UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4700
------------
The Gabelli Equity Trust Inc.
-----------------------------------------
(Exact name of registrant as specified in charter)
One Corporate Center,
Rye, New York 10580-1422
-----------------------------------------
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center,
Rye, New York 10580-1422
-----------------------------------------
(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
---------------
Date of fiscal year end: December 31, 2003
------------------
Date of reporting period: June 30, 2003
---------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO OMITTED]
THE GABELLI
EQUITY TRUST INC.
THE GABELLI EQUITY TRUST INC.
Semi-Annual Report
June 30, 2003
TO OUR SHAREHOLDERS,
We are changing the way we provide portfolio managers' commentary to
shareholders of our Funds. Our shareholder reports have typically contained
commentary on each portfolio manager's assessment of the stock market,
individual stocks and how economic events affect their thinking in managing a
specific Fund. We have always provided details about performance and presented
returns, both good and bad, hopefully in a clear and concise fashion. These
comments have been included as part of each Fund's quarterly, semi-annual, and
annual financial statements.
The Sarbanes-Oxley Act's new corporate governance regulations now require
a Fund's principal executive and financial officers to certify the entire
contents of shareholder reports in a filing with the Securities and Exchange
Commission on form N-CSR. This certification covers the portfolio manager's
commentary and subjective opinions if they are attached to or a part of the
financial statements.
Rather than ask our portfolio managers to eliminate their opinions and/or
restrict their commentary to historical facts only, we are removing their
commentary from the financial statements and sending it to you separately. As a
result, this commentary will no longer be considered part of a Fund's financial
report and therefore will not be subject to the officers' certifications.
We trust that you understand that our approach is an unintended
consequence of the ever-increasing regulatory requirements affecting public
companies generally. We hope the specific certification requirements of these
new regulations will be modified as they relate to mutual funds, since
investment companies have different corporate structures and objectives than
other public companies.
Sincerely yours,
/S/ BRUCE N. ALPERT
Bruce N. Alpert
Chief Operating Officer
August 8, 2003 Gabelli Funds, LLC
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES
QUARTER ENDED JUNE 30, 2003 (UNAUDITED)
OWNERSHIP AT
JUNE 30,
SHARES 2003
------ ------------
NET PURCHASES
COMMON STOCKS
Amadeus Global Travel Distribution
SA, Cl. A .................. 70,000 70,000
AT&T Corp. .................... 15,000 315,000
AT&T Wireless Services Inc. ... 54,830 605,000
ATX Communications Inc. ....... 20,000 80,540
Bristol-Myers Squibb Co. ...... 20,000 130,000
BT Group plc, ADR ............. 1,700 24,000
Cable & Wireless
Jamaica Ltd. (a) ............ 246,698 4,440,821
Cadbury Schweppes plc, ADR .... 15,000 30,000
Cincinnati Bell Inc. .......... 880,000 880,000
Compania de Telecomunicaciones de
Chile SA, ADR .............. 13,000 60,000
Cooper Industries Ltd., Cl. A . 5,000 125,000
Curtiss-Wright Corp., Cl. B ... 1,000 102,320
DQE Inc. ...................... 5,000 115,000
Embratel Participacoes
SA, ADR (b) ................. 38,000 38,000
Energy East Corp. ............. 10,000 40,000
Exxon Mobile Corp. ............ 20,000 60,000
Flowers Foods Inc. (c) ........ 20,800 62,400
Fomento Economico Mexicano
SA de CV, ADR .............. 1,000 8,000
Gaylord Entertainment Co. ..... 8,300 248,300
Gemstar-TV Guide
International Inc. .......... 14,568 365,000
Genuine Parts Co. ............. 40,000 250,000
GrafTech International Ltd. ... 10,000 80,000
Grupo Bimbo SA de CV, Ser. A .. 10,000 450,000
Harmony Gold Mining
Co. Ltd., ADR ............... 5,000 35,000
Independent News & Media plc .. 52,266 248,266
InterActive Corp. ............. 480,000 480,000
Japan Telecom
Holdings Co. Ltd. ........... 25 255
John Hancock Financial
Services Inc. ............... 2,000 77,000
KDDI Corp. .................... 65 208
Knight-Ridder Inc. ............ 2,000 19,000
Liberty Satellite & Technology Inc.,
Cl. A ...................... 11,100 45,100
Lucent Technologies Inc. ...... 5,000 130,000
Maytag Corp. .................. 30,000 75,000
Midas Inc. .................... 15,000 120,000
Motorola Inc. ................. 20,000 140,000
National Presto
Industries Inc. ............. 1,300 51,300
Nestle SA ..................... 500 2,500
New Germany Fund Inc. ......... 3,000 70,000
Nikko Cordial Corp. ........... 50,000 257,500
Nortel Networks Corp. ......... 10,000 110,000
Northeast Utilities ........... 50,000 300,000
NTT DoCoMo Inc. ............... 500 1,500
Park-Ohio Holdings Corp. ...... 31,285 115,000
OWNERSHIP AT
JUNE 30,
SHARES 2003
------ ------------
Penton Media Inc. ............. 140,000 500,000
Pfizer Inc. ................... 25,000 90,000
PRIMEDIA Inc. ................. 50,000 400,000
Pulitzer Inc. ................. 7,000 40,000
Rayonier Inc. (d) ............. 5,000 15,000
Reader's Digest
Association Inc. ............ 7,200 178,000
RFS Hotel Investors Inc. ...... 50,000 50,000
Rohm Co. Ltd. ................. 1,500 7,500
Sara Lee Corp. ................ 85,000 100,000
Scheib (Earl) Inc. ............ 4,200 75,000
Schering-Plough Corp. ......... 50,000 70,000
Southwest Gas Corp. ........... 6,000 20,000
Synthes-Stratec Inc. .......... 700 700
Telecom Argentina Stet France
Telecom SA, ADR ............ 2,000 42,000
Texas Instruments Inc. ........ 15,000 220,000
Thomas Nelson Inc. ............ 5,000 80,000
Unitrin Inc. .................. 1,500 60,000
Waddell & Reed Financial Inc.,
Cl. A ...................... 4,900 60,000
NET PURCHASES
PREFERRED STOCKS
Cincinnati Bell Inc.,
6.750% Cv. Pfd.,
Ser. B ..................... 26,000 26,000
NET SALES
COMMON STOCKS
Abbott Laboratories ........... (6,000) 14,000
Acterna Corp. ................. (60,000) --
Acuity Brands Inc. ............ (10,000) 210,000
Adelphia Communications Corp.,
Cl. A ...................... (100,000) --
Agere Systems Inc., Cl. B ..... (5,393) 145,000
AGL Resources Inc. ............ (5,000) 65,000
Aliant Inc. ................... (1,132) 7,000
Allegiance Telecom Inc. ....... (6,000) --
Allen Telecom Inc. ............ (65,000) 225,000
Allstate Corp. ................ (25,000) 65,000
ALLTEL Corp ................... (5,000) 25,000
Altria Group Inc. ............. (20,000) --
Amphenol Corp., Cl. A ......... (500) 1,500
Apache Corp. .................. (3,270) 36,000
Apogent Technologies Inc. (e) . (40,000) --
Argonaut Group Inc. ........... (2,400) 34,000
ArvinMeritor Inc. ............. (2,000) 18,000
Avaya Inc. .................... (3,333) --
Bank Of New York Co. Inc. ..... (3,000) 77,000
Bank One Corp. ................ (10,000) 75,000
See accompanying notes to financial statements.
