. 587,593
Custodian fees ...................................... 248,603
Payroll expenses .................................... 228,531
Trustees' fees ...................................... 173,000
Legal and audit fees ................................ 90,649
Accounting fees ..................................... 45,000
Shareholder services fees ........................... 42,266
Interest expenses ................................... 5,820
Miscellaneous expenses .............................. 389,836
------------
TOTAL EXPENSES ...................................... 26,369,966
Less: Custodian fee credits ......................... (92,212)
------------
NET EXPENSES ........................................ 26,277,754
------------
NET INVESTMENT INCOME ............................... 72,921,975
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
WRITTEN OPTIONS, SWAP CONTRACTS, FUTURES CONTRACTS,
SECURITIES SOLD SHORT, AND FOREIGN CURRENCY:
Net realized gain on investments .................... 90,440,691
Net realized loss on written options ................ (5,070)
Net realized gain on swap contracts ................. 973,297
Net realized gain on futures contracts .............. 1,538,828
Net realized gain on securities sold short .......... 1,287,046
Net realized loss on foreign currency transactions .. (512,590)
------------
Net realized gain on investments, written options, swap
contracts, futures contracts, securities sold short, and
foreign currency transactions ...................... 93,722,202
------------
Net change in unrealized appreciation/depreciation:
on investments .................................... 243,491,253
on written options ................................ (220,307)
on swap contracts ................................. 219,598
on securities sold short .......................... 6,133
on foreign currency translations .................. 262
------------
Net change in unrealized appreciation/depreciation
on investments, written options, swap contracts,
securities sold short, and foreign currency
translations ...................................... 243,496,939
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, WRITTEN OPTIONS, SWAP CONTRACTS,
FUTURES CONTRACTS, SECURITIES SOLD SHORT, AND
FOREIGN CURRENCY .................................. 337,219,141
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................... 410,141,116
------------
Total Distributions to Preferred Stock Shareholders (26,051,913)
------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON
SHAREHOLDERS RESULTING FROM OPERATIONS ............ $384,089,203
============

See accompanying notes to financial statements.

THE GABELLI DIVIDEND & INCOME TRUST

STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS

YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
----------------- -----------------
OPERATIONS:

Net investment income ............................................................ $ 72,921,975 $ 47,549,275
Net realized gain on investments, written options, swap contracts,
futures contracts, securities sold short, and foreign currency transactions .... 93,722,202 68,354,941
Net change in unrealized appreciation/depreciation on investments, written
options, swap contracts, securities sold short, and foreign currency translations 243,496,939 43,584,535
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................. 410,141,116 159,488,751
-------------- --------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
Net investment income ............................................................ (10,255,572) (5,432,355)
Net realized short-term gain on investments, written options, swap contracts,
futures contracts, securities sold short, and foreign currency transactions .... (4,091,893) (1,314,615)
Net realized long-term gains on investments, written options, swap contracts,
futures contracts, securities sold short, and foreign currency transactions .... (11,704,448) (6,733,232)
-------------- --------------
TOTAL DISTRIBUTIONS TO PREFERRED SHAREHOLDERS .................................... (26,051,913) (13,480,202)
-------------- --------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
RESULTING FROM OPERATIONS ...................................................... 384,089,203 146,008,549
-------------- --------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income ............................................................ (50,995,124) (40,982,793)
Net realized short-term gain on investments, written options, swap contracts,
futures contracts, securities sold short, and foreign currency transactions .... (20,346,652) (9,917,725)
Net realized long-term gain on investments, written options, swap contracts,
futures contracts, securities sold short, and foreign currency transactions .... (58,199,561) (50,796,878)
-------------- --------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS ....................................... (129,541,337) (101,697,396)
-------------- --------------
FUND SHARE TRANSACTIONS:
Net decrease from repurchase of common shares .................................... (6,491,041) (9,076,752)
Offering costs for preferred shares charged to paid-in capital ................... (130,874) (3,782,570)
-------------- --------------
NET DECREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS .......................... (6,621,915) (12,859,322)
-------------- --------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS ................... 247,925,951 31,451,831
NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS:
Beginning of period .............................................................. 1,738,155,175 1,706,703,344
-------------- --------------
End of period (including undistributed net investment income of
$12,027,863 and $132,784, respectively) ........................................ $1,986,081,126 $1,738,155,175
============== ==============

See accompanying notes to financial statements.

THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION. The Gabelli Dividend & Income Trust (the "Fund") is a
non-diversified closed-end management investment company organized as a Delaware
statutory trust on November 18, 2003 and registered under the Investment Company
Act of 1940, as amended (the "1940 Act"). Investment operations commenced on
November 28, 2003.

The Fund's investment objective is to provide a high level of total return
on its assets with an emphasis on dividends and income. The Fund will attempt to
achieve its investment objective by investing, under normal market conditions,
at least 80% of its assets in dividend paying securities (such as common and
preferred stock) or other income producing securities (such as fixed income debt
securities and securities that are convertible into equity securities).

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 Gabelli Funds, LLC (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 to the
valuation and changes in valuation of similar securities, including a comparison
of foreign securities to the equivalent U.S. dollar value American Depository
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.

In September 2006, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards ("SFAS") 157, Fair Value
Measurements, which clarifies the definition of fair value and requires
companies to expand their disclosure about the use of fair value to measure
assets and liabilities in interim and annual periods subsequent to initial
recognition. Adoption of SFAS 157 requires the use of the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. At this time,
management is in the process of reviewing the requirements of SFAS 157 against
its current valuation policies to determine future applicability.

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.
The Fund will always receive and maintain securities as collateral whose market
value, including accrued interest, will be 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, 2006, the Fund had investments of $210,000,000 in repurchase agreements.

THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

OPTIONS. The Fund may purchase or write call or put options on securities
or indices. As a writer of put options, the Fund receives a premium at the
outset and then bears the risk of unfavorable changes in the price of the
financial instrument underlying the option. The Fund would incur a loss if the
price of the underlying financial instrument decreases between the date the
option is written and the date on which the option is terminated. The Fund would
realize a gain, to the extent of the premium, if the price of the financial
instrument increases between those dates.

As a purchaser of put options, the Fund pays a premium for the right to
sell to the seller of the put option the underlying security at a specified
price. The seller of the put has the obligation to purchase the underlying
security upon exercise at the exercise price. If the price of the underlying
security declines, the Fund would realize a gain upon sale or exercise. If the
price of the underlying security increases or stays the same, the Fund would
realize a loss upon sale or at expiration date, but only to the extent of the
premium paid.

In the case of call options, these exercise prices are referred to as
"in-the-money," "at-the-money," and "out-of-the-money," respectively. The Fund
may write (a) in-the-money call options when the Adviser expects that the price
of the underlying security will remain stable or decline moderately during the
option period, (b) covered at-the-money call options when the Adviser expects
that the price of the underlying security will remain stable or advance
moderately during the option period, and (c) out-of-the-money call options when
the Adviser expects that the premiums received from writing the call option will
be greater than the appreciation in the price of the underlying security above
the exercise price. By writing a call option, the Fund limits its opportunity to
profit from any increase in the market value of the underlying security above
the exercise price of the option. Out-of-the-money, at-the-money, and
in-the-money put options (the reverse of call options as to the relation of
exercise price to market price) may be utilized in the same market environments
that such call options are used in equivalent transactions.

SWAP AGREEMENTS. The Fund may enter into interest rate swap or cap
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. Swap agreements may involve, to varying
degrees, elements of market and counterparty risk, and exposure to loss in
excess of the related amounts reflected in the Statement of Assets and
Liabilities. In an interest rate swap, the Fund would agree to pay to the other
party to the interest rate swap (which is known as the "counterparty")
periodically a fixed rate payment in exchange for the counterparty agreeing to
pay to the Fund periodically a variable rate payment that is intended to
approximate the Fund's variable rate payment obligation on Series B Preferred
Stock. In an interest rate cap, the Fund would pay a premium to the counterparty
and, to the extent that a specified variable rate index exceeds a predetermined
fixed rate, would receive from that counterparty payments of the difference
based on the notional amount of such cap. Interest rate swap and cap
transactions introduce additional risk because the Fund would remain obligated
to pay preferred stock dividends when due in accordance with the Articles
Supplementary even if the counterparty defaulted. If there is a default by the
counterparty to a swap contract, the Fund will be limited to contractual
remedies pursuant to the agreements related to the transaction. 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 for Series B Preferred
Stock. In addition, at the time an interest rate swap or cap transaction reaches
its scheduled termination date, there is a risk that the Fund will not be able
to obtain a replacement transaction or that the terms of the replacement will
not be as favorable as on the expiring transaction. If this occurs, it could
have a negative impact on the Fund's ability to make dividend payments on Series
B Preferred Stock.

