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FIRST QUARTER REPORT
MARCH 31, 2002
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Our cover icon represents the underpinnings of Gabelli. The
Teton mountains in Wyoming represent what we believe in in
America -- that creativity, ingenuity, hard work and a
global uniqueness provide enduring values. They also stand
out in an increasingly complex, interconnected and
interdependent economic world.
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INVESTMENT OBJECTIVE:
The Gabelli Equity Trust Inc. is a closed-end,
non-diversified management investment company whose primary
objective is long-term growth of capital, with income as a
secondary objective.
THIS REPORT IS PRINTED ON RECYCLED PAPER.
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TO OUR SHAREHOLDERS,
The overall economic and stock market unfolded along the lines we
anticipated in our year-end report and in our interview with Barron's which we
shared with you.
We articulated that a combination of dynamics would converge to cause
economic activity, particularly in the first quarter, to be above the long-term
Gross Domestic Product ("GDP") growth of 3% to 4% that we had anticipated for
the balance of this decade.
In addition, we were and are in a camp of those that indicated that
earnings would surge upwards in 2002 driven by the higher volume, lower energy,
better inter-relationships between price/cost/productivity gains, the absence of
"the Kitchen Sink," and Financial Accounting Standards Board ("FASB") 142.
On the other side, we argued that we needed the rising earnings to provide
the underpinnings for a market that could readily be weighed down by concerns
from "Enronitis", analyst conflicts, Mid-East issues, the continuing war effort
and high equity valuations. The overall market would make little progress rising
some 5% or declining some 10% on the year -- this was our scenario.
SO WHAT HAPPENED?
Solid evidence that the economy had emerged from recession spawned a stock
market rally in late February/early March. However, the market stalled in late
March as investors waited to see if the brightening economic outlook would
translate into good first quarter earnings. At quarter-end, the leading market
indices were virtually unchanged, with the Dow Jones Industrial Average and the
Standard & Poor's ("S&P") 500 Index posting modest gains. Large cap stocks
continued to be battered as momentum investors abandoned this style of
speculation for investments in value-type stocks, particularly among lesser
known (and owned) small cap companies. Buoyed by good performance from
industrial goods, specialty chemicals and advertising-supported media shares,
our Trust enjoyed a roughly 3% appreciation in value.
COMPARATIVE RESULTS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH MARCH 31, 2002 (A)
-------------------------------------------------
SINCE
QUARTER 1 YEAR 3 YEAR 5 YEAR 10 YEAR INCEPTION (B)
------- ------ ------ ------ ------- -------------
Gabelli Equity Trust NAV Return (c) ...... 3.40% 5.36% 6.46% 11.95% 12.17% 12.48%
Gabelli Equity Trust Investment Return (d) 5.32% 14.96% 12.40% 17.00% 14.28% 13.48%
Dow Jones Industrial Average ............. 4.29% 7.23% 3.78% 11.47% 14.87% 11.58%
S&P 500 Index ............................ 0.28% 0.24% (2.53)% 10.18% 13.25% 10.26%
Nasdaq Composite Index ................... (5.39)% 0.28% (9.16)% 8.60% 11.82% 10.63%
(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 sold, they may be worth more or less than their original cost.
The Dow Jones Industrial Average is an unmanaged index of 30 large industrial
stocks. The S&P 500 Index and the Nasdaq Composite Index are unmanaged
indicators of stock market performance. Dividends are considered reinvested
(except for the Nasdaq Composite Index). Performance for periods less than one
year are not annualized.
(b) From commencement of investment operations on August 21, 1986.
(c) Total returns and average annual returns reflect changes in net asset
value (NAV), reinvestment of distributions, adjustments for rights offerings,
spin-offs and taxes paid on undistributed long-term capital gains, and are net
of expenses. Life of Fund return based on initial net asset value of $9.34.
(d) Total returns and average annual returns reflect changes in closing market
values on the New York Stock Exchange, reinvestment of distributions,
adjustments for rights offerings, spin-offs and taxes paid on undistributed
long-term capital gains. Life of Fund return based on an initial offering
price of $10.00.
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PREMIUM / DISCOUNT DISCUSSION
As a refresher to our shareholders, the price of a closed-end mutual fund
is determined in the open market by willing buyers and sellers. Shares of the
Trust trade on the New York Stock Exchange and may trade at a premium to (higher
than) net asset value ("NAV") (the market value of the Trust's underlying
portfolio) or a discount to (lower than) net asset value. Of the 470 closed-end
funds in the U.S., approximately 31% currently trade at premiums to NAV versus
21% five years ago and 61% ten years ago. For general equity funds such as the
Trust, approximately 31% currently trade at premiums to NAV versus 13% five
years and 19% ten years ago.
Ideally, the Trust's market price will generally track the NAV. The
Trust's premium or discount to NAV fluctuates over time. Over our Trust's
15-year history, the range fluctuated from a 28% premium in February 2002 to a
27% discount in December 1987. The average variance from NAV for the Trust since
inception is a 1% discount to NAV. Beginning in early 2001, the market price of
the Trust exceeded the NAV and this premium has gradually increased since. The
previous extended period in which a premium existed occurred during a 20-month
period from August 1993 to March 1995.
"Mr. Market" often provides opportunities to invest at a discount. The
Trust has undertaken various initiatives to narrow the discount when appropriate
through distribution policies, rights offerings, share repurchase programs and
use of leverage.
The Trust's long-term investment goal is to generate a real rate of return
of 10%. We believe that our stock selection process adds to the investment
equation. We have a successful history of investment providing shareholders
average annual returns of 13% since inception. However, it is important to
remember that "Mr. Market" is a pendulum that swings both ways. As the market
moves away from momentum investing and back to basics, we believe that an
excessive premium for the Trust is not likely to be sustainable.
PREMIUM/DISCOUNT SINCE INCEPTION
MARCH 31, 2002
--------------
Net Asset Value $ 9.00
Market Price $11.08
Premium 23.11%
[EDGAR REPRESENTATION OF GRAPH]
PLOT POINTS TO BE ADDED
9/30/86 0.0067
10/31/86 0.0046
11/30/86 -0.039
12/31/86 -0.0661
1/31/87 -0.1363
2/28/87 -0.1323
3/31/87 -0.1555
4/30/87 -0.1393
5/31/87 -0.1788
6/30/87 -0.2028
7/31/87 -0.2
8/31/87 -0.2052
9/30/87 -0.2128
10/31/87 -0.2074
11/30/87 -0.2154
12/31/87 -0.2061
1/31/88 -0.2235
2/29/88 -0.1145
3/31/88 -0.1523
4/30/88 -0.1477
5/31/88 -0.1906
6/30/88 -0.0819
7/31/88 -0.0984
8/31/88 -0.0942
9/30/88 -0.1097
10/31/88 -0.1256
11/30/88 -0.1104
12/31/88 -0.1113
1/31/89 -0.1214
2/28/89 -0.1108
3/31/89 -0.1006
4/30/89 -0.0925
5/31/89 -0.0699
6/30/89 -0.0468
7/31/89 -0.0854
8/31/89 -0.0243
9/30/89 -0.0385
10/31/89 -0.0257
11/30/89 -0.0217
12/31/89 0.0076
1/31/90 0.0534
2/28/90 -0.0156
3/31/90 0.0242
4/30/90 0.0033
5/31/90 -0.0056
6/30/90 -0.0049
7/31/90 -0.0176
8/31/90 -0.018
9/30/90 -0.0348
10/31/90 -0.1187
11/30/90 -0.0327
12/31/90 0.029
1/31/91 -0.0091
2/28/91 0.0269
3/31/91 0.015
4/30/91 -0.0257
5/31/91 -0.01
6/30/91 0.0138
7/31/91 -0.0032
8/31/91 -0.0009
9/30/91 -0.0298
10/31/91 -0.0083
11/30/91 -0.1014
12/31/91 -0.0366
1/31/92 -0.0077
2/29/92 0.0141
3/31/92 0.0045
4/30/92 0.0069
5/31/92 0.0092
6/30/92 0.0032
7/31/92 0.0165
8/31/92 0.0309
9/30/92 0.0427
10/31/92 -0.0068
11/30/92 -0.0461
12/31/92 -0.0257
1/31/93 -0.0312
2/28/93 -0.0046
3/31/93 0.0265
4/30/93 0.0436
5/31/93 0.012
6/30/93 -0.0207
7/31/93 -0.0093
8/31/93 -0.0358
9/30/93 0.0088
10/31/93 0.0601
11/30/93 0.0659
12/31/93 0.0573
1/31/94 0.0797
2/28/94 0.0673
3/31/94 0.0733
4/30/94 -0.027
5/31/94 0.0524
6/30/94 0.0542
7/31/94 0.0233
8/31/94 0.0597
9/30/94 0.0185
10/31/94 0.0375
11/30/94 0.0622
12/31/94 0.0121
1/31/95 0.0047
2/28/95 0.03
3/31/95 0.017
4/30/95 -0.0122
5/31/95 -0.024
6/30/95 -0.0081
7/31/95 -0.044
8/31/95 -0.0697
9/30/95 -0.0845
10/31/95 -0.1206
11/30/95 -0.075
12/31/95 -0.0578
1/31/96 -0.0625
2/29/96 -0.0821
3/31/96 -0.0385
4/30/96 -0.0732
5/31/96 -0.0916
6/30/96 -0.047
7/31/96 -0.0576
8/31/96 -0.0708
9/30/96 -0.0474
10/31/96 -0.0405
11/30/96 -0.0644
12/31/96 -0.0394
1/31/97 -0.0741
2/28/97 -0.0644
3/31/97 -0.0424
4/30/97 -0.0077
5/31/97 -0.0688
6/30/97 -0.0613
7/31/97 -0.0693
8/31/97 -0.0676
9/30/97 -0.0397
10/31/97 -0.0636
11/30/97 -0.0175
12/31/97 0.0316
1/31/98 0.0119
2/28/98 -0.0088
3/31/98 -0.022
4/30/98 -0.0788
5/31/98 -0.0885
6/30/98 -0.04
7/31/98 -0.042
8/31/98 -0.0814
9/30/98 -0.0091
10/31/98 0.0025
11/30/98 0.0216
12/31/98 0.0026
1/31/99 0.0103
2/28/99 0.0264
3/31/99 0.0202
4/30/99 -0.0068
5/31/99 -0.006
6/30/99 -0.0163
7/31/99 0.007
8/31/99 0.0159
9/30/99 0.0126
10/31/99 -0.0045
11/30/99 -0.0178
12/31/99 -0.0147
1/31/00 -0.0331
2/29/00 -0.0835
3/31/00 -0.0438
4/30/00 -0.078
5/31/00 -0.046
6/30/00 0.0097
7/31/00 -0.0093
8/31/00 0.0073
9/30/00 -0.0179
10/31/00 -0.0298
11/30/00 0.0332
12/31/00 0.0493
1/31/01 -0.045
2/28/01 -0.0067
3/31/01 0.1048
4/30/01 0.0937
5/31/01 0.1453
6/30/01 0.1596
7/31/01 0.1107
8/31/01 0.1614
9/30/01 0.2041
10/31/01 0.2241
11/30/01 0.2314
12/31/01 0.2029
3/31/02 0.025
0.0246
0.0231
2
COMMENTARY
THE ECONOMY: READY TO RUMBLE?