2
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES (CONTINUED)
QUARTER ENDED JUNE 30, 2003 (UNAUDITED)
OWNERSHIP AT
JUNE 30,
SHARES 2003
------ ------------
NET SALES (CONTINUED)
COMMON STOCKS (CONTINUED)
Bankgesellschaft Berlin AG .... (5,000) 275,000
BCE Inc. ...................... (20,000) 300,000
Boeing Co. .................... (1,000) 114,000
Broadwing Inc. ................ (900,000) --
BT Group plc .................. (15,000) 1,760,000
Burlington Resources Inc. ..... (10,000) 140,000
Cable & Wireless plc, ADR ..... (60,000) 110,000
Cablevision Systems
Corp., Cl. A ................ (6,443) 1,545,000
Capcom Co. Ltd. ............... (20,000) --
Catellus Development Corp. .... (59,700) 390,000
Cendant Corp. ................. (10,000) 170,000
Centerpulse AG ................ (18,000) 5,000
CenturyTel Inc. ............... (13,000) 117,000
Clear Channel
Communications Inc. ......... (10,000) --
CMS Energy Corp. .............. (5,000) 95,000
Comcast Corp., Cl. A .......... (45,250) 480,000
Commerzbank AG, ADR ........... (5,000) 185,000
Commonwealth Telephone
Enterprises Inc. ........... (22,466) 233,000
Computer Associates
International Inc. .......... (10,000) --
Cypress Semiconductor Corp. ... (90,000) 410,000
Dana Corp. .................... (2,061) 318,000
Delphi Corp. .................. (5,000) 55,000
Deutsche Bank AG, ADR ......... (2,000) 158,000
Deutsche Telekom AG, ADR ...... (32,000) 198,000
Dominion Resources Inc. ....... (2,500) --
Donaldson Co. Inc. ............ (1,000) 215,000
Dreyer's Grand Ice Cream Inc. . (20,000) --
DTE Energy Co. ................ (10,000) 17,000
du Pont de Nemours
(E.I.) and Co. .............. (2,000) 8,000
Duke Energy Corp. ............. (110,000) 470,000
Embratel Participacoes SA, ADR (200,000) --
FleetBoston Financial Corp. ... (5,000) 45,000
Florida East Coast Industries Inc.,
Cl. A ...................... (1,000) 43,000
Flowserve Corp. ............... (5,000) 130,000
France Telecom SA, ADR ........ (11,500) 11,500
Gallaher Group plc, ADR ....... (10,000) 240,000
GATX Corp. .................... (5,000) 105,000
General Mills Inc. ............ (5,000) 85,000
General Motors Corp. .......... (2,942) 165,000
GenTek Inc. ................... (200,000) --
Gillette Co. .................. (25,000) 275,000
Grupo Televisa SA, ADR ........ (10,000) 185,000
Grupo TMM SA de CV, Cl. A, ADR (2,000) 18,000
Gucci Group NV, ADR ........... (17,000) 5,000
Halliburton Co. ............... (62,000) 80,000
OWNERSHIP AT
JUNE 30,
SHARES 2003
------ ------------
Harley-Davidson Inc. .......... (5,000) 55,000
Henry Schein Inc. ............. (2,000) 18,000
Hewlett-Packard Co. ........... (25,000) --
HomeFed Corp. ................. (4,753) --
Honeywell International Inc. .. (2,000) 418,000
IDEX Corp. .................... (16,300) 195,000
ITT Industries Inc. ........... (2,000) 118,000
Kansas City Southern .......... (7,500) --
Kellogg Co. ................... (40,000) 310,000
Leap Wireless
International Inc. .......... (52,100) 27,900
Leucadia National Corp. ....... (2,000) 62,000
Lockheed Martin Corp. ......... (5,000) 95,000
Loral Space &
Communications Ltd. (f) ..... (171,000) 19,000
McGraw-Hill Companies Inc. .... (5,000) 100,000
Media General Inc., Cl. A ..... (11,000) 389,000
Merck & Co. Inc. .............. (5,000) 45,000
Metro-Goldwyn-Mayer Inc. ...... (25,000) 375,000
Mirant Corp. .................. (20,000) 70,000
mm02 plc ...................... (15,000) 1,760,000
mm02 plc, ADR ................. (15,000) 109,000
Murata Manufacturing Co. Ltd. . (10,500) --
National Service
Industries Inc. (g) ......... (34,500) --
Neiman Marcus Group
Inc., Cl. A ................. (40,000) 50,000
News Corp. Ltd., ADR .......... (1,016) 10,000
Nextel Communications
Inc., Cl. A ................. (5,000) 235,000
Northrop Grumman Corp. ........ (9,000) 170,000
O'Reilly Automotive Inc. ...... (20,000) --
Pactiv Corp. .................. (20,000) 150,000
Panamerican Beverages
Inc., Cl. A (h) ............. (30,000) --
Paxson Communications Corp. ... (3,000) 128,000
PepsiCo Inc. .................. (15,000) 485,000
Pernod-Ricard SA .............. (2,000) 6,750
Phoenix Companies Inc. ........ (10,000) 175,000
Precision Castparts Corp. ..... (2,000) 50,000
RCN Corp. ..................... (10,000) 60,000
Rogers Wireless Communications Inc.,
Cl. B ...................... (20,000) 230,000
Rohm and Haas Co. ............. (5,000) --
Royal Dutch Petroleum Co. ..... (7,500) --
Royce Value Trust Inc. ........ (4,000) 36,000
SBC Communications Inc. ....... (5,000) 220,000
Schwab (Charles) Corp. ........ (5,000) 45,000
Sequa Corp., Cl. B ............ (3,400) 74,600
Six Flags Inc. ................ (5,000) 220,000
SJW Corp. ..................... (400) 10,000
Sony Corp., ADR ............... (2,000) 45,000
Sulzer AG ..................... (1,500) 4,000
Synavant Inc. ................. (3,500) --
Syngenta AG, ADR .............. (1,697) 10,000
See accompanying notes to financial statements.
3
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES (CONTINUED)
QUARTER ENDED JUNE 30, 2003 (UNAUDITED)
OWNERSHIP AT
JUNE 30,
SHARES 2003
------ ------------
NET SALES (CONTINUED)
COMMON STOCKS (CONTINUED)
T. Rowe Price Group Inc. ...... (7,000) 93,000
Telecom Italia SpA, ADR ....... (8,000) 115,000
Telephone & Data Systems Inc. . (2,000) 448,000
TELUS Corp., Non-Voting, ADR .. (4,000) 20,750
Terumo Corp. .................. (20,000) --
Travelers Property Casualty Corp.,
Cl. A ...................... (7,000) --
Tyco International Ltd. ....... (30,000) 25,000
USA Interactive Inc. .......... (485,000) --
Verizon Communications Inc. ... (7,000) 333,000
Wachovia Corp. ................ (25,000) 100,000
Winn-Dixie Stores Inc. ........ (20,000) --
Wrigley (Wm.) Jr. Co. ......... (2,000) 177,100
Xcel Energy Inc. .............. (20,000) 40,000
Xerox Corp. ................... (10,000) --
PREFERRED STOCKS
Allen Telecom Inc., 7.750% Cv. Pfd.,
Ser. D ..................... (6,500) --
Broadwing Inc., 6.750% Cv. Pfd.,
Ser. B ..................... (31,000) --
Hercules Trust I, 9.420% Pfd. . (19,100) 261,400
Lucent Technologies Capital Trust I,
7.750% Cv. Pfd. ............ (500) --
Prosieben Sat.1 Media AG, Pfd. (25,000) 75,000
OWNERSHIP AT
JUNE 30,
SHARES 2003
------ ------------
CORPORATE BONDS
Agere Systems Inc., Sub. Dev. Cv.,
6.500%, 12/15/09 ...........(2,800,000) 500,000
Charter Communications Inc., Cv.,
4.750%, 06/01/06 ........... (100,000) 1,100,000
Hilton Hotels Corp., Sub. Deb. Cv.,
5.000%, 05/15/06 ........... (400,000) --
Mirant Corp., Sub. Deb. Cv.,
2.500%, 06/15/21 ........... (100,000) 900,000
Standard Motor Products Inc.,
Sub. Deb. Cv., 6.750%,
07/15/09 ................... (50,000) 1,200,000
WARRANTS
Harmony Gold Mining Co. Ltd., ADR,
expires 06/29/03 ........... (5,000) --
--------------------
(a) 1 for 17 bonus issue
(b) 1 for 5 reverse stock split
(c) 3 for 2 stock split
(d) 3 for 2 stock split
(e) Tender Offer at $17.50 per share
(f) 1 for 10 reverse stock split
(g) Tender Offer at $10.00 per share
(h) Tender Offer at $22.00 per share
See accompanying notes to financial statements.
4
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS
JUNE 30, 2003 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS -- 96.6%
TELECOMMUNICATIONS -- 9.1%
7,000 Aliant Inc. .......$ 62,390 $ 150,072
25,000 ALLTEL Corp. ...... 534,554 1,205,500
315,000 AT&T Corp. ........ 10,042,730 6,063,750
80,540 ATX Communications
Inc.+ ........... 252,120 28,994
300,000 BCE Inc. .......... 7,951,642 6,933,000
33,400 Brasil Telecom Participacoes
SA, ADR ......... 1,940,826 1,250,830
1,760,000 BT Group plc ...... 7,277,785 5,917,492
24,000 BT Group plc, ADR . 907,300 807,840
4,440,821 Cable & Wireless
Jamaica Ltd. .... 101,639 60,522
110,000 Cable & Wireless
plc, ADR ........ 2,314,741 601,700
117,000 CenturyTel Inc. ... 2,733,061 4,077,450
880,000 Cincinnati Bell Inc.+ 7,720,293 5,896,000
100,000 Citizens Communications
Co.+ ............ 1,226,788 1,289,000
233,000 Commonwealth Telephone
Enterprises Inc.+ 8,614,270 10,245,010
20,000 Commonwealth Telephone
Enterprises Inc.,
Cl. B+ .......... 128,902 920,000
60,000 Compania de
Telecomunicaciones de
Chile SA, ADR+ .. 897,937 708,000
198,000 Deutsche Telekom
AG, ADR+ ........ 3,284,671 3,009,600
38,000 Embratel Participacoes
SA, ADR+ ........ 2,709,959 381,140
11,500 France Telecom
SA, ADR ......... 399,220 283,475
255 Japan Telecom Holdings
Co. Ltd. ........ 867,437 775,141
208 KDDI Corp. ........ 685,401 805,497
100,000 KPN NV+ ........... 232,728 708,528
700,000 Qwest Communications
International Inc.+ 2,010,505 3,346,000
60,000 RCN Corp.+ ........ 425,991 118,800
9,655 Rogers Communications
Inc., Cl. B ..... 137,424 153,840
110,345 Rogers Communications
Inc., Cl. B, ADR 1,537,198 1,771,037
220,000 SBC Communications
Inc. ............ 7,272,156 5,621,000
350,000 Sprint Corp. -
FON Group ....... 8,833,016 5,040,000
186,554 Tele Norte Leste
Participacoes
SA, ADR ......... 2,554,387 2,178,951
42,000 Telecom Argentina Stet
France Telecom
SA, ADR+ ........ 360,891 273,000
400,040 Telecom Italia SpA 3,059,315 3,619,939
115,000 Telecom Italia
SpA, ADR ........ 2,472,570 10,423,600
150,000 Telecom Italia
SpA, RNC ........ 572,370 821,639
MARKET
SHARES COST VALUE
------ ---- ------
275,849 Telefonica SA,
ADR+ ............$ 9,182,496 $ 9,536,100
17,595 Telefonica SA, BDR+ 206,518 204,221
36,000 Telefonos de Mexico SA
de CV, Cl. L, ADR 389,422 1,131,120
12,750 TELUS Corp. ....... 222,542 224,362
52,500 TELUS Corp., ADR .. 950,397 923,846
4,250 TELUS Corp.,
Non-Voting ...... 74,181 69,908
20,750 TELUS Corp., Non-Voting,
ADR ............. 438,501 341,316
333,000 Verizon
Communications Inc. 12,620,633 13,136,850
-------------- --------------
114,206,907 111,054,070
-------------- --------------
FINANCIAL SERVICES -- 8.7%
65,000 Allstate Corp. .... 1,561,054 2,317,250
550,000 American Express Co. 19,230,623 22,995,500
34,000 Argonaut Group Inc. 893,076 419,220
90,000 Banco Santander Central
Hispano SA, ADR . 322,130 793,800
110,000 Bank of Ireland ... 635,101 1,332,652
77,000 Bank of New
York Co. Inc. ... 2,834,050 2,213,750
75,000 Bank One Corp. .... 2,217,452 2,788,500
275,000 Bankgesellschaft
Berlin AG+ ...... 5,495,399 789,486
260 Berkshire Hathaway Inc.,
Cl. A+ .......... 824,299 18,850,000
5,000 Block (H&R) Inc. .. 97,625 216,250
185,000 Commerzbank AG, ADR 3,747,342 2,591,776
158,000 Deutsche Bank AG, ADR 6,778,705 10,178,360
20,000 Dun and Bradstreet
Corp.+ .......... 333,130 822,000
45,000 FleetBoston Financial
Corp. ........... 937,650 1,336,950
25,000 Hibernia Corp., Cl. A 198,750 454,000
20,000 Invik & Co. AB, Cl. B 936,800 960,658
100,000 Irish Life &
Permanent plc ... 781,432 1,079,442
30,000 Janus Capital
Group Inc. ...... 470,955 492,000
77,000 John Hancock Financial
Services Inc. ... 2,797,394 2,366,210
50,000 JP Morgan Chase & Co. 1,334,283 1,709,000
62,000 Leucadia National
Corp. ........... 1,961,985 2,301,440
100,000 Mellon Financial
Corp. ........... 3,140,094 2,775,000
199,400 Midland Co. ....... 1,114,894 4,428,674
30,000 Moody's Corp. ..... 666,995 1,581,300
257,500 Nikko Cordial Corp. 1,725,292 1,033,646
175,000 Phoenix Companies
Inc. ............ 2,612,432 1,580,250
2,500 Prudential
Financial Inc. .. 68,750 84,125
31,002 RAS SpA ........... 350,111 470,288
60,000 Riggs National Corp. 552,538 913,200
45,000 Schwab (Charles)
Corp. ........... 657,563 454,050
80,000 State Street Corp. 1,417,370 3,152,000
See accompanying notes to financial statements.
