## + ## Gabelli Merger Plus Trust plc ## Annual Report and Accounts ## For the year ended 30 June 2022 ## M ERGER I NVESTING ## S INCE 1977 ## “There are many advantages to investing in risk arbitrage. Let’s focus on three: risk arbitrage returns are ## not closely correlated with those of the stock market; they are less volatile than returns on the S&P 500; and ## longer term they are higher than those returns afforded by traditional investing. While these three factors ## provide for excellent results in the world of arbitrage, the real beauty of risk arb investing is that there is ## rarely a down year. Because risk arb returns are consistently positive year in and year out, they fulfill the ## concept of a compound return. We proclaim this source of compounded earnings as the eighth wonder of the ## world. ## Compounding is the secret to wealth creation over a period of decades.” ## Mario Gabelli ## (Deals...Deals...and More Deals, 1999) ## ENGLISH ITALIAN CHINESE JAPANESE ### Deals...Deals...and More Deals - Now in four languages. ### Originally published in 1999 by Gabelli University Press. Strategic report Governance Financial statements ## + ## Gabelli Merger Plus Trust Plc’s investment ## objective: ## The Company’s primary investment ## objective is to seek to generate total ## return consisting of capital appreciation ## and current income. Contents Strategic report At a glance 02 Financial Highlights 02 Chairman’s Statement 03 The Search For Value – A History of Gabelli 06 The Gabelli Investment Process 07 Investment Objective and Policy 08 Portfolio Manager’s Review 09 Portfolio Summary 13 Strategy 14 Key Performance Indicators (KPI) 14 Principal Risks 16 Viability & Going Concern Statement 19 Governance Board of Directors 20 Directors’ Report 22 Corporate Governance Report 28 Report of the Audit & Risk Committee 32 Directors’ Remuneration Report 35 Statement of Directors’ Responsibilities in respect of the Financial Statements 38 Financial statements Independent Auditors’ Report 39 Statement of Comprehensive Income 46 Statement of Changes in Equity 47 Statement of Financial Position 48 Statement of Cash Flows 49 Notes to the Financial Statements 50 Regulatory Disclosures 67 Glossary 68 Company Information 71 Annual General Meeting 72 Notes to the Notice of the AGM 74 Appendix – AIFMD Remuneration Disclosures 76 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## At a glance Merger investing is a highly specialised The Company seeks to generate process oriented towards undervalued active investment approach designed total returns consisting of capital assets as articulated through its to profit from corporate catalyst events appreciation and current income through proprietary Private Market Value with a TM | such as announced mergers, acquisitions, | the application of this active merger | Catalyst | methodology (“PMV with a | | --- | --- | --- | --- | | leveraged buyouts, demergers and other | investment program. A secondary | Catalyst”). PMV with a Catalyst is the price | | | types of reorganisations and corporate | objective is the protection of capital, | an informed buyer would pay for an entire | | | actions (“deals”). The Portfolio Manager, | while earning returns uncorrelated to | business in a negotiated transaction, | | | (Gabelli Funds, LLC), seeks to earn | unmanaged equity and fixed income | combined with a catalyst, to earn rates of | | | returns through a diversified portfolio of | markets. | return independent of the broad markets’ | | | investments across such deals earning | | direction. | | | the differential or “spread” between | The Portfolio Manager has invested in | | | | the market price and the investment’s | mergers since 1977, and created its first | The Company is part of the lineage | | | ultimate value. Gabelli Merger Plus+ Trust | dedicated merger fund in 1985. The | of Gabelli’s fifteen listed investment | | | plc (“GMP” or “the Company”) invests | Portfolio Manager remains vigilant in the | companies beginning in 1986 with the | | | globally, although it has an emphasis on | application of its investment methodology | Gabelli Equity Trust (NYSE:GAB). The | | | securities traded in the United States, | and search for opportunities, maintaining | Gabelli Funds complex currently includes | | | across market capitalisations and sectors. | a diversified portfolio of catalyst event | thirteen U.S.-based closed-end funds, or | | | | merger arbitrage strategies that seek to | investment companies, one UK-based | | | The Company was launched in July | create an optimal risk/reward profile for | Investment trust, GMP, and four actively | | | 2017 to access this unique investment | the portfolio. | managed ETFs. Gabelli Funds also | | | approach. The Company’s shares trade | | manages twenty four open-end funds | | | on the Specialist Fund Segment of | The Company provides access to Gabelli’s | and a Luxembourg SICAV with three | | | the London Stock Exchange and The | deep history of investing in mergers. The | UCITS sub-funds. | | | International Stock Exchange under the | approach is a natural extension of its | | | | symbol “GMP”. | longstanding research-driven investment | | | ## Financial Highlights As at As at Performance 30 June 2022 30 June 2021 Net asset value per share (cum income) $9.35 $9.94 Net asset value per share (ex income) $9.78 $10.27 1 Dividends per share paid during the year $0.48 $0.48 Share price $9.00 $7.40 2,3 Discount to Net Asset Value (3.74)% (25.63%) Year ended Year ended Total returns 30 June 2022 30 June 2021 4 Net asset value per share (1.34)% 12.12% U.S. 3-month Treasury Bill 1.69% 0.09% 5 Share price 29.06% 5.46% Year ended Year ended Income 30 June 2022 30 June 2021 Revenue return per share ($0.09) ($0.14) Year ended Year ended 6 Ongoing charges 30 June 2022 30 June 2021 Annualised ongoing charges 1.67% 1.66% Source: Portfolio Manager (Gabelli Funds, LLC), verified by the Administrator (State Street Bank and Trust Company). 1 The dividends paid during the year ended 30 June 2022 include the fourth quarter dividend for the year ended 30 June 2021. 2 Figures are inclusive of income and dividends paid, in line with the Association of Investment Companies (the “AIC”) guidance. 3 These key performance indicators are alternative performance measures. Further information regarding the use of alternative performance measures can be found on page 14 and in the glossary on page 68. 4 Net Asset Value per ordinary share, total return represents the theoretical return on NAV per ordinary share, assuming that dividends paid to shareholders were reinvested at the NAV per ordinary share at the close of business on the day shares were quoted ex dividend. 5 Share Price Total Return represents the theoretical return to a shareholder, on a closing market price basis, assuming that all dividends received were reinvested, without transaction costs, into the ordinary shares of the Company at the close of business on the day the shares were quoted ex dividend. 6 Ongoing Charges are operating expenses incurred in the running of the Company, whether charged to revenue or capital, but excluding financing costs. These are expressed as a percentage of the average net asset value during the period and this is calculated in accordance with guidance issued by the Association of Investment Companies. ## 02 Strategic report Governance Financial statements ## Chairman’s Statement Marc Gabelli Chairman | We share this Annual Report to | liquid, non-market correlated alternative | The Investment Environment | | --- | --- | --- | | Shareholders, encompassing the period | to traditional equity and fixed income | Uncertainty surrounding the current | | from July 2021 through June 2022, and | securities. Merger returns are derived | state of the global macroeconomic | | note certain developments post financial | through the narrowing of deal spreads | environment, taxed supply chains and an | | year end. This period marks the fifth year | from time of announcement until their | ongoing war in Eastern Europe plagued | | of operations for the Gabelli Merger Plus+ | expected closure. The spread is a function | the pace of deal making in the first half | | Trust Plc (the “Company”), activating | of three primary elements: the risk | of 2022, which showed a 21% decrease | | the Loyalty Programme tender offer and | free rate, the risk premium associated | in deals versus last year’s levels in the | | additional voting shares for qualifying | with the transaction fundamentals, and | second quarter alone. Deal making in | | shareholders. Gabelli Merger Plus+ | the time value of money. The dynamic | the technology sector slowed 19% year- | | Trust Plc operates globally in the highly | interplay across these components is | over-year, but remained the most active, | | specialised investment discipline of event | evaluated within every investment by | followed by industrials and financials. | | driven merger arbitrage. The objectives | the Manager. Position sizing will vary | | | are to compound and preserve wealth | according to a probabilistic assessment | Despite COVID-19 cases trending | | over time, while remaining non-correlated | of the risk. The inherent risk in all merger | significantly below peak, certain hot | | to the broad equity and fixed income | investing is a broken deal rather than the | spots remain, particularly in China. This | | markets. The investment programme is | standard deviation or price variance of the | adds an element of uncertainty to capital | | global, encompassing a broad spectrum | market price movements over the deal | allocation decisions evidenced in a further | | of special situations and event driven | timeline. Gabelli Funds LLC, the Portfolio | 17% decline in cross border activity when | | opportunities, with an emphasis on | Manager, employs an active approach to | compared to last year. | | announced merger transactions. The | analysing the fundamentals of a merger | | | portfolio is a highly liquid, non-market | investment and has a long history of | Nevertheless, the number of deals | | correlated alternative to traditional equity | implementing such a programme. At | greater than $10 billion increased 11% | | and fixed income securities. | its core, this differentiated investment | year-over-year, and several well-known | | | approach utilises the Gabelli analytical | targets entered into merger agreements. | | The Company’s primary objective is to | methodology to manage risk amongst | Microsoft began the year announcing its | | seek to generate total return, consisting | other inputs and factors. The full details of | $69 billion acquisition of game developer | | of capital appreciation and current | this investment programme were set out | Activision Blizzard. | | income. The Company will seek a | in the offering Prospectus and are found | | | secondary objective of the protection of | on the Company’s web site, www.Gabelli. | In May, software company VMware Inc | | capital, uncorrelated to equity and fixed | com/MergerPlus. | agreed to be acquired by Broadcom Inc in | | income markets. The Fund utilizes the | | a cash and stock transaction valued at $61 | | Gabelli Private Market Value (PMV) with | The Board is always receptive to feedback | billion. There was also Elon Musk’s well- | TM | a Catalyst | investment methodology, | and is available should you have any | publicised bid to take Twitter private for | | --- | --- | --- | --- | | and has built a diversified portfolio using | | questions or comments via the Portfolio | $44 billion, the outcome of which remains | | catalyst event merger arbitrage strategies | | Manager’s Investor Relations group | uncertain. | | to create an optimal risk/reward profile. | | directly. We thank you, our shareholders, | | | The investment programme is global, | | for your confidence in entrusting a portion | The broad market still sits over 20% above | | encompassing a broad spectrum of special | | of your assets to our team. | the level where it ended in 2019, an 8% | | situations and event driven opportunities, | | | CAGR over a very fraught time. We as a | | with an emphasis on announced merger | | | society may have moved past COVID, | | transactions. The portfolio is a highly | | | but its aftereffects are still felt. Political, | ## 03 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Chairman’s statement continued corporate and individual actors still catalysts to invest, thus providing the reserves to make the dividend payment, need to sort through a variety of issues. potential for returns independent of the and the level of dividend may vary over Economic and market conditions may broad markets. Volatility has historically time. As such, the portfolio’s managed worsen before they improve, and there presented excellent opportunities to distribution of capital through the may be volatility in currency markets as acquire a business through the fractional payment of quarterly dividends is under Central Banks adjust interest rate policies, interest represented in its traded shares review as we enter the new Fiscal Year. but the risks are more balanced today and we believe the PMV with a Catalyst than they have been in some time. method will fare well in the period ahead. Tender Offer and Close Company Status This report also addresses the period | Principal Developments on Investments | Performance | through October 2022 as a subsequent | | --- | --- | --- | | During the Year | The Company’s net asset value (NAV) | event to the fiscal year ending 30 June | | Throughout periods of the first half, we | plus dividends paid delivered a total | 2022. The Company commenced the | | saw significant widening of deal spreads, | return to shareholders during the year | Fifth Anniversary Tender Offer for | | some of which were tied to specific | under review of -1.11% in U.S. dollars. This | Qualifying Registered Shares via two | | deal risks, including worries that buyers | performance compared to the equivalent | tranches beginning in September 2022 | | would walk away from transactions, | 13-week U.S. Treasury Bill which yielded | and ending February 2023. Shareholders | | leaving target companies vulnerable to | 1.69% as of 30 June 2022, and also relative | whose shares are registered in the Loyalty | | market conditions. This led to relatively | to the IQ Merger Arbitrage ETF, S&P | Programme for five years are eligible | | broad based selling across announced | Merger Arbitrage Index, and Credit Suisse | to participate in the Company’s tender | | deals, with more pain felt in technology, | Merger Arbitrage Liquid Index, which | offer. As of 7 October 2022 the Company | | given the sector’s steep selloff this year | returned -7.44%, -1.59%, and -0.88%, | successfully completed the tender for | | following lofty valuations. | respectively. The share price total return | 3,005,957 shares at NAV less expenses.The | | | with dividends reinvested was 29.06%, | Tranche Two tender offer will commence | | Spreads have since rebounded following | with the discount narrowing during the | in January 2023, with an estimated | | the successful completion of several | year. The performance for shareholders | maximum of approximately 343,000 | | deals, as well as updates provided by | at IPO through the tender period of | Qualifying Shares. The Tender results | | buyers to reassure the market that | 22 September 2022, was 19.08% with | present two significant developments for | | they remain committed to closing their | dividends reinvested, versus a return | shareholder consideration: first, the overall | | transactions. While the pace of acquisition | of 18.97% for the Credit Suisse Merger | portfolio assets under management are | | announcements by strategic acquirers | Arbitrage Liquid Index. | now USD 68 million versus USD 97 million; | | slowed, private equity backed deals | | second, the post tender shareholder | | remained plentiful. A total of $553 billion | Dividend | composition requires the Company to | | worth of deals were announced in the half, | The Company’s portfolio is largely focused | operate as a Close Company. The Board | | accounting for a quarter of all M&A activity. | on the Catalyst events of announced | of Directors acknowledges the broad | | While some private equity sponsors have | takeovers, where the terms are known | shareholder participation in the tender, | | hit roadblocks attempting to secure | and transparent to the market. Such | and notes that the largest shareholder, | | financing, strategic buyers balance sheets | investments generally have estimated | Associated Capital Group, elected not to | | remain strong with regards to cash levels | return profiles in periods of less than nine | tender and has expressed its view that the | | and financial buyers’ are coming off very | months. The company will pursue other | Company should continue. Associated | | robust years of capital raising. | Catalyst Event opportunities as they | Capital Group, legal and beneficial owner | | | surface, and will also invest occasionally | of 6,216,256 shares at the time of this | | We expect transaction activity to | in other forms of relative value arbitrage, | writing, has confirmed via a letter of Deed, | | strengthen as companies gain more | such as such as share class arbitrage and | which contains enforceable irrevocable | | certainty in the face of current global | holdco arbitrage. Holding periods average | undertakings, that it will both vote in | | concerns. As market valuations continue | approximately 120 days. In arbitrage, the | favour of continuation of the company | | to reset, the strong US Dollar is enticing | culmination of a position is effectively a | and not participate in the Second Tranche | | for corporate deal making, positioning | return of cash as the position is closed. In | tender offer. As a result, the Company | | American companies well in the | order to allow the Shareholders to realise | will operate as a Close investment | | competition for assets on a global basis. | a predictable, but not assured, level of | company, and therefore will be subject to | | The Gabelli method is well organised | cash flow and some liquidity periodically | UK corporate taxes, and thus no longer | | to invest during such a period. Gabelli | on their investment, the Company has | avail itself to investment trust status. The | | managers are fundamental and bottom up. | adopted a “managed dividend policy”. | Board of Directors will assess shareholder | | Their analysts follow sectors globally, and | This policy seeks to pay Shareholders a | considerations and undertake the analysis | | seek to understand everything available | quarterly dividend in relation to the Net | of options for the continuing Company, | | relating to a business, and are agnostic | Asset Value of the Company at the time, | including operational and structural | | of indices and market capitalisations. | which may be changed at any time by the | alternatives oriented towards expense | | Their work emphasizes balance sheet | Board. Between inception and 30 June | and tax savings, as it progresses. Finally, | | and cash flows. Ultimately, they seek to | 2022, the Company returned $2.27 per | in accordance with the charter, remaining | | identify businesses that are trading in the | share to shareholders, consistent with its | registered loyalty Programme Five- | | market at discounts to their estimates of | dividend policy. Dividends are paid only | year shareholders are eligible to receive | | the value an informed industrial acquirer | when declared by the Board subject to | an additional vote per individual share | | would pay for the company in its entirety, | the Board’s assessment of the Company’s | held. The Loyalty Programme has been | | thus establishing the Private Market Value | financial position and only if the Company | implemented in accordance with the | | (“PMV”). The Gabelli team also need event | has sufficient income and distributable | offering prospectus. | ## 04 Strategic report Governance Financial statements Final Thoughts With heartfelt sadness we write this letter after the passing of Her Majesty Queen Elizabeth II, whose steadfast leadership will be missed. Today’s post World War II order is facing intense challenges, yet this Company has performed consistently and non-correlated to the broader indices since inception. It has endured COVID-19, the onset of inflation and higher interest rates, and a fragile regulatory environment lead by the geo-political wrangling between the US and China. The list continues, as will the Gabelli Merger Plus+ Trust Plc in the United Kingdom. Marc Gabelli Chairman 25 October 2022 ## 05 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## The Search For Value – A History of Gabelli | Origins of Gabelli | and further adapted by their founder, | necessary to grow the business. We | | --- | --- | --- | | The Gabelli organisation, of which Gabelli | Mario Gabelli, with his development of | believe free cash flow is the best barometer | | Funds, LLC is a major affiliate, began | private market value (“PMV”) analysis. | of a business’ value. Deteriorating or | | in the U.S. in 1976 as an institutional | Private Market Values estimate the value | rising free cash flow often foreshadows | | research firm. Gabelli’s intense, research | of a business through the lens of what | net earnings changes. In addition, they | | driven culture has driven its evolution | an informed industrialist would pay for | analyze on and off balance sheet assets | | into a diversified global financial services | a business in its entirety in a privately | and liabilities such as property, plant | | company. The basis of its success remains | negotiated transaction. Gabelli however | and equipment, inventories, receivables, | | unchanged – a focus on fundamental, | will not invest on differences to PMV | and legal, environmental and health care | | bottom-up research, a highly consistent | alone, and need a catalyst in place to | issues. We want to know everything and | | investment process, and the commitment | realize returns. Catalysts are something | anything that will add to, or detract from, | | to superior risk adjusted returns. Today | happening in the company’s industry or | our valuation models. | | operating from offices including the U.S., | indigenous to the company itself that will | | | London, Tokyo, Hong Kong and Shanghai, | help realize returns. | These time-tested investment principles | | we offer portfolio management in our | | of fundamental security analysis are | | core competencies across the globe. | Gabelli approaches the global stock | as valid today as they were nearly one | | | marketplace in a similar fashion; we focus | hundred years ago. | | Gabelli managers are research-driven, | on free cash flow: earnings before interest, | | | fundamental investors focusing on the | taxes, depreciation and amortization | | | principles of Graham & Dodd in 1934 | (EBITDA) minus the capital expenditures | | ## Our Investment Approach ## Continuing a Value Investing Legacy ● Our Firm’s approach is founded on the principles of Graham & Dodd • Furthered academically by our founder Mario Gabelli • Establish values to determine margin of safety • Invest within circle of competence • Invest as fractional owners of businesses ● Intensive proprietary research culture • Focused and rigorous independent fundamental analysis in valuing the underlying business using publicly available information including data from customers, competitors, products and new technologies • Announcement of a merger with definitive terms starts the process • Merger investing benefits from the Gabelli core fundamental approach by establishing real world value before initiating positions Portfolio Identify ### Gabelli supplements the principles of Graham & Dodd through the Catalysts ### implementation of our proprietary Private Market ### Private Market Value (PMV) with a Catalyst™ approach Value (PMV) Gabelli Research Universe ## 06 Strategic report Governance Financial statements ## Merger Investing Process Begins with Announced Deal Terms Bottom Up Trading and Analysis of Analysis/ Hedging of Dynamic Idea Generation Merger Assessment of Positions Monitoring of Opportunity Deal Milestones Positions • Ideas sourced from • Understand all downside • Assess risk / reward • Cash deals remain un- • Determine optimal asset proprietary database of risks profile through probability hedged (hedged through class to invest in Gabelli PMV with a based analysis the cash terms) T M • Focus on legal and • Dynamically assess size Catalyst original governance, Material • Understand the financial • Stock deals are fully of position according to research coupled with Adverse Change (MAC) wherewithal of both hedged using the • Risk / reward announced corporate clauses, financing acquirer and target acquirers’ stock events and M&A • Break risk conditions, shareholders’ transactions worldwide • Understand Board / key • All foreign currency • Maximum acceptable votes shareholder / exposure is hedged to the potential downside • Analyze antitrust / management / advisers’ U.S. dollar • Portfolio diversification regulatory issues motivations • Assess overall portfolio • Dynamically assess time • Analyze antitrust / for market beta, to realize returns based regulatory approval sector/country on the catalyst process concentrations and • Assess other key correlation risks milestones for transaction • Real time monitoring of completion spreads/ positions (using TM Gabelli “PMV with a Catalyst” • Assess deal optionality our proprietary database) One Process Globally which are actively traded • Select deals with as the event progresses attractive risk / reward and according to closing Origination of opportunities with fundamental research, profile overlap with analysis of merger investing team • Reverse strategies are considered if attractive risk / reward ## Investment Process ## Methodology in Action ## Building A Position ### Position sizing increasing as deal hurdles are met Remaining Hurdles: -Board approval (friendly) Remaining Hurdles: - Definitive agreement (vs. LOI) - Antitrust approval - Antitrust approval (all -Other regulatory approvals Remaining Hurdles: - Customary closing conditions All approvals in place jurisdictions) - Antitrust approval (light) - Other regulatory approvals - Stock market regulator approval - Shareholder approval Nearing end of deal timeline -Customary closing conditions - Notes tender - Other light approvals - Stock market regulator approval - Financing approval - Notes tender - Litigation resolutions - Financing approval - Shareholder approval - Litigation resolutions - Shareholder approval ## Deal Timeline Closing 07 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Investment Objective and Policy Investment objective The Company’s primary investment objective is to seek to generate total return, consisting of capital appreciation and current income. The Company will seek a secondary objective of the protection of capital, uncorrelated to equity and fixed income markets. Investment policy TM, The Company will seek to meet its investment objective by utilising the Gabelli Private Market Value (PMV) with a Catalyst investment methodology, maintaining a diversified portfolio of event merger arbitrage strategies to seek to create an optimal risk/ reward profile for the portfolio. “Event Driven Merger Arbitrage” is a highly specialised active investment approach designed principally to profit from the differences between the public market price and the price achieved through corporate catalyst events. Catalysts are utilised to earn returns independent of the broad markets’ direction. This includes corporate events such as announced mergers, acquisitions, takeovers, tender offers, leveraged buyouts, restructurings, demergers and other types of reorganisations and corporate actions (“deals”). The Company will invest globally although it is expected to have an emphasis on securities traded in the United States, predominantly equity securities issued by companies of any market capitalisation. The Company is permitted to use a variety of investment strategies and instruments, including but not limited to: convertible and non-convertible debt securities; asset-backed and mortgage-backed securities; fixed interest securities, preferred stock, non-convertible preferred stock, depositary receipts; shares or units of UCIs or UCITS; rights qualifying as transferable securities; when issued, delayed delivery transferable securities; forward contracts; swaps; recently issued transferable securities; repurchase agreements, money market instruments and warrants. The Company may invest part of its net assets in cash and cash equivalents, money market instruments, bonds, commercial paper or other debt obligations with banks or other counterparties having at least a single A (or equivalent) credit rating from an internationally recognised rating agency or government and other public securities, if the Portfolio Manager believes that it would be in the best interests of the Company and its Shareholders. This may be the case, for example, if the Portfolio Manager believes that adverse market conditions justify a temporary defensive position. Any cash or surplus assets may also be temporarily invested in such instruments pending investment in accordance with the Company’s investment policy. The Company may take both long and short positions in equity and debt securities. For shorting purposes, the Company may use indices, individual stocks, or fixed income securities. The Company may utilise financial derivative instruments to create both long and synthetic covered short positions with the aim of maximising positive returns. The Company may use strategies and techniques consisting of options, futures contracts, and currency transactions and may enter into total rate of return, credit default, or other types of swaps and related derivatives for various purposes, including to gain economic exposure to an asset or group of assets that may be difficult or impractical to acquire. The Company may also use derivatives for efficient portfolio management purposes including, without limitation, hedging and risk management and leverage. The Company has broad and flexible investment authority and, accordingly, it may at any time have investments in other related or unrelated areas. Strategies and financial instruments utilised by the Company may include: (i) purchasing or writing options (listed or unlisted) of any and all types including options on equity securities, stock market and commodity indices, debt securities, futures contracts, future contracts on commodities and currencies; (ii) trading in commodity futures contracts, commodity option contracts and other commodity interests including physical commodities; (iii) borrowing money from brokerage firms and banks on a demand basis to buy and sell short investments in excess of capital; and (iv) entering into swap agreements (of any and all types including commodity swaps, interest rate swaps and currency swaps), forward contracts, currencies, foreign exchange contracts, warrants, credit default swaps, synthetic derivatives (for example, CDX), collateralised debt obligations tranches, and other structured or synthetic debt obligations, partnership interests or interests in other investment companies and any other financial instruments of any and all types which exist now or are hereafter created. There has been no change to the investment policy since the launch of the Company on 19 July 2017. No material change will be made without shareholder approval. ## 08 Strategic report Governance Financial statements ## Portfolio Manager’s Review 1 | Methodology and Market Opportunity | Global Deal Activity | 1970s Chair Arthur Burns, Jerome Powell | | --- | --- | --- | | Gabelli Funds would like to thank our | Global deal merger and acquisition | has had to act aggressively with increases | | investors for allocating a portion of their | activity (“M&A”) totaled $2.2 trillion | of 150 basis points over the last six | | assets to the Gabelli Merger Plus+ Trust | during the first half of 2022, a year- | months. The Fed can neither pump more | | (“GMP”). We appreciate the confidence | over-year decrease of 21%; however, the | oil nor harvest more wheat, but it can act | | and trust you have placed in our | deal flow remained notably consistent, | on the demand side of the equation. | | organization through your investment | capped off with $1 trillion in deals in the | | | in GMP. Our investment objective is to | second quarter. This marked the eighth | Against this backdrop of rising rates, | | compound and preserve wealth over time | consecutive quarter to pass $1 trillion. | macroeconomic concerns, and regulatory | | while remaining non-correlated to the | There were twenty-six deals completed | uncertainty, deal making slowed to $2.2 | | broad markets. As a firm, we have invested | with values greater than $10 billion, | trillion in the first half of the year. While | | in mergers since 1977 and created the | accounting for $609 billion in aggregate, | this was down 21% compared to the same | | Gabelli group’s first dedicated, announced | up 11% year over year. Deals with values | period last year, 2021 was a record year | | merger fund more than thirty years ago. | between $1-$5 billion accounted for $562 | and a likely outlier for M&A activity. The | | We remain vigilant in the application of | billion during the year, a decrease of 35% | first two quarters of 2022 each saw deal | | our investment philosophy and in our | compared to the first half of 2021. | volume above $1 trillion, the 7th and 8th | | search for opportunities. In this context, | | consecutive quarters to reach that level. | | let us outline our investment methodology | Cross border M&A activity totaled $687 | We expect we will continue to see a robust | | and the investment environment through | billion for the calendar year, marking | deal environment, as a reset in valuations | | 30 June 2022. | a decrease of 17% year-over-year. The | should provide