GAMCO Natural
Resources, Gold & Income Trust
Notes to Financial Statements (Unaudited) (Continued)
| | |
Valuation
Inputs | | |
| |
| | |
Level
1
Quoted Prices | | |
Level
2 Other
Significant
Observable Inputs | | |
Total
Market Value
at 06/30/22 | |
| INVESTMENTS
IN SECURITIES: | |
| | |
| | |
| |
| ASSETS
(Market Value): | |
| | |
| | |
| |
| Common
Stocks (a) | |
$ | 91,505,502 | | |
| — | | |
$ | 91,505,502 | |
| Convertible Corporate
Bonds (a) | |
| — | | |
$ | 466,915 | | |
| 466,915 | |
| Corporate Bonds (a) | |
| — | | |
| 334,295 | | |
| 334,295 | |
| U.S.
Government Obligations | |
| — | | |
| 42,310,219 | | |
| 42,310,219 | |
| TOTAL
INVESTMENTS IN SECURITIES – ASSETS | |
$ | 91,505,502 | | |
$ | 43,111,429 | | |
$ | 134,616,931 | |
| | |
| | | |
| | | |
| | |
| INVESTMENTS
IN SECURITIES: | |
| | | |
| | | |
| | |
| LIABILITIES (Market
Value): | |
| | | |
| | | |
| | |
| Equity
Contracts | |
| | | |
| | | |
| | |
| Call Options Written | |
$ | (394,855 | ) | |
$ | (2,800,441 | ) | |
$ | (3,195,296 | ) |
| Put
Options Written | |
| (917,312 | ) | |
| (1,092,998 | ) | |
| (2,010,310 | ) |
| TOTAL
INVESTMENTS IN SECURITIES – LIABLITIES | |
$ | (1,312,167 | ) | |
$ | (3,893,439 | ) | |
$ | (5,205,606 | ) |
| (a) | Please
refer to the Schedule of Investments (SOI) for the industry classifications of these
portfolio holdings. |
There
were no Level 3 investments at June 30, 2022 or December 31, 2021.
Additional
Information to Evaluate Qualitative Information.
General. The
Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most
of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing
sources. Several different pricing feeds are received to value domestic equity securities, international equity securities,
preferred equity securities, and fixed income securities. The data within these feeds are ultimately sourced from major stock
exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining
quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable,
prices will be sought from another pricing service or from a broker/dealer that trades that security or similar
securities.
Fair
Valuation. Fair valued
securities may be common or preferred equities,
warrants,
options, rights, or fixed income
obligations. Where appropriate, Level 3 securities are those for which market quotations are not available, such as securities
not traded for several days, or for which current bids are not available, or which are restricted as to transfer. When fair valuing
a security, factors to consider include recent prices of comparable securities that are publicly traded, reliable prices of securities
not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost
if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value
in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures
continue to apply.
GAMCO
Natural Resources, Gold & Income Trust
Notes to Financial Statements (Unaudited) (Continued)
The
Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These may include
backtesting the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
Derivative
Financial Instruments. The
Fund may engage in various portfolio investment strategies by investing in derivative financial instruments for the purposes
of increasing the income of the Fund, hedging against changes in the value of its
portfolio securities and in the value of securities it intends to purchase, or hedging against a specific transaction with
respect to either the currency in which the transaction is denominated or another currency. Investing in certain derivative
financial instruments, including participation in the options, futures, or
swap markets, entails
certain execution, liquidity,
hedging, tax, and securities, interest, credit, or
currency market risks. Losses may arise if the Adviser’s prediction of movements in the direction of the securities, foreign
currency, and interest rate markets is inaccurate. Losses may also arise if the counterparty does not perform its duties
under a contract, or, in the event of default, the Fund may be delayed in or prevented from obtaining payments or other
contractual remedies owed to it
under derivative contracts. The creditworthiness of the counterparties is closely monitored in order to minimize these risks.
Participation in derivative transactions involves investment risks, transaction
costs, and
potential losses to which the Fund would not be subject absent the use of these strategies. The consequences of these risks,
transaction costs, and losses may have a negative impact on the Fund’s ability to pay distributions.
Collateral
requirements differ by type of derivative. Collateral requirements are set by the broker or exchange clearing house for exchange
traded derivatives, while collateral terms are contract specific for derivatives traded over-the-counter. Securities pledged to
cover obligations of the Fund under derivative contracts are noted in the Schedule of Investments. Cash collateral, if any, pledged
for the same purpose will be reported separately in the Statement of Assets and Liabilities.