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 are 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.

The Fund has entered into an interest rate swap agreement with Citibank
N.A. Under the agreement the Fund receives a floating rate of interest and pays
a respective fixed rate of interest on the nominal value of the swap. Details of
the swap at December 31, 2006 are as follows:

NOTIONAL VARIABLE RATE* TERMINATION UNREALIZED
AMOUNT FIXED RATE (RATE RESET MONTHLY) DATE APPRECIATION
------------ ---------- -------------------- ------------ ------------
$100,000,000 4.01% 5.32% June 2, 2010 $3,155,309

---------------------------------
* Based on Libor (London Interbank Offered Rate).

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

THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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, 2006, 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, 2006, there were no open
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. At December 31, 2006, there were no open forward
foreign exchange contracts.

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 initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.

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.

RESTRICTED AND ILLIQUID SECURITIES. The Fund is not subject to an
independent limitation on the amount it may invest in securities for which the
markets are illiquid. Illiquid securities include securities the disposition of
which is subject to substantial legal or contractual restrictions. The sale of
illiquid securities often requires more time and results in higher brokerage
charges or dealer discounts and other selling expenses than does the sale of
securities eligible for trading on national securities exchanges or in the
over-the-counter markets. Restricted securities may sell at a price lower than
similar securities that are not subject to restrictions on resale. Securities
freely saleable among qualified institutional investors under special rules
adopted by the SEC may be treated as liquid if they satisfy liquidity standards
established by the Board. The continued liquidity of such securities is not as
well assured as that of publicly traded securities, and accordingly the Board
will monitor their liquidity.

THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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 of 2.00% above the Federal Funds
rate on outstanding balances. This amount, if any, would be shown as "interest
expense" in the Statement of Operations.

DISTRIBUTIONS TO SHAREHOLDERS. Distributions to common 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 fiscal year
ended December 31, 2006, reclassifications were made to increase accumulated net
investment income by $223,800, to increase accumulated distributions in excess
of net realized gain on investments, swap contracts, options, and foreign
currency transactions by $221,108, with an offsetting adjustment to paid-in
capital.

Distributions to shareholders of the Fund's 5.875% Series A Cumulative
Preferred Stock, Series B Auction Market Cumulative Preferred Stock, Series C
Auction Market Cumulative Preferred Stock, 6.00% Series D Cumulative Preferred
Stock, and Series E Auction Rate Cumulative Preferred Stock ("Cumulative
Preferred Stock") are recorded on a daily basis and are determined as described
in Note 5.

The tax character of distributions paid during the fiscal year ended
December 31, 2006 and December 31, 2005 was as follows:

YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
------------------------ ------------------------
Common Preferred Common Preferred
------ --------- ------ ---------

DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short-term capital gains) ..$ 71,341,776 $14,347,465 $ 50,900,518 $ 6,746,970
Net long-term capital gains ............... 58,199,561 11,704,448 50,796,878 6,733,232
------------ ----------- ------------ -----------
Total distributions paid .................. $129,541,337 $26,051,913 $101,697,396 $13,480,202
============ =========== ============ ===========

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.

At December 31, 2006, the difference between book basis and tax basis
unrealized appreciation was primarily due to deferral of losses from wash sales
for tax purposes and basis adjustments on investments in partnerships.

As of December 31, 2006, the components of accumulated earnings/(losses) on
a tax basis were as follows:

Net unrealized appreciation on investments, written options,
foreign currency, and swap contracts ................... $431,173,223
Post-October currency loss deferral ...................... (449,565)
Undistributed ordinary income ............................ 11,337,666
Other temporary differences .............................. (1,545)
------------
Total .................................................... $442,059,779
============

THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The following summarizes the tax cost of investments, written options, swap
contracts, and the related unrealized appreciation/ (depreciation) at December
31, 2006:

GROSS GROSS NET UNREALIZED
COST/ UNREALIZED UNREALIZED APPRECIATION/
PROCEEDS APPRECIATION DEPRECIATION (DEPRECIATION)
-------- ------------ ------------ --------------

Investments ............. $2,060,027,628 $449,771,458 $(21,431,518) $428,339,940
Written options ......... 1,898,621 52,301 (272,608) (220,307)
Swap contracts .......... -- 3,054,809 -- 3,054,809
-------------- ------------ ------------ ------------
$2,061,926,249 $452,878,568 $(21,704,126) $431,174,442
============== ============ ============ ============

In July 2006, the FASB issued Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109" ("the
Interpretation"). The Interpretation establishes for all entities, including
pass-through entities such as the Fund, a minimum threshold for financial
statement recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction), and
requires certain expanded tax disclosures. The Interpretation is required to be
implemented for the Fund no later than June 29, 2007, and is to be applied to
all open tax years as of the date of effectiveness. Management has recently
begun to evaluate the application of the Interpretation to the Fund, and is not
in a position at this time to estimate the significance of its impact, if any,
on the Fund's financial statements.

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 fee, computed weekly and paid
monthly, equal on an annual basis to 1.00% of the value of the Fund's average
weekly net assets including the liquidation value of the preferred stock. 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. The Adviser has agreed to reduce
the management fee on the incremental assets attributable to the Cumulative
Preferred Stock if the total return of the NAV of the common shares of the Fund,
including distributions and advisory fee subject to reduction, does not exceed
the stated dividend rate or corresponding swap rate of each particular series of
the Cumulative Preferred Stock for the fiscal year.

The Fund's total return on the NAV of the common shares is monitored on a
monthly basis to assess whether the total return on the NAV of the common shares
exceeds the stated dividend rate or corresponding swap rate of each particular
series of Cumulative Preferred Stock for the period. For the fiscal year ended
December 31, 2006, the Fund's total return on the NAV of the common shares
exceeded the stated dividend rate or corresponding swap rate of all outstanding
Preferred Stock. Thus, management fees were accrued on these assets.

During the fiscal year ended December 31, 2006, the Fund paid brokerage
commissions of $878,825 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 fiscal
year ended December 31, 2006, the Fund paid or accrued $45,000 to the Adviser in
connection with the cost of computing the Fund's NAV.

The Fund is assuming its portion of the allocated cost of the Gabelli
Funds' Chief Compliance Officer in the amount of $38,033 for the fiscal year
ended December 31, 2006, which is included in payroll expenses in the Statement
of Operations.

The Fund pays each Trustee that is not considered to be an affiliated
person an annual retainer of $12,000 plus $1,500 for each Board meeting attended
and they are reimbursed for any out of pocket expenses incurred in attending
meetings. All Board committee members receive $1,000 per meeting attended. In
addition, the Audit Committee Chairman receives an annual fee of $3,000, the
Proxy Voting Committee Chairman receives an annual fee of $1,500, and the
Nominating Committee Chairman receives an annual fee of $2,000. 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 fiscal year ended December 31, 2006, other than short-term and U.S
Government securities, aggregated $984,096,704 and $564,949,256, respectively.

Option contracts written by the Fund during the fiscal year ended December
31, 2006 were as follows:

NUMBER OF
CONTRACTS PREMIUMS
----------- ----------
Options outstanding at December 31, 2005 .. -- --
Options written ........................... 9,331 $2,145,911
Options exercised ......................... (3,487) (228,211)
Options closed ............................ (300) (19,079)
------ ----------
Options outstanding at December 31, 2006 .. 5,544 $1,898,621
====== ==========

THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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 fiscal year ended
December 31, 2006, the Fund repurchased 340,235 shares of beneficial interest in
the open market at a cost of $6,491,041 and an average discount of approximately
13.99% from its NAV. All shares of beneficial interest repurchased have been
retired.

