Gabelli Equity Trust Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number             811-04700                 

                           The Gabelli Equity Trust Inc.                                  

(Exact name of registrant as specified in charter)

One Corporate Center

                   Rye, New York 10580-1422                   

(Address of principal executive offices) (Zip code)

Bruce N. Alpert

Gabelli Funds, LLC

One Corporate Center

                                 Rye, New York 10580-1422                                

(Name and address of agent for service)

Registrant’s telephone number, including area code: 1-800-422-3554

Date of fiscal year end:  December 31

Date of reporting period:  December 31, 2013

 

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.


Item 1. Reports to Stockholders.

The Report to Shareholders is attached herewith.


The Gabelli Equity Trust Inc.

Annual Report — December 31, 2013

Portfolio Management Team

 

LOGO

To Our Shareholders,

For the year ended December 31, 2013, the net asset value (“NAV”) total return of The Gabelli Equity Trust Inc. (the “Fund”) was 41.9%, compared with total returns of 32.4% and 29.6% for the Standard & Poor’s (“S&P”) 500 Index and the Dow Jones Industrial Average, respectively. The total return for the Fund’s publicly traded shares was 52.4%. The Fund’s NAV per share was $7.23, while the price of the publicly traded shares closed at $7.75 on the New York Stock Exchange (“NYSE”). See below for additional performance information.

Enclosed are the schedule of investments and financial statements as of December 31, 2013.

 

 

Sincerely yours,

 

LOGO

  Bruce N. Alpert
 

President

February 14, 2014

Comparative Results

 

 

Average Annual Returns through December 31, 2013 (a) (Unaudited)       
 
 
Since
Inception
(08/21/86)
  
  
  
    

1 Year

   

5 Year

   

10 Year

   

20 Year

   

25 Year

   

Gabelli Equity Trust

            

NAV Total Return (b)

     41.90     25.34     11.13     10.49     11.08     11.44

Investment Total Return (c)

     52.44        29.86        11.77        10.24        11.80        11.38   

S&P 500 Index

     32.39        17.94        7.41        9.22        10.27        10.04 (d) 

Dow Jones Industrial Average

     29.59        16.69        7.43        10.22        11.25        11.12 (d) 

Nasdaq Composite Index

     40.12        22.92        8.81        8.77        10.04          9.51 (d) 

 

  (a)

Returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. Current performance may be lower or higher than the performance data presented. Visit www.gabelli.com for performance information as of the most recent month end. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The Dow Jones Industrial Average is an unmanaged index of 30 large capitalization stocks. The S&P 500 and the Nasdaq Composite Indices are unmanaged indicators of stock market performance. Dividends are considered reinvested except for the Nasdaq Composite Index. You cannot invest directly in an index.

 
  (b)

Total returns and average annual returns reflect changes in the NAV per share, reinvestment of distributions at NAV on the ex-dividend date, adjustments for rights offerings, spin-offs, and taxes paid on undistributed long term capital gains and are net of expenses. Since inception return is based on an initial NAV of $9.34.

 
  (c)

Total returns and average annual returns reflect changes in closing market values on the NYSE, reinvestment of distributions, and adjustments for rights offerings, spin-offs, and taxes paid on undistributed long term capital gains. Since inception return is based on an initial offering price of $10.00.

 
  (d)

From August 31, 1986, the date closest to the Fund’s inception for which data is available.

 

 


Summary of Portfolio Holdings (Unaudited)

The following table presents portfolio holdings as a percent of total investments as of December 31, 2013:

 

The Gabelli Equity Trust Inc.

  

Food and Beverage

     10.9

Financial Services

     8.2

Cable and Satellite

     8.1

Entertainment

     7.9

Equipment and Supplies

     6.8

Diversified Industrial

     5.5

Energy and Utilities

     5.1

Health Care

     4.3

Automotive: Parts and Accessories

     3.9

Consumer Products

     3.5

Consumer Services

     3.3

Retail

     3.0

Telecommunications

     3.0

Aerospace and Defense

     2.9

Business Services

     2.8

Aviation: Parts and Services

     2.6

Machinery

     2.4

Broadcasting

     1.8

Specialty Chemicals

     1.7

Hotels and Gaming

     1.7
  

U.S. Government Obligations

     1.4

Publishing

     1.4

Electronics

     1.1

Wireless Communications

     0.9

Environmental Services

     0.9

Computer Software and Services

     0.8

Agriculture

     0.7

Automotive

     0.6

Communications Equipment

     0.6

Metals and Mining

     0.5

Transportation

     0.4

Real Estate

     0.4

Closed-End Funds

     0.3

Building and Construction

     0.3

Real Estate Investment Trusts

     0.1

Computer Hardware

     0.1

Manufactured Housing and
Recreational Vehicles

     0.1
  

 

 

 
         100.0
  

 

 

 
 

 

The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at 800-GABELLI (800-422-3554). The Fund’s Form N-Q is available on the SEC’s website at www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.

Proxy Voting

The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.

 

2


The Gabelli Equity Trust Inc.

Portfolio Changes — Quarter Ended December 31, 2013 (Unaudited)

 

 

 

         Shares        Ownership at
December 31,
2013

NET PURCHASES

         

Common Stocks

         

Actavis plc(a)

       13,200          13,200  

Alcoa Inc.

       20,600          110,000  

Allegion plc(b)

       14,334          14,334  

Anadarko Petroleum Corp.

       7,400          37,000  

ARAMARK Holdings Corp.

       13,000          13,000  

Ashland Inc.

       2,900          15,500  

Avon Products Inc.

       2,800          115,000  

B/E Aerospace Inc.

       900          1,000  

Baxter International Inc.

       4,200          26,400  

Beam Inc.

       2,000          163,200  

Blyth Inc.

       17,000          90,000  

BorgWarner Inc.(c)

       54,900          117,600  

BP plc, ADR

       6,000          80,000  

Chemtura Corp.

       5,000          5,000  

Cincinnati Bell Inc.

       100,000          700,000  

CONSOL Energy Inc.

       31,200          50,000  

Coty Inc., Cl. A

       79,000          120,000  

Crimson Wine Group Ltd.

       1,500          18,000  

CST Brands Inc.

       50,000          55,500  

Davide Campari-Milano SpA

       50,000          652,800  

DaVita HealthCare Partners Inc.

       8,000          8,000  

Diebold Inc.

       14,900          86,000  

Discovery Communications Inc., Cl. C

       4,100          83,100  

Forest City Enterprises Inc., Cl. A

       27,000          32,000  

General Mills Inc.

       2,000          49,000  

General Motors Co.

       10,000          10,000  

Griffon Corp.

       4,000          32,000  

Henry Schein Inc.

       800          28,800  

Hillshire Brands Co.

       30,000          232,200  

Intel Corp.

       2,400          79,000  

Intelsat SA

       5,000          5,000  

International Business Machines Corp.

       7,000          7,000  

International Game Technology

       30,000          30,000  

J.C. Penney Co. Inc.

       20,000          50,000  

Johnson Controls Inc.

       3,200          160,600  

Liberty Global plc, Cl. C

       1,900          80,900  

Macquarie Infrastructure Co. LLC

       6,000          6,000  

Merck & Co. Inc.

       2,600          95,200  

Millicom International Cellular SA, SDR

       6,000          13,000  

Murphy USA Inc.

       15,000          15,000  

Navistar International Corp.

       2,100          122,100  

NCR Corp.

       2,400          67,200  

News Corp., Cl. B

       13,000          148,600  

Nobel Biocare Holding AG

       1,400          11,000  

Nobility Homes Inc.

       5,100          20,100  
    Shares   Ownership at
December 31, 
2013

O’Reilly Automotive Inc.

      5,300         92,000  

Penske Automotive Group Inc.

      8,000         8,000  

QTS Realty Trust Inc., Cl. A

      4,500         4,500  

Remy Cointreau SA

      927         38,600  

Rolls-Royce Holdings plc, Cl. C(d)

      103,200,000         103,200,000  

Royce Global Value Trust Inc.(e)

      4,285         4,285  

Ryman Hospitality Properties Inc.

      600         188,800  

Skyline Corp.

      23,000         55,000  

Spirit Aerosystems Holdings Inc., Cl. A

      2,000         2,000  

Telecom Italia SpA

      35,000         600,000  

The ADT Corp.

      9,900         170,000  

The Bank of New York Mellon Corp.

      9,500         204,500  

Time Warner Cable Inc.

      13,000         79,000  

Timken Co.

      90,000         100,000  

Toray Industries Inc.

      7,000         7,000  

Twenty-First Century Fox Inc., Cl. B

      12,600         363,300  

Tyco International Ltd.

      4,200         217,000  

Vivendi SA

      10,500         336,166  

Vodafone Group plc, ADR

      400         75,200  

Rights

       

Turquoise Hill Resources Ltd.,
expire 03/25/14(f)

      72,900         72,900  

NET SALES

       

Common Stocks

       

Accor SA

      (1,400 )       16,000  

Actavis Inc.(a)

      (11,100 )       -  

Allergan Inc.

      (2,000 )       10,000  

AMC Networks Inc., Cl. A

      (5,000 )       273,000  

American Express Co.

      (17,000 )       428,000  

AMETEK Inc.

      (10,000 )       456,000  

Amgen Inc.

      (3,300 )       32,700  

Apache Corp.

      (1,000 )       59,000  

Archer Daniels Midland Co.

      (45,200 )       200,000  

AutoNation Inc.

      (400 )       70,600  

Becton, Dickinson and Co.

      (1,100 )       12,800  

Berkshire Hathaway Inc., Cl. A

      (1 )       127  

Biogen Idec Inc.

      (2,600 )       25,200  

Boston Scientific Corp.

      (30,500 )       275,000  

Bristol-Myers Squibb Co.

      (8,700 )       76,300  

Burger King Worldwide Inc.

      (8,300 )       41,700  

Cablevision Systems Corp., Cl. A

      (36,200 )       1,125,000  

Campbell Soup Co.

      (5,600 )       63,800  

CBS Corp., Cl. A, Voting

      (2,700 )       257,300  

Church & Dwight Co. Inc.

      (4,000 )       20,000  

CLARCOR Inc.

      (6,200 )       113,800  

CMS Energy Corp.

      (3,800 )       22,100  
 

 

See accompanying notes to financial statements.

 

3


The Gabelli Equity Trust Inc.

Portfolio Changes (Continued) — Quarter Ended December 31, 2013 (Unaudited)

 

 

 

         Shares       Ownership at
December 31,
2013

ConocoPhillips

       (1,800 )       202,200  

Corning Inc.

       (10,800 )       462,100  

Corus Entertainment Inc., Cl. B, OTC

       (2,800 )       17,334  

Crane Co.

       (300 )       201,700  

Curtiss-Wright Corp.

       (23,900 )       278,300  

Danone SA

       (17,500 )       204,500  

Dean Foods Co.

       (9,800 )       25,000  

Deere & Co.

       (30,000 )       322,000  

Deutsche Bank AG

       (2,800 )       10,000  

Deutsche Telekom AG, ADR

       (2,200 )       108,900  

Diageo plc, ADR

       (3,500 )       192,500  

DIRECTV

       (24,600 )       398,200  

Discovery Communications Inc., Cl. A

       (9,400 )       79,600  

Dole Food Co. Inc.(g)

       (30,000 )       -  

Donaldson Co. Inc.

       (400 )       372,800  

Dr Pepper Snapple Group Inc.

       (10,200 )       89,800  

E. I. du Pont de Nemours and Co.

       (400 )       20,000  

Eaton Corp. plc

       (135,973 )       8,000  

El Paso Electric Co.

       (11,000 )       217,500  

Endo Health Solutions Inc.

       (11,300 )       10,000  

Energizer Holdings Inc.

       (4,000 )       90,000  

Exelis Inc.

       (14,400 )       225,600  

Flowers Foods Inc.

       (11,500 )       80,000  

Flowserve Corp.

       (13,800 )       277,200  

Fomento Economico Mexicano SAB de CV,
ADR

       (600 )       76,200  

Fortune Brands Home & Security Inc.

       (21,400 )       94,600  

Freeport-McMoRan Copper & Gold Inc.

       (1,800 )       26,000  

G4S plc

       (14,800 )       185,200  

General Electric Co.

       (20,400 )       170,000  

Gerber Scientific Inc., Escrow

       (60,000 )       -  

Gray Television Inc.

       (4,000 )       26,000  

Greif Inc., Cl. A

       (2,400 )       146,300  

Greif Inc., Cl. B

       (2,103 )       12,897  

Grupo Bimbo SAB de CV, Cl. A

       (151,600 )       1,848,400  

Grupo Televisa SAB, ADR

       (7,900 )       612,000  

H&R Block Inc.

       (1,800 )       20,400  

H.B. Fuller Co.

       (6,600 )       24,000  

Halliburton Co.

       (1,600 )       196,400  

Harley-Davidson Inc.

       (2,100 )       23,800  

Heineken NV

       (3,300 )       40,700  

Honeywell International Inc.

       (18,400 )       363,000  

Hospira Inc.

       (5,200 )       29,800  

Huntsman Corp.

       (4,000 )       16,000  

IAC/InterActiveCorp.

       (14,800 )       50,000  

IDEX Corp.

       (12,500 )       269,000  

ITT Corp.

       (1,500 )       126,500  
         Shares       Ownership at
December 31,
2013

Janus Capital Group Inc.

       (5,000 )       260,000  

Jardine Matheson Holdings Ltd.

       (1,300 )       16,700  

Johnson & Johnson

       (3,000 )       37,000  

JPMorgan Chase & Co.

       (2,288 )       56,800  

Kellogg Co.

       (1,100 )       12,800  

Kinder Morgan Inc.

       (24,400 )       50,600  

Kraft Foods Group Inc.

       (4,000 )       45,333  

Las Vegas Sands Corp.

       (400 )       46,800  

Legg Mason Inc.

       (3,000 )       125,000  

Leucadia National Corp.

       (7,900 )       99,100  

Liberty Global plc, Cl. A

       (2,200 )       76,800  

Liberty Media Corp., Cl. A

       (4,400 )       80,300  

Lockheed Martin Corp.

       (3,000 )       -  

Macy’s Inc.

       (6,000 )       341,000  

Mallinckrodt plc

       (5,225 )       -  

Marsh & McLennan Companies Inc.

       (10,000 )       125,000  

Martin Marietta Materials Inc.

       (400 )       5,500  

MasterCard Inc., Cl. A

       (900 )       34,700  

McGraw Hill Financial Inc.

       (400 )       111,600  

Modine Manufacturing Co.

       (20,000 )       200,000  

Molex Inc., Cl. A(h)

       (20,000 )       -  

Mondelēz International Inc., Cl. A

       (5,800 )       257,000  

Monsanto Co.

       (1,500 )       17,000  

Moody’s Corp.

       (400 )       9,000  

News Corp., Cl. A

       (11,300 )       154,900  

Niko Resources Ltd.

       (1,000 )       -  

Northeast Utilities

       (4,200 )       40,000  

Northrop Grumman Corp.

       (1,000 )       17,500  

Oceaneering International Inc.

       (2,800 )       32,400  

Oi SA, ADR

       (9,100 )       329,500  

OMNOVA Solutions Inc.

       (3,000 )       250,000  

Outerwall Inc.

       (10,000 )       -  

PACCAR Inc.

       (6,000 )       75,000  

Park-Ohio Holdings Corp.

       (4,500 )       90,000  

PepsiCo Inc.

       (1,800 )       217,600  

Phillips 66

       (29,000 )       47,200  

Precision Castparts Corp.

       (2,700 )       82,800  

Rayonier Inc.

       (2,500 )       29,000  

Reckitt Benckiser Group plc

       (4,100 )       50,900  

Rockwell Automation Inc.

       (4,100 )       21,900  

Rogers Communications Inc., Cl. B,
New York

       (2,600 )       479,090  

Rollins Inc.

       (65,000 )       1,220,000  

Rowan Companies plc, Cl. A

       (17,000 )       153,000  

Sally Beauty Holdings Inc.

       (2,700 )       33,300  

Scripps Networks Interactive Inc., Cl. A

       (9,200 )       108,800  

Sensient Technologies Corp.

       (7,400 )       192,600  
 

 

See accompanying notes to financial statements.

 

4


The Gabelli Equity Trust Inc.

Portfolio Changes (Continued) — Quarter Ended December 31, 2013 (Unaudited)

 

 

 

         Shares       Ownership at
December 31,
2013

Shaw Communications Inc., Cl. B,
New York

       (30,000 )       120,000  

Southwest Gas Corp.

       (1,500 )       17,000  

Standard Motor Products Inc.

       (7,000 )       130,000  

Starwood Hotels & Resorts Worldwide Inc.

       (2,500 )       29,000  

Starz, Cl. A

       (6,700 )       83,300  

Sulzer AG

       (1,900 )       15,000  

Svenska Cellulosa AB, Cl. B

       (2,400 )       30,000  

Swedish Match AB

       (10,200 )       823,800  

Syngenta AG , ADR

       (1,100 )       12,800  

T. Rowe Price Group Inc.

       (1,200 )       128,400  

TE Connectivity Ltd.

       (3,700 )       42,600  

Telefonica Brasil SA, ADR

       (253 )       81,500  

Telephone & Data Systems Inc.

       (9,000 )       573,300  

Television Broadcasts Ltd.

       (14,800 )       85,200  

TELUS Corp.

       (2,800 )       25,000  

Tenaris SA, ADR

       (6,800 )       45,000  

Texas Instruments Inc.

       (10,000 )       250,000  

The Boeing Co.

       (7,000 )       98,000  

The Charles Schwab Corp.

       (600 )       25,000  

The Coca-Cola Co.

       (800 )       132,600  

The Dun & Bradstreet Corp.

       (1,100 )       12,300  

The Hain Celestial Group Inc.

       (1,500 )       17,000  

The Interpublic Group of Companies Inc.

       (8,400 )       306,600  

The St. Joe Co.

       (5,500 )       189,500  

The Weir Group plc

       (5,200 )       64,800  

The Western Union Co.

       (10,000 )       20,000  

Time Warner Inc.

       (5,000 )       185,200  

Tokyo Broadcasting System Holdings Inc.

       (7,400 )       42,600  

Tootsie Roll Industries Inc.

       (6,677 )       132,300  

Trinity Industries Inc.

       (2,200 )       28,200  

TripAdvisor Inc.

       (2,200 )       8,000  

Twenty-First Century Fox Inc., Cl. A

       (19,600 )       585,200  
         Shares       Ownership at
December 31,
2013

Tyson Foods Inc., Cl. A

       (3,600 )       50,000  

UnitedHealth Group Inc.

       (7,000 )       87,000  

Universal Entertainment Corp.

       (6,700 )       76,600  

Verizon Communications Inc.

       (10,600 )       121,800  

Visa Inc., Cl. A

       (200 )       3,200  

Waddell & Reed Financial Inc., Cl. A

       (11,100 )       37,000  

Walgreen Co.

       (4,600 )       57,400  

Waste Management Inc.

       (7,600 )       162,400  

Watts Water Technologies Inc., Cl. A

       (6,000 )       142,000  

Westar Energy Inc.

       (20,500 )       174,500  

Whole Foods Market Inc.

       (3,900 )       35,000  

William Demant Holding A/S

       (4,500 )       55,500  

Yahoo! Inc.

       (80,000 )       177,000  

Yakult Honsha Co. Ltd.