Impressive first and perhaps second quarter GDP growth appears to be "in
the bag" -- largely the result of the lift in manufacturing schedules from the
absence of "the inventory drag" in output. However, looking farther ahead, there
are marked differences of opinion on how strong the nascent economic recovery
will be. The optimists expect business investment, especially information
technology capital spending, to rebound in the second half, providing "legs" to
the consumer-led recovery. The pessimists contend that with the consumer having
spent freely throughout the modest and short-lived recession, end demand will
not be impressive enough to inspire corporations to invest more in their
businesses. Consequently, they anticipate an anemic recovery at best, and if
consumer spending flags, perhaps even a double-dip recession.
The realists -- we generously put ourselves in this category -- fall in
between. It is certainly true that strong economic recoveries are generally
propelled by pent-up consumer demand (housing, autos, and so on). But, we don't
expect the consumer to roll over and play dead. The Federal Reserve Board
("Fed") will probably hike interest rates later in the year -- "taking back" the
post 9/11 cuts -- but interest rates should remain relatively low. Mortgage
re-financing will abate as rates rise, but lower mortgage payments will continue
to have a positive effect on household cash flow. In addition, the 2001 tax cuts
that took place in 2002 continue to bolster workers' "take home" pay. Political
dynamics, volatility in oil prices and in the U.S. dollar will act as a drag on
consumer psychology. Our concerns center on the U.S. dollar, the Fed's
stop-go/stop-go policy and the "what if?" if the housing sector gets crimped.
We don't anticipate a surge in business investment this year and doubt
that technology capital spending will increase significantly. However, because
corporations reduced inventories so aggressively following the terrorist
attacks, capital outlays on cost saving equipment should increase as production
is ramped up to meet current retail activity. Should inventories be restocked,
this would put added zest to the manufacturing schedule. For example, General
Motors' "Keep America Rolling" campaign removed a million units from auto
industry inventories. The company has to increase production, which is below
demand, or inventories will be depleted even further. Our conclusion is that
business investment will trend higher, particularly as the year unfolds,
providing enough additional support to sustain an economic recovery muted by
higher oil prices. Finally, we observe that exports to Europe and Japan will
help in 2003, as will continued pick-up in defense-related spending.
EARNINGS, VALUATIONS AND INTEREST RATES CALL THE MARKET TUNE
The outlook for the economy certainly has an impact on investor
psychology. To wit, the late February/early March market surge was sparked by
the release of encouraging economic data and Fed Chairman Alan Greenspan's
uncharacteristically upbeat comments to Congress. However, earnings, valuations
and interest rates, not GDP growth rates, call the stock market tune.
The positive impact of cost cutting and improved productivity is never
apparent when the economy is in recession, but is magnified in profits when the
economy recovers. Corporations have been aggressively cutting costs and
improving productivity, and we believe earnings leverage will result in stronger
than expected profit growth in the year ahead. Also, corporations took maximum
advantage of the recession and the turmoil caused by the 9/11 tragedy to write
off everything including the kitchen sink. Going forward, we won't see the level
of write-offs that have penalized earnings in recent years. Finally, FASB
Statement 142, which does not require companies to amortize goodwill, should
provide a meaningful boost to reported earnings. After the surge in profits this
year, we see U.S.
3
corporate earnings growing on a secular basis in the 6% to 8% range in the years
ahead. S&P 500 earnings outside the U.S. should grow materially faster should
the U.S. dollar weaken, as we expect. The fact that we are entering a period of
easy year-to-year earnings comparisons should improve investors' moods.
Fed Chairman Greenspan has followed a policy of stop-go/stop-go/stop-go
type of monetary policy. In the past, this has been proven to be a difficult
course to pursue. Our conclusion is that the stock market can make halting
progress over the balance of 2002, but that stock selection will be the primary
determinant of investment returns for the foreseeable future.
PENT-UP DEAL DEMAND
While consumers have spent freely despite the recession and 9/11,
corporate acquirers have been sitting on their wallets. Deal activity, already
diminished by economic uncertainty and the declining value of equity as a deal
currency, came to an abrupt halt in the wake of the 9/11 crisis. As the
political, economic, and stock market dust settles, we expect pent-up deal
demand to be unleashed in a variety of industries.
The ability to grow via acquisition in a slower growth economy, the need
to preserve profit margins through realizing economies of scale, a government
now more concerned with economic growth than potentially anti-competitive
business combinations, more stable stock prices, and a change in accounting
rules diminishing the impact of goodwill on reported earnings are powerful
forces contributing to the "urge to merge."
TAKING THE HANDCUFFS OFF MEDIA
In recent shareholder letters we have discussed how regulatory changes in
the media industry should promote increased deal activity. On February 19, 2002
the District of Columbia Court of Appeals struck down Federal Communications
Commission ("FCC") restrictions on the ownership of cable and broadcast
television properties in the same markets. This would allow cable giants like
AOL Time Warner to bid for broadcast properties. The court ruling also paved the
way for raising the current cap above the 35% national "footprint" for
television broadcasters, in effect putting a bounty on the small group
broadcasters in our portfolio. We expect rules currently preventing companies
from owning television stations and newspapers in the same market to be modified
or eliminated. This should also spur further consolidation in the media
industry.
Thus far this year, just one of our media holdings, Ackerley Group, has
been taken out. We expect more media deals at more attractive premiums to reward
us in the year ahead.
THINNING THE WIRELESS HERD
Many years ago, we coined the phrase "Buffalo Investing," referring to our
strategy of buying small cable television companies in front of what we believed
would be massive consolidation in the industry. Our rationale was that as the
herd was thinned out, the cost of hunting and therefore the value of the
remaining buffalos would soar. When the industry was freed from the pricing
regulation that had been strangling cash flow, the hunt was on and we were
grandly rewarded.
We believe that the currently depressed wireless communications industry
is also ripe for consolidation. There are simply too many players battling for
market share. We expect to see the herd thinned out considerably in the years
ahead both by financial starvation of the weakest players and by bigger
predators taking down smaller competitors. Once again, we were somewhat
disappointed by the only deal we've seen this year -- Alltel's purchase of
4
CenturyTel's cellular properties at about 8 to 9 times cash flow -- a
substantial discount to the Street's prevailing valuation of 10 to 12 times cash
flow appraisal of wireless franchise values.
INTERNATIONAL OUTLOOK
A portion of the Trust's portfolio continues to be managed by Caesar
Bryan. Caesar is the portfolio manager of the Gabelli International Growth Fund
and the co-portfolio manager of The Gabelli Global Opportunity Fund and The
Gabelli Global Growth Fund. Caesar's thoughts on international markets and
global economies are provided below:
The overriding investment theme that seemed to dominate equity markets
during the first quarter was the strength of the economic recovery. This
recovery, having started in the U.S., is expected to spread to her trading
partners.
Looking at the GDP numbers, it appears that the recession in the U.S. was
short and shallow. It started in March 2001 and ended sometime last winter with
GDP, adjusted for inflation, falling by a tiny 0.3%. However, a story lies
behind the numbers. Since March 2001 about 1.4 million jobs have been lost which
is a fall of 1.1% in total employment. So a significant number of jobs were lost
when output hardly fell. The result was a rapid increase in productivity.
Two factors probably combined to limit the fall in output. First,
government spending rose sharply in response to the terrorist attacks on 9/11
and secondly, record low interest rates allowed the auto companies to offer zero
financing to consumers. These factors then led to a period of inventory
rebuilding.
Recent stock market price action suggests that investors remain skeptical
as to the strength of the recovery. Concerns center around the ability and
willingness of corporate America to begin to spend again. And this, in turn,
depends heavily on corporate profits. On the plus side, the consumer remains in
good spirits, the housing market is booming, and inflation is low and falling.
In this environment the Fed is likely to err on the side of maintaining interest
rates at a low level until more evidence of a sustained recovery appears. In the
background is the issue of the level of the dollar. The U.S. needs inflows of
$1.5 billion a day to finance its current account deficit. So foreign confidence
needs to be maintained, yet many U.S. industrialists are starting to squeal
about the painful side effects of a strong dollar on U.S. industrial
competitiveness. Should the dollar weaken, inflationary expectations may rise
and the Fed will be under some pressure to raise rates.
In contrast to the Fed, the European Central Bank ("ECB") has adopted a
more hawkish stance. This is probably because inflation is a little bit more
sticky in Europe than in the U.S. The ECB is now less confident that inflation
will fall below 2% in the coming months and believes risks to price stability
lie more on the upside than on the downside. The ECB is concerned because of the
strong Purchasing Managers Index report for April which also contained a large
jump in the "prices paid" component. It is possible that interest rates could
rise in Euroland from their current 3.25% before the Fed raises U.S. short-term
rates. The United Kingdom is probably the best performing of the larger European
economies. The consumer remains confident as the country is in the grip of a
housing boom.
There was a huge collective sigh of relief in early April emanating from
Japan as the fiscal year came to a close without a financial meltdown. Indeed, a
decent rally in the stock market in March helped shore up year-end balance
sheets. We believe Japan presents an interesting investment opportunity. There
are many world-class manufacturing companies which are attractively priced
ranked on a global basis, as well as domestic companies which will benefit from
restructuring and improved demand. There are signs that the Japanese economy is
undergoing a mild cyclical recovery. Of course, structural reform remains a
necessity. The banking problem is not yet fixed and there remains
5
over-capacity. Through higher demand and the reduction of capacity, Japanese
corporate profitability must be improved. Increasingly, we see evidence that
this challenge is being met.
Global economies are recovering, but the strength of the recovery may
disappoint the market. Many sectors will continue to suffer from over-capacity
and severe competition. We do expect a rebound in corporate profitability, but
this is based more on cost cutting than revenue growth. Of course, should there
be a more robust recovery, with a sharply higher level of corporate fixed
investment, profit growth could be explosive. But at this point, that scenario
is a little too rosy to reasonably expect. On the plus side, equity valuations
are now much more interesting, and many excellent companies are trading at
reasonable valuations. This is a level from which we hope to achieve reasonable
gains over the next year.
INVESTMENT SCORECARD
In anticipation of better earnings as the economy recovers, our industrial
cyclical holdings performed well, with stocks such as Dana Corp. and Nortek near
the top of our performance list. Small group broadcasters Young Broadcasting and
Gray Communications rebounded nicely this quarter, as did newspaper publishers
including Media General, McClatchy, and Scripps. Investments in lodging/gaming
companies like Hilton Hotels, Aztar, and Starwood Hotels and Resorts rewarded us
as the travel and tourism industry recovered from the shock of 9/11.
Telecommunications, wired and wireless, as well as cable holdings
continued to be the portfolio's albatross, with a substantial percentage of our
biggest laggards coming from this sector, which has witnessed the dumping of
their shares by growth and momentum-oriented portfolio managers. Longer term, as
growth in demand overtakes excess capacity, we believe our patience in the
telecom arena will be satisfactorily rewarded. In the interim, we believe
consolidation in the industry will help surface values. We believe AOL Time
Warner will continue to be a multimedia powerhouse and that Cablevision will
ultimately be the target of one of the dominant cable players.