Transactions in shares of beneficial interest were as follows:

YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------

Net decrease from repurchase of common shares ..... (340,235) $(6,491,041) (504,100) $(9,076,752)

The Fund's Declaration of Trust, as amended, authorizes the issuance of an
unlimited number of shares of $0.001 par value Cumulative Preferred Stock. The
Cumulative Preferred Stock is senior to the common shares and results in the
financial leveraging of the common shares. Such leveraging tends to magnify both
the risks and opportunities to common shareholders. Dividends on shares of the
Cumulative Preferred Stock are cumulative. The Fund is required by the 1940 Act
and by the Statements of Preferences to meet certain asset coverage tests with
respect to the Cumulative Preferred Stock. If the Fund fails to meet these
requirements and does not correct such failure, the Fund may be required to
redeem, in part or in full, the 5.875% Series A, Series B Auction Market, Series
C Auction Market, 6.00% Series D, and Series E Auction Rate Cumulative Preferred
Stock at redemption prices of $25, $25,000, $25,000, $25, and $25,000,
respectively, per share plus an amount equal to the accumulated and unpaid
dividends whether or not declared on such shares in order to meet these
requirements. Additionally, failure to meet the foregoing asset coverage
requirements could restrict the Fund's ability to pay dividends to common
shareholders and could lead to sales of portfolio securities at inopportune
times. The income received on the Fund's assets may vary in a manner unrelated
to the fixed and variable rates, which could have either a beneficial or
detrimental impact on net investment income and gains available to common
shareholders.

On October 12, 2004, the Fund received net proceeds of $77,280,971 (after
underwriting discounts of $2,520,000 and offering expenses of $199,029) from the
public offering of 3,200,000 shares of 5.875% Series A Cumulative Preferred
Stock. Commencing October 12, 2009 and thereafter, the Fund, at its option, may
redeem the 5.875% Series A Cumulative Preferred Stock in whole or in part at the
redemption price at any time. During the fiscal year ended December 31, 2006,
the Fund did not repurchase any shares of 5.875% Series A Cumulative Preferred
Stock. At December 31, 2006, 3,200,000 shares of 5.875% Series A Cumulative
Preferred Stock were outstanding and accrued dividends amounted to $78,333.

On October 12, 2004, the Fund received net proceeds of $217,488,958 (after
underwriting discounts of $2,200,000 and offering expenses of $311,042) from the
public offering of 4,000 shares of Series B and 4,800 shares of Series C Auction
Market Cumulative Preferred Stock, respectively. The dividend rate, as set by
the auction process, which is generally held every seven days, is expected to
vary with short-term interest rates. The dividend rates of Series B Auction
Market Cumulative Preferred Stock ranged from 4.14% to 5.30% for the fiscal year
ended December 31, 2006. The dividend rates of Series C Auction Market
Cumulative Preferred Stock ranged from 4.10% to 5.36% during the fiscal year
ended December 31, 2006. Existing shareholders may submit an order to hold, bid,
or sell such shares on each auction date. Series B and C Auction Market
Cumulative Preferred Stock shareholders may also trade shares in the secondary
market. The Fund, at its option, may redeem the Series B and C Auction Market
Cumulative Preferred Stock in whole or in part at the redemption price at any
time. During the fiscal year ended December 31, 2006, the Fund did not redeem
any shares of Series B and C Auction Market Cumulative Preferred Stock. At
December 31, 2006, 4,000 and 4,800 shares of the Series B and C Auction Market
Cumulative Preferred Stock were outstanding with an annualized dividend rate of
5.30% and 5.32% per share and accrued dividends amounted to $73,611 and $53,200,
respectively.

On November 3, 2005, the Fund received net proceeds of $62,617,239 (after
underwriting discounts of $2,047,500 and offering expenses of $335,261) from the
public offering of 2,600,000 shares of 6.00% Series D Cumulative Preferred
Stock. Commencing November 3, 2010 and thereafter, the Fund, at its option, may
redeem the 6.00% Series D Cumulative Preferred Stock in whole or in part at the
redemption price at any time. During the fiscal year ended December 31, 2006,
the Fund did not repurchase any shares of 6.00% Series D Cumulative Preferred
Stock. At December 31, 2006, 2,600,000 shares of 6.00% Series D Cumulative
Preferred Stock were outstanding and accrued dividends amounted to $65,000.

THE GABELLI DIVIDEND & INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

On November 3, 2005, the Fund received net proceeds of $133,379,387 (after
underwriting discounts of $1,350,000 and offering expenses of $270,613) from the
public offering of 5,400 shares of Series E Auction Rate Cumulative Preferred
Stock. The dividend rate, as set by the auction process, which is generally held
every 7 days, is expected to vary with short-term interest rates. The dividend
rates of Series E Auction Rate Cumulative Preferred Stock ranged from 4.22% to
5.30% for the fiscal year ended December 31, 2006. Existing shareholders may
submit an order to hold, bid, or sell such shares on each auction date. Series E
Auction Rate Preferred Stock shareholders may also trade shares in the secondary
market. The Fund, at its option, may redeem the Series E Auction Rate Preferred
Stock in whole or in part at the redemption price at any time. During the year
ended December 31, 2006, the Fund did not redeem any shares of Series E Auction
Rate Preferred Stock. At December 31, 2006, 5,400 shares of Series E Auction
Rate Preferred Stock were outstanding with an annualized dividend rate of 5.30%
and accrued dividends amounted to $79,500.

The holders of Cumulative Preferred Stock generally are entitled to one
vote per share held on each matter submitted to a vote of shareholders of the
Fund and will vote together with holders of common shares as a single class. The
holders of Cumulative Preferred Stock voting together as a single class also
have the right currently to elect two Trustees and under certain circumstances
are entitled to elect a majority of the Board of Trustees. In addition, the
affirmative vote of a majority of the votes entitled to be cast by holders of
all outstanding shares of the preferred stock, voting as a single class, will be
required to approve any plan of reorganization adversely affecting the preferred
stock, and the approval of two-thirds of each class, voting separately, of the
Fund's outstanding voting stock must approve the conversion of the Fund from a
closed-end to an open-end investment company. The approval of a majority (as
defined in the 1940 Act) of the outstanding preferred stock and a majority (as
defined in the 1940 Act) of the Fund's outstanding voting securities are
required to approve certain other actions, including changes in the Fund's
investment objectives or fundamental investment policies.

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. The Adviser and/or affiliates received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund share trading practices involving certain funds managed by the
Adviser. GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company,
responded to these requests for documents and testimony. In June 2006, GAMCO
began discussions with the SEC regarding a possible resolution of their inquiry.
In February 2007, the Adviser made an offer of settlement to the staff of the
SEC for communication to the Commission for its consideration to resolve this
matter. This offer of settlement is subject to agreement regarding the specific
language of the SEC's administrative order and other settlement documents. On a
separate matter, in September 2005, the Adviser was informed by the staff of the
SEC that the staff may recommend to the Commission that an administrative remedy
and a monetary penalty be sought from the Adviser in connection with the actions
of two of seven closed-end funds managed by the Adviser relating to Section
19(a) and Rule 19a-1 of the 1940 Act. These provisions require registered
investment companies to provide written statements to shareholders when a
dividend is made from a source other than net investment income. While the two
closed-end funds sent annual statements and provided other materials containing
this information, the funds did not send written statements to shareholders with
each distribution in 2002 and 2003. The Adviser believes that all of the funds
are now in compliance. The Adviser believes that these matters would have no
effect on the Fund or any material adverse effect on the Adviser or its ability
to manage the Fund. The staff's notice to the Adviser did not relate to the
Fund.

THE GABELLI DIVIDEND & INCOME TRUST
FINANCIAL HIGHLIGHTS

SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT EACH PERIOD:

YEAR ENDED DECEMBER 31,
----------------------------------- PERIOD ENDED
2006 2005 2004 DECEMBER 31, 2003 (F)
--------- --------- --------- ----------------------