       (9,000 )       341,000  

Warrants

        

Kinder Morgan Inc., expire 05/25/17

       (20,200 )       115,800  

 

 

(a)

Merger/Reincorporation - 1 new share of Actavis plc for every 1 share of Actavis Inc. held. 2,100 shares were purchased after merger.

(b)

Spin-off - 1 share of Allegion plc for every 3 shares of Ingersoll-Rand plc held.

(c)

Stock Split - 2 shares for every 1 share held. 2,500 shares were sold before stock split. 58,000 shares were purchased after stock split. 60,800 shares were sold after stock split.

(d)

Stock Dividend - 86 shares of Rolls-Royce Holdings plc, Cl. C for every 1 share of Rolls-Royce Holdings plc held.

(e)

Spin-off - 0.1428571428 shares of Royce Global Value Trust Inc. for every 1 share of Royce Value Trust Inc. 1 share was sold after spin-off.

(f)

Rights Issuance - 1 share of Turquoise Hill Resources Ltd., expire 03/25/14 for every 1 share of Turquoise Hill Resources Ltd. held.

(g)

Tender Offer - $13.50 cash for every 1 share held.

(h)

Tender Offer - $38.50 cash, plus $0.18 dividend adjustment per share held.

 

 

See accompanying notes to financial statements.

 

5


The Gabelli Equity Trust Inc.

Schedule of Investments — December 31, 2013

 

 

 

Shares

         

Cost

    

Market
Value

 
   COMMON STOCKS — 98.4%      
   Food and Beverage — 10.9%      
  163,200       Beam Inc.(a)    $ 7,424,402       $ 11,107,392   
  52,500       Brown-Forman Corp., Cl. A      1,761,167         3,872,925   
  18,675       Brown-Forman Corp., Cl. B      1,064,826         1,411,270   
  63,800       Campbell Soup Co.      1,781,130         2,761,264   
  15,000       Coca-Cola Enterprises Inc.      275,289         661,950   
  60,000       ConAgra Foods Inc.      2,125,435         2,022,000   
  30,600      

Constellation Brands Inc.,
Cl. A†

     383,791         2,153,628   
  18,000       Crimson Wine Group Ltd.†      91,848         159,120   
  204,500       Danone SA      9,851,504         14,719,274   
  652,800       Davide Campari-Milano SpA      3,566,380         5,460,206   
  25,000       Dean Foods Co.†      448,232         429,750   
  192,500       Diageo plc, ADR      8,913,966         25,490,850   
  89,800       Dr Pepper Snapple Group Inc.      2,143,930         4,375,056   
  80,000       Flowers Foods Inc.      263,976         1,717,600   
  76,200      

Fomento Economico Mexicano
SAB de CV, ADR

     1,023,214         7,457,694   
  49,000       General Mills Inc.      1,424,718         2,445,590   
  1,848,400       Grupo Bimbo SAB de CV, Cl. A      2,624,249         5,691,087   
  40,700       Heineken NV      1,918,423         2,748,048   
  232,200       Hillshire Brands Co.      6,541,771         7,764,768   
  17,800       Ingredion Inc.      253,704         1,218,588   
  105,000       ITO EN Ltd.      2,422,898         2,194,521   
  12,800       Kellogg Co.      475,305         781,696   
  64,000       Kerry Group plc, Cl. A      735,609         4,445,398   
  45,333       Kraft Foods Group Inc.      1,402,246         2,444,355   
  10,600      

LVMH Moet Hennessy Louis Vuitton SA

     365,943         1,933,636   
  257,000      

Mondelēz International Inc.,
Cl. A

     6,781,720         9,072,100   
  70,000       Morinaga Milk Industry Co. Ltd.      299,202         207,388   
  29,100       Nestlé SA      786,713         2,130,183   
  217,600       PepsiCo Inc.      12,159,446         18,047,744   
  39,200       Pernod Ricard SA      3,228,300         4,465,748   
  37,000       Post Holdings Inc.†      353,395         1,822,990   
  38,600       Remy Cointreau SA      2,242,063         3,238,704   
  132,600       The Coca-Cola Co.      3,211,317         5,477,706   
  17,000       The Hain Celestial Group Inc.†      227,968         1,543,260   
  2,000       The J.M. Smucker Co.      52,993         207,240   
  132,300       Tootsie Roll Industries Inc.      1,911,993         4,305,042   
  50,000       Tyson Foods Inc., Cl. A      421,291         1,673,000   
  43,347       WhiteWave Foods Co., Cl. A†      719,878         994,380   
  341,000       Yakult Honsha Co. Ltd.      9,700,538         17,194,094   
     

 

 

    

 

 

 
        101,380,773         185,847,245   
     

 

 

    

 

 

 
   Financial Services — 8.2%      
  428,000       American Express Co.(a)      22,874,732         38,832,440   
  13,200      

Argo Group International
Holdings Ltd.

     434,487         613,668   
  72,000       Banco Santander SA, ADR      545,542         653,040   
  127       Berkshire Hathaway Inc., Cl. A†      544,374         22,593,300   

Shares

         

Cost

    

Market
Value

 
  10,000      

Calamos Asset Management
Inc., Cl. A

   $ 88,164       $ 118,400   
  18,800       CIT Group Inc.      776,644         980,044   
  106,500       Citigroup Inc.      3,864,872         5,549,715   
  10,000       Deutsche Bank AG      457,248         482,400   
  10,000      

Fortress Investment Group LLC,
Cl. A

     49,693         85,600   
  20,400       H&R Block Inc.      353,425         592,416   
  40,000      

Interactive Brokers Group Inc.,
Cl. A

     643,310         973,600   
  260,000       Janus Capital Group Inc.      2,790,080         3,216,200   
  56,800       JPMorgan Chase & Co.      1,944,615         3,321,664   
  35,000       Kinnevik Investment AB, Cl. A      569,727         1,628,692   
  125,000       Legg Mason Inc.      2,560,368         5,435,000   
  99,100       Leucadia National Corp.      1,372,835         2,808,494   
  10,000       Loews Corp.      384,673         482,400   
  125,000      

Marsh & McLennan Companies
Inc.

     3,772,923         6,045,000   
  9,000       Moody’s Corp.      312,150         706,230   
  22,000      

Och-Ziff Capital Management
Group LLC, Cl. A

     214,559         325,600   
  4,285       Royce Global Value Trust Inc.†      37,280         38,094   
  120,000       State Street Corp.      4,047,374         8,806,800   
  17,000       SunTrust Banks Inc.      358,050         625,770   
  128,400       T. Rowe Price Group Inc.      3,946,862         10,756,068   
  204,500      

The Bank of New York Mellon
Corp.

     6,139,410         7,145,230   
  25,000       The Charles Schwab Corp.      365,313         650,000   
  12,300       The Dun & Bradstreet Corp.      292,691         1,509,825   
  20,000       The Western Union Co.      283,994         345,000   
  13,000       W. R. Berkley Corp.      476,775         564,070   
  37,000      

Waddell & Reed Financial Inc.,
Cl. A

     825,958         2,409,440   
  270,000       Wells Fargo & Co.      8,051,764         12,258,000   
     

 

 

    

 

 

 
        69,379,892         140,552,200   
     

 

 

    

 

 

 
   Cable and Satellite — 8.1%      
  273,000      

AMC Networks Inc., Cl. A†

     11,508,792         18,594,030   
  1,125,000      

Cablevision Systems Corp.,
Cl. A

     13,583,610         20,171,250   
  86,400      

Comcast Corp., Cl. A, Special

     835,556         4,309,632   
  398,200       DIRECTV†      15,372,913         27,511,638   
  100,000       DISH Network Corp., Cl. A†      2,524,679         5,792,000   
  34,440      

EchoStar Corp., Cl. A†

     1,065,233         1,712,357   
  5,000       Intelsat SA†      98,700         112,700   
  76,800       Liberty Global plc, Cl. A†      1,643,801         6,834,432   
  80,900       Liberty Global plc, Cl. C†      2,068,334         6,821,488   
  479,090      

Rogers Communications Inc.,
Cl. B, New York

     3,985,689         21,678,823   
  19,310      

Rogers Communications Inc.,
Cl. B, Toronto

     137,424         873,835   
 

 

See accompanying notes to financial statements.

 

6


The Gabelli Equity Trust Inc.

Schedule of Investments (Continued) — December 31, 2013

 

 

 

Shares

         

Cost

    

Market
Value

 
   COMMON STOCKS (Continued)      
   Cable and Satellite (Continued)      
  108,800      

Scripps Networks Interactive
Inc., Cl. A

   $ 3,513,944       $ 9,401,408   
  120,000      

Shaw Communications Inc.,
Cl. B, New York

     354,632         2,920,800   
  40,000      

Shaw Communications Inc.,
Cl. B, Toronto

     52,983         973,406   
  79,000       Time Warner Cable Inc.      5,812,160         10,704,500   
     

 

 

    

 

 

 
          62,558,450           138,412,299   
     

 

 

    

 

 

 
   Entertainment — 7.9%      
  79,600      

Discovery Communications Inc.,
Cl. A†

     2,950,872         7,197,432   
  83,100      

Discovery Communications Inc.,
Cl. C†

     1,328,223         6,968,766   
  612,000      

Grupo Televisa SAB, ADR

     7,989,641         18,519,120   
  32,000      

Societe d’Edition de Canal +

     34,010         272,940   
  83,300      

Starz, Cl. A†

     330,827         2,435,692   
  305,000      

The Madison Square Garden
Co., Cl. A†

     5,463,532         17,561,900   
  185,200      

Time Warner Inc.

     7,573,022         12,912,144   
  42,600      

Tokyo Broadcasting System
Holdings Inc.

     865,234         528,303   
  585,200      

Twenty-First Century Fox Inc.,
Cl. A

     5,721,741         20,587,336   
  363,300      

Twenty-First Century Fox Inc.,
Cl. B

     5,456,601         12,570,180   
  76,600      

Universal Entertainment Corp.

     1,325,152         1,411,110   
  289,500      

Viacom Inc., Cl. A

     13,568,454         25,409,415   
  336,166      

Vivendi SA

     8,613,790         8,858,522   
     

 

 

    

 

 

 
        61,221,099         135,232,860   
     

 

 

    

 

 

 
   Equipment and Supplies — 6.8%      
  456,000      

AMETEK Inc.

     3,274,418         24,017,520   
  3,500      

Amphenol Corp., Cl. A

     12,928         312,130   
  94,000      

CIRCOR International Inc.

     1,246,366         7,593,320   
  372,800      

Donaldson Co. Inc.

     3,261,704         16,201,888   
  277,200      

Flowserve Corp.

     3,744,879         21,851,676   
  40,700      

Franklin Electric Co. Inc.

     229,059         1,816,848   
  72,400      

GrafTech International Ltd.†

     694,817         813,052   
  269,000      

IDEX Corp.

     7,414,410         19,865,650   
  49,000      

Ingersoll-Rand plc

     1,012,714         3,018,400   
  22,000      

Mueller Industries Inc.

     1,014,246         1,386,220   
  13,000      

Sealed Air Corp.

     208,280         442,650   
  45,000      

Tenaris SA, ADR

     1,981,220         1,966,050   
  15,000      

The Greenbrier Companies
Inc.†

     297,309         492,600   
  4,000      

The Manitowoc Co. Inc.

     25,450         93,280   
  64,800      

The Weir Group plc

     272,671         2,287,766   
  100,000      

Timken Co.

     5,443,961         5,507,000   

Shares

         

Cost

    

Market
Value

 
  142,000      

Watts Water Technologies Inc.,
Cl. A

   $ 2,997,499       $ 8,785,540   
     

 

 

    

 

 

 
          33,131,931           116,451,590   
     

 

 

    

 

 

 
   Diversified Industrial — 5.4%      
  3,000      

Acuity Brands Inc.

     76,507         327,960   
  152,000      

Ampco-Pittsburgh Corp.

     1,976,139         2,956,400   
  201,700      

Crane Co.

     4,987,226         13,564,325   
  8,000      

Eaton Corp. plc

     415,245         608,960   
  170,000      

General Electric Co.

     3,076,930         4,765,100   
  146,300      

Greif Inc., Cl. A

     1,574,786         7,666,120   
  12,897      

Greif Inc., Cl. B

     639,903         757,957   
  32,000      

Griffon Corp.

     298,790         422,720   
  363,000      

Honeywell International Inc.

     13,406,057         33,167,310   
  126,500      

ITT Corp.

     1,497,869         5,492,630   
  11,000      

Jardine Strategic Holdings Ltd.

     222,951         352,000   
  2,000      

Kennametal Inc.

     77,640         104,140   
  26,000      

Material Sciences Corp.†

     26,265         307,060   
  90,000      

Park-Ohio Holdings Corp.†

     930,280         4,716,000   
  37,400      

Pentair Ltd.

     1,292,773         2,904,858   
  30,000      

Rexnord Corp.†

     630,867         810,300   
  15,000      

Sulzer AG

     739,785         2,419,707   
  7,000      

Toray Industries Inc.

     49,349         48,390   
  10,000      

Tredegar Corp.

     136,250         288,100   
  28,200      

Trinity Industries Inc.

     712,233         1,537,464   
  217,000      

Tyco International Ltd.

     5,366,438         8,905,680   
     

 

 

    

 

 

 
        38,134,283         92,123,181   
     

 

 

    

 

 

 
   Energy and Utilities — 5.1%      
  16,000      

ABB Ltd., ADR

     249,120         424,960   
  37,000      

Anadarko Petroleum Corp.

     2,080,728         2,934,840   
  59,000      

Apache Corp.

     2,771,519         5,070,460   
  80,000      

BP plc, ADR

     3,952,168         3,888,800   
  22,100      

CMS Energy Corp.

     141,190         591,617   
  202,200      

ConocoPhillips

     9,359,464         14,285,430   
  50,000      

CONSOL Energy Inc.

     1,876,269         1,902,000   
  15,400      

Duke Energy Corp.

     837,476         1,062,754   
  217,500      

El Paso Electric Co.

     4,977,269         7,636,425   
  69,400      

Exxon Mobil Corp.

     2,391,496         7,023,280   
  140,000      

GenOn Energy Inc., Escrow†

     0         0   
  196,400      

Halliburton Co.

     3,831,496         9,967,300   
  50,600      

Kinder Morgan Inc.

     1,453,014         1,821,600   
  10,000      

Marathon Oil Corp.

     278,414         353,000   
  6,000      

Marathon Petroleum Corp.

     186,212         550,380   
  15,000      

Murphy USA Inc.†

     676,524         623,400   
  5,000      

National Fuel Gas Co.

     375,876         357,000   
  20,400      

NextEra Energy Inc.

     1,110,264         1,746,648   
  2,000      

Niko Resources Ltd.†

     110,842         4,704   
  40,000      

Northeast Utilities

     873,522         1,695,600   
  32,400      

Oceaneering International Inc.

     437,629         2,555,712   
  47,200      

Phillips 66

     2,450,746         3,640,536   
  153,000      

Rowan Companies plc, Cl. A†

     5,743,460         5,410,080   
  28,000      

RPC Inc.

     363,509         499,800   
 

 

See accompanying notes to financial statements.

 

7


The Gabelli Equity Trust Inc.

Schedule of Investments (Continued) — December 31, 2013

 

 

 

Shares

         

Cost

    

Market
Value

 
   COMMON STOCKS (Continued)      
   Energy and Utilities (Continued)      
  5,000      

SJW Corp.

   $ 68,704       $ 148,950   
  17,000      

Southwest Gas Corp.

     389,070         950,470   
  111,100      

Spectra Energy Corp.

     2,779,246         3,957,382   
  55,500      

The AES Corp.

     318,043         805,305   
  9,000      

Transocean Ltd.

     442,041         444,780   
  35,000      

Weatherford International Ltd.†

     503,431         542,150   
  174,500      

Westar Energy Inc.

     2,904,704         5,613,665   
     

 

 

    

 

 

 
          53,933,446           86,509,028   
     

 

 

    

 

 

 
   Health Care — 4.3%      
  13,200      

Actavis plc†

     1,938,602         2,217,600   
  10,000      

Allergan Inc.

     465,214         1,110,800   
  32,700      

Amgen Inc.

     2,023,813         3,733,032   
  26,400      

Baxter International Inc.

     1,325,410         1,836,120   
  12,800      

Becton, Dickinson and Co.

     1,024,120         1,414,272   
  25,200      

Biogen Idec Inc.†

     1,398,502         7,049,700   
  275,000      

Boston Scientific Corp.†

     1,968,361         3,305,500   
  76,300      

Bristol-Myers Squibb Co.

     1,919,054         4,055,345   
  49,000      

Covidien plc

     1,756,167         3,336,900   
  8,000      

DaVita HealthCare Partners
Inc.†

     489,395         506,960   
  10,000      

Endo Health Solutions Inc.†

     320,069         674,600   
  20,000      

Express Scripts Holding Co.†

     1,328,989         1,404,800   
  28,800      

Henry Schein Inc.†

     999,862         3,290,688   
  29,800      

Hospira Inc.†

     964,141         1,230,144   
  37,000      

Johnson & Johnson

     2,400,670         3,388,830   
  65,000      

Life Technologies Corp.†

     4,918,309         4,927,000   
  34,000      

Mead Johnson Nutrition Co.

     1,527,559         2,847,840   
  95,200      

Merck & Co. Inc.

     2,219,590         4,764,760   
  11,000      

Nobel Biocare Holding AG

     297,055         171,403   
  89,800      

Novartis AG, ADR

     4,073,366         7,218,124   
  15,000      

Teva Pharmaceutical Industries
Ltd., ADR

     581,414         601,200   
  87,000      

UnitedHealth Group Inc.

     4,489,729         6,551,100   
  4,000      

Waters Corp.†

     285,470         400,000   
  55,500      

William Demant Holding A/S†

     2,528,275         5,393,666   
  8,600      

Zimmer Holdings Inc.

     435,897         801,434   
  16,000      

Zoetis Inc.

     416,000         523,040   
     

 

 

    

 

 

 
        42,095,033         72,754,858   
     

 

 

    

 

 

 
   Automotive: Parts and Accessories — 3.9%      
  117,600      

BorgWarner Inc.

     4,353,228         6,575,016   
  113,800      

CLARCOR Inc.

     1,584,023         7,323,030   
  215,000      

Dana Holding Corp.

     1,440,698         4,218,300   
  245,000      

Genuine Parts Co.

     8,686,915         20,381,550   
  160,600      

Johnson Controls Inc.

     3,803,198         8,238,780   
  200,000      

Modine Manufacturing Co.†

     4,252,670         2,564,000   
  92,000      

O’Reilly Automotive Inc.†

     3,284,385         11,841,320   
  130,000      

Standard Motor Products Inc.

     1,345,271         4,784,000   

Shares

         

Cost

    

Market
Value

 
  70,000      

Superior Industries International Inc.

   $ 1,405,635       $ 1,444,100   
     

 

 

    

 

 

 
        30,156,023         67,370,096   
     

 

 

    

 

 

 
   Consumer Products — 3.5%      
  115,000      

Avon Products Inc.

     2,221,952         1,980,300   
  90,000      

Blyth Inc.

     1,572,687         979,200   
  15,300      

Christian Dior SA

     579,339         2,890,982   
  20,000      

Church & Dwight Co. Inc.

     66,357         1,325,600   
  120,000      

Coty Inc., Cl. A

     1,928,375         1,830,000   
  20,000      

Crocs Inc.†

     295,554         318,400   
  90,000      

Energizer Holdings Inc.