opportunities for both | | | value of private equity-backed buyouts | strategic and private equity buyers. | | We remain vigilant in the application of | remained robust at $553 billion in the first | | | our investment philosophy and in our | half, an all-time high. This accounted for | As we have noted in the past, the merger | | search for opportunities. In this context, | nearly 26% of total M&A activity. | arbitrage strategy is a beneficiary of rising | | let us outline our investment methodology | | rates, as the risk free rate is one of the | | and the investment environment through | The slowdown of deal activity, compared | components of a deal spread. As rates | | 30 June 2022. Merger arbitrage is a highly | to the record-breaking levels of 2021, was | rise, nominal spreads should widen, all | | specialised investment approach designed | driven mainly by U.S. based targets, which | things being equal. Fixed income markets | | principally to profit from corporate events, | saw $958 billion in deal activity, a decrease | are currently anticipating an additional | | including the successful completion | of 28% year-over-year. European M&A | 200 basis points of rate hikes this year, | | of proposed mergers, acquisitions, | tallied $527 billion of transactions over | which would bring the Fed Funds rate to | | takeovers, tender offers, leveraged | the same period, a decrease of only 4%. | 3.5%. | buyouts, restructurings, demergers, and | other types of corporate reorganizations | | The Technology sector was the biggest | Currently, the spreads in the portfolio | | --- | --- | --- | --- | | and actions. As arbitrageurs, we seek to | | contributor to merger activity during | are as wide as we have seen since the | | earn the differential, or “spread,” between | | the first half, totaling $531 billion. This | beginning of the COVID pandemic. | | the market price of our investments and | | accounted for 25% of total announced | Aggressive antitrust policy rhetoric has | | the value ultimately realized through deal | | deal volume, a record. Financials and | increased volatility in deal spreads, which | | consummation. | | Industrials sectors were also large | provides us an opportunity. Mispriced risk | | | | contributors, each accounting for 12% of | allows us to add to our highest conviction | | We are especially enthusiastic about the | | M&A activity. | positions at lower prices, generating | | opportunities to grow client wealth in the | | | more attractive returns as deals progress | | decades to come, and we highlight below | | Portfolio in Review | towards closing. | | several factors that should help drive | | The first half of 2022 was the worst for | | | results. These include: | | markets since 1970 with the S&P 500 | We continue to find attractive investment | | | | shedding nearly 21%. Similar to 1970, | opportunities in newly announced and | | • Increased market volatility, which | | the main cause of the market turmoil | pipeline deals. We remain focused on | | | enhances our ability to establish | was inflation. Economists often define | investing in highly strategic, well-financed | | | positions for the prospect of improved | inflation as too many dollars chasing | deals with an added focus on near- | | | returns; | too few goods. Both those conditions | term catalysts, and are upbeat about | | | | have been eminently true of late. Years | our prospect to continue to generate | | • A robust market for corporate deal | | of easy monetary policy formed the | absolute returns. | | | making as conditions continue to | underbrush while $5 trillion in rescue | | | | provide an accommodative market | stimulus, $5 trillion in Quantitative Easing, | | | | for mergers and acquisitions. | supply chain snafus, and pent-up demand | | triggered by COVID provided the spark • A rising interest rate environment, for an explosion in prices. The war in providing attractive merger spread Ukraine, which has perhaps permanently opportunities; altered global food and energy flows, accelerated the fire. Unfortunately, most • The Fund’s experienced investment central banks, including the Fed, entered team, which pursues opportunities this year behind the curve. In order to globally through the disciplined restore credibility and avoid the fate of application of Gabelli’s investment methodology; 1 Thomson Reuters M&A Review – First Half of 2022 ## 09 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Portfolio Manager’s Review continued | Notable contributors to performance | | • Xilinx, Inc. (XLNX-NASDAQ), a | | | --- | --- | --- | --- | | include: | | | designer of advanced programmable | | • Arena Pharmaceuticals, Inc. (ARNA- | | | semiconductors used in automotive, | | | NASDAQ), a biotechnology company | | aerospace, and consumer | | | that develops therapeutics for | | applications, was acquired by | | | autoimmune diseases, was acquired | | Advanced Micro Devices. The | | | by Pfizer in March after the companies | | companies received approval from | | | received U.S. antitrust approval. In | | Chinese antitrust regulator SAMR in | | | February, Pfizer withdrew and refiled | | January, but were required to re-file | | | its application for antitrust approval | | their application in the U.S., given it | | | in the hopes of avoiding a second | | had been more than one year since | | | request that would have extended the | | receiving U.S. antitrust approval, | | | timeline for approval. The companies | | which was granted on 9 February, | | | had already received antitrust | | 2022. The deal subsequently closed | | | approvals in Germany and Austria, | | on 14 February, 2022. Under the terms | | | and Arena shareholders voted to | | of the agreement, Xilinx shareholders | | | approve the transaction in February. | | received 1.7234 shares of AMD | | | Under the terms of the agreement, | | common stock per share of Xilinx, | | | Arena shareholders received $100.00 | | which valued the company at $48 | | | cash per share, or about $6 billion. | | billion. | | • Meggitt plc (MGGT LN-London), | | Notable detractors from performance | | | | an engineering firm that designs | include: | | | | and manufactures components for | • Avast plc (AVST LN-London), | | | | the aerospace, defense and energy | | a provider of cyber security | | | industries, agreed to be acquired by | | software, agreed to be acquired by | | | Parker-Hannifin for £8.00 cash per | | NortonLifeLock for $7.61 cash and | | | share, or about £7 billion. Meggitt | | 0.0302 shares of NLOK, valuing the | | | has made considerable progress | | transaction at $8 billion. While the | | | securing various approvals needed | | deal secured all global regulatory | | | to consummate the transaction | | approvals outside of the UK, in March | | | and awaits only UK government | | the UK antitrust regulator referred the | | | approval. The deal was completed on | | deal to a stage two review, and the | | | 13 September 2022. | | stock sold off due to the uncertainty. | In the end, the transaction secured | • Sanderson Farms, Inc. (SAFM- | | approval from the Competition and | | --- | --- | --- | | | NASDAQ), a producer and processor | Markets Authority, with a completion | | | of fresh and frozen chicken products, | date of 12 September 2022. | agreed to be acquired by a consortium | led by Cargill for $203 cash per share, | • Twitter Inc. (TWTR US), a provider | | | --- | --- | --- | | or about $5 billion. As the deal awaits | | of online social networking services, | | its final regulatory approval from the | | Twitter agreed to be acquired by | | U.S. Department of Justice, the stock | | Elon Musk for $54.20 cash, or $44 | | has traded favorably on Sanderson’s | | billion. In July, Elon Musk unilaterally | | fundamentals. The company’s results | | terminated the merger agreement | | have greatly benefited from poultry | | with Twitter, citing material breach | | pricing and the consensus is that | | of the access to information and | | the stock would trade significantly | | financing cooperation covenants in | | higher in the event the deal cannot be | | the context of spam accounts. Twitter | | completed. | | sued Musk in Delaware Chancery | court for Specific Performance, | • Swedish Match (SWMA SS- | | essentially asking the court to compel | | --- | --- | --- | | | Stockholm), a manufacturer of | Musk to close the deal on terms. | | | smokeless tobacco products, | Musk’s attempt to terminate the | | | including the market-leading product | transaction caused some disruption | | | ZYN, agreed to be acquired by Philip | at the company. This, coupled with a | | | Morris International for SEK106.00 | deteriorating environment for digital- | | | cash per share, or about $16 billion. In | advertising spending, negatively | | | June, the companies received antitrust | impacted Twitter’s stock price. On 4 | | | approval in the U.S. The spread then | October 2022, Musk again reversed | | | tightened further upon reports that | course and stated that he would | | | Elliott was building a stake in Swedish | move ahead with the acquisition at | | | Match to oppose the sale at current | the original price of $54.20. At the | | | terms. | time of writing, the outcome of this | deal is still uncertain. ## 10 Strategic report Governance Financial statements ### Select Portfolio Holdings as Mandiant, Inc. (MNDT-NASDAQ) Swedish Match AB (SWMA SS- agreed to be acquired by Alphabet, Stockholm) agreed to be acquired ### of 30 June 2022 Inc. (GOOGL-NASDAQ). Mandiant by Philip Morris International, Inc. Activision Blizzard, Inc. (ATVI- provides cyber defense solutions. (PM-NYSE). Swedish Match develops, NASDAQ) agreed to be acquired by Under the terms of the agreement, manufactures, markets, and sells Microsoft Corp. (MSFT-NASDAQ). Mandiant shareholders will receive snus and other smokeless tobacco Activision Blizzard develops and $23.00 cash per share, valuing the products, nicotine pouches, and other publishes interactive entertainment transaction at approximately $5 tobacco products in Scandinavia, content and services. Under the billion. The transaction is subject to the U.S., and internationally. Under terms of the agreement, Activision shareholder as well as regulatory the terms of the agreement, Swedish shareholders will receive $95.00 cash approvals, and is expected to close in Match shareholders will receive SEK per share, valuing the transaction the second half of 2022. 106.00 cash per share, valuing the at approximately $74 billion. The transaction at approximately $16 transaction is subject to shareholder Meggitt plc (MGGT LN-London) agreed billion. The transaction is subject to as well as regulatory approvals, and is to be acquired by Parker-Hannifin the tender of at least 90% of shares expected to close in late 2022 or 2023. Corp. (PH-NYSE). Meggitt designs outstanding, as well as regulatory and manufactures components and approvals, and is expected to close in Avast plc (AVST LN-London) agreed sub-systems in the UK, rest of Europe, the fourth quarter of 2022. to be acquired by NortonLifeLock, the U.S., and internationally. Under Inc. (NLOK-NASDAQ). Avast the terms of the agreement, Meggitt Tower Semiconductor Ltd. (TSEM- provides digital security and privacy shareholders will receive £8.00 cash NASDAQ) agreed to be acquired by products. Under the terms of the per share, valuing the transaction Intel Corp. (INTC-NASDAQ). Tower agreement, Avast shareholders will at approximately £7 billion. The Semiconductor operates foundries, receive $7.61 cash and 0.0302 shares transaction is subject to shareholder proving manufacturing of integrated of NortonLifeLock common stock as well as regulatory approvals, and is circuits (ICs) worldwide. Under per share, valuing the transaction expected to close in the third quarter the terms of the agreement, Tower at approximately £6 billion. The of 2022. shareholders will receive $53.00 cash transaction was subject to shareholder per share, valuing the transaction as well as regulatory approvals, and Rogers Corp. (ROG-NYSE) agreed to at approximately $5 billion. The closed in mid-September 2022. be acquired by DuPont de Nemours, transaction is subject to shareholder Inc. (DD-NYSE). Rogers designs, as well as regulatory approvals, and is Coherent, Inc. (COHR-NASDAQ) develops, manufactures, and sells expected to close by the first quarter agreed to be acquired by II-VI, Inc. engineered materials and components of 2023. (IIVI-NASDAQ). Coherent provides worldwide. Under the terms of the lasers, laser-based technologies, and agreement, Rogers shareholders will Vifor Pharma AG (VIFN SW- laser-based system solutions. Under receive $277.00 cash per share, valuing Switzerland) agreed to be acquired the terms of the agreement, Coherent the transaction at approximately $5 by CSL Ltd. (CSL AU- Sydney). Vifor shareholders received $220.00 cash billion. The transaction is subject to Pharma develops and manufactures and 0.91 shares of II-VI common stock shareholder as well as regulatory pharmaceutical products in per share, valuing the transaction approvals, and is expected to close in Switzerland, rest of Europe, the U.S., at approximately $7 billion. The the second half of 2022. and internationally. Under the terms of transaction was subject to approval the agreement, Vifor shareholders will by shareholders of both companies, Shaw Communications, Inc. (SJR/B receive $179.25 cash per share, valuing as well as regulatory approvals, and CN-Toronto) agreed to be acquired by the transaction at approximately $12 closed in July 2022. Rogers Communications, Inc. (RCI/B billion. The transaction is subject to the CN-Toronto). Shaw Communications tender of at least a majority of shares First Horizon Corp. (FHN-NYSE) operates as a connectivity company outstanding, as well as regulatory agreed to be acquired by The Toronto- in North America in the Wireline and approvals, and closed in August. Dominion Bank (TD CN-Toronto). First Wireless segments of the market. Horizon operates as the bank holding Under the terms of the agreement, company for First Horizon Bank, which Shaw shareholders will receive provides various financial services. C$40.50 cash per share, valuing the Under the terms of the agreement, transaction at approximately C$26 First Horizon shareholders will receive billion. The transaction is subject $25.00 cash per share, valuing the shareholder as well as regulatory transaction at approximately $13 approvals, and is expected to close in billion. The transaction is subject to the second half of 2022. shareholder, as well as regulatory approvals, and is expected to close in late 2022 or early 2023. ## 11 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Portfolio Manager’s Review continued ### Select Closed Deals as of Intersect ENT, Inc. was acquired by Medtronic plc in May 2022. Intersect ### 30June 2022 ENT operates as an ear, nose, and throat Arena Pharmaceuticals, Inc. was medical technology company in the U.S. acquired by Pfizer Inc. in March 2022. On 6 August, 2021, Medtronic announced Arena Pharmaceuticals focuses on it would acquire Intersect for $28.25 developing novel medicines in the areas cash per share, valuing the transaction at of gastroenterology, dermatology, and approximately $1 billion. cardiology. On 13 December, 2021, Pfizer announced it would acquire Arena for Mimecast Ltd. was acquired by Permira $100.00 cash per share, valuing the in May 2022. Mimecast provides cloud transaction at approximately $6 billion. security and risk management services for corporate information and email. On Cerner Corp. was acquired by Oracle 7 December, 2021, Permira announced Corp. in June 2022. Cerner provides it would acquire Mimecast for $80.00 health care information technology cash per share, valuing the transaction at solutions and tech-enabled services in the approximately $6 billion. U.S. and internationally. On 20 December, 2021, Oracle announced it would acquire Nuance Communications, Inc. was Cerner for $95.00 cash per share, valuing acquired by Microsoft Corp. in March the transaction at approximately $30 2022. Nuance Communications provides billion. conversational and cognitive artificial intelligence innovations. On 12 April, 2021, Crown Resorts Ltd. was acquired by Microsoft announced it would acquire Blackstone, Inc. in June 2022. Crown Nuance for $56.00 cash per share, Resorts operates in the entertainment valuing the transaction at approximately industry primarily in Australia. On $17 billion. 13February, 2022, Blackstone announced it would acquire Crown for A$13.10 cash Veoneer, Inc. was acquired by per share, valuing the transaction at QUALCOMM, Inc. in April 2022. Veoneer approximately A$9 billion. designs, develops, and manufactures automotive safety electronics primarily CyrusOne, Inc. was acquired by KKR & Co., in North America, Europe, and Asia. On Inc. and Global Infrastructure Partners in 4 October, 2021, QUALCOMM announced March 2022. CyrusOne is a premier global it would acquire Veoneer for $37.00 cash REIT specializing in design, construction, per share, valuing the transaction at and operation of more than 50 high- approximately $4 billion. performance data centers worldwide. On 15 November, 2021, KKR announced Xilinx, Inc. was acquired by Advanced it would acquire CyrusOne for $90.50 Micro Devices, Inc. in February 2022. Xilinx cash per share, valuing the transaction at designs and develops programmable approximately $15 billion. devices and associated technologies worldwide. On 27 October, 2020, Ferro Corp. was acquired by Prince Advanced Micro Devices announced it International, a portfolio company of would acquire Xilinx for 1.7234 shares of American Securities LLC, in April 2022. Advanced Micro common stock per share, Ferro produces and markets specialty valuing the transaction at approximately materials in the U.S., Europe, the Middle $34 billion. East, Africa, the Asia Pacific, and Latin America. On 11 May, 2021, Prince Z Energy Ltd. was acquired by Ampol announced it would acquire Ferro for Ltd. in May 2022. Z Energy sells transport $22.00 cash per share, valuing the fuel in New Zealand. On 12 October, transaction at approximately $2 billion. 2021, Ampol announced it would acquire Z Energy for NZ$3.78 cash per share, IHS Markit Ltd. was acquired by S&P valuing the transaction at approximately Global, Inc. in February 2022. IHS Markit NZ$3 billion. provides critical information, analytics, and solutions for various industries and markets worldwide. On 30 November, 2020, S&P announced it would acquire IHS for 0.2838 shares of S&P common stock per share, valuing the transaction at approximately $44 billion. ## 12 Strategic report Governance Financial statements ## Portfolio Summary Largest Portfolio Security holdings (excluding cash and cash equivalents) (Unaudited) As at 30 June 2022 | | | | | % of total | | | | | Offsetting market | | | % of total | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | portfolio | 3 | Market value | | 4 | | value | 5 | portfolio | | 6 | | Security | 1 | Offsetting short position | 2 | (gross) | | | $000 | | | $000 | | | (net) | | Shaw Communications Inc 2.7 3,143 2.7 Activision Blizzard Inc 2.5 2,870 2.5 Coherent Inc II-VI Inc 2.3 2,693 (399) 2.0 Mandiant Inc 2.1 2,486 2.1 Vifor Pharma AG 2.1 2,442 2.1 Change Healthcare Inc 2.1 2,389 2.1 Rogers Corp 2.0 2,327 2.0 First Horizon Corp 1.9 2,245 1.9 PNM Resources Inc 1.9 2,179 1.9 Tower Semiconductor Ltd 1.8 2,112 1.8 BioHaven Pharmaceutical Holding Company Ltd 1.8 2,076 1.8 Aerojet Rocketdyne Holdings Inc 1.7 1,960 1.7 Citrix Systems Inc 1.7 1,924 1.7 Nielsen Holdings plc 1.5 1,750 1.5 Intertape Polymer Group Inc 1.4 1,672 1.4 Altaba Inc 1.4 1,666 1.4 SailPoint Technologies Inc 1.4 1,630 1.4 Tegna Inc 1.4 1,592 1.4 Zendesk Inc 1.4 1,567 1.4 MoneyGram International Inc 1.2 1,412 1.2 Sub-total 36.3 42,135 (399) 36.0 7 Other holdings 63.7 78,868 (4,901) 64.0 Total holdings 100.0 121,003 (5,300) 100.0 1 Long position. 2 The offsetting short position of II-VI taken in advance of its acquisition of Coherent Inc., which was converted into the right to receive $220 in cash plus 0.91 share of II-VI common stock. 3 Represents the market value as a percentage of the total portfolio value. 4 Market value of the long position. 5 Market value of the offsetting short position. 6 Represents the total position value (market value plus the offsetting market value) as a percentage of the total portfolio value. 7 Including derivatives and equity short positions, and excluding U.S. Treasuries. A Statement of Portfolio Changes is available from the Administrator upon request. ## 13 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Strategy | Our Key Performance Indicators (“KPIs”) | Manager, the Company may use leverage | Business Model | | --- | --- | --- | | The Company’s strategy is to generate | as part of its investment programme. | Please see the Methodology in Action on | | returns for its shareholders by pursuing | It is anticipated that the Company will | page 7. | | its investment objective while mitigating | structurally gear and use tactical leverage | | | shareholder risk, by investing in a | or portfolio borrowings in an amount | Board Diversity | | diversified spread of equity investments. | (calculated at the time of investment) of | Please see the “Board Diversity” item on | | Through a process of bottom-up stock | around 2 times of the Net Asset Value, | page 29. | | selection and the implementation of | subject to maximum gearing of 2.5 | | | disciplined portfolio construction, we | times the Net Asset Value. Please refer | | | aim to create value for the Company’s | to page 68 in the Glossary for further | | | shareholders. | discussion of gearing. | | | The largest holdings in the Company’s | Leverage | | | portfolio are listed on page 13. | Leverage is calculated using two methods: | | i) Gross method and ii) Commitment Gearing Policy method. For further details please see the At the sole discretion of the Portfolio Glossary on page 69. ## Key Performance Indicators (“KPIs”) | The Board recognises that it is share price | value. The central priority is to generate | For the year ended 30 June 2022, the | | --- | --- | --- | | performance that is most important to the | returns for the Company’s shareholders | Company’s KPIs, as monitored closely | | Company’s shareholders. Fundamental | through net asset value and share price | by the Board at each meeting, are listed | | to share price performance is the | total return, and discount management. | below: | performance of the Company’s net asset Net Asset Value Total Return Share Price Total Return Discount to Net Asset Value Year ended 30 June 2022 Year ended 30 June 2022 Year ended 30 June 2022 ## (1.34)% 29.06% 3.74% ## (30 June 2021: 12.12%) (30 June 2021: 5.46%) (30 June 2021: 25.63%) The above table sets out the key KPIs for the Company. These KPIs fall within the definition of ‘Alternative Performance Measures’ (APMs) under guidance issued by the European Securities and Markets Authority (ESMA). Information explaining how these are calculated is set out in the Glossary. These KPIs including APMs have been carefully selected by the Board on discussion with the Portfolio Manager, to give the most appropriate overview of performance in the financial year to shareholders and other stakeholders. Performance measured against various The Company does not use a benchmark. However, at each meeting the Board reviews indices and compares portfolio performance in the context of the performance of the ETF MNA and Credit Suisse Merger Arb Liquid Indices. Information on the Company’s performance is given in the Chairman’s Statement and the Portfolio Manager’s Review. Share Price Total Return The Company’s primary investment objective is to seek to generate total return consisting of capital appreciation and current income. In order to allow the Shareholders to realise a predictable, but not assured, level of cash flow and some liquidity periodically on their investment, the Company has adopted a “managed dividend policy”. This policy seeks to pay Shareholders a quarterly dividend in relation to the Net Asset Value of the Company at the time, which may be changed at any time by the Board. Between inception and 30 June 2022, the Company returned $2.27 per share to shareholders, consistent with its dividend policy. Dividends are paid only when declared by the Board subject to the Board’s assessment of the Company’s financial position and only if the Company has sufficient income and distributable reserves to make the dividend payment, and the level of dividend may vary over time. As such, the portfolio’s managed distribution of capital through the payment of quarterly dividends is under review as we enter the new Fiscal Year. Additional information can be found in the Glossary on page 70. ## 14 Strategic report Governance Financial statements # **Share price discount to net asset value (NAV) per share** The NAV per share is published on a daily basis on the London Stock Exchange and The International Stock Exchange. The NAV is calculated in accordance with the Association of Investment Companies (AIC) formula. At each Board meeting, the Board monitors the level of the Company's discount to NAV, the changes thereto and the reason for such changes. The Directors recognise the importance to investors that the shares should not trade at a significant discount to NAV. Accordingly, the Board would consider implementing a share buy back programme to ensure that the share price does not trade at a significant discount to the NAV. In the year under review, the Company's shares have traded from a discount of 25.63% as of 30 June 2021 to a discount of 3.85% as of 30 June 2022. Performance is assessed on a total return basis for the NAV and share price. # **Cumulative Performance Chart (USD) from 19 July 2017** ![img-0.jpeg](img-0.jpeg) # **Dividend History** | | Rate ($) | Ex-dividend date | Record date | Payment date | | --- | --- | --- | --- | --- | | Fourth interim 2022 | Not yet declared* | | | | | Third interim 2022 | 0.12 | 18 April 2022 | 19 April 2022 | 28 April 2022 | | Second interim 2022 | 0.12 | 20 January 2022 | 21 January 2022 | 03 February 2022 | | First interim 2022 | 0.12 | 18 November 2021 | 19 November 2021 | 03 December 2021 | | **Total** | **0.36** | | | | | Fourth interim 2021 | 0.12 | 14 October 2021 | 15 October 2021 | 29 October 2021 | | Third interim 2021 | 0.12 | 15 April 2021 | 16 April 2021 | 30 April 2021 | | Second interim 2021 | 0.12 | 14 January 2021 | 15 January 2021 | 28 January 2021 | | First interim 2021 | 0.12 | 15 October 2020 | 16 October 2020 | 30 October 2020 | | **Total** | **0.48** | | | | \* The Board expects to announce the final interim dividend in respect of the Company's financial year ended 30 June 2022 after the Tranche Two Tender Offer has concluded. Qualifying Registered Shareholders who participate in either Tender Offer will not be entitled to any such dividend in respect of any Ordinary Shares validly tendered. 15 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Principal Risks | The Company continues to have exposure | model, future performance, solvency or | following table with an explanation of how | | --- | --- | --- | | to a variety of risks and uncertainties, and | liquidity. The Company maintains a risk | they are mitigated. On review during the | | the Audit & Risk Committee has focused | matrix which sets out the risks facing the | year, the Board re-rated several principal | | attention on identifying and mitigating | Company, the likelihood and potential | risks and considered the adequacy of | | key risks likely to crystallise in the current | impact of each risk and the controls | mitigating controls in place across the | | economic environment. The Board | established for mitigation. The risk matrix | Company’s operations and those of its | | continues to prioritise a robust system of | is reviewed by the Audit & Risk Committee | key third party providers. The Audit & | | controls to minimise exposure to global | on a regular basis throughout the financial | Risk Committee has also specifically | | macro events in particular, which remains | year, and was specifically refreshed in 2022 | considered the risks associated to the | | highlighted as a generic risk as in recent | to introduce more stringent risk ratings | Portfolio Manager’s use of Contracts for | | Annual Reports. | for each risk and to reflect the impact of | Difference within the investment strategy, | | | related mitigating controls. | which on review were felt to continue to | | The Directors confirm that they have | | be appropriate. The risk narrative in the | | carried out a further robust assessment | The core principal risks set out in the | table below includes a summary of the | | of the principal risks facing the Company | 2021 Annual Report remain largely | actions taken to position the Company to | | during the year, including those that would | unchanged, however there are some risks | withstand the related effects for markets | | threaten its investment objective, business | that have emerged which are set out in the | and investments: | Risk Mitigation Investment Portfolio Risks Decline in the U.S. equity markets. By investing in a diversified portfolio and by adhering to a carefully monitored series of investment restrictions, enabled by automated pre-trade compliance features and daily review of trade tickets. These strictures mandate that no single security purchase can, at the time of investment, account for more than 15% of the gross assets of the Company. The Board meets the portfolio management team quarterly at the Board meetings to review the risk factors and their effects on the portfolio, and a thorough analysis of the investment strategy is undertaken. Merger and event driven risks address the Portfolio management team’s careful selection and active monitoring of mergers possibility that deals do not go through, are and acquisitions deals, and maintaining a thorough knowledge of the selected delayed beyond the original closing dates, or that securities in the portfolio. the terms of the proposed transactions change adversely. Global Macro Events Risks Unforeseen global emergencies such as the Global economic, geopolitical, and financial conditions are constantly monitored. pandemic could lead to dramatically increased Diversification of Company assets is incorporated into the investment strategy market instability and Company share price and, if disruptive events occur, the Manager is prepared to adopt a temporary volatility. defensive position and invest some or all of the Company’s portfolio in cash or cash equivalents, money market instruments, bonds, commercial paper, or other debt obligations with banks or other counterparties, with appropriate ratings as determined by an internationally recognised rating agency and approved by the Board. Another option is the investment in “government and public securities” as defined for the purposes of the Financial Conduct Authority Handbook. The effects of the COVID-19 pandemic appear to be easing, but the aftermath of the pandemic continues to create uncertainty for economic forecasts and markets as Governments globally seek to transition communities, businesses and individuals back to normality. The Manager has therefore carefully managed the Company’s investments to protect shareholders’ interests and to position the Company to benefit from future performance of markets in line with its key investment principles. The pandemic also impacted the day-to-day operational management of both the Board and the Company’s third party service providers. The Board and all its third party service providers continue to successfully work and meet remotely, and regular third party briefings have kept the Board informed of how related risks are minimised through the pandemic and ongoing global recovery. ## 16 Strategic report Governance Financial statements Risk Mitigation The military aggression undertaken by Russia The Board continues to monitor the events unfolding in Ukraine. The portfolio against Ukraine has upset the world economic management team of the Trust monitors the holdings for their exposure to order. The geopolitical repercussions are extensive, the war. creating global problems including higher energy The Audit & Risk Committee have noted that it is possible that a future event and food prices and possibly altering global food may temporarily compromise the availability of an individual board member or a and energy flows permanently. key representative or integral team member of a third party service provider, in turn impacting the Company’s performance and have plans in place to prepare for such eventualities such as remote working etc to ensure continuity. Fraud and cybersecurity vulnerability could The Board relies on assurances from the Company’s key third-party providers increase for key service providers resulting from that they have appropriate and adequate cybersecurity policies in place to the war in Ukraine. Such events are external to mitigate the risk of a cyberattack. The Board keep these policies under review the management and beyond the controls of the by receiving regular presentations from the Heads of cybersecurity of its service Company. providers, who describe in detail the efforts they take to secure the company’s data and to mitigate the risks of loss or potential damages that could result from such attacks. Operational Risks Outsourcing The operational functions of the Company are All third party service providers report to the Board on a regular basis and their outsourced to third parties. Systems disruptions, reports and representations are reviewed by the Board, the AIF Manager and control failures and/or operational lockdowns the Portfolio Manager. caused by the COVID-19 pandemic at these companies could impact the Company. A state-backed cyberattack could also result Whilst the Board takes all reasonable endeavours to safeguard the Company in widespread disruption across the financial from a cyberattack on this scale, complete mitigation of this external risk industry. cannot be guaranteed, however the