OPERATING PERFORMANCE:
Net asset value, beginning of period ........................ $ 20.62 $ 20.12 $ 19.26 $ 19.06(g)
--------- --------- --------- ---------
Net investment income ........................................ 0.87 0.55 0.40 --
Net realized and unrealized gain on investments, written
options, swap contracts, futures contracts, securities sold short,
and foreign currency transactions .......................... 4.00 1.33 1.80 0.20
---------- ---------- ---------- ----------
Total from investment operations ............................. 4.87 1.88 2.20 0.20
---------- ---------- ---------- ----------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS: (A)
Net investment income ........................................ (0.12) (0.06) (0.01) --
Net realized gain on investments ............................. (0.19) (0.10) (0.01) --
---------- ---------- ---------- ----------
Total distributions to preferred stock shareholders .......... (0.31) (0.16) (0.02) --
---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON
SHAREHOLDERS RESULTING FROM OPERATIONS ..................... 4.56 1.72 2.18 --
---------- ---------- ---------- ----------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income ........................................ (0.61) (0.48) (0.39) --
Net realized gain on investments ............................. (0.93) (0.72) (0.24) --
Return of capital ............................................ -- -- (0.57) --
---------- ---------- ---------- ----------
Total distributions to common shareholders ................... (1.54) (1.20) (1.20) --
---------- ---------- ---------- ----------
FUND SHARE TRANSACTIONS:
Decrease in net asset value from common share transactions ... -- -- (0.05) --
Increase in net asset value from repurchase of common shares 0.01 0.02 -- --
Offering costs for common shares charged to paid-in capital .. -- -- (0.01) --
Offering costs for preferred shares charged to paid-in capital (0.00)(d) (0.04) (0.06) --
---------- ---------- ---------- ----------
Total from fund share transactions ........................... 0.01 (0.02) (0.12) --
---------- ---------- ---------- ----------
NET ASSET VALUE ATTRIBUTABLE TO COMMON SHAREHOLDERS,
END OF PERIOD ..............................................$ 23.65 $ 20.62 $ 20.12 $ 19.26
========== ========== ========== ==========
NAV total return + ........................................... 24.09% 9.47% 11.56% 1.0%*
========== ========== ========== ==========
Market value, end of period ..................................$ 21.47 $ 17.62 $ 17.95 $ 20.00
========== ========== ========== ==========
Investment total return ++ ................................... 31.82% 4.85% (4.15)% 0.0%**
========== ========== ========== ==========

See accompanying notes to financial statements.

THE GABELLI DIVIDEND & INCOME TRUST
FINANCIAL HIGHLIGHTS (CONTINUED)

SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT EACH PERIOD:

YEAR ENDED DECEMBER 31,
----------------------------------- PERIOD ENDED
2006 2005 2004 DECEMBER 31, 2003 (F)
--------- --------- --------- ----------------------

RATIOS AND SUPPLEMENTAL DATA:
Net assets including liquidation value of preferred shares,
end of period (in 000's) ...................................$2,486,081 $2,238,155 $2,006,703 --
Net assets attributable to common shares,
end of period (in 000's) ...................................$1,986,081 $1,738,155 $1,706,703 $1,451,650
Ratio of net investment income to average net assets
attributable to common shares before preferred
share distributions ........................................ 3.91% 2.75% 2.17% (0.04)%(h)
Ratio of operating expenses to average net assets
attributable to common shares net of advisory fee
reduction, if any .......................................... 1.41%(e) 1.33%(e) 1.12% 1.38%(h)
Ratio of operating expenses to average net assets including
liquidation value of preferred shares net of advisory
fee reduction, if any ...................................... 1.11%(e) 1.12%(e) 1.07% --
Portfolio turnover rate ...................................... 28.8% 25.6% 33.3% 0.4%
5.875% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ..................$ 80,000 $ 80,000 $ 80,000 --
Total shares outstanding (in 000's) .......................... 3,200 3,200 3,200 --
Liquidation preference per share .............................$ 25.00 $ 25.00 $ 25.00 --
Average market value (b) .....................................$ 23.86 $ 24.82 $ 24.68 --
Asset coverage per share .....................................$ 124.30 $ 111.91 $ 167.23 --
AUCTION MARKET SERIES B CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ..................$ 100,000 $ 100,000 $ 100,000 --
Total shares outstanding (in 000's) .......................... 4 4 4 --
Liquidation preference per share .............................$ 25,000 $ 25,000 $ 25,000 --
Average market value (b) .....................................$ 25,000 $ 25,000 $ 25,000 --
Asset coverage per share .....................................$ 124,304 $ 111,908 $ 167,225 --
AUCTION MARKET SERIES C CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ..................$ 120,000 $ 120,000 $ 120,000 --
Total shares outstanding (in 000's) .......................... 5 5 5 --
Liquidation preference per share .............................$ 25,000 $ 25,000 $ 25,000 --
Average market value (b) .....................................$ 25,000 $ 25,000 $ 25,000 --
Asset coverage per share .....................................$ 124,304 $ 111,908 $ 167,225 --
6.00% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ..................$ 65,000 $ 65,000 -- --
Total shares outstanding (in 000's) .......................... 2,600 2,600 -- --
Liquidation preference per share .............................$ 25.00 $ 25.00 -- --
Average market value (b) .....................................$ 24.37 $ 24.72 -- --
Asset coverage per share .....................................$ 124.30 $ 111.91 -- --
AUCTION RATE SERIES E CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ..................$ 135,000 $ 135,000 -- --
Total shares outstanding (in 000's) .......................... 5 5 -- --
Liquidation preference per share .............................$ 25,000 $ 25,000 -- --
Average market value (b) .....................................$ 25,000 $ 25,000 -- --
Asset coverage per share .....................................$ 124,304 $ 111,908 -- --
ASSET COVERAGE (C) ........................................... 497% 448% 669% --

----------------------------------
(a) Calculated based upon average common shares outstanding on the record dates
throughout the year.
(b) Based on weekly prices.
(c) Asset coverage is calculated by combining all series of preferred stock.
(d) Amount represents less than $0.005 per share.
(e) For the fiscal years ended December 31, 2006 and December 31, 2005, the
effect of custodian fee credits was minimal.
(f) The Gabelli Dividend & Income Trust commenced investment operations on
November 28, 2003.
(g) The beginning NAV includes a $0.04 reduction for costs associated with the
initial public offering.
(h) Annualized.
* Based on net asset value per share at commencement of operations of $19.06
per share.
** Based on market value per share at initial public offering of $20.00 per
share.
+ Based on net asset value per share, adjusted for reinvestment of
distributions at prices obtained under the Fund's dividend reinvestment
plan. Total return for the period of less than one year is not annualized.
++ Based on market value per share, adjusted for reinvestment of distributions
at prices obtained under the Fund's dividend reinvestment plan. Total return
for the period of less than one year is not annualized.

See accompanying notes to financial statements.

THE GABELLI DIVIDEND & INCOME TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of
The Gabelli Dividend & Income Trust:

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Dividend & Income Trust
(hereafter referred to as the "Fund") at December 31, 2006, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the periods presented, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements 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 are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 2006 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
February 28, 2007

THE GABELLI DIVIDEND & INCOME TRUST
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
officers and is available, without charge, upon request, by calling 800-GABELLI
(800-422-3554) or by writing to The Gabelli Dividend &Income Trust 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 2003*** 24 Chairman of the Board and Chief Director of Morgan Group
Trustee and Executive Officer of GAMCO Investors, Holdings, Inc. (transportation
Chief Investment Officer Inc. and Chief Investment Officer - services); Chairman of the
Age: 64 Value Portfolios of Gabelli Funds, LLC Board of Lynch Interactive
and GAMCO Asset Management Inc.; Corporation (multimedia and
Director/Trustee or Chief Investment communication services
Officer of other registered investment
companies in the Gabelli Funds company)
complex; Chairman and Chief Executive
Officer of GGCP, Inc.

SALVATORE M. SALIBELLO Since 2003** 3 Certified Public Accountant and Managing --
Trustee Partner of the public accounting firm
Age: 61 Salibello & Broder, LLP since 1978

EDWARD T. TOKAR Since 2003** 3 Senior Managing Director of Beacon Trustee, LEVCO Series Trust;
Trustee Trust Company (trust services) Director of DB Hedge Strategies
Age: 59 since 2004; Chief Executive Officer Fund LLC; Director of the
of Allied Capital Management LLC Topiary Benefit Plan Investor
(1977-2004); Vice President of Fund LLC (financial services)
Honeywell International
Inc., (1977-2004)

INDEPENDENT TRUSTEES 5:
-----------------------
ANTHONY J. COLAVITA Since 2003* 34 Partner in the law firm of --
Trustee Anthony J. Colavita, P.C.
Age: 71

JAMES P. CONN Since 2003** 15 Former Managing Director and Director of First Republic
Trustee Chief Investment Officer of Bank (banking)
Age: 68 Financial Security Assurance Holdings
Ltd. (insurance holding company)
(1992-1998)

MARIO D'URSO Since 2003*** 4 Chairman of Mittel Capital Markets --
Trustee S.p.A., since 2001; Senator in the
Age: 66 Italian Parliament, (1996-2001)

FRANK J. FAHRENKOPF, JR. Since 2003* 5 President and Chief Executive Officer Director of First Republic
Trustee of the American Gaming Association; Bank (banking)
Age: 67 Partner in the law firm of Hogan &
Hartson LLP; Co-Chairman of the
Commission on Presidential Debates;
Former Chairman of the Republican
National Committee