     4,583,603         9,741,600   
  2,100      

Givaudan SA

     725,396         2,999,159   
  44,200      

Hanesbrands Inc.

     1,026,897         3,105,934   
  23,800      

Harley-Davidson Inc.

     1,105,662         1,647,912   
  6,000      

Jarden Corp.†

     91,909         368,100   
  7,000      

Mattel Inc.

     126,000         333,060   
  11,383      

National Presto Industries Inc.

     542,365         916,332   
  10,000      

Oil-Dri Corp. of America

     171,255         378,400   
  50,900      

Reckitt Benckiser Group plc

     1,554,668         4,039,936   
  30,000      

Svenska Cellulosa AB, Cl. B

     404,760         923,529   
  823,800      

Swedish Match AB

     9,125,578         26,474,414   
  2,000      

The Estee Lauder Companies
Inc., Cl. A

     72,260         150,640   
     

 

 

    

 

 

 
          26,194,617           60,403,498   
     

 

 

    

 

 

 
   Consumer Services — 3.3%      
  14,334      

Allegion plc†

     232,677         633,419   
  50,000      

IAC/InterActiveCorp.

     1,277,636         3,434,500   
  205,000      

Liberty Interactive Corp., Cl. A†

     3,861,726         6,016,750   
  15,451      

Liberty Ventures, Cl. A†

     710,069         1,894,138   
  1,220,000      

Rollins Inc.

     12,716,683         36,953,800   
  170,000      

The ADT Corp.

     5,845,919         6,879,900   
  8,000      

TripAdvisor Inc.†

     282,851         662,640   
     

 

 

    

 

 

 
        24,927,561         56,475,147   
     

 

 

    

 

 

 
   Retail — 3.0%      
  70,600      

AutoNation Inc.†

     741,397         3,508,114   
  41,700      

Burger King Worldwide Inc.

     657,629         953,262   
  40,000      

Costco Wholesale Corp.

     1,843,960         4,760,400   
  55,500      

CST Brands Inc.

     1,790,334         2,037,960   
  120,000      

CVS Caremark Corp.

     4,075,042         8,588,400   
  25,900      

HSN Inc.

     664,588         1,613,570   
  50,000      

J.C. Penney Co. Inc.†

     644,777         457,500   
  341,000      

Macy’s Inc.

     6,368,108         18,209,400   
  8,000      

Penske Automotive Group Inc.

     309,805         377,280   
  33,300      

Sally Beauty Holdings Inc.†

     264,056         1,006,659   
  13,000      

The Cheesecake Factory Inc.

     380,728         627,510   
  3,000      

Tiffany & Co.

     171,090         278,340   
  57,400      

Walgreen Co.

     1,728,566         3,297,056   
  36,100      

Wal-Mart Stores Inc.

     1,816,342         2,840,709   
 

 

See accompanying notes to financial statements.

 

8


The Gabelli Equity Trust Inc.

Schedule of Investments (Continued) — December 31, 2013

 

 

 

Shares

        

Cost

    

Market
Value

 
  COMMON STOCKS (Continued)      
  Retail (Continued)      
  35,000     

Whole Foods Market Inc.

   $ 341,631       $ 2,024,050   
    

 

 

    

 

 

 
         21,798,053           50,580,210   
    

 

 

    

 

 

 
  Aerospace and Defense — 2.9%      
  616,615     

BBA Aviation plc

     1,488,708         3,273,610   
  225,600     

Exelis Inc.

     1,690,286         4,299,936   
  35,800     

Kaman Corp.

     881,634         1,422,334   
  17,500     

Northrop Grumman Corp.

     900,365         2,005,675   
  1,200,000     

Rolls-Royce Holdings plc

     9,166,092         25,336,157   
  103,200,000     

Rolls-Royce Holdings plc,
Cl. C†(b)(c)

     166,664         170,895   
  98,000     

The Boeing Co.(a)

     6,288,497         13,376,020   
    

 

 

    

 

 

 
       20,582,246         49,884,627   
    

 

 

    

 

 

 
  Telecommunications — 2.9%      
  55,400     

BCE Inc.

     1,226,373         2,398,266   
  1,000,000     

BT Group plc, Cl. A

     4,135,105         6,282,705   
  700,000     

Cincinnati Bell Inc.†

     3,430,473         2,492,000   
  108,900     

Deutsche Telekom AG, ADR

     1,805,375         1,879,614   
  36,000     

Hellenic Telecommunications
Organization SA†

     452,922         478,910   
  15,000     

Hellenic Telecommunications
Organization SA, ADR†

     91,062         97,500   
  264,732     

Koninklijke KPN NV†

     448,166         853,305   
  7,040,836     

LIME†(c)

     128,658         11,292   
  329,500     

Oi SA, ADR

     2,493,819         523,905   
  29,000     

Oi SA, Cl. C, ADR

     265,522         47,560   
  31,053     

Sprint Corp.†

     176,071         333,820   
  21,000     

Telecom Argentina SA, ADR

     127,554         362,040   
  600,000     

Telecom Italia SpA

     2,342,466         595,130   
  81,500     

Telefonica Brasil SA, ADR

     1,675,765         1,566,430   
  597,315     

Telefonica SA, ADR

     9,146,761         9,760,127   
  573,300     

Telephone & Data Systems Inc.

     24,644,307         14,779,674   
  25,000     

TELUS Corp.

     233,734         860,438   
  121,800     

Verizon Communications Inc.

     4,037,085         5,985,252   
    

 

 

    

 

 

 
       56,861,218         49,307,968   
    

 

 

    

 

 

 
  Business Services — 2.8%   
  10,000     

ACCO Brands Corp.†

     70,117         67,200   
  13,000     

ARAMARK Holdings Corp.†

     287,155         340,860   
  159,000     

Clear Channel Outdoor Holdings Inc., Cl. A

     1,236,036         1,612,260   
  33,000 (d)   

Contax Participacoes SA†

     67,778         279,750   
  86,000     

Diebold Inc.

     3,094,600         2,838,860   
  4,000     

Edenred

     57,883         133,884   
  185,200     

G4S plc

     0         805,044   
  16,700     

Jardine Matheson Holdings Ltd.

     533,749         873,577   
  88,000     

Landauer Inc.

     2,472,818         4,629,680   
  6,000     

Macquarie Infrastructure Co. LLC

     316,920         326,580   

Shares

         

Cost

    

Market
Value

 
  34,700      

MasterCard Inc., Cl. A

   $ 3,314,170       $ 28,990,462   
  10,000      

Monster Worldwide Inc.†

     87,351         71,300   
  306,600      

The Interpublic Group of
Companies Inc.

     3,030,380         5,426,820   
  3,200      

Visa Inc., Cl. A

     140,800         712,576   
     

 

 

    

 

 

 
          14,709,757           47,108,853   
     

 

 

    

 

 

 
   Aviation: Parts and Services — 2.6%      
  1,000      

B/E Aerospace Inc.†

     75,711         87,030   
  278,300      

Curtiss-Wright Corp.

     8,603,243         17,318,609   
  275,000      

GenCorp Inc.†

     2,370,094         4,955,500   
  82,800      

Precision Castparts Corp.

     4,589,141         22,298,040   
  2,000      

Spirit Aerosystems Holdings
Inc., Cl. A†

     62,973         68,160   
     

 

 

    

 

 

 
        15,701,162         44,727,339   
     

 

 

    

 

 

 
   Machinery — 2.4%      
  12,800      

Caterpillar Inc.

     86,323         1,162,368   
  53,592      

CNH Industrial NV†

     464,629         608,269   
  322,000      

Deere & Co.(a)

     9,668,773         29,408,260   
  289,600      

Xylem Inc.

     6,927,287         10,020,160   
     

 

 

    

 

 

 
        17,147,012         41,199,057   
     

 

 

    

 

 

 
   Broadcasting — 1.8%      
  257,300      

CBS Corp., Cl. A, Voting

     7,749,192         16,374,572   
  2,000      

Cogeco Inc.

     39,014         92,219   
  17,334      

Corus Entertainment Inc., Cl. B, OTC

     30,215         419,136   
  6,666      

Corus Entertainment Inc., Cl. B, Toronto

     12,406         161,402   
  26,000      

Gray Television Inc.†

     26,192         386,880   
  80,300      

Liberty Media Corp., Cl. A†

     6,142,009         11,759,935   
  24,000      

LIN Media LLC, Cl. A†

     372,000         689,040   
  85,200      

Television Broadcasts Ltd.

     339,712         569,699   
     

 

 

    

 

 

 
        14,710,740         30,452,883   
     

 

 

    

 

 

 
   Specialty Chemicals — 1.7%      
  15,500      

Ashland Inc.

     815,358         1,504,120   
  5,000      

Chemtura Corp.†

     132,900         139,600   
  20,000      

E. I. du Pont de Nemours and Co.

     899,328         1,299,400   
  425,000      

Ferro Corp.†

     3,974,417         5,452,750   
  8,000      

FMC Corp.

     136,430         603,680   
  24,000      

H.B. Fuller Co.

     504,689         1,248,960   
  16,000      

Huntsman Corp.

     226,053         393,600   
  62,000      

International Flavors & Fragrances Inc.

     2,933,750         5,330,760   
  250,000      

OMNOVA Solutions Inc.†

     1,510,743         2,277,500   
  192,600      

Sensient Technologies Corp.

     4,877,366         9,344,952   
  2,000      

SGL Carbon SE

     68,557         79,172   
  95,000      

Zep Inc.

     1,243,246         1,725,200   
     

 

 

    

 

 

 
        17,322,837         29,399,694   
     

 

 

    

 

 

 
 

 

See accompanying notes to financial statements.

 

9


The Gabelli Equity Trust Inc.

Schedule of Investments (Continued) — December 31, 2013

 

 

 

Shares

         

Cost

    

Market
Value

 
   COMMON STOCKS (Continued)      
   Hotels and Gaming — 1.7%      
  16,000      

Accor SA

   $ 549,282       $ 754,987   
  70,000      

Genting Singapore plc

     52,525         82,927   
  8,000      

Hyatt Hotels Corp., Cl. A†

     263,258         395,680   
  30,000      

International Game Technology

     535,752         544,800   
  27,200      

Interval Leisure Group Inc.

     513,097         840,480   
  1,070,000      

Ladbrokes plc

     5,855,054         3,169,884   
  46,800      

Las Vegas Sands Corp.

     708,817         3,691,116   
  3,650,000      

Mandarin Oriental International
Ltd.

     6,850,139         6,095,500   
  90,000      

MGM China Holdings Ltd.

     177,759         384,174   
  25,000      

MGM Resorts International†

     258,037         588,000   
  45,000      

Orient-Express Hotels Ltd.,
Cl. A†

     621,367         679,950   
  34,000      

Pinnacle Entertainment Inc.†

     161,420         883,660   
  188,800      

Ryman Hospitality Properties Inc.

     5,121,573         7,888,064   
  29,000      

Starwood Hotels & Resorts Worldwide Inc.

     446,065         2,304,050   
  200,000      

The Hongkong & Shanghai Hotels Ltd.

     155,450         271,333   
  2,000      

Wynn Resorts Ltd.

     61,976         388,420   
     

 

 

    

 

 

 
        22,331,571         28,963,025   
     

 

 

    

 

 

 
   Publishing — 1.4%      
  100,000      

Il Sole 24 Ore SpA†

     198,073         82,955   
  111,600      

McGraw Hill Financial Inc.

     4,595,648         8,727,120   
  130,000      

Media General Inc.†

     1,142,790         2,938,000   
  104,000      

Meredith Corp.

     4,447,392         5,387,200   
  154,900      

News Corp., Cl. A†

     965,203         2,791,298   
  148,600      

News Corp., Cl. B†

     1,640,044         2,649,538   
  25,000      

The E.W. Scripps Co., Cl. A†

     157,281         543,000   
     

 

 

    

 

 

 
        13,146,431         23,119,111   
     

 

 

    

 

 

 
   Electronics — 1.1%      
  18,000      

Bel Fuse Inc., Cl. A

     524,289         349,560   
  4,000      

Hitachi Ltd., ADR

     287,076         305,640   
  79,000      

Intel Corp.

     1,707,504         2,050,840   
  31,985      

Koninklijke Philips NV

     115,982         1,182,485   
  45,000      

LSI Corp.

     493,875         495,900   
  2,400      

Mettler-Toledo International Inc.†

     337,271         582,216   
  42,600      

TE Connectivity Ltd.

     1,656,580         2,347,686   
  250,000      

Texas Instruments Inc.

     7,806,091         10,977,500   
     

 

 

    

 

 

 
        12,928,668         18,291,827   
     

 

 

    

 

 

 
   Wireless Communications — 0.9%      
  110,800      

America Movil SAB de CV, Cl. L, ADR

     760,404         2,589,396   
  850,000      

Cable & Wireless Communications plc

     551,036         791,755   

Shares

         

Cost

    

Market
Value

 
  13,000      

Millicom International Cellular SA, SDR

   $ 1,272,184       $ 1,294,573   
  150,000      

NTT DoCoMo Inc.

     2,980,751         2,457,032   
  50,075      

Tim Participacoes SA, ADR

     371,251         1,313,968   
  104,600      

United States Cellular Corp.

     4,965,942         4,374,372   
  75,200      

Vodafone Group plc, ADR

     2,019,992         2,956,112   
     

 

 

    

 

 

 
        12,921,560         15,777,208   
     

 

 

    

 

 

 
   Environmental Services — 0.9%      
  224,400      

Republic Services Inc.

     4,947,896         7,450,080   
  162,400      

Waste Management Inc.

     4,671,752         7,286,888   
     

 

 

    

 

 

 
        9,619,648         14,736,968   
     

 

 

    

 

 

 
   Computer Software and Services — 0.8%      
  7,000      

Check Point Software
Technologies Ltd.†

     118,774         451,640   
  16,000      

Electronic Arts Inc.†

     229,669         367,040   
  25,000      

InterXion Holding NV†

     367,395         590,250   
  67,200      

NCR Corp.†

     886,109         2,288,832   
  21,900      

Rockwell Automation Inc.

     695,220         2,587,704   
  20,000      

VeriFone Systems Inc.†

     477,903         536,400   
  177,000      

Yahoo! Inc.†

     3,867,319         7,157,880   
     

 

 

    

 

 

 
          6,642,389           13,979,746   
     

 

 

    

 

 

 
   Agriculture — 0.7%      
  200,000      

Archer Daniels Midland Co.

     4,691,883         8,680,000   
  17,000      

Monsanto Co.

     755,020         1,981,350   
  12,800      

Syngenta AG, ADR

     186,484         1,023,232   
  10,000      

The Mosaic Co.

     428,085         472,700   
     

 

 

    

 

 

 
        6,061,472         12,157,282   
     

 

 

    

 

 

 
   Automotive — 0.6%      
  20,000      

Ford Motor Co.

     310,850         308,600   
  10,000      

General Motors Co.†

     409,483         408,700   
  122,100      

Navistar International Corp.†

     3,045,534         4,662,999   
  75,000      

PACCAR Inc.

     327,796         4,437,750   
     

 

 

    

 

 

 
        4,093,663         9,818,049   
     

 

 

    

 

 

 
   Communications Equipment — 0.6%      
  55,400      

Cisco Systems Inc.

     1,087,568         1,243,730   
  462,100      

Corning Inc.

     4,297,587         8,234,622   
     

 

 

    

 

 

 
        5,385,155         9,478,352   
     

 

 

    

 

 

 
   Metals and Mining — 0.5%      
  37,400      

Agnico Eagle Mines Ltd.

     1,530,570         986,612   
  110,000      

Alcoa Inc.

     1,014,118         1,169,300   
  54,600      

Barrick Gold Corp.

     1,598,688         962,598   
  26,000      

Freeport-McMoRan Copper & Gold Inc.

     903,831         981,240   
  4,800      

Materion Corp.

     108,162         148,080   
  50,000      

New Hope Corp. Ltd.

     67,580         148,667   
  144,400      

Newmont Mining Corp.

     5,135,669         3,325,532   
  72,900      

Turquoise Hill Resources Ltd.†

     456,325         240,570   
 

 

See accompanying notes to financial statements.

 

10


The Gabelli Equity Trust Inc.

Schedule of Investments (Continued) — December 31, 2013

 

 

 

Shares

         

Cost

    

Market
Value

 
   COMMON STOCKS (Continued)      
   Metals and Mining (Continued)      
  12,000       Vale SA, ADR    $ 215,984       $ 183,000   
     

 

 

    

 

 

 
        11,030,927         8,145,599   
     

 

 

    

 

 

 
   Transportation — 0.4%      
  139,800       GATX Corp.      4,452,896         7,293,366   
     

 

 

    

 

 

 
   Real Estate — 0.4%      
  32,000      

Forest City Enterprises Inc.,
Cl. A†

     624,690         611,200   
  55,500       Griffin Land & Nurseries Inc.      529,368         1,852,590   
  189,500       The St. Joe Co.†      3,696,635         3,636,505   
     

 

 

    

 

 

 
        4,850,693         6,100,295   
     

 

 

    

 

 

 
   Closed-End Funds — 0.3%      
  30,000       Royce Value Trust Inc.      368,797         480,000   
  95,636      

The Central Europe, Russia, and Turkey Fund Inc.

     2,486,189         2,921,680   
  74,871       The New Germany Fund Inc.      834,068         1,492,179   
     

 

 

    

 

 

 
        3,689,054         4,893,859   
     

 

 

    

 

 

 
   Building and Construction — 0.3%      
  94,600      

Fortune Brands Home & Security Inc.

     914,362         4,323,220   
  20,000       Layne Christensen Co.†      380,656         341,600   
     

 

 

    

 

 

 
        1,295,018         4,664,820   
     

 

 

    

 

 

 
   Real Estate Investment Trusts — 0.1%      
  1,800       Camden Property Trust      33,741         102,384   
  4,500       QTS Realty Trust Inc., Cl. A      94,500         111,510   
  29,000       Rayonier Inc.      618,380         1,220,900   
     

 

 

    

 

 

 
        746,621         1,434,794   
     

 

 

    

 

 

 
   Computer Hardware — 0.1%      
  7,000      

International Business Machines
Corp.