Board, together with its’ service providers remain vigilant to the likelihood of such an event in the current climate and have improved the company’s readiness to reduce disruptions to the company’s activities, in the event of such threat. Market and Share Price Risks Market risk arising from volatility in the prices of To address a discount, the Board may consider using share buybacks, through the Company’s investments. The share price of which shares would be repurchased when trading at a discount from NAV, up to the Company may fall below the NAV. a maximum percentage of 14.99% of the issued share capital. The Company has continued its shareholder engagement programmes to increase its visibility and interaction with existing and potential investors. Financial Risks Comprise: (i) share price risk (comprising interest Further details of these risks are disclosed in Note 12 to the financial statements rate risk, currency risk and other price related together with a summary of the policies for managing these risks. risks); (ii) liquidity risk; and (iii) credit risk. ## 17 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Principal Risks continued Risk Mitigation Corporate Governance and Regulatory Compliance Risks Damage to its reputation through poor corporate The Board complies with good governance practices in accordance with the governance. Association of Investments Trusts’ (“AIC”) Code of Corporate Governance guidelines which endorse the UK Corporate Governance Code. The Board and its Committees actively perform self-assessments of compliance through the annual effectiveness evaluation and receive are advised regularly advice from by the Company Secretary in relation to any regulatory changes within the corporate governance landscape that may impact the company. Shareholder discontent due to a lack of The Board is in contact with its major shareholders on a regular basis, and it appropriate communications and/or inadequate monitors shareholder sentiment. financial reporting. Failure to comply with legal and regulatory The Company receives and responds to guidance from both its external and requirements internal advisors on compliance with the Listing Rules, the Financial Conduct Authority’s Disclosure and Transparency Rules, UK Companies Act 2006, as well as other applicable regulations. In order to qualify as an investment trust, the The Board receives confirmations periodically that the Company remains Company must comply with Section 1158-59 compliant with s1158 CTA 2010 in maintaining its Investment Trust Status. The of the Corporation Tax Act 2010 (“CTA 2010”). criteria are monitored by the Administrator, AIF Manager, and the Portfolio A breach of these sections could result in the Manager who reports to the Board on compliance at each quarterly meeting. Company losing investment trust status and, In addition, the Audit & Risk Committee are also kept informed of any potential as a consequence, capital gains realised within breaches by the Company’s External Auditors who review compliance as part of the Company’s portfolio would be subject to the audit process and provide guidance accordingly. Corporation Tax. Emerging Risks Mitigation Environmental, Social and Climate Change Risks Environmental, Social and Climate issues pose The Board and Investment Manager are committed to supporting business some of the most significant challenges to the activities that are environmentally and socially responsible in line with its long-term prosperity of the global economy, the sustainability commitments and its support of the goals of the Paris Accord. well-being of people and communities, and the natural environmental ability to support life. Geopolitical Risks Geopolitical risks have risen with Russia’s The Board is keeping these evolving risks and market pressures under constant invasion of Ukraine. The impact of sanctions review and will continue to monitor the volatility around investee company and the rise in commodity prices are likely to be valuations and implications for the Company’s likely future dividend income the main transmission mechanism to markets. stream. Rising commodity prices and further disruption to supply chains shall exacerbate inflationary pressure and may also create a negative impact on global growth, with Europe at particular risk. ## 18 Strategic report Governance Financial statements ## Viability & Going Concern Statement | In accordance with the provisions of the | The nature of the Company’s investments | | contact with the Company’s major | | --- | --- | --- | --- | | UK Corporate Governance Code, the | means that solvency and liquidity risks | | shareholders, have received a letter | | Directors have assessed the prospects of | are low because: | | in Deed, which contains enforceable | | the Company over a longer period than | | | irrevocable undertakings, from the largest | | the 12 months referred to in the ‘Going | • The Company’s portfolio is invested in | | shareholder, Associated Capital Group, | | Concern’ guidelines. | | readily realisable, listed securities; | legal and beneficial owner of 6,216,256 | shares at the time of this writing, that they | The Board conducted this review | | • The closed-end nature of the | | will both vote in favour of continuation of | | --- | --- | --- | --- | --- | | focusing on a period of five years. This | | | Company means that, unlike an | the company and not participate in the | | period was selected as it is aligned with | | | open-ended fund, it does not need to | 2nd tender offer. Thereby the Directors | | the Company’s investment objective of | | | liquidate positions when shareholders | confirm with certainty that the company’s | | generating total return, consisting of | | | wish to sell their shares; and | largest shareholder will vote in favour of | | capital appreciation and current income. | | | | the company to continue to operate. | | In making this assessment the Board also | | • The expenses of the Company | | | | considered the Company’s principal risks. | | | are predictable and modest in | The Company’s portfolio consists primarily | | | | | comparison with the assets and there | of U.S. investments. Accordingly, the | | Investment Companies in the UK operate | | | are no capital commitments currently | Company believes that the post “Brexit” | | in a well established and robust regulatory | | | foreseen which would alter that | arrangements introduced by the U.K. | | environment and the Directors have | | | position. | government and market U.K. government | | assumed that: | | | | and market regulators will not materially | | | | • The taxation of the Company should | | affect the prospects for the Company, | | • Investors will continue to want to | | | it operate as a close investment | but the Board and Portfolio Manager will | | | invest in closed-end investment | | company are predictable and modest | continue to keep developments under | | | companies because the fixed | | in comparison with the return profile | review. | | | capitalisation structure is suited to | | of the investment programme, and as | | | | pursuing the Portfolio Manager’s | | a result of regular consultation with | This Viability & Going Concern Statement, | | | proprietary long-term PMV with a | | shareholders, an effort to undertake | the Strategic Report for the year ended | TM | | Catalyst | investment strategy; | | the mitigation of such close status | 30 June 2022 (on pages 2 to 18 of this | | --- | --- | --- | --- | --- | --- | | | | | | taxation, such as a re-domiciliation, | document) and the s172 statement (on | | • The Company’s remit of investing | | | | is not expected in the period after 12 | pages 29 and 30) have been approved by | | | globally with an emphasis on securities | | | months from the tranche two tender | the Board and signed on its behalf by: | | | traded in the U.S., and predominantly | | | offer. | | | | equity securities issued by companies | | | | Marc Gabelli | | | of any market capitalisation will | | The Board have closely monitored | | | | | continue to be attractive to investors. | | the impact of the ongoing COVID-19 | | Chairman | | | | | pandemic, Brexit uncertainty, and the | | 25 October 2022 | | • The UK’s well established investment | | | war in Ukraine. Those impacts and related | | | | | and robust regulatory environment | | continuing uncertainty have short- and | | | | | will continue as such and will remain | | potentially medium-term implications | | | | | an attractive global domicile for the | | for the Company’s investment strategy. | | | | | Company’s remit. | | Additionally, the Board is monitoring the | | | period ahead on the basis of the Company • The recent period of UK political no longer having investment trust status instability as reflected in the Sterling and its implications on the Company’s exchange rate relative to the US investment return profile over the longer Dollar, the interplay of parliamentary term. In context, the Board continuously politics with the Bank of England, and monitors the Company’s investment the regulatory unravelling of Brexit portfolio, liquidity and gearing, along with relative to the European Union, will levels of market activity, to appropriately pass in the medium term and return to minimise and mitigate consequential a period of marketplace stability and risks to capital and future income such instill domicile confidence for global as geopolitical risks, financial risks etc. investors. The risks are discussed in more detail in the Chairman’s statement and on pages As with all investment vehicles, there is 3 to 5. a risk that the performance of individual investments will vary and that capital may Taking these factors into account, be lost, but this is not regarded as a threat the Directors confirm that they have to the viability of the Company. a reasonable expectation that the Company will continue to operate and | Operationally, the Company retains title | meet its expenses. The Directors have | | --- | --- | | to all assets, and cash and securities are | also considered the fact that there will | | held with a custodian bank approved by | be a continuation vote at the Company’s | | the Portfolio Manager and the Board. | 2022 Annual General Meeting, and | having consulted and maintained close ## 19 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Board of Directors The Directors of the Company who were in office during the year and up to the date of the signing of the financial statements were as follows: | Marc Gabelli | Marco Bianconi | John Birch | | --- | --- | --- | | Non-executive Director and Chairman | Independent non-executive Director | Non-executive Director | | Chairman of the Nomination Committee | Chairman of the Audit & Risk Committee, | Chairman of the Management | | | member of the Conflicts and Remuneration | Engagement and Conflicts Committees, | | Marc is a director and President of the | Committees | member of the Remuneration and | | Portfolio Manager’s parent company, | | Nomination Committees | | GGCP, a director of Associated Capital | Marco is Corporate Development, M&A | | | Group “ACG” and is a Senior Portfolio | and Investor Relations Director at Cementir | John is the Managing Partner of The | | Manager at Gabelli. As a fund manager, his | Holding N.V. an international Building | Cardinal Partners Global S.a.r.l. Previously | | focus is global value equity investments. | Materials manufacturer quoted on the | he was Chief Operating Officer of | | He has managed several Morningstar five | Italian Stock exchange. He has previously | Sentinel Asset Management, Inc. and | | star mutual funds, and a Lipper #1 ranked | served for five years as CFO of its parent | Sentinel Administrative Services, Inc., | | global equity mutual fund. Marc is active | company Caltagirone SpA. Prior to this | both members of National Life Group. He | | in a variety of charitable educational | he worked for over eight years at Fidelity | has also held senior roles in State Street, | | efforts in the United States and United | Investments in London as Portfolio | American Skandia Investment Services, | | Kingdom. He has lived and worked in the | Manager and Pan-European Equity Analyst. | Inc., Gabelli Funds, Inc. and Gabelli | | U.K. at various times, beginning in 1990. | Marco holds a number of non-executive | International. He has an MA in Tax and over | | He is a graduate of the Massachusetts | roles within the Cementir group and is non- | 30 years experience in asset management. | | Institute of Technology (M.I.T.) Sloan | executive director at Henderson European | | | School of Management. | Focus Trust Plc. Marco holds an MBA at | Appointed on 5 June 2017. | NYU Stern School of Business, class 1996 Appointed on 28 April 2017. and he is a Chartered Accountant since 1990. Appointed on 5 June 2017. ## 20 Strategic report Governance Financial statements | John Newlands | Yuji Sugimoto | James Wedderburn | | --- | --- | --- | | Independent non-executive Director | Independent non-executive Director | Independent non-executive Director | | Member of the Audit & Risk Committee | Member of the Nomination, Conflicts and | Chairman of the Remuneration | | | Management Engagement Committees | Committee and member of the Audit & | | John has served more than twenty years | | Risk Committee | | in the City of London, most recently | Yuji has over 37 years experience in | | | with Brewin Dolphin Limited as Head of | financial markets. He is a former Executive | James has over 40 years experience in | | Investment Companies Research from | Director of Sumitomo Mitsui Banking | the investment industry. From 1999 to | | 2007 to 2017. He was a member of the | Corporation in the US. Prior to this | 2017 he was Director of the family office | | Association of Investment Companies | Yuji co-managed Japanese/Pan-Asian | of Sir Peter Lampl, founder of the Sutton | | Statistics’ Committee from 2000 to | institutional research sales as a Managing | Trust social mobility charity, where he | | 2017. He has an MBA from Edinburgh | Director at Lehman Brothers / Barclays. | was responsible for all financial and | | University Business School and is a | From 2003 to 2007 he managed a New | investment matters and closely involved | | Chartered Electrical Engineer. He has | York based Japanese equity hedge fund | with the charity’s finances. He worked | | written four books about financial history, | Sugimoto Capital Management LLC, | previously at financial group Hamilton | | the most recent charting the history | which he founded. He started his career | Lunn monitoring the global investments | | of Dunedin Income Growth Investment | at Salomon Brothers working for 24 years | of ultra high net worth clients and, prior | | Trust. He is a non executive director of | in New York, London, Hong Kong and | to that, was a fund manager at Invesco | | CQS New City High Yield Fund and Chair | Tokyo in a number of institutional sales | MIM and Samuel Montagu responsible | | of Develop North PLC and Deputy Chair | management positions as a Managing | for UK pension fund and charity clients. | | of the Investment Committee of Durham | Director. He has a MBA from the University | James spent his early career as a UK | | Cathedral. | of Southern California and a B.A. in | equity research analyst at Cazenove and | | | Economics from Columbia University. | Laing & Cruickshank after graduating | | Appointed on 8 February 2018. | | from Oxford University. | Appointed on 5 June 2017. Appointed on 15 November 2017. ## 21 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2022 # Directors' Report The Directors present the annual report and accounts of the Company for the year ended 30 June 2022. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the UK international accounting standards and have been prepared in accordance with the requirements of the Companies Act 2006. ## The Company The Company was incorporated in England and Wales on 28 April 2017 with registered number 10747219. The Company is registered as an investment company as defined by Section 833 of the Companies Act 2006 (the "Companies Act") and operates as such. The Company was admitted to the Specialist Fund Segment of the Main Market of the London Stock Exchange and trading on the Official List of the International Stock Exchange on 19 July 2017. The Company's Listing Sponsor on the International Stock Exchange is Ocorian Administration (Guernsey) Limited. The Company also operates an additional market quote for its ordinary shares on the London Stock Exchange, denominated in sterling. In the opinion of the Directors, the Company has conducted its affairs during the year under review so as to qualify as an investment trust for the purposes of section 1158 of the Corporation Tax Act 2010 (as amended). See below in the Directors' Report for additional information on the Company's tax status. ## Continuation of the Company An ordinary resolution for the continuation of the Company as a closed-end investment company will be proposed at the Annual General Meeting ("AGM") scheduled to be held on 30 November 2022, which is the AGM immediately following the fifth anniversary of the Company's listing. Associated Capital Group, legal and beneficial owner of 6,216,256 shares at the time of this writing, has confirmed via a letter of Deed, which contains enforceable irrevocable undertakings, that it will both vote in favour of continuation of the company and not participate in the 2nd tender offer. As such the Company will continue its business as presently constituted. The Directors believe, having taken into account the views of the Company's investment manager, that the continuation of the Company's operations is in the best interests of its Shareholders. ## Going concern The Directors, having taken account of the continuing market regulatory changes affecting investee companies, investment valuations, implications of the COVID-19 pandemic, and the war in Ukraine, and, have determined that the Company's strategy, longer-term asset allocation, short-term liquidity and robust governance structure provide a sufficient basis for the Board to adopt the going concern basis for the Company as at 30 June 2022. In forming this position, the Directors consulted with shareholders utilizing the tender offer process, considered the Company's investment objectives, risk management policies, capital management policies and procedures, the nature of the portfolio and expenditure projections in detail. The Company is able to meet all of its liabilities from its assets and the ongoing charges are approximately 1.60% of assets. This Going Concern statement should be read in conjunction with the Company's Viability & Going Concern Statement which can be found on page 19. Furthermore, the Company has the full support of the largest shareholder, Associated Capital Group, legal and beneficial owner of 6,216,256 shares at the time of this writing, that has confirmed via a letter of Deed that it will both vote in favour of continuation of the company and not participate in the 2nd tender offer. ## Directors The Directors of the Company in office at the date of this report and their biographies are set out on pages 20 and 21. Details of Directors' interests in the shares of the Company are set out in the Directors' Remuneration Report. Directors' retirements are subject to the Company's Articles of Association (the "Articles"). The Articles provide that the directors may appoint a person who is willing to act as a director and any director so appointed is required to retire at the next AGM after his or her appointment and is eligible for reappointment. All directors who held office at the time of the two preceding AGMs and who did not retire by rotation at either of them are also required to retire by rotation and are eligible for reappointment. In addition, each Director considered to be non-independent will retire and being eligible offer themselves for re-election on an annual basis. The Board has agreed to follow the recommendations of the latest Corporate Governance Codes and ask all Directors of the Company to offer themselves for re-election annually. Therefore, all the Directors will retire at the forthcoming AGM and, being eligible will offer themselves for re-election. Having considered the Directors' performance as part of the annual Board evaluation process the Board believes that it continues to be effective and that the Directors each bring an appropriate level of knowledge, experience, business, financial and asset management skills. The Board therefore recommends that shareholders vote in favour of each Director's proposed election at the AGM. Mr. Gabelli, as a Director and President of the Gabelli Group ("GGCP, Inc."), the parent company of both Gabelli Funds, LLC (the "Portfolio Manager") and Associated Capital Group, the Company's largest shareholder, is deemed to be interested in the Company's Portfolio Management Agreement, as is Mr. Birch, who serves on the Boards of other funds in the Gabelli/GAMCO group of companies. There were no other contracts subsisting during the year under review, or up to the date of this report, in which a Director of the Company is, or was, materially interested and which is, or was, significant in relation to the Company's business. None of the Directors have a service contract with the Company. The terms of their appointment was provided to them in writing. No Director is entitled to compensation for loss of office on the takeover of the Company. The powers of the Directors are set out in the Corporate Governance Statement. ## Directors' conflicts of interest Directors have a duty to avoid situations in which they have, or could have, a direct or indirect interest that conflicts, or may potentially conflict, with the Company's interests. This is in addition to the continuing duty that Directors owe the Company to disclose to the Board any transaction or arrangement under consideration by the Company in which they are interested. 22 Strategic report Governance Financial statements Directors are required to disclose any conflicts and potential conflicts of interest upon appointment. A schedule of these is maintained by the Company Secretary and provided at each quarterly Board meeting. Directors are responsible for keeping these disclosures up to date and in particular to notify any new potential conflicts of interest, or changes to existing situations, to the Company Secretary. In accordance with the Companies Act 2006 and the Company's Articles, the Directors can authorise such conflicts or potential conflicts of interest. In deciding whether to authorise any conflict, the Directors must consider their general duties under the Companies Act 2006, and their overriding obligation to act in a way they consider, in good faith, will be most likely to promote the Company's success. In addition, the Directors are able to impose limits or conditions when giving authorisation to a conflict, or potential conflict of interest, if they think this is appropriate. The authorisation of any conflict matter, and the terms of any authorisation, may be reviewed by the Board at any time. The Board believes that the procedures established to deal with conflicts of interest operated effectively during the year under review. #### Directors' Indemnities In accordance with the provisions of the Companies Act, the Company's Articles allow for Directors and officers of the Company to be indemnified out of the assets of the Company against all costs, losses, and liabilities incurred for negligence, default, breach of duty or trust in relation to the Company's affairs and activities. The Articles also provide that, subject to the provisions of the Companies Act 2006, the Board may purchase and maintain insurance for the benefit of Directors and officers of the Company against any liability which may incur in relation to anything done or omitted to be done, or alleged to be done or omitted to be done, as a Director or officer. The Company has taken out Directors' and Officers' Liability insurance, which covers the Directors and officers of the Company. #### Share Capital Full details of the Company's issued share capital are given in Note 11 to the Financial Statements on page 57. Details of the voting rights in the Company's shares as at the date of this report are also given in Note 14 to the Notice of Annual General Meeting on page 62. The ordinary shares carry the right to receive dividends and have one voting right per share. Voting rights may increase to certain Loyalty Programme qualifying shareholders in the subsequent period commencing calendar year end 2022 (see "Loyalty Programme"). There are no restrictions on the voting rights of the ordinary shares or any shares which carry specific rights with regard to the control of the Company. No shares were issued during the year under review, or up to close of business on 30 June 2022. At the year end and at the date of this report there were accordingly 95,960 ordinary shares held in treasury (0.93% of the issued share capital). #### Share Repurchase The Company has authority to buy back shares in the market and may cancel or hold ordinary shares acquired by way of market purchase in treasury. The Directors will consider repurchasing shares in the market under an extension of the programme if they believe it to be in shareholders' interests. It is the Board's intention that any shares bought back by the Company will be held in treasury and will only be sold at prices at or above the prevailing NAV per share ensuring a positive overall effect for shareholders when shares are bought back at a discount and then sold at a price at or above the NAV per share. The current authorities to buy back and sell shares from treasury and to issue shares will expire at the conclusion of the 2022 Annual General Meeting. The Directors are proposing that these authorities be renewed at the forthcoming Annual General Meeting. #### Tender Offer In line with the fifth anniversary tender offer, and via two separate tranches, the company is implementing the offer to purchase shares from all qualifying registered shareholders entered into the loyalty register and who continuously remain on the loyalty register at the time of the implementation of the respective tender offer. As a subsequent event, the tender offer completed its first tranche on 30 September and purchased and settled 3,055,957 million shares. A second tranche fifth anniversary tender offer is expected to commence in January of 2023. While the tender offer is available to all shareholders, Associated Capital Group, legal and beneficial owner of 6,216,256 shares at the time of this writing, has confirmed via a letter of Deed that it will both vote in favour of continuation of the company and not participate in the 2nd tender offer and thereby remain as the company's largest shareholder. #### Close Company As a result of the Fifth Anniversary tender offer tranche one, the Company will operate as an Investment Company with Close Company status. The Board does not expect any impact on the investment policy as detailed in the Charter, as a result of close status. The Board is examining alternatives to reduce costs on an ongoing basis and will seek to undertake a comprehensive review during the fiscal year following the completion of the tranche two of the Fifth Anniversary tender offer, beginning in the 2023-2024 period. #### Loyalty Programme The Company has implemented a loyalty programme to incentivise long-term share ownership. The loyalty programme is open to all shareholders, who are entered in the Loyalty Register, a separate register maintained by the registrar to allow a shareholder to increase its voting power after holding shares for a continuous period of at least five years. Each shareholder so registered will be entitled to subscribe for one special voting loyalty share in respect of each ordinary share held. A shareholder may only exercise this right during the prescribed subscription period each calendar year, being between 1 and 14 December, by completing the appropriate subscription documentation and paying up the nominal value of the special voting loyalty shares. Subject to the receipt of valid subscriptions during the period and the satisfaction of certain requirements by the Company under the Companies Act and the Articles special 23 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2022 # Directors' Report continued voting loyalty shares would be issued on 31 December, or the preceding business day, should 31 December not be a business day. Each ordinary shareholder and holder of special voting loyalty shares has the right to receive notice of, to attend, to speak at, and vote at general meetings of the Company. Each ordinary shareholder and holder of special voting loyalty shares who is present in person or by proxy at general meetings has one vote, whether on a show of hands or on a poll, in respect of each ordinary and special voting loyalty share held. At any general meeting ordinary shares and any special voting loyalty shares in the capital of the Company in issue would vote effectively one class. The ordinary shares carry the right to receive dividends. The special voting loyalty shares are not entitled to participate in any dividend or distribution made or declared by the Company except for a fixed annual dividend equal to 0.00001% of their nominal value. On a winding up of the Company holders of special voting loyalty shares would be entitled to be repaid the capital paid up thereon pari passu with the repayment of the nominal amount of the ordinary shares. The special voting loyalty shares are not transferrable without the prior written consent of the Company. There are no restrictions on the transfer of ordinary shares or on the exercise of voting rights attached to them, which are governed by the Company's Articles and relevant legislation. There are no shares which carry specific rights with regard to the control of the Company. ## Activities and Business Review A review of the business and details of research activities can be found within the Strategy section of this Annual Report. ## Alternative Investment Fund Managers As an investment company that is managed and marketed in the United Kingdom, the Company is an Alternative Investment Fund ("AIF") falling within the scope of, and subject to the requirements of, the Alternative Investment Fund Managers Directive ("AIFMD"). The Company has appointed Carne Global Fund Managers (Ireland) Limited ("Carne") as its Alternative Investment Fund Manager ("AIFM") pursuant to the AIFMD, however as a result of the United Kingdom's departure from the European Union, the Company will assign Gabelli Funds LLC, a US SEC registered investment advisor as the investment manager in accordance with such exemptions. Carne is responsible for the portfolio management and risk management functions of the Company until which point Gabelli Funds' LLC is assigned portfolio manager. At such point Carne will continue to provide the Company AIFM administrative services and monitor risks. The Carne Agreement may be terminated by either party giving not less than 90 days' written notice. Carne is entitled to receive from the Company such annual fees, accrued and payable at such times, as may be agreed in writing between itself and the Company from time to time. The fees are to be payable monthly and subject to a minimum monthly fee of €2,500. During the year under review the AIFM fees paid to Carne were $48,062 (2021: $53,475). Regulatory disclosures including the Key Investor Information Document are provided on the website. Disclosures on Remuneration as required under AIFMD can also be found on page 36 and 65. ## Portfolio management and administration Gabelli Funds, LLC ("Gabelli") was appointed as Portfolio Manager with effect from 15 June 2017 under a Portfolio Management Agreement (the "Agreement") with Carne and the Company under which portfolio management functions were delegated to Gabelli. Gabelli receives a management fee, payable monthly within 10 business days calculated at the rate of 0.85% of NAV accrued daily and calculated on each business day. Gabelli is entitled to earn a performance fee under the Agreement in respect of each performance period, ending 30 June each year. For the year under review Gabelli was entitled to a performance fee of 20% of any outperformance of the net asset value total return, capped at 3% of the average NAV. For the year ended 30 June 2022 no performance fee was paid (2021: $2,795,658). ## Appointment of the Manager The arrangements for the provision of portfolio management and other services to the Company is considered by the Board on an ongoing basis and a formal review is conducted annually. During the year, the Board considered the performance of Gabelli as Portfolio Manager by reference to the investment process, portfolio performance and how it had fulfilled its obligations under the terms of the Portfolio Management Agreement. It is the opinion of the Board that the continuing appointment of Gabelli as Portfolio Manager, on the terms disclosed is in shareholders' interests as a whole. Among the reasons for this view is the depth, experience and investment process of Gabelli. ## Facilitating Retail Investments The Company conducts its affairs so that its shares can be recommended by independent financial advisers to ordinary retail investors in accordance with the FCA's rules in relation to non-mainstream pooled investments and intends to continue to do so for the foreseeable future. The shares are excluded from the FCA's restrictions which apply to non-mainstream pooled investments because they are shares in an investment trust. ## Other third party service providers Depository and Custodian The Company appointed State Street Trustees Limited as its Depository under a Depository Agreement dated 30 June 2017 between Carne, Gabelli and the Company. The main role of the Depository under the AIFMD is to act as a central custodian with additional duties to monitor the operations of the Company, including cash flows and to ensure that the Company's assets are valued appropriately. The Depository receives a fee payable at 0.025% per annum of the gross assets of the Company. Under the Depository Agreement, custody services in respect of the Company's assets have been delegated to State Street Bank and Trust Company. The Custodian receives a custody fee payable by the Company at rates depending on the number of trades and the location of securities held subject to a minimum annual fee payable of not less than $31,250. Custody fees of $41,736 were paid during the year under review (2021: $38,326). The depository agreement is subject to 90 days' written notice of termination by any party. 