MICHAEL J. MELARKEY Since 2003*** 4 Partner in the law firm of Avansino, Director of Southwest Gas
Trustee Melarkey, Knobel & Mulligan Corporation (natural gas
Age: 57 utility)

ANTHONIE C. VAN EKRIS Since 2003* 17 Chairman of BALMAC International, Inc. --
Trustee (commodities and futures trading)
Age: 72

SALVATORE J. ZIZZA Since 2003* 25 Chairman of Hallmark Electrical Director of Hollis-Eden
Trustee Supplies Corp. (distribution of Pharmaceuticals (biotechnology)
Age: 61 electrical supplies) and Earl Scheib, Inc.
(automotive services)

THE GABELLI DIVIDEND & INCOME TRUST
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)

TERM OF
OFFICE AND
NAME, POSITION(S) LENGTH OF
ADDRESS 1 TIME PRINCIPAL OCCUPATION(S)
AND AGE SERVED 2 DURING PAST FIVE YEARS
---------------- ---------- --------------------
OFFICERS:
---------

BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC
President since 1988 and an officer of all of the registered investment companies in
Age: 55 the Gabelli Funds complex. Director and President of Gabelli Advisers, Inc.
since 1998

CARTER W. AUSTIN Since 2003 Vice President of The Gabelli Equity Trust since 2000, The Gabelli Global
Vice President Gold, Natural Resources &Income Trust since 2005, and The Gabelli Global
Age: 40 Deal Fund since 2006; Vice President of Gabelli Funds, LLC since 1996

JAMES E. MCKEE Since 2003 Vice President, General Counsel and Secretary of GAMCO Investors, Inc.
Secretary (since 1999) and GAMCO Asset Management Inc. (since 1993); Secretary
Age: 43 of all of the registered investment companies in the Gabelli Funds complex

AGNES MULLADY Since 2006 Treasurer of all of the registered investment companies in the Gabelli Funds
Treasurer complex; Senior Vice President of U.S. Trust Company, N.A. and Treasurer and Chief
Age: 48 Financial Officer of Excelsior Funds from 2004 through 2005; Chief Financial
Officer of AMIC Distribution Partners from 2002 through 2004; Controller of
Reserve Management Corporation and Reserve Partners, Inc. and Treasurer of
Reserve Funds from 2000 through 2002

PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs at GAMCO Investors, Inc. since 2004; Chief
Chief Compliance Officer Compliance Officer of all of the registered investment companies in the
Age: 53 Gabelli Funds complex; Vice President of Goldman Sachs Asset Management
from 2000 through 2004

------------------------------------------------------------
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 2008 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 2007 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 an
"interested person" of the Fund as a result of his employment as an officer of
the Investment Adviser. Mr. Gabelli is also a registered representative of an
affiliated broker-dealer. Mr. Tokar is an "interested person" as a result of
his son's employment by an affiliate of the Investment Adviser. Mr. Salibello
may be considered an "interested person" of the Fund as a result of being a
partner in an accounting firm that provides professional services to
affiliates of the investment 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.

CERTIFICATIONS

The Fund's Chief Executive Officer has certified to the New York Stock
Exchange ("NYSE") that, as of June 12, 2006, he was not aware of any violation
by the Fund of applicable NYSE corporate governance listing standards. The Fund
reports to the SEC on Form N-CSR which contains certifications by the Fund's
principal executive officer and principal financial officer that relate to the
Fund's disclosure in such reports and that are required by Rule 30a-2(a) under
the 1940 Act.

THE GABELLI DIVIDEND & INCOME TRUST
INCOME TAX INFORMATION (UNAUDITED)
DECEMBER 31, 2006

CASH DIVIDENDS AND DISTRIBUTIONS

TOTAL AMOUNT ORDINARY LONG-TERM DIVIDEND
PAYABLE RECORD PAID INVESTMENT CAPITAL REINVESTMENT
DATE DATE PER SHARE (A) INCOME (A)(A) GAINS (a) PRICE
------- ------ ------------- ------------- ---------- ------------
COMMON STOCK

01/25/06 01/17/06 $0.10000 $0.05681 $0.04319 $18.55500
02/22/06 02/13/06 0.10000 0.05500 0.04500 18.59810
03/27/06 03/17/06 0.10000 0.05500 0.04500 18.58470
04/24/06 04/13/06 0.10000 0.05500 0.04500 18.57050
05/24/06 05/16/06 0.10000 0.05500 0.04500 18.21850
06/26/06 06/16/06 0.10000 0.05500 0.04500 18.17280
07/25/06 07/17/06 0.10000 0.05500 0.04500 18.59760
08/25/06 08/17/06 0.10000 0.05500 0.04500 19.07180
09/25/06 09/15/06 0.10000 0.05500 0.04500 19.18870
10/25/06 10/17/06 0.10000 0.05500 0.04500 20.04590
11/24/06 11/15/06 0.10000 0.05500 0.04500 20.10720
12/18/06 12/13/06 0.35000 0.19249 0.15751 21.28810
01/08/07 12/29/06 0.09000 0.04950 0.04050 21.09060
-------- -------- --------
$1.54000 $0.84880 $0.69120
5.875% PREFERRED SHARES
03/27/06 03/20/06 $0.36719 $0.20367 $0.16352
06/26/06 06/19/06 0.36719 0.20194 0.16525
09/26/06 09/19/06 0.36719 0.20194 0.16525
12/26/06 12/18/06 0.36719 0.20194 0.16525
-------- -------- --------
$1.46875 $0.80950 $0.65925
6.000% PREFERRED SHARES
03/27/06 03/20/06 $0.37500 $0.20800 $0.16700
06/26/06 06/19/06 0.37500 0.20624 0.16876
09/26/06 09/19/06 0.37500 0.20624 0.16876
12/26/06 12/18/06 0.37500 0.20624 0.16876
-------- -------- --------
$1.50000 $0.82672 $0.67328

SERIES B AND C AUCTION MARKET AND SERIES E AUCTION RATE PREFERRED SHARES
The Series B Auction Market Preferred Shares, Series C Auction Market
Preferred Shares, and Series E Auction Rate Preferred Shares pay dividends
weekly based on a rate set at auction, usually held every seven days. The
percentage of 2006 distributions derived from long-term capital gains for the
Series B Auction Market Preferred Shares, Series C Auction Market Preferred
Shares, and Series E Auction Rate Preferred Shares was 47.13%.

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
your 2006 tax returns. Ordinary income distributions include net investment
income and realized net short-term capital gains. The long-term gain
distribution for the fiscal year ended December 31, 2006 is $69,904,009.

CORPORATE DIVIDENDS RECEIVED DEDUCTION, QUALIFIED DIVIDEND INCOME AND U.S.
GOVERNMENT SECURITIES INCOME
The Fund paid to common, 5.875% Series A, and 6.00% Series D preferred
shareholders ordinary income dividends of $0.84880, $0.80950, and $0.82672 per
share, respectively, in 2006. The Fund paid weekly distributions to Series B, C,
and E preferred shareholders at varying rates throughout the year, including
ordinary income dividends totaling $676.98080, $676.17050, and $675.64140 per
share, respectively, in 2006. For the year ended December 31, 2006, 65.79% of
the ordinary dividend qualified for the dividend received deduction available to
corporations, and 93.67% of the ordinary income distribution was qualified
dividend income. The percentage of ordinary income dividends paid by the Fund
during 2006 derived from U.S. Treasury Securities was 4.79%. 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 the Fund's fiscal year in U.S. Government Securities. The
Fund did not meet this strict requirement in 2006. The percentage of
U.S. Treasury Securities held as of December 31, 2006 was 2.89%.