LET'S TALK STOCKS
The following are stock specifics on selected holdings of our Trust.
Favorable earnings prospects do not necessarily translate into higher stock
prices, but they do express a positive trend that we believe will develop over
time.
AMERICAN EXPRESS CO. (AXP - $40.96 - NYSE), one of the most widely recognized
brands around the world, is focused on increasingly cross-selling financial
products and services to its customers. The company consists of three segments:
its Travel Related Services business, which contributes 80% of revenues,
provides charge cards, credit cards, travelers cheques, and travel services to
corporations and consumers; American Express Financial Advisors, which
contributes 17% of revenues, provides investment advisory services and financial
products such as mutual funds, insurance, and annuities; finally, American
Express Bank, which accounts for 3% of revenues, offers banking services to
other financial institutions, wholesale banking for corporations, and private
banking for high net worth individuals. The company's long-term goal is to
deliver revenue growth of at least 8% and earnings per share ("EPS") growth
between 12% and 15%.
BERKSHIRE HATHAWAY INC. (BRK'A - $71,100 - NYSE) is Warren Buffett. The company
has interests in insurance (notably GEICO and General Re), publishing, aviation,
retailing, and manufacturing. Its investment portfolio includes over $28 billion
of marketable equity securities. Berkshire has grown rapidly through
acquisitions over the past 15 years, including Kirby vacuum cleaners; World Book
encyclopedias; H. H. Brown, Dexter and Justin
6
footwear; Executive Jet aviation; Dairy Queen restaurants and snack treats;
Johns Manville building products; Benjamin Moore paints; Shaw Industries
carpets; MiTek steel connectors; XTRA transportation leasing; GEICO insurance;
and General Re reinsurance. GEICO, the sixth largest auto insurer in the U.S.,
contributes 19% of revenues while General Re, the fourth largest reinsurer
globally, contributes 30% of revenues.
GUCCI GROUP NV (GUC - $92.52 - NYSE), Pinault Printemps (PPR - $118.32 - Paris
Stock Exchange) and LVMH Moet Hennessy Louis Vuitton (LVMHY - $10.15 - Nasdaq)
have signed a three-step agreement under which PPR will take control of Gucci.
In the first step, PPR has raised its stake in Gucci by buying 8.6 million
shares from LVMH. Gucci has also already paid to holders a dividend of $7 per
share. The final step will enable Gucci public shareholders to "put" (sell)
their shares to PPR at $101.50 per share in March 2004. At the current price,
the yield to the put date for Gucci shareholders, including dividends, is
approximately 5% annualized.
LIBERTY MEDIA CORP. (L - $12.64 - NYSE), run by savvy media investor John
Malone, is engaged in businesses that provide programming services (including
production, acquisition and distribution through all media formats) as well as
businesses engaged in electronic retailing, direct marketing and other services.
Liberty Media holds interests in globally branded entertainment networks such as
the Discovery Channel, USA Networks, QVC, Encore and STARZ!. Liberty's
investment portfolio also includes interests in international video distribution
businesses, international telephony and domestic wireless companies, plant and
equipment manufacturers, and other businesses related to broadband services.
MEDIA GENERAL INC. (MEG - $63.50 - NYSE) is a Richmond, Virginia-based
communications company that is primarily focused on the Southeast. Its newspaper
publishing operations include the Richmond Times-Dispatch, the Winston-Salem
Journal, the Tampa Tribune, and 22 other daily newspapers. This includes 5 daily
newspapers, clustered in Alabama and South Carolina, which the company bought
from Thomson Corp. for $238 million in August 2000. The company also owns a 20
percent interest in the Denver Post. Media General also operates 26 television
stations primarily located in Southeastern markets, including 13 purchased from
Spartan Communications on March 27, 2000 for $605 million.
NAVISTAR INTERNATIONAL CORP. (NAV - $44.30 - NYSE), with world headquarters
outside of Chicago, is a leading North American manufacturer and marketer of
medium and heavy trucks and school buses, and a worldwide leader in the
manufacture of mid-range diesel engines, produced in a range of 160 to 300
horsepower for the International[R] brand. The company is also a private label
designer and manufacturer of diesel engines for the full-size pickup truck and
van markets. The company's products, parts and services are sold through a
network of 1,000 International[R] brand dealer outlets in the United States,
Canada, Brazil and Mexico, and through more than 90 separate dealers in 75
countries. Navistar provides financing for its customers and distributors
principally through its wholly-owned subsidiary, Navistar Financial Corporation.
PEPSICO INC. (PEP - $51.50 - NYSE) is a $25 billion food and beverage company
after the acquisition of Quaker Oats was completed on August 2, 2001. PepsiCo
added several products to its existing portfolio of the Pepsi-Cola and Frito Lay
brands, such as Gatorade and the Quaker Oat snack and food businesses. The
company is focused on the faster growing convenience category, improving their
distribution systems and extracting the synergies expected from the merger.
PepsiCo is also benefiting from the introduction of new products such as
Mountain Dew Code Red, Pepsi with Lemon, Bistro chips and the continued robust
growth of Aquafina.
7
SPS TECHNOLOGIES INC. (ST - $42.37 - NYSE) is a leading manufacturer of
fasteners, superalloys and magnetic materials for the aerospace, automotive and
industrial markets. The Precision Fasteners and Components group produces high
strength fasteners for the aerospace, automotive and machinery markets. The
Specialty Materials and Alloys group makes superalloys for the aerospace and
industrial gas turbine markets and the Magnetic Products group produces magnetic
materials used in automotive, electronics and other specialty applications.
Under the leadership of CEO Charlie Grigg, SPS has made 18 acquisitions since
1996 and has positioned the nearly $1 billion company to be a strategic global
supplier in the fastener and component industry. We believe the company will
continue to use its strong cash flow to augment internal revenue and earnings
growth with acquisitions.
STANDARD MOTOR PRODUCTS INC. (SMP - $14.60 - NYSE), headquartered in Long Island
City, New York, supplies functional replacement parts for the engine management,
electrical and climate control systems of cars, trucks and buses. The company
services all makes and models, both new and old cars, imported and domestic. SMP
has two primary divisions -- engine management and temperature control -- and
believes it is the number one supplier to the North American aftermarket in each
of these lines.
TELEPHONE & DATA SYSTEMS INC. (TDS - $88.25 - AMEX) provides mobile and local
phone services to 3.6 million customers in 35 states. TDS conducts its cellular
operations through an 81%-owned United States Cellular (USM - $41.00 - AMEX) and
its wireline telephone operations through its wholly owned TDS
Telecommunications ("TDS Telecom") subsidiary, a full-service local exchange
carrier. Having completed a merger of its 82%-owned PCS subsidiary Aerial
Communications with VoiceStream Wireless, which was acquired by Deutsche Telekom
(DT - $14.98 - NYSE), a former German phone monopoly, TDS now owns 131.6 million
shares of Deutsche Telekom valued at almost $2 billion. As part of the
VoiceStream/Deutsche Telekom deal, TDS also received $570 million in cash.
THOMAS & BETTS CORP. (TNB - $21.16 - NYSE) primarily manufactures electrical
components and connectors. This business is suffering from its exposure to the
technology and telecommunications industries. Management is cutting costs and
restructuring the business to be profitable at the current lower revenue levels.
Any or all of the 3 smaller business segments -- Steel Structures (utility
poles), Communications (CATV equipment), and HVAC -- could be sold to raise cash
and streamline the company. We also expect management to monetize the 20%
investment in Leviton Manufacturing, a private company on Long Island, NY.
VIACOM INC. (VIA - $48.60 - NYSE) is a diversified media company with businesses
across many media platforms. The firm operates cable networks (including VH1,
MTV, Showtime and Nickelodeon), television networks and stations (including the
CBS and UPN Television networks and numerous affiliated TV stations in major
markets), major market radio stations and outdoor advertising (through Infinity
Broadcasting), a movie studio (Paramount), a publishing house (Simon and
Schuster), amusement parks (Paramount Parks) and video rental operations
(Blockbuster). The company focuses on high growth businesses and aims to deliver
cash flow growth that is above the industry average.
8
COMMON STOCK 10% DISTRIBUTION POLICY
The Trust continues to maintain its 10% Distribution Policy whereby the
Trust pays out to common stock shareholders 10% of its average net assets each
year. Pursuant to this policy, the Trust distributed $0.27 per share on March
25, 2002. The next distribution is scheduled for June 2002.
7.25% TAX ADVANTAGED CUMULATIVE PREFERRED STOCK - DIVIDENDS
The Trust's 7.25% Tax Advantaged Cumulative Preferred Stock paid a cash
distribution on March 26, 2002 of $0.453125 per share. For the twelve months
ended March 31, 2002, Preferred Stock shareholders received distributions
totaling 1.8125, the annual dividend rate per share of Preferred Stock. The next
distribution is scheduled for June 2002.
7.20% TAX ADVANTAGED SERIES B CUMULATIVE PREFERRED STOCK - DIVIDENDS
The Trust's 7.20% Tax Advantaged Series B Cumulative Preferred Stock paid
a cash distribution on March 26, 2002 of $0.45 per share. The Series B Preferred
Shares were issued on June 20, 2001 at $25.00 per share and will pay
distributions quarterly at an annual dividend rate of $1.80 per share. The next
distribution is scheduled for June 2002.
WWW.GABELLI.COM
Please visit us on the Internet. Our homepage at http://www.gabelli.com
contains information about Gabelli Asset Management Inc., the Gabelli Mutual
Funds, IRAs, 401(k)s, quarterly reports, closing prices and other current news.
You can send us e-mail at closedend@gabelli.com.
In our efforts to bring our shareholders more timely portfolio
information, Gabelli Fund's portfolio managers regularly participate in chat
sessions at www.gabelli.com as reflected below.
WHO WHEN
--- ----
Special Chats: Mario J. Gabelli First Monday of each month
Howard Ward First Tuesday of each month
In addition, every Wednesday will feature a different portfolio manager.
The upcoming Wednesday chat schedule is as follows:
MAY JUNE JULY
--- ---- ----
1st Wednesday Ivan Arteaga Henry Van der Eb Ivan Arteaga
2nd Wednesday Charles Minter & Martin Weiner Caesar Bryan Caesar Bryan
3rd Wednesday Walter Walsh & Laura Linehan Ivan Arteaga Lynda Calkin
4th Wednesday Hart Woodson Barbara Marcin Henry Van der Eb
5th Wednesday Barbara Marcin Barbara Marcin
All chat sessions start at 4:15 ET. Please arrive early, as participation
is limited.
You may sign up for our HIGHLIGHTS e-mail newsletter at www.gabelli.com
and receive early notice of chat sessions, closing mutual fund prices, news
events and media sightings.
9
IN CONCLUSION
In the first quarter of 2002, equity investors responded favorably to
encouraging economic news. Indeed, the economy appears back on solid footing and
we should see earnings rebound nicely. Our concern is that much of this good
news is already reflected in stock prices and that as the Fed raises interest
rates later in the year, equity valuations may come under pressure. So, while
the worst may be over, we don't see smooth sailing for equities going forward.
Stock picking will remain the key to returns and we believe our focus on
companies selling at deep discounts to intrinsic value will be rewarded as
merger and acquisition activity heats up in the year ahead.