24 Strategic report Governance Financial statements ### Registrar Computershare Investor Services Plc (the "Registrar") has been appointed as the Company's registrar pursuant to the Registrar Services Agreement. The Registrar is responsible for maintaining the Company's register of shareholders and also provides services in respect of the payment of dividends, provision of shareholder documentation and compliance with the Common Reporting Standard. Fees of $13,000 was paid to the Registrar during the year under review (2021: $15,525). Fees in respect of corporate actions will be agreed at the time of the corporate action. ### Other Service Providers Kin Company Secretarial Limited was formally appointed in October 2021 to take over as the Company Secretary from Maitland Administration Services Limited ("Maitland"). State Street Bank and Trust Company ("the Administrator") is responsible for the day-to-day administration of the Company including the maintenance of the Company's financial records and the calculation of the daily NAV. Kin Company Secretarial has worked with the Administrator to perform the functions of Company Secretary for the 2021/2022 financial year. The Kin Company Secretarial agreement has no minimum term and is terminable by Kin or the Company on not less than one month's notice. Fees of $84,466 were paid for Company Secretarial services during the year under review (2021: $62,299). ### Related Party Transactions Carne Global Fund Managers (Ireland) Limited is a related party to the Company as it is considered to have significant influence over the Company in its role as AIFM. AIFM fees of $48,062 were paid to Carne during the year ended 30 June 2022 (2021: $53,475). Further details of related party transactions are provided in note 16 to the financial statements. ### Substantial shareholders As at 30 June 2022, the Company had been advised by the following shareholders of their interests of 3% or more in the Company's ordinary issued share capital: | Shareholder | % of Voting Rights | | --- | --- | | Associated Capital Group Inc | 60.42% | | Banca Generali SpA | 5.26% | | Fondazione Cassa di Risparmio di Perugia | 4.83% | | Victor Paullier & Cia | 4.59% | | Pictet & Cie (Europe) SA Luxembourg | 4.03% | | Banco di Desio e Della Brianza | 3.87% | | LQH SA | 3.42% | Subsequent to 30 June 2022 and as result of the fifth anniversary tender offer tranche one, the Company has been notified of several significant changes. The Company was notified that Associated Capital Group had not tendered any shares in tranche one of the tender and does not plan to tender any shares in the tranche two tender, resulting in Associated Capital Group owning an estimated 87% of the voting rights. As of the time of this report's publishing, the list of substantial shareholders is being gathered, however it is expected to change significantly. ### Future developments The Chairman's Statement and Portfolio Manager's report within this Annual Report contain details of likely future developments. ### Financial instruments The financial risk management and internal control processes and policies, and exposure to the risks associated with financial instruments can be found in Note 12 to the financial statements. ### Results The Company generated a revenue loss for the year ended 30 June 2022 of $943,000 (2021: $1,459,000). ### Disclosure of Information under Listing Rule 9.8.4 The disclosures required by Listing Rule 9.8.4, where relevant to the Company, are discussed in more detail on page 67. ### Dividends and dividend policy In order to allow the Shareholders to realise a predictable, but not assured, level of cash flow and some liquidity periodically on their investment, the Company has adopted a "managed dividend policy". This policy seeks to pay Shareholders a quarterly dividend in relation to the Net Asset Value of the Company at the time, which may be changed at any time by the Board. Between inception and 30 June 2022, the Company returned $2.27 per share to shareholders, consistent with its dividend policy. Dividends are paid only when declared by the Board subject to the Board's assessment of the Company's financial position and only if the Company has sufficient income and distributable reserves to make the dividend payment, and the level of dividend may vary over time. As such, the portfolio's managed distribution of capital through the payment of quarterly dividends is under review as we enter the new Fiscal Year. The Company declared and paid three quarterly interim dividends of US$0.12 per ordinary share each on 03 December, 03 February 2022, and 28 April 2022 for the financial year ending 30 June 2022. The Board expects to announce the fourth interim dividend in respect of the Company's financial year ended 30 June 2022 after the Tranche Two Tender Offer has concluded. Qualifying Registered Shareholders who participate in either Tender Offer will not be entitled to any such dividend in respect of any Ordinary Shares validly tendered. ### Exercise of Voting Rights in Investee Companies The exercise of voting rights attached to the Company's portfolio has been delegated to the Portfolio Manager. ### Articles of Association The Company's Articles can only be amended by special resolution at a general meeting of the shareholders. No amendments are proposed at the 2022 AGM. ### Change of Control There are no agreements the Company is party to that might be affected by a change in Control of the Company. There are no agreements between the Company and its Directors for compensation for loss of office that occurs as a result of a takeover bid. ### Gabelli approach to voting at shareholder meetings During the year, the Manager voted on approximately 859 proposals at approximately 165 shareholder meetings on behalf of the Company. At these meetings, the Manager voted in favour of the majority of resolutions, but voted against the recommendations of management on approximately 29 resolutions. 25 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2022 # Directors' Report continued Most of the votes against were in respect of resolutions relating to super-dilutive stock option plans, which were deemed by the Investment Manager not to be in the best interests of shareholders. ## Streamlined Energy and Carbon Reporting The Company is categorised as a lower energy user under the HMRC Environmental Reporting Guidelines March 2019 and is therefore not required to make the detailed disclosures of energy and carbon information set out within the guidelines. The Company's energy and carbon information is therefore not disclosed in this report. ## Greenhouse Gas Emissions The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013. ## Modern Slavery Act 2015 (the "MSA") The Company is an investment company and has no employees and does not provide goods and services in the normal course of business. Accordingly, the Directors consider that the Company is not required to make a slavery and human trafficking statement under the MSA. ## Employees, Social, Human Rights and Environmental Matters The Company is an investment company and has no employees and accordingly it has no direct social, human rights or environmental impact from its operations. In carrying on its investment activities and relationship with suppliers the Company aims to conduct itself responsibly, ethically and fairly. ## Political donations No political contributions or donations were made during the financial period ended 30 June 2022. ## Annual General Meeting The following information to be discussed at the forthcoming Annual General Meeting is important and requires your immediate attention. If you are in any doubt about the action you should take, you should seek advice from your stockbroker, bank manager, solicitor, accountant or other financial adviser authorised under the Financial Services and Markets Act 2000 (as amended). If you have sold or transferred all of your ordinary shares in the Company, you should pass this document, together with any other accompanying documents, including the form of proxy, at once to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for onward transmission to the purchaser or transferee. The Directors currently anticipate that this year's Annual General Meeting will be open to shareholders, but reserve the right to change arrangements for the meeting at short notice. Therefore shareholders are strongly encouraged to vote by proxy and to appoint the Chairman as their proxy. The following resolutions will be proposed to the AGM. Resolutions 12-14 are proposed to the meeting as special business of the meeting as an ordinary resolution. Resolutions 15-17 are proposed as special resolutions. Ordinary resolutions require a simple majority vote (above 50%) to be passed, whereas Special resolutions require at least a 75% majority vote to be passed. ## Resolution 12 The Company's articles of association include a requirement for the Board to propose an ordinary resolution at the first annual general meeting following the fifth anniversary of the initial public offering of the Company for the Company to continue its business as a closed-ended investment company. Resolution 12 in the Notice of AGM is an ordinary resolution for shareholders to approve that the Company continues in existence (the "Continuation Resolution"). ## Resolution 13 Authority to Allot shares The Directors may only allot shares for cash if authorised to do so by shareholders in general meeting. Resolution 13 seeks authority for the Directors to allot shares for cash up to an aggregate nominal amount of US$10,238 which represents 10% of the current issued share capital. The authority will expire at the conclusion of the 2022 Annual General Meeting unless renewed prior to that date. ## Resolution 14 Loyalty Shares The articles of association authorise the issuance of Special Voting Loyalty Shares. Resolution 14 seeks authority for the Directors to allot Special Voting Loyalty Shares, and to accept subscriptions for such Special Voting Loyalty Shares outside the subscription period specified in the articles of association, provided all other conditions set forth therein are satisfied. ## Resolution 15 Authority to disapply pre-emption rights Directors require specific authority from shareholders before allotting new shares or selling shares from treasury for cash without first offering them to shareholders in proportion to their existing holdings. Resolution 15 seeks to empower the Directors to allot new shares for cash or to sell shares held in treasury free from statutory pre-emption rights up to an aggregate nominal amount of US$10,238, being 10% of the current issued share capital and equivalent to 1,023,820 ordinary shares of US$0.01 each. The authority will expire at the conclusion of the 2022 Annual General Meeting unless renewed prior to that date. ## Resolution 16 Authority to buy back shares Resolution 16 seeks to renew the authority previously granted to Directors to enable the Company to purchase up to 1,535,628 ordinary shares being 14.99% of the issued share capital. The Directors will only consider repurchasing shares in the market if they believe it to be in shareholders' interests and as a means of correcting any imbalance between supply and demand for the Company's shares. Under the Listing Rules of the Financial Conduct Authority ("FCA"), the maximum price which can be paid is the higher of (i) 5% above the average market value of the ordinary shares for the five business days immediately preceding the date on which the purchase is made and (ii) the higher of the price quoted for (a) the last independent trade of, and (b) the highest current independent bid for, any number of ordinary shares on the trading venue where the purchase is carried out. In making purchases, the Company will deal only with member firms of the London Stock Exchange. The authority will expire at the conclusion of the 2022 Annual General Meeting unless renewed prior to that date. ## Resolution 17 General Meetings on 14 clear days' notice Resolution 17 seeks shareholder authority to call general meetings other than an AGM on 14 clear days' notice. The approval will be 26 Strategic report Governance Financial statements effective until the Company’s next AGM, when it is intended that a similar resolution will be proposed. The Board will utilise this authority to provide flexibility when merited and would not use it as a matter of routine. Recommendation Your Board recommends all resolutions to shareholders as being in the best interests of the Company and its shareholders as a whole. The Directors therefore unanimously recommend that shareholders vote in favour of each resolution, as they intend to do in respect of their own beneficial holdings. Directors’ statement as to the disclosure of information to the auditors In accordance with the requirement and definitions under section 418 of the Companies Act 2006, the Directors at the date of approval of this report confirm that: • so far as they are aware, there is no relevant audit information of which the Company’s auditors are unaware; and • each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company’s auditors are aware of that information. Appointment of independent auditors PricewaterhouseCoopers LLP, the independent external auditors of the Company, were appointed in 2017. Resolutions to reappoint PricewaterhouseCoopers LLP as the Company’s auditors, and to authorise the Audit & Risk Committee to determine their remuneration will be proposed at the forthcoming AGM. The Directors’ Report was approved by the Board on 25 October 2022. Marc Gabelli Chairman 25 October 2022 ## 27 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Corporate Governance Report This Report sets out the role and activities of the Board and The Board considers that reporting against the principles and explains how the Company is governed. provisions of the AIC Code, which has been endorsed by the Financial Reporting Council, provides more relevant information Governance to shareholders. The following analysis explains how the Applicable Corporate Governance Code and compliance company has complied with the principles and provisions of the in year AIC Code during the financial year. As a company admitted to trading on the Specialist Fund Segment, the Board has considered the principles and provisions The Board of Directors also recognise the critical importance of of the Association of Investment Companies’ Code of Corporate effective corporate governance to investors, potential investors Governance (the ‘AIC Code’). The AIC Code addresses the and the Company’s stakeholders, and the directors therefore Principles and Provisions set out in the 2018 version of the give priority to high standards of corporate governance. Financial Reporting Council’s UK Corporate Governance Code (the ‘UK Code’), as well as setting out additional provisions The Board confirms that it complies with the recommendations on issues that are of specific relevance to the Company as an of the AIC Code and the relevant provisions of the UK Code investment company listed on the London Stock Exchange. except as follows: Summary of AIC Code Provision Compliance Performance in year Director and Board independence x A formal policy and procedure ensure Board independence and independence from the Manager and the independence of the investment Manager. The Chair should be independent on x Although the Chairman is not deemed independent for appointment the purposes of the AIC Code, given his qualifications and investment experience, and the significant commitment being made by the Gabelli Group to the Company, the Board believes that his appointment as Chairman is in the best interests of the Company and the shareholders as a whole. Appoint a Senior Independent Director x The Board does not deem it necessary to appoint a SID given (‘SID’) the nature of its activities as a listed investment trust. The key responsibilities of the SID under the UK Code are completed by the Non-executive Directors. The performance of the Chairman is appraised annually by the Non-executive Directors. Monitor risk management and internal x The Company has delegated its operational management to control systems third party service providers, the Board therefore receives reports from those parties to satisfy itself that an appropriate controls environment is maintained. These reports extend to any relevant instances of whistleblowing at each of the service providers. Identification of remuneration consultant x The Remuneration Committee does not deem it necessary to in the Annual Report appoint a remuneration consultant. The AIC Code is available on the AIC website (www.theaic.co.uk). including strategy and management, internal controls and risk It includes an explanation of how the AIC Code adapts the management, strategy and policy considerations, transactions, Principles and Provisions set out in the UK Code to make them and finance. relevant for investment companies. The UK Code is available from the Financial Reporting Council’s website at frc.org.uk. The provision of the UK Code which relates to the combination of the roles of the chairman and chief executive does not apply The Board as the Company has no executive directors. Overview of the Board The Board consists of six non-executive Directors. All Directors The Board meets quarterly to review investment performance, have a wide range of other interests and are not dependent financial reports, discuss strategy and has the overriding on the Company itself. Their biographical details, which are responsibility for assessing and reviewing the company’s risk set out in detail on pages 20 and 21, demonstrate a breadth of appetite. Board or Committee meetings are also held on an ad investment, commercial and professional experience with an hoc basis and as required to consider any other material issues international perspective. as they arise. The Board has a formal schedule of matters specifically reserved Representatives of the Portfolio Manager and Company for its decision, which are categorised under various headings, Secretary attend each meeting. The Board, the AIFM, the Portfolio Manager, the Company Secretary and other key ## 28 Strategic report Governance Financial statements services providers operate in a cooperative and constructive subject to the Articles and to such approval of the shareholders relationship. in a general meeting as may be required from time to time. Chairman The Board also ensures that the necessary resources are in place The Board is satisfied that other than his relationship with the to enable the Company’s objectives to be met in accordance Portfolio Manager, the Chairman, Marc Gabelli, does not have with the Company’s investment objective, and that shareholder any appointments or interests which may create a conflict of value is maximised within a framework of proper controls. interest with the Company’s activities or interests. The Directors exercise the powers conferred by the Company’s The Nomination Committee reviewed the performance of the Articles of Association and UK Company Law to manage Chairman during the year and is comfortable that he continues the Company’s interest for the benefit of shareholders and to have sufficient time to commit to his duties, and that he stakeholders. performs effectively in the role. The Board therefore recommends As an investment company the Company’s day to day shareholders vote to re-elect the Chairman at the 2022 Annual responsibilities are delegated to third party service providers. The General Meeting. Company has no employees and the Directors are non-executive Board Diversity with the Portfolio Manager represented by the Chairman. When recruiting a new Director, the Board’s policy is to appoint Stakeholder Interests (s.172 statement) individuals on merit. The Board believes diversity is important in The Companies (Miscellaneous Reporting) Regulations 2018 bringing an appropriate range of skills, knowledge and experience require directors to explain more fully how they have discharged to the Board and gives that consideration when recruiting new their duties under Section 172(1) of the Companies Act 2006 Directors. in promoting the success of their companies for the benefit As at 30 June 2022 there were 6 male Directors, of multiple of members as a whole. This enhanced disclosure covers how nationalities and ethnicities, and no female Directors on the Board. the Board has engaged with and understands the views of Whilst all future board appointments will be made on merit, the stakeholders and how stakeholders’ needs have been taken into Directors have committed to keep the Board’s gender diversity account, the outcome of this engagement and the impact that it under review with a view to improving the ratio over time. has had on the Board’s decisions. Role of the Board As the Company is an externally managed investment company The Board is collectively responsible for the long-term success and does not have any employees or customers, the Board of the Company and is accountable to shareholders and considers the main stakeholders in the Company to be the the Company’s wider stakeholders for the performance and shareholders and other key service providers. The reasons for governance of the Company. It is also ultimately responsible for this determination, and the Board’s overarching approach to setting and executing the Company’s strategic aims, its purpose, engagement with these stakeholders, are set out in the table culture and values. The authority of the Board in these areas is below. Stakeholder Activity or mitigation in the year Shareholders • The Company operates a Loyalty Programme to reward shareholders who retain their shares for at least five years. Further information regarding the Programme can be found on page 23; • As a listed investment trust, the Board operates policies designed to safeguard the value of shareholders’ investment, in particular the Board may initiate a buyback programme whenever the Company’s share price represents a discount of 7.5% or more; • Shareholders’ rights are also protected under the Company’s Articles of Association which require any proposal that may materially change those rights to be subject to prior approval by a majority of shareholders in general meeting; and • Shareholders are given opportunities to attend meetings with the Board and to also attend, ask questions and vote at the Annual General Meeting of the Company. Service Providers The Board regularly evaluates the performance of its key panel of third-party professional service providers. The appraisals involve an opportunity for those third parties to provide 360° feedback. During the period under review, the Board traveled to New York to visit the GAMCO head office and meet with members of staff at all levels by way of employee engagement. As part of the off-site visit, the Board also met with the company’s major shareholders. Social & Environment Whilst the Company’s key investment objective targets outperformance through exposure to corporate transactions in the United States, the Investment Manager, Gabelli Funds, LLC operates a suite of investment policies designed to take account of Environmental, Social and Governance (‘ESG’) themes across its investment strategies. These policies ensure that exposure to ESG risks is minimised for the Company’s stakeholders. ## 29 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Corporate Governance Report continued Stakeholder Activity or mitigation in the year Other Stakeholders • The Board seeks to maintain the highest levels of corporate governance through compliance with the principles and provisions of both the AIC Code and, to the maximum extent practicable, the UK Code; and • The Board is committed to responding promptly and transparently to any reputational or regulatory matter that might arise affecting the Company, its future prospects or its investment activities. Purpose, Values and Culture Committees of the Board The Board takes its responsibilities under the AIC Code seriously The Board has established an Audit & Risk Committee, Nomination and has accordingly sought to identify and promote each of: a Committee, Remuneration Committee, Management Engagement corporate purpose, distinct values and a culture for the Company. Committee and a Conflicts Committee. Each Committee has defined terms of reference and duties. A record of the meetings However, as a listed investment trust, which has appointed third held during the year is set out in the table on page 31. party service providers to operate its day to day business, the chosen purpose, values and culture are necessarily focused on Audit & Risk Committee the approach and activities of the Board of Directors. The Audit & Risk Committee is chaired by Marco Bianconi. Further details are provided in the report of the Audit & Risk Nevertheless, the Board prioritises the Company’s primary Committee on pages 32 to 34. investment objective, together with its proprietary Private Market Nomination Committee Value with a Catalyst methodology, in defining its PMV with a The Nomination Committee is chaired by the Chairman of Catalyst purpose. The Company’s values and culture primarily the Board (who would not chair the Committee when the reflect those of its experienced, independent and diverse Chairman’s successor was being considered) and consists of individual board members, combined with the approach and Marc Gabelli, John Birch and Yuji Sugimoto. The Nomination professionalism of its appointed third party service providers. Committee is responsible for reviewing Board succession, the policy on directors’ tenure, the performance of the Board and The Board regularly monitors both the performance of the its Committees and the appointment of new Directors. When Company against its investment objective and proprietary voting on candidates for the appointment of new directors, only methodology; and its individual directors and service providers independent directors will vote. to ensure continuing strong performance and integration with the Board’s values and culture. Remuneration Committee The Remuneration Committee is chaired by James Wedderburn Employees, Social, Human Rights and Environmental Matters and consists of John Birch and Marco Bianconi. The Remuneration As an investment vehicle the Company has no employees and Committee is responsible for setting the Directors’ remuneration accordingly it has no direct social or community impact and in conjunction with the Chairman and will take into consideration limited environmental impact from its operations. However, the the Company’s peer group and the potential to appoint external Company believes that it is in shareholders’ interests to consider remuneration consultants when making decisions. human rights issues, together with environmental, social and governance factors when selecting and retaining investments. Management Engagement Committee The Management Engagement Committee is chaired by Directors’ Appointment, Retirement and Succession John Birch and consists of John Birch and Yuji Sugimoto. The The rules concerning the appointment, retirement and rotation Management Engagement Committee is responsible for ensuring of Directors are set out in the Directors’ Report. The Board that the provisions of the Portfolio Management Agreement believes that it has a reasonable balance of skills and experience. remain competitive and in the best interest of shareholders and It recognises the value of the progressive refreshing of, and to review the performance of the Manager, Portfolio Manager succession planning for, company boards, including for the and other third party service providers to the Company. Details Chairman. The Board’s tenure and succession policy seeks to of the management arrangements are set out on page 24. ensure that it maintains the balance of skills and experience required. Conflicts Committee Directors must be able to demonstrate their commitment, in The Conflicts Committee is chaired by John Birch and consists terms of time, to the Company. The Board is of the view that of Marco Bianconi and Yuji Sugimoto. The Conflicts Committee length of service does not itself impair a Director’s ability to is responsible for considering the potential conflicts of interest act independently or exercise good judgement, rather, a long that may arise in relation to the operation of the Company with serving Director can continue to offer valuable perspectives and regard to the Directors, the AIF Manager, the Portfolio Manager experience. and other service providers of the Company. When Directors are appointed they go through an induction Attendance at scheduled meetings programme organised by the Portfolio Manager to familiarise The table below sets out the number of Board and Committee them with the specifics of the portfolio. Directors are also meetings held during the year under review to 30 June 2022 and provided with key information on the Company’s policies, the number of meetings attended by each Director. regulatory and statutory requirements and internal controls on a regular basis. ## 30 Strategic report Governance Financial statements The Audit & Risk Committee will meet at least twice a year and The internal controls aim to ensure that assets of the Company all other Committees at least once a year and additionally as are safeguarded, proper accounting records are maintained, required. and the financial information used within the business and for publication is reliable. The need for an internal audit function is reviewed annually by the Committee. Audit & Risk Rem M.E Nom Conficts Director Board 1 Co. 2 Co. Co.. Co. Co. The system therefore manages rather than eliminates risk of failure to achieve the Company’s business objectives and Marc Gabelli 4/4 n/a n/a n/a 1/1 n/a provides reasonable, but not absolute assurance against material Marco Bianconi 4/4 6/6 1/1 n/a n/a 1/1 misstatement or loss. John Birch 4/4 n/a 1/1 1/1 1/1 1/1 Shareholder relations and Annual General Meeting John Newlands 4/4 6/6 n/a n/a n/a n/a The primary medium by which the Company communicates with James Wedderburn 4/4 6/6 1/1 n/a n/a n/a its shareholders is through the Annual and Half Yearly Reports which aim to provide shareholders with a clear understanding Yuji Sugimoto 4/4 n/a n/a 1/1 1/1 1/1 of the Company’s activities and results in the relevant financial 1 The meetings held total includes dividend and other specific purpose period. This information is supplemented by the daily calculation approval Board Sub-Committee meetings held by video conference that not and publication of the NAV per share to a regulatory information all directors were expected to attend. service. 2 Includes a Cyber-Security Deep-Dive Session . The Annual and other General Meetings provide an opportunity Board Evaluation for shareholders to engage with the Board of Directors, and The Board undertook an annual self-evaluation of its performance, the individual directors and the Investment Manager regularly that of its committees and individual Directors, including the communicate with significant shareholders to discuss company Chairman. The reviews were led by the Chairman, in the case of updates and other key events. the Board, and the Chairman of each committee otherwise. All shareholders are ordinarily encouraged to attend and vote at Each Chairman, assisted by the Company Secretary, determined the Company’s Annual General Meeting. However, it is explained the scope and format for the review, which generally confirmed in the Notice of Annual General Meeting that whilst the Directors the directors’ view that the Board and its governance continued anticipate the meeting in 2022 being open to shareholders, to function well with few issues. the Directors reserve the right to change arrangements at short notice. Shareholders are strongly encouraged to vote by There were no significant actions arising from the evaluation proxy and to appoint the Chairman as their proxy. The Board process and it was agreed that the composition of the Board, at and representatives of the Portfolio Manager are similarly that time, reflected a suitable mix of skills and experience, and that usually available at the Annual General Meeting to discuss the Board as a whole, the individual Directors and its committees issues affecting the Company. They will be happy to answer any were performing in accordance with the provisions of the AIC questions provided in writing prior to the meeting this year. Code other than where explained in this Report. The Notice of Annual General Meeting is set out on pages 72 Risk Management and 73 and details the business of the meeting. Any item not of Directors’ liability insurance an entirely routine nature is explained in the Directors’ Report During the year the Company has renewed and maintained on pages 22 to 27. The Notice of Annual General Meeting and appropriate Directors & Officers’ insurance on behalf of the Board. any related papers are sent to shareholders at least 21 clear days before the meeting. Internal controls The Board has overall responsibility for the Company’s systems Substantial Shareholdings of internal controls and for reviewing their effectiveness. In A summary of the significant shareholders that have been common with the majority of investment trusts, the Board has notified to the Board as at the date of this report can be found determined that the most efficient and effective management on page 25. of the Company is achieved by the Directors determining the investment strategy, and the Portfolio Manager being responsible Anti-Bribery Policy for the day-to-day investment management decisions on behalf The Company has zero tolerance towards bribery and is of the Company. committed to carrying out business fairly, honestly and openly. Accounting, company secretarial and custodial services have The Board takes its responsibility to prevent bribery seriously also been delegated to third party service providers who and its service providers are contacted to regularly confirm their specialise in these areas and can provide, because of their size anti-bribery policies and controls. and specialisation, economies of scale, segregation of duties, and all that is required to provide proper systems of internal Criminal Finances Act 2017 control within a regulated environment. The Board has a zero tolerance approach to the facilitation of tax evasion. As the Company has no employees and its operational functions are undertaken by third parties, the Audit & Risk Committee By order of the Board does not consider it necessary for the Company to establish its own internal audit function. Instead, the Audit & Risk Committee Marc Gabelli examines internal control reports received from its principal Chairman service providers to satisfy itself as to the controls in place. 