     1,232,957         1,312,990   
     

 

 

    

 

 

 
   Manufactured Housing and Recreational Vehicles — 0.1%   
  5,500       Martin Marietta Materials Inc.      115,650         549,670   
  20,100       Nobility Homes Inc.†      258,217         181,101   
  55,000       Skyline Corp.†      644,888         283,250   
     

 

 

    

 

 

 
        1,018,755         1,014,021   
     

 

 

    

 

 

 
   TOTAL COMMON STOCKS      843,393,611         1,675,973,945   
     

 

 

    

 

 

 
   CONVERTIBLE PREFERRED STOCKS — 0.1%   
   Telecommunications — 0.1%      
  22,000      

Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B

     613,103         1,003,420   
     

 

 

    

 

 

 
   RIGHTS — 0.0%      
   Metals and Mining — 0.0%      
  72,900      

Turquoise Hill Resources Ltd.,
expire 03/25/14†

     128,707         69,984   
     

 

 

    

 

 

 

Shares

         

Cost

    

Market
Value

 
   WARRANTS — 0.0%      
   Energy and Utilities — 0.0%      
  115,800      

Kinder Morgan Inc., expire 05/25/17†

   $ 139,263       $ 470,148   
     

 

 

    

 

 

 

Principal
Amount

                    
   CONVERTIBLE CORPORATE BONDS — 0.1%   
   Diversified Industrial — 0.1%      
  $  2,000,000      

Griffon Corp., Sub. Deb.,
4.000%, 01/15/17(e)

     2,000,000         2,356,250   
     

 

 

    

 

 

 
   U.S. GOVERNMENT OBLIGATIONS — 1.4%   
  24,413,000      

U.S. Treasury Bills,
0.020% to 0.130%††,
01/16/14 to 06/26/14(f)

     24,407,176         24,408,345   
     

 

 

    

 

 

 

 

TOTAL INVESTMENTS — 100.0%

   $ 870,681,860         1,704,282,092   
     

 

 

    

Number of
Contracts

         

Expiration
Date

    

Unrealized
Depreciation

 
   FUTURES CONTRACTS — SHORT POSITION   
  430      

S & P 500 E-Mini
Futures(g)

     03/21/14         (1,432,214
        

 

 

 
  Other Assets and Liabilities (Net)         9,812,798   
  PREFERRED STOCK      

 

    (9,373,057 preferred shares outstanding)

  

     (334,226,425
        

 

 

 
  NET ASSETS — COMMON STOCK      

 

    (190,604,128 common shares outstanding)

  

   $ 1,378,436,251   
        

 

 

 
  NET ASSET VALUE PER COMMON SHARE      

 

    ($1,378,436,251 ÷ 190,604,128 shares outstanding)

  

   $ 7.23   
        

 

 

 

 

(a)

Securities, or a portion thereof, with a value of $60,785,500, were pledged as collateral for futures contracts.

(b)

Illiquid security.

(c)

At December 31, 2013, the Fund held investments in restricted securities amounting to $182,187 or 0.01% of total investments, which were valued as follows:

 

Acquisition
Shares

  

Issuer

  

Acquisition
Date

  

Acquisition
Cost

    

12/31/13
Carrying
Value
Per Share

 
7,040,836   

LIME

   09/30/93      $128,658         $0.0016   
103,200,000   

Rolls-Royce Holdings plc, Cl. C

   10/23/13      166,664         0.0017   
 

 

See accompanying notes to financial statements.

 

11


The Gabelli Equity Trust Inc.

Schedule of Investments (Continued) — December 31, 2013

 

 

(d)

Denoted in units.

(e)

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2013, the market value of the Rule 144A security amounted to $2,356,250 or 0.14% of total investments.

(f)

At December 31, 2013, $495,000 of the principal amount was pledged as collateral for futures contracts.

(g)

At December 31, 2013, the Fund had entered into futures contracts with UBS AG.

Non-income producing security.

††

Represents annualized yield at date of purchase.

ADR

American Depositary Receipt

SDR

Swedish Depositary Receipt

Geographic Diversification

   % of Total
Investments
 

Market
  Value

 

North America

   82.6%   $ 1,408,271,068   

Europe

   13.1     223,047,808   

Latin America

   2.4     40,223,034   

Japan

   1.4     24,346,478   

Asia/Pacific

   0.5     8,393,704   
  

 

 

 

 

 

Total Investments

   100.0%   $ 1,704,282,092   
  

 

 

 

 

 
 

 

See accompanying notes to financial statements.

 

12


The Gabelli Equity Trust Inc.

 

Statement of Assets and Liabilities

December 31, 2013

 

Assets:

  

Investments, at value (cost $870,681,860)

     $1,704,282,092   

Foreign currency, at value (cost $3,177)

     3,174   

Cash

     856   

Receivable for investments sold

     21,163,487   

Dividends and interest receivable

     2,645,672   

Deferred offering expense

     153,073   

Prepaid expenses

     15,292   
  

 

 

 

Total Assets

     1,728,263,646   
  

 

 

 

Liabilities:

  

Distributions payable

     205,474   

Payable for investments purchased

     11,210,192   

Payable for investment advisory fees

     2,876,865   

Payable for payroll expenses

     84,477   

Payable for accounting fees

     3,750   

Payable for auction agent fees

     873,578   

Variation margin payable

     135,003   

Other accrued expenses

     211,631   
  

 

 

 

Total Liabilities

     15,600,970   
  

 

 

 

Cumulative Preferred Stock, $0.001 par value:

  

Series C (Auction Rate, $25,000 liquidation value,
5,200 shares authorized with 2,880 shares
issued and outstanding)

     72,000,000   

Series D (5.875%, $25 liquidation value,
3,000,000 shares authorized with 2,363,860
shares issued and outstanding)

     59,096,500   

Series E (Auction Rate, $25,000 liquidation value,
2,000 shares authorized with 1,120 shares
issued and outstanding)

     28,000,000   

Series G (5.000%, $25 liquidation value,
2,816,524 shares authorized with 2,814,924
shares issued and outstanding)

     70,373,100   

Series H (5.000%, $25 liquidation value,
4,200,000 shares authorized with 4,190,273
shares issued and outstanding)

     104,756,825   
  

 

 

 

Total Preferred Stock

     334,226,425   
  

 

 

 

Net Assets Attributable to Common
Shareholders

     $1,378,436,251   
  

 

 

 

Net Assets Attributable to Common Shareholders Consist of:

  

Paid-in capital

     $   556,944,639   

Distributions in excess of net investment income

     (534,425

Accumulated net realized loss on investments, futures contracts, and foreign currency transactions

     (10,142,625

Net unrealized appreciation on investments

     833,600,232   

Net unrealized depreciation on futures contracts

     (1,432,214

Net unrealized appreciation on foreign currency translations

     644   
  

 

 

 

Net Assets

     $1,378,436,251   
  

 

 

 

Net Asset Value per Common Share:

  

($1,378,436,251 ÷ 190,604,128 shares
outstanding at $0.001 par value;
246,000,000 shares authorized)

     $7.23   
  

 

 

 

Statement of Operations

For the Year Ended December 31, 2013

 

Investment Income:

  

Dividends (net of foreign withholding taxes of $970,235)

   $ 27,457,907   

Interest

     94,588   
  

 

 

 

Total Investment Income

     27,552,495   
  

 

 

 

Expenses:

  

Investment advisory fees

     15,675,284   

Shareholder communications expenses

     304,544   

Custodian fees

     205,818   

Payroll expenses

     197,858   

Directors’ fees

     183,500   

Shareholder services fees

     137,939   

Legal and audit fees

     134,366   

Accounting fees

     45,000   

Miscellaneous expenses

     304,957   
  

 

 

 

Total Expenses

     17,189,266   
  

 

 

 

Net Investment Income

     10,363,229   
  

 

 

 

Net Realized and Unrealized Gain/(Loss) on Investments, Futures Contracts, and Foreign Currency:

  

Net realized gain on investments

     155,486,807   

Net realized loss on futures contracts

     (4,988,345

Net realized gain on foreign currency transactions

     52,126   
  

 

 

 

Net realized gain on investments, futures contracts, and foreign currency transactions

     150,550,588   
  

 

 

 

Net change in unrealized appreciation/
depreciation:

  

on investments

     279,279,348   

on futures contracts

     (1,432,214

on foreign currency translations

     12,882   
  

 

 

 

Net change in unrealized appreciation/
depreciation on investments, futures contracts, and foreign currency translations

     277,860,016   
  

 

 

 

Net Realized and Unrealized Gain/(Loss) on Investments, Futures Contracts, and Foreign Currency

     428,410,604   
  

 

 

 

Net Increase in Net Assets Resulting from Operations

     438,773,833   
  

 

 

 

Total Distributions to Preferred Shareholders

     (12,772,029
  

 

 

 

Net Increase in Net Assets Attributable to Common Shareholders Resulting from Operations

   $ 426,001,804   
  

 

 

 
 

 

See accompanying notes to financial statements.

 

13


The Gabelli Equity Trust Inc.

Statement of Changes in Net Assets Attributable to Common Shareholders

 

 

     Year Ended
December 31, 2013
    Year Ended
December 31, 2012
 

Operations:

    

Net investment income

   $ 10,363,229      $        15,726,952   

Net realized gain on investments, futures contracts, and foreign currency transactions

     150,550,588        28,904,608   

Net change in unrealized appreciation on investments, futures contracts, and foreign currency translations

     277,860,016        150,802,035   
  

 

 

   

 

 

 

Net Increase in Net Assets Resulting from Operations

     438,773,833        195,433,595   
  

 

 

   

 

 

 

Distributions to Preferred Shareholders:

    

Net investment income

     (1,017,365     (5,031,388

Net realized gain

     (11,754,664     (9,393,151
  

 

 

   

 

 

 

Total Distributions to Preferred Shareholders

     (12,772,029     (14,424,539
  

 

 

   

 

 

 

Net Increase in Net Assets Attributable to Common Shareholders Resulting
from Operations

     426,001,804        181,009,056   
  

 

 

   

 

 

 

Distributions to Common Shareholders:

    

Net investment income

     (9,326,302     (10,788,546

Net realized gain

     (107,756,321     (20,141,253

Return of capital

            (73,112,281
  

 

 

   

 

 

 

Total Distributions to Common Shareholders

     (117,082,623     (104,042,080
  

 

 

   

 

 

 

Fund Share Transactions:

    

Net increase in net assets from common shares issued upon reinvestment of distributions

     18,998,599        17,071,629   

Taxable distribution of rights offering to preferred sharesholders

            702,048   

Net increase in net assets from repurchase of preferred shares

     44,806          

Offering costs for preferred shares charged to paid-in capital

            (4,239,995

Adjustment to offering costs for preferred shares credited to paid-in capital

     22,605          
  

 

 

   

 

 

 

Net Increase in Net Assets from Fund Share Transactions

     19,066,010        13,533,682   
  

 

 

   

 

 

 

Net Increase in Net Assets Attributable to Common Shareholders

     327,985,191        90,500,658   

Net Assets Attributable to Common Shareholders:

    

Beginning of year

     1,050,451,060        959,950,402   
  

 

 

   

 

 

 

End of year (including undistributed net investment income of $0 and $0, respectively)

   $ 1,378,436,251      $ 1,050,451,060   
  

 

 

   

 

 

 

See accompanying notes to financial statements.

 

14


The Gabelli Equity Trust Inc.

Financial Highlights

 

Selected data for a share outstanding throughout each year:

 

     Year Ended December 31,  
     2013     2012     2011     2010     2009  

Operating Performance:

             

Net asset value, beginning of year

      $ 5.60      $ 5.20      $ 5.85      $ 5.03      $ 4.14   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

        0.06        0.09        0.07        0.05        0.06   

Net realized and unrealized gain/(loss) on investments, futures contracts, swap contracts, and foreign currency transactions

        2.26        0.97        (0.08     1.35        1.62   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

        2.32        1.06        (0.01     1.40        1.68   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions to Preferred Shareholders: (a)

             

Net investment income

        (0.01     (0.03     (0.06     (0.05     (0.07

Net realized gain

        (0.06     (0.05     (0.01              

Return of capital

                             (0.02       
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions to preferred shareholders

        (0.07     (0.08     (0.07     (0.07     (0.07
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Increase/(Decrease) in Net Assets Attributable to Common

  

       

Shareholders Resulting from Operations

        2.25        0.98        (0.08     1.33        1.61   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions to Common Shareholders:

             

Net investment income

        (0.05     (0.06     (0.02            (0.00 )(b) 

Net realized gain

        (0.57     (0.11     (0.00 )(b)               

Return of capital

               (0.39     (0.55     (0.51     (0.72
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions to common shareholders

        (0.62     (0.56     (0.57     (0.51     (0.72
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fund Share Transactions:

             

Increase in net asset value from common stock share transactions

        0.00 (b)                           0.00 (b) 

Increase in net asset value from repurchase of preferred shares

        0.00 (b)                           0.00 (b) 

Recapture of gain on sale of Fund shares by an affiliate

                             0.00 (b)        

Offering costs and adjustment to offering costs for preferred shares charged to paid-in capital

        0.00 (b)      (0.02                     
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Fund share transactions

        0.00 (b)      (0.02            0.00 (b)      0.00 (b) 
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Asset Value Attributable to Common Shareholders, End of Year

      $ 7.23      $ 5.60      $ 5.20      $ 5.85      $ 5.03   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NAV total return †

        41.90     19.05     (1.17 )%      28.15     44.10
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Market value, end of year

      $ 7.75      $ 5.58      $ 4.99      $ 5.67      $ 5.04   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Investment total return ††

        52.44     23.62     (2.15 )%      23.96     61.56
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets and Supplemental Data:

             

Net assets including liquidation value of preferred shares, end of year (in 000’s)

      $ 1,712,663      $ 1,384,961      $ 1,265,307      $ 1,364,172      $ 1,215,626   

Net assets attributable to common shares, end of year (in 000’s)

      $ 1,378,436      $ 1,050,451      $ 959,950      $ 1,058,815      $ 910,269   

Ratio of net investment income to average net assets attributable to common shares before preferred distributions

        0.84     1.54     1.26     0.92     1.53

Ratio of operating expenses to average net assets attributable to common shares:

             

before fee reduction

        1.40     1.48     1.48     1.50     1.74

net of fee reduction, if any

        1.40     1.48     1.19     1.50     1.72

Ratio of operating expenses to average net assets including liquidation value of preferred shares:

             

before fee reduction

        1.10     1.12     1.15     1.14     1.22

net of fee reduction, if any

        1.10     1.12     0.92     1.14     1.20

Portfolio turnover rate

        10.0     4.2     6.3     5.5     6.7

See accompanying notes to financial statements.

 

15


The Gabelli Equity Trust Inc.

Financial Highlights (Continued)

 

Selected data for a share outstanding throughout each year:

 

     Year Ended December 31,  
     2013     2012     2011     2010     2009  

Preferred Stock:

             

Auction Rate Series C Cumulative Preferred Stock

             

Liquidation value, end of year (in 000’s)

      $ 72,000      $ 72,000      $ 72,000      $ 72,000      $ 72,000   

Total shares outstanding (in 000’s)

        3        3        3        3        3   

Liquidation preference per share

      $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

Average market value(c)

      $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

Asset coverage per share

      $ 128,106      $ 103,507      $ 103,593      $ 111,687      $ 99,525   

5.875% Series D Cumulative Preferred Stock

             

Liquidation value, end of year (in 000’s)

      $ 59,097      $ 59,097      $ 59,097      $ 59,097      $ 59,097   

Total shares outstanding (in 000’s)

        2,364        2,364        2,364        2,364        2,364   

Liquidation preference per share

      $ 25.00      $ 25.00      $ 25.00      $ 25.00      $ 25.00   

Average market value(d)

      $ 25.27      $ 25.75      $ 25.35      $ 25.03      $ 23.39   

Asset coverage per share

      $ 128.11      $ 103.51      $ 103.59      $ 111.69      $ 99.53   

Auction Rate Series E Cumulative Preferred Stock

             

Liquidation value, end of year (in 000’s)

      $ 28,000      $ 28,000      $ 28,000      $ 28,000      $ 28,000   

Total shares outstanding (in 000’s)

        1        1        1        1        1   

Liquidation preference per share

      $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

Average market value(c)

      $ 25,000      $ 25,000      $ 25,000      $ 25,000      $ 25,000   

Asset coverage per share

      $ 128,106      $ 103,507      $ 103,593      $ 111,687      $ 99,525   

6.200% Series F Cumulative Preferred Stock

             

Liquidation value, end of year (in 000’s)

                    $ 146,260      $ 146,260      $ 146,260   

Total shares outstanding (in 000’s)

                      5,850        5,850        5,850   

Liquidation preference per share

                    $ 25.00      $ 25.00      $ 25.00   

Average market value(d)

                    $ 25.57      $ 25.71      $ 24.08   

Asset coverage per share

                    $ 103.59      $ 111.69      $ 99.53   

Series G Cumulative Preferred Stock

             

Liquidation value, end of year (in 000’s)

      $ 70,373      $ 70,413                        

Total shares outstanding (in 000’s)

        2,815        2,817                        

Liquidation preference per share

      $ 25.00      $ 25.00                        

Average market value(d)

      $ 23.91      $ 26.01                        

Asset coverage per share

      $ 128.11      $ 103.51                        

5.000% Series H Cumulative Preferred Stock

             

Liquidation value, end of year (in 000’s)

      $ 104,757      $ 105,000                        

Total shares outstanding (in 000’s)

        4,190        4,200                        

Liquidation preference per share

      $ 25.00      $ 25.00                        

Average market value(d)

      $ 23.85      $ 25.55                        

Asset coverage per share

      $ 128.11      $ 103.51                        

Asset Coverage(e)

        512     414     414     447     398

 

For 2013 based on net asset value per share, adjusted for reinvestment of distributions at net asset value on the ex-dividend date. The years ended 2012, 2011, 2010, and 2009 were based on net asset value per share, adjusted for reinvestment of distributions at prices obtained under the Fund’s dividend reinvestment plan.

††

Based on market value per share, adjusted for reinvestment of distributions at prices determined under the Fund’s dividend reinvestment plan.

(a)

Calculated based upon average common shares outstanding on the record dates throughout the periods.

(b)

Amount represents less than $0.005 per share.

(c)

Liquidation value. Since February 2008, the weekly auctions have failed. Holders that have submitted orders have not been able to sell any or all of their shares in the auctions.

(d)

Based on weekly prices.

(e)

Asset coverage is calculated by combining all series of preferred stock.

See accompanying notes to financial statements.

 

16


The Gabelli Equity Trust Inc.

Notes to Financial Statements

 

 

1. Organization. The Gabelli Equity Trust Inc. (the “Fund”) is a non-diversified closed-end management investment company organized as a Maryland corporation on May 20, 1986 and registered under the Investment Company Act of 1940, as amended (the “1940 Act”), whose primary objective is long term growth of capital with income as a secondary objective. Investment operations commenced on August 21, 1986.

The Fund will invest at least 80% of its assets in equity securities under normal market conditions (the “80% Policy”). The 80% Policy may be changed without shareholder approval. The Fund will provide shareholders with notice at least sixty days prior to the implementation of any changes in the 80% Policy.

2. Significant Accounting Policies. The Fund’s financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), which may require the use of management estimates and assumptions. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.

Security Valuation. Portfolio securities listed or traded on a nationally recognized securities exchange or traded in the U.S. over-the-counter market for which market quotations are readily available are valued at the last quoted sale price or a market’s official closing price as of the close of business on the day the securities are being valued. If there were no sales that day, the security is valued at the average of the closing bid and asked prices or, if there were no asked prices quoted on that day, then the security is valued at the closing bid price on that day. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price or, if the Board of Directors (the “Board”) so determines, by such other method as the Board shall determine in good faith to reflect its fair market value. Portfolio securities traded on more than one national securities exchange or market are valued according to the broadest and most representative market, as determined by Gabelli Funds, LLC (the “Adviser”).

Portfolio securities primarily traded on a foreign market are generally valued at the preceding closing values of such securities on the relevant market, but may be fair valued pursuant to procedures established by the Board if market conditions change significantly after the close of the foreign market, but prior to the close of business on the day the securities are being valued. Debt instruments with remaining maturities of sixty days or less that are not credit impaired are valued at amortized cost, unless the Board determines such amount does not reflect the securities’ fair value, in which case these securities will be fair valued as determined by the Board. Debt instruments having a maturity greater than sixty days for which market quotations are readily available are valued at the average of the latest bid and asked prices. If there were no asked prices quoted on such day, the security is valued using the closing bid price. U.S. government obligations with maturities greater than sixty days are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations. Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract is traded.