The
Fund’s policy with respect to offsetting is that,
absent an event of default by
the counterparty or a termination of the agreement, the master agreement does not result in an offset of reported amounts of financial
assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the Fund and the applicable
counterparty. The enforceability of the right to offset may vary by jurisdiction.
The
Fund’s derivative contracts held at June 30, 2022, if any, are not accounted for as hedging instruments under GAAP and are disclosed
in the Schedule of Investments together with the related counterparty.
Options.
The Fund may purchase or write call or put options on securities or indices for the purpose of increasing the income of
the Fund. 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 the expiration date, but only
to the extent of the premium paid.
GAMCO
Natural Resources, Gold & Income Trust
Notes to Financial Statements (Unaudited) (Continued)
If
a written call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining
whether there has been a realized gain or loss. If a written put option is exercised, the premium reduces the cost basis of the
security. In the case of call options, the 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 during the option period, (b) at-the-money call options when the Adviser expects that the price
of the underlying security will remain stable, decline, 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. Option positions at June 30, 2022 are
reflected within the Schedule of Investments.
The
Fund’s volume of activity in equity options contracts during the six months ended June 30, 2022 had an average monthly market
value of approximately $8,058,873.
At
June 30, 2022, the Fund’s
derivative liabilities (by type) are as follows:
| |
Gross
Amounts of
Recognized Liabilities
Presented in the
Statement of
Assets and Liabilities |
Gross
Amounts
Available for
Offset in the
Statement of Assets and Liabilities |
Net
Amounts of
Liabilities Presented in
the Statement of
Assets and Liabilities |
| Liabilities |
|
|
|
| OTC
Equity Written Options |
$3,499,381 |
— |
$3,499,381 |
The
following table presents the Fund’s derivative liabilities by counterparty net of the related collateral segregated by the Fund
for the benefit of the counterparty as of June 30, 2022:
| |
Net
Amounts Not Offset in the Statement of Assets and Liabilities |
| |
Net
Amounts of
Liabilities Presented in
the Statement of
Assets and Liabilities |
Securities
Pledged
as Collateral |
Cash
Collateral
Pledged |
Net
Amount |
| Counterparty |
|
|
|
|
| Pershing
LLC |
$3,480,665 |
$(3,480,665) |
— |
— |
| Morgan
Stanley |
18,716 |
(18,716) |
— |
— |
| Total |
$3,499,381 |
$(3,499,381) |
— |
— |
As
of June 30, 2022, the value of equity options written can be found in the Statement of Assets and Liabilities, under Liabilities,
options written, at
value. For the six months ended June 30, 2022,
the effect of equity options written
can be found in the Statement of Operations under Net Realized and Unrealized Gain/(Loss) on Investments, Securities Sold Short,
Written Options, and Foreign Currency, within Net realized gain on written options, and Net change in unrealized appreciation/(depreciation)
on written options.
Limitations
on the Purchase and Sale of Futures Contracts, Certain Options, and Swaps. Subject
to the guidelines of the Board,
the Fund may engage in “commodity
interest” transactions
(generally, transactions in
GAMCO
Natural Resources, Gold & Income Trust
Notes to Financial Statements (Unaudited) (Continued)
futures,
certain options, certain currency
transactions, and
certain types of swaps) only for bona fide hedging or other permissible transactions in accordance with the rules and regulations
of the Commodity Futures Trading Commission (CFTC). Pursuant to amendments by the CFTC to Rule 4.5 under the Commodity Exchange
Act (CEA), the
Adviser has filed a notice of exemption from registration as a “commodity pool operator” with respect to the Fund. The
Fund and the Adviser are therefore not subject to registration or regulation as a commodity pool operator under the CEA. In addition,
certain trading restrictions are now applicable to the Fund which permit the Fund to engage in commodity interest transactions
that include (i) “bona fide hedging” transactions,
as that term is defined and interpreted
by the CFTC and its staff, without regard to the percentage of the Fund’s assets committed to margin and options premiums and
(ii) non-bona fide hedging transactions, provided that the Fund does not enter into such non-bona fide hedging transactions if,
immediately thereafter, either
(a) the sum of the amount of initial margin deposits on the Fund’s
existing futures positions or swaps positions and option or swaption premiums would exceed 5% of the market value of the Fund’s
liquidating value, after taking into account unrealized profits and unrealized losses on any such transactions, or (b) the aggregate
net notional value of the Fund’s
commodity interest transactions would not exceed 100% of the market value of the Fund’s liquidating value, after taking into account
unrealized profits and unrealized losses on any such transactions. Therefore, in order to claim the Rule 4.5 exemption, the Fund
is limited in its ability to invest in commodity futures, options, and certain types of swaps (including securities futures, broad
based stock index futures, and financial futures contracts). As a result, in the future the Fund will be more limited in its ability
to use these instruments than in the past, and these limitations may have a negative impact on the ability of the Adviser to manage
the Fund, and on the Fund’s performance.