HISTORICAL DISTRIBUTION SUMMARY

SHORT-TERM LONG-TERM ADJUSTMENT
INVESTMENT CAPITAL CAPITAL RETURN OF TOTAL TO
INCOME (B) GAINS (B) GAINS CAPITAL (C) DISTRIBUTIONS (A) COST BASIS (D)
---------- --------- ----- ----------- ----------------- --------------
COMMON STOCK

2006 $0.60798 $0.24082 $0.69120 -- $1.54000 --
2005 0.45996 0.08568 0.65436 -- 1.20000 --
2004 0.40005 0.10023 0.13893 $0.56079 1.20000 $0.56079
5.875% PREFERRED STOCK
2006 $0.57983 $0.22967 $0.65925 -- $1.46875 --
2005 0.56290 0.10493 0.80092 -- 1.46875 --
2004 0.19150 0.04798 0.06651 -- 0.30599 --
6.000% PREFERRED STOCK
2006 $0.59215 $0.23457 $0.67328 -- $1.50000 --
2005 0.08620 0.01610 0.12270 -- 0.22500 --
AUCTION MARKET/RATE PREFERRED SHARES
2006 Class B Shares $484.90820 $192.07260 $551.32920 -- $1228.31000 --
2006 Class C Shares 484.32800 191.84250 550.66950 -- 1226.84000 --
2006 Class E Shares 483.94880 191.69260 550.23860 -- 1225.88000 --
2005 Class B Shares 320.22640 59.69220 455.63150 -- 835.55000 --
2005 Class C Shares 324.19300 60.43160 461.27540 -- 845.90000 --
2005 Class E Shares 67.54440 12.59070 96.10490 -- 176.24000 --
2004 Class B Shares 68.71140 17.21520 23.86340 -- 109.80000 --
2004 Class C Shares 70.77030 17.73100 24.57840 -- 113.10000 --

--------------------------
(a) Total amounts may differ due to rounding.
(b) Taxable as ordinary income for Federal tax purposes.
(c) Non-taxable.
(d) Decrease in cost basis.

THE GABELLI DIVIDEND & INCOME TRUST

APPROVAL OF CONTINUANCE OF INVESTMENT ADVISORY AGREEMENT

During the six months ended December 31, 2006, the Board of Trustees of the
Trust approved the continuation of the investment advisory agreement with the
Adviser for the Trust on the basis of the recommendation by the trustees (the
"Independent Board Members") who are not "interested persons" of the Trust. 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 portfolio managers, the depth of the analyst pool
available to the Adviser and the portfolio managers, the scope of
administrative, shareholder and other services supervised or provided by the
Adviser, and the absence of significant service problems reported to the Board.
The Independent Board Members noted the experience, length of service, and
reputation of the portfolio managers.

INVESTMENT PERFORMANCE. The Independent Board Members reviewed the performance
of the Fund since inception against a peer group of all closed-end equity funds.
The Board Members noted the Fund's excellent performance for the one year
period, two year period, and since inception.

PROFITABILITY. The Independent Board Members reviewed summary data regarding the
profitability of the Fund to the Adviser.

ECONOMIES OF SCALE. The Independent Board Members discussed the major elements
of the Adviser's cost structure and the relationship of those elements to
potential economies of scale and reviewed rudimentary data suggesting that 20%
growth in the Fund would not produce meaningful economies of scale that the
shareholders would not participate in.

SHARING OF ECONOMIES OF SCALE. The Independent Board Members noted that the
investment management fee schedule for the Fund does not take into account any
potential economies of scale that may develop.

SERVICE AND COST COMPARISONS. The Independent Board Members compared the expense
ratios of the investment management fee, other expenses, and total expenses of
the Fund to similar expense ratios of the peer group of closed-end equity funds
and noted that the Adviser's management fee includes substantially all
administrative services of the Fund as well as investment advisory services. The
Fund's assets are higher than all but six closed-end funds. The Fund's
management fee is six basis points higher than the group average and total
expense ratio is 36 basis points below the group average. The Independent Board
Members also noted that the management fee structure was the same as that in
effect for most of the Gabelli funds. The Independent Board Members were
presented with, but did not compare, the management fee to the fee for other
types of accounts managed by the Adviser.

CONCLUSIONS. The Independent Board Members concluded that the Fund enjoyed
highly experienced portfolio management services, good ancillary services, and a
moderately above average performance record. The Independent Board Members also
concluded that the Fund's expense ratios and the profitability to the Adviser of
managing the Fund were reasonable, and that economies of scale were not a
significant factor in their thinking at this time. The Independent Board Members
did not view the potential profitability of ancillary services as 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 continuation of the Advisory Agreement to the full Board.

AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLANS

ENROLLMENT IN THE PLAN

It is the policy of The Gabelli Dividend &Income Trust (the "Fund") to
automatically reinvest dividends payable to common shareholders. As a
"registered" shareholder you automatically become a participant in the Fund's
Automatic Dividend Reinvestment Plan (the "Plan"). The Plan authorizes the Fund
to issue shares of common stock to participants upon an income dividend or a
capital gains distribution regardless of whether the shares are trading at a
discount or a premium to net asset value. All distributions to shareholders
whose shares are registered in their own names will be automatically reinvested
pursuant to the Plan in additional shares of the Fund. Plan participants may
send their stock certificates to Computershare Trust Company, N.A.
("Computershare") to be held in their dividend reinvestment account. Registered
shareholders wishing to receive their distributions in cash must submit this
request in writing to:

The Gabelli Dividend & Income Trust
c/o Computershare
P.O. Box 43010
Providence, RI 02940-3010

Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan or requesting a copy of the terms of the
Plan may contact Computershare at (800) 336-6983.

If your shares are held in the name of a broker, bank, or nominee, you
should contact such institution. If such institution is not participating in the
Plan, your account will be credited with a cash dividend. In order to
participate in the Plan through such institution, it may be necessary for you to
have your shares taken out of "street name" and re-registered in your own name.
Once registered in your own name your distributions will be automatically
reinvested. Certain brokers participate in the Plan. Shareholders holding shares
in "street name" at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must
contact their broker to make this change.

The number of shares of common stock distributed to participants in the
Plan in lieu of cash dividends is determined in the following manner. Under the
Plan, whenever the market price of the Fund's common stock is equal to or
exceeds net asset value at the time shares are valued for purposes of
determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued shares of common stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current market price of the Fund's common stock. The valuation date is
the dividend or distribution payment date or, if that date is not a New York
Stock Exchange ("NYSE") trading day, the next trading day. If the net asset
value of the common stock at the time of valuation exceeds the market price of
the common stock, participants will receive shares from the Fund valued at
market price. If the Fund should declare a dividend or capital gains
distribution payable only in cash, Computershare will buy shares of common stock
in the open market, or on the NYSE or elsewhere, for the participants' accounts,
except that Computershare will endeavor to terminate purchases in the open
market and cause the Fund to issue shares at net asset value if, following the
commencement of such purchases, the market value of the common stock exceeds the
then current net asset value.

The automatic reinvestment of dividends and capital gains distributions
will not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for Federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.

VOLUNTARY CASH PURCHASE PLAN

The Voluntary Cash Purchase Plan is yet another vehicle for our
shareholders to increase their investment in the Fund. In order to participate
in the Voluntary Cash Purchase Plan, shareholders must have their shares
registered in their own name.

Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to Computershare for investments in the Fund's common
shares at the then current market price. Shareholders may send an amount from
$250 to $10,000. Computershare will use these funds to purchase shares in the
open market on or about the 1st and 15th of each month. Computershare will
charge each shareholder who participates $0.75, plus a pro rata share of the
brokerage commissions. Brokerage charges for such purchases are expected to be
less than the usual brokerage charge for such transactions. It is suggested that
any voluntary cash payments be sent to Computershare, P.O. Box 43010,
Providence, RI 02940-3010 such that Computershare receives such payments
approximately 10 days before the 1st and 15th of the month. Funds not received
at least five days before the investment date shall be held for investment until
the next purchase date. A payment may be withdrawn without charge if notice is
received by Computershare at least 48 hours before such payment is to be
invested.

SHAREHOLDERS WISHING TO LIQUIDATE SHARES HELD AT COMPUTERSHARE must do so
in writing or by telephone. Please submit your request to the above mentioned
address or telephone number. Include in your request your name, address, and
account number. The cost to liquidate shares is $2.50 per transaction as well as
the brokerage commission incurred. Brokerage charges are expected to be less
than the usual brokerage charge for such transactions.

For more information regarding the Dividend Reinvestment Plan and Voluntary
Cash Purchase Plan, brochures are available by calling (914) 921-5070 or by
writing directly to the Fund.

The Fund reserves the right to amend or terminate the Plan as applied to
any voluntary cash payments made and any dividend or distribution paid
subsequent to written notice of the change sent to the members of the Plan at
least 90 days before the record date for such dividend or distribution. The Plan
also may be amended or terminated by Computershare on at least 90 days' written
notice to participants in the Plan.