Securities and assets for which market quotations are not readily available are fair valued as determined by the Board. Fair valuation methodologies and procedures may include, but are not limited to: analysis and review of available financial and non-financial information about the company; comparisons with the valuation and changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S. dollar value American Depositary Receipt securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security.

 

17


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:

 

   

Level  1 — quoted prices in active markets for identical securities;

   

Level  2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and

   

Level  3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities and other financial instruments by inputs used to value the Fund’s investments as of December 31, 2013 is as follows:

 

     Valuation Inputs         
     Level 1
Quoted Prices
     Level 2 Other Significant
Observable Inputs
     Level 3 Significant
Unobservable Inputs
     Total Market Value
at 12/31/13
 

INVESTMENTS IN SECURITIES:

           

ASSETS (Market Value):

           

Common Stocks:

           

Energy and Utilities

     $    86,509,028                 $            0         $     86,509,028   

Aerospace and Defense

     49,713,732                 170,895         49,884,627   

Telecommunications

     49,296,676         $        11,292                 49,307,968   

Other Industries (a)

     1,490,272,322                         1,490,272,322   

Total Common Stocks

     1,675,791,758         11,292         170,895         1,675,973,945   

Convertible Preferred Stocks (a)

     1,003,420                         1,003,420   

Rights (a)

     69,984                         69,984   

Warrants (a)

     470,148                         470,148   

Convertible Corporate Bonds (a)

             2,356,250                 2,356,250   

U.S. Government Obligations

             24,408,345                 24,408,345   

TOTAL INVESTMENTS IN SECURITIES – ASSETS

     $1,677,335,310         $26,775,887         $170,895         $1,704,282,092   

OTHER FINANCIAL INSTRUMENTS:*

           

LIABILITIES (Unrealized Depreciation): EQUITY CONTRACTS

           

Futures Contracts Sold (b)

     $    (1,432,214)         $                —         $          —         $    (1,432,214)   

 

(a)

Please refer to the Schedule of Investments (“SOI”) for the industry classifications of these portfolio holdings.

(b)

Represents cumulative unrealized depreciation of futures contracts as reported in the SOI.

*

Other financial instruments are derivatives reflected in the SOI, such as options, futures, forwards, and swaps, which may be valued at the unrealized appreciation/depreciation of the instrument.

The Fund did not have material transfers among Level 1, Level 2, and Level 3 during the year ended December 31, 2013. The Fund’s policy is to recognize transfers among Levels as of the beginning of the reporting period.

Additional Information to Evaluate Qualitative Information.

    General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities.

 

18


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

The data within these feeds is ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.

    Fair Valuation. Fair valued securities may be common and preferred equities, warrants, options, rights, and fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not available, such as securities not traded for several days, or for which current bids are not available, or which are restricted as to transfer. Among the factors to be considered to fair value a security are recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.

The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These include back testing the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.

Derivative Financial Instruments. The Fund may engage in various portfolio investment strategies by investing in a number of derivative financial instruments for the purposes of increasing the income of the Fund, hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase, or hedging against a specific transaction with respect to either the currency in which the transaction is denominated or another currency. Investing in certain derivative financial instruments, including participation in the options, futures, or swap markets, entails certain execution, liquidity, hedging, tax, and securities, interest, credit, or currency market risks. Losses may arise if the Adviser’s prediction of movements in the direction of the securities, foreign currency, and interest rate markets is inaccurate. Losses may also arise if the counterparty does not perform its duties under a contract, or that, in the event of default, the Fund may be delayed in or prevented from obtaining payments or other contractual remedies owed to it under derivative contracts. The creditworthiness of the counterparties is closely monitored in order to minimize these risks. Participation in derivative transactions involves investment risks, transaction costs, and potential losses to which the Fund would not be subject absent the use of these strategies. The consequences of these risks, transaction costs, and losses may have a negative impact on the Fund’s ability to pay distributions.

Collateral requirements differ by type of derivative. Collateral requirements are set by the broker or exchange clearing house for exchange traded derivatives, while collateral terms are contract specific for derivatives traded over-the-counter. Securities pledged to cover obligations of the Fund under derivative contracts are noted in the Schedule of Investments. Cash collateral, if any, pledged for the same purpose will be reported separately in the Statement of Assets and Liabilities.

The Fund’s policy with respect to offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the master netting agreement does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the Fund and the applicable counterparty. The enforceability of the right to offset may vary by jurisdiction.

 

19


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

The Fund’s derivative contracts held at December 31, 2013, if any, are not accounted for as hedging instruments under GAAP and are disclosed in the Schedule of Investments together with the related counterparty.

    Swap Agreements. The Fund may enter into equity contract for difference swap transactions for the purpose of increasing the income of the Fund. The use of swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. In an equity contract for difference swap, 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 Fund’s portfolio securities at the time an equity contract for difference swap transaction reaches its scheduled termination date, there is a risk that the Fund will not be able to obtain a replacement transaction or that the terms of the replacement will not be as favorable as on the expiring transaction.

During the year ended December 31, 2013, the Fund held no investments in equity contract for difference swap agreements.

    Futures Contracts. The Fund may engage in futures contracts for the purpose of hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase. Upon entering into a futures contract, the Fund is required to deposit with the broker an amount of cash or cash equivalents equal to a certain percentage of the contract amount. This is known as the “initial margin.” Subsequent payments (“variation margin”) are made or received by the Fund each day, depending on the daily fluctuations in the value of the contract, and are included in unrealized appreciation/depreciation on futures contracts. The Fund recognizes a realized gain or loss when the contract is closed.

There are several risks in connection with the use of futures contracts as a hedging instrument. The change in value of futures contracts primarily corresponds with the value of their underlying instruments, which may not correlate with the change in value of the hedged investments. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market. Open positions in futures contracts at December 31, 2013 are reflected within the Schedule of Investments.

The Fund’s volume of equity futures contracts held during the year ended December 31, 2013 had an average monthly notional amount of approximately $28,077,669.

At December 31, 2013, the Fund’s derivative liabilities (by type) are as follows:

 

          Gross Amounts Not Offset in the
Statement of Assets and Liabilities
    
     Gross Amounts of
Recognized Liabilities
Presented in the
Statement of Assets
and Liabilities
   Gross Amounts
Available for Offset
in the Statement of
Assets and Liabilities
   Financial
Instruments
   Cash
Collateral
Pledged
   Net Amount

Liabilities

              

Futures Contracts

   $135,003             $135,003

 

20


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

For the year ended December 31, 2013, the effect of equity futures contracts can be found in the Statement of Operations under Net Realized and Unrealized Gain/(Loss) on Investments, Futures Contracts, and Foreign Currency, Net realized loss on futures contracts and Net change in unrealized depreciation on futures contracts.

Limitations on the Purchase and Sale of Futures Contracts, Certain Options, and Swaps. Subject to the guidelines of the Board, the Fund may engage in “commodity interest” transactions (generally, transactions in futures, certain options, certain currency transactions, and certain types of swaps) only for bona fide hedging or other permissible transactions in accordance with the rules and regulations of the Commodity Futures Trading Commission (“CFTC”). Pursuant to amendments by the CFTC to Rule 4.5 under the Commodity Exchange Act (“CEA”), the Adviser has filed a notice of exemption from registration as a “commodity pool operator” with respect to the Fund. The Fund and the Adviser are therefore not subject to registration or regulation as a commodity pool operator under the CEA. In addition, certain trading restrictions are now applicable to the Fund as of January 1, 2013. These trading restrictions permit the Fund to engage in commodity interest transactions that include (i) “bona fide hedging” transactions, as that term is defined and interpreted by the CFTC and its staff, without regard to the percentage of the Fund’s assets committed to margin and options premiums and (ii) non-bona fide hedging transactions, provided that the Fund does not enter into such non-bona fide hedging transactions if, immediately thereafter, either (a) the sum of the amount of initial margin deposits on the Fund’s existing futures positions or swaps positions and option or swaption premiums would exceed 5% of the market value of the Fund’s liquidating value, after taking into account unrealized profits and unrealized losses on any such transactions, or (b) the aggregate net notional value of the Fund’s commodity interest transactions would not exceed 100% of the market value of the Fund’s liquidating value, after taking into account unrealized profits and unrealized losses on any such transactions. Therefore, in order to claim the Rule 4.5 exemption, the Fund is limited in its ability to invest in commodity futures, options, and certain types of swaps (including securities futures, broad based stock index futures, and financial futures contracts). As a result, in the future, the Fund will be more limited in its ability to use these instruments than in the past, and these limitations may have a negative impact on the ability of the Adviser to manage the Fund, and on the Fund’s performance.

Investments in other Investment Companies. The Fund may invest, from time to time, in shares of other investment companies (or entities that would be considered investment companies but are excluded from the definition pursuant to certain exceptions under the 1940 Act) (the “Acquired Funds”) in accordance with the 1940 Act and related rules. Shareholders in the Fund would bear the pro rata portion of the periodic expenses of the Acquired Funds in addition to the Fund’s expenses. For the year ended December 31, 2013, the Fund’s pro rata portion of the periodic expenses charged by the Acquired Funds was less than 1 basis point.

Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at current exchange rates. Purchases and sales of investment securities, income, and expenses are translated at the exchange rate prevailing on the respective dates of such transactions. Unrealized gains and losses that result from changes in foreign exchange rates and/or changes in market prices of securities have been included in unrealized appreciation/depreciation on investments and foreign currency translations. Net realized foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade

 

21


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

date and settlement date on investment securities transactions, foreign currency transactions, and the difference between the amounts of interest and dividends recorded on the books of the Fund and the amounts actually received. The portion of foreign currency gains and losses related to fluctuation in exchange rates between the initial purchase trade date and subsequent sale trade date is included in realized gain/(loss) on investments.

Foreign Securities. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the inability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than securities of comparable U.S. issuers.

Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.

Restricted Securities. The Fund may invest up to 10% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than does the sale of securities eligible for trading on national securities exchanges or in the over-the-counter markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. Securities freely saleable among qualified institutional investors under special rules adopted by the SEC may be treated as liquid if they satisfy liquidity standards established by the Board. The continued liquidity of such securities is not as well assured as that of publicly traded securities, and accordingly the Board will monitor their liquidity. For the restricted securities the Fund held as of December 31, 2013, refer to the Schedule of Investments.

Securities Transactions and Investment Income. Securities transactions are accounted for on the trade date with realized gain/(loss) on investments determined by using the identified cost method. Interest income (including amortization of premium and accretion of discount) is recorded on the accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends.

Custodian Fee Credits and Interest Expense. When cash balances are maintained in the custody account, the Fund receives credits which are used to offset custodian fees. The gross expenses paid under the custody arrangement are included in custodian fees in the Statement of Operations with the corresponding expense offset, if any, shown as “Custodian fee credits.” When cash balances are overdrawn, the Fund is charged an overdraft fee equal to 110% of the 90 day Treasury Bill rate on outstanding balances. This amount, if any, would be included in the Statement of Operations.

Distributions to Shareholders. Distributions to common shareholders are recorded on the ex-dividend date. Distributions to shareholders are based on income and capital gains as determined in accordance with federal income tax regulations, which may differ from income and capital gains as determined under GAAP. These differences are primarily due to differing treatments of income and gains on various investment securities and

 

22


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

foreign currency transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. Distributions from net investment income for federal income tax purposes include net realized gains on foreign currency transactions. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. Permanent differences were primarily due to reclassifications of distributions and taxable distributions in excess of book income. These reclassifications have no impact on the NAV of the Fund. For the year ended December 31, 2013, reclassifications were made to decrease distributions in excess of net investment income by $40,055 and decrease accumulated net realized loss on investments, futures contracts, and foreign currency transactions by $13,120,246, with an offsetting adjustment to paid-in capital.

Under the Fund’s current common share distribution policy, the Fund declares and pays quarterly distributions from net investment income, capital gains, and paid-in capital. The actual source of the distribution is determined after the end of the year. Pursuant to this policy, distributions during the year may be made in excess of required distributions. To the extent such distributions are made from current earnings and profits, they are considered ordinary income or long term capital gains. The Fund’s current distribution policy may restrict the Fund’s ability to pass through to shareholders all of its net realized long term capital gains as a Capital Gain Dividend and may cause such gains to be treated as ordinary income. Distributions sourced from paid-in capital should not be considered as dividend yield or the total return from an investment in the Fund. The Board will continue to monitor the Fund’s distribution level, taking into consideration the Fund’s NAV and the financial market environment. The Fund’s distribution policy is subject to modification by the Board at any time.

Distributions to shareholders of the Fund’s Series C Auction Rate Cumulative Preferred Stock, 5.875% Series D Cumulative Preferred Stock, Series E Auction Rate Cumulative Preferred Stock, Series G Cumulative Preferred Stock, and 5.00% Series H Cumulative Preferred Stock (“Preferred Stock”) are recorded on a daily basis and are determined as described in Note 5.

The tax character of distributions paid during the years ended December 31, 2013 and December 31, 2012 was as follows:

 

     Year Ended
December 31, 2013
     Year Ended
December 31, 2012
 
     Common      Preferred      Common      Preferred  

Distributions paid from:

           

Ordinary income

   $ 21,142,024       $ 2,306,290       $ 30,929,799       $ 14,424,539   

Net long term capital gains

     95,940,599         10,465,739                   

Return of capital

                     73,112,281           
  

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions paid

   $ 117,082,623       $ 12,772,029       $ 104,042,080       $ 14,424,539   
  

 

 

    

 

 

    

 

 

    

 

 

 

Provision for Income Taxes. The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.

 

23


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

As of December 31, 2013, the components of accumulated earnings/losses on a tax basis were as follows:

 

Net unrealized appreciation on investments, futures contracts, and foreign
currency translations

   $ 820,059,398   

Other temporary differences*

     1,432,214   
  

 

 

 

Total

   $ 821,491,612   
  

 

 

 

 

*

Other temporary differences were primarily due to mark-to-market adjustments on future contracts.

Under the Regulated Investment Company Modernization Act of 2010, the Fund is permitted to carry forward for an unlimited period capital losses incurred. As a result of the rule, post enactment capital losses that are carried forward will retain their character as either short term or long term capital losses rather than being considered all short term as under previous law.

During the year ended December 31, 2013, the Fund utilized capital loss carryforwards of $38,870,325.

At December 31, 2013, the temporary differences between book basis and tax basis net unrealized appreciation on investments were primarily due to deferral of losses from wash sales for tax purposes and adjustments on the sale of securities no longer deemed passive foreign investment company.

The following summarizes the tax cost of investments and the related net unrealized appreciation at December 31, 2013:

 

     Cost      Gross
Unrealized
Appreciation
     Gross
Unrealized
Depreciation
     Net Unrealized
Appreciation
 

Investments

   $ 882,791,124       $ 861,971,539       $ (40,480,571    $ 821,490,968   

The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. For the year ended December 31, 2013, the Fund did not incur any income tax, interest, or penalties. As of December 31, 2013, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. Tax years ended December 31, 2010 through December 31, 2013 remain subject to examination by the Internal Revenue Service and state taxing authorities. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.

3. Agreements and Transactions with Affiliates. The Fund has entered into an investment advisory agreement (the “Advisory Agreement”) with the Adviser which provides that the Fund will pay the Adviser a fee, computed weekly and paid monthly, equal on an annual basis to 1.00% of the value of the Fund’s average weekly net assets including the liquidation value of preferred stock. In accordance with the Advisory Agreement, the Adviser provides a continuous investment program for the Fund’s portfolio and oversees the administration of all aspects of the Fund’s business and affairs.

The Adviser has agreed to reduce the management fee on the incremental assets attributable to the Series C, Series D, and Series E Preferred Stock (“C, D, and E Preferred Stock”) if the total return of the NAV of the common shares of the Fund, including distributions and advisory fee subject to reduction, does not exceed the stated dividend rate or corresponding swap rate of the C, D, and E Preferred Stock for the year. The Fund’s total return on the NAV of the common shares is monitored on a monthly basis to assess whether the total

 

24


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

return on the NAV of the common shares exceeds the stated dividend rate of the C, D, and E Preferred Stock for the period. For the year ended December 31, 2013, the Fund’s total return on the NAV of the common shares exceeded the stated dividend rate or corresponding swap rate of the outstanding C, D, and E Preferred Stock. Thus, advisory fees were accrued on the liquidation value of the C, D, and E Preferred Stock.

During the year ended December 31, 2013, the Fund paid brokerage commissions on security trades of $84,244 to G.research, Inc., an affiliate of the Adviser.

The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement between the Fund and the Adviser. During the year ended December 31, 2013, the Fund paid or accrued $45,000 to the Adviser in connection with the cost of computing the Fund’s NAV.

As per the approval of the Board, the Fund compensates officers of the Fund, who are employed by the Fund and are not employed by the Adviser (although the officers may receive incentive based variable compensation from affiliates of the Adviser). For the year ended December 31, 2013, the Fund paid or accrued $197,858 in payroll expenses in the Statement of Operations.

The Fund pays each Director who is not considered an affiliated person an annual retainer of $15,000 plus $2,000 for each Board meeting attended. Each Director is reimbursed by the Fund for any out of pocket expenses incurred in attending meetings. All Board committee members receive $1,000 per meeting attended. The Audit Committee Chairman receives an annual fee of $3,000, the Proxy Voting Committee Chairman receives an annual fee of $1,500, the Nominating Committee Chairman and the Lead Director each receive an annual fee of $2,000. A Director may receive a single meeting fee, allocated among the participating funds, for participation in certain meetings held on behalf of multiple funds. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Fund.

4. Portfolio Securities. Purchases and sales of securities during the year ended December 31, 2013, other than short term securities and U.S. Government obligations, aggregated $153,764,541 and $276,929,898, respectively.

5. Capital. The Fund’s Articles of Incorporation, as amended, permit the Fund to issue 246,000,000 shares of common stock (par value $0.001) and authorizes the Board to increase its authorized shares from time to time. The Board has authorized the repurchase of its shares on the open market when the shares are trading on the NYSE at a discount of 10% or more (or such other percentage as the Board may determine from time to time) from the NAV of the shares. During the years ended December 31, 2013 and December 31, 2012, the Fund did not repurchase any shares of its common stock in the open market.

Transactions in common shares were as follows:

 

     Year Ended
December 31, 2013
     Year Ended
December 31, 2012
 
     Shares      Amount      Shares      Amount  

Net increase from common shares issued upon reinvestment of distributions

     2,888,148       $ 18,998,599         3,095,742       $ 17,071,629   

A shelf registration authorizing the offering of an additional $500 million of common or preferred shares was declared effective by the SEC on May 22, 2013.

 

25


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

The Fund’s Articles of Incorporation, as amended, authorize the issuance of up to 18,000,000 shares of $0.001 par value Preferred Stock. The Preferred Stock is senior to the common stock and results in the financial leveraging of the common stock. Such leveraging tends to magnify both the risks and opportunities to common shareholders. Dividends on shares of the Preferred Stock are cumulative. The Fund is required by the 1940 Act and by the Articles Supplementary to meet certain asset coverage tests with respect to the Preferred Stock. If the Fund fails to meet these requirements and does not correct such failure, the Fund may be required to redeem, in part or in full, the Series C, Series D, Series E, Series G, and Series H Preferred Stock at redemption prices of $25,000, $25, $25,000, $25, and $25, respectively, per share plus an amount equal to the accumulated and unpaid dividends whether or not declared on such shares in order to meet these requirements. Additionally, failure to meet the foregoing asset coverage requirements could restrict the Fund’s ability to pay dividends to common shareholders and could lead to sales of portfolio securities at inopportune times. The income received on the Fund’s assets may vary in a manner unrelated to the fixed and variable rates, which could have either a beneficial or detrimental impact on net investment income and gains available to common shareholders.