Sincerely,
/S/ Mario J. Gabelli
MARIO J. GABELLI, CFA
Portfolio Manager and Chief Investment Officer
May 6, 2002
--------------------------------------------------------------------------------
SELECTED HOLDINGS
MARCH 31, 2002
--------------
American Express Co. Navistar International Corp.
Berkshire Hathaway Inc. PepsiCo Inc.
Gucci Group NV Telephone & Data Systems Inc.
Liberty Media Corp. Thomas & Betts Corp.
Media General Inc. Viacom Inc.
--------------------------------------------------------------------------------
NOTE: The views expressed in this report reflect those of the portfolio managers
only through the end of the period stated in this report. The managers' views
are subject to change at any time based on market and other conditions.
10
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES
QUARTER ENDED MARCH 31, 2002
(UNAUDITED)
OWNERSHIP AT
MARCH 31,
SHARES 2002
---------- ------------
NET PURCHASES
COMMON STOCKS
American Express Co. ........................... 70,000 550,000
AOL Time Warner Inc. ........................... 110,000 575,000
AT&T Wireless Services Inc. .................... 130,000 500,170
BAE Systems plc ................................ 25,000 150,000
Bank of Ireland, London ........................ 11,000 11,000
BCE Inc. ....................................... 45,000 320,000
Broadwing Inc. ................................. 130,000 810,000
Burlington Resources Inc. ...................... 15,000 150,000
Cable & Wireless plc, ADR ...................... 3,000 173,000
Campbell Soup Co. .............................. 45,000 65,000
Coca-Cola Co. .................................. 15,000 30,000
Cooper Industries Inc. ......................... 5,000 120,000
CoreComm Ltd. .................................. 577,000 1,577,000
Corning Inc. ................................... 60,000 460,000
Curtiss-Wright Corp., Cl. B .................... 92,000 98,320
Dana Corp. ..................................... 69,900 320,061
DTE Energy Co. ................................. 18,000 30,366
Embratel Participacoes SA, ADR ................. 5,000 215,000
Flowers Foods Inc. (a) ......................... 26,600 41,600
Fox Entertainment Group Inc., Cl. A ............ 10,000 120,000
FPL Group Inc. ................................. 9,400 9,400
France Telecom SA, ADR ......................... 2,000 27,000
Franklin Electric Co. Inc. (b) ................. 6,500 13,000
Fuller (H.B.) Co. .............................. 16,000 40,000
General Motors Corp. ........................... 10,000 167,942
Genuity Inc. ................................... 20,000 180,000
Grupo Bimbo, SA de CV, Ser. A .................. 184,300 351,000
Gucci Group NV, ADR ............................ 3,000 33,000
Halliburton Co. ................................ 100,000 300,000
Heinz (H.J.) Co. ............................... 5,000 85,000
Hilton Group plc ............................... 200,000 1,650,000
Honeywell International Inc. ................... 5,000 380,000
John Hancock Financial Services Inc. ........... 20,000 60,000
Leap Wireless International Inc. ............... 10,000 140,000
Liberty Media Corp., Cl. A ..................... 100,000 1,800,000
MeadWestvaco Corp. (c) ......................... 100,000 100,000
Merck & Co. Inc. ............................... 35,000 35,000
Metro-Goldwyn-Mayer Inc. ....................... 290,000 300,000
Mirant Corp. ................................... 60,000 60,000
mm02 plc, ADR .................................. 14,500 130,000
Motorola Inc. .................................. 10,000 110,000
Newmont Mining Corp. Holding Co. ............... 25,000 125,000
News Corp. Ltd., ADR (d) ....................... 6,017 11,017
Nikko Cordial Co. .............................. 15,000 186,500
Northeast Utilities ............................ 55,000 250,000
NTT DoCoMo Inc. (e) ............................ 100 200
NTT DoCoMo Inc. - W/I (e) ...................... 800 800
Pennzoil-Quaker State Co. ...................... 50,000 213,400
PRIMEDIA Inc. .................................. 87,000 300,000
Qwest Communications
International Inc. .......................... 20,000 20,000
Rainbow Media Group ............................ 50,000 550,000
RAS SpA ........................................ 10,000 60,000
OWNERSHIP AT
MARCH 31,
SHARES 2002
---------- ------------
Sara Lee Corp. ................................. 10,000 20,000
Schwab (Charles) Corp. ......................... 50,000 50,000
Sensient Technologies Corp. .................... 13,800 213,800
SJW Corp. ...................................... 200 10,400
Sprint Corp. - PCS Group ....................... 30,000 250,000
Telecom Argentina Stet France
Telecom SA, ADR ............................. 20,000 40,000
Telefonica SA, ADR (f) ......................... 13,775 279,024
Telefonica SA, BDR (g) ......................... 657 16,913
Texas Instruments Inc. ......................... 40,000 40,000
Thomas Industries Inc. ......................... 23,000 100,000
Tootsie Roll Industries Inc. (h) ............... 3,025 103,855
Total Fina Elf SA .............................. 2,000 6,907
Travelers Property Casualty Corp. .............. 7,000 7,000
TRW Inc. ....................................... 170,000 170,000
PREFERRED STOCKS
Allen Telecom Inc., 7.750%,
Cv. Pfd., Ser. D ............................ 60,000 60,000
Lucent Technologies Capital Trust I,
7.750% Cv. Pfd. ............................. 500 500
News Corp. Ltd., Pfd., ADR (i) ................. 3,008 770,499
ProSieben Sat.1 Media AG, Pfd. ................. 57,000 100,000
PRINCIPAL
AMOUNT
----------
CORPORATE BONDS
Charter Communications Inc.,
Cv., 4.750%, 06/01/06 ....................... $100,000 $500,000
Hilton Hotels Corp., Sub. Deb. Cv.,
5.000%, 05/15/06 ............................ 170,000 400,000
Nextel Communications Inc., 9.500%,
02/01/11 .................................... 500,000 500,000
SHARES
----------
NET SALES
COMMON STOCKS
Ackerley Group Inc. ............................ (7,100) 42,900
Aetna Inc. ..................................... (50,000) 0
AGL Resources Inc. ............................. (3,400) 70,000
Allstate Corp. ................................. (5,000) 90,000
Amphenol Corp., Cl. A .......................... (3,000) 2,000
AutoNation Inc. ................................ (20,000) 300,000
Aztar Corp. .................................... (10,000) 110,000
Bank of New York Co. Inc. ...................... (5,000) 80,000
Bank One Corp. ................................. (5,000) 105,000
Benesse Corp. .................................. (14,000) 0
Boeing Co. ..................................... (3,000) 115,000
Cable & Wireless plc ........................... (95,000) 0
CH Energy Group Inc. ........................... (5,000) 115,000
CLARCOR Inc. ................................... (7,000) 100,000
Coca-Cola Enterprises Inc. ..................... (20,000) 50,000
Curtiss-Wright Corp. ........................... (98,000) 0
Dominion Resources Inc. ........................ (3,000) 5,000
Donaldson Co. Inc. ............................. (6,000) 219,000
Friends Provident plc .......................... (126,000) 0
General Mills Inc. ............................. (5,000) 90,000
GTECH Holdings Corp. ........................... (1,000) 4,000
11
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES (CONTINUED)
QUARTER ENDED MARCH 31, 2002
(UNAUDITED)
OWNERSHIP AT
MARCH 31,
SHARES 2002
---------- ------------
NET SALES (CONTINUED)
COMMON STOCKS (CONTINUED)
Harley Davidson Inc. ........................... (10,000) 60,000
Hilton Hotels Corp. ............................ (40,000) 660,000
IDEX Corp. ..................................... (47,000) 250,000
Independent News & Media plc, Dublin. .......... (235,000) 411,000
ITT Industries Inc. ............................ (5,000) 125,000
Jafco Co. Ltd. ................................. (10,000) 0
Loral Space & Communications Ltd. .............. (10,000) 190,000
MGM Mirage Inc. ................................ (25,000) 90,000
National Service Industries Inc. (j) ........... (105,000) 35,000
Navistar International Corp. ................... (5,000) 425,000
Nextel Communications Inc., Cl. A .............. (10,000) 240,000
Niagara Mohawk Holdings Inc. (k) ............... (210,000) 0
Nortek Inc. .................................... (4,000) 140,000
NRJ Group ...................................... (10,000) 40,375
NTL Inc. ....................................... (20,000) 40,000
Obic Co. Ltd. .................................. (1,000) 1,500
Pactiv Corp. ................................... (10,000) 170,000
Procter & Gamble Co. ........................... (10,000) 100,000
RCN Corp. ...................................... (20,000) 130,000
Rohm and Haas Co. .............................. (73,000) 100,000
Rollins Inc. ................................... (5,000) 505,000
Royce Value Trust Inc. ......................... (4,000) 40,000
Sammy Corp. .................................... (3,300) 0
Scheib (Earl) Inc. ............................. (4,200) 70,800
Scripps (E.W.) Co., Cl. A ...................... (1,000) 70,000
Secom Co. Ltd. ................................. (3,000) 7,000
Smith Group plc ................................ (2,420) 10,000
Starwood Hotels & Resorts
Worldwide Inc. .............................. (10,000) 50,000
Superior Industries International Inc. ......... (10,000) 60,000
THK Co. Ltd. ................................... (4,000) 44,000
Tokyo Electron Ltd. ............................ (3,000) 9,400
Tyson Foods Inc., Cl. A ........................ (110,000) 90,000
Waste Management Inc. .......................... (10,000) 300,000
Westvaco Corp. (c) ............................. (105,000) 0
Willamette Industries Inc. (l) ................. (322,000) 0
Winn-Dixie Stores Inc. ......................... (10,000) 50,000
Wyeth .......................................... (2,000) 38,000
Xerox Corp. .................................... (2,000) 10,000
OWNERSHIP AT
PRINCIPAL MARCH 31,
AMOUNT 2002
---------- ------------
CORPORATE BONDS
Kaman Corp., Sub. Deb. Cv.,
6.000%, 03/15/12 ............................ $ (67,000) $ 933,000
News America Holdings Inc.,
Sub. Deb. Cv., Zero Coupon (d)(i) ........... (200,000) 0
Waste Management Inc.,
Sub. Deb. Cv., 4.000%, 02/01/02 ............. (2,039,000) 0
--------------------------------------------------------------------------------
(a) 3 for 2 stock split
(b) 2 for 1 stock split
(c) Merger - 0.97 shares of MeadWestvaco Corp. for every 1 share of Westvaco
Corp.
(d) Merger - 0.0301 shares of News Corp. Ltd., ADR for every 1 share of News
America Holdings Inc., Cvt.
(e) 5 for 1 stock split
(f) 2% Stock dividend
(g) 2% Stock dividend
(h) 3% Stock dividend
(i) Merger - 0.0150 shares of News Corp. Ltd., Pfd., ADR for every
1 share of News America Holdings Inc., Cvt.