--------------------------------------------------------------------------------
The Annual Meeting of The Gabelli Dividend & Income Trust's shareholders will
be held at 12:00 P.M. on Monday, May 14, 2007 at the Greenwich Library in
Greenwich, Connecticut.
--------------------------------------------------------------------------------

TRUSTEES AND OFFICERS
THE GABELLI DIVIDEND & INCOME TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422

TRUSTEES OFFICERS

Mario J. Gabelli, CFA Bruce N. Alpert
CHAIRMAN & CHIEF EXECUTIVE OFFICER, PRESIDENT
GAMCO INVESTORS, INC.
Carter W. Austin
Anthony J. Colavita VICE PRESIDENT
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C. Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
James P. Conn
FORMER CHIEF INVESTMENT OFFICER, James E. McKee
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD. SECRETARY

Mario d'Urso Agnes Mullady
CHAIRMAN, MITTEL CAPITAL MARKETS SPA TREASURER

Frank J. Fahrenkopf, Jr. INVESTMENT ADVISER
PRESIDENT & CHIEF EXECUTIVE OFFICER, Gabelli Funds, LLC
AMERICAN GAMING ASSOCIATION One Corporate Center
Rye, New York 10580-1422
Michael J. Melarkey
ATTORNEY-AT-LAW, CUSTODIAN
AVANSINO, MELARKEY, KNOBEL & MULLIGAN State Street Bank and Trust Company

Salvatore M. Salibello COUNSEL
CERTIFIED PUBLIC ACCOUNTANT, Skadden, Arps, Slate, Meagher & Flom, LLP
SALIBELLO & BRODER, LLP
TRANSFER AGENT AND REGISTRAR
Edward T. Tokar Computershare Trust Company, N.A.
SENIOR MANAGING DIRECTOR, BEACON TRUST COMPANY
STOCK EXCHANGE LISTING
Anthonie C. van Ekris 5.875% 6.00%
CHAIRMAN, BALMAC INTERNATIONAL, INC. COMMON PREFERRED PREFERRED
------ --------- ---------
Salvatore J. Zizza NYSE-Symbol: GDV GDV PrA GDVPrD
CHAIRMAN, HALLMARK ELECTRICAL SUPPLIES CORP. Shares Outstanding: 83,973,170 3,200,000 2,600,000

The Net Asset Value per share appears in
the Publicly Traded Funds column, under
the heading "General 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
"General Equity Funds."

The Net Asset Value per share may be obtained
each day by calling (914) 921-5070.

--------------------------------------------------------------------------------
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 Fund may
also, from time to time, purchase its Series A and Series D Cumulative Preferred
Shares in the open market when the shares are trading at a discount to the
Liquidation Value of $25.00.
--------------------------------------------------------------------------------

THE GABELLI DIVIDEND & INCOME TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422

PHONE: 800-GABELLI (800-422-3554)
FAX: 914-921-5118 INTERNET: WWW.GABELLI.COM
EMAIL: CLOSEDEND@GABELLI.COM

GDV Q4/2006

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
Trustees 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
$103,372 for 2005 and $50,700 for 2006.

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 $13,800 for 2005 and $13,800 for 2006. Audit-related fees
represent services provided in the preparation of Preferred Shares
Reports.

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 $2,880 for 2005 and
$3,100 for 2006. 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 2005 and $0 for 2006.

(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
registered public accounting firm to the registrant and (ii) all
permissible non-audit services to be provided by the independent
registered public accounting firm 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 registered public accounting firm's 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) 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 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 $0 for 2005 and $0 for 2006.

(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: Frank J. Fahrenkopf, Jr., Anthonie C. van Ekris and Savadore
J. Zizza.

ITEM 6. SCHEDULE OF INVESTMENTS.

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.

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 Gabelli Advisers, 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 by GAMCO
Investors, Inc. 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.

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.

A. 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.

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

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' staff may request proxy-voting
records for use in presentations to current or prospective clients. Requests for
proxy voting records should be made at least ten days prior to client meetings.

If a client wishes to receive a proxy voting record on a quarterly,
semi-annual or annual basis, please notify the Proxy Voting Department. The
reports will be available for mailing approximately ten days after the quarter
end of the period. First quarter reports may be delayed since the end of the
quarter falls during the height of the proxy season.

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 Wexford Clearing Services
Corporation are responsible for forwarding proxies directly to GAMCO.

Proxies are received in one of two forms:

o Shareholder Vote Authorization Forms (VAFs) - Issued by ADP. VAFs must be
voted through the issuing institution causing a time lag. ADP 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. Upon receipt of instructions from the proxy committee (see Administrative),
the votes are cast and recorded for each account on an individual basis.

Since January 1, 1992, records have been maintained on the Proxy Edge system.
The system is backed up regularly. From 1990 through 1991, records were
maintained on the PROXY VOTER system and in hardcopy format. Prior to 1990,
records were maintained on diskette and in hardcopy format.

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
The rationale for the vote when it appropriate

Records prior to the institution of the PROXY EDGE system include:
Security name
Type of Meeting (Annual, Special, Contest)
Date of Meeting
Name of Custodian
Name of Client
Custodian Account Number
Adviser or Fund Account Number
Directors' recommendation
How the Adviser voted for the client on each issue
Date the proxy statement was received and by whom
Name of person posting the vote
Date and method by which the vote was cast

o From these records individual client proxy voting records are compiled. It
is our policy to provide institutional clients with a proxy voting record
during client reviews. In addition, we will supply a proxy voting record at
the request of the client on a quarterly, semi-annual or annual basis.

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 ADP are always sent directly
to a specific individual at ADP.

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 ADP 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 ADP:

The back of the VAF is stamped indicating that we wish to vote in person.
The forms are then sent overnight to ADP. ADP 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 ADP may be
implemented.

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).

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.

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 audit.

BLANK CHECK PREFERRED STOCK

We oppose the issuance of blank check preferred stock.

Blank check preferred stock allows the company to issue stock and establish
dividends, voting rights, etc. without further shareholder approval.

CLASSIFIED BOARD

A classified board is one where the directors are divided into classes with
overlapping terms. A different class is elected at each annual meeting.

While a classified board promotes continuity of directors facilitating long
range planning, we feel directors should be accountable to shareholders on an
annual basis. We will look at this proposal on a case-by-case basis taking into
consideration the board's historical responsiveness to the rights of
shareholders.

Where a classified board is in place we will generally not support attempts to
change to an annually elected board.

When an annually elected board is in place, we generally will not support
attempts to classify the board.

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.

CUMULATIVE VOTING

In general, we support cumulative voting.

Cumulative voting is a process by which a shareholder may multiply the number of
directors being elected by the number of shares held on record date and cast the
total number for one candidate or allocate the voting among two or more
candidates.

Where cumulative voting is in place, we will vote against any proposal to
rescind this shareholder right.

Cumulative voting may result in a minority block of stock gaining representation
on the board. When a proposal is made to institute cumulative voting, the
proposal will be reviewed on a case-by-case basis. While we feel that each board
member should represent all shareholders, cumulative voting provides minority
shareholders an opportunity to have their views represented.

DIRECTOR LIABILITY AND INDEMNIFICATION

We support efforts to attract the best possible directors by limiting the
liability and increasing the indemnification of directors, except in the case of
insider dealing.

EQUAL ACCESS TO THE PROXY

The SEC's rules provide for shareholder resolutions. However, the resolutions
are limited in scope and there is a 500 word limit on proponents' written
arguments. Management has no such limitations. While we support equal access to
the proxy, we would look at such variables as length of time required to
respond, percentage of ownership, etc.

FAIR PRICE PROVISIONS

Charter provisions requiring a bidder to pay all shareholders a fair price are
intended to prevent two-tier tender offers that may be abusive. Typically, these
provisions do not apply to board-approved transactions.

We support fair price provisions because we feel all shareholders should be
entitled to receive the same benefits.

Reviewed on a case-by-case basis.

GOLDEN PARACHUTES

Golden parachutes are severance payments to top executives who are terminated or
demoted after a takeover.

We support any proposal that would assure management of its own welfare so that
they may continue to make decisions in the best interest of the company and
shareholders even if the decision results in them losing their job. We do not,
however, support excessive golden parachutes. Therefore, each proposal will be
decided on a case-by-case basis.

NOTE: CONGRESS HAS IMPOSED A TAX ON ANY PARACHUTE THAT IS MORE THAN THREE TIMES
THE EXECUTIVE'S AVERAGE ANNUAL COMPENSATION.

ANTI-GREENMAIL PROPOSALS

We do not support greenmail. An offer extended to one shareholder should be
extended to all shareholders equally across the board.

LIMIT SHAREHOLDERS' RIGHTS TO CALL SPECIAL MEETINGS

We support the right of shareholders to call a special meeting.