For Series C and Series E Preferred Stocks, the dividend rates, as set by the auction process that is generally held every seven days, are expected to vary with short term interest rates. Since February 2008, the number of shares of Series C and Series E Preferred Stock subject to bid orders by potential holders has been less than the number of shares of Series C and Series E Preferred Stock subject to sell orders. Holders that have submitted sell orders have not been able to sell any or all of the Series C and Series E Preferred Stock for which they have submitted sell orders. Therefore the weekly auctions have failed, and the dividend rate has been the maximum rate. For Series C and Series E Preferred Stock, the maximum auction rate is 175% of the “AA” Financial Composite Commercial Paper Rate. Existing Series C and Series E shareholders may submit an order to hold, bid, or sell such shares on each auction date, or trade their shares in the secondary market.

The Fund may redeem at anytime, in whole or in part, the Series C, Series D, and Series E Preferred Stock at their respective redemption prices. In addition, the Board has authorized the repurchase of Series D Preferred Stock in the open market at prices less than the $25 liquidation value per share. During the years ended December 31, 2013 and December 31, 2012, the Fund did not repurchase or redeem any shares of Series C, Series D, and Series E Preferred Stock.

Commencing July 31, 2017 and September 27, 2017, and anytimes thereafter, the Fund at its option, may redeem the Series G and Series H Preferred Stock, respectively, in whole or in part at the redemption price. In addition, the Board has authorized the repurchase of the Series G and Series H Preferred Stock in the open market at prices less than the $25 liquidation value per share. During the year ended December 31, 2013, the Fund repurchased 1,600 shares and 9,727 shares of the Series G and Series H Preferred Stock, respectively.

 

26


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

The following table summarizes Cumulative Preferred Stock information:

 

Series   Issue Date   Issued/
Authorized
  Number of Shares
Outstanding at
12/31/2013
  Net Proceeds   2013 Dividend
Rate Range
  Dividend
Rate at
12/31/2013
  Accrued
Dividends at
12/31/2013

C Auction Rate

 

June 27, 2002

 

5,200

 

2,880

 

$128,246,557

 

0.053% to 0.228%

 

0.105%

 

$1,260

D 5.875%

 

October 7, 2003

 

3,000,000

 

2,363,860

 

$72,375,842

 

Fixed Rate

 

5.875%

 

$57,865

E Auction Rate

 

October 7, 2003

 

2,000

 

1,120

 

$49,350,009

 

0.07% to 0.263%

 

0.105%

 

$408

G 5.000%*

 

August 1, 2012

 

2,816,524

 

2,814,924

 

$69,812,243

 

Fixed Rate

 

5.000%

 

$58,644

H 5.000%

 

September 28, 2012

 

4,200,000

 

4,190,273

 

$101,167,500

 

Fixed Rate

 

5.000%

 

$87,297

 

*

The Series G Cumulative Preferred Stock had a 6.000% fixed rate until July 31, 2013. Beginning August 1, 2013, the fixed rate changed to 5.000%.

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

6. Indemnifications. The Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.

7. Other Matters. On April 24, 2008, the Adviser entered into a settlement with the SEC to resolve an inquiry regarding prior frequent trading in shares of the GAMCO Global Growth Fund (the “Global Growth Fund”) by one investor who was banned from the Global Growth Fund in August 2002. Under the terms of the settlement, the Adviser, without admitting or denying the SEC’s findings and allegations, paid $16 million (which included a $5 million civil monetary penalty). On the same day, the SEC filed a civil action in the U.S. District Court for the Southern District of New York against the Executive Vice President and Chief Operating Officer of the Adviser, alleging violations of certain federal securities laws arising from the same matter. The officer, who also is an officer of the Global Growth Fund and other funds in the Gabelli/GAMCO complex, including this Fund, denies the allegations and is continuing in his positions with the Adviser and the funds. The settlement by the Adviser did not have, and the resolution of the action against the officer is not expected to have, a material adverse impact on the Adviser or its ability to fulfill its obligations under the Advisory Agreement.

8. Subsequent Events. On January 23, 2014 the credit rating agency for the Series H Preferred changed from Standard & Poor’s Ratings Services to Moody’s Investors Service (“Moody’s”). The Series H Preferred is rated A1 by Moody’s. On January 28, 2014 the secondary credit rating agency for the Series C and Series E Preferred changed from Standard & Poor’s Rating Services to Fitch Ratings (“Fitch”). The Series C and Series E Preferreds are rated AA by Fitch and A1 by Moody’s.

 

27


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

Management has evaluated the impact on all other subsequent events of the Fund and has determined that there were no other subsequent events requiring recognition or disclosure in the financial statements.

 

28


The Gabelli Equity Trust Inc.

Report of Independent Registered Public Accounting Firm

 

 

To the Board of Directors and Shareholders of

The Gabelli Equity Trust Inc.:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of The Gabelli Equity Trust Inc. (hereafter referred to as the “Fund”) at December 31, 2013, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

New York, New York

February 27, 2014

 

29


The Gabelli Equity Trust Inc.

Additional Fund Information (Unaudited)

 

 

The business and affairs of the Fund are managed under the direction of the Fund’s Board of Directors. Information pertaining to the Directors and officers of the Fund is set forth below. The Fund’s Statement of Additional Information includes additional information about the Fund’s Directors and officers and is available without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to The Gabelli Equity Trust Inc. at One Corporate Center, Rye, NY 10580-1422.

 

Name, Position(s)
Address1
and Age

  

Term of Office
and Length of
Time Served2

  

Number of
Funds in Fund
Complex
Overseen by
Director

  

Principal Occupation(s)
During Past Five Years

 

Other Directorships
Held by Director3

INTERESTED DIRECTORS4 :

             

Mario J. Gabelli, CFA

Director and

Chief Investment Officer

Age: 71

   Since 1986***    27    Chairman, Chief Executive Officer, Chief
Investment Officer–Value Portfolios of GAMCO
Investors, Inc., and Chief Investment Officer–
Value Portfolios of Gabelli Funds, LLC and
GAMCO Asset Management Inc.; Director/
Trustee or Chief Investment Officer of other
registered investment companies in the Gabelli/
GAMCO Funds Complex; Chief Executive Officer
of GGCP, Inc.
  Director of Morgan Group
Holdings, Inc. (holding company);
Chairman of the Board and Chief
Executive Officer of LICT Corp.
(multimedia and communication services); Director of CIBL, Inc.
(broadcasting and wireless
communications); Director of ICTC
Group, Inc. (communications);
Director of RLJ Acquisition Inc.
(blank check company)
(2011-2012)

INDEPENDENT DIRECTORS5 :

             

Anthony J. Colavita6

Director

Age: 78

   Since 1999*    36    President of the law firm of
Anthony J. Colavita, P.C.
 

James P. Conn6

Director

Age: 75

   Since 1989**    20    Former Managing Director and Chief Investment
Officer of Financial Security Assurance Holdings
Ltd. (insurance holding company) (1992-1998)
  Director of First Republic Bank
(banking) through January 2008

Frank J. Fahrenkopf, Jr.

Director

Age: 74

   Since 1998*    7    Former President and Chief Executive Officer of
the American Gaming Association (1995-2013);
Co-Chairman of the Commission on Presidential
Debates; Former Chairman of the Republican
National Committee (1983-1989)
  Director of First Republic Bank
(banking)

Arthur V. Ferrara

Director

Age: 83

   Since 2001***    8    Former Chairman of the Board and Chief
Executive Officer of The Guardian Life Insurance
Company of America (1993-1995)
 

William F. Heitmann

Director

Age: 64

   Since 2012***    3    Senior Vice President of Finance, Verizon
Communications, and President, Verizon
Investment Management (1971-2011)
 

Anthony R. Pustorino

Director

Age: 88

   Since 1986**    13    Certified Public Accountant; Professor Emeritus,
Pace University
  Director of The LGL Group, Inc.
(diversified manufacturing)
(2002-2010)

Salvatore J. Zizza

Director

Age: 68

   Since 1986*    30    Chairman (since 1978) of Zizza & Associates
Corp. (financial consulting); Chairman (since
2005) of Metropolitan Paper Recycling, Inc.
(recycling); Chairman (since 1999) of Harbor
BioSciences, Inc. (biotechnology)
  Director and Vice Chairman of
Trans-Lux Corporation (business
services); Director and Chairman
of Harbor Diversified Inc.
(pharmaceuticals); Chairman of
Bion Environmental Technologies
(technology); Director, Chairman,
and CEO of General Employment
Enterprises (staffing services)
(2009-2012)

 

30


The Gabelli Equity Trust Inc.

Additional Fund Information (Continued) (Unaudited)

 

 

Name, Position(s)
Address1
and Age

   Term of Office
and Length of
Time Served2
  

Principal Occupation(s)
During Past Five Years

OFFICERS:

  

Bruce N. Alpert

President

Age: 62

   Since 2003    Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988; Officer of registered investment companies in the Gabelli/GAMCO Funds Complex; Director of Teton Advisors, Inc. 1998-2012; Chairman of Teton Advisors, Inc. 2008-2010; President of Teton Advisors, Inc. 1998-2008; Senior Vice President of GAMCO Investors, Inc. since 2008

Andrea R. Mango

Secretary

Age: 41

   Since November
2013
   Counsel- Gabelli Funds, LLC since August 2013; Corporate Vice President of New York Life Insurance Company (May 2011-March 2013); Vice President Counsel of Deutsche Asset Management (2006-2011)

Agnes Mullady

Treasurer

Age: 55

   Since 2006    President and Chief Operating Officer of the Open-End Fund Division of Gabelli Funds, LLC since September 2010; Senior Vice President of GAMCO Investors, Inc. since 2009; Vice President of Gabelli Funds, LLC since 2007; Officer of all of the registered investment companies in the Gabelli/GAMCO Funds Complex

Richard J. Walz

Chief Compliance Officer

Age: 54

   Since November
2013
   Chief Compliance Officer of the Gabelli/GAMCO Funds Complex; Chief Compliance Officer of AEGON USA Investment Management LLC 2011-2013; Chief Compliance Officer of Cutwater Asset Management 2004-2011

Carter W. Austin

Vice President

Age: 47

   Since 2000    Vice President and/or Ombudsman of closed-end funds within the Gabelli/GAMCO Funds complex; Vice President of Gabelli Funds, LLC since 1996

Molly A.F. Marion

Vice President and Ombudsman

Age: 60

   Since 2009    Vice President and/or Ombudsman of closed-end funds within the Gabelli/GAMCO Funds complex; Assistant Vice President of GAMCO Investors, Inc. since 2006

David I. Schachter

Vice President

Age: 60

   Since 2013    Vice President and/or Ombudsman of closed-end funds within the Gabelli/GAMCO Funds complex; Vice President of Gabelli Funds, LLC since 1999

 

1 

Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.

2 

The Fund’s Board of Directors is divided into three classes, each class having a term of three years. Each year the term of office of one class expires and the successor or successors elected to such class serve for a three year term. The three year term for each class expires as follows:

  *

– Term expires at the Fund’s 2014 Annual Meeting of Shareholders or until their successors are duly elected and qualified.

  **

– Term expires at the Fund’s 2015 Annual Meeting of Shareholders or until their successors are duly elected and qualified.

  ***

– Term expires at the Fund’s 2016 Annual Meeting of Shareholders or until their successors are duly elected and qualified.

  Each

officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified.

3 

This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934, as amended, i.e., public companies, or other investment companies registered under the 1940 Act.

4 

“Interested person” of the Fund as defined in the 1940 Act. Mr. Gabelli is considered an “interested person” because of his affiliation with Gabelli Funds, LLC which acts as the Fund’s investment adviser.

5 

Directors who are not interested persons are considered “Independent” Directors.

6 

Represents holders of the Fund’s Preferred Stock.

 

31


THE GABELLI EQUITY TRUST INC.

INCOME TAX INFORMATION (Unaudited)

December 31, 2013

Cash Dividends and Distributions

 

            Payable        
Date
         Record    
Date
         Total Amount    
Paid
Per Share (a)
     Ordinary
    Investment    
Income (a)
         Long Term    
Capital
Gains (a)
         Return of    
Capital
     Dividend
    Reinvestment    
Price
 

Common Stock

                   
    03/21/13         03/14/13         $0.14000         $0.02540         $0.11460                 $6.13700   
    06/21/13         06/14/13         0.14000         0.02540         0.11460                 6.18450   
    09/23/13         09/16/13         0.14000         0.02540         0.11460                 6.75000   
    12/19/13         12/13/13         0.20000         0.03630         0.16370                 7.14400   
       

 

 

    

 

 

    

 

 

    

 

 

    
          $0.62000         $0.11250         $0.50750              

5.875% Series D Cumulative Preferred Stock

  

              
    03/26/13         03/19/13         $0.36719         $0.06660         $0.30059              
    06/26/13         06/19/13         0.36719         0.06660         0.30059              
    09/26/13         09/19/13         0.36719         0.06660         0.30059              
    12/26/13         12/18/13         0.36719         0.06660         0.30059              
       

 

 

    

 

 

    

 

 

    

 

 

    
          $1.46875         $0.26641         $1.20234              

Series G Cumulative Preferred Stock

  

              
    03/26/13         03/19/13         $0.37500         $0.06800         $0.30700              
    06/26/13         06/19/13         0.37500         0.06800         0.30700              
    09/26/13         09/19/13         0.33680         0.06110         0.27570              
    12/26/13         12/18/13         0.31250         0.05670         0.25580              
       

 

 

    

 

 

    

 

 

    

 

 

    
          $1.39930         $0.25380         $1.14550              

5.000% Series H Cumulative Preferred Stock

  

              
    03/26/13         03/19/13         $0.31250         $0.05670         $0.25580              
    06/26/13         06/19/13         0.31250         0.05670         0.25580              
    09/26/13         09/19/13         0.31250         0.05670         0.25580              
    12/26/13         12/18/13         0.31250         0.05670         0.25580              
       

 

 

    

 

 

    

 

 

    

 

 

    
          $1.25000         $0.22680         $1.02320              

Auction Rate Series C and E Cumulative Preferred Stock

Auction Rate Preferred Stocks pay dividends weekly based on the maximum rate. The distributions derived from long term capital gains for the Auction Rate Series C and Series E Cumulative Preferred Stock were $72,672 and $29,238, respectively.

A Form 1099-DIV has been mailed to all shareholders of record which sets forth specific amounts to be included in the 2013 tax returns. Ordinary income distributions include net investment income and realized net short term capital gains, if any. Ordinary income is reported in box 1a of Form 1099-DIV. Capital gain distributions are reported in box 2a of Form 1099-DIV. The long term gain distributions for the year ended December 31, 2013 were $106,406,338.

Corporate Dividends Received Deduction, Qualified Dividend Income, and U.S. Government Securities Income

In 2013, the Fund paid to common, 5.875% Series D, Series G, and 5.000% Series H preferred shareholders ordinary income dividends totaling $0.11250, $0.26641, $0.25380, and $0.22680 per share, respectively. The Fund paid weekly distributions to auction rate Series C and Series E preferred shareholders at varying rates throughout the year, including an ordinary income dividend totaling $5.62289 and $5.78432 per share, respectively, in 2013. For the year ended December 31, 2013, 82.54% of the ordinary income dividend qualified for the dividend received deduction available to corporations, and 100% of the ordinary income distribution was deemed qualified dividend income and is reported in box 1b on Form 1099-DIV. The percentage of the ordinary income dividends paid by the Fund during 2013 derived from U.S. Government securities was 0.02%. Such income is exempt from state and local tax in all states. However, many states, including New York and California, allow a tax exemption for a portion of the income earned only if a mutual fund has invested at least 50% of its assets at the end of each quarter of the Fund’s fiscal year in U.S. Government securities. The Fund did not meet this strict requirement in 2013. The percentage of U.S. Government securities held as of December 31, 2013 was 1.43%. For the year ended December 31, 2013, 0.35% of the ordinary income dividend was qualified interest income.

 

32


THE GABELLI EQUITY TRUST INC.

INCOME TAX INFORMATION (Unaudited) (Continued)

December 31, 2013

 

Historical Distribution Summary

 

     Investment
Income (b)
     Short Term
Capital
Gains (b)
     Long Term
Capital
Gains
     Non-Taxable
Return of
Capital
     Undistributed
Long Term
Capital
Gains
     Taxes Paid
on
Undistributed
Capital
Gains (c)
     Total
Distributions
(a)
     Adjustment
to Cost
Basis
 

Common Stock

  

                 

2013

     $0.05000         $0.06250         $0.50750                                 $0.62000           

2012

     0.05800         0.10800                 $0.39400                         0.56000         $0.39400 – 

2011

     0.01676         0.00430                 0.54895                         0.57000         0.54895 – 

2010

                             0.51000                         0.51000         0.51000 – 

2009

     0.00040                         0.71960                         0.72000         0.71960 – 

2008

     0.01000                         0.79000                         0.80000         0.79000 – 

2007 (d)

     0.10455         0.05323         0.52679         0.63543                         1.32000         0.63543 – 

2006

     0.15690         0.06400         0.65910                                 0.88000           

2005 (e)

     0.08756         0.00672         0.75572                                 0.85000           

2004

     0.01930         0.04990         0.73080                                 0.80000           

2003

     0.01140         0.04480         0.63380                                 0.69000           

2002

     0.05180         0.01550         0.88270                                 0.95000           

2001 (f)

     0.06700         0.06400         0.94900                                 1.08000           

2000

     0.04070         0.15500         1.11430                                 1.31000           

1999 (g)

     0.03010         0.21378         0.99561         0.91176                         2.15125         0.91176 – 

1998

     0.06420                 1.10080                                 1.16500           

1997

     0.07610         0.00210         0.93680         0.02500                         1.04000         0.02500 – 

1996

     0.10480                 0.78120         0.11400                         1.00000         0.11400 – 

1995 (h)

     0.12890                 0.49310         0.37800                         1.00000         0.37800 – 

1994 (i)

     0.13536         0.06527         0.30300         1.38262                         1.88625         1.38262 – 

1993 (j)

     0.13050         0.02030         0.72930         0.22990                         1.11000         0.22990 – 

1992 (k)

     0.20530         0.04050         0.29660         0.51760                         1.06000         0.51760 – 

1991 (l)

     0.22590         0.03990         0.14420         0.68000                         1.09000         0.68000 – 

1990

     0.50470                 0.22950         0.44580                         1.18000         0.44580 – 

1989

     0.29100         0.35650         0.66250                 $0.62880         $0.21380         1.31000         0.41500

1988

     0.14500         0.20900         0.19600                 0.25130         0.08540         0.55000         0.16590

1987

     0.25600         0.49100         0.33500                                 1.08200           

5.875% Series D Cumulative Preferred Stock

  

                 

2013

     $0.11822         $0.14819         $1.20234                                 $1.46875           

2012

     0.51428         0.95447                                         1.46875           

2011

     1.16910         0.29965                                         1.46875           

2010

     1.05723                         $0.41152                         1.46875         $0.41152 – 

2009

     1.46875                                                 1.46875           

2008

     1.46875                                                 1.46875           

2007

     0.22096         0.11474         1.13305                                 1.46875           

2006

     0.26193         0.10688         1.09994                                 1.46875           

2005

     0.14405         0.01170         1.31300                                 1.46875           

2004

     0.03542         0.09159         1.34174                                 1.46875           

2003

     0.00535         0.02086         0.29610                                 0.32231           

Series G Cumulative Preferred Stock

  

                 

2013

     $0.11270         $0.14110         $1.14550                                 $1.39930           

2012

     0.21155         0.39262                                         0.60417           

5.000% Series H Cumulative Preferred Stock

  

                 

2013

     $0.10080         $0.12600         $1.02320                                 $1.25000           

2012

     0.10700         0.19860                                         0.30560           

 

33


THE GABELLI EQUITY TRUST INC.