(j) 1 for 4 stock split
(k) Cash merger at $18.89 a share
(l) Tender Offer at $55.50 per share
12
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS
MARCH 31, 2002 (UNAUDITED)
MARKET
SHARES VALUE
------------ ------------
COMMON STOCKS -- 88.5%
ENTERTAINMENT -- 8.8%
575,000 AOL Time Warner Inc.+ ........................ $ 13,598,750
160,000 Canal Plus, ADR .............................. 106,640
220,000 Disney (Walt) Co. ............................ 5,077,600
100,000 EMI Group plc, ADR ........................... 1,029,550
120,000 Fox Entertainment Group Inc., Cl. A+ ......... 2,838,000
50,000 GC Companies Inc.+ ........................... 8,000
30,432 Gemstar-TV Guide International Inc.+ ......... 450,089
195,000 Grupo Televisa SA, ADR+ ...................... 9,459,450
24,000 Liberty Livewire Corp., Cl. A+ ............... 138,720
1,800,000 Liberty Media Corp., Cl. A+ .................. 22,752,000
300,000 Metro-Goldwyn-Mayer Inc.+ .................... 4,986,000
160,000 Publishing & Broadcasting Ltd. ............... 849,641
100,000 Six Flags Inc.+ .............................. 1,786,000
495,000 USA Networks Inc.+ ........................... 15,726,150
850,000 Viacom Inc., Cl. A+ .......................... 41,310,000
30,900 Vivendi Universal SA ......................... 1,201,743
210,000 Vivendi Universal SA, ADR .................... 8,085,000
------------
129,403,333
------------
TELECOMMUNICATIONS -- 8.6%
8,132 Aliant Inc. .................................. 135,837
7,500 Allegiance Telecom Inc.+ ..................... 22,500
30,000 ALLTEL Corp. ................................. 1,666,500
50,000 AT&T Canada Inc., Cl. B+ ..................... 1,346,500
1,500,000 AT&T Corp. ................................... 23,550,000
3,333 Avaya Inc.+ .................................. 24,598
320,000 BCE Inc. ..................................... 5,638,400
33,400 Brasil Telecom
Participacoes SA, ADR ...................... 1,332,660
810,000 Broadwing Inc.+ .............................. 5,661,900
1,775,000 BT Group plc+ ................................ 7,077,350
29,000 BT Group plc, ADR+ ........................... 1,165,220
3,338,192 Cable & Wireless Jamaica Ltd. ................ 121,337
173,000 Cable & Wireless plc, ADR .................... 1,702,320
130,000 CenturyTel Inc. .............................. 4,420,000
100,000 Citizens Communications Co.+ ................. 1,075,000
255,466 Commonwealth Telephone
Enterprises Inc.+ .......................... 9,771,574
20,000 Commonwealth Telephone
Enterprises Inc., Cl. B+ ..................... 870,000
45,000 Compania de Telecomunicaciones
de Chile SA, ADR+ .......................... 673,650
1,577,000 CoreComm Ltd.+ ............................... 157,700
240,278 Deutsche Telekom AG, ADR ..................... 3,599,364
215,000 Embratel Participacoes SA, ADR ............... 741,750
27,000 France Telecom SA, ADR ....................... 821,070
265 Japan Telecom Co. Ltd. ....................... 819,783
100,000 KPN NV+ ...................................... 512,096
MARKET
SHARES VALUE
------------ ------------
20,000 Qwest Communications
International Inc. ......................... $ 164,400
130,000 RCN Corp.+ ................................... 183,300
9,655 Rogers Communications Inc., Cl. B+ ........... 131,926
110,345 Rogers Communications
Inc., Cl. B, ADR+ .......................... 1,511,727
115,000 SBC Communications Inc. ...................... 4,305,600
350,000 Sprint Corp. - FON Group ..................... 5,351,500
186,554 Tele Norte Leste
Participacoes SA, ADR ...................... 2,343,118
40,000 Telecom Argentina Stet
France Telecom SA, ADR ..................... 114,400
400,040 Telecom Italia SpA ........................... 3,294,492
123,000 Telecom Italia SpA, ADR ...................... 10,055,250
135,000 Telecom Italia SpA, RNC ...................... 741,972
279,024 Telefonica SA, ADR+ .......................... 9,238,487
16,913 Telefonica SA, BDR+ .......................... 190,303
36,000 Telefonos de Mexico SA, Cl. L, ADR ........... 1,454,040
12,750 TELUS Corp. .................................. 145,926
52,500 TELUS Corp., ADR ............................. 600,872
4,250 TELUS Corp., Non-Voting ...................... 44,673
27,500 TELUS Corp., Non-Voting, ADR ................. 289,060
295,000 Verizon Communications Inc. .................. 13,466,750
100,000 WorldCom Inc. - MCI Group .................... 591,000
------------
127,125,905
------------
FINANCIAL SERVICES -- 8.0%
26,000 Aegon NV ..................................... 634,650
4,100 Allianz AG ................................... 976,472
90,000 Allstate Corp. ............................... 3,399,300
550,000 American Express Co. ......................... 22,528,000
36,400 Argonaut Group Inc. .......................... 769,496
90,000 Banco Santander Central
Hispano SA, ADR ............................ 739,800
99,000 Bank of Ireland, Ireland ..................... 1,071,816
11,000 Bank of Ireland, London ...................... 122,353
80,000 Bank of New York Co. Inc. .................... 3,361,600
105,000 Bank One Corp. ............................... 4,386,900
282,000 Bankgesellschaft Berlin AG+ .................. 519,092
260 Berkshire Hathaway Inc., Cl. A+ .............. 18,486,000
5,000 Block (H&R) Inc. ............................. 222,250
190,000 Commerzbank AG, ADR .......................... 3,401,266
160,000 Deutsche Bank AG, ADR+ ....................... 10,304,000
20,000 Dun and Bradstreet Corp.+ .................... 800,200
56,000 HBOS plc ..................................... 604,864
25,000 Hibernia Corp., Cl. A ........................ 477,500
20,000 Invik & Co. AB, Cl. B ........................ 1,032,997
100,000 Irish Life & Permanent plc, Dublin ........... 1,260,611
60,000 John Hancock Financial Services Inc. ......... 2,291,400
50,000 JP Morgan Chase & Co. ........................ 1,782,500
64,000 Leucadia National Corp. ...................... 2,288,000
13
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2002 (UNAUDITED)
MARKET
SHARES VALUE
------------ ------------
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES (CONTINUED)
83,100 Mellon Financial Corp. ....................... $ 3,206,829
100,000 Midland Co. .................................. 4,260,000
30,000 Moody's Corp. ................................ 1,233,000
186,500 Nikko Cordial Corp. .......................... 823,197
185,000 Phoenix Companies Inc.+ ...................... 3,552,000
2,500 Prudential Financial Inc.+ ................... 77,625
50,000 Prudential plc ............................... 504,101
60,000 RAS SpA ...................................... 785,155
60,000 Riggs National Corp. ......................... 921,000
50,000 Schwab (Charles) Corp. ....................... 654,500
80,000 State Street Corp. ........................... 4,430,400
30,000 Stilwell Financial Inc. ...................... 734,700
20,000 SunTrust Banks Inc. .......................... 1,334,600
10,200 Swiss Re ..................................... 938,542
100,000 T. Rowe Price Group Inc. ..................... 3,893,000
7,000 Travelers Property Casualty Corp.+ ........... 140,000
50,000 Unitrin Inc. ................................. 2,010,000
130,000 Wachovia Corp. ............................... 4,820,400
55,100 Waddell & Reed Financial Inc., Cl. A ......... 1,679,448
------------
117,459,564
------------
FOOD AND BEVERAGE -- 6.7%
10,108 Advantica Restaurant Group Inc.+ ............. 10,209
10,800 Cadbury Schweppes plc, ADR ................... 299,700
65,000 Campbell Soup Co. ............................ 1,742,000
30,000 Coca-Cola Co. ................................ 1,567,800
50,000 Coca-Cola Enterprises Inc. ................... 939,000
150,940 Compass Group plc ............................ 1,010,221
100,000 Corn Products International Inc. ............. 3,220,000
100,000 Diageo plc ................................... 1,307,245
224,000 Diageo plc, ADR .............................. 11,753,280
41,600 Flowers Foods Inc.+ .......................... 1,059,552
90,000 General Mills Inc. ........................... 4,396,500
351,000 Grupo Bimbo,SA de CV, Ser. A ................. 934,283
20,000 Hain Celestial Group Inc.+ ................... 445,000
85,000 Heinz (H.J.) Co. ............................. 3,527,500
30,000 Interbrew SA ................................. 830,956
350,000 Kellogg Co. .................................. 11,749,500
75,000 Kerry Group plc, Cl. A ....................... 1,009,270
60,500 LVMH Moet Hennessy
Louis Vuitton, ADR ......................... 614,075
41,300 Mondavi (Robert) Corp., Cl. A+ ............... 1,484,322
600,595 PepsiAmericas Inc. ........................... 8,660,580
525,000 PepsiCo Inc. ................................. 27,037,500
60,000 Ralcorp Holdings Inc.+ ....................... 1,632,000
20,000 Sara Lee Corp. ............................... 415,200
103,855 Tootsie Roll Industries Inc. ................. 4,776,287
90,000 Tyson Foods Inc., Cl. A ...................... 1,123,200
MARKET
SHARES VALUE
------------ ------------
150,000 Wrigley (Wm.) Jr. Co. ........................ $ 7,996,500
------------
99,541,680
------------
EQUIPMENT AND SUPPLIES-- 6.5%
120,000 AMETEK Inc. .................................. 4,465,200
2,000 Amphenol Corp., Cl. A+ ....................... 93,600
10,000 Caterpillar Inc. ............................. 568,500
95,000 CIRCOR International Inc. .................... 1,971,250
100,000 CLARCOR Inc. ................................. 3,200,000
320,000 Deere & Co. .................................. 14,576,000
219,000 Donaldson Co. Inc. ........................... 8,805,990
150,000 Flowserve Corp.+ ............................. 4,801,500
13,000 Franklin Electric Co. Inc. ................... 658,580
105,000 Gerber Scientific Inc.+ ...................... 771,750
250,000 IDEX Corp. ................................... 9,250,000
20,000 Ingersoll-Rand Co., Cl. A .................... 1,000,400
60,000 Lufkin Industries Inc. ....................... 1,620,000
1,000 Manitowoc Co. Inc. ........................... 39,500
425,000 Navistar International Corp.+ ................ 18,827,500
28,000 Olympus Optical Co. Ltd. ..................... 348,587
20,000 PACCAR Inc. .................................. 1,464,200
84,500 Sequa Corp., Cl. A+ .......................... 4,410,900
75,000 Sequa Corp., Cl. B+ .......................... 4,425,000
170,000 SPS Technologies Inc.+ ....................... 7,202,900
60,000 Sybron Dental Specialties Inc.+ .............. 1,206,000
44,000 THK Co. Ltd. ................................. 836,609
75,000 UCAR International Inc.+ ..................... 1,065,000
250,000 Watts Industries Inc., Cl. A ................. 4,200,000
100,000 Weir Group plc ............................... 414,388
------------
96,223,354
------------
DIVERSIFIED INDUSTRIAL -- 5.2%
220,000 Acuity Brands Inc. ........................... 3,636,600
195,000 Ampco-Pittsburgh Corp. ....................... 2,271,750
120,000 Cooper Industries Inc. ....................... 5,034,000
270,000 Crane Co. .................................... 7,381,800
110,000 GATX Corp. ................................... 3,498,000
200,000 GenTek Inc. .................................. 60,000
260,000 Greif Bros. Corp., Cl. A ..................... 9,282,000
3,400 Greif Bros. Corp., Cl. B ..................... 113,050
380,000 Honeywell International Inc. ................. 14,542,600
125,000 ITT Industries Inc. .......................... 7,880,000
400,600 Lamson & Sessions Co.+ ....................... 2,303,450
35,000 National Service Industries Inc. ............. 365,400
83,715 Park-Ohio Holdings Corp.+ .................... 375,043
213,800 Sensient Technologies Corp. .................. 4,921,676
10,000 Smiths Group plc ............................. 115,488