CONSIDERATION OF NONFINANCIAL EFFECTS OF A MERGER

This proposal releases the directors from only looking at the financial effects
of a merger and allows them the opportunity to consider the merger's effects on
employees, the community, and consumers.

As a fiduciary, we are obligated to vote in the best economic interests of our
clients. In general, this proposal does not allow us to do that. Therefore, we
generally cannot support this proposal.

Reviewed on a case-by-case basis.

MERGERS, BUYOUTS, SPIN-OFFS, RESTRUCTURINGS

Each of the above is considered on a case-by-case basis. According to the
Department of Labor, we are not required to vote for a proposal simply because
the offering price is at a premium to the current market price. We may take into
consideration the long term interests of the shareholders.

MILITARY ISSUES

Shareholder proposals regarding military production must be evaluated on a
purely economic set of criteria for our ERISA clients. As such, decisions will
be made on a case-by-case basis.

In voting on this proposal for our non-ERISA clients, we will vote according to
the client's direction when applicable. Where no direction has been given, we
will vote in the best economic interests of our clients. It is not our duty to
impose our social judgment on others.

NORTHERN IRELAND

Shareholder proposals requesting the signing of the MacBride principles for the
purpose of countering the discrimination of Catholics in hiring practices must
be evaluated on a purely economic set of criteria for our ERISA clients. As
such, decisions will be made on a case-by-case basis.

In voting on this proposal for our non-ERISA clients, we will vote according to
client direction when applicable. Where no direction has been given, we will
vote in the best economic interests of our clients. It is not our duty to impose
our social judgment on others.

OPT OUT OF STATE ANTI-TAKEOVER LAW

This shareholder proposal requests that a company opt out of the coverage of the
state's takeover statutes. Example: Delaware law requires that a buyer must
acquire at least 85% of the company's stock before the buyer can exercise
control unless the board approves.

We consider this on a case-by-case basis. Our decision will be based on the
following:

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

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.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

PORTFOLIO MANAGERS

Mr. Mario J. Gabelli, CFA, is primarily responsible for the day-to-day
management of The Gabelli Dividend & Income Trust, (the Trust). 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.

Additionally, Barbara G. Marcin serves as Senior Portfolio Manager for the
Trust. Ms. Marcin joined GAMCO Investors, Inc. in 1999 to manage larger
capitalization value style portfolios.

MANAGEMENT OF OTHER ACCOUNTS

The table below shows the number of other accounts managed by the Portfolio
Managers 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.

-------------------------------------------------------------------------------------------------------------------------
Total Assets
No. of Accounts in Accounts
Total where Advisory where Advisory
Name of No. of Accounts Fee is Based on Fee is Based
Portfolio Manager Type of Accounts Managed Total Assets Performance on Performance
---------------------------- ---------------- --------------- ------------ ------------- --------------
-------------------------------------------------------------------------------------------------------------------------

1. Mario J. Gabelli Registered 22 $11.5B 5 $2.9B
Investment
Companies:
-------------------------------------------------------------------------------------------------------------------------
Other Pooled 17 $714.9M 16 $624.3M
Investment
Vehicles:
-------------------------------------------------------------------------------------------------------------------------
Other Accounts: 1818 $11.0B 6 $1.5B
-------------------------------------------------------------------------------------------------------------------------
2. Barbara G. Marcin Registered 2 $474.9M 0 0
Investment
Companies:
-------------------------------------------------------------------------------------------------------------------------
Other Pooled 0 0 0 0
Investment
Vehicles:
-------------------------------------------------------------------------------------------------------------------------
Other Accounts: 21 $138.0M 0 0
-------------------------------------------------------------------------------------------------------------------------

POTENTIAL CONFLICTS OF INTEREST

As reflected above, the Portfolio Managers manage accounts in addition to the
Trust. 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, the Portfolio
Managers manage multiple accounts. As a result, he/she will not be able to
devote all of their time to the management of the Trust. The Portfolio Managers,
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/she were to devote all of their attention to the management of
only the Trust.

ALLOCATION OF LIMITED INVESTMENT OPPORTUNITIES. As indicated above, the
Portfolio Managers manage managed accounts with investment strategies and/or
policies that are similar to the Trust. In these cases, if the Portfolio Manager
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 a Portfolio Manager 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, the Portfolio Managers may determine
that an investment opportunity may be appropriate for only some of the accounts
for which he/she 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, the Portfolio Manager 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 the Portfolio Manager differs among the accounts
that he/she 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 they have 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 the Portfolio
Manager manages accounts which have performance fee arrangements, certain
portions of his/her compensation will depend on the achievement of performance
milestones on those accounts. The Portfolio Manager could be incented to afford
preferential treatment to those accounts and thereby be 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 Trust. Net revenues are
determined by deducting from gross investment management fees the firm's
expenses (other than Mr. Gabelli's compensation) allocable to this Trust. Five
closed-end registered investment companies (including this Trust) 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.

COMPENSATION STRUCTURE FOR BARBARA G. MARCIN

The compensation of Ms. Marcin for the Trust is structured to enable the Adviser
to attract and retain highly qualified professionals in a competitive
environment. The Portfolio Manager receives a compensation package that includes
a minimum draw or base salary, equity-based incentive compensation via awards of
stock options, and incentive based variable compensation based on a percentage
of net revenue received by the Adviser for managing the Trust to the extent that
the amount exceeds a minimum level of compensation. Net revenues are determined
by deducting from gross investment management fees certain of the firm's
expenses (other than the Portfolio Managers' compensation) allocable to the
Trust (the incentive-based variable compensation for managing other accounts is
also based on a percentage of net revenues to the investment adviser for
managing the account). This method of compensation is based on the premise that
superior long-term performance in managing a portfolio should be rewarded with
higher compensation as a result of growth of assets through appreciation and net
investment activity. The level of equity-based incentive and incentive-based
variable compensation is based on an evaluation by the Adviser's parent, GBL, of
quantitative and qualitative performance evaluation criteria. This evaluation
takes into account, in a broad sense, the performance of the accounts managed by
the Portfolio Manager, but the level of compensation is not determined with
specific reference to the performance of any account against any specific
benchmark. Generally, greater consideration is given to the performance of
larger accounts and to longer term performance over smaller accounts and
short-term performance.

OWNERSHIP OF SHARES IN THE FUND

Mario Gabelli and Barbara Marcin owned over $1,000,000 and $0 of shares,
respectively, of the Trust as of December 31, 2006.

(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 (B) AVERAGE PRICE PURCHASED AS PART OF SHARES (OR UNITS) THAT MAY YET
SHARES (OR UNITS) PAID PUBLICLY ANNOUNCED PLANS BE PURCHASED UNDER THE PLANS
PERIOD PURCHASED PER SHARE (OR UNIT) OR PROGRAMS OR PROGRAMS
=============================================================================================================================

Month #1 Common - 20,000 Common - $18.2371 Common - 20,000 Common - 84,108,005
07/01/06 Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 3,200,000
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,600,000
07/31/06
=============================================================================================================================

=============================================================================================================================

Month #2 Common - N/A Common - N/A Common - N/A Common - 84,108,005
08/01/06 Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 3,200,000
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,600,000
08/31/06
=============================================================================================================================
Month #3 Common - 5,000 Common - $19.1334 Common - 5,000 Common - 84,103,005
09/01/06 Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 3,200,000
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,600,000
09/30/06
=============================================================================================================================
Month #4 Common - 10,400 Common - $19.7129 Common - 10,400 Common - 84,092,605
10/01/06 Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 3,200,000
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,600,000
10/31/06
=============================================================================================================================
Month #5 Common - 100,000 Common - $20.2674 Common - 100,000 Common - 83,992,605
11/01/06 Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 3,200,000
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,600,000
11/30/06
=============================================================================================================================
Month #6 Common - 19,435 Common - $20.6518 Common - 19,435 Common - 83,973,170
12/01/06 Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - 3,200,000
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,600,000
12/31/06
=============================================================================================================================
Total Common - 154,835 Common - $19.9853 Common - 154,835 N/A
Preferred Series A - N/A Preferred Series A - N/A Preferred Series A - N/A
Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 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 Trustees, 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 Dividend & Income Trust
-------------------------------------------------------------------

By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer

Date 03/01/2007
----------------------------------------------------------------------------

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 03/01/2007
----------------------------------------------------------------------------

By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady,
Principal Financial Officer and Treasurer

Date 03/01/2007
----------------------------------------------------------------------------

* Print the name and title of each signing officer under his or her signature.