25 October 2022 ## 31 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Report of the Audit & Risk Committee Chairman of the During the year the principal activities of the Committee included: Chairman Audit & Risk Committee Marco Bianconi • A comprehensive review of the half yearly report and annual Marco Bianconi report and accounts, having considered the disclosures made therein in relation to internal controls, risk management, Members viability, going concern, related parties, whether the report Marco Bianconi is fair, balanced and understandable and whether it provides John Newlands the information necessary for shareholders to assess the James Wedderburn Company’s position and performance, business model and strategy; • A review of the effectiveness of the external audit process, including the scope, execution, level of materiality, together with the independence, objectivity and efficiency of the external auditors and the quality of the audit engagement As Chairman of the Audit & Risk Committee, I am pleased to team; present the Report of the Audit & Risk Committee for the year ended 30 June 2022. • A review and approval of the external audit plan together with the annual audit fee; Role of the Committee The Company has established a separately chaired Audit & • Setting a policy for the approval of non-audit services; Risk Committee (the “Committee”) to ensure that the interests of shareholders are properly protected in relation to financial • A review of the appropriateness of the Company’s accounting reporting, internal controls and risk mitigation. policies; • Ensuring the adequacy of the internal control systems and The Committee meets at least twice a year in preparation for evaluating the need for an internal audit function, further the publication of both the annual and half yearly results, and details of which are provided below; and otherwise as necessary. • Meeting with representatives of the Company’s third-party This year, following review of the Audit & Risk Committee Terms service providers to review and benchmark the adequacy of Reference, we collectively decided to expand the remit of the and effectiveness of their internal controls processes and risk Committee to incorporate elements of risk oversight beyond the management systems. This initiative included a review of the scope of financial risk, with particular attention to Cybersecurity key technology risks facing the company and its main service Risk. As a result, the Committee is now more appropriately providers, including, but not limited to policies, practices and renamed ‘the Audit & Risk Committee’ and the Committee’s terms safeguards, cybersecurity and fraud, identification, assessment, of reference have been updated to reflect this expanded remit. monitoring, mitigation and the overall management of those risks, The updated terms of reference are available from the Company’s website at https://www.gabelli.co.uk/investment-products/gabelli- • A comprehensive deep-dive analysis of the cybersecurity merger plus/. risks facing the Company, including meetings with the Chief Technology Officers and Heads of cybersecurity of key third- Composition of the Committee party service providers to ensure adequate and appropriate The Committee consisted of three Directors during the year safeguards were in place to protect the integrity of the under review whose biographies are on pages 20 and 21 and the company’s data, including a cyberattack incident response Committee composition was therefore unchanged. and recovery plan. The Committee as a whole has competence relevant to the • A thorough review of the adequacy and security of the investment trust sector and is able to discharge its responsibilities company’s arrangements with its contractors and external effectively, with each Director having appropriate financial parties to raise concerns, in confidence, about possible experience and as such contribute strongly to the Committee’s wrongdoing in financial reporting or other matters. The operation. Committee considered that the arrangements remained appropriate and proportionate. The Company’s Auditors are invited to attend meetings of the Committee on a regular basis. Representatives of the Portfolio • Meeting with key senior staff of GAMCO at their New York Manager and other external advisors, including the Administrator, headquarters and undertook a comprehensive due diligence may also be invited to attend if deemed necessary by the Audit & review of their operations, including a detailed review of Risk Committee. the NAV calculation process. The Committee resolved to undertake a due diligence of third-party service providers’ Committee Responsibilities internal controls and risk management systems at regular The key responsibilities of the Audit & Risk Committee are to intervals and on a rotational basis. ensure the integrity, clarity and completeness of the Company’s financial statements, evaluate the robustness of the systems of internal controls, monitor the quality, effectiveness and objectivity of the external audit process and monitor the key risks facing the Company. ## 32 Strategic report Governance Financial statements Significant Issues and Audit Risk appropriate areas of audit risk relevant to the Company had been During the year, the Audit & Risk Committee also considered a put in place to obtain a reasonable assurance that the financial number of significant issues and areas of key audit risk in respect statements as a whole would be free of material misstatement. of the Annual Report and Accounts. The Committee reviewed the external audit plan at an early stage and concluded that the The following table sets out the key areas of risk identified and explains how these were addressed. Significant issue How the issue was addressed COVID-19 and geopolitical risks The Board reviews the risks arising from the COVID-19 pandemic and from the war in Ukraine, which both impacted market valuations during the financial year and continue to create uncertainty regarding the Company’s future dividend income streams. The Audit & Risk Committee has regularly reviewed the Company’s exposure to systemic and company specific risks arising from the COVID-19 pandemic and from the increasing geopolitical tensions. Valuation and existence of investments The AIFM performs the valuation of the Company’s assets in accordance with its responsibilities under the AIFMD rules. Ownership of listed investments is verified by reconciliation to the Custodian’s records. Ownership of CFDs is verified by reconciliation to the counterparty’s records. The Directors receive reports, and an annual confirmation from the Depository who has responsibility for overseeing the operations of the Company including verification of the existence and valuation of investments. Recognition of income Income received is accounted for in line with the Company’s accounting policies, as set out on pages 50 and 51. Compliance with Section 1158 of the Corporation Tax Act 2010 The Committee regularly considers the controls in place to ensure the regulations for ensuring investment trust status are observed at all times receiving supporting documentation from GabelIi Funds LLC and State Street Bank and Trust Company. Maintaining internal controls The Committee receives regular reports on internal controls from State Street Bank and Trust Company and Gabelli Funds and has access to the relevant personnel of both State Street and Gabelli Funds who have a responsibility for risk management and internal audit. Performance fee The performance fee calculation is prepared by the Administrator and reviewed by the Manager and the Committee before recommendation to the Board, all with reference to the portfolio management agreement. Resource Risk The Company has no employees and its day to day activities are delegated to third party suppliers. The Board monitors the performance of third-party suppliers on an ongoing basis. Governance The Company has developed a risk register which identifies the risks facing the Company, their likelihood, potential impact and the controls established for mitigation. The risk register and the operation of key controls by the Portfolio Manager and third- party service providers is reviewed on a regular basis by the Committee. ## 33 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Report of the Audit & Risk Committee continued External audit Whistleblowing, anti-bribery and corruption The Committee conducted a review of PricewaterhouseCoopers The Company has no employees; therefore no policies relating LLP’s independence and audit process effectiveness as part of to whistleblowing, anti-bribery, or corruption are considered its review of the financial reporting for the year ended 30 June necessary. Notwithstanding this, the Company seeks at all times 2022 and separately completed a market benchmarking exercise to conduct its business with the highest standards of integrity in respect of the external audit. In considering the effectiveness, and honesty. Gabelli Funds, LLC is committed to complying with all the Committee reviewed the audit plan, the level of materiality, key applicable legal and regulatory requirements relating to accounting financial reporting risks, and the auditors’ findings. and auditing controls and procedures. Staff members of Gabelli Funds, LLC are encouraged to report complaints and concerns The Committee also considered the execution of the audit against regarding accounting or auditing matters through available the plan, as well as the auditors reporting to the Committee in channels described in the Portfolio Manager’s Whistleblower respect of the financial statements for the year. Based on this, Policy. the Committee was satisfied with the quality of the external audit process.with appropriate focus and challenge on the key audit risks. The Committee advises the Board on the appointment of the external auditors and on their remuneration. It keeps under review the cost effectiveness and the independence and objectivity of the external auditors, mindful of controls in place to ensure the Marco Bianconi latter. To this end, the Committee has implemented a policy on the Chairman of the Audit & Risk Committee engagement of the external auditors to supply non-audit services. 25 October 2022 The Committee was satisfied that the objectivity and independence of the auditors was not impaired as no non audit services were undertaken during the year. Accordingly, the Committee recommended to the Board that shareholder approval be sought at the forthcoming AGM for the appointment of PricewaterhouseCoopers LLP as the Company’s auditors for the ensuing financial year, and for the Committee to determine the auditors’ remuneration. Audit Tendering PricewaterhouseCoopers LLP was appointed as auditors with effect from the Company’s launch in July 2017. The Company is required to put the external audit out to tender at least every ten years, and at least every twenty years to change the auditors. The Company will be required to put the audit out to tender, at the latest following the 2027 year end. The Audit & Risk Committee will consider annually the need to tender as a consequence of audit quality or independence. There are no contractual obligations that restrict the Company’s choice of auditors. During the year ended 30 June 2022 £0 was paid to the auditors for non-audit services (2021: £0). The auditors are required to rotate the Company’s Lead Engagement Partner every five years. Kevin Rollo was appointed as the Audit Engagement Partner in 2021 and has successfully overseen the engagement with the support of a strengthened audit team for the financial year under review. Internal Audit function As the Company has no employees and its operational functions are undertaken by third parties, the Committee does not consider it necessary for the Company to establish its own internal audit function. Instead, the Committee examines internal control reports received from its principal service providers to satisfy itself as to the controls in place. The internal controls aim to ensure that assets of the Company are safeguarded, proper accounting records are maintained, and the financial information used within the business and for publication is reliable. The need for an internal audit function is reviewed annually by the Committee. ## 34 Strategic report Governance Financial statements # Directors' Remuneration Report The Board presents the Directors' Remuneration Report which has been prepared in accordance with the requirements of Sections 420-422 of the Companies Act 2006 and Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. The law requires the Company's auditors to audit certain of the disclosures provided. Where disclosures have been audited this is indicated. ## Statement from the Chairman This Report describes how the Board has applied the principles relating to Directors' remuneration. The Company's Remuneration Policy was originally approved by shareholders at the AGM in 2018 and shareholders approved a version of the Remuneration Policy with minor further updates at the AGMs in 2019 and in 2020, in accordance with section 439A of the Companies Act 2006. Such policy would therefore ordinarily remain in place until further approved by shareholders in 2023. All future amendments to the Remuneration Policy are required to be made by way of an ordinary resolution put to shareholders at a General Meeting. Following the recommendation of the Remuneration Committee the Remuneration Policy was amended in 2019 to reflect that a portion of the annual Directors' fees would be payable in Ordinary Shares of the Company, such amount to be determined by the Board at its discretion. But, owing to complexities surrounding the share issuance scheme approved at the 2019 Annual General Meeting, and following legal advice, the incremental compensation will be paid in cash, in the amount of $10,000 per annum, per Director. In 2020, the Remuneration Policy was updated to increase the overall aggregate limit on fees payable to Directors from $150,000 to $180,000. ## Remuneration Committee The Company has established a Remuneration Committee which meets at least once a year. Further details of the membership are provided in the Corporate Governance Report on page 30. ## Policy Table | **Fixed fee element** | Remuneration consists of a fixed fee each year and the Directors of the Company are entitled to such rates of annual fees as the Board at its discretion determines. | | --- | --- | | **Discretionary element** | In accordance with the Company's Articles of Association, if a Director is requested to perform extra or special services, they will be entitled to receive such additional remuneration as the Board considers appropriate. | | **Expenses** | In accordance with the Company's Articles of Association the Directors are also entitled to be reimbursed for out-of-pocket expenses and any other reasonable expenses incurred in the proper performance of their duties. | | **Purpose and link to strategy** | Directors' fees are set to: • be sufficient to attract and retain individuals of a high calibre with suitable knowledge and experience to promote the long term success of the Company; • reflect the time spent by the Directors working on the Company's behalf and representing the Company; • reflect the responsibilities borne by the Directors; • recognise the greater time commitment and responsibility required for the positions of Chairman of the Board and the Chairman of the Audit & Risk Committee through appropriate fee supplements for each role. | | **Operation** | Fees payable to the Directors will be reviewed annually. A number of factors will be considered to ensure that the fees are set at an appropriate level. These will include the average rate of inflation during the period since the last fee increase, the level of Directors' remuneration for other investment trusts of a similar size and complexity of the Directors' responsibilities. | | **Maximum** | The total remuneration paid to the non-executive Directors is subject to an annual aggregate limit of $180,000 in accordance with the Company's Articles of Association, following approval by shareholders at the AGM in 2020. Any further changes to this limit will require Shareholder approval by ordinary resolution. | The Company has no employees to consult in drawing up the policy. There are no performance related elements to the Directors' fees. To ensure fees are set at an appropriate level, the Company Secretary provides a comparison of the Directors' remuneration with other investment trusts of a similar size and/or mandate, as well as taking into account any data published by the Association of Investment Companies. This comparison, together with consideration of any alteration in non-executive 35 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2022 # Directors' Remuneration Report continued Directors' responsibilities, is used to review whether any change in remuneration is necessary. The review of fees is performed on an annual basis. The fees paid to Directors on an annual basis during the year to 30 June 2022 are set out on the next page. | Remuneration | Fees per annum US$ | | --- | --- | | Director of the Board | 30,000 | | Additional fee for the Chairman of the Board | 1,000 | | Additional fee for the Chairman of the Audit & Risk Committee | 5,000 | | Additional fee for the members of the Audit & Risk Committee | 1,000 | Following a review in September 2021, the Committee agreed that the Directors' fee would not increase for the year ending 30 June 2022. Any remuneration arrangements for new directors will be determined by the Committee in accordance with the Remuneration Policy, and would also be expected to mirror the above fee structure. The additional fees shown in the table above paid to the Chairman of the Board (albeit Mr Gabelli waived his fee) and the Chairman and members of the Audit & Risk Committee during the year ended 30 June 2022 also remain unchanged for the year ending 30 June 2023. ## Consideration of Shareholders' Views Shareholders' approval for the remuneration report will be sought at the 2022 AGM. Shareholders will have the opportunity to express their views and raise any queries on the policy either at or in advance of this meeting. The AGM is currently anticipated to be open to shareholders, however, if the AGM is closed to shareholders wishing to attend in person for any reason, there will be an opportunity for questions to be lodged for a response from the Board in parallel to the meeting being held. At the AGM held on 1 December 2021, of the votes cast, 100% were in favour of (or granted discretion to the Chairman who voted in favour of) each of the resolutions to approve the Directors' Remuneration Report and the recommended amendments to the Directors' Remuneration Policy. Details of voting on the Remuneration Report at the 2022 AGM will be provided in the annual report for the year ending 30 June 2023. ## Director's Remuneration Implementation Report (audited) ### Single Total Figure of Remuneration The single total remuneration figure for each Director who served during the year to 30 June 2022 is set out below with prior year comparison. As the Company has no employees the table below sets out the total remuneration costs paid by the Company. Mr Gabelli waived the entitlement to his fees as Chairman. Mr Gabelli devotes a portion of his time employed by Gabelli to serve as Chairman of the Company. An apportionment of his remuneration on a time served basis from employment by an affiliate of the Portfolio Manager would materially equate to the fees received by the other Directors of the Company for similar qualifying services. ### Directors' notice periods and payment for loss of office Directors' appointments may be terminated without notice. In this event, the Director will only be entitled to fees accrued at the date of termination, together with reimbursement of any expenses properly incurred to that date. None of the Directors are entitled to post-employment benefits or termination benefits. No discretionary payments were made during the year to 30 June 2022. | | Year to 30 June 2022 | Year to 30 June 2021 | Year to 30 June 2020 | | --- | --- | --- | --- | | Fees | Total | % change | Fees | Shares^{1} | Total | % change | Fees | Shares^{1} | Total | | Marc Gabelli | - | - | - | - | - | - | - | - | - | | Marco Bianconi | 35,000 | 35,000 | (3)% | 25,000 | 11,167 | 36,167 | 24% | 24,167 | 5,000 | | John Birch | 30,000 | 30,000 | (4)% | 20,000 | 11,167 | 31,167 | 29% | 19,167 | 5,000 | | John Newlands | 31,000 | 31,000 | (4)% | 21,000 | 11,167 | 32,167 | 21% | 21,558 | 5,000 | | Yuji Sugimoto | 30,000 | 30,000 | (4)% | 20,000 | 11,167 | 31,167 | 29% | 19,167 | 5,000 | | James Wedderburn | 31,000 | 31,000 | (4)% | 21,000 | 11,167 | 32,167 | 28% | 20,167 | 5,000 | | **Total** | **157,000** | **157,000** | | **107,000** | **55,835** | **162,835** | | **104,226** | **25,000** | $^{1}$ Represents the fee supplement originally to be paid in shares, on a pro rata basis for the period 1 January to 30 June 2020 following shareholder approval in 2019. Owing to complexities surrounding the share issuance scheme approved at the 2019 Annual General Meeting, and following legal advice, the incremental compensation was paid in cash, in the amount of $10,000 per annum, per Director. The amount presented for the year ended 30 June 2021 includes cash payments equivalent to and in lieu of dividends that would have been paid between 1 January 2020 and 30 June 2021, in the amount of $1,167 per Director. See page 35 for further details. 36 Strategic report Governance Financial statements ### Directors' Interests The interests of the Directors (including their connected persons), who are not required to purchase shares, in the Company's share capital are as follows: | Directors | Ordinary shares of $0.01 | | | --- | --- | --- | | | As at 30 June 2022 | As at 30 June 2021 | | Marc Gabelli | 20,100 | 20,000 | | Marco Bianconi | 1,200 | 1,200 | | John Birch | 1,000 | 1,000 | | John Newlands | - | - | | Yuji Sugimoto | - | - | | James Wedderburn | 1,500 | 1,500 | | **Total** | **23,800** | **23,700** | None of the Directors has been granted, or exercised, any options or rights to subscribe for the Ordinary Shares of the Company. ### Company Performance A graph showing the Company's NAV performance measured by total shareholder return compared with the Credit Suisse Merger Arb Liquid Index, the S&P Merger Arb Index, the 13 week US Treasury Bills, and the IQ Merger Arbitrage ETF (MNA), since launch, can be found on page 15. ### Relative Importance of Spend on Pay The table below shows the Directors' remuneration (2022: $157,000 and 2021: $162,835) in comparison with Portfolio management fees paid, dividends paid to shareholders and the Company's annual revenues. | Directors' remuneration as a % of | 2022 | | 2021 | | | --- | --- | --- | --- | --- | | | $000 | % | $000 | % | | Dividends to Shareholders | 4,914 | 3.2 | 4,936 | 3.3 | | Portfolio management fees | 842 | 18.6 | 852 | 19.1 | | **Revenues** | **1,076** | **14.6** | **327** | **49.8** | ### Statement by the Chairman of the Board The Directors confirm that the Directors' Remuneration Report set out above provides a fair and reasonable summary for the financial year ended 30 June 2022 of: - a) the major decisions on Directors' remuneration; - b) any substantial changes relating to Directors' remuneration made during the period; and - c) the context in which those changes occurred and the decisions which have been taken. The Directors' Remuneration Report was approved by the Board on 25 October 2022 and is signed on its behalf by: Marc Gabelli Chairman of the Board 25 October 2022 37 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Statement of Directors’ Responsibilities in respect ## of the Financial Statements The Directors are responsible for preparing the Annual Report The Directors are also responsible for safeguarding the assets and the financial statements in accordance with applicable law of the Company and hence for taking reasonable steps for the and regulation. prevention and detection of fraud and other irregularities. Company Law requires the Directors to prepare financial The Directors are responsible for keeping adequate accounting statements for each financial year. Under that law the Directors records that are sufficient to show and explain the Company’s have prepared the financial statements in accordance with UK- transactions and disclose with reasonable accuracy at any time adopted international accounting standards in conformity with the financial position of the Company and enable them to ensure the requirements of the Companies Act 2006. Under company that the financial statements and the Directors’ Remuneration law the Directors must not approve the financial statements Report comply with the Companies Act 2006. unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the The Directors are responsible for the maintenance and integrity Company for that period. of the Company’s website. In preparing the financial statements, the Directors are required Legislation in the United Kingdom governing the preparation and to: dissemination of financial statements may differ from legislation in other jurisdictions. • select suitable accounting policies and then apply them consistently; Directors’ confirmations The Directors consider that the annual report and accounts, • state whether applicable UK-adopted international taken as a whole, is fair, balanced and understandable and accounting standards in conformity with the requirements of provides the information necessary for shareholders to assess the Companies Act 2006 have been followed, subject to any the Company’s position and performance, business model and material departures disclosed and explained in the financial strategy. statements; In the case of each Director in office at the date the Director’s • make judgements and accounting estimates that are Report is approved: reasonable and prudent; and • so far as the Director is aware, there is no relevant audit • prepare the financial statements on the going concern basis information of which the Company’s auditors are unaware; unless it is inappropriate to presume that the Company will and continue in business. • they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company’s auditors are aware of that information. By order of the Board Marc Gabelli Chairman of the Board 25 October 2022 ## 38 Strategic report Governance Financial statements ## Independent auditors’ report to the members of ### + ## Gabelli Merger Plus Trust Plc ### Report on the audit of the financial statements Opinion In our opinion, Gabelli Merger Plus+ Trust plc’s financial statements: • give a true and fair view of the state of the company’s affairs as at 30 June 2022 and of its result and cash flows for the year then ended; • have been properly prepared in accordance with UK-adopted international accounting standards; and • have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise: the Statement of Financial Position as at 30 June 2022; the Statement of Comprehensive Income, the Statement of Changes in Equity, and the Statement of Cash Flows for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies. Our opinion is consistent with our reporting to the Audit & Risk Committee. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided. We have provided no non-audit services to the company in the period under audit. Our audit approach Overview Audit scope • The company is a standalone Investment trust company and engages Gabelli Funds, LLC (the “Manager”) to manage its assets. • We conducted our audit of the Financial Statements using information from State Street Global Services (the “Administrator”) to whom the Manager has, with the consent of the Directors, delegated the provision of certain administrative functions. • We tailored the scope of our audit taking into account the types of investments within the company, the involvement of the third parties referred to above, the accounting processes and controls, and the industry in which the company operates. • We obtained an understanding of the control environment in place at both the Manager and the Administrator, and adopted a fully substantive testing approach using reports obtained from the administrator. Key audit matters • Valuation and existence of investments • Income from investments • Assessment of the appropriateness of the going concern basis of preparation of the financial statements Materiality • Overall materiality: US$958,410 (2021: US$1,017,250) based on 1% of net assets. • Performance materiality: US$718,808 (2021: US$762,938). The scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. ## 39 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2019 ## Independent auditors’ report to the members of ### + ## Gabelli Merger Plus Trust Plc continued Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. Assessment of the appropriateness of the going concern basis of preparation of the financial statements is a new key audit matter this year. Consideration of the impact of COVID-19, which was a key audit matter last year, is no longer included because of the reduced uncertainty of the impact of COVID-19 in the current year as markets and economies continue to recover. Otherwise, the key audit matters below are consistent with last year. Key audit matter How our audit addressed the key audit matter Valuation and existence of investments Refer to page 50 (Accounting Policies, Note 2(g)) and • We assessed the accounting policy for the valuation of investments page 52 (Notes to the Financial Statements, Note 3). for compliance with accounting standards and the AIC SORP and The company’s investments have increased to US$95m. performed testing to check that investments are accounted for in The investment portfolio at year-end consisted of accordance with this stated accounting policy. listed equity investments and derivatives (contracts for • We tested the valuation of the listed equity investments by agreeing difference). We focused on the valuation and existence the prices used in the valuation to independent third party sources. of investments because investments represent the principal element of the net asset value as disclosed • We tested the existence of the investment portfolio by agreeing in the Statement of Financial Position in the financial listed equity investment holdings to an independent custodian statements. We also focused on the accounting policy confirmation. for the valuation of investments as set out in the accounting standards as incorrect application could • For derivatives, we tested a sample of the valuation of these indicate a misstatement in the valuation of investments. investments using valuation techniques. • We tested existence of derivatives by obtaining a direct confirmation from the respective counterparty. • No material issues were identified. Income from investments Income from investments refers to dividend income and • We assessed the accounting policies implemented were in net capital gains from investments. Refer to pages 50 accordance with accounting standards and the AIC SORP, and and 51 (Accounting Policies, Note2(e) and 2(g)). The that income has been accounted for in accordance with the stated company’s dividend income for the year is US$1.1m. accounting policy. Realised gains on investments for the year is US$5.8m • We tested the accuracy of dividend receipts by agreeing the and unrealised losses on investments is US$6.3m. We dividend rates from investments to independent market data. To test focused on the accuracy, occurrence and completeness for occurrence, we confirmed that a sample of dividends recorded of dividend income, and existence of net capital gains had occurred in the market. To test for completeness, we tested that as incomplete or inaccurate income could have a the appropriate dividends had been received in the year by reference material impact on the company’s net asset value and to independent data of dividends declared for all listed investments dividend cover. We also focused on the accounting during the year. policy for income recognition and its presentation in the Statement of Comprehensive Income as set out • We also tested the allocation and presentation of dividend income in the requirements of The Association of Investment between the revenue and capital return columns of the Income Companies Statement of Recommended Practice (the Statement in line with the requirements set out in the AIC SORP by “AIC SORP”) as incorrect application could indicate a confirming reasons behind dividend distributions. misstatement in income recognition. • The gains/losses on investments held at fair value comprise realised and unrealised gains/losses. For unrealised gains and losses, we tested the valuation of the portfolio at the year-end (on a sample basis for derivatives), together with testing the reconciliation of opening and closing investments. For realised gains/losses, we tested a sample of disposals by agreeing the proceeds to bank statements and we re-performed the calculation of a sample of realised gains/ losses. • No material issues were identified. ## 40 Strategic report Governance Financial statements Key audit matter How our audit addressed the key audit matter Assessment of the appropriateness of the going concern basis of preparation of the financial statements Refer to the “conclusions on going concern” section below outlining The Company is subject to a continuation vote in the evaluation of the directors’ assessment of the company’s ability to November 2022, whereby should shareholders not continue to adopt the going concern basis and the conclusions reached. vote in favour of continuation the Directors would have The assessment of going concern is intrinsically linked to the directors’ to put forward plans to restructure or liquidate the statement regarding the longer-term viability. Additional procedures Company (Directors’ Report, sections “Continuation of associated with the directors’ statement regarding the longer-term the Company”, page 22). As this follows a recent Tender viability included: offer which has resulted in the loss of Investment Trust status, we considered whether this led to an increased • Challenging management as to the likelihood of continued likelihood that the continuation vote would go against shareholder support for a UK listing and evaluating the extent of continuation. Secondly, we considered whether the the binding legal nature of the commitments from the majority loss of Investment Trust Company (“ITC”) status would shareholders. mean that the Directors of the Trust would voluntarily choose to restructure or liquidate the Company as • Forming an independent view as to the potential or otherwise to it no longer benefited from tax efficient status of an utilise brought forward tax losses in the new structure and evaluating ITC. Thirdly, with a second Tender Offer to be made to management’s assessment of viability to ensure that it was not shareholders in January 2023 we considered the risk dependent on a specific outcome. of whether a significant proportion of the remaining Refer to the “Corporate Governance” section for the conclusions shareholders tendering their shares would result in the reached. Company either not being able to meet its obligations or requiring again the Directors to restructure or liquidate the Company (see Directors’ Report, “Going Concern” section, page 22 and Note 2c), page 50). How we tailored the audit scope We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the company, the accounting processes and controls, and the industry in which it operates. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the Directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: | Overall company materiality | US$958,410 (2021: US$1,017,250). | | --- | --- | | How we determined it | 1% of net assets | | Rationale for benchmark applied | We believe that net assets is the primary measure used by shareholders in assessing | the performance of the company and is a generally accepted auditing benchmark for investment trust audits. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2021: 75%) of overall materiality, amounting to US$718,808 (2021: US$762,938) for the company financial statements. In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Audit & Risk Committee that we would report to them misstatements identified during our audit above $47,921 (2021: $50,863) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. ## 41 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Independent auditors’ report to the members of ### + ## Gabelli Merger Plus Trust Plc continued Conclusions relating to going concern Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of accounting included: • Evaluating the Directors’ assessment of potential operational impacts of the results of the recent Tender offer and the upcoming Continuation vote, considering their consistency with other available information and our understanding of the business and assessed the potential impact on the financial statements; • Reviewing the Directors’ assessment of the Company’s financial position in the context of its ability to meet future expected operating expenses, their assessment of liquidity as well as their review of the operational resilience of the Company and oversight of key third-party service providers; • Assessing the implications of potential significant reductions in Net Asset Value as a result of market performance on the ongoing ability of the Company to operate; • Evaluating the legally binding confirmation from the majority shareholder regarding their intention and ability to continue to support the Company and commitment to not participate in the January Tender Offer; and • Assessing the impact of loss of Investment Trust Company status and the continued operations of the company. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company’s ability to continue as a going concern. In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Reporting on other information The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities. With respect to the Strategic report and Director’s Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below. Strategic report and Director’s Report In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Director’s Report for the year ended 30 June 2022 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Director’s Report. ## 42 Strategic report Governance Financial statements Directors’ Remuneration In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. Corporate governance statement The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to: • The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks; • The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed or mitigated; • The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; • The directors’ explanation as to their assessment of the company’s prospects, the period this assessment covers and why the period is appropriate; and • The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Our review of the directors’ statement regarding the longer-term viability of the group was substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the company and its environment obtained in the course of the audit. In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit: • The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for the members to assess the company’s position, performance, business model and strategy; • The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and • The section of the Annual Report describing the work of the Audit & Risk Committee. We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors. Responsibilities for the financial statements and the audit Responsibilities of the directors for the financial statements As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. ## 43 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Independent auditors’ report to the members of ### + ## Gabelli Merger Plus Trust Plc continued Auditors’ responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of section 1158 of the Corporation Tax Act 2010 (see page 33 of the Annual Report), and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting of inappropriate journal entries to increase income or to overstate the value of investments and increase the net asset value of the company. Audit procedures performed by the engagement team included: • Discussions with the Directors, the Manager and the Administrator, including consideration of known or suspected instances of non-compliance with laws and regulation and fraud; • Evaluation of the controls implemented by the Manager and the Administrator designed to prevent and detect irregularities; • Assessment of the company’s compliance with the requirements of Section 1158 of the Corporation Tax Act 2010, including recalculation of numerical aspects of the eligibility conditions; and • Identifying and testing journal entries, in particular a sample of journals posted as part of the financial year end close process. There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non- compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org. uk/auditorsresponsibilities. This description forms part of our auditors’ report. Use of this report This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. ### Other required reporting Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: • we have not obtained all the information and explanations we require for our audit; or • adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or • certain disclosures of directors’ remuneration specified by law are not made; or • the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. ## 44 Strategic report Governance Financial statements Appointment Following the recommendation of the Audit & Risk Committee, we were appointed by the members on 1 July 2017 to audit the financial statements for the year ended 30 June 2018 and subsequent financial periods. The period of total uninterrupted engagement is 5years, covering the years ended 30 June 2018 to 30 June 2022. Kevin Rollo (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 25 October 2022 ## 45 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2022 # Statement of Comprehensive Income for the year ended 30 June 2022 | Income | Notes | Year ended 30 June 2022 | | | Year ended 30 June 2021 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Revenue $000 | Capital $000 | Total $000 | Revenue $000 | Capital $000 | Total $000 | | Investment income | 5 | 1,076 | - | 1,076 | 327 | - | 327 | | **Total investment income** | | **1,076** | **-** | **1,076** | **327** | **-** | **327** | | **Gains/(Losses) on investments** | | | | | | | | | Net realised and unrealised (losses)/gains on investments | 3, 14 | - | (460) | (460) | - | 15,435 | 15,435 | | Net realised and unrealised currency gains/(losses) on investments | | - | 490 | 490 | - | (142) | (142) | | Net gains/(losses) on investments | | - | 30 | 30 | - | 15,293 | 15,293 | | **Total income and gains on investments** | | **1,076** | **30** | **1,106** | **327** | **15,293** | **15,620** | | **Expenses** | | | | | | | | | Portfolio management fee | 6 | (842) | - | (842) | (852) | - | (852) | | Performance fee | 6, 13 | - | - | - | - | (2,796) | (2,796) | | Other expenses | 6 | (1,127) | (124) | (1,251) | (901) | (174) | (1,075) | | **Total expenses** | | **(1,969)** | **(124)** | **(2,093)** | **(1,753)** | **(2,970)** | **(4,723)** | | **Net return on ordinary activities before finance costs and taxation** | | **(893)** | **(94)** | **(987)** | **(1,426)** | **12,323** | **10,897** | | Interest expense and similar charges | | (1) | - | (1) | - | - | - | | **Profit/(loss) before taxation** | | **(894)** | **(94)** | **(988)** | **(1,426)** | **12,323** | **10,897** | | Taxation on ordinary activities | 8 | (49) | - | (49) | (33) | - | (33) | | **Profit/(loss) for the year** | | **(943)** | **(94)** | **(1,037)** | **(1,459)** | **12,323** | **10,864** | | **Earnings/(Loss) per share (basic and diluted)** | 9 | **($0.09)** | **($0.01)** | **($0.10)** | **($0.14)** | **$1.20** | **$1.06** | The total column of this statement represents the Statement of Comprehensive Income prepared in accordance with International Financial Reporting Standards ("IFRS"). The supplementary revenue return and capital return columns are both prepared under guidance issued by the Association of Investment Companies. All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year ended 30 June 2022. The Company does not have any income or expense that is not included in net profit for the year. Accordingly, the net profit for the period is also the total comprehensive income for the year, as defined in IAS1 (revised). The notes on pages 50 to 66 form part of these financial statements. 46 Strategic report Governance Financial statements ## Statement of Changes in Equity ### for the year ended 30 June 2022 Year ended 30 June 2022 | | Called up | | | Special | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Share | Distributable | | Capital | Revenue | | | | Capital | | | Reserve* | Reserve | Reserve* | Total | | Year ended 30 June 2022 Note | | $000 | | $000 | $000 | $000 | $000 | Balance as at 1 July 2021 103 83,976 21,059 (3,413) 101,725 Loss for the period after tax on ordinary activities – – (94) (943) (1,037) Dividends paid 7 – (4,914) – – (4,914) Balance as at 30 June 2022 103 79,062 20,965 (4,356) 95,774 Year ended 30 June 2021 | | Called up | | | Special | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Share | Distributable | | Capital | Revenue | | | | Capital | | | Reserve* | Reserve | Reserve* | Total | | Year ended 30 June 2021 Note | | $000 | | $000 | $000 | $000 | $000 | Balance as at 1 July 2020 103 88,912 9,279 (1,954) 96,340 Ordinary shares bought back into treasury – – (543) – (543) Profit/(loss) for the period after tax on ordinary activities – – 12,323 (1,459) 10,864 Dividends paid 7 – (4,936) – – (4,936) Balance as at 30 June 2021 103 83,976 21,059 (3,413) 101,725 * The Revenue Reserve and Special Distributable Reserve are treated as distributable reserves. As at 30 June 2022, the net amount of reserves that are distributable are $74,706,000 (2021: $80,563,000). ## 47 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2022 # Statement of Financial Position as at 30 June 2022 | | Note | As at 30 June 2022 | | As at 30 June 2021 | | | --- | --- | --- | --- | --- | --- | | | | $000 | $000 | $000 | $000 | | **Non-current assets** | | | | | | | Investments held at fair value through profit or loss | 3 | | 92,381 | | 98,369 | | **Current assets** | | | | | | | Cash and cash equivalents | 10 | 5,911 | | 12,405 | | | Receivable for investment sold | | 423 | | 2,622 | | | Other receivables | 15 | 66 | | 147 | | | | | 6,400 | | 15,174 | | | **Current liabilities** | | | | | | | Portfolio management fee payable | | (61) | | (82) | | | Performance fee payable | | - | | (2,796) | | | Payable for investment purchased | | (1,875) | | (1,822) | | | Other payables | 15 | (212) | | (314) | | | Bank overdrafts | | | (391) | | - | | **Net current assets** | | | 3,861 | | 10,160 | | **Non-current liabilities** | | | | | | | Investments at fair value through profit or loss | 3 | | (416) | | (6,752) | | Offering fees payable | | | (52) | | (52) | | **Net assets** | | | 95,774 | | 101,725 | | **Share capital and reserves** | | | | | | | Called-up share capital | 11 | 103 | | 103 | | | Special distributable reserve* | | 79,062 | | 83,976 | | | Capital reserve | | 20,965 | | 21,059 | | | Revenue reserve* | | (4,356) | | (3,413) | | | **Total shareholders' funds** | | | 95,774 | | 101,725 | | **Net asset value per ordinary share** | | | **$9.35** | | **$9.94** | * The Revenue Reserve and Special Distributable Reserve are treated as distributable reserves. As at 30 June 2022, the net amount of reserves that are distributable are $74,706,000 (2021: $80,563,000). Signed by: 48 Strategic report Governance Financial statements # Statement of Cash Flows for the year ended 30 June 2022 | | Year ended 30 June 2022 | | Year ended 30 June 2021 | | | --- | --- | --- | --- | --- | | | $'000 | $'000 | $'000 | $'000 | | **Cash flows from operating activities** | | | | | | (Loss)/profit before tax | | (988) | | 10,897 | | **Adjustments for:** | | | | | | Gains on investments | (30) | | (15,293) | | | **Cash flows from operating activities** | | | | | | Purchases of investments^{1,2} | (202,678) | | (277,371) | | | Sales of investments^{1,2} | 204,122 | | 252,191 | | | Increase in receivables^{2} | (995) | | (409) | | | (Decrease)/increase in payables^{2} | (2,918) | | 2,640 | | | Interest paid | (1) | | - | | | Dividend income | 1,076 | | 330 | | | Foreign withholding taxes on dividends | (49) | | (33) | | | **Net cash flows from operating activities^{3}** | | **(2,461)** | | **(27,048)** | | **Cash flows from financing activities** | | | | | | Shares bought back for cash | - | | (543) | | | Dividends paid | (4,914) | | (4,936) | | | **Net cash flows from financing activities** | | **(4,914)** | | **(5,479)** | | **Net decrease in cash and cash equivalents^{3}** | | **(7,375)** | | **(32,527)** | | Cash and cash equivalents at the start of the period | | 12,405 | | 45,074 | | Effect of foreign exchange rates^{3} | | 490 | | (142) | | **Cash and cash equivalents at the end of the period^{4}** | | **5,520** | | **12,405** | $^{1}$ Receipts from the sale of, and payments to acquire, investment securities, have been classified as components of cash flows from operating activities because they form part of the Company's dealing operations. $^{2}$ Comparative figures have been updated to reflect a reclassification of moving the non-cash elements of the purchases/sales from the "increase/decrease in receivables/payables" to the "purchases/sales of investments" section. $^{3}$ Comparative figures have been updated to reflect a reclassification of effect of foreign exchange rates from "cash flows from operating activities" to "net decrease in cash and cash equivalents" section. $^{4}$ As at 30 June 2022, $5,843,979 (2021: $11,697,439) was held as collateral at UBS securities LLC and was restricted. Gabelli Merger Plus$^{®}$ Trust Plc is registered in England and Wales under Company number 10747219. The financial statements on pages 46 to 49 were approved by the Board of Directors on 25 October 2022 and signed on its behalf by Marc Gabelli Chairman 49 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Notes to the Financial Statements 1 General Information Gabelli Merger Plus+ Trust Plc (the “Company”) is a closed-ended public limited company incorporated in the United Kingdom on 28 April 2017 with registered number 10747219. The Company commenced operation on 19 July 2017 and intends to conduct its affairs so as to qualify, at all times, as an investment trust for the purposes of section 1158 of the Corporation Tax Act 2010 (as amended). 2 Accounting policies (a) Basis of preparation – The financial statements of Gabelli Merger Plus+ Trust Plc have been prepared in accordance with the UK adopted International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative financial instruments) at fair value through profit or loss. The principal accounting policies adopted by the Company are set out below. Where presentational guidance set out in the Statement of Recommended Practice (‘SORP’) for investment trusts issued by the Association of Investment Companies (‘AIC’) in October 2019 is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. (b) Presentation of Statement of Comprehensive Income – To better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income. (c) Going concern – The Directors, having taken account of the continuing market regulatory changes affecting investee companies, investment valuations, implications of the COVID-19 pandemic, and the war in Ukraine, and have determined that the Company’s strategy, longer-term asset allocation, short-term liquidity and robust governance structure provide a sufficient basis for the Board to adopt the going concern basis for the Company as at 30 June 2022. In forming this position, the Directors consulted with shareholders utilizing the tender offer process, considered the Company’s investment objectives, risk management policies, capital management policies and procedures, the nature of the portfolio and expenditure projections in detail. These items are discussed in more detail in the Directors’ Report on pages 22 to 27 and the Chairman’s Statement on pages 3 to 5. The Directors have also considered the fact that there will be a continuation vote at the Company’s 2022 Annual General Meeting, and having consulted and maintained close contact with the Company’s major shareholders, have received a letter in Deed, which contains enforceable irrevocable undertakings, from the largest shareholder, Associated Capital Group, legal and beneficial owner of 6,216,256 shares at the time of this writing, that they will both vote in favour of continuation of the company and not participate in the 2nd tender offer. Thereby the Directors confirm with certainty that the company’s largest shareholder will vote in favour of the company to continue to operate. The Viability & Going Concern Statement on page 19 contains additional information. (d) Statement of estimation uncertainty – In the application of the Company’s accounting policies, the Investment Manager is required to make judgements, estimates, and assumptions about carrying values of assets and liabilities that are not always readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may vary from these estimates. There have been no significant judgements, estimates, or assumptions for the period. (e) Income recognition – Revenue from investments (other than special dividends), including taxes deducted at source, is included in revenue by reference to the date on which the investment is quoted ex-dividend, or where no ex-dividend date is quoted, when the Company’s right to receive payment is established. Franked investment income is stated net of the relevant tax credit. Other income includes any taxes deducted at source. Special dividends are credited to capital or revenue, according to the circumstances. Scrip dividends are treated as unfranked investment income; any excess in value of the shares received over the amount of the cash dividend is recognised as a capital item in the Statement of Comprehensive Income. Interest income is accounted for on an accrual basis by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. (f) Expenses – The management fees are allocated to revenue in the Statement of Comprehensive Income. Interest receivable and payable and management expenses are treated on an accruals basis. All other expenses are charged to revenue except where they directly relate to the acquisition or disposal of an investment, in which case, they are added to the cost of the investment or deducted from the sale proceeds. The formation and initial expenses of the Company are allocated to capital. ## 50 Strategic report Governance Financial statements (g) Investments – Investments have been designated upon initial recognition at fair value through profit or loss. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time frame established by the market concerned, and are initially measured at fair value. Subsequent to initial recognition, investments are valued at fair value. Movements in the fair value of investments and gains/losses on the sale of investments are taken to the Statement of Comprehensive Income as capital items. The Company’s investments are classified as held at fair value through profit or loss in accordance with applicable International Financial Standards. Financial assets and financial liabilities are recognised in the Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument. The Company shall offset financial assets and financial liabilities if it has a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis. Financial assets and liabilities are derecognised when the Company settles its obligations relating to the instrument. Contracts for Difference (CFDs) CFDs are recognised in the Statement of Financial Position at the accumulated unrealised gain or loss as an asset or liability, respectively. This represents the difference between the nominal book cost and market value of each position held. Movements in the unrealised gains/losses are taken to the Statement of Comprehensive Income as capital items. (h) Cash and cash equivalents – The Company may invest part of its net assets in cash and cash equivalents, money market instruments, bonds, commercial papers or other debt obligations with banks or other counterparties, having at least a single-A (or equivalent) credit rating from an internationally recognised rating agency or government and other public securities, if the Portfolio Manager believes that it would be in the best interests of the Company and its shareholders. This may be the case, for example, where the Portfolio Manager believes that adverse market conditions justify a temporary defensive position. Any cash or surplus assets may also be temporarily invested in such instruments pending investment in accordance with the Company’s investment policy. Cash balances are marked to market based on the prevailing exchange rate as of the valuation date. US Treasuries are valued at their amortised cost. (i) Transaction costs – Transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the Statement of Comprehensive Income. (j) Foreign currency – Foreign currencies are translated at the rates of exchange ruling on the period end date. Revenue received/ receivable and expenses paid/payable in foreign currencies are translated at the rates of exchange ruling at the transaction date. (k) Fair value – All financial assets and liabilities are recognised in the financial statements at fair value. (l) Dividends payable – Interim and final dividends are recognised in the period in which they are declared. (m) Capital reserve – Capital distributions received, realised gains or losses on investments that are readily convertible to cash, and capital expenses are transferred to the capital reserve. Share buybacks are funded through the capital reserve, with details of buybacks disclosed on page 23 and in note 11. (n) Taxation – The tax effect of different items of income/gains and expenditure/losses is allocated between revenue and capital on the same basis as the particular item to which it relates, under the marginal method, using the Company’s effective rate of tax. Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the period end date where transactions of events that result in an obligation to pay more or a right to pay less tax in future have occurred at the period end date measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company’s taxable profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods. (o) Functional and presentation currency – The functional and presentation currency of the Company is the U.S. dollar. ## 51 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Notes to the Financial Statements continued 3 Investments at fair value through profit or loss The financial assets measured at fair value through profit or loss in the financial statements are grouped into the fair value hierarchy as follows: As at 30 June 2022 Level 1 Level 2 Level 3 Total $000 $000 $000 $000 Financial assets at fair value through profit or loss Quoted equities 89,577 1,782 – 91,359 Contingent value rights – 132 5 137 Derivatives – 885 – 885 Gross fair value 92,381 Derivatives – (416) – (416) Net fair value 89,577 2,383 5 91,965 As at 30 June 2021 Level 1 Level 2 Level 3 Total $000 $000 $000 $000 Financial assets at fair value through profit or loss Quoted equities 92,205 5,498 – 97,703 Contingent value rights – 278 – 278 Derivatives – 388 – 388 Gross fair value 98,369 Derivatives – (1,892) – (1,892) Quoted equities - shorts (4,860) – – (4,860) Net fair value 87,345 4,272 – 91,617 * Dova Pharmaceuticals Inc has been transferred from Level 1 to Level 2 and Zagg Inc has been transfered from Level 2 to Level 3 during the year. Analysis of changes in market value and book cost of portfolio investments in year | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 June 2022 | | 30 June 2021 | | | | $000 | | $000 | Opening book cost 93,078 59,509 Opening investment holding losses (1,461) (9,377) Opening market value 91,617 50,132 Additions at cost 202,731 276,928 Disposals proceeds received (201,923) (250,878) Gains/(losses) on investments (460) 15,435 Market value of investments 91,965 91,617 Closing book cost 99,687 93,078 Closing investment holding losses (7,722) (1,461) Closing market value 91,965 91,617 The company received $201,923,000 (2021: $250,878,000) from investments sold in the year. The book cost of these investments when they were purchased was $196,122,000 (2021: $243,359,000). Further explanation of the disposal proceeds received in the year can be found in the Net realised and unrealised gains/(losses) on investments section on page 53. ## 52 Strategic report Governance Financial statements Fair value hierarchy IFRS 13 requires the Company to classify its financial instruments held at fair value using a hierarchy that reflects the significance of the inputs used in the valuation methodologies. These are as follows: • Level 1 – quoted prices in active markets for identical investments; • Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayments, credit risk, etc.); and • Level 3 – Significant unobservable inputs. Valuation process and techniques for Level 3 valuations The investments in contingent value rights are reviewed regularly to ensure that the initial classification remains correct given each asset’s characteristics and the Company’s investment policies. The contingent value rights are initially recognised using the transaction price as the best evidence of fair value at acquisition, and are subsequently measured at fair value. At 30 June 2022, the quantitative inputs used to value the level 3 contingent value rights included the last sale price, broker quotes, or the merger price. Level 2 financial assets at fair value through profit or loss The investments in contracts for difference are marked at the price of the underlying equity. Contingent value rights in Level 2 are marked using broker quotes. Level 3 financial assets at fair value through profit or loss | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 June 2022 | | 30 June 2021 | | | | $000 | | $000 | Opening valuation – 42 Assets acquired during the year – 2 Assets disposed during the year – – Total profit or loss included in net profits/(losses) on investments in the Statement of Comprehensive Income 5 (44) Closing valuation 5 – Net realised and unrealised gains/(losses) on investments | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 June 2022 | | 30 June 2021 | | | | $000 | | $000 | Realised gains on investments 5,801 7,519 Movement in unrealised gains/(losses) on investments (6,261) 7,916 Net realised and unrealised gains/(losses) on investments (460) 15,435 4 Transactions costs During the year commissions and other expenses were incurred in acquiring within gains/(losses) in the Statement of Comprehensive Income. The total costs were as follows: | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 June 2022 | | 30 June 2021 | | | | $000 | | $000 | Purchases 68 79 Sales 33 75 Total 101 154 ## 53 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Notes to the Financial Statements continued 5 Income/(loss) from investments | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 June 2022 | | 30 June 2021 | | | | $000 | | $000 | Income/(loss) from investments Overseas equities 530 286 1 Income on short-term investments 3 (7) Other income 543 48 Total income/(losses) 1,076 327 1 Income on short-term investments represents the return on cash and cash equivalents, primarily U.S. Treasury Bills. Further information can be found in Note 10 on page 57. 6 Expenses | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 June 2022 | | 30 June 2021 | | | | $000 | | $000 | Revenue expenses Portfolio Management Fee (842) (852) Contracts for Difference (429) (277) Directors’ Remuneration (157) (163) Legal Fees (110) (45) Company Secretary Fees (94) (62) Audit Fees – PwC (70) (68) AIFM – Carne (60) (53) Administration Fees – State Street (44) (42) Custodian/Depositary Fees – State Street (42) (38) Printing (17) (13) Other (33) (36) Directors’ Expenses (15) - Ongoing LSE and UKLA Fees (14) (10) 1 Registrar – Computershare (13) (16) Regulatory Filing Fees – AIFMD (13) (58) LSE RNS fees (8) (14) Marketing expenses (4) (3) Dividend Expense on Securities Sold Short (4) (7) 2 Broker Retainer Fee - 4 Total revenue expenses (1,969) (1,753) Capital expenses Transaction costs on derivatives (73) (103) Transaction Charges – State Street (51) (71) 3 Performance Fee – (2,796) Total capital expenses (124) (2,970) 1 The regulatory filing fees for the year ended 30 June 2021 include filing fees from prior fiscal years. 2 The broker retainer fees for the year ended 30 June 2022 reflects a Cantor Fitzgerald Europe Retainer reimbursement. 3 Further information regarding the Performance Fee can be found in Note 13 on page 62. ## 54 Strategic report Governance Financial statements Portfolio Management Fee Under the terms of the Portfolio Management Agreement, the Portfolio Manager will be entitled to a management fee (“Management Fee”), together with reimbursement of reasonable expenses incurred by it in the performance of its duties under the Portfolio Management Agreement, other than the salaries of its employees and general overhead expenses attributable to the provision of the services under the Portfolio Management Agreement. The Management Fee shall be accrued daily and calculated on each Business Day at a rate equivalent to 0.85% of NAV per annum. AIFM fees The Company has appointed Carne Global Fund Managers (Ireland) Limited (“Carne”) as its Alternative Investment Fund Manager pursuant to the AIFMD. Carne is entitled to receive from the Company such annual fees, accrued and payable at such times, as may be agreed in writing between itself and the Company from time to time. The fees are payable monthly and subject to a minimum monthly fee of ¤2,500. 7 Equity dividends | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 June 2022 | | 30 June 2021 | | | | $000 | | $000 | Dividends paid 4,914 4,936 During the year ended 30 June 2022 dividends paid per share totalled $0.48 (30 June 2021: $0.48 per share). More detailed information can also be found in the Dividend History table on page 14. 