6,000 Sulzer AG .................................... 1,314,655
100,000 Thomas Industries Inc. ....................... 2,925,000
50,000 Trinity Industries Inc. ...................... 1,215,500
170,000 TRW Inc. ..................................... 8,749,900
------------
75,985,912
------------
14
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2002 (UNAUDITED)
MARKET
SHARES VALUE
------------ ------------
COMMON STOCKS (CONTINUED)
PUBLISHING -- 5.1%
20,000 Dow Jones & Co. Inc. ......................... $ 1,164,400
411,000 Independent News & Media
plc, Dublin ................................ 788,819
5,000 McClatchy Co., Cl. A ......................... 296,850
105,000 McGraw-Hill Companies Inc. ................... 7,166,250
400,000 Media General Inc., Cl. A .................... 25,400,000
125,000 Meredith Corp. ............................... 5,313,750
115,000 New York Times Co., Cl. A .................... 5,503,900
120,000 News Corp. Ltd. .............................. 840,248
11,017 News Corp. Ltd., ADR ......................... 313,922
400,000 Penton Media Inc. ............................ 3,020,000
300,000 PRIMEDIA Inc.+ ............................... 951,000
33,000 Pulitzer Inc. ................................ 1,765,500
185,000 Reader's Digest
Association Inc., Cl. B .................... 4,403,000
400,000 SCMP Group Ltd. .............................. 225,647
70,000 Scripps (E.W.) Co., Cl. A .................... 5,748,400
91,842 Seat-Pagine Gialle SpA+ ...................... 71,069
75,000 Thomas Nelson Inc. ........................... 911,250
250,000 Tribune Co. .................................. 11,365,000
------------
75,249,005
------------
ENERGY AND UTILITIES -- 4.9%
70,000 AGL Resources Inc. ........................... 1,645,000
37,400 Apache Corp. ................................. 2,127,312
120,000 BP plc ....................................... 1,068,010
248,800 BP plc, ADR .................................. 13,211,280
150,000 Burlington Resources Inc. .................... 6,013,500
115,000 CH Energy Group Inc. ......................... 5,456,750
20,000 Cinergy Corp. ................................ 715,000
210,000 Conoco Inc. .................................. 6,127,800
10,000 Constellation Energy Group Inc. .............. 308,500
5,000 Dominion Resources Inc. ...................... 325,800
15,000 DPL Inc. ..................................... 383,250
50,000 DQE Inc. ..................................... 1,065,500
30,366 DTE Energy Co. ............................... 1,381,653
400,000 El Paso Electric Co.+ ........................ 6,260,000
20,000 Energy East Corp. ............................ 435,000
9,400 FPL Group Inc. ............................... 559,770
300,000 Halliburton Co. .............................. 5,121,000
38,632 Kerr-McGee Corp. ............................. 2,428,021
60,000 Mirant Corp.+ ................................ 867,000
100,000 NiSource Inc.+ ............................... 232,000
250,000 Northeast Utilities .......................... 4,967,500
213,400 Pennzoil-Quaker State Co. .................... 4,581,698
100,000 Progress Energy Inc.+ ........................ 27,500
10,400 SJW Corp. .................................... 844,480
14,000 Southwest Gas Corp. .......................... 350,000
6,907 Total Fina Elf SA ............................ 1,066,537
MARKET
SHARES VALUE
------------ ------------
250,000 Western Resources Inc. ....................... $ 4,287,500
------------
71,857,361
------------
WIRELESS COMMUNICATIONS -- 4.8%
95,000 America Movil SA de CV, Cl. L, ADR ........... 1,886,700
500,170 AT&T Wireless Services Inc.+ ................. 4,476,521
140,000 Leap Wireless International Inc.+ ............ 1,178,800
1,775,000 mm02 plc+ .................................... 1,725,104
130,000 mm02 plc, ADR+ ............................... 1,272,700
240,000 Nextel Communications Inc., Cl. A+ ........... 1,291,200
200 NTT DoCoMo Inc. .............................. 543,253
800 NTT DoCoMo Inc. - W/I+ ....................... 2,166,974
250,000 Rogers Wireless Communications
Inc., Cl. B+ ............................... 2,850,000
250,000 Sprint Corp. - PCS Group+ .................... 2,572,500
16,700 Tele Celular Sul
Participacoes SA, ADR ...................... 222,945
55,666 Tele Centro Oeste Celular
Participacoes SA, ADR ...................... 335,666
3,340 Tele Leste Celular
Participacoes SA, ADR+ ..................... 58,951
8,350 Tele Nordeste Celular
Participacoes SA, ADR ...................... 201,653
3,340 Tele Norte Celular
Participacoes SA, ADR ...................... 53,273
1,400,000 Telecom Italia Mobile SpA .................... 6,790,721
8,350 Telemig Celular
Participacoes SA, ADR ...................... 237,140
450,000 Telephone & Data Systems Inc. ................ 39,712,500
66,800 Telesp Celular Participacoes SA, ADR ......... 422,844
553,888 Vodafone Group plc ........................... 1,023,396
100,000 Vodafone Group plc, ADR ...................... 1,843,000
------------
70,865,841
------------
CONSUMER PRODUCTS -- 4.0%
70,000 Altadis SA ................................... 1,285,474
43,000 Christian Dior SA ............................ 1,626,187
10,000 Church & Dwight Co. Inc. ..................... 294,600
110,000 Compagnie Financiere
Richemont AG, Cl. A ........................ 2,534,472
50,000 Department 56 Inc.+ .......................... 700,000
350,001 Energizer Holdings Inc.+ ..................... 8,312,524
90,000 Fortune Brands Inc. .......................... 4,443,300
250,000 Gallaher Group plc, ADR ...................... 7,712,500
300,000 Gillette Co. ................................. 10,203,000
2,000 Givaudan SA .................................. 642,165
60,000 Harley Davidson Inc. ......................... 3,307,800
15,000 Matsushita Electric Industrial
Co. Ltd., ADR .............................. 185,250
100,000 Mattel Inc. .................................. 2,084,000
30,000 Maytag Corp. ................................. 1,327,500
15
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2002 (UNAUDITED)
MARKET
SHARES VALUE
------------ ------------
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS (CONTINUED)
50,000 National Presto Industries Inc. .............. $ 1,438,000
9,500 Nintendo Co. Ltd. ............................ 1,397,744
20,000 Philip Morris Companies Inc. ................. 1,053,400
100,000 Procter & Gamble Co. ......................... 9,009,000
32,000 Shimano Inc. ................................. 393,556
15,000 Swatch Group AG, Cl. B+ ...................... 1,527,372
10,425 Syratech Corp.+(a) ........................... 5,265
------------
59,483,109
------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 3.4%
20,000 ArvinMeritor Inc. ............................ 571,000
36,802 BorgWarner Inc. .............................. 2,315,582
320,061 Dana Corp. ................................... 6,871,710
65,000 Delphi Corp. ................................. 1,039,350
260,000 GenCorp Inc. ................................. 4,087,200
210,000 Genuine Parts Co. ............................ 7,721,700
114,000 Johnson Controls Inc. ........................ 10,067,340
110,000 Midas Inc. ................................... 1,568,600
335,000 Modine Manufacturing Co. ..................... 9,041,650
20,000 O'Reilly Automotive Inc.+ .................... 631,400
70,800 Scheib (Earl) Inc.+ .......................... 187,974
163,000 Standard Motor Products Inc. ................. 2,379,800
60,000 Superior Industries International Inc. ....... 2,926,800
105,000 TransPro Inc.+ ............................... 453,600
------------
49,863,706
------------
CABLE -- 2.6%
515,000 Cablevision Systems Corp., Cl. A+ ............ 17,510,000
40,000 Comcast Corp., Cl. A+ ........................ 1,338,000
85,000 Comcast Corp., Cl. A, Special+ ............... 2,703,000
40,000 NTL Inc.+ .................................... 8,000
550,000 Rainbow Media Group+ ......................... 13,574,000
20,000 Shaw Communications Inc., Cl. B .............. 358,273
80,000 Shaw Communications Inc.,
Cl. B, Non-Voting ............................ 1,438,400
370,000 UnitedGlobalCom Inc., Cl. A+ ................. 2,001,700
------------
38,931,373
------------
HOTELS AND GAMING -- 2.4%
110,000 Aztar Corp.+ ................................. 2,409,000
90,000 Boca Resorts Inc., Cl. A+ .................... 1,164,600
240,000 Gaylord Entertainment Co.+ ................... 6,384,000
4,000 GTECH Holdings Corp.+ ........................ 195,000
1,650,000 Hilton Group plc ............................. 5,856,436
660,000 Hilton Hotels Corp. .......................... 9,438,000
90,000 MGM Mirage Inc.+ ............................. 3,260,700
430,000 Park Place Entertainment Corp.+ .............. 4,536,500
50,000 Starwood Hotels & Resorts
Worldwide Inc. ............................... 1,880,500
------------
35,124,736
------------
MARKET
SHARES VALUE
------------ ------------
HEALTH CARE -- 2.2%
60,000 Amgen Inc.+ .................................. $ 3,580,800
40,000 Apogent Technologies Inc.+ ................... 987,200
10,000 AstraZeneca plc, London ...................... 496,554
35,146 AstraZeneca plc, Stockholm ................... 1,747,424
12,000 Aventis SA ................................... 829,124
26,000 Biogen Inc.+ ................................. 1,275,560
75,036 GlaxoSmithKline plc .......................... 1,767,337
4,000 GlaxoSmithKline plc, ADR ..................... 188,000
56,011 Invitrogen Corp.+ ............................ 1,922,298
35,000 Merck & Co. Inc. ............................. 2,015,300
46,000 Novartis AG .................................. 1,809,301
108,000 Novartis AG, Registered ...................... 4,276,800
65,000 Pfizer Inc. .................................. 2,583,100
17,900 Roche Holding AG ............................. 1,391,611
20,000 Sanofi-Synthelabo SA ......................... 1,284,165
10,000 Schering-Plough Corp. ........................ 313,000
23,000 Sulzer Medica AG ............................. 2,119,740
14,000 Takeda Chemical Industries Ltd. .............. 567,246
38,000 Wyeth ........................................ 2,494,700
------------
31,649,260
------------
RETAIL -- 2.1%
200,000 Albertson's Inc. ............................. 6,628,000
300,000 AutoNation Inc.+ ............................. 4,176,000
10,000 Coldwater Creek Inc.+ ........................ 177,600
16,000 Delhaize Le Lion SA, ADR ..................... 731,680
33,000 Gucci Group NV, ADR .......................... 3,053,160
100,000 Lillian Vernon Corp. ......................... 640,000
104,500 Neiman Marcus Group Inc., Cl. A+ ............. 3,600,025
320,000 Neiman Marcus Group Inc., Cl. B+ ............. 10,480,000
50,000 Winn-Dixie Stores Inc. ....................... 802,000
------------
30,288,465
------------
AEROSPACE -- 1.6%
150,000 BAE Systems plc .............................. 715,567
115,000 Boeing Co. ................................... 5,548,750
100,000 Lockheed Martin Corp. ........................ 5,758,000
97,978 Northrop Grumman Corp. ....................... 11,076,413
------------
23,098,730
------------
SPECIALTY CHEMICALS -- 1.3%
5,400 Ciba Specialty Chemicals, ADR(b) ............. 204,120
10,000 E.I. du Pont de Nemours and Co. .............. 471,500
315,000 Ferro Corp. .................................. 9,072,000
40,000 Fuller (H.B.) Co. ............................ 1,198,000
120,000 Hercules Inc.+ ............................... 1,597,200
210,000 Omnova Solutions Inc. ........................ 1,743,000
100,000 Rohm and Haas Co. ............................ 4,227,000
11,697 Syngenta AG, ADR+ ............................ 143,873
------------
18,656,693
------------
16
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2002 (UNAUDITED)
MARKET