INCOME TAX INFORMATION (Unaudited) (Continued)

December 31, 2013

Historical Distribution Summary (Continued)

 

     Investment
Income
     Short Term
Capital
Gains (b)
     Long Term
Capital
Gains
     Non-Taxable
Return of
Capital
     Undistributed
Long Term
Capital
Gains
     Taxes Paid
on
Undistributed
Capital
Gains (c)
     Total
Distributions
(a)
     Adjustment
to Cost
Basis
 

Auction Rate Series C Cumulative Preferred Stock

  

              

2013

   $ 2.49523       $ 3.12766       $ 25.37712                               $ 31.00000           

2012

     13.04312         24.20688                                         37.25000           

2011

     29.61842         7.59158                                         37.21000           

2010

     47.84624                       $ 18.62376                         66.47000       $ 18.62376–   

2009

     70.60000                                                 70.60000           

2008

     760.66000                                                 760.66000           

2007

     203.92150         105.89030         1,045.88200                                 1,355.50000           

2006

     219.92983         89.73249         923.57769                                 1,233.24000           

2005

     83.01020         6.73650         756.60330                                 846.35000           

2004

     9.15570         23.67550         346.83810                                 379.66930           

2003

     5.42000         21.05000         298.41000                                 324.88000           

2002

     12.28350         3.71450         209.89200                                 225.89000           

Auction Rate Series E Cumulative Preferred Stock

  

              

2013

   $ 2.56686       $ 3.21745       $ 26.10568                               $ 31.89000           

2012

     12.47587         23.15413                                         35.63000           

2011

     27.47723         7.04277                                         34.52000           

2010

     48.73162                       $ 18.96838                         67.70000       $ 18.96838–   

2009

     65.24000                                                 65.24000           

2008

     783.29000                                                 783.29000           

2007

     199.17211         103.42412         1,021.33377                                 1,323.93000           

2006

     218.22316         89.03616         916.41068                                 1,223.67000           

2005

     82.44330         6.69050         751.43620                                 840.57000           

2004

     9.30280         24.05620         352.41090                                 385.76000           

2003

     1.07000         4.18000         59.32000                                 64.57000           

 

 

(a)

Total amounts may differ due to rounding.

(b)

Taxable as ordinary income.

(c)

Net Asset Value was reduced by this amount on the last business day of the year. Non-taxable.

(d)

On June 28, 2007, the Fund distributed shares of The Gabelli Healthcare & WellnessRx Trust valued at $8.40 per share.

(e)

On September 21, 2005, the Fund also distributed Rights equivalent to $0.21 per share based upon full subscription of all issued shares.

(f)

On January 10, 2001, the Fund also distributed Rights equivalent to $0.56 per share based upon full subscription of all issued shares.

(g)

On July 9, 1999, the Fund also distributed shares of The Gabelli Utility Trust valued at $9.8125 per share.

(h)

On October 19, 1995, the Fund also distributed Rights equivalent to $0.37 per share based upon full subscription of all issued shares.

(i)

On November 15, 1994, the Fund also distributed shares of The Gabelli Multimedia Trust Inc. valued at $8.0625 per share.

(j)

On July 14, 1993, the Fund also distributed Rights equivalent to $0.50 per share based upon full subscription of all issued shares.

(k)

On September 28, 1992, the Fund also distributed Rights equivalent to $0.36 per share based upon full subscription of all issued shares.

(l)

On October 21, 1991, the Fund also distributed Rights equivalent to $0.42 per share based upon full subscription of all issued shares.

(m)

On June 29, 2012, the Fund also distributed Rights equivalent to $0.12 per share based upon full subscription of all issued shares.

-

Decrease in cost basis

+

Increase in cost basis

 

All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.

 

34


THE GABELLI EQUITY TRUST INC.

One Corporate Center

Rye, NY 10580-1422

Portfolio Management Team Biographies

Mario J. Gabelli, CFA, is Chairman and Chief Executive Officer of GAMCO Investors, Inc. that he founded in 1977 and Chief Investment Officer – Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. Mr. Gabelli is a summa cum laude graduate of Fordham University and holds an MBA degree from Columbia Business School and Honorary Doctorates from Fordham University and Roger Williams University.

Christopher J. Marangi joined Gabelli in 2003 as a research analyst. He currently serves as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Gabelli/GAMCO Funds Complex. Mr. Marangi graduated magna cum laude and Phi Beta Kappa with a BA in Political Economy from Williams College and holds an MBA with honors from Columbia Business School.

Kevin V. Dreyer joined Gabelli in 2005 as a research analyst covering companies within the consumer sector. He currently serves as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Gabelli/GAMCO Funds Complex. Mr. Dreyer received a BSE from the University of Pennsylvania and an MBA from Columbia Business School.

 

We have separated the portfolio managers’ commentary from the financial statements and investment portfolio due to corporate governance regulations stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that the content of the portfolio managers’ commentary is unrestricted. The financial statements and investment portfolio are mailed separately from the commentary. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com.

 

The Net Asset Value per share appears in the Publicly Traded Funds column, under the heading “General Equity Funds,” in Monday’s The Wall Street Journal. It is also listed in Barron’s Mutual Funds/Closed End Funds section under the heading “General Equity Funds.”

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

The NASDAQ symbol for the Net Asset Value is “XGABX.”

 

 

Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that the Fund may, from time to time, purchase its common shares in the open market when the Fund’s shares are trading at a discount of 10% or more from the net asset value of the shares. The Fund may also, from time to time, purchase its preferred shares in the open market when the preferred shares are trading at a discount to the liquidation value.

 


THE GABELLI EQUITY TRUST INC.

One Corporate Center

Rye, NY 10580-1422

t  800-GABELLI (800-422-3554)

f  914-921-5118

e info@gabelli.com

   GABELLI.COM

 

 

DIRECTORS    OFFICERS
Mario J. Gabelli, CFA    Bruce N. Alpert
Chairman & Chief Executive Officer,    President
GAMCO Investors, Inc.   
   Andrea R. Mango
Anthony J. Colavita    Secretary
President,   
Anthony J. Colavita, P.C.    Agnes Mullady
   Treasurer
James P. Conn   
Former Managing Director &    Richard J. Walz
Chief Investment Officer,    Chief Compliance Officer
Financial Security Assurance   
Holdings Ltd.    Carter W. Austin
   Vice President
  
Frank J. Fahrenkopf, Jr.    Molly A.F. Marion
Former President &    Vice President & Ombudsman
Chief Executive Officer,   
American Gaming Association    David I. Schachter
   Vice President
Arthur V. Ferrara   
Former Chairman &    INVESTMENT ADVISER
Chief Executive Officer,   
Guardian Life Insurance    Gabelli Funds, LLC
Company of America    One Corporate Center
   Rye, New York 10580-1422
  
William F. Heitmann    CUSTODIAN
Former Senior Vice President of Finance,    The Bank of New York Mellon
Verizon Communications, Inc.   
   COUNSEL
Anthony R. Pustorino   
Certified Public Accountant,    Willkie Farr & Gallagher LLP
Professor Emeritus,   
Pace University    TRANSFER AGENT AND
   REGISTRAR

Salvatore J. Zizza

Chairman,

Zizza & Associates Corp.

   Computershare Trust Company,
N.A.
  

 

GAB Q4/2013

LOGO

 


Item 2. Code of Ethics.

 

  (a)

The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.

 

  (c)

There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description.

 

  (d)

The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions.

Item 3. Audit Committee Financial Expert.

As of the end of the period covered by the report, the registrant’s Board of Directors has determined that Anthony R. Pustorino is qualified to serve as an audit committee financial expert serving on its audit committee and that he is “independent,” as defined by Item 3 of Form N-CSR.

Item 4. Principal Accountant Fees and Services.

Audit Fees

 

  (a)

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $45,427 for 2012 and $47,471 for 2013.

Audit-Related Fees

 

  (b)

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item are $7,500


 

for 2012 and $37,500 for 2013. Audit-related fees represent services provided in the preparation of Preferred Shares Reports.

Tax Fees

 

  (c)

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $4,200 for 2012 and $4,370 for 2013. Tax fees represent tax compliance services provided in connection with the review of the Registrant’s tax returns.

All Other Fees

 

  (d)

The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 for 2012 and $0 for 2013.

 

  (e)(1)

Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.

 

    

Pre-Approval Policies and Procedures. The Audit Committee (“Committee”) of the registrant is responsible for pre-approving (i) all audit and permissible non-audit services to be provided by the independent registered public accounting firm to the registrant and (ii) all permissible non-audit services to be provided by the independent registered public accounting firm to the Adviser, Gabelli Funds, LLC, and any affiliate of Gabelli Funds, LLC (“Gabelli”) that provides services to the registrant (a “Covered Services Provider”) if the independent registered public accounting firm’s engagement related directly to the operations and financial reporting of the registrant. The Committee may delegate its responsibility to pre-approve any such audit and permissible non-audit services to the Chairperson of the Committee, and the Chairperson must report to the Committee, at its next regularly scheduled meeting after the Chairperson’s pre-approval of such services, his or her decision(s). The Committee may also establish detailed pre-approval policies and procedures for pre-approval of such services in accordance with applicable laws, including the delegation of some or all of the Committee’s pre-approval responsibilities to the other persons (other than Gabelli or the registrant’s officers). Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the permissible non-audit services were not recognized by the registrant at the time of the engagement to be non-audit services; and (ii) such services are promptly brought to the attention of the Committee and approved by the Committee or Chairperson prior to the completion of the audit.

 

  (e)(2)

The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:

(b) 100%

(c) 100%

(d) N/A

 

  (f)

The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work


 

performed by persons other than the principal accountant’s full-time, permanent employees was 0%.

 

  (g)

The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $0 for 2012 and $0 for 2013.

 

  (h)

The registrant’s audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

Item 5. Audit Committee of Listed registrants.

The registrant has a separately designated audit committee consisting of the following members: Anthony J. Colavita, Anthony R Pustorino and Salvatore J. Zizza.

Item 6. Investments.

 

(a) Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form.

 

 (b) Not applicable.

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

The Proxy Voting Policies are attached herewith.


The Voting of Proxies on Behalf of Clients

Rules 204(4)-2 and 204-2 under the Investment Advisers Act of 1940 and Rule 30b1-4 under the Investment Company Act of 1940 require investment advisers to adopt written policies and procedures governing the voting of proxies on behalf of their clients.

These procedures will be used by GAMCO Asset Management Inc., Gabelli Funds, LLC, Gabelli Securities, Inc., and Teton Advisors, Inc. (collectively, the “Advisers”) to determine how to vote proxies relating to portfolio securities held by their clients, including the procedures that the Advisers use when a vote presents a conflict between the interests of the shareholders of an investment company managed by one of the Advisers, on the one hand, and those of the Advisers; the principal underwriter; or any affiliated person of the investment company, the Advisers, or the principal underwriter. These procedures will not apply where the Advisers do not have voting discretion or where the Advisers have agreed to with a client to vote the client’s proxies in accordance with specific guidelines or procedures supplied by the client (to the extent permitted by ERISA).

 

I.

Proxy Voting Committee

The Proxy Voting Committee was originally formed in April 1989 for the purpose of formulating guidelines and reviewing proxy statements within the parameters set by the substantive proxy voting guidelines originally published in 1988 and updated periodically, a copy of which are appended as Exhibit A. The Committee will include representatives of Research, Administration, Legal, and the Advisers. Additional or replacement members of the Committee will be nominated by the Chairman and voted upon by the entire Committee.

Meetings are held as needed basis to form views on the manner in which the Advisers should vote proxies on behalf of their clients.

In general, the Director of Proxy Voting Services, using the Proxy Guidelines, recommendations of Institutional Shareholder Corporate Governance Service (“ISS”), other third-party services and the analysts of Gabelli & Company, Inc., will determine how to vote on each issue. For non-controversial matters, the Director of Proxy Voting Services may vote the proxy if the vote is (1) consistent with the recommendations of the issuer’s Board of Directors and not contrary to the Proxy Guidelines; (2) consistent with the recommendations of the issuer’s Board of Directors and is a non-controversial issue not covered by the Proxy Guidelines; or (3) the vote is contrary to the recommendations of the Board of Directors but is consistent with the Proxy Guidelines. In those instances, the Director of Proxy Voting Services or the Chairman of the Committee may sign and date the proxy statement indicating how each issue will be voted.

All matters identified by the Chairman of the Committee, the Director of Proxy Voting Services or the Legal Department as controversial, taking into account the

 

1


recommendations of ISS or other third party services and the analysts of Gabelli & Company, Inc., will be presented to the Proxy Voting Committee. If the Chairman of the Committee, the Director of Proxy Voting Services or the Legal Department has identified the matter as one that (1) is controversial; (2) would benefit from deliberation by the Proxy Voting Committee; or (3) may give rise to a conflict of interest between the Advisers and their clients, the Chairman of the Committee will initially determine what vote to recommend that the Advisers should cast and the matter will go before the Committee.

 

  A.

Conflicts of Interest.

The Advisers have implemented these proxy voting procedures in order to prevent conflicts of interest from influencing their proxy voting decisions. By following the Proxy Guidelines, as well as the recommendations of ISS, other third-party services and the analysts of Gabelli & Company, the Advisers are able to avoid, wherever possible, the influence of potential conflicts of interest. Nevertheless, circumstances may arise in which one or more of the Advisers are faced with a conflict of interest or the appearance of a conflict of interest in connection with its vote. In general, a conflict of interest may arise when an Adviser knowingly does business with an issuer, and may appear to have a material conflict between its own interests and the interests of the shareholders of an investment company managed by one of the Advisers regarding how the proxy is to be voted. A conflict also may exist when an Adviser has actual knowledge of a material business arrangement between an issuer and an affiliate of the Adviser.

In practical terms, a conflict of interest may arise, for example, when a proxy is voted for a company that is a client of one of the Advisers, such as GAMCO Asset Management Inc. A conflict also may arise when a client of one of the Advisers has made a shareholder proposal in a proxy to be voted upon by one or more of the Advisers. The Director of Proxy Voting Services, together with the Legal Department, will scrutinize all proxies for these or other situations that may give rise to a conflict of interest with respect to the voting of proxies.

 

  B.

Operation of Proxy Voting Committee

For matters submitted to the Committee, each member of the Committee will receive, prior to the meeting, a copy of the proxy statement, any relevant third party research, a summary of any views provided by the Chief Investment Officer and any recommendations by Gabelli & Company, Inc. analysts. The Chief Investment Officer or the Gabelli & Company, Inc. analysts may be invited to present their viewpoints. If the Director of Proxy Voting Services or the Legal Department believe that the matter before the committee is one with respect to which a conflict of interest may exist between the Advisers and their clients, counsel will

 

2


provide an opinion to the Committee concerning the conflict. If the matter is one in which the interests of the clients of one or more of Advisers may diverge, counsel will so advise and the Committee may make different recommendations as to different clients. For any matters where the recommendation may trigger appraisal rights, counsel will provide an opinion concerning the likely risks and merits of such an appraisal action.

Each matter submitted to the Committee will be determined by the vote of a majority of the members present at the meeting. Should the vote concerning one or more recommendations be tied in a vote of the Committee, the Chairman of the Committee will cast the deciding vote. The Committee will notify the proxy department of its decisions and the proxies will be voted accordingly.

Although the Proxy Guidelines express the normal preferences for the voting of any shares not covered by a contrary investment guideline provided by the client, the Committee is not bound by the preferences set forth in the Proxy Guidelines and will review each matter on its own merits. Written minutes of all Proxy Voting Committee meetings will be maintained. The Advisers subscribe to ISS, which supplies current information on companies, matters being voted on, regulations, trends in proxy voting and information on corporate governance issues.

If the vote cast either by the analyst or as a result of the deliberations of the Proxy Voting Committee runs contrary to the recommendation of the Board of Directors of the issuer, the matter will be referred to legal counsel to determine whether an amendment to the most recently filed Schedule 13D is appropriate.

 

II.

Social Issues and Other Client Guidelines

If a client has provided special instructions relating to the voting of proxies, they should be noted in the client’s account file and forwarded to the proxy department. This is the responsibility of the investment professional or sales assistant for the client. In accordance with Department of Labor guidelines, the Advisers’ policy is to vote on behalf of ERISA accounts in the best interest of the plan participants with regard to social issues that carry an economic impact. Where an account is not governed by ERISA, the Advisers will vote shares held on behalf of the client in a manner consistent with any individual investment/voting guidelines provided by the client. Otherwise the Advisers will abstain with respect to those shares.

 

III.

Client Retention of Voting Rights

If a client chooses to retain the right to vote proxies or if there is any change in voting authority, the following should be notified by the investment professional or sales assistant for the client.

-Operations

-Legal Department

 

3


-Proxy Department

-Investment professional assigned to the account

In the event that the Board of Directors (or a Committee thereof) of one or more of the investment companies managed by one of the Advisers has retained direct voting control over any security, the Proxy Voting Department will provide each Board Member (or Committee member) with a copy of the proxy statement together with any other relevant information including recommendations of ISS or other third-party services.

 

IV.

Voting Records

The Proxy Voting Department will retain a record of matters voted upon by the Advisers for their clients. The Advisers will supply information on how an account voted its proxies upon request.

A letter is sent to the custodians for all clients for which the Advisers have voting responsibility instructing them to forward all proxy materials to:

[Adviser name]

Attn: Proxy Voting Department

One Corporate Center

Rye, New York 10580-1433

The sales assistant sends the letters to the custodians along with the trading/DTC instructions. Proxy voting records will be retained in compliance with Rule 204-2 under the Investment Advisers Act.

 

V.

Voting Procedures

1. Custodian banks, outside brokerage firms and clearing firms are responsible for forwarding proxies directly to the Advisers.

Proxies are received in one of two forms:

 

 

Shareholder Vote Authorization Forms (“VAFs”) - Issued by Broadridge Financial Solutions, Inc. (“Broadridge”) VAFs must be voted through the issuing institution causing a time lag. Broadridge is an outside service contracted by the various institutions to issue proxy materials.

 

Proxy cards which may be voted directly.

2. Upon receipt of the proxy, the number of shares each form represents is logged into the proxy system according to security.

3. In the case of a discrepancy such as an incorrect number of shares, an improperly signed or dated card, wrong class of security, etc., the issuing custodian is notified by phone. A corrected proxy is requested. Any arrangements are made to insure that a

 

4


proper proxy is received in time to be voted (overnight delivery, fax, etc.). When securities are out on loan on record date, the custodian is requested to supply written verification.

4. Upon receipt of instructions from the proxy committee (see Administrative), the votes are cast and recorded for each account on an individual basis.

Records have been maintained on the Proxy Edge system. The system is backed up regularly.