8 Taxation on ordinary activities Year ended 30 June 2022 Revenue Capital Total Analysis of the tax charge in the year $000 $000 $000 Irrecoverable overseas tax (49) – (49) Total (49) – (49) Year ended 30 June 2021 Revenue Capital Total Analysis of the tax charge in the year $000 $000 $000 Irrecoverable overseas tax (33) – (33) Total (33) – (33) Year ended 30 June 2022 Revenue Capital Total Factors affecting the tax charge for the year $000 $000 $000 Loss before taxation (894) (94) (988) UK Corporation tax at effective rate of 19% 170 18 188 Effects of: Non taxable overseas dividends 98 – 98 Gains on investments held at fair value through profit or loss – (87) (87) Irrecoverable overseas tax (49) – (49) Expenses not deductible for tax purposes (1) (10) (11) Losses on foreign currencies – 93 93 Movement in excess management expenses (352) (18) (370) Movement in deferred tax rate on excess management expenses 85 4 89 Total (219) (18) (237) Total tax charge for the year (49) – (49) ## 55 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2022 # Notes to the Financial Statements continued ## 8 Taxation on ordinary activities (continued) | Factors affecting the tax charge for the year | Year ended 30 June 2021 | | | | --- | --- | --- | --- | | | Revenue $000 | Capital $000 | Total $000 | | (Loss)/profit before taxation | (1,426) | 12,323 | 10,897 | | UK Corporation tax at effective rate of 19% | 271 | (2,341) | (2,070) | | **Effects of:** | | | | | Non taxable overseas dividends | 54 | - | 54 | | Losses on investments held at fair value through profit or loss | - | 2,933 | 2,933 | | Irrecoverable overseas tax | (33) | - | (33) | | Expenses not deductible for tax purposes | (1) | (12) | (13) | | Gains on foreign currencies | - | (27) | (27) | | Movement in excess management expenses | (324) | (553) | (877) | | **Total** | **(304)** | **2,341** | **2,037** | | **Total tax charge for the year** | **(33)** | **-** | **(33)** | At the year end after offset against income taxable on receipt, there is a potential deferred tax asset of $2,354,232 (2021: $1,498,961) in relation to surplus tax reliefs. As the Company has not generated sufficient taxable profits to utilise these amounts, no deferred tax asset has not been recognised. Due to the Company's status as an investment trust and the intention to continue to meet the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on capital gains and losses arising on the revaluation or disposal of investments. ## 9 Earnings per share Earnings per ordinary share is calculated with reference to the following amounts: | | Year ended 30 June 2022 | Year ended 30 June 2021 | | --- | --- | --- | | **Revenue return** | | | | Revenue loss attributable to ordinary shareholders ($000) | (943) | (1,459) | | Weighted average number of shares in issue during year | 10,238,206 | 10,247,238 | | **Total revenue return (loss) per ordinary share** | **($0.09)** | **($0.14)** | | **Capital return** | | | | Capital return attributable to ordinary shareholders ($000) | (94) | 12,323 | | Weighted average number of shares in issue during year | 10,238,206 | 10,247,238 | | **Total capital return per ordinary share** | **($0.01)** | **$1.20** | | **Total return per ordinary share** | **($0.10)** | **$1.06** | | **Net asset value per share** | As at 30 June 2022 | As at 30 June 2021 | | Net assets attributable to shareholders ($000) | 95,774 | 101,725 | | Number of shares in issue at year end | 10,238,206 | 10,238,206 | | **Net asset value per share** | **$9.35** | **$9.94** | 56 Strategic report Governance Financial statements 10 Cash and cash equivalents | | As at | | As at | | --- | --- | --- | --- | | 30 June 2022 | | 30 June 2021 | | | | $000 | | $000 | Cash 5,911 12,405 Total 5,911 12,405 The Board and Investment Manager oversee investments held in cash and cash equivalents in accordance with the Investment Policy. 11 Called up share capital | | As at | | As at | | --- | --- | --- | --- | | 30 June 2022 | | 30 June 2021 | | | | $000 | | $000 | Allotted, called up and fully paid: 10,238,206 (2021: 10,238,206) Ordinary shares of $0.01 each – equity 102 102 Treasury shares: 95,960 (2021: 95,960) Ordinary shares of $0.01 each – equity 1 1 Total shares 103 103 12 Financial risk management The Company’s financial instruments comprise securities and other investments, cash balances, receivables, and payables that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and receivables for accrued income. The Company also has the ability to enter into derivative transactions in the form of forward foreign currency contracts, futures, and options, for the purpose of managing currency and market risks arising from the Company’s activities. The main risks the Company faces from its financial instruments are (i) share price risk (comprising interest rate risk, currency risk, and other price risk), (ii) liquidity risk, and (iii) credit risk. The Board regularly reviews, and agrees upon, policies for managing each of these risks. The Portfolio Manager’s policies for managing these risks are summarised below and have been applied throughout the year. The numerical disclosures exclude short term receivables and payables, other than for currency disclosures. (i) Share price risk The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements – interest rate risk, currency risk, and other price risk. Interest rate risk Interest rate movements may affect the level of income receivable and payable on cash deposits. The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions. ## 57 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Notes to the Financial Statements continued 12 Financial risk management (continued) Interest risk profile The interest rate risk profile of the portfolio of financial assets/(liabilities) at the year end date was as follows: As at 30 June 2022 | Interest | | | Local | Foreign | | US Dollar | | | --- | --- | --- | --- | --- | --- | --- | --- | | | rate | currency | | exchange | | equivalent | | | | % | | 000 | | rate | | $000 | Assets: US dollar 0.24 5,585 1.00 5,585 Australian dollar 0.12 (48) 1.45 (33) Canadian dollar 0.15 15 1.29 12 Euro currency (0.75) (8) 0.96 (8) GBP Sterling 0.12 (24) 0.82 (29) Hong Kong dollar 0.00 1 7.85 * New Zealand dollar 0.10 5 1.61 3 Norwegian krone 0.00 (5) 9.88 (1) South African rand 0.00 (13) 16.38 (1) Swedish krona (0.75) (80) 10.25 (8) Total 5,520 * Less than $500. As at 30 June 2021 | Interest | | | Local | Foreign | | US Dollar | | | --- | --- | --- | --- | --- | --- | --- | --- | | | rate | currency | | exchange | | equivalent | | | | % | | 000 | | rate | | $000 | Assets: US dollar 0.00 12,462 1.00 12,462 Australian dollar 0.00 1 1.33 1 Canadian dollar 0.00 6 1.24 5 Euro currency (0.75) (12) 0.84 (14) GBP sterling 0.00 (39) 0.72 (54) Hong Kong dollar 0.00 1 7.77 * Japanese yen (0.35) 265 110.99 2 Polish zloty 0.00 1 3.81 * Singapore dollar 0.00 4 1.34 3 Swedish krona (1.25) 1 8.55 * Total 12,405 * Less than $500. Interest rate sensitivity The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the year end date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. If interest rates had been 10 (2021: 10) basis points higher or lower and all other variables were held constant, the Company’s profit or loss for the reporting year to 30 June 2022 would increase/decrease by $6,000 (2021: $12,000). This is mainly attributable to the Company’s exposure to interest rates on its floating rate cash balances. ## 58 Strategic report Governance Financial statements Currency risk The Company’s investment portfolio is invested predominantly in foreign securities and the year end can be significantly affected by movements in foreign exchange rates. It is not the Company’s policy to hedge this risk on a continuing basis but the Company may, from time to time, match specific overseas investments with foreign currency borrowings. The revenue account is subject to currency fluctuation arising from overseas income. Currency risk exposure by currency of denomination: As at 30 June 2022 | | Net | Net monetary | | Total currency | | | | --- | --- | --- | --- | --- | --- | --- | | Investments | | | assets | | exposure | | | | $000 | | $000 | | | $000 | Australian dollar – (55) (55) Canadian dollar 5,295 (5,222) 73 Euro currency 98 (55) 43 GBP Sterling 937 (805) 132 Hong Kong dollar – 2 2 New Zealand dollar – 3 3 South African rand – (7) (7) Swedish krona – 108 108 Swiss franc – – – Total non US Investments 8,772 (6,031) 2,741 US dollar 82,724 10,309 93,033 Total 91,496 4,278 95,774 As at 30 June 2021 | | Net | Net monetary | | Total currency | | | | --- | --- | --- | --- | --- | --- | --- | | Investments | | | assets | | exposure | | | | $000 | | $000 | | | $000 | Australian dollar – (7) (7) Canadian dollar 4,845 (4,851) (6) Euro currency 1,327 (604) 723 GBP sterling – (44) (44) Hong Kong dollar – (12) (12) Japanese yen – 5 5 Norwegian krone – 4 4 Singapore dollar – 2 2 South African rand – (2) (2) Total non US Investments 6,172 (5,509) 663 US dollar 91,806 9,256 101,062 Total 97,978 3,747 101,725 ## 59 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Notes to the Financial Statements continued 12 Financial risk management (continued) Currency sensitivity The following table details the Company’s sensitivity to a 10% increase and decrease in US dollars against the relevant foreign currencies and the resultant impact that any such increase or decrease would have on net return before tax and equity shareholders’ funds. The sensitivity analysis includes only outstanding foreign currency denominated items and adjusts their translation at the year end for a 10% change in foreign currency rates. | | As at | | As at | | --- | --- | --- | --- | | 30 June 2022 | | 30 June 2021 | | | | $000 | | $000 | Australian dollar (6) (1) Canadian dollar 8 (1) Euro currency 5 72 GBP Sterling 13 (4) Japanese yen – 1 South African rand (1) – Swedish krona 11 – Swiss franc – – The relevant US dollar exchange rates as at 30 June 2022 were: Australian Dollar (1: 1.4542); Canadian Dollar (1: 1.2900); Euro currency (1: 0.9565); GBP Sterling (1: 0.8234), South African rand (1: 16.3825), Swedish krona (1: 10.2474) and Swiss franc (1: 0.9574). Other price risk Other price risks, i.e., changes in market prices other than those arising from interest rate or currency risk, may affect the value of the quoted investments. The Investment Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on a recognised stock exchange. Other price risk sensitivity If market prices at the year end date had been 15% higher or lower while all other variables remained constant, the return attributable to ordinary shareholders for the year ended 30 June 2022 would have increased/decreased by $13,795,000. The calculations are based on the portfolio valuations as at the year end date, and are not representative of the year as a whole. (ii) Liquidity risk This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. All creditors are payable within 3 months. Liquidity risk is not considered to be significant as the Company’s assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. (iii) Credit risk This is the risk of failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss. The table below shows the counterparty risk as at the Balance Sheet date: Derivative exposure: CFDs Collateral posted Net exposure $000 $000 $000 Counterparty UBS Securities, LLC (469) (5,844) (6,313) Total (469) (5,844) (6,313) Net exposure represents the mark-to-market value of derivative contracts less any cash collateral held. Negative exposure represents the Fund’s exposure to that counterparty. Positive amounts are not an exposure to the Fund. The risk is managed as follows: • Investment transactions are carried out mainly with brokers whose credit ratings are reviewed periodically by the Portfolio Manager. • Most transactions are made delivery versus payment on recognised exchanges. ## 60 Strategic report Governance Financial statements • Cash is held at State Street Bank and Trust which has a credit rating by Standard and Poor’s on short term deposits of A-1+ and long term deposits AA-. The maximum credit risk exposure as at 30 June 2022 was $6,400,000 (2021: $15,174,000). This was due to cash and receivables as per note (10) ‘Cash & cash equivalents’, note (15) ‘Total other receivables’ and Statement of Financial Position Receivable for investment sold. Capital management policies and procedures The Company’s capital management objectives are: • to ensure that the Company will be able to continue as a going concern; and • to maximise the revenue and capital return to its equity shareholders through an appropriate balance of equity capital and debt. The Board monitors and reviews the broad structure of the Company’s capital on an ongoing basis. The Board considers the Company’s capital requirements in the context of both the Special Distributable and Revenue reserves being treated as distributable, as permitted by current accounting standards for listed investment trusts. The distributable reserves can be used to fund dividends and share repurchase programmes. This review includes the nature and planned level of gearing, which takes account of the Portfolio Manager’s views on the market and the extent to which revenue in excess of that which is required to be distributed under the investment trust rules should be retained. The analysis of shareholders’ funds is as follows: | | As at | | As at | | --- | --- | --- | --- | | 30 June 2022 | | 30 June 2021 | | | | $000 | | $000 | Called-up share capital 103 103 Special distributable reserve* 79,062 83,976 Capital reserve 20,965 21,059 Revenue reserve* (4,356) (3,413) Total shareholders' funds 95,774 101,725 * The Revenue Reserve and Special Distributable Reserve are treated as distributable reserves. As at 30 June 2022, the net amount of reserves that are distributable are $74,706,000 (2021: $80,563,000). Alternative Investment Fund Managers’ (‘AIFM’) Directive In accordance with the Alternative Investment Fund Managers’ Directive (“AIFMD”), the Company has appointed Carne Global Fund Managers (Ireland) Limited as its Alternative Investment Fund Manager (the “AIFM”) to provide portfolio management and risk management services to the Company in accordance with the investment management agreement. Leverage Leverage is calculated using two methods: i) Gross method and ii) Commitment method. For further details please see the Glossary on page 69. The Company’s maximum leverage levels at 30 June 2022 are shown below: Gross Commitment Leverage Exposure method method Maximum permitted limit 500% 250% Actual 131% 137% The leverage limits are set by the AIFM and approved by the Board and are in line with the maximum leverage levels permitted in the Company’s Articles of Association. The AIFM is also required to comply with the gearing parameters set by the Board in relation to borrowings. ## 61 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Notes to the Financial Statements continued 13 Performance fee Subject to the satisfaction of the Performance Conditions, the Portfolio Manager shall be entitled under the Portfolio Management Agreement, in respect of each Performance Period, to receive 20% of the Total Return relating to such Performance Period, provided that such amount shall not exceed 3% of the Average NAV. Performance Conditions The Portfolio Manager’s entitlement to a Performance fee in respect of any Performance Period shall be conditional on the Closing NAV per Share in respect of the Performance Period (adjusted for any changes to the NAV per Share through dividend payments, Share repurchases (howsoever effected) and Share issuances since Admission) being in excess of the Performance Hurdle and High Water Mark. For the year ended 30 June 2022, no Performance fee was paid. As at 30 June 2022, no amount was outstanding to the Portfolio Manager in respect of the performance fee, reflecting the performance period matching the Company’s financial year (2021: $2,795,658). 14 Derivatives risk The Company’s investment policy may involve the use of derivatives (including, without limitation, forward foreign exchange contracts, equity contracts for difference swap agreements (“CFDs”), securities sold short and/or structured financial instruments). The Company may use both exchange-traded and over-the-counter derivatives as part of its investment activity. The cost of investing utilizing derivatives may be higher than investing in securities (whether directly or through nominees) as the Company will have to bear the additional costs of purchasing and holding such derivatives, which could have a material adverse effect on the Company’s returns. The low initial margin deposits normally required to establish a position in such instruments permit a high degree of leverage. As a result, depending on the type of instrument, a relatively small movement in the price of a contract may result in a profit or a loss which is high in proportion to the amount of funds actually placed as initial margin and may result in unquantifiable further losses exceeding any margin deposited. In addition, daily limits on price fluctuations and speculative position limits on exchanges may prevent prompt liquidation of positions resulting in potentially greater losses. The use of derivatives may expose the Company to a higher degree of risk. These risks may include credit risk with regard to counterparties with whom the Company trades, the risk of settlement default, lack of liquidity of the derivative, imperfect tracking between the change in value of the derivative and the change in value of the underlying asset that the Company is seeking to track and greater transaction costs than investing in the underlying assets directly. Additional risks associated with investing in derivatives may include a counterparty breaching its obligations to provide collateral, or, due to operational issues (such as time gaps between the calculation of risk exposure to a counterparty’s provision of additional collateral or substitutions of collateral or the sale of collateral in the event of a default by a counterparty), there may be instances where credit exposure to its counterparty under a derivative contract is not fully collateralised. The use of derivatives may also expose the Company to legal risk, which is the risk of loss due to the unexpected application of a law or regulation, or because a court declares a contract not legally enforceable. The use of CFDs is a highly specialised activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. In a CFD, a set of future cash flows is exchanged between two counterparties. One of these cash flow streams will typically be based on a reference interest rate combined with the performance of a notional value of shares of a stock. The other will be based on the performance of the shares of a stock. Depending on the general state of short term interest rates and the returns on the Company’s portfolio securities at the time a CFD transaction reaches its scheduled termination date, there is a risk that the Company will not be able to obtain a replacement transaction or that terms of the replacement will not be as favourable as on the expiring transaction. At 30 June 2022 the Company held CFDs, as shown in the following table. ## 62 Strategic report Governance Financial statements As at 30 June 2022 Unrealised Trade Shares gain/(loss) Security name currency (000) $000 Aareal Bank AG EUR 7 (3) ADTRAN Inc USD (15) 7 ADVA Optical Networking SE USD 27 (7) Ardent Leisure Group Ltd AUD 190 6 Atlantia SpA EUR 73 (2) Atotech Ltd USD 27 (5) Avast plc USD 383 160 Befimmo EUR 7 ** Black Knight Inc USD 3 3 Brewin Dolphin Holdings plc GBP 109 4 Broadcom Inc USD (1) 14 Caretech Holdings plc GBP 9 ** Cazoo Group Ltd USD 27 (8) CMC Materials Inc USD 11 10 ContourGlobal plc GBP 60 (1) Deutsche Euroshop AG EUR 56 11 Disruptive Capital GP GBP 86 ** Distell Group Ltd ZAR 44 (6) Drilling Co USD 15 (130) EcoOnline Holding AS NOK 103 ** EDF SA EUR 14 (7) Emis Group plc GBP 2 ** Entain plc GBP 22 (26) Entegris Inc USD (5) 29 Euronav NV USD 1 ** Flagstar Bancorp Inc USD 11 8 Frontline Ltd USD (1) ** Fulton Financial USD (9) ** Genkyotex SA EUR 7 ** Grief Inc USD (4) (7) Grifols SA USD (12) (4) Healthcare Realty Trust Inc USD (37) (64) Healthcare Trust of America USD 37 15 HomeServe plc GBP 67 8 Hunter Douglas EUR * ** Ideagen Inc GBP 88 2 II-VI Inc USD (8) 45 Intercontinental Exchange Inc USD * 1 ## 63 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2022 # Notes to the Financial Statements continued ## 14 Derivatives risk (continued) | Security name | Trade currency | Shares (000) | As at 30 June 2022 Unrealised gain/(loss) $000 | | --- | --- | --- | --- | | Intertrust NV | EUR | 29 | 1 | | IVECO Group NV | EUR | 6 | ** | | Lennar Corp | USD | (5) | (3) | | Leovegas AB | SEK | 46 | ** | | Link Admin | AUD | 94 | (28) | | MaxLinear Inc | USD | (2) | 3 | | Mediaset Espana Comunicacion, S.A. | EUR | 32 | (2) | | Meggitt plc | GBP | 395 | 97 | | MKS Instruments Inc | USD | (1) | 5 | | New York Community Bancorp | USD | (44) | (4) | | Newcrest Mining | AUD | (3) | 5 | | Noble Corp | USD | (25) | 156 | | NortonLifeLock | USD | (10) | 3 | | Orange Belgium SA | EUR | 5 | (4) | | Praemium Ltd | AUD | 121 | (5) | | Prudential | USD | 11 | 4 | | Randall & Quilter Investment Holdings Ltd | GBP | 32 | 5 | | Rentokil Initial plc | USD | (77) | (2) | | Sanne Group plc | GBP | 11 | 1 | | SciPlay Corp | USD | 20 | 10 | | Siemens Gamesa Renewable Energy S.A. | EUR | 12 | 1 | | Silicon Motion Technology Corp ADR | USD | 4 | (21) | | Siltronic AG | EUR | 5 | (41) | | SOHO China Ltd | HKD | 437 | 2 | | Spear Investment Group | EUR | 39 | (2) | | Spire Healthcare plc | GBP | 62 | 6 | | Swedish Match AB | SEK | 391 | 115 | | Telecom Italia | EUR | 285 | 1 | | Ultra Electronics Holdings plc | GBP | 30 | 73 | | Vivo Energy plc | USD | 412 | 11 | | VMware Inc | USD | 5 | (34) | | Vonage Holdings Corp | USD | 45 | 63 | | **Total unrealised gain on derivatives** | | | **469** | * Less than 500 shares. ** Less than $500. 64 Strategic report Governance Financial statements 15 Other Assets and Liabilities The categories of other receivables and other payables include: | As at 30 June | | As at 30 June | | | --- | --- | --- | --- | | | 2022 | | 2021 | | | $000 | | $000 | Other receivables FX currency sold 12 57 All other receivables 54 90 Total other receivables 66 147 Other payables FX currency purchased – 20 Custodian fees 7 8 Accounting fees 17 13 Audit fees 70 70 All other payables 118 203 Total other payables 212 314 16 Related party disclosure: Directors Each of the Directors is entitled to receive a fee from the Company at such rate as may be determined in accordance with the Articles of Incorporation. The Directors’ remuneration is $30,000 per annum for each Director, other than: • the Chairman, who will receive an additional $1,000 per annum *; • the Chairman of the Audit & Risk Committee, who will receive an additional $5,000 per annum; and • the Members of the Audit & Risk Committee, who will receive an additional $1,000 per annum. Each of the Directors is also entitled to be paid all reasonable expenses properly incurred by them in connection with the performance of their duties. These expenses will include those associated with attending general meetings, Board or committee meetings and legal fees. The Board may determine that additional remuneration may be paid, from time to time, to any one or more Directors in the event such Director or Directors are requested by the Board to perform extra or special services on behalf of the Company. Carne Global Fund Managers (Ireland) Limited, as AIFM is considered a related party to the Company as it is considered to have significant influence over the Company in its role as AIFM. During the financial year ended 30 June 2022, the AIFM received fees of US$46,403, of which US$3,135 was payable at year end. Carne Global Financial Services Limited, the parent Company of the AIFM, received fees amounting to US$14,645 during the financial year ended 30 June 2022 in respect of other fund governance services to the Company, of which US$3,223 was payable at year end. The related party transactions with the Directors are set out in the Directors’ Remuneration Report on pages 35 to 37. Related parties disclosure: other The Portfolio Management fee and Performance fee for the year ended 30 June 2022 paid by the Company to the Portfolio Manager are presented in the Statement of Comprehensive Income. Details of Portfolio management fee paid during the year are disclosed in Note 6. Details of Performance fee paid during the year are disclosed in Note 13. As at 30 June 2022, Associated Capital Group Inc., an affiliate of the Portfolio Manager, held 6,195,825 Ordinary Shares in the Company. Further details of related parties and transactions, including with the Company’s AIFM Carne Global Fund Managers (Ireland) Limited, are disclosed in the Directors’ Report on pages 22 and 27. Connected party transactions All connected party transactions are carried out at arm’s length. There were no such transactions during the year ended 30 June 2022. * Mr Gabelli has waived his fees since appointment as Chairman. ## 65 Gabelli Merger Plus\* Trust Plc Annual Report and Accounts 2022 # Notes to the Financial Statements continued ## 17 Contingent Liabilities and Commitments As at 30 June 2022, the Company had no contingent liabilities or commitments (30 June 2021: nil). ## 18 Historical Share and NAV information | | 30 June 2022 | 30 June 2021 | 30 June 2020 | | --- | --- | --- | --- | | Total Shares | 10,238,206 | 10,238,206 | 10,328,206 | | Total NAV ($000) | 95,774 | 101,725 | 96,430 | | NAV per share | $9.35 | $9.94 | $9.33 | ## 19 Significant events The outbreak of Coronavirus (COVID-19), declared by the World Health Organisation as a global pandemic in 2020, has impacted many aspects of daily life and the global economy. Travel movements and operational restrictions were implemented by many countries throughout 2019-2021. However in 2022, most economies globally have fully reopened and the pace of recovery has varied from country to country. Countries and their workforce have successfully adapted to living and working in this pandemic environment. As we move into the latter half of 2022, there continues to be potential unforeseen economic consequences from this virus and market reaction to such consequences could be rapid, unpredictable and vary significantly from country to country. The Directors together with the Manager will continue to monitor business continuity and resilience processes with the objective of mitigating any potential for ongoing impact of COVID-19. ### Conflict in Ukraine Events arising in Ukraine, as a result of military action being undertaken by Russia, may impact on securities directly or indirectly related to companies domiciled in Russia and/or listed on exchanges located in Russia ("Russian Securities"). As at 30 June 2022, the Company did not have direct exposure to Russian securities. The Directors are monitoring developments related to this military action, including economic sanctions and actions of foreign governments. ## 20 Post balance sheet events The Gabelli Merger Plus+ Trust conducted and completed the Tranche One Tender Offer, as set out in the circular published by the Company on 19 August 2022. The results of the tender were as follows: A total of 3,055,957 Qualifying Shares were validly tendered under the Tranche One Tender Offer at the Tender Price of 938.15 U.S. cents per share, which, upon being purchased by the Company, are to be held in treasury. Proceeds of the tender were payable by 13 October 2022. The post tender remaining Shareholder base may result in the Company being deemed a Close Company for the purposes of taxation and is separately under advice. The Company is committed to delivering its investment programme for the long term and is examining alternatives to minimise taxes, costs and expenses for its Shareholders. 66 Strategic report Governance Financial statements # Regulatory Disclosures ## Information to be disclosed in accordance with Listing Rule 9.8.4 The disclosures below are made in compliance with the requirements of Listing Rule 9.8.4. 9.8.4 (1) The Company has not capitalised any interest in the year under review. 9.8.4 (2) The Company has not published any unaudited financial information in a class 1 circular or prospectus or any profit forecast or profit estimate. 9.8.4 (4) The Company does not have any long term incentive schemes in operation. 9.8.4 (5) and (6) The Chairman Mr Gabelli has waived or agreed to waive any current or future emoluments from the Company. 9.8.4 (7) During the year to 30 June 2021, the Company has not issued shares. 9.8.4 (8) and 9.8.4 (9) are not applicable. 9.8.4 (10) As President of the Portfolio Manager's parent company, GGCP, and an employee of the Portfolio Manager, Mr Gabelli is/was deemed to be interested in the Company's portfolio management agreement. There were no other contracts of significance subsisting during the year under review to which the Company is a party and in which a Director of the Company is or was materially interested; or between the Company and a controlling shareholder. 9.8.4 (11) This provision is not applicable to the Company. 9.8.4 (12) and (13) There were no arrangements under which a shareholder has waived or agreed to waive any dividends or future dividends. 9.8.4 (14) This provision is not applicable to the Company. 