SHARES VALUE
------------ ------------
COMMON STOCKS (CONTINUED)
BROADCASTING -- 1.1%
42,900 Ackerley Group Inc.+ ......................... $ 766,194
16,666 Corus Entertainment Inc., Cl. B+ ............. 383,894
28,000 Gray Communications Systems Inc. ............. 448,560
25,000 Gray Communications
Systems Inc., Cl. B ........................ 362,250
200,000 Liberty Corp. ................................ 7,964,000
4,000 Nippon Broadcasting System Inc. .............. 128,871
40,375 NRJ Group .................................... 876,699
131,000 Paxson Communications Corp.+ ................. 1,435,760
14,700 RTL Group (Brussels) ......................... 569,395
3,000 RTL Group (New York) ......................... 116,988
100,000 Television Broadcasts Ltd. ................... 465,398
110,000 Young Broadcasting Inc., Cl. A+ .............. 2,748,900
------------
16,266,909
------------
PAPER AND FOREST PRODUCTS -- 1.0%
100,000 MeadWestvaco Corp. ........................... 3,315,000
170,000 Pactiv Corp.+ ................................ 3,403,400
10,000 Rayonier Inc. ................................ 532,800
253,000 St. Joe Co. .................................. 7,590,000
------------
14,841,200
------------
AGRICULTURE -- 1.0%
1,050,000 Archer-Daniels-Midland Co. ................... 14,626,500
5,000 Delta & Pine Land Co. ........................ 94,850
------------
14,721,350
------------
REAL ESTATE -- 0.9%
450,000 Catellus Development Corp.+ .................. 8,851,500
75,000 Cheung Kong (Holdings) Ltd. .................. 670,692
44,000 Florida East Coast Industries
Inc., Cl. A ................................ 1,245,640
58,451 Florida East Coast Industries
Inc., Cl. B ................................ 1,532,001
55,000 Griffin Land & Nurseries Inc.+ ............... 819,500
4,753 HomeFed Corp.+ ............................... 4,182
------------
13,123,515
------------
ELECTRONICS -- 0.9%
3,000 Hitachi Ltd., ADR ............................ 220,650
16,000 Molex Inc., Cl. A ............................ 489,440
7,500 NEC Corp., ADR ............................... 62,625
38,800 Philips Electronics NV, ADR .................. 1,172,536
7,400 Rohm Co. Ltd. ................................ 1,111,102
47,000 Sony Corp., ADR .............................. 2,429,900
40,000 Texas Instruments Inc. ....................... 1,324,000
250,000 Thomas & Betts Corp. ......................... 5,290,000
9,400 Tokyo Electron Ltd. .......................... 653,216
------------
12,753,469
------------
MARKET
SHARES VALUE
------------ ------------
CONSUMER SERVICES -- 0.7%
40,000 Loewen Group Inc.+ ........................... $ 1,200
505,000 Rollins Inc. ................................. 10,655,500
------------
10,656,700
------------
AUTOMOTIVE -- 0.7%
15,000 Ford Motor Co. ............................... 247,350
167,942 General Motors Corp. ......................... 10,152,094
------------
10,399,444
------------
ENVIRONMENTAL SERVICES -- 0.6%
65,000 Republic Services Inc.+ ...................... 1,214,200
300,000 Waste Management Inc. ........................ 8,175,000
------------
9,389,200
------------
COMMUNICATIONS EQUIPMENT -- 0.6%
68,000 Acterna Corp.+ ............................... 102,000
290,000 Allen Telecom Inc.+ .......................... 1,937,200
460,000 Corning Inc. ................................. 3,505,200
130,000 Lucent Technologies Inc. ..................... 614,900
110,000 Motorola Inc. ................................ 1,562,000
100,000 Nortel Networks Corp. ........................ 449,000
44,000 Scientific-Atlanta Inc. ...................... 1,016,400
------------
9,186,700
------------
BUSINESS SERVICES -- 0.6%
60,000 ANC Rental Corp.+ ............................ 21,000
180,000 Cendant Corp.+ ............................... 3,456,000
1,000 CheckFree Corp.+ ............................. 15,330
98,000 Landauer Inc. ................................ 3,719,100
70,000 Nashua Corp.+ ................................ 413,000
10,833 Reuters Group plc, ADR ....................... 511,210
7,000 Secom Co. Ltd. ............................... 309,503
250,000 Securicor plc ................................ 434,324
3,500 SYNAVANT Inc.+ ............................... 11,795
------------
8,891,262
------------
AVIATION: PARTS AND SERVICES -- 0.6%
98,320 Curtiss-Wright Corp., Cl. B .................. 6,415,380
90,000 Fairchild Corp., Cl. A+ ...................... 226,800
60,000 Precision Castparts Corp. .................... 2,124,600
------------
8,766,780
------------
BUILDING AND CONSTRUCTION -- 0.5%
112,500 CRH plc ...................................... 1,982,517
32,222 Huttig Building Products Inc.+ ............... 178,510
15,000 Martin Marietta Materials Inc. ............... 633,300
140,000 Nortek Inc.+ ................................. 5,040,000
5,000 Nortek Inc., Special Common+(a) .............. 180,000
------------
8,014,327
------------
17
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2002 (UNAUDITED)
MARKET
SHARES VALUE
------------ ------------
COMMON STOCKS (CONTINUED)
METALS AND MINING -- 0.3%
72,500 Harmony Gold Mining Co. Ltd. ................. $ 812,713
15,000 Harmony Gold Mining Co. Ltd., ADR ............ 169,500
125,000 Newmont Mining Corp. Holding Co. ............. 3,461,250
50,000 Placer Dome Inc. ............................. 612,500
-------------
5,055,963
-------------
SATELLITE -- 0.2%
180,323 General Motors Corp., Cl. H+ ................. 2,966,313
340,000 Liberty Satellite &
Technology Inc., Cl. A+ .................... 197,200
190,000 Loral Space & Communications Ltd.+ ........... 408,500
-------------
3,572,013
-------------
TRANSPORTATION -- 0.2%
100,000 AMR Corp.+ ................................... 2,641,000
7,500 Kansas City Southern Industries Inc.+ ........ 119,550
31,273 Tsakos Energy Navigation Ltd.+ ............... 467,413
-------------
3,227,963
-------------
COMPUTER SOFTWARE AND SERVICES -- 0.2%
20,000 Capcom Co. Ltd. .............................. 534,198
10,000 Computer Associates
International Inc. ......................... 218,900
170,000 EMC Corp.+ ................................... 2,026,400
180,000 Genuity Inc.+ ................................ 156,600
1,500 Obic Co. Ltd. ................................ 283,510
-------------
3,219,608
-------------
CLOSED END FUNDS -- 0.2%
59,000 Central European Equity Fund Inc. ............ 782,930
18,592 France Growth Fund Inc. ...................... 139,254
54,150 Italy Fund Inc. .............................. 372,552
68,000 New Germany Fund Inc.+ ....................... 402,560
70,000 Pimco RCM Europe Fund Inc. ................... 535,500
40,000 Royce Value Trust Inc. ....................... 718,000
-------------
2,950,796
-------------
COMPUTER HARDWARE -- 0.0%
26,000 Hewlett-Packard Co. .......................... 466,440
10,000 Xerox Corp.+ ................................. 107,500
-------------
573,940
-------------
TOTAL COMMON STOCKS .......................... 1,306,419,166
-------------
PREFERRED STOCKS -- 1.8%
PUBLISHING -- 1.2%
770,499 News Corp. Ltd., Pfd., ADR, .................. 18,490,419
-------------
MARKET
SHARES VALUE
------------ ------------
TELECOMMUNICATIONS -- 0.4%
60,000 Allen Telecom Inc.,
7.750% Cv. Pfd., Ser. D .................... $ 2,851,200
31,000 Broadwing Inc.,
6.750% Cv. Pfd., Ser. B .................... 1,010,600
20,000 Citizens Communications Co.,
5.000% Cv. Pfd. ............................ 940,400
500 Lucent Technologies Capital Trust I,
7.750% Cv. Pfd.+ (b) ....................... 474,125
-------------
5,276,325
-------------
AEROSPACE -- 0.1%
14,021 Northrop Grumman Corp.,
7.000% Cv. Pfd., Ser. B .................... 1,859,185
-------------
BROADCASTING -- 0.1%
100,000 ProSieben Sat.1 Media AG, Pfd. ............... 873,267
-------------
EQUIPMENT AND SUPPLIES -- 0.0%
3,000 Sequa Corp.,
$5.00 Cv. Pfd. ............................. 252,750
-------------
WIRELESS COMMUNICATIONS -- 0.0%
10,760,547 Telesp Celular Participacoes SA, Pfd. ........ 26,670
-------------
TOTAL PREFERRED STOCKS ....................... 26,778,616
-------------
PRINCIPAL
AMOUNT
------
CORPORATE BONDS -- 0.3%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.1%
$1,500,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ........................... 1,115,625
-------------
AVIATION: PARTS AND SERVICES -- 0.1%
933,000 Kaman Corp., Sub. Deb. Cv.,
6.000%, 03/15/12 ........................... 912,007
-------------
ENERGY AND UTILITIES -- 0.1%
1,000,000 Mirant Corp., Sub. Deb. Cv.,
2.500%, 06/15/21 ........................... 810,000
-------------
CABLE -- 0.0%
500,000 Charter Communications Inc., Cv.,
4.750%, 06/01/06 ........................... 391,250
-------------
HOTELS AND GAMING -- 0.0%
400,000 Hilton Hotels Corp., Sub. Deb. Cv.,
5.000%, 05/15/06 ........................... 381,000
-------------
18
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 2002 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
------------ -------------
CORPORATE BONDS (CONTINUED)
WIRELESS COMMUNICATIONS -- 0.0%
$ 500,000 Nextel Communications Inc.,
9.500%, 02/01/11 ........................... $ 323,750
--------------
CONSUMER PRODUCTS -- 0.0%
1,000,000 Pillowtex Corp., Sub. Deb. Cv.,
6.000%, 03/15/12+ (e) ...................... 0
--------------
TOTAL CORPORATE BONDS ........................ 3,933,632
--------------
SHARES
------
WARRANTS -- 0.0%
FOOD AND BEVERAGE -- 0.0%
62,463 Advantica Restaurant Group Inc.,
expires 01/07/05+ ......................... 1,249
--------------
METALS AND MINING -- 0.0%
5,000 Harmony Gold Mining Co. Ltd., ADR,
expires 06/29/03+ .......................... 38,250
--------------
TOTAL WARRANTS ............................... 39,499
--------------
PRINCIPAL
AMOUNT
------------
U.S. GOVERNMENT OBLIGATIONS -- 6.8%
$100,000,000 U.S. Treasury Bills,
1.660% to 1.770%++,
04/25/02 to 07/11/02 ....................... 99,653,744
--------------
REPURCHASE AGREEMENT -- 2.8%
42,000,000 State Street Bank & Trust Co.,
1.770%, dated 03/28/02,
due 04/01/02, proceeds at maturity
$42,008,260 (c) ............................ 42,000,000
--------------
TOTAL INVESTMENTS -- 100.2%
(Cost $1,109,848,786) ..................................... 1,478,824,657
OTHER ASSETS, LIABILITIES
AND LIQUIDATION VALUE OF
CUMULATIVE PREFERRED STOCK -- (20.4)% ..................... (301,425,621)
--------------
NET ASSETS -- COMMON STOCK -- 79.7%
(130,831,966 common shares outstanding) ................... 1,177,399,036
--------------
NET ASSETS -- PREFERRED STOCK -- 20.3%
(11,967,900 preferred shares outstanding) ................. 299,197,500
--------------
TOTAL NET ASSETS -- 100.0% .................................. $1,476,596,536
==============
NET ASSET VALUE PER COMMON SHARE
($1,177,399,036 / 130,831,966 shares outstanding) .......... $9.00
=====
PRINCIPAL SETTLEMENT NET UNREALIZED
AMOUNT DATE APPRECIATION
------------ ---------- --------------
FORWARD FOREIGN EXCHANGE CONTRACTS -- 0.0%
$4,992,000(d) Deliver Hong Kong Dollars
in exchange for
USD 639,820 .................. 08/01/02 $374
====
NUMBER OF
CONTRACTS
------------
FUTURE CONTRACTS - SHORT POSITION
20 S&P 500 Index Futures ......... 06/21/02 84,000
==============
---------------
For Federal tax purposes:
Aggregate cost ................................. $1,109,848,786
==============
Gross unrealized appreciation .................. $ 436,350,184
Gross unrealized depreciation .................. (67,374,313)
--------------
Net unrealized appreciation .................... $ 368,975,871
==============
---------------
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
(a) Security fair valued under procedures established by the Board of
Directors.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At March
31, 2002, the market value of Rule 144A securities amounted to $678,245 or
0.0% of total net assets.
