Gabelli Global Small and Mid Cap Value Trust Declares Third Quarter Distribution of $0.16 Per Share

Rhea-AI Summary

The Gabelli Global Small and Mid Cap Value Trust (NYSE:GGZ) has declared a $0.16 per share cash distribution for the third quarter, payable on September 23, 2024, to shareholders of record on September 16, 2024. The Fund aims to pay quarterly distributions, with the amount determined by the Board of Trustees. Additionally, an adjusting distribution may be paid in December to meet minimum distribution requirements.

The distribution breakdown for 2024 is estimated as 14% from net investment income, 53% from net capital gains, and 33% as return of capital. However, these figures are subject to final determination after year-end. Shareholders will receive detailed tax information via Form 1099-DIV in early 2025.

Positive

• Consistent quarterly cash distribution of $0.16 per share
• 53% of distribution comes from net capital gains, indicating positive investment performance

Negative

• 33% of distribution is deemed return of capital, potentially reducing shareholder's cost basis
• Distribution policy subject to modification, lacking guarantee of continuity

Insights

Financial Analyst

The declaration of a $0.16 per share quarterly distribution by Gabelli Global Small and Mid Cap Value Trust (GGZ) is a routine event that maintains the Fund's commitment to regular shareholder payouts. However, the composition of this distribution is noteworthy. Approximately 53% comes from net capital gains, indicating successful investment realizations. The 33% return of capital component suggests the Fund is dipping into its asset base to maintain the distribution level, which could be concerning if it persists long-term. The 14% from net investment income is relatively low, reflecting challenges in generating income in the current market environment. Investors should monitor these ratios in future distributions to assess the Fund's sustainability and performance.

Tax Expert

The tax implications of GGZ's distribution are complex and potentially advantageous for shareholders. The significant portion derived from net capital gains (53%) may be taxed at the preferential long-term capital gains rate, maxing at 20% for most investors. The 14% from net investment income could qualify for lower dividend tax rates. Notably, the 33% return of capital is not immediately taxable but reduces the cost basis of shares, potentially increasing future capital gains. High-income investors should be aware of the additional 3.8% Medicare surcharge on investment income. This tax-efficient distribution structure could enhance after-tax returns for shareholders, especially in taxable accounts.

RYE, N.Y., Aug. 23, 2024 (GLOBE NEWSWIRE) -- The Board of Trustees of The Gabelli Global Small and Mid Cap Value Trust (NYSE:GGZ) (the “Fund”) declared a $0.16 per share cash distribution payable on September 23, 2024 to common shareholders of record on September 16, 2024.

The Fund intends to pay a quarterly distribution of an amount determined each quarter by the Board of Trustees. In addition to the quarterly distributions, and in accordance with the minimum distribution requirements of the Internal Revenue Code for regulated investment companies, the Fund may pay an adjusting distribution in December which includes any additional income and net realized capital gains in excess of the quarterly distributions for that year.

Each quarter, the Board of Directors reviews the amount of any potential distribution from the income, realized capital gain, or capital available. The Board of Directors will continue to monitor the Fund’s distribution level, taking into consideration the Fund’s net asset value and the current financial market environment. The Fund’s distribution policy is subject to modification by the Board of Directors at any time, and there can be no guarantee that the policy will continue. The distribution rate should not be considered the dividend yield or total return on an investment in the Fund.

All or part of the distribution may be treated as long-term capital gain or qualified dividend income (or a combination of both) for individuals, each subject to the maximum federal income tax rate for long term capital gains, which is currently 20% in taxable accounts for individuals (or less depending on an individual’s tax bracket). In addition, certain U.S. shareholders who are individuals, estates or trusts and whose income exceeds certain thresholds will be required to pay a 3.8% Medicare surcharge on their "net investment income", which includes dividends received from the Fund and capital gains from the sale or other disposition of shares of the Fund.

If the Fund does not generate sufficient earnings (dividends and interest income, less expenses, and realized net capital gain) equal to or in excess of the aggregate distributions paid by the Fund in a given year, then the amount distributed in excess of the Fund’s earnings would be deemed a return of capital. Since this would be considered a return of a portion of a shareholder’s original investment, it is generally not taxable and would be treated as a reduction in the shareholder’s cost basis.

Long-term capital gains, qualified dividend income, investment company taxable income, and return of capital, if any, will be allocated on a pro-rata basis to all distributions to common shareholders for the year. Based on the accounting records of the Fund currently available, each of the distributions paid to common shareholders in 2024 would include approximately 14% from net investment income, 53% from net capital gains and 33% would be deemed a return of capital on a book basis. This does not represent information for tax reporting purposes. The estimated components of each distribution are updated and provided to shareholders of record in a notice accompanying the distribution and are available on our website (www.gabelli.com). The final determination of the sources of all distributions in 2024 will be made after year end and can vary from the quarterly estimates. Shareholders should not draw any conclusions about the Fund’s investment performance from the amount of the current distribution. All individual shareholders with taxable accounts will receive written notification regarding the components and tax treatment for all 2024 distributions in early 2025 via Form 1099-DIV.

Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. For more information regarding the Fund’s distribution policy and other information about the Fund, call:

Bethany Uhlein
(914) 921-5546

About The Gabelli Global Small and Mid Cap Value Trust
The Gabelli Global Small and Mid Cap Value Trust is a diversified, closed-end management investment company with $132 million in total net assets whose primary investment objective is to achieve long-term capital growth of capital. Under normal market conditions, the Fund will invest at least 80% of its total assets in equity securities (such as common stock and preferred stock) of companies with small or medium sized market capitalizations. The Fund is managed by Gabelli Funds, LLC, a subsidiary of GAMCO Investors, Inc. (OTCQX: GAMI).

NYSE – GGZ
CUSIP – 36249W104

Investor Relations Contact:
Bethany Uhlein
(914) 921-5546
buhlein@gabelli.com

FAQ

When is the Gabelli Global Small and Mid Cap Value Trust (GGZ) third quarter distribution payable?

The third quarter distribution of $0.16 per share for GGZ is payable on September 23, 2024, to shareholders of record on September 16, 2024.

What is the estimated breakdown of GGZ's 2024 distributions?

Based on current accounting records, GGZ's 2024 distributions are estimated to comprise 14% from net investment income, 53% from net capital gains, and 33% as return of capital.

How will GGZ shareholders be informed about the tax treatment of 2024 distributions?

GGZ shareholders with taxable accounts will receive written notification regarding the components and tax treatment of all 2024 distributions via Form 1099-DIV in early 2025.

What is the NYSE ticker symbol for the Gabelli Global Small and Mid Cap Value Trust?

The NYSE ticker symbol for the Gabelli Global Small and Mid Cap Value Trust is GGZ.