THE GABELLI DIVIDEND & INCOME TRUST

                _______________________________________________



                           AUCTION AGENCY AGREEMENT



                           dated as of May __, 2004



                                  Relating to



                   Series B Auction Market Preferred Shares



                                      of



                      THE GABELLI DIVIDEND & INCOME TRUST

                ______________________________________________



                             The Bank of New York,

                               as Auction Agent



                           AUCTION AGENCY AGREEMENT



         This Auction Agency Agreement (this "Agreement"), dated as of May __,

2004, is between The Gabelli Dividend & Income Trust (the "Trust") and The

Bank of New York, a New York banking corporation, as Auction Agent (as defined

below).



         The Trust proposes to issue an aggregate of [__] preferred shares,

par value $0.001 per share, liquidation preference $25,000 per share,

designated as Series B Auction Market Preferred Shares (the "Preferred

Shares"), pursuant to the Statement of Preferences (as defined below).



         The Trust desires that the Auction Agent perform certain duties as

agent in connection with each Auction (as defined below) (in such capacity,

the "Auction Agent"), and as the transfer agent, registrar, dividend paying

agent and redemption price disbursing agent with respect to the Preferred

Shares (in such capacity, the "Paying Agent"), upon the terms and conditions

of this Agreement, and the Trust hereby appoints The Bank of New York as said

Auction Agent.



         NOW, THEREFORE, in consideration of the premises and the mutual

covenants contained herein, the Trust and the Auction Agent agree as follows:



1. Definitions and Rules of Construction.



         1.1 Terms Defined By Reference to the Statement of Preferences.



         Capitalized terms not defined herein shall have the respective

meanings specified in the Statement of Preferences.



         1.2 Terms Defined Herein.



         As used herein and in the Settlement Procedures, each of the

following terms shall have the meaning ascribed to it below, unless the

context otherwise requires:



         (a) "Agent Member" of any Person shall mean the member of, or

participant in, the Securities Depository that will act on behalf of a Bidder.



         (b) "Agreement" shall mean this Agreement.



         (c) "Auction" shall have the meaning specified in Section 2.1 hereof.



         (d) "Auction Procedures" shall mean the auction procedures

constituting Part II of the Statement of Preferences as of the filing thereof.



         (e) "Authorized Officer" of the Auction Agent shall mean each Vice

President, Assistant Vice President and Assistant Treasurer of the Auction

Agent assigned to the Dealing and Trading Group of its Corporate Trust

Department and every other officer or employee of the Auction Agent designated

as an "Authorized Officer" for purposes hereof in a written communication to

the Trust.



         (f) "Broker-Dealer Agreement" shall mean each agreement between the

Auction Agent and a Broker-Dealer substantially in the form attached hereto as

Exhibit A.



         (g) "Preferred Shares" shall mean the preferred shares, par value

$.001 per share, of the Trust designated as its "Series B Auction Market

Preferred Shares" and bearing such further designation as to series as the

Board of Trustees, as the case may be, of the Trust or any committee thereof

shall specify.



         (h) "Rate Multiple" has the meaning provided in Section 2.6.



         (i) "Settlement Procedures" shall mean the Settlement Procedures

attached hereto as Exhibit B.



         (j) "Statement of Preferences" shall mean the Statement of

Preferences Creating and Fixing the Rights of the Series B Auction Market

Preferred Stock.



         (k) "Trust Officer" shall mean the Chairman and Chief Executive

Officer, the President, each Vice President (whether or not designated by a

number or word or words added before or after the title "Vice President"), the

Secretary, the Treasurer, each Assistant Vice President, each Assistant

Secretary and each Assistant Treasurer of the Trust and every other officer or

employee of the Trust designated as a "Trust Officer" for purposes hereof in a

notice to the Auction Agent.



         1.3 Rules of Construction.



         Unless the context or use indicates another or different meaning or

intent, the following rules shall apply to the construction of the Agreement:



         (a) Words importing the singular number shall include the plural

number and vice versa.



         (b) The captions and headings herein are solely for convenience of

reference and shall not constitute a part of the Agreement nor shall they

affect its meaning, construction or effect.



         (c) The words "hereof", "herein", "hereto" and other words of similar

import refer to the Agreement as a whole.

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