(c) Collateralized by U.S. Treasury Notes, 5.50% to 5.75%, due 04/30/03 to
05/31/03, market value $42,844,368.
(d) Principal amount denoted in Hong Kong Dollars.
(e) Bond in default.
ADR - American Depositary Receipt.
BDR - Brazilian Depositary Receipt.
RNC - Non-Convertible Savings Shares.
USD - U.S. Dollars.
W/I - When Issued.
% OF
MARKET MARKET
VALUE VALUE
------ --------------
GEOGRAPHIC DIVERSIFICATION
United States ................ 83.7% $1,237,952,444
Europe ....................... 11.2 166,199,880
Asia/Pacific Rim ............. 2.5 37,131,402
Latin America ................ 1.4 20,620,530
Canada ....................... 1.1 15,938,188
South Africa ................. 0.1 982,213
------ --------------
Total Investments ............ 100.0% $1,478,824,657
====== ==============
19
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLAN
ENROLLMENT IN THE PLAN
It is the policy of The Gabelli Equity Trust Inc. ("Equity Trust") to
automatically reinvest dividends. As a "registered" shareholder you
automatically become a participant in the Equity Trust's Automatic Dividend
Reinvestment Plan (the "Plan"). The Plan authorizes the Equity Trust to issue
shares to participants upon an income dividend or a capital gains distribution
regardless of whether the shares are trading at a discount or a premium to net
asset value. All distributions to shareholders whose shares are registered in
their own names will be automatically reinvested pursuant to the Plan in
additional shares of the Equity Trust. Plan participants may send their stock
certificates to EquiServe Trust Company ("EquiServe") to be held in their
dividend reinvestment account. Registered shareholders wishing to receive their
distribution in cash must submit this request in writing to:
The Gabelli Equity Trust Inc.
c/o EquiServe
P.O. Box 43011
Providence, RI 02940-3011
Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan may contact EquiServe at 1 (800)
336-6983.
SHAREHOLDERS WISHING TO LIQUIDATE REINVESTED SHARES held at EquiServe must
do so in writing or by telephone. Please submit your request to the above
mentioned address or telephone number. Include in your request your name,
address and account number. The cost to liquidate shares is $2.50 per
transaction as well as the brokerage commission incurred. Brokerage charges are
expected to be less than the usual brokerage charge for such transactions.
If your shares are held in the name of a broker, bank or nominee, you
should contact such institution. If such institution is not participating in the
Plan, your account will be credited with a cash dividend. In order to
participate in the Plan through such institution, it may be necessary for you to
have your shares taken out of "street name" and re-registered in your own name.
Once registered in your own name your dividends will be automatically
reinvested. Certain brokers participate in the Plan. Shareholders holding shares
in "street name" at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must
contact their broker to make this change.
The number of shares of Common Stock distributed to participants in the
Plan in lieu of cash dividends is determined in the following manner. Under the
Plan, whenever the market price of the Equity Trust's Common Stock is equal to
or exceeds net asset value at the time shares are valued for purposes of
determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued shares of Common Stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current market price of the Equity Trust's Common Stock. The valuation
date is the dividend or distribution payment date or, if that date is not a New
York Stock Exchange trading day, the next trading day. If the net asset value of
the Common Stock at the time of valuation exceeds the market price of the Common
Stock, participants will receive shares from the Equity Trust valued at market
price. If the Equity Trust should declare a dividend or capital gains
distribution payable only in cash, EquiServe will buy Common Stock in the open
market, or on the New York Stock Exchange or elsewhere, for the participants'
accounts, except that EquiServe will endeavor to terminate purchases in the open
market and cause the Equity Trust to issue shares at net asset value if,
following the commencement of such purchases, the market value of the Common
Stock exceeds the then current net asset value.
The automatic reinvestment of dividends and capital gains distributions
will not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for Federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.
The Equity Trust reserves the right to amend or terminate the Plan as
applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to written notice of the change sent to the members of the Plan
at least 90 days before the record date for such dividend or distribution. The
Plan also may be amended or terminated by EquiServe on at least 90 days' written
notice to participants in the Plan.
VOLUNTARY CASH PURCHASE PLAN
The Voluntary Cash Purchase Plan is yet another vehicle for our
shareholders to increase their investment in the Equity Trust. In order to
participate in the Voluntary Cash Purchase Plan, shareholders must have their
shares registered in their own name.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to EquiServe for investments in the Equity Trust's
shares at the then current market price. Shareholders may send an amount from
$250 to $10,000. EquiServe will use these funds to purchase shares in the open
market on or about the 1st and 15th of each month. EquiServe will charge each
shareholder who participates $0.75, plus a pro rata share of the brokerage
commissions. Brokerage charges for such purchases are expected to be less than
the usual brokerage charge for such transactions. It is suggested that any
voluntary cash payments be sent to EquiServe, P.O. Box 43011, Providence,
RI02940-3011 such that EquiServe receives such payments approximately 10 days
before the investment date. Funds not received at least five days before the
investment date shall be held for investment in the following month. A payment
may be withdrawn without charge if notice is received by EquiServe at least 48
hours before such payment is to be invested.
For more information regarding the Dividend Reinvestment Plan and
Voluntary Cash Purchase Plan, brochures are available by calling (914) 921-5070
or by writing directly to the Equity Trust.
20
DIRECTORS AND OFFICERS
THE GABELLI EQUITY TRUST INC.
ONE CORPORATE CENTER, RYE, NY 10580-1422
DIRECTORS
Mario J. Gabelli, CFA
CHAIRMAN & CHIEF INVESTMENT OFFICER,
GABELLI ASSET MANAGEMENT INC.
Dr. Thomas E. Bratter
PRESIDENT, JOHN DEWEY ACADEMY
Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.
James P. Conn
FORMER MANAGING DIRECTOR AND CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Frank J. Fahrenkopf, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER,
AMERICAN GAMING ASSOCIATION
Arthur V. Ferrara
FORMER CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
Karl Otto Pohl
FORMER PRESIDENT, DEUTSCHE BUNDESBANK
Anthony R. Pustorino
CERTIFIED PUBLIC ACCOUNTANT,
PROFESSOR EMERITUS, PACE UNIVERSITY
Salvatore J. Zizza
CHAIRMAN, HALLMARK ELECTRICAL SUPPLIES CORP.
OFFICERS
Mario J. Gabelli, CFA
PRESIDENT & CHIEF INVESTMENT OFFICER
Bruce N. Alpert
VICE PRESIDENT & TREASURER
Carter W. Austin
VICE PRESIDENT
James E. McKee
SECRETARY
INVESTMENT ADVISOR
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
CUSTODIAN
Boston Safe Deposit and Trust Company
COUNSEL
Willkie Farr & Gallagher
TRANSFER AGENT AND REGISTRAR
EquiServe Trust Company
STOCK EXCHANGE LISTING
COMMON 7.25% PREFERRED 7.20% PREFERRED
------ --------------- ---------------
NYSE-
Symbol: GAB GAB Pr GAB PrB
Shares
Outstanding: 130,831,966 5,367,900 6,600,000
The Net Asset Value appears in the Publicly Traded Funds column, under the
heading "General Equity Funds," in Sunday's The New York Times and 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 may be obtained each day by calling (914) 921-5071.
--------------------------------------------------------------------------------
For general information about the Gabelli Funds,
call 1-800-GABELLI (1-800-422-3554), fax us at
914-921-5118, visit Gabelli Funds' Internet
homepage at: HTTP://WWW.GABELLI.COM
or e-mail us at: closedend@gabelli.com
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Equity Trust may, from time to time,
purchase shares of its common stock in the open market when the Equity Trust
shares are trading at a discount of 10% or more from the net asset value of
the shares. The Equity Trust may also, from time to time, purchase shares of
its Cumulative Preferred Stock in the open market when the shares are trading
at a discount to the Liquidation Value of $25.00.
--------------------------------------------------------------------------------
THE GABELLI EQUITY TRUST INC.
ONE CORPORATE CENTER
RYE, NY 10580-1422
(914) 921-5070
HTTP://WWW.GABELLI.COM
FIRST QUARTER REPORT
MARCH 31, 2002
GBFCM 03/02