67 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Glossary Alternative Investment Fund Managers Directive (“AIFMD”) Agreed by the European Parliament and the Council of the European Union and adopted into UK legislation, the AIFMD classifies certain investment vehicles, including investment companies, as Alternative Investment Funds (“AIFS”) and requires them to appoint an Alternative Investment Fund Manager (“AIFM”) and Depositary to manage and oversee the operations of the investment vehicle. The Board of the Company retains responsibility for strategy, operations and compliance and the Directors retain a fiduciary duty to shareholders. Alternative Performance Measures Net Asset Value total return, which is calculated based on the net asset value per share at 30 June 2022, compared to the Net Asset Value per share as at 30 June 2021, adjusted for dividends paid, and assumes that dividends are reinvested. Share price total return, which is calculated based on the share price as at 30 June 2022, compared to the share price as at 30 June 2021, adjusted for dividends paid, and assumes that all dividends are reinvested. Discount to net asset value, which is calculated by dividing the difference between the share price and net asset value per share, by the net asset value per share. Association of Investment Companies (“AIC”) The Company is a member of the AIC which is the trade body for investment companies and represents the industry in relation to various matters which impact the regulation of such entities. Capital Return per Share The capital return per share is the capital profit for the year (see Statement of Comprehensive Income) divided by the weighted average number of ordinary shares in issue during the year. Close company Subject to certain exceptions, a close company is broadly a company which is under the control of five or fewer participators or any number of participators if those participators are directors, or more than half the assets of which would be distributed to five or fewer participators, or to participators who are directors, in the event of the winding up of the company. Contract for Difference (“CFD”) A financial instrument in which a set of future cash flows is exchanged between two counterparties. One of these cash flow streams will typically be based on a reference interest rate combined with the performance of a notional value of shares of a stock. The other will be based on the performance of the shares of a stock. CFDs are open-ended with no fixed termination date, in contrast to swaps, which utilitize fixed termination dates. Custodian The Custodian is responsible for ensuring the safe custody of the Company’s assets and that all transactions in the underlying holdings are transacted in an accurate and timely manner. Depositary From July 2014 all AIFs were required to appoint a Depositary who has responsibility for overseeing the operations of the Company including safekeeping, cash monitoring and verification of ownership and valuation of the underlying holdings and is responsible for the appointment of a custodian. The Depositary is strictly liable for the loss of any investments or other assets in its custody unless it has notified that it has discharged its liability in certain markets. The Depositary has confirmed that it has not discharged liability in relation to any of the Company’s assets. Dividend Dates When declared or recommended, each dividend will have three key dates applied to it. The payment date is the date on which shareholders will receive their dividend, either by BACS transfer or by receipt of a dividend cheque. The record date applied to the dividend is used as a cut-off for the Company’s registrars to know which shareholders should be paid a dividend. Only shareholders on the register of members at the close of business on the record date will receive the dividend. The ex-dividend date is the business day before the record date and is the date upon which the Company’s net asset value will be disclosed ex-dividend. Dividend Yield The annual dividend expressed as a percentage of the share price. Gearing (including Actual and Nominal Gearing) The net gearing percentage reflects the amount of borrowings (i.e. bank loans or overdrafts) the Company has used to invest in the market less cash and investments in cash funds, divided by net assets. Nominal gearing is the total notional amount of assets plus total notional amount of liabilities, divided by equity. Actual gearing is calculated under two methodologies: the gross method, ## 68 Strategic report Governance Financial statements which includes the market value of positions and the gross exposure of derivatives, and excludes cash and cash equivalents; and the commitment method, which includes the value of cash and cash equivalents. Nominal CFD gearing is the gross nominal value of CFD positions, as a percentage of shareholders' equity. #### High Water Mark The closing Net Asset Value (NAV) per share in respect of the last performance period in respect of which a performance fee was payable to the Portfolio Manager (adjusted for any changes to the NAV per share through dividend payments, share repurchases, and share issuances from admission to the end of such performance period). #### Investment Trusts Investment trusts are public limited companies, listed on the London Stock Exchange, which provide shareholders with a professionally managed portfolio of investments. Investments trusts are exempt from tax on the capital gains arising on their investments subject to meeting certain criteria. Income, net of expenses and tax, is substantially distributed to shareholders. Investment trusts are also known as investment companies, although the tax legislation retains the reference to investment trusts. #### Liquidity In the context of the liquidity of shares in the stock market, this refers to the availability of buyers in the market for the share in question. Where the market in a particular share is described as liquid, that share will be in demand and holders wishing to sell their shares should find ready buyers. Conversely, where the market in a share is illiquid the difficulty of finding a buyer will tend to depress the price that might be negotiated for a sale. #### Leverage Leverage is the ratio between a fund's Total Exposure and its Net Asset Value, expressed as a percentage. For the purposes of the AIFM Directive, leverage can be calculated using two methods: (i) the gross method; and (ii) the commitment method. Under the gross method, Total Exposure is the algebraic sum of all investment positions (long and short), excluding cash and cash equivalents and converting derivative instruments into the equivalent position in the underlying asset. Under the commitment method, Total Exposure is the algebraic sum of all investment positions (long and short), plus cash and cash equivalents, minus hedging arrangements and offsetting instruments between eligible assets. #### Net Asset Value ("NAV") per ordinary share The value of the Company's assets (i.e. investments, cash held and debtors) less any liabilities (i.e. bank borrowings, debt securities and creditors) for which the Company is responsible, divided by the number of shares in issue. The aggregate NAV is also referred to as total shareholders' funds on the Statement of Financial Position. The NAV is published daily. **Net Asset Value per ordinary share, total return** represents the theoretical return on NAV per ordinary share, assuming that dividends paid to shareholders were reinvested at the NAV per ordinary share at the close of business on the day shares were quoted ex-dividend. | | 2022 | 2021 | | --- | --- | --- | | NAV at start of year | 9.93 | 9.33 | | NAV at end of year | 9.35 | 9.93 | | Effect of dividends* | 0.46 | 0.51 | | NAV at end of year including effect of dividends | 9.81 | 10.44 | | NAV total return | (1.34)% | 11.89% | \* Assumed reinvested at the time of shares going ex-dividend. **Ongoing Charges** are operating expenses incurred in the running of the Company, whether charged to revenue or capital, but excluding financing costs. These are expressed as a percentage of the average net asset value during the year and this is calculated in accordance with guidance issued by the Association of Investment Companies. | | | 2022 $000 | 2021 $000 | | --- | --- | --- | --- | | Regular recurring expenses | a | 1,592 | 1,736 | | Average Shareholders' funds | b | 99,579 | 131,080 | | Ongoing Charge Calculation | a/b | 1.60% | 1.32% | 69 Gabelli Merger Plus\* Trust Plc Annual Report and Accounts 2022 # Glossary continued ## Performance Fee A detailed explanation of the calculation methodology for the Performance Fee payable to the Investment Manager can be found in Note 13. ## Performance Hurdle In relation to each performance period, the hurdle is represented by “A” multiplied by “B”, where: “A” is equal to the starting NAV per share increased by two times the rate of return on 13 week Treasury Bills published by the US Department of the Treasury over the performance period, less the starting NAV per share; and “B” is the weighted average of the number of shares in issue (excluding any shares held in treasury) at the end of each day during the performance period. The Remuneration Committee has determined that this is the most appropriate means of benchmarking the Manager’s performance. ## Premium/(Discount) The amount by which the market price per share of an investment trust is either higher premium or lower (discount) than the NAV per share, expressed as a percentage of the NAV per share. ## Revenue Return per ordinary share The revenue return per ordinary share is the revenue return profit for the year divided by the weighted average number of ordinary shares in issue during the year. **Share Price Total Return** represents the theoretical return to a shareholder, on a closing market price basis, assuming that all dividends received were reinvested, without transaction costs, into the ordinary shares of the Company at the close of business on the day the shares were quoted ex dividend. | | 2022 | 2021 | | --- | --- | --- | | Share price at start of year | 7.40 | 7.50 | | Share price at end of year | 9.00 | 7.40 | | Effect of dividends* | 0.55 | 0.51 | | Share price at end of year including effect of dividends | 9.55 | 7.91 | | Share price total return | 29.06% | 5.46% | \* Assumed reinvested at the time of the shares going ex-dividend. ## Total Return Performance This is the return on the share price or NAV taking into account both the rise and fall of share prices and the dividends and interest paid to shareholders. Any dividends received by a shareholder are assumed to have been reinvested in either additional shares (for share price total return) or the Company’s assets (for NAV total return). 70 Strategic report Governance Financial statements ## Company Information Registered Name Registrar and Receiving Agent Gabelli Merger Plus+ Trust Plc Computershare Investment Services PLC The Pavillions | Registered Office | Bridgwater Road | | --- | --- | | 3 St. James’s Place, | Bristol BS99 6ZZ | | London SW1A 1NP, | United Kingdom | United Kingdom Legal & Financial Advisers to the Company | Board of Directors | Dickson Minto W.S. | | --- | --- | | Marc Gabelli | 16 Charlotte Square | | Marco Bianconi | Edinburgh | | John Birch | EH2 4DF | John Newlands Yuji Sugimoto The Company is a member of The Association of Investment Companies James Wedderburn (“AIC”), which publishes a number of useful fact sheets and email updates for investors interested in investment trust companies. Portfolio Manager | Gabelli Funds, LLC | The AIC | | --- | --- | | One Corporate Center | 9th Floor | | Rye, NY 10580-1422 | 24 Chiswell Street | | United States | London | EC1Y 4YY Company Secretary 0207 282 5555 Kin Company Secretarial (from 13 July 2021 onwards) www.theaic.co.uk Hyde Park House 5 Manfred Road London Information to Shareholders United Kingdom With effect from 1 January 2016 new tax legislation under the OECD SW15 2RS (Organisation for Economic Co-operation and Development) Common Reporting Standard for Automatic Exchange of Financial Account Maitland Administration Services Limited Information (“The Common Reporting Standard”) has been introduced. (until 12 July 2021 only) This legislation requires investment trust companies to provide personal Independent Auditors information to the HMRC on certain investors who purchase shares in PricewaterhouseCoopers LLP investment trusts. As an affected company, Gabelli Merger Plus+ Trust 7 More London Riverside Plc will have to provide information annually to the local tax authority on London SE1 2RT a number of non-UK based certificated shareholders and incorporated United Kingdom entities. Administrator and Custodian All new shareholders, excluding those whose shares are held on CREST, State Street Bank and Trust Company who are entered onto the share register after 1 January 2016 will be sent 20 Churchill Place a certification form for the purposes of collecting this information. Canary Wharf | London E14 5HJ | For further information, please see the HMRC’s Quick Guide: Automatic | | --- | --- | | United Kingdom | Exchange of Information – information for account holders. | | Depositary | https://www.gov.uk/government/publications/exchange-of- | | State Street Trustees Ltd | informationaccount-holders. | 20 Churchill Place Canary Wharf Please visit us on the internet. Our home page at www.gabelli.co.uk London E14 5HJ contains information about Gabelli Funds,. LLC and Gabelli Merger Plus+ | United Kingdom | Trust Plc. | | --- | --- | | Alternative Investment Fund Manager | We welcome your comments and questions at +44 02 3206 2100 or via | | Carne Global Fund Managers (Ireland) Limited | email at info@gabelli.co.uk. | 2nd Floor, Block E Iveagh Court, Harcourt Road Dublin 2 Ireland ## 71 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2022 # Annual General Meeting ## Notice of Annual General Meeting Notice is hereby given that the fifth Annual General Meeting (the "AGM") of the Company will be held at GAMCO (UK), 3 St. James's Place London SW1A 1NP United Kingdom on Wednesday 30 November 2022 at 15:00 (GMT) to consider and, if thought fit, pass the following resolutions, of which resolutions numbered 1 to 14 (inclusive) will be proposed as Ordinary Resolutions, and resolutions numbered 15 to 17 (inclusive) will be proposed as Special Resolutions. The Directors currently anticipate that this year's Annual General Meeting will be open to shareholders, but reserve the right to change arrangements for the meeting at short notice. Therefore shareholders are encouraged to vote by proxy and to appoint the Chairman as their proxy. ### Ordinary Business 1 To receive the Company's audited financial statements, the Strategic Report and the reports of the Directors of the Company (the "Directors") for the year ended 30 June 2022 (the "Annual Report") together with the report of the auditors thereon. 2 To approve the Directors' Remuneration Report for the year ended 30 June 2022. 3 To approve the Company's dividend policy to continue to pay quarterly interim dividends. The three dividends declared in respect of the financial year ended 30 June 2022 total $0.36 per share. 4 To re-elect Marc Gabelli as a Director. 5 To re-elect Marco Bianconi as a Director. 6 To re-elect John Birch as a Director. 7 To re-elect John Newlands as a Director. 8 To re-elect Yuji Sugimoto as a Director. 9 To re-elect James Wedderburn as a Director. 10 To appoint PricewaterhouseCoopers LLP as auditors of the Company to hold office until the conclusion of the next Annual General Meeting of the Company. 11 To authorise the Audit & Risk Committee to determine the remuneration of the Company's auditors. ### Special Business #### Ordinary Resolutions 12 THAT, in accordance with Article 143 of the Articles of Association which provides that the Directors shall propose a Continuation Resolution at the first annual general meeting of the Company following the fifth anniversary of Admission that the Company, the Company continues its business as a closed-ended investment company; it being understood that the Articles of Association do not require any further Continuation Resolutions to be proposed to shareholders thereafter. 13 THAT, in addition to all existing authorities, the Board of Directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 (the "Act") to exercise all the power of the Company to allot relevant securities (within the meaning of section 551 of the Act) in the Company up to a maximum aggregate nominal amount of $71,822 (being ten percent of the total number of voting rights of the Company at the latest practicable date prior to the publication of this Notice of Annual General Meeting), such authority, unless previously revoked, to apply until the conclusion of next year's Annual General Meeting containing this resolution, but, in each case, during this period the Company may make offers and enter into agreements which would, or might, require shares to be allotted or rights to subscribe for or convert securities into shares to be granted after the authority ends and the Board of Directors may allot shares or grant rights to subscribe for or convert securities into shares under any such offer or agreement as if the authority had not ended. 14 THAT, in addition to all existing powers, the Board of Directors be and are hereby empowered to issue and allot Special Voting Loyalty Shares in order to give effect to Article 11(2) of the Articles of Association and THAT, in order to facilitate the administrative process of accepting subscriptions for such Special Voting Loyalty Shares, the Board of Directors be and are hereby empowered to accept subscriptions for such Special Voting Loyalty Shares outside of the Subscription Period specified in Article 11(2)(b) provided that all other conditions set forth therein are satisfied. ### Special Resolutions 15 THAT, in addition to all existing powers, the Board of Directors be and are hereby empowered in accordance with section 570 of the Companies Act 2006 (the "Act"), to allot equity securities (as defined in section 560 of the Act) for cash under the authority given by resolution 13 set out in the Notice of Annual General Meeting containing this resolution and to sell any ordinary shares of $0.01 each in the Company ("Ordinary Shares") held by the Company as treasury shares for cash as if section 561(1) of the Act did not apply to any such allotment or sale, such power to be limited: a. to the allotment of equity securities and sale of treasury shares in connection with an offer of, or invitation to apply for, equity securities: i. to holders of Ordinary Shares in the capital of the Company in proportion (as nearly as may be practicable) to their existing holdings; and ii. to holders of other equity securities in the capital of the Company, as required by the rights of those securities or, subject to such rights, as the Board of Directors otherwise considers necessary, and so that the Board of Directors may impose any limits or restrictions and make any arrangements which it considers necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in or under the laws of any territory or the requirements of any regulatory body or stock exchange; and 72 Strategic report Governance Financial statements b. otherwise than pursuant to paragraph a. above, to the 17 THAT a general meeting of the Company other than an allotment of equity securities and sale of treasury shares Annual General Meeting may be called on not less than 14 up to an aggregate nominal amount of $10,238 (being 10% clear days’ notice. of the total number of voting rights of the Company at the latest practicable date prior to the publication of this Notice); By order of the Board and Marc Gabelli c. such that no allotment of securities shall be made which Chairman would result in Ordinary Shares being issued or sold 25 October 2022 from treasury at a price which is less than the higher of the Company’s cum or ex income net asset value per Registered Office: Ordinary Share at the latest practicable date before 3 St. James’s Place such allotment of equity securities as determined by the London Board of Directors in their reasonable discretion, such England power, unless renewed, to apply until the conclusion of SW1A 1NP next year’s AGM but, in each case, during this period the Company may make offers, and enter into agreements, which would, or might, require equity securities to be allotted (and treasury shares to be sold) after the power ends and the Board of Directors may allot equity securities (and sell treasury shares) under any such offer or agreement as if the power had not ended. 16 THAT, in addition to all existing authorities, the Company be authorised for the purposes of section 701 of the Act to make one or more market purchases (as defined in section 693(4) of the Act) of its Ordinary Shares, provided that: a the maximum number of Ordinary Shares hereby authorised to be purchased is 1,076,619 (being 14.99% of the total number of voting rights of the Company at the latest practicable date prior to the publication of this Notice of Annual General Meeting containing this resolution); b. the minimum price (exclusive of expenses) which may be paid for an Ordinary Share is the nominal amount of that share; and c. the maximum price (exclusive of expenses) which may be paid for an Ordinary Share is the higher of: i. an amount equal to 5% above the average of the middle market quotations for an Ordinary Share as derived from the Daily Official List of the London Stock Exchange plc for the five business days immediately preceding the day on which that Ordinary Share is contracted to be purchased; and ii. an amount equal to the higher of the price of the last independent trade and the highest current independent bid on the trading venues where the purchase is carried out at the relevant time, and d. such authority, unless renewed, or extended, shall apply until the conclusion of the Company’s next year’s Annual General Meeting but during this period the Company may enter into a contract to purchase Ordinary Shares, which would, or might, be completed or executed wholly or partly after the authority ends and the Company may purchase Ordinary Shares pursuant to any such contract as if the authority had not ended. ## 73 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Notes to the Notice of the AGM In accordance with the prevailing guidance issued by the UK be determined by reference to the Company’s register government in response to the coronavirus pandemic, the of members as at the close of business on 25 November Annual General Meeting is currently anticipated to be open to 2022, or, if the meeting is adjourned, no later than 48 hours members. All members are entitled to vote at the meeting by (excluding any part of a day that is not a working day) before providing a form of proxy. Members are strongly advised to the time fixed for the adjourned meeting (as the case may appoint the Chairman of the meeting as their proxy. be). In each case, changes to the register of members after such time will be disregarded. Proxy appointment 1 A member is entitled to appoint another person as his proxy CREST members to exercise all or any of his rights to attend and to speak and 8 CREST members who wish to appoint a proxy or proxies vote at the AGM, or any adjournment thereof. A proxy need through the CREST electronic proxy appointment service not be a shareholder of the Company. A shareholder may may do so for the meeting (and any adjournment of the appoint more than one proxy in relation to the AGM provided meeting) by following the procedures described in the that each proxy is appointed to exercise the rights attached CREST Manual available on the website of Euroclear UK and to a different share or shares held by that shareholder. Ireland Limited (“Euroclear”) at www.euroclear.com. CREST Personal Members or other CREST sponsored members (and 2 A form of proxy is enclosed. The appointment of a proxy those CREST members who have appointed a voting service will not prevent a member from subsequently attending and provider) should refer to their CREST sponsor or voting voting at the meeting in person. service provider, who will be able to take the appropriate action on their behalf. 3 To appoint a proxy, the form of proxy and any power of attorney or other authority (if any) under which it is executed In order for a proxy appointment or instruction made (or a duly certified copy of any such power or authority), must by means of CREST to be valid, the appropriate CREST be either (a) sent to the Company’s Registrar, Computershare message (a “CREST Proxy Instruction”) must be properly Investor Services PLC, at The Pavilions, Bridgwater Road, authenticated in accordance with Euroclear’s specifications Bristol, BS99 6ZY, or (b) the proxy appointment must be and must contain the information required for such lodged using the CREST Proxy Voting Service in accordance instructions, as described in the CREST Manual. The message with Note 8 below, in either case so as to be received no later (regardless of whether it constitutes the appointment than 15:00 (GMT) on 28 November 2022 (or, if the meeting of a proxy or an amendment to the instruction given to a is adjourned, no later than 48 hours (excluding any part previously appointed proxy) must, in order to be valid, be of a day that is not a working day) before the time of any transmitted so as to be received by Computershare Investor adjourned meeting). Services PLC Participant ID 3RA50 by the latest time(s) for receipt of proxy appointments specified in Note 3 above. For Joint shareholders this purpose, the time of receipt will be taken to be the time 4 In the case of joint holders of a share the vote of the senior (as determined by the timestamp applied to the message by who tenders a vote, whether in person or by proxy, shall the CREST Applications Host) from which the issuer’s agent be accepted to the exclusion of the votes of the other joint is able to retrieve the message by enquiry to CREST in the holders, and for this purpose seniority shall be determined manner prescribed by CREST. After this time any change of by the order in which the names appear in the register of instructions to a proxy appointed through CREST should be members in respect of the share. communicated to him by other means. Nominated persons CREST members (and, where applicable, their CREST 5 The right to appoint a proxy does not apply to persons sponsors or voting service providers) should note that whose shares are held on their behalf by another person Euroclear does not make available special procedures in and who have been nominated to receive communications CREST for any particular messages. Normal system timings from the Company in accordance with section 146 of the Act and limitations will therefore apply in relation to the input (“Nominated Persons”). Nominated Persons may have a right of CREST Proxy Instructions. It is the responsibility of the under an agreement with the member who holds the shares CREST member concerned to take (or, if the CREST member on their behalf to be appointed (or to have someone else is a CREST personal member or sponsored member or has appointed) as a proxy. Alternatively, if Nominated Persons do appointed a voting service provider, to procure that his not have such a right or do not wish to exercise it, they may CREST sponsor or voting service provider takes) such action have a right under such an agreement to give instructions as shall be necessary to ensure that a message is transmitted to the person holding the shares as to the exercise of voting by means of the CREST system by any particular time. In this rights. connection, CREST members (and, where applicable, their CREST sponsors or voting service providers) are referred, in Information about shares and voting particular, to those sections of the CREST Manual concerning 6 Holders of Ordinary Shares are entitled to attend and vote practical limitations of the CREST system and timings. The at general meetings of the Company. The total number of Company may treat as invalid a CREST Proxy Instruction issued Ordinary Shares in the Company on 10 October 2022, in the circumstances set out in Regulation 35(5) (a) of the which is the latest practicable date before the publication Uncertificated Securities Regulations 2001. of this Notice is 7,182,249 Shares (excluding shares held in treasury). Corporate representatives 9 Any corporation which is a member can appoint one or more Right to attend and vote corporate representatives who may exercise on its behalf all 7 Entitlement to attend and vote at the meeting, and the of its powers as a member provided that they do not do so number of votes which may be cast at the meeting, will in relation to the same shares. ## 74 Strategic report Governance Financial statements Audit concerns Such a request may be in hard copy form or in electronic form, 10 Shareholders should note that, under section 527 of the Act, and must identify the resolution of which notice is to be given members meeting the threshold requirements set out in that or the matter to be included in the business, must be authorised section have the right to require the Company to publish on by the person or persons making it, must be received by the a website a statement setting out any matter relating to: (i) Company not later than four weeks before the AGM, and (in the the audit of the Company’s accounts (including the auditors case of a matter to be included in the business only) must be report and the conduct of the audit) that are to be laid before accompanied by a statement setting out the grounds for the the AGM for the financial year ended 30 June 2022; or (ii) request. any circumstance connected with auditors of the Company appointed for the financial year ended 30 June 2022 Website information ceasing to hold office since the previous meeting at which 13 A copy of this notice and other information required by annual accounts and reports were laid. The Company may section 311A of the Act can be found at www.gabelli.co.uk/ not require the shareholders requesting any such website investment-products/gabelli-merger-plus/. publication to pay its expenses in complying with sections 527 or 528 (requirements as to website availability) of the Use of electronic address Act. Where the Company is required to place a statement on 14 Members may not use any electronic address provided a website under section 527 of the Act, it must forward the in either this notice of meeting or any related documents statement to the Company’s auditors not later than the time (including the enclosed form of proxy) to communicate with when it makes the statement available on the website. The the Company for any purposes other than those expressly business which may be dealt with at the AGM for the relevant stated. financial year includes any statement that the Company has been required under section 527 of the Act to publish on a Documents available for inspection website. 15 Copies of the letters of appointment of the non-executive Directors may be inspected during normal business hours Questions on any weekday (Saturdays, Sundays and public holidays 11 Any member attending the AGM has the right to ask excepted) at the registered office of the Company at 3 St. questions. The Company must cause to be answered any James’s Place, London SW1A 1NP, United Kingdom, up to and such question relating to the business being dealt with at including the date of the AGM, and, if possible, on the date the meeting but no such answer need be given if (a) to do so itself at the AGM venue 15 minutes before the meeting until it would interfere unduly with the preparation for the meeting ends. or involve the disclosure of confidential information, (b) the answer has already been given on a website in the form of an Communication answer to a question, or (c) it is undesirable in the interests 16 Except as provided above, shareholders who have general of the Company or the good order of the meeting that the queries about the AGM should use the following means of question be answered. communication (no other methods of communication will be accepted): Members’ right to request a resolution to be proposed at the Meeting • by calling the Registrar’s helpline on: +44 (0)370 703 12 Under sections 338 and 338A of the Companies Act 2006, 6319, or members meeting the threshold requirements in those sections have the right to require the Company: • by writing to the Registrar, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol i. to give, to members of the Company entitled to receive BS99 6ZZ, or notice of the meeting, notice of a resolution which may properly be moved and is intended to be moved at the • by email to the Registrar web.queries@computershare.co.uk meeting; and/or Gabelli Merger Plus+ Loyalty Programme ii. to include in the business to be dealt with at the meeting The Company has a Loyalty Programme in place for its long | | | any matter (other than a proposed resolution) which may | term shareholders. Please see page 23 for benefits and eligibility | | --- | --- | --- | --- | | | | be properly included in the business. | requirements. | | A resolution may properly be moved or a matter may | | | Contact the Company | | | properly be included in the business unless: | | www.gabelli.com/mergerplus | gmpassist@gabelli.com a. (in the case of a resolution only) it would, if passed, be +44 20 3206 2100 ineffective (whether by reason of inconsistency with any +1 914 921 5135 enactment or the Company’s constitution or otherwise); +39 02 3057 8299 b. it is defamatory of any person; or c. it is frivolous or vexatious. ## 75 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## Appendix ## AIFMD Remuneration Disclosure The European Union Directive 2011/61/EU as implemented in Ireland by S.I. No. 257/2013 European Union (Alternative Investment Fund Managers) Regulations 2013, requires alternative investment fund managers (“AIFMs”) to establish and apply remuneration policies and practices that promote sound and effective risk management, and do not encourage risk taking which is inconsistent with the risk profile of the Fund. To that effect, Carne Global Fund Managers (Ireland) Limited (“the Manager”), has implemented a remuneration policy that applies to all alternative investment funds (“AIFs”) for which the Manager acts as AIFM (the “Remuneration Policy”) and covers all staff whose professional activities have a material impact on the risk profile of the Manager or the AIFs it manages (“Identified Staff of the Manager”). The Remuneration Policy also applies to all UCITS funds for which the Manager acts as manager. In accordance with the Remuneration Policy, all remuneration paid to Identified Staff of the Manager can be divided into: • Fixed remuneration (payments or benefits without consideration of any performance criteria); and • remuneration (additional payments or benefits depending on performance or, in certain cases, other contractual criteria) which is not based on the performance of the Fund. The Manager has designated the following persons as Identified Staff of the Manager: 1. The Designated Persons; 2. Each of the Manager’s directors; 3. Compliance Officer; 4. Risk Officer; 5 Money Laundering Reporting Officer; 6. Chief Executive Officer; 7. Chief Operating Officer; 8. Head of Compliance with responsibility for Anti-Money Laundering and Counter Terrorist Financing; and 9. All members of the investment committee. The Manager has a business model, policies, and procedures which by their nature do not promote excessive risk taking and take account of the nature, scale and complexity of the Manager and the Fund. The Remuneration Policy is designed to discourage risk taking that is inconsistent with the risk profile of the Fund and the Manager is not incentivised or rewarded for taking excessive risk. The Manager has determined not to constitute a separate remuneration committee and for remuneration matters to be determined through the Manager’s Compliance and AML Committee. The Compliance and AML Committee is responsible for the ongoing implementation of the Manager’s remuneration matters and will assess, oversee, and review the remuneration arrangements of the Manager as well as that of the delegates as relevant, in line with the provisions of the applicable remuneration requirements. The Manager’s parent company is Carne Global Financial Services Limited (“Carne”). Carne operates through a shared services organisational model which provides that Carne employs the majority of staff and enters into inter-group agreements with other Carne Group entities within the group to ensure such entities are resourced appropriately. Additionally, the Manager has a number of directly employed staff. The one non-executive independent director is not an employee of the Manager. 4 of the Designated Persons are directly employed by the Manager. The remainder of the identified staff are employees of Carne, or employees of another entity within the Carne Group, and are remunerated directly based on their contribution to Carne Group as a whole. In return for the services of each of the Carne Identified Staff, the Manager pays an annual staff recharge to Carne (the “Staff Recharge”). The non-executive independent director is paid a fixed remuneration and each other Identified Staff member’s remuneration is linked to their overall individual contribution to the Carne Group, with reference to both financial and non-financial criteria and not directly linked to the performance of specific business units or targets reached or the performance of the Fund. The aggregate of the total Staff Recharge and the remuneration of the independent non-executive director is ¤1,762,906 paid to 21 individuals for the year ended 31 December 2021. The Manager has also determined that, on the basis of number of sub-funds / net asset value of the Fund relative to the number of sub-funds/assets under management, the portion of this figure attributable to the Fund is ¤2,185. The Fund does not pay any fixed or variable remuneration to identified staff of the Investment Manager. The Remuneration Policy and the Manager’s remuneration practices and procedures were amended during the financial year. Also, the committee responsible for remuneration matters for the Manager has changed to the Compliance and AML Committee, a Committee of the Manager’s Board. ## 76 Strategic report Governance Financial statements The offer is made by the prospectus only. ## Ordinary Shares ## 10,011,100 ## This announcement is neither an offer to sell nor a solicitation of an offer to buy these securities. + 77 ## $100,111,000 ## Price $10 per Share Gabelli Merger Plus Trust Plc 19 July 2017 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2022 ## 78 Printed by Park Communications on FSC® certified paper. Park works to the EMAS standard and its Environmental Management System is certified to ISO 14001. 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