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. The broker retains collateral for the value of
the open positions, which is adjusted periodically as the value of the position fluctuates. For the six months ended June 30,
2022, the Fund incurred $873 in service fees related to its investment positions sold short and held by the broker. These amounts
are included in the Statement of Operations under Expenses, Service fees for securities sold short.
Investments
in Other Investment Companies. The Fund may invest, from
time to time, in
shares of other investment companies (or entities that would be considered investment companies but are excluded from the
definition pursuant to certain exceptions under the 1940 Act) (the Acquired Funds) in accordance with the 1940 Act and
related rules. Shareholders in the Fund would bear the pro rata portion of the periodic expenses of the Acquired Funds in
addition to the Fund’s expenses. For the six months ended June 30, 2022, the Fund’s
pro rata portion of the periodic expenses charged by the Acquired Funds was less than one basis point.
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 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
GAMCO
Natural Resources, Gold & Income Trust
Notes to Financial Statements (Unaudited) (Continued)
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 purchase 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
inability 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 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
Securities. The Fund
may invest up to 15% of its net assets in securities for which the markets are restricted. Restricted securities include
securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities
often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than 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. At June 30, 2022, the Fund did not hold
any restricted securities.
Securities
Transactions and Investment Income. Securities
transactions are accounted for on the trade date with realized gain/(loss) on investments determined by using the identified cost
method. Interest income (including amortization of premium and accretion of discount) is recorded on an accrual basis. Premiums
and discounts on debt securities are amortized using the effective yield to maturity method or amortized to earliest call date,
if applicable. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities that
are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.
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 110% of the 90 day U.S. Treasury Bill rate on outstanding balances. This amount, if any, would be included in the Statement
of Operations.
GAMCO
Natural Resources, Gold & Income Trust
Notes to Financial Statements (Unaudited) (Continued)
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 GAAP. 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 for
federal income tax purposes 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.
The
Fund declares and pays monthly distributions from net investment income, capital gains, and paid-in capital. The actual
source of the distribution is determined after the end of the year. Distributions during the year may be made in excess of
required distributions. Distributions sourced from paid-in capital should not be considered as dividend yield or the total
return from an investment in the Fund. The Board will continue to monitor the Fund’s
distribution level, taking into consideration the Fund’s NAV and the financial market environment. The Fund’s distribution
policy is subject to modification by the Board at any time.
Distributions
to shareholders of the Fund’s
5.200% Series A Cumulative Preferred Shares (Series A Preferred) are accrued on a daily basis and are determined as described
in Note 5.
The
tax character of distributions paid during the year ended December 31, 2021 was as follows:
| | |
Common | | |
Preferred | |
| Distributions paid from: | |
| | | |
| | |
| Ordinary income | |
$ | – | | |
$ | 1,448,100 | |
| Return of capital | |
| 6,890,575 | | |
| 73,033 | |
| Total distributions paid | |
$ | 6,890,575 | | |
$ | 1,521,133 | |
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, 2021, the Fund had net capital loss carryforwards for federal income tax purposes which are available to reduce future
required distributions of net capital gains to shareholders. The Fund is permitted to carry capital losses forward for an unlimited
period. Capital losses that are carried forward will retain their character as either short term or long term capital losses.
| Long term capital loss carryforward with no expiration | |
$ | (85,202,554 | ) |
GAMCO
Natural Resources, Gold & Income Trust
Notes to Financial Statements (Unaudited) (Continued)
The
following summarizes the tax cost of investments, written options, and the related net unrealized depreciation at June
30, 2022:
| |
Cost/
(Premiums) |
|
Gross
Unrealized
Appreciation |
|
Gross
Unrealized
Depreciation |
|
Net
Unrealized
Depreciation |
| Investments
and other derivative instruments |
$168,083,998 |
|
$— |
|
$(33,467,067) |
|
$(33,467,067) |
The
Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s
tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax
authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations
if the tax positions were deemed not to meet the more-likely-than-not threshold. During the six months ended June 30, 2022, the
Fund did not incur any income tax, interest, or penalties. As of June 30, 2022, the Adviser has reviewed all open tax years and
concluded that there was no impact to the Fund’s net assets or results of operations. The Fund’s federal and state tax returns
for the prior three fiscal years remain open, subject to examination. On an ongoing basis, the Adviser will monitor the Fund’s
tax positions to determine if adjustments to this conclusion are necessary.