Proxy Edge records include:

Security Name and Cusip Number

Date and Type of Meeting (Annual, Special, Contest)

Client Name

Adviser or Fund Account Number

Directors’ Recommendation

How GAMCO voted for the client on each issue

5. VAFs are kept alphabetically by security. Records for the current proxy season are located in the Proxy Voting Department office. In preparation for the upcoming season, files are transferred to an offsite storage facility during January/February.

6. Shareholder Vote Authorization Forms issued by Broadridge are always sent directly to a specific individual at Broadridge.

7. If a proxy card or VAF is received too late to be voted in the conventional matter, every attempt is made to vote on one of the following manners:

 

 

VAFs can be faxed to Broadridge up until the time of the meeting. This is followed up by mailing the original form.

 

 

When a solicitor has been retained, the solicitor is called. At the solicitor’s direction, the proxy is faxed.

8. In the case of a proxy contest, records are maintained for each opposing entity.

9. Voting in Person

a) At times it may be necessary to vote the shares in person. In this case, a “legal proxy” is obtained in the following manner:

 

 

Banks and brokerage firms using the services at Broadridge:

The back of the VAF is stamped indicating that we wish to vote in person. The forms are then sent overnight to Broadridge. Broadridge issues individual legal proxies and

 

5


sends them back via overnight (or the Adviser can pay messenger charges). A lead-time of at least two weeks prior to the meeting is needed to do this. Alternatively, the procedures detailed below for banks not using Broadridge may be implemented.

 

 

Banks and brokerage firms issuing proxies directly:

The bank is called and/or faxed and a legal proxy is requested.

All legal proxies should appoint:

“Representative of [Adviser name] with full power of substitution.”

b)   The legal proxies are given to the person attending the meeting along with the following supplemental material:

 

 

A limited Power of Attorney appointing the attendee an Adviser representative.

 

A list of all shares being voted by custodian only. Client names and account numbers are not included. This list must be presented, along with the proxies, to the Inspectors of Elections and/or tabulator at least one-half hour prior to the scheduled start of the meeting. The tabulator must “qualify” the votes (i.e. determine if the vote have previously been cast, if the votes have been rescinded, etc. vote have previously been cast, etc.).

 

A sample ERISA and Individual contract.

 

A sample of the annual authorization to vote proxies form.

 

A copy of our most recent Schedule 13D filing (if applicable).

 

6


Appendix A

Proxy Guidelines

PROXY VOTING GUIDELINES

GENERAL POLICY STATEMENT

 

It is the policy of GAMCO Investors, Inc. to vote in the best economic interests of our clients. As we state in our Magna Carta of Shareholders Rights, established in May 1988, we are neither for nor against management. We are for shareholders.

At our first proxy committee meeting in 1989, it was decided that each proxy statement should be evaluated on its own merits within the framework first established by our Magna Carta of Shareholders Rights. The attached guidelines serve to enhance that broad framework.

We do not consider any issue routine. We take into consideration all of our research on the company, its directors, and their short and long-term goals for the company. In cases where issues that we generally do not approve of are combined with other issues, the negative aspects of the issues will be factored into the evaluation of the overall proposals but will not necessitate a vote in opposition to the overall proposals.

 

7


BOARD OF DIRECTORS

 

The advisers do not consider the election of the Board of Directors a routine issue. Each slate of directors is evaluated on a case-by-case basis.

Factors taken into consideration include:

 

 

Historical responsiveness to shareholders

This may include such areas as:

-Paying greenmail

-Failure to adopt shareholder resolutions receiving a majority of shareholder votes

 

Qualifications

 

Nominating committee in place

 

Number of outside directors on the board

 

Attendance at meetings

 

Overall performance

SELECTION OF AUDITORS

In general, we support the Board of Directors’ recommendation for auditors.

BLANK CHECK PREFERRED STOCK

We oppose the issuance of blank check preferred stock.

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

CLASSIFIED BOARD

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

While a classified board promotes continuity of directors facilitating long range planning, we feel directors should be accountable to shareholders on an annual basis. We will look

 

8


at this proposal on a case-by-case basis taking into consideration the board’s historical responsiveness to the rights of shareholders.

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

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

INCREASE AUTHORIZED COMMON STOCK

The request to increase the amount of outstanding shares is considered on a case-by-case basis.

Factors taken into consideration include:

 

 

Future use of additional shares

-Stock split

-Stock option or other executive compensation plan

-Finance growth of company/strengthen balance sheet

-Aid in restructuring

-Improve credit rating

-Implement a poison pill or other takeover defense

 

Amount of stock currently authorized but not yet issued or reserved for stock option plans

 

Amount of additional stock to be authorized and its dilutive effect

We will support this proposal if a detailed and verifiable plan for the use of the additional shares is contained in the proxy statement.

CONFIDENTIAL BALLOT

We support the idea that a shareholder’s identity and vote should be treated with confidentiality.

However, we look at this issue on a case-by-case basis.

In order to promote confidentiality in the voting process, we endorse the use of independent Inspectors of Election.

 

9


CUMULATIVE VOTING

In general, we support cumulative voting.

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

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

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

DIRECTOR LIABILITY AND INDEMNIFICATION

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

EQUAL ACCESS TO THE PROXY

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

FAIR PRICE PROVISIONS

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

 

10


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

Reviewed on a case-by-case basis.

GOLDEN PARACHUTES

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

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

Note: Congress has imposed a tax on any parachute that is more than three times the executive’s average annual compensation.

ANTI-GREENMAIL PROPOSALS

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

LIMIT SHAREHOLDERS’ RIGHTS TO CALL SPECIAL MEETINGS

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

CONSIDERATION OF NONFINANCIAL EFFECTS OF A MERGER

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

 

11


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

Reviewed on a case-by-case basis.

MERGERS, BUYOUTS, SPIN-OFFS, RESTRUCTURINGS

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

MILITARY ISSUES

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

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

NORTHERN IRELAND

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

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

 

12


OPT OUT OF STATE ANTI-TAKEOVER LAW

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

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

 

 

State of Incorporation

 

Management history of responsiveness to shareholders

 

Other mitigating factors

POISON PILL

In general, we do not endorse poison pills.

In certain cases where management has a history of being responsive to the needs of shareholders and the stock is very liquid, we will reconsider this position.

REINCORPORATION

Generally, we support reincorporation for well-defined business reasons. We oppose reincorporation if proposed solely for the purpose of reincorporating in a state with more stringent anti-takeover statutes that may negatively impact the value of the stock.

STOCK OPTION PLANS

Stock option plans are an excellent way to attract, hold and motivate directors and employees. However, each stock option plan must be evaluated on its own merits, taking into consideration the following:

 

 

Dilution of voting power or earnings per share by more than 10%

 

Kind of stock to be awarded, to whom, when and how much

 

Method of payment

 

13


 

Amount of stock already authorized but not yet issued under existing stock option plans

SUPERMAJORITY VOTE REQUIREMENTS

Supermajority vote requirements in a company’s charter or bylaws require a level of voting approval in excess of a simple majority of the outstanding shares. In general, we oppose supermajority-voting requirements. Supermajority requirements often exceed the average level of shareholder participation. We support proposals’ approvals by a simple majority of the shares voting.

LIMIT SHAREHOLDERS RIGHT TO ACT BY WRITTEN CONSENT

Written consent allows shareholders to initiate and carry on a shareholder action without having to wait until the next annual meeting or to call a special meeting. It permits action to be taken by the written consent of the same percentage of the shares that would be required to effect proposed action at a shareholder meeting.

Reviewed on a case-by-case basis.

 

14


Item 8. Portfolio Managers of Closed-End Management Investment Companies.

PORTFOLIO MANAGERS

Mario J. Gabelli, CFA, is Chairman and Chief Executive Officer of GAMCO Investors, Inc. that he founded in 1977 and Chief Investment Officer – Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc. Mr. Gabelli is a summa cum laude graduate of Fordham University and holds an MBA degree from Columbia Business School and Honorary Doctorates from Fordham University and Roger Williams University.

Kevin V. Dreyer joined Gabelli in 2005 as a research analyst covering companies within the consumer sector. He currently serves as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Gabelli/GAMCO Funds Complex. Mr. Dreyer received a BSE from the University of Pennsylvania and an MBA from Columbia Business School.

Christopher J. Marangi joined Gabelli in 2003 as a research analyst. He currently serves as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Gabelli/GAMCO Funds Complex. Mr. Marangi graduated magna cum laude and Phi Beta Kappa with a BA in Political Economy from Williams College and holds an MBA with honors from Columbia Business School.

MANAGEMENT OF OTHER ACCOUNTS

Information provided as of December 31, 2013

The table below shows the number of other accounts managed by the portfolio manager and the total assets in each of the following categories: registered investment companies, other paid investment vehicles and other accounts. For each category, the table also shows the number of accounts and the total assets in the accounts with respect to which the advisory fee is based on account performance.

 

Name of Portfolio

Manager

 

Type of

Accounts

 

Total

No. of
Accounts
Managed

 

Total

Assets

 

No. of

Accounts

where

Advisory
Fee is Based

on

Performance

 

Total Assets

in Accounts
where

Advisory
Fee is Based

on

Performance

1. Mario J. Gabelli

 

Registered Investment Companies:

 

  26   24.2B   7   3.6B
   

Other Pooled Investment Vehicles:

 

  15   555.2M   13   547.2M
   

Other

Accounts:

 

  1,694   18.5B   21   2.3B

2. Kevin V. Dreyer

 

Registered Investment Companies:

 

  5   6.4B   1   2.5B
   

Other Pooled Investment Vehicles:

 

  0   0   0   0
   

Other

Accounts:

 

  280   1.1B   1   8.3


3. Christopher J. Marangi  

Registered Investment Companies:

 

  5   7.2B   2   2.7B
   

Other Pooled Investment Vehicles:

 

  0   0   0   0
   

Other

Accounts:

 

  286   1.2B   2   20.4M

POTENTIAL CONFLICTS OF INTEREST

Actual or apparent conflicts of interest may arise when a Portfolio Manager also has day-to-day management responsibilities with respect to one or more other accounts. These potential conflicts include:

ALLOCATION OF LIMITED TIME AND ATTENTION.  Because the portfolio managers manage many accounts, they may not be able to formulate as complete a strategy or identify equally attractive investment opportunities for each of those accounts as might be the case if they were to devote all of their attention to the management of only a few accounts.

ALLOCATION OF LIMITED INVESTMENT OPPORTUNITIES.    If the portfolio managers identify an investment opportunity that may be suitable for multiple accounts, the Fund may not be able to take full advantage of that opportunity because the opportunity may be allocated among all or many of these accounts or other accounts managed primarily by other portfolio managers of the Adviser, and their affiliates.

SELECTION OF BROKER/DEALERS.  Because of Mr. Gabelli’s indirect majority ownership interest in G.research, Inc., he may have an incentive to use G.research to execute portfolio transactions for a Fund.

PURSUIT OF DIFFERING STRATEGIES.  At times, the portfolio managers may determine that an investment opportunity may be appropriate for only some of the accounts for which they exercises investment responsibility, or may decide that certain of these accounts should take differing positions with respect to a particular security. In these cases, the portfolio managers may execute differing or opposite transactions for one or more accounts which may affect the market price of the security or the execution of the transaction, or both, to the detriment of one or more of their accounts.

VARIATION IN COMPENSATION.   A conflict of interest may arise where the financial or other benefits available to the portfolio manager differ among the accounts that they manage. If the structure of the Adviser’s management fee or the portfolio manager’s compensation differs among accounts (such as where certain accounts pay higher management fees or performance-based management fees), the portfolio managers may be motivated to favor certain accounts over others. The portfolio managers also may be motivated to favor accounts in which they have an investment interest, or in which the Adviser, or its affiliates have investment interests. In Mr. Gabelli’s case, the Adviser’s compensation and expenses for the Fund are marginally greater as a percentage of assets than for certain other accounts and are less than for certain other accounts managed by Mr. Gabelli, while his personal compensation


structure varies with near-term performance to a greater degree in certain performance fee based accounts than with on-performance based accounts. In addition, he has investment interests in several of the funds managed by the Adviser and its affiliates.

The Adviser and the Funds have adopted compliance policies and procedures that are designed to address the various conflicts of interest that may arise for the Adviser and their staff members. However, there is no guarantee that such policies and procedures will be able to detect and prevent every situation in which an actual or potential conflict may arise.

COMPENSATION STRUCTURE FOR MARIO J. GABELLI

Mr. Gabelli receives incentive-based variable compensation based on a percentage of net revenues received by the Adviser for managing the Trust. Net revenues are determined by deducting from gross investment management fees the firm’s expenses (other than Mr. Gabelli’s compensation) allocable to this Trust. Five closed-end registered investment companies (including this Trust) managed by Mr. Gabelli have arrangements whereby the Adviser will only receive its investment advisory fee attributable to the liquidation value of outstanding preferred stock (and Mr. Gabelli would only receive his percentage of such advisory fee) if certain performance levels are met. Additionally, he receives similar incentive based variable compensation for managing other accounts within the firm and its affiliates. This method of compensation is based on the premise that superior long-term performance in managing a portfolio should be rewarded with higher compensation as a result of growth of assets through appreciation and net investment activity. The level of compensation is not determined with specific reference to the performance of any account against any specific benchmark. One of the other registered investment companies managed by Mr. Gabelli has a performance (fulcrum) fee arrangement for which his compensation is adjusted up or down based on the performance of the investment company relative to an index. Mr. Gabelli manages other accounts with performance fees. Compensation for managing these accounts has two components. One component is based on a percentage of net revenues to the investment adviser for managing the account. The second component is based on absolute performance of the account, with respect to which a percentage of such performance fee is paid to Mr. Gabelli. As an executive officer of the Adviser’s parent company, GBL, Mr. Gabelli also receives ten percent of the net operating profits of the parent company. He receives no base salary, no annual bonus, and no stock options.

COMPENSATION STRUCTURE FOR PORTFOLIO MANAGERS OF THE ADVISER OTHER THAN MARIO GABELLI

The compensation of the Portfolio Managers for the Fund is structure to enable the Adviser to attract and retain highly qualified professionals in a competitive environment. The Portfolio Managers receive a compensation package that includes a minimum draw or base salary, equity-based incentive compensation via awards of restricted stock, and incentive-based variable compensation based on a percentage of net revenue received by the Adviser for managing a Fund to the extent that the amount exceeds a minimum level of compensation. Net revenues are determined by deducting from gross investment management fees certain of the firm’s expenses (other than the respective Portfolio Manager’s compensation) allocable to the respective Fund (the incentive-based variable compensation for managing other accounts is also based on a percentage of net revenues to the investment adviser for managing the account). This method of compensation is based on the premise that superior long-term performance in managing a portfolio should be rewarded with higher compensation as a result of growth of assets through appreciation and net investment activity. The level of equity-based incentive and incentive-based variable compensation is based on an evaluation by the Adviser’s parent, GBL, of


quantitative and qualitative performance evaluation criteria. This evaluation takes into account, in a broad sense, the performance of the accounts managed by the Portfolio Manager, but the level of compensation is not determined with specific reference to the performance of any account against any specific benchmark. Generally, greater consideration is given to the performance of larger accounts and to longer term performance over smaller accounts and short-term performance.

OWNERSHIP OF SHARES IN THE FUND

Mario J. Gabelli, Kevin V. Dreyer and Christopher J. Marangi each owned over $1,000,000, $0 and $0, respectively, of shares of the Trust as of December 31, 2013.

 

(b) Not applicable.

 

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

REGISTRANT PURCHASES OF EQUITY SECURITIES

 

Period

 

      

(a) Total Number of
Shares (or Units)
Purchased

 

 

(b) Average Price Paid
per Share (or Unit)

 

 

(c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs

 

 

(d) Maximum Number (or
Approximate Dollar Value) of
Shares (or Units) that  May
Yet Be Purchased Under the
Plans or Programs

 

Month #1

07/01/13

through

07/31/13

     

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Common – 189,106,918

 

Preferred Series D – 2,363,860

 

Preferred Series G – 2,816,524

 

Preferred Series H – 4,200,000

 

Month #2

08/01/13

through

08/31/13

     

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – 100

 

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – $21.72

 

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – 100

 

Common – 189,106,918

 

Preferred Series D – 2,363,860

 

Preferred Series G – 2,816,524

 

Preferred Series H – 4,199,900

 

Month #3

09/01/13

through

09/30/13

     

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Common – 189,747,662

 

Preferred Series D – 2,363,860

 

Preferred Series G – 2,816,524

 

Preferred Series H – 4,199,900

 

Month #4

10/01/13

through

     

Common – N/A

 

Preferred Series D – N/A

 

Common – N/A

 

Preferred Series D – N/A

 

Common – N/A

 

Preferred Series D – N/A

 

Common – 189,747,662

 

Preferred Series D – 2,363,860

 


10/31/13      

Preferred Series G – N/A

 

Preferred Series H – N/A

 

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Preferred Series G – 2,816,524

 

Preferred Series H – 4,199,900

Month #5 11/01/13 through 11/30/13      

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G –

1,600

 

Preferred Series H – 9,627

 

 

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – $21.0275

 

Preferred Series H – $20.99

 

 

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – 1,600

 

Preferred Series H – 9,627

 

 

Common – 189,747,662

 

Preferred Series D – 2,363,860

 

Preferred Series G – 2,814,924

 

Preferred Series H – 4,190,273

 

Month 12/01/13 through 12/31/13      

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

 

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

 

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

 

Common – 190,604,128

 

Preferred Series D – 2,363,860

 

Preferred Series G – 2,814,924

 

Preferred Series H – 4,190,273

 

Total      

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G –

1,600

 

Preferred Series H – 9,727

 

 

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – $21.0275

 

Preferred Series H – $21.0471

 

 

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – 1,600

 

Preferred Series H –9,727

 

  N/A

 

Footnote columns (c) and (d) of the table, by disclosing the following information in the aggregate for all plans or programs publicly announced:

 

a. The date each plan or program was announced – The notice of the potential repurchase of common and preferred shares occurs quarterly in the Fund’s quarterly report in accordance with Section 23(c) of the Investment Company Act of 1940, as amended.
b. The dollar amount (or share or unit amount) approved – Any or all common shares outstanding may be repurchased when the Fund’s common shares are trading at a discount of 10% or more from the net asset value of the shares. Any or all preferred shares outstanding may be repurchased when the Fund’s preferred shares are trading at a discount to the liquidation value of $25.00.
c. The expiration date (if any) of each plan or program – The Fund’s repurchase plans are ongoing.
d. Each plan or program that has expired during the period covered by the table – The Fund’s repurchase plans are ongoing.
e. Each plan or program the registrant has determined to terminate prior to expiration, or under which the registrant does not intend to make further purchases. – The Fund’s repurchase plans are ongoing.


Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s Board of Directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.

Item 11. Controls and Procedures.

 

  (a)

The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

 

  (b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits.

 

  (a)(1)

Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto.

 

  (a)(2)

Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

 

  (a)(3)

Not applicable.

 

  (b)

Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto.

 (12.other) Not applicable.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant)

 

            The Gabelli Equity Trust Inc.

 

By (Signature and Title)*

 

  /s/ Bruce N. Alpert

 

      Bruce N. Alpert, Principal Executive Officer

 

Date

 

    3/10/2014

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)*

 

  /s/ Bruce N. Alpert

 

      Bruce N. Alpert, Principal Executive Officer

 

Date

 

    3/10/2014

 

By (Signature and Title)*

 

  /s/ Agnes Mullady

 

      Agnes Mullady, Principal Financial Officer and Treasurer

 

Date

 

    3/10/2014

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