5
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES (CONTINUED)
20,000 SunTrust Banks Inc.$ 419,333 $ 1,186,800
93,000 T. Rowe Price
Group Inc. ...... 3,121,425 3,510,750
20,000 UBS AG ............ 845,648 1,112,555
60,000 Unitrin Inc. ...... 1,112,190 1,627,200
100,000 Wachovia Corp. .... 3,043,582 3,996,000
60,000 Waddell & Reed Financial
Inc., Cl. A ..... 1,247,250 1,540,200
-------------- --------------
76,484,702 106,454,282
-------------- --------------
ENTERTAINMENT -- 7.7%
620,000 AOL Time Warner Inc.+ 14,622,091 9,975,800
24,000 Ascent Media Group Inc.,
Cl. A+ .......... 93,109 29,760
160,000 Canal Plus, ADR ... 34,010 165,360
110,000 EMI Group plc ..... 292,543 221,452
100,000 EMI Group plc, ADR 1,189,467 402,630
120,000 Fox Entertainment Group
Inc., Cl. A+ .... 2,783,871 3,453,600
50,000 GC Companies Inc.+ 54,500 7,500
365,000 Gemstar-TV Guide
International
Inc.+ ........... 2,710,973 1,857,850
1,913,600 Liberty Media Corp.,
Cl. A+ .......... 9,721,198 22,121,216
375,000 Metro-Goldwyn-Mayer
Inc.+ ........... 5,562,500 4,657,500
160,000 Publishing &
Broadcasting Ltd. 893,720 1,060,178
15,000 Regal Entertainment
Group, Cl. A .... 285,000 353,700
220,000 Six Flags Inc.+ ... 1,921,068 1,491,600
260,000 The Walt Disney Co. 5,453,387 5,135,000
840,000 Viacom Inc., Cl. A+ 35,321,393 36,708,000
40,900 Vivendi Universal SA+ 2,169,026 744,430
320,000 Vivendi Universal SA,
ADR+ ............ 9,816,202 5,900,800
-------------- --------------
92,924,058 94,286,376
-------------- --------------
FOOD AND BEVERAGE -- 7.6%
30,000 Cadbury Schweppes plc,
ADR ............. 746,559 725,400
100,000 Campbell Soup Co. . 2,694,094 2,450,000
16,000 Carlsberg AS, Cl. B 764,371 572,480
35,000 Coca-Cola Co. ..... 1,625,312 1,624,350
45,000 Coca-Cola
Enterprises Inc. 696,034 816,750
40,000 Coca-Cola Hellenic Bottling
Co. SA .......... 614,996 667,876
100,000 Corn Products
International Inc. 2,916,387 3,003,000
MARKET
SHARES COST VALUE
------ ---- ------
53,592 Del Monte Foods Co.$ 447,217 $ 473,753
10,108 Denny's Corp.+ .... 14,358 7,025
100,000 Diageo plc ........ 1,037,393 1,067,657
224,000 Diageo plc, ADR ... 8,642,745 9,802,240
62,400 Flowers Foods Inc. 1,055,628 1,233,024
8,000 Fomento Economico
Mexicano SA de CV,
ADR ............. 288,077 329,600
85,000 General Mills Inc. 3,124,275 4,029,850
450,000 Grupo Bimbo SA de CV,
Ser. A .......... 966,223 755,467
20,000 Hain Celestial
Group Inc.+ ..... 267,663 319,800
120,000 Heinz (H.J.) Co. .. 4,315,473 3,957,600
20,000 Hershey Foods Corp. 1,333,128 1,393,200
310,000 Kellogg Co. ....... 8,638,995 10,654,700
75,000 Kerry Group plc,
Cl. A ........... 860,877 1,154,084
12,100 LVMH Moet Hennessy
Louis Vuitton SA+ 419,053 600,123
50,000 Mondavi (Robert) Corp.,
Cl. A+ .......... 1,442,406 1,265,500
2,500 Nestle SA ......... 513,610 515,858
600,595 PepsiAmericas Inc. 8,073,962 7,543,473
485,000 PepsiCo Inc. ...... 13,734,141 21,582,500
6,750 Pernod-Ricard SA .. 470,174 602,277
60,000 Ralcorp Holdings
Inc.+ ........... 940,903 1,497,600
100,000 Sara Lee Corp. .... 1,837,634 1,881,000
2,000 Smucker (J.M.) Co. 52,993 79,780
106,969 Tootsie Roll
Industries Inc. . 1,580,949 3,261,485
177,100 Wrigley (Wm.) Jr. Co. 9,608,864 9,958,333
-------------- --------------
79,724,494 93,825,785
-------------- --------------
ENERGY AND UTILITIES -- 6.3%
60,000 AES Corp.+ ........ 294,617 381,000
65,000 AGL Resources Inc. 1,165,615 1,653,600
36,000 Apache Corp. ...... 776,702 2,342,160
120,000 BP plc ............ 725,215 832,178
248,800 BP plc, ADR ....... 10,091,328 10,454,576
140,000 Burlington
Resources Inc. .. 5,902,202 7,569,800
115,000 CH Energy Group Inc. 4,749,282 5,175,000
23,000 Cinergy Corp. ..... 700,115 846,170
95,000 CMS Energy Corp. .. 606,926 769,500
103,217 ConocoPhillips .... 5,288,737 5,656,291
10,000 Constellation Energy
Group Inc. ...... 237,177 343,000
26,000 DPL Inc. .......... 524,093 414,440
115,000 DQE Inc. .......... 1,955,641 1,733,050
17,000 DTE Energy Co. .... 750,951 656,880
470,000 Duke Energy Corp. . 8,624,500 9,376,500
200,000 El Paso Corp. ..... 2,700,689 1,616,000
400,000 El Paso Electric Co.+ 3,236,625 4,932,000
See accompanying notes to financial statements.
6
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES (CONTINUED)
40,000 Energy East Corp. .$ 826,233 $ 830,400
35,000 Eni SpA ........... 509,461 529,329
60,000 Exxon Mobil Corp. . 1,991,246 2,154,600
8,300 FPL Group Inc. .... 448,272 554,855
80,000 Halliburton Co. ... 799,065 1,840,000
38,632 Kerr-McGee Corp. .. 2,281,548 1,730,714
70,000 Mirant Corp.+ ..... 632,748 203,000
100,000 NiSource Inc.+ .... 200,000 222,000
300,000 Northeast Utilities 5,660,050 5,022,000
100,000 Progress Energy
Inc., CVO+ ...... 52,000 10,500
10,000 SJW Corp. ......... 883,106 852,500
20,000 Southwest Gas Corp. 415,025 423,600
7,907 Total SA .......... 1,114,624 1,194,921
100,000 TXU Corp. ......... 1,673,875 2,245,000
260,000 Westar Energy Inc. 4,407,757 4,219,800
40,000 Xcel Energy Inc. .. 408,700 601,600
-------------- --------------
70,634,125 77,386,964
-------------- --------------
EQUIPMENT AND SUPPLIES -- 5.8%
120,000 AMETEK Inc. ....... 1,873,494 4,398,000
1,500 Amphenol Corp.,
Cl. A+ .......... 22,162 70,230
10,000 Caterpillar Inc. 136,559 556,600
95,000 CIRCOR International
Inc. ............ 981,440 1,693,850
320,000 Deere & Co. ....... 15,328,000 14,624,000
215,000 Donaldson Co. Inc. 1,443,612 9,556,750
130,000 Flowserve Corp.+ .. 2,341,263 2,557,100
13,000 Franklin Electric
Co. Inc. ........ 210,022 723,450
100,000 Gerber Scientific
Inc.+ ........... 1,060,701 666,000
80,000 GrafTech International
Ltd.+ ........... 1,000,049 436,000
195,000 IDEX Corp. ........ 6,304,350 7,066,800
20,000 Ingersoll-Rand Co.,
Cl. A ........... 836,200 946,400
60,000 Lufkin Industries
Inc. ............ 1,105,223 1,461,000
1,000 Manitowoc Co. Inc. 25,450 22,300
425,000 Navistar International
Corp.+ .......... 6,419,192 13,867,750
30,000 PACCAR Inc. ....... 450,000 2,026,800
5,000 Sealed Air Corp.+ . 87,018 238,300
170,000 SPS Technologies
Inc.+ ........... 2,963,443 4,596,800
60,000 Sybron Dental Specialties
Inc.+ ........... 1,140,669 1,416,000
250,000 Watts Industries Inc.,
Cl. A ........... 3,331,739 4,462,500
100,000 Weir Group plc .... 420,789 385,313
-------------- --------------
47,481,375 71,771,943
-------------- --------------
MARKET
SHARES COST VALUE
------ ---- ------
PUBLISHING -- 5.6%
20,000 Dow Jones &
Co. Inc. ........$ 1,030,036 $ 860,600
248,266 Independent News &
Media plc ....... 358,456 450,449
19,000 Knight-Ridder Inc. 1,271,049 1,309,670
5,000 McClatchy Co., Cl. A 240,250 288,100
100,000 McGraw-Hill
Companies Inc. .. 6,052,805 6,200,000
389,000 Media General Inc.,
Cl. A ........... 23,023,400 22,250,800
125,000 Meredith Corp. .... 2,091,314 5,500,000
115,000 New York Times Co.,
Cl. A ........... 790,115 5,232,500
120,000 News Corp. Ltd. ... 696,029 901,366
10,000 News Corp. Ltd., ADR 186,274 302,700
500,000 Penton Media Inc.+ 4,789,842 295,000
400,000 PRIMEDIA Inc.+ .... 1,948,569 1,220,000
40,000 Pulitzer Inc. ..... 1,826,481 1,976,800
178,000 Reader's Digest
Association Inc. 3,247,836 2,399,440
261,319 SCMP Group Ltd. ... 191,790 103,045
70,000 Scripps (E.W.) Co.,
Cl. A ........... 4,559,387 6,210,400
91,842 Seat-Pagine
Gialle SpA+ ..... 204,007 63,807
80,000 Thomas Nelson Inc.+ 951,267 1,000,000
250,000 Tribune Co. ....... 11,310,100 12,075,000
-------------- --------------
64,769,007 68,639,677
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 4.6%
210,000 Acuity Brands Inc. 3,603,717 3,815,700
195,000 Ampco-Pittsburgh
Corp. ........... 2,627,873 2,613,000
125,000 Cooper Industries
Ltd., Cl. A ..... 6,152,755 5,162,500
270,000 Crane Co. ......... 5,062,737 6,110,100
105,000 GATX Corp. ........ 1,708,946 1,716,750
260,000 Greif Inc., Cl. A . 4,845,131 5,980,000
3,400 Greif Inc., Cl. B . 69,825 85,850
418,000 Honeywell International
Inc. ............ 14,210,303 11,223,300
118,000 ITT Industries Inc. 3,585,603 7,724,280
400,600 Lamson & Sessions
Co.+ ............ 2,458,185 1,930,892
115,000 Park-Ohio Holdings
Corp.+ .......... 1,147,165 568,100
213,800 Sensient Technologies
Corp. ........... 3,865,929 4,915,262
10,000 Smiths Group plc .. 171,257 116,007
4,000 Sulzer AG ......... 850,053 558,861
100,000 Thomas
Industries Inc. . 1,388,525 2,705,000
50,000 Trinity Industries
Inc. ............ 945,000 925,500
25,000 Tyco International
Ltd. ............ 325,732 474,500
-------------- --------------
53,018,736 56,625,602
-------------- --------------
See accompanying notes to financial statements.
7
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
WIRELESS COMMUNICATIONS -- 4.6%
95,000 America Movil SA de CV,
Cl. L, ADR ......$ 1,235,397 $ 1,781,250
605,000 AT&T Wireless
Services Inc.+ .. 7,589,893 4,967,050
27,900 Leap Wireless
International Inc.+ 8,252 1,395
1,760,000 mm02 plc+ ......... 1,963,847 1,648,185
109,000 mm02 plc, ADR+ .... 1,259,992 1,006,070
235,000 Nextel Communications Inc.,
Cl. A+ .......... 3,746,523 4,248,800
1,500 NTT DoCoMo Inc. ... 3,553,937 3,247,970
230,000 Rogers Wireless
Communications Inc.,
Cl. B+ .......... 2,999,275 3,887,000
230,000 Sprint Corp. -
PCS Group+ ...... 533,587 1,322,500
16,700 Tele Celular Sul
Participacoes
SA, ADR ......... 266,992 139,111
55,666 Tele Centro Oeste Celular
Participacoes
SA, ADR ......... 166,868 321,749
3,340 Tele Leste Celular
Participacoes
SA, ADR+ ........ 89,340 25,785
8,350 Tele Nordeste Celular
Participacoes
SA, ADR ......... 123,227 134,852
3,340 Tele Norte Celular
Participacoes
SA, ADR+ ........ 51,601 22,378
1,400,000 Telecom Italia
Mobile SpA ...... 2,694,316 6,896,948
75,000 Telefonica Moviles
SA+ ............. 535,739 602,019
8,350 Telemig Celular
Participacoes
SA, ADR ......... 241,320 175,517
448,000 Telephone & Data
Systems Inc. .... 36,971,784 22,265,600
66,800 Telesp Celular
Participacoes
SA, ADR+ ........ 2,135,936 260,520
553,888 Vodafone Group plc 975,799 1,083,098
100,000 Vodafone Group
plc, ADR ........ 927,768 1,965,000
-------------- --------------
68,071,393 56,002,797
-------------- --------------
CABLE -- 4.3%
1,545,000 Cablevision Systems Corp.,
Cl. A+ .......... 23,103,311 32,074,200
30,000 Charter Communications
Inc., Cl. A+ .... 138,876 119,100
480,000 Comcast Corp., Cl. A+ 15,580,814 14,486,400
85,000 Comcast Corp., Cl. A,
Special+ ........ 756,584 2,450,550
20,000 Shaw Communications Inc.,
Cl. B ........... 52,983 267,599
MARKET
SHARES COST VALUE
------ ---- ------
80,000 Shaw Communications Inc.,
Cl. B,
Non-Voting ......$ 329,197 $ 1,076,000
370,000 UnitedGlobalCom Inc.,
Cl. A+ .......... 2,499,253 1,912,900
-------------- --------------
42,461,018 52,386,749
-------------- --------------
CONSUMER PRODUCTS -- 4.0%
60,000 Altadis SA ........ 885,677 1,537,861
43,000 Christian Dior SA . 1,514,055 1,719,368
10,000 Church & Dwight
Co. Inc. ........ 99,536 327,300
100,000 Compagnie Financiere
Richemont AG, Cl. A 1,411,829 1,616,785
50,000 Department 56 Inc.+ 524,317 766,500
40,000 Energizer
Holdings Inc.+ .. 938,568 1,256,000
90,000 Fortune Brands Inc. 2,401,343 4,698,000
30,000 Gallaher Group plc 274,164 294,554
240,000 Gallaher Group
plc, ADR ........ 9,300,000 9,504,000
275,000 Gillette Co. ...... 8,780,020 8,761,500
2,000 Givaudan SA ....... 550,742 841,614
55,000 Harley-Davidson Inc. 138,531 2,192,300
15,000 Matsushita Electric
Industrial Co.
Ltd., ADR ....... 178,325 150,750
100,000 Mattel Inc. ....... 1,549,565 1,892,000
75,000 Maytag Corp. ...... 1,879,366 1,831,500
51,300 National Presto
Industries Inc. . 1,808,866 1,621,080
8,200 Nintendo Co. Ltd. . 700,058 596,177
100,000 Procter & Gamble Co. 8,770,000 8,918,000
10,000 Swatch Group AG,
Cl. B ........... 584,263 906,212
-------------- --------------
42,289,225 49,431,501
-------------- --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 3.4%
18,000 ArvinMeritor Inc. . 337,568 363,240
37,802 BorgWarner Inc. ... 1,727,093 2,434,449
100,000 CLARCOR Inc. ...... 1,266,455 3,855,000
318,000 Dana Corp. ........ 5,199,986 3,676,080
55,000 Delphi Corp. ...... 697,278 474,650
260,000 GenCorp Inc. ...... 2,470,673 2,311,400
250,000 Genuine Parts Co. . 6,819,120 8,002,500
114,000 Johnson Controls Inc. 9,222,600 9,758,400
120,000 Midas Inc.+ ....... 1,596,034 1,454,400
335,000 Modine Manufacturing
Co. ............. 4,388,179 6,488,950
75,000 Scheib (Earl) Inc.+ 619,805 205,875
163,000 Standard Motor
Products Inc. ... 1,748,388 1,809,300
24,000 Superior Industries
International Inc. 603,378 1,000,800
105,000 TransPro Inc.+ .... 936,808 470,400
-------------- --------------
37,633,365 42,305,444
-------------- --------------
See accompanying notes to financial statements.
8
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
HEALTH CARE -- 3.0%
14,000 Abbott
Laboratories ....$ 520,100 $ 612,640
60,000 Amgen Inc.+ ....... 256,894 3,986,400
10,000 AstraZeneca plc,
London .......... 385,298 400,990
35,146 AstraZeneca plc,
Stockholm ....... 1,255,532 1,424,732
15,000 Aventis SA ........ 1,056,288 825,257
26,000 Biogen Inc.+ ...... 181,025 988,000
130,000 Bristol-Myers
Squibb Co. ...... 3,420,465 3,529,500
5,000 Centerpulse AG+ ... 325,651 1,345,475
75,036 GlaxoSmithKline plc 1,817,377 1,514,340
4,000 GlaxoSmithKline
plc, ADR ........ 216,096 162,160
18,000 Henry Schein Inc.+ 775,800 942,120
56,011 Invitrogen Corp.+ . 2,678,981 2,149,142
45,000 Merck & Co. Inc. .. 2,542,323 2,724,750
41,000 Novartis AG ....... 1,292,180 1,622,396
108,000 Novartis AG,
Registered ...... 3,905,280 4,299,480
90,000 Pfizer Inc. ....... 1,903,100 3,073,500
17,900 Roche Holding AG .. 1,644,702 1,404,074
20,000 Sanofi-Synthelabo SA 967,750 1,171,310
70,000 Schering-Plough Corp. 1,446,838 1,302,000
700 Synthes-Stratec Inc. 469,462 502,827
14,000 Takeda Chemical
Industries Ltd. . 782,347 516,511
60,000 Wyeth ............. 2,563,371 2,733,000
-------------- --------------
30,406,860 37,230,604
-------------- --------------
CONSUMER SERVICES -- 2.6%
480,000 InterActive Corp.+ 11,596,996 18,993,600
40,000 Loewen Group Inc.+ 48,700 0
697,800 Rollins Inc. ...... 5,357,729 13,153,530
-------------- --------------
17,003,425 32,147,130
-------------- --------------
HOTELS AND GAMING -- 2.6%
110,000 Aztar Corp.+ ...... 772,707 1,772,100
90,000 Boca Resorts Inc.,
Cl. A+ .......... 787,000 1,170,000
248,300 Gaylord Entertainment
Co.+ ............ 6,357,944 4,859,231
30,000 Greek Organization of
Football
Prognostics ..... 288,231 305,919
8,000 GTECH Holdings Corp.+ 69,219 301,200
2,510,000 Hilton Group plc .. 8,418,704 7,621,122
650,000 Hilton Hotels Corp. 6,542,136 8,313,500
60,000 MGM Mirage+ ....... 1,588,260 2,050,800
430,000 Park Place Entertainment
Corp.+ .......... 2,424,893 3,908,700
50,000 Starwood Hotels & Resorts
Worldwide Inc. .. 1,075,717 1,429,500
-------------- --------------
28,324,811 31,732,072
-------------- --------------
MARKET
SHARES COST VALUE
------ ---- ------
RETAIL -- 2.0%
200,000 Albertson's Inc. ..$ 5,617,829 $ 3,840,000
300,000 AutoNation Inc.+ .. 3,354,597 4,716,000
75,000 Boots Group plc ... 739,158 802,599
15,000 Coldwater Creek Inc.+ 181,517 184,950
5,000 Gucci Group NV, ADR 455,824 490,000
16,000 Ito-Yokado Co. Ltd. 563,986 383,094
100,000 Lillian Vernon Corp.+ 1,362,258 723,000
50,000 Neiman Marcus Group Inc.,
Cl. A+ .......... 1,485,058 1,830,000
320,000 Neiman Marcus Group Inc.,
Cl. B+ .......... 7,741,769 11,040,000
7,750 Tod's SpA ......... 387,822 241,003
-------------- --------------
21,889,818 24,250,646
-------------- --------------
AEROSPACE -- 1.9%
150,000 BAE Systems plc ... 564,815 352,723
114,000 Boeing Co. ........ 3,814,474 3,912,480
95,000 Lockheed Martin Corp. 5,393,245 4,519,150
170,000 Northrop Grumman
Corp.+ .......... 16,166,154 14,669,300
-------------- --------------
25,938,688 23,453,653
-------------- --------------
BROADCASTING -- 1.9%
16,666 Corus Entertainment Inc.,
Cl. B+ .......... 62,036 279,044
100,000 Gray Television Inc. 974,530 1,240,000
28,000 Gray Television Inc.,
Cl. A ........... 376,900 344,400
185,000 Grupo Televisa
SA, ADR ......... 4,870,420 6,382,500
200,000 Liberty Corp. ..... 8,528,905 8,500,000
5,000 LIN TV Corp., Cl. A+ 110,000 117,750
120,000 Mediaset SpA ...... 915,894 1,015,595
4,000 Nippon Broadcasting
System Inc. ..... 161,709 101,270
40,375 NRJ Group ......... 384,806 598,100
128,000 Paxson Communications
Corp.+ .......... 1,263,348 766,720
17,700 RTL Group ......... 775,136 845,548
100,000 Television Broadcasts
Ltd. ............ 396,239 358,419
110,000 Young Broadcasting Inc.,
Cl. A+ .......... 2,713,685 2,324,300
-------------- --------------
21,533,608 22,873,646
-------------- --------------
REAL ESTATE -- 1.7%
390,000 Catellus Development
Corp.+ .......... 6,469,316 8,580,000
70,000 Cheung Kong (Holdings)
Ltd. ............ 815,521 420,998
43,000 Florida East Coast
Industries Inc.,
Cl. A ........... 511,096 1,098,650
See accompanying notes to financial statements.
9
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
REAL ESTATE (CONTINUED)
58,451 Florida East Coast
Industries Inc.,
Cl. B ...........$ 964,977 $ 1,455,430
55,000 Griffin Land & Nurseries
Inc.+ ........... 513,143 759,275
50,000 RFS Hotel Investors
Inc. ............ 613,500 616,000
253,000 St. Joe Co. ....... 1,873,208 7,893,600
-------------- --------------
11,760,761 20,823,953
-------------- --------------
ELECTRONICS -- 1.4%
145,000 Agere Systems Inc.,
Cl. B+ .......... 477,524 333,500
410,000 Cypress Semiconductor
Corp.+ .......... 2,530,947 4,920,000
3,000 Hitachi Ltd., ADR . 218,796 126,900
20,000 Molex Inc., Cl. A . 519,697 463,580
7,500 NEC Corp., ADR .... 43,625 37,800
7,500 Rohm Co. Ltd. ..... 1,162,607 817,614
38,800 Royal Philips Electronics
NV, ADR ......... 53,456 741,468
45,000 Sony Corp., ADR ... 1,340,589 1,260,000
220,000 Texas Instruments
Inc. ............ 5,428,505 3,872,000
250,000 Thomas & Betts Corp.+ 4,581,748 3,612,500
10,400 Tokyo Electron Ltd. 507,989 492,825
-------------- --------------
16,865,483 16,678,187
-------------- --------------
AVIATION: PARTS AND SERVICES -- 1.2%
102,320 Curtiss-Wright Corp.,
Cl. B ........... 5,637,891 6,374,536
90,000 Fairchild Corp.,
Cl. A+ .......... 1,111,343 362,700
50,000 Precision Castparts
Corp. ........... 923,218 1,555,000
84,500 Sequa Corp., Cl. A+ 3,371,578 2,898,350
74,600 Sequa Corp., Cl. B+ 3,852,673 3,085,456
-------------- --------------
14,896,703 14,276,042
-------------- --------------
AGRICULTURE -- 1.1%
1,050,000 Archer-Daniels-
Midland Co. ..... 13,728,377 13,513,500
5,000 Delta & Pine Land Co. 84,396 109,900
-------------- --------------
13,812,773 13,623,400
-------------- --------------
SPECIALTY CHEMICALS -- 0.9%
5,400 Ciba Specialty Chemicals,
ADR ............. 14,912 164,970
8,000 du Pont de Nemours (E.I.)
and Co. ......... 262,000 333,120
330,000 Ferro Corp. ....... 6,975,503 7,434,900
40,000 Fuller (H.B.) Co. . 968,437 880,800
MARKET
SHARES COST VALUE
------ ---- ------
120,000 Hercules Inc.+ ....$ 1,543,119 $ 1,188,000
15,000 IVAX Corp.+ ....... 170,440 267,750
210,000 Omnova Solutions
Inc.+ ........... 1,767,940 848,400
10,000 Syngenta AG, ADR .. 18,940 101,400
-------------- --------------
11,721,291 11,219,340
-------------- --------------
COMMUNICATIONS EQUIPMENT -- 0.9%
225,000 Allen Telecom Inc.+ 1,431,267 3,717,000
525,000 Corning Inc.+ ..... 5,185,332 3,879,750
130,000 Lucent Technologies
Inc.+ ........... 852,756 263,900
140,000 Motorola Inc. ..... 1,803,785 1,320,200
110,000 Nortel Networks
Corp.+ .......... 755,785 297,000
44,000 Scientific-Atlanta
Inc. ............ 355,750 1,048,960
-------------- --------------
10,384,675 10,526,810
-------------- --------------
ENVIRONMENTAL SERVICES -- 0.7%
65,000 Republic Services
Inc.+ ........... 875,761 1,473,550
300,000 Waste Management Inc. 6,690,206 7,227,000
-------------- --------------
7,565,967 8,700,550
-------------- --------------
BUSINESS SERVICES -- 0.7%
60,000 ANC Rental Corp.+ . 578,273 300
170,000 Cendant Corp.+ .... 2,363,518 3,114,400
1,000 CheckFree Corp.+ .. 9,040 27,840
98,000 Landauer Inc. ..... 634,307 4,099,340
70,000 Nashua Corp.+ ..... 634,028 623,000
250,000 Securicor plc ..... 0 307,343
-------------- --------------
4,219,166 8,172,223
-------------- --------------
METALS AND MINING -- 0.5%
72,500 Harmony Gold Mining
Co. Ltd. ........ 347,738 950,898
35,000 Harmony Gold Mining Co.
Ltd., ADR ....... 282,733 471,450
130,000 Newmont Mining Corp. 2,977,871 4,219,800
50,000 Placer Dome Inc. .. 487,169 613,500
-------------- --------------
4,095,511 6,255,648
-------------- --------------
AUTOMOTIVE -- 0.5%
20,000 Ford Motor Co. .... 490,840 219,800
165,000 General Motors Corp. 5,239,847 5,940,000
-------------- --------------
5,730,687 6,159,800
-------------- --------------
PAPER AND FOREST PRODUCTS -- 0.5%
100,000 MeadWestvaco Corp. 2,760,271 2,470,000
150,000 Pactiv Corp.+ ..... 1,569,911 2,956,500
15,000 Rayonier Inc. ..... 465,432 495,000
-------------- --------------
4,795,614 5,921,500
-------------- --------------
See accompanying notes to financial statements.
10
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS (CONTINUED)
SATELLITE -- 0.2%
180,323 General Motors Corp.,
Cl. H+ ..........$ 2,584,089 $ 2,309,938
45,100 Liberty Satellite &
Technology Inc.,
Cl. A+ .......... 930,397 117,260
19,000 Loral Space &
Communications
Ltd.+ ........... 614,954 57,950
-------------- --------------
4,129,440 2,485,148
-------------- --------------
CLOSED END FUNDS -- 0.2%
59,000 Central European Equity
Fund Inc.+ ...... 740,735 976,450
18,000 France Growth
Fund Inc.+ ...... 178,953 113,040
70,000 New Germany
Fund Inc.+ ...... 754,518 345,100
70,000 Pimco RCM Europe
Fund Inc.+ ...... 512,662 469,700
36,000 Royce Value
Trust Inc. ...... 435,552 537,840
-------------- --------------
2,622,420 2,442,130
-------------- --------------
BUILDING AND CONSTRUCTION -- 0.2%
100,500 CRH plc ........... 1,259,458 1,575,325
32,222 Huttig Building
Products Inc.+ .. 81,163 87,322
15,000 Martin Marietta
Materials Inc. .. 322,687 504,150
-------------- --------------
1,663,308 2,166,797
-------------- --------------
COMPUTER SOFTWARE AND SERVICES -- 0.1%
5,000 Electronic Data Systems
Corp. ........... 69,661 107,250
160,000 EMC Corp.+ ........ 2,649,432 1,675,200
-------------- --------------
2,719,093 1,782,450
-------------- --------------
TRANSPORTATION -- 0.1%
70,000 Amadeus Global Travel
Distribution SA,
Cl. A ........... 413,436 401,116
100,000 AMR Corp.+ ........ 1,924,248 1,100,000
18,000 Grupo TMM SA de CV,
Cl. A, ADR+ ..... 112,860 39,600
-------------- --------------
2,450,544 1,540,716
-------------- --------------
TOTAL COMMON
STOCKS ........... 1,054,229,051 1,184,633,635
-------------- --------------
PREFERRED STOCKS -- 2.5%
PUBLISHING -- 1.6%
765,000 News Corp. Ltd.,
Pfd., ADR ....... 20,772,157 19,163,250
-------------- --------------
MARKET
SHARES COST VALUE
------ ---- ------
SPECIALTY CHEMICALS -- 0.5%
261,400 Hercules Trust I,
9.420% Pfd. .....$ 5,915,725 $ 6,239,618
-------------- --------------
TELECOMMUNICATIONS -- 0.2%
26,000 Cincinnati Bell Inc.,
6.750% Cv. Pfd.,
Ser. B .......... 820,366 1,062,100
21,000 Citizens Communications Co.,
5.000% Cv. Pfd. . 1,020,698 1,113,000
-------------- --------------
1,841,064 2,175,100
-------------- --------------
AEROSPACE -- 0.1%
14,021 Northrop Grumman Corp.,
7.000% Cv. Pfd.,
Ser. B .......... 1,633,727 1,724,583
-------------- --------------
BROADCASTING -- 0.1%
90 Gray Television Inc.,
8.000% Cv. Pfd.,
Ser. C (a)(b) ... 900,000 927,000
75,000 ProSieben Sat.1 Media AG,
Pfd. ............ 689,863 499,529
-------------- --------------
1,589,863 1,426,529
-------------- --------------
AVIATION: PARTS AND SERVICES -- 0.0%
3,000 Sequa Corp.,
$5.00 Cv. Pfd. .. 239,700 226,500
-------------- --------------
WIRELESS COMMUNICATIONS -- 0.0%
10,760,547 Telesp Celular
Participacoes
SA, Pfd.+ ....... 82,623 16,728
-------------- --------------
TOTAL PREFERRED
STOCKS ........... 32,074,859 30,972,308
-------------- --------------
PRINCIPAL
AMOUNT
---------
CORPORATE BONDS -- 0.4%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.1%
$1,200,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 1,139,784 1,038,000
-------------- --------------
AVIATION: PARTS AND SERVICES -- 0.1%
868,000 Kaman Corp., Sub. Deb. Cv.,
6.000%, 03/15/12 823,352 836,535
-------------- --------------
CABLE -- 0.1%
1,100,000 Charter Communications
Inc., Cv.,
4.750%, 06/01/06 717,652 731,500
-------------- --------------
See accompanying notes to financial statements.
11
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT COST VALUE
------ ---- ------
ENERGY AND UTILITIES -- 0.1%
$ 900,000 Mirant Corp., Sub. Deb. Cv.,
2.500%,
06/15/21+ .......$ 685,959 $ 675,000
-------------- --------------
ELECTRONICS -- 0.0%
500,000 Agere Systems Inc.,
Sub. Deb. Cv.,
6.500%, 12/15/09 500,000 575,000
-------------- --------------
WIRELESS COMMUNICATIONS -- 0.0%
500,000 Nextel Communications Inc.,
9.500%, 02/01/11 356,644 556,250
-------------- --------------
TOTAL CORPORATE
BONDS ............ 4,223,391 4,412,285
-------------- --------------
SHARES
--------
WARRANTS -- 0.0%
FOOD AND BEVERAGE -- 0.0%
62,463 Denny's Corp.,
expires 01/07/05+ 105,603 640
-------------- --------------
PRINCIPAL
AMOUNT
---------
U.S. GOVERNMENT OBLIGATIONS -- 0.5%
$6,407,000 U.S. Treasury Bills,
0.771% to 0.915%++,
08/21/03 to
09/25/03 ........ 6,397,825 6,398,015
-------------- --------------
REPURCHASE AGREEMENT -- 0.0%
574,000 Agreement with State Street
Bank and Trust Co.,
1.080%, dated 06/30/03,
due 07/01/03, proceeds at
maturity,
$574,017 (c) .... 574,000 574,000
-------------- --------------
TOTAL INVESTMENTS -- 100.0% ....$1,097,604,729 $1,226,990,883
==============
OTHER LIABILITIES IN EXCESS OF ASSETS ......... (10,416,383)
PREFERRED STOCK
(6,605,200 preferred shares outstanding) .... (295,000,000)
--------------
NET ASSETS -- COMMON STOCK
(136,014,878 common shares outstanding) ..... 921,574,500
==============
NET ASSET VALUE PER COMMON SHARE
($921,574,500 (DIVIDE)
136,014,878 shares outstanding) ............ $6.78
=====
NUMBER OF EXPIRATION UNREALIZED
CONTRACTS DATE APPRECIATION
--------- ---------- ------------
FUTURE CONTRACTS -- SHORT POSITION
390 S&P 500
Index Futures ....... 9/19/03 $ 2,686,125
==============
-------------------
For Federal tax purposes:
Aggregate cost ...................$1,097,604,729
==============
Gross unrealized appreciation ....$ 245,591,461
Gross unrealized depreciation .... (116,205,307)
--------------
Net unrealized appreciation ......$ 129,386,154
==============
-------------------
(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
June 30, 2003, the market value of Rule 144A securities amounted to
$927,000 or 0.1% of total net assets.
(c) Collateralized by U.S. Treasury Notes, 3.375%, due 04/30/04, market value
$589,537.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR - American Depository Receipt.
BDR - Brazilian Depository Receipt.
CVO - Contingent Value Obligation.
RNC - Non-Convertible Savings Shares.
USD - U.S. Dollars.
% OF
MARKET MARKET
VALUE VALUE
------ ------
GEOGRAPHIC DIVERSIFICATION
United States ................. 81.77% $1,003,286,967
Europe ........................ 12.57 154,247,674
Asia/Pacific .................. 2.71 33,256,850
Latin America ................. 1.45 17,789,520
Canada ........................ 1.38 16,987,524
South Africa .................. 0.12 1,422,348
------ --------------
Total Investments ............. 100.0% $1,226,990,883
====== ==============
See accompanying notes to financial statements.
12
THE GABELLI EQUITY TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2003 (UNAUDITED)
ASSETS:
Investments, at value (cost $1,097,604,729) ......... $ 1,226,990,883
Foreign currency, at value (cost $146,250) .......... 145,500
Dividends and interest receivable ................... 1,818,765
Receivable for investments sold ..................... 3,444,227
Other assets ........................................ 2,340
---------------
TOTAL ASSETS ........................................ 1,232,401,715
---------------
LIABILITIES:
Dividends payable ................................... 190,567
Unrealized depreciation on swap contract ............ 11,304,988
Payable for investment advisory fees ................ 811,351
Interest payable on swap contract ................... 320,926
Payable to custodian ................................ 2,530,649
Other accrued expenses and liabilities .............. 668,734
---------------
TOTAL LIABILITIES ................................... 15,827,215
---------------
PREFERRED STOCK:
Series B Cumulative Preferred Stock
(7.20%, $25 liquidation value,
$0.001 par value, 8,000,000 shares
authorized with 6,600,000 shares
issued and outstanding) ........................... 165,000,000
Series C Cumulative Preferred Stock
(Auction Rate, $25,000 liquidation value,
$0.001 par value, 6,000 shares authorized
with 5,200 shares issued and outstanding) ......... 130,000,000
---------------
TOTAL PREFERRED STOCK ............................... 295,000,000
---------------
NET ASSETS ATTRIBUTABLE TO COMMON
STOCK SHAREHOLDERS ................................ $ 921,574,500
===============
NET ASSETS ATTRIBUTABLE TO COMMON STOCK
SHAREHOLDERS CONSIST OF:
Capital stock, at par value ......................... $ 136,015
Additional paid-in capital .......................... 873,744,705
Accumulated distributions in excess of net
investment income ................................. (63,705,454)
Accumulated net realized loss on investments,
futures contracts and foreign currency transactions (9,398,368)
Net unrealized appreciation on investments, future
contracts, swap contracts and foreign currency
transactions ...................................... 120,797,602
---------------
TOTAL NET ASSETS .................................... $ 921,574,500
===============
NET ASSET VALUE PER COMMON SHARE
($921,574,500 / 136,014,878 shares outstanding;
191,994,000 shares authorized of $0.001 par value) .. $6.78
=====
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign taxes of $297,683) ...... $ 9,783,743
Interest .......................................... 1,147,233
-------------
TOTAL INVESTMENT INCOME ........................... 10,930,976
-------------
EXPENSES:
Investment advisory fees .......................... 4,728,350
Interest expense on interest rate swap contract ... 2,064,270
Shareholder communications expenses ............... 222,907
Payroll ........................................... 142,335
Shareholder services fees ......................... 136,956
Custodian fees .................................... 82,321
Directors' fees ................................... 70,318
Legal and audit fees .............................. 91,394
Miscellaneous expenses ............................ 305,293
-------------
TOTAL EXPENSES .................................... 7,844,144
-------------
NET INVESTMENT INCOME ............................. 3,086,832
-------------
NET REALIZED AND UNREALIZED GAIN/LOSS ON
INVESTMENTS, FUTURES CONTRACTS, SWAP
CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments .................. 2,014,260
Net realized gain on foreign currency transactions .. 15,595
Net realized loss on futures contracts ............. (5,303,710)
-------------
Net realized loss on investments, futures contracts
and foreign currency transactions ............... (3,273,855)
-------------
Net change in unrealized appreciation/depreciation
on investments, futures contracts, swap contracts
and foreign currency transactions ............... 132,330,988
-------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS,
FUTURES CONTRACTS, SWAP CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS ........................... 129,057,133
-------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................. 132,143,965
-------------
Total Distributions to Preferred
Stock Shareholders .............................. (11,599,110)
-------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO
COMMON STOCK SHAREHOLDERS RESULTING
FROM OPERATIONS ................................. $ 120,544,855
=============
See accompanying notes to financial statements.
13
THE GABELLI EQUITY TRUST INC.
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
SIX MONTHS ENDED
JUNE 30, 2003 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2002
--------------- -----------------
OPERATIONS:
Net investment income .............................................................. $ 3,086,832 $ 8,044,586
Net realized gain (loss) on investments, options, futures contracts
and foreign currency transactions ................................................ (3,273,855) 135,274,932
Net change in unrealized appreciation/depreciation on investments, future contracts,
swap contracts and foreign currency transactions ................................. 132,330,988 (348,434,576)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................... 132,143,965 (205,115,058)
--------------- ---------------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income .............................................................. (11,599,110) (1,241,220)
Net realized short-term gain on investments, options, futures
contracts and foreign currency transactions ...................................... -- (375,336)
Net realized long-term gains on investments, options, futures
contracts and foreign currency transactions ...................................... -- (21,209,095)
--------------- ---------------
TOTAL DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS ................................ (11,599,110) (22,825,651)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO
COMMON STOCK SHAREHOLDERS
RESULTING FROM OPERATIONS ........................................................ 120,544,855 (227,940,709)
--------------- ---------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income .............................................................. (54,786,351) (6,579,486)
Net realized short-term gain on investments, options, futures
contracts and foreign currency transactions ...................................... -- (2,051,189)
Net realized long-term gains on investments, options, futures
contracts and foreign currency transactions ...................................... -- (115,905,914)
Return of capital .................................................................. -- (218,677)
--------------- ---------------
TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS ................................... (54,786,351) (124,755,266)
--------------- ---------------
TRUST SHARE TRANSACTIONS:
Net increase in net assets from common shares issued upon
reinvestment of dividends and distributions ...................................... 13,413,091 30,727,869
Offering costs for preferred shares charged to paid-in capital ..................... -- (1,800,000)
--------------- ---------------
NET INCREASE IN NET ASSETS FROM TRUST SHARE TRANSACTIONS ........................... 13,413,091 28,927,869
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO COMMON STOCK
SHAREHOLDERS .................................................................... 79,171,595 (323,768,106)
NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS:
Beginning of period ................................................................ 842,402,905 1,166,171,011
--------------- ---------------
End of period ...................................................................... $ 921,574,500 $ 842,402,905
=============== ===============
See accompanying notes to financial statements.
14
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION. The Gabelli Equity Trust Inc. (the "Equity Trust") is a
closed-end, non-diversified management investment company organized as a
Maryland corporation on May 20, 1986 and registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), whose primary objective is long-term
growth of capital. The Equity Trust had no operations until August 11, 1986,
when it sold 10,696 shares of common stock to Gabelli Funds, LLC (the "Adviser")
for $100,008. Investment operations commenced on August 21, 1986.
Effective August 1, 2002, the Equity Trust modified its non-fundamental
investment policy to increase, from 65% to 80%, the portion of its assets that
it will invest, under normal market conditions in equity securities (the "80%
Policy"). The 80% Policy may be changed without shareholder approval. However,
the Equity Trust has adopted a policy to provide shareholders with at least 60
days' notice of the implementation of any change in the 80% Policy.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Equity Trust in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Directors so determines, by such other method as the Board of Directors
shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser"). Portfolio securities primarily traded in
foreign markets are generally valued at the preceding closing values of such
securities on their respective exchanges or markets. Securities and assets for
which market quotations are not readily available are valued at their fair value
as determined in good faith under procedures established by and under the
general supervision of the Board of Directors. Short term debt securities with
remaining maturities of 60 days or less are valued at amortized cost, unless the
Board of Directors determines such does not reflect the securities fair value,
in which case these securities will be valued at their fair value as determined
by the Board of Directors. Debt instruments having a maturity greater than 60
days for which market quotations are readily available are valued at the latest
average of the bid and asked prices. If there were no asked prices quoted on
such day, the security is valued using the closing bid price on that day.
Options are valued at the last sale price on the exchange on which they are
listed. If no sales of such options have taken place that day, they will be
valued at the mean between their closing bid and asked prices.
REPURCHASE AGREEMENTS. The Equity Trust may enter into repurchase
agreements with primary government securities dealers recognized by the Federal
Reserve Bank of New York, with member banks of the Federal Reserve System or
with other brokers or dealers that meet credit guidelines established by the
Adviser and reviewed by the Board of Directors. Under the terms of a typical
repurchase agreement, the Equity Trust takes possession of an underlying debt
obligation subject to an obligation of the seller to repurchase, and the Equity
Trust to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Equity Trust's holding period. The Equity Trust
will always receive and maintain securities as collateral whose market value,
including accrued interest, will be at least equal to 102% of the dollar amount
invested by the Equity Trust in each agreement. The Equity Trust will make
payment for such securities only upon physical delivery or
15
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
upon evidence of book entry transfer of the collateral to the account of the
custodian. To the extent that any repurchase transaction exceeds one business
day, the value of the collateral is marked-to-market on a daily basis to
maintain the adequacy of the collateral. If the seller defaults and the value of
the collateral declines or if bankruptcy proceedings are commenced with respect
to the seller of the security, realization of the collateral by the Equity Trust
may be delayed or limited.
SWAP AGREEMENTS. The Equity Trust may enter into interest rate swap or cap
transactions. The use of interest rate swaps and caps is a highly specialized
activity that involves investment techniques and risks different from those
associated with ordinary portfolio security transactions. In an interest rate
swap, the Equity Trust would agree to pay to the other party to the interest
rate swap (which is known as the "counterparty") periodically a fixed rate
payment in exchange for the counterparty agreeing to pay to the Equity Trust
periodically a variable rate payment that is intended to approximate the Equity
Trust's variable rate payment obligation on the Series C Preferred Stock. In an
interest rate cap, the Equity Trust would pay a premium to the interest rate cap
to the counterparty and, to the extent that a specified variable rate index
exceeds a predetermined fixed rate, would receive from the counterparty payments
of the difference based on the notional amount of such cap. Interest rate swap
and cap transactions introduce additional risk because the Equity Trust would
remain obligated to pay preferred stock dividends when due in accordance with
the Articles Supplementary even if the counterparty defaulted. Depending on the
general state of short-term interest rates and the returns on the Equity Trust's
portfolio securities at that point in time, such a default could negatively
affect the Equity Trust's ability to make dividend payments for the Series C
Preferred Stock. In addition, at the time an interest rate swap or cap
transaction reaches its scheduled termination date, there is a risk that the
Equity Trust will not be able to obtain a replacement transaction or that the
terms of the replacement will not be as favorable as on the expiring
transaction. If this occurs, it could have a negative impact on the Equity
Trust's ability to make dividend payments on the Series C Preferred Stock.
The Trust has entered into one interest rate swap agreement with Citibank
N.A. Under the agreement the Trust receives a floating rate of interest and pays
a respective fixed rate of interest on the nominal value of the swap. Details of
the swap at June 30, 2003 are as follows:
NOTIONAL FLOATING RATE* TERMINATION UNREALIZED
AMOUNT FIXED RATE (RATE RESET MONTHLY) DATE DEPRECIATION
-------- ---------- -------------------- ----------- ------------
$130,000,000 4.494% 1.32% July 1, 2007 $(11,304,988)
----------------
* Based on Libor (London Interbank Offered Rate).
FUTURES CONTRACTS. The Equity Trust may engage in futures contracts for the
purpose of hedging against changes in the value of its portfolio securities and
in the value of securities it intends to purchase. Such investments will only be
made if they are economically appropriate to the reduction of risks involved in
the management of the Equity Trust's investments. Upon entering into a futures
contract, the Equity Trust is required to deposit with the broker an amount of
cash or cash equivalents equal to a certain percentage of the contract amount.
This is known as the "initial margin." Subsequent payments ("variation margin")
are made or received by the Equity Trust each day, depending on the daily
fluctuation of the value of the contract. The daily changes in the contract are
included in unrealized appreciation/depreciation on investments and futures
contracts. The Equity Trust recognizes a realized gain or loss when the contract
is closed.
There are several risks in connection with the use of futures contracts as
a hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk the
Equity Trust may not be able to enter into a closing transaction because of an
illiquid secondary market.
16
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
FORWARD FOREIGN EXCHANGE CONTRACTS. The Equity Trust may engage in forward
foreign exchange contracts for hedging a specific transaction with respect to
either the currency in which the transaction is denominated or another currency
as deemed appropriate by the Adviser. Forward foreign exchange contracts are
valued at the forward rate and are marked-to-market daily. The change in market
value is included in unrealized appreciation/depreciation on investments and
foreign currency transactions. When the contract is closed, the Equity Trust
records a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate
fluctuations in the underlying prices of the Equity Trust's portfolio
securities, but it does establish a rate of exchange that can be achieved in the
future. Although forward foreign exchange contracts limit the risk of loss due
to a decline in the value of the hedged currency, they also limit any potential
gain/(loss) that might result should the value of the currency increase. In
addition, the Equity Trust could be exposed to risks if the counterparties to
the contracts are unable to meet the terms of their contracts.
FOREIGN CURRENCY TRANSLATION. The books and records of the Equity Trust are
maintained in United States (U.S.) dollars. Foreign currencies, investments and
other assets and liabilities are translated into U.S. dollars at the exchange
rates prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated at the exchange rate prevailing
on the respective dates of such transactions. Unrealized gains and losses, which
result from changes in foreign exchange rates and/or changes in market prices of
securities, have been included in unrealized appreciation/depreciation on
investments and foreign currency transactions. Net realized foreign currency
gains and losses resulting from changes in exchange rates include foreign
currency gains and losses between trade date and settlement date on investment
securities transactions, foreign currency transactions and the difference
between the amounts of interest and dividends recorded on the books of the
Equity Trust and the amounts actually received. The portion of foreign currency
gains and losses related to fluctuation in exchange rates between the initial
trade date and subsequent sale trade date is included in realized gain/(loss) on
investments.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for as of the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders
are recorded on the ex-dividend date. Distributions to shareholders of the
Equity Trust's 7.25% Tax Advantaged Series A Cumulative Preferred Stock, 7.20%
Tax Advantaged Series B Cumulative Preferred Stock and Series C Auction Rate
Cumulative Preferred Stock ("Cumulative Preferred Stock") are accrued on a daily
basis and are determined as described in Note 5.
Income distributions and capital gain distributions are determined in
accordance with Federal income tax regulations which may differ from accounting
principles generally accepted in the United States. These differences are
primarily due to differing treatments of income and gains on various investment
securities held by the Equity Trust, timing differences and differing
characterization of distributions made by the Equity Trust.
PROVISION FOR INCOME TAXES. The Equity Trust intends to continue to qualify
as a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended. As a result, a Federal income tax provision is not
required.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. The Equity Trust has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Equity Trust will pay the Adviser a fee,
computed weekly and paid monthly, equal on an annual basis to 1.00% of the value
of the Equity Trust's average weekly net assets plus liquidation value of
preferred stock. In accordance with the Advisory Agreement, the Adviser provides
a continuous investment program
17
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
for the Equity Trust's portfolio and oversees the administration of all aspects
of the Equity Trust's business and affairs. The Adviser has agreed to reduce the
management fee on the incremental assets attributable to the Cumulative
Preferred Stock if the total return of the net asset value of the common shares
of the Equity Trust, including distributions and advisory fee subject to
reduction, does not exceed the stated dividend rate or corresponding swap rate
of the Cumulative Preferred Stock. On June 11, 2003, the Equity Trust redeemed
all of its outstanding 7.25% Cumulative Preferred Stock. For the period from
January 1, 2003 through June 17, 2003, the Trust's total return on the net asset
value of the common shares succeeded the stated dividend rate of the Cumulative
Preferred Stock for this period. Thus, management fees were earned on these
assets. For the period from January 1, 2003 through June 30, 2003, the Trust's
total return on the net asset value of the common shares exceeded the stated
dividend rates of all other outstanding preferred stock.
During the six months ended June 30, 2003, Gabelli & Company, Inc. received
$125,487 in brokerage commissions as a result of executing agency transactions
in portfolio securities on behalf of the Equity Trust.
The cost of calculating the Trust's net asset value per share is a Trust
expense pursuant to the Investment Advisory Agreement between the Trust and the
Adviser. During the six months ended June 30, 2003, the Gabelli Equity Trust
reimbursed the Adviser $17,400 in connection with the cost of computing the
Trust's net asset value.
4. PORTFOLIO SECURITIES. Cost of purchases and proceeds from sales of
securities, other than short-term securities, for the six months ended June 30,
2003 aggregated $25,264,816 and $64,686,026, respectively.
5. CAPITAL. The Articles of Incorporation, dated May 19, 1986, permit the Equity
Trust to issue 183,994,000 shares of common stock (par value $0.001). The Board
of Directors of the Equity Trust has authorized the repurchase of its shares on
the open market when the shares are trading at a discount of 10% or more (or
such other percentage as the Board of Directors may determine from time to time)
from the net asset value of the shares. During the six months ended June 30,
2003, the Equity Trust did not repurchase any shares of its common stock in the
open market.
Transactions in common stock were as follows:
SIX MONTHS ENDED
JUNE 30, 2003 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2002
------------------------ -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
Shares issued upon reinvestment of
dividends and distributions ........ 1,954,911 $13,413,091 3,992,168 $30,727,869
--------- ----------- --------- -----------
Net increase ........................... 1,954,911 $13,413,091 3,992,168 $30,727,869
========= =========== ========= ===========
The holders of Cumulative Preferred Stock have voting rights equivalent to
those of the holders of common stock (one vote per share) and will vote together
with holders of shares of common stock as a single class. In addition, the 1940
Act requires that along with approval of a majority of the holders of common
stock, approval of a majority of the holders of any outstanding shares of
Cumulative Preferred Stock, voting separately as a class, would be required to
(a) adopt any plan of reorganization that would adversely affect the Cumulative
Preferred Stock, and (b) take any action requiring a vote of security holders,
including, among other things, changes in the Trust's subclassification as a
closed-end investment company or changes in its fundamental investment
restrictions. The Equity Trust's Articles of Incorporation, as amended,
authorize the issuance of up to 16,006,000 shares of $0.001 par value Cumulative
Preferred Stock. The Cumulative Preferred Stock is senior to the common stock
and results in the financial leveraging of the common stock. Such leveraging
tends to magnify both the risks and opportunities to common shareholders.
Dividends on shares of the Cumulative Preferred Stock are cumulative.
18
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
The Equity Trust is required to meet certain asset coverage tests as required by
the 1940 Act and by the Shares' Articles Supplementary with respect to the
Cumulative Preferred Stock. If the Equity Trust fails to meet these requirements
and does not correct such failure, the Equity Trust may be required to redeem,
in part or in full, the 7.20% Series B and Series C Auction Rate Cumulative
Preferred Stock at a redemption price of $25 and $25,000, respectively, per
share plus an amount equal to the accumulated and unpaid dividends whether or
not declared on such shares in order to meet these requirements. Additionally,
failure to meet the foregoing asset requirements could restrict the Equity
Trust's ability to pay dividends to common shareholders and could lead to sales
of portfolio securities at inopportune times. The income received on the Equity
Trust's assets may vary in a manner unrelated to the fixed and variable rates,
which could have either a beneficial or detrimental impact on net investment
income and gains available to common shareholders.
Under Emerging Issues Task Force (EITF) promulgating Topic D-98,
CLASSIFICATION AND MEASUREMENT OF REDEEMABLE SECURITIES, which was issued on
July 19, 2001, preferred securities that are redeemable for cash or other assets
are to be classified outside of permanent equity to the extent that the
redemption is at a fixed or determinable price and at the option of the holder
or upon the occurrence of an event that is not solely within the control of the
issuer. Subject to the guidance of the EITF, the Equity Trust's Cumulative
Preferred Stock has been reclassified outside of permanent equity (net assets
attributable to common stock shareholders) in the accompanying financial
statements.
The Equity Trust as authorized by the Board of Directors, redeemed all
(5,367,900 shares) of its outstanding 7.25% Cumulative Preferred Stock. The
redemption date was June 17, 2003 and the redemption price was $25.4078 per
Preferred Share, which consisted of $25.00 per Preferred Share (the "liquidation
value") plus accrued dividends through the redemption date of $0.4078 per
Preferred Share. The Preferred Shares were callable at any time at the
liquidation value of $25.00 per share plus accrued dividends following the
expiration of the five-year call protection on June 9, 2003.
On June 20, 2001, the Equity Trust received net proceeds of $159,329,175
(after underwriting discounts of $5,197,500 and estimated offering expenses of
$473,325) from the public offering of 6,600,000 shares of 7.20% Series B
Cumulative Preferred Stock. Commencing June 20, 2006 and thereafter, the Equity
Trust, at its option, may redeem the 7.20% Series B Cumulative Preferred Stock
in whole or in part at the redemption price. The Board of Directors has
authorized the repurchase in the open market at prices less than the $25
liquidation value of the Cumulative Preferred Stock. During the six months ended
June 30, 2003, the year ended December 31, 2002, and the year ended December 31,
2001, the Equity Trust did not repurchase any shares of 7.20% Series B
Cumulative Preferred Stock. At June 30, 2003, 6,600,000 shares of the 7.20%
Series B Cumulative Preferred Stock were outstanding at the fixed rate of 7.20%
per share and accrued dividends amounted to $165,000.
On June 27, 2002, the Equity Trust received net proceeds of $128,200,000
(after underwriting discounts of $1,300,000 and estimated offering expenses of
$500,000) from the public offering of 5,200 shares of Series C Auction Rate
Cumulative Preferred Stock. The dividend rate, as set by the auction process,
which is generally held every 7 days, is expected to vary with short-term
interest rates. Existing shareholders may submit an order to hold, bid or sell
such shares on each auction date. Series C Auction Rate Cumulative Preferred
Stock shareholders may also trade shares in the secondary market. The Equity
Trust, at its option, may redeem the Series C Auction Rate Cumulative Preferred
Stock in whole or in part at the redemption price at any time. During the six
months ended June 30, 2003 and the year ended December 31, 2002, the Equity
Trust did not repurchase any shares of Series C Auction Rate Cumulative
Preferred Stock. At June 30, 2003, 5,200 shares of the Series C Auction Rate
Cumulative Preferred Stock were outstanding at the annual rate of 1.18% per
share and accrued dividends amounted to $25,567.
19
THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR AN TRUST COMMON SHARE SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
OUTSTANDING THROUGHOUT EACH PERIOD: JUNE 30, 2003 ----------------------------------------------------------
(UNAUDITED) 2002(A) 2001(A) 2000(A) 1999(A) 1998(A)
---------------- -------- -------- ------- ------- -------
OPERATING PERFORMANCE:
Net asset value, beginning of period ......... $ 6.28 $ 8.97 $ 10.89 $ 12.75 $ 11.47 $ 11.56
--------- -------- -------- --------- --------- ---------
Net investment income ........................ 0.03 0.06 0.08 0.05 0.04 0.07
Net realized and unrealized gain
(loss) on investments ...................... 0.95 (1.64) (0.16) (0.51) 3.25 1.09
--------- -------- -------- --------- --------- ---------
Total from investment operations ............. 0.98 (1.58) (0.08) (0.46) 3.29 1.16
--------- -------- -------- --------- --------- ---------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income ........................ (0.09) (0.01) (0.01) (0.00)(c) (0.00)(c) (0.00)(c)
Net realized gain on investments ............. -- (0.16) (0.11) (0.09) (0.09) (0.05)
--------- -------- -------- --------- --------- ---------
Total distributions to preferred
stock shareholders ........................ (0.09) (0.17) (0.12) (0.09) (0.09) (0.05)
--------- -------- -------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE
TO COMMON STOCK SHAREHOLDERS RESULTING
FROM OPERATIONS ............................ 0.89 (1.75) (0.20) (0.55) 3.20 1.11
--------- -------- -------- --------- --------- ---------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income ........................ (0.40) (0.05) (0.06) (0.04) (0.03)(b) (0.06)
Net realized gain on investments ............. -- (0.90) (1.02) (1.27) (1.21)(b) (1.10)
Paid-in capital .............................. -- (0.00)(c) -- -- (0.68)(b) --
--------- -------- -------- --------- --------- ---------
Total distributions to common
stock shareholders ......................... (0.40) (0.95) (1.08) (1.31) (1.92) (1.16)
--------- -------- -------- --------- --------- ---------
CAPITAL SHARE TRANSACTIONS:
Increase (decrease) in net asset value from common
stock share transactions ................... 0.01 0.02 0.03 -- -- --
Decrease in net asset value from shares issued in
rights offering ............................ -- -- (0.62) -- -- --
Offering costs for preferred shares charged to
paid-in capital ............................ -- (0.01) (0.05) -- -- (0.04)
--------- -------- -------- --------- --------- ---------
Total capital share transactions ............. 0.01 0.01 (0.64) -- -- (0.04)
--------- -------- -------- --------- --------- ---------
NET ASSET VALUE ATTRIBUTABLE TO COMMON STOCK
SHAREHOLDERS, END OF PERIOD ................ $ 6.75 $ 6.28 $ 8.97 $ 10.89 $ 12.75 $ 11.47
========= ======== ======== ========= ========= =========
Net