3.
Investment Advisory Agreement and Other Transactions. 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 preferred shares. 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.
4.
Portfolio Securities. Purchases and sales of securities during the six months ended June 30, 2022, other than short term securities
and U.S. Government obligations, aggregated $96,768,471 and $115,549,319, respectively.
5.
Transactions with Affiliates and Other Arrangements. During the six months ended June 30,
2022, the Fund received credits
from a designated broker who agreed to pay certain Fund operating expenses. The amount of such expenses paid through this directed
brokerage arrangement during this period was $1,635.
As
per the approval of the Board, the Fund compensates officers of the Fund, who are employed by the Fund and are not employed by
the Adviser (although the officers may receive incentive based variable compensation from affiliates of the Adviser). During the
six months ended June 30, 2022, the Fund accrued $66,923 in Payroll expenses in the Statement of Operations.
The
Fund pays retainer and per meeting fees to Trustees not affiliated with the Adviser, plus specified amounts to the Lead Trustee
and Audit Committee Chairman. Trustees are also reimbursed for out of pocket expenses incurred in attending meetings. Trustees
who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the
Fund.
6.
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 in the open market when the shares are trading at a discount of 10% or
more (or such other percentage as the Board may determine from time to time)
GAMCO
Natural Resources, Gold & Income Trust
Notes to Financial Statements (Unaudited) (Continued)
from
the NAV of the shares. During the six months ended June 30, 2022 and the year ended December 31, 2021
the Fund repurchased and retired 485,050 and 872,702
shares, respectively, of its common shares at an investment of $2,606,277 and $4,517,773, respectively, and an average discount
of approximately 13.87% and 13.06%, respectively, from its NAV.
Transactions
in common shares of beneficial interest for the six months ended June 30, 2022 and the year ended December 31,
2021, respectively were as follows:
| | |
Six
Months Ended
June 30, 2022
(Unaudited) | | |
Year
Ended
December 31, 2021 | |
| | |
Shares | | |
Amount | | |
Shares | | |
Amount | |
| Net decrease
from repurchase of common shares | |
| (485,050 | ) | |
| $ (2,606,277 | ) | |
| (872,702 | ) | |
| $ (4,517,773 | ) |
The
Fund has an effective shelf registration authorizing the issuance of $200 million in common or preferred shares.
The
Fund’s Declaration of Trust, as amended, authorizes the issuance of an unlimited number of $0.001 par value Preferred
Shares. On October 26, 2017, the Fund issued 1,200,000 shares of 5.200% Series A Cumulative Preferred Shares (Series A
Preferred), receiving $28,851,132, after the deduction of offering expenses of $203,868
and underwriting fees of $945,000. The Series A Preferred has a liquidation value of $25 per share, an
annual dividend rate of 5.200%, and is noncallable before October 26, 2022. The Board has authorized the repurchase of the
Series A Preferred in the open market at prices less than $25 liquidation value per share. The Fund did not repurchase any
Series A Preferred Shares in 2021. At June 30, 2022, 1,170,102
shares were outstanding and accrued dividends amounted to $21,127.
The
Series A Preferred 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 the Series A Preferred are
cumulative. The Fund is required by the 1940 Act and by the Statement of Preferences to meet certain asset coverage tests
with respect to the Series A Preferred. 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
Series A Preferred at the redemption price of $25 per share plus an amount equal to the accumulated and unpaid dividends
whether or not declared on such shares in order to meet the 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 rate, which could have either a beneficial
or detrimental impact on net investment income and gains available to common shareholders.
The
holders of Preferred Shares 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 Preferred
Shares 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
GAMCO
Natural Resources, Gold & Income Trust
Notes to Financial Statements (Unaudited) (Continued)
Shares,
voting as a single class, will be required to approve any plan of reorganization adversely affecting the Preferred Shares, and
the approval of two-thirds of each class, voting separately, of the Fund’s outstanding voting shares 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 Shares 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.
7.
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.
Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
8.
Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the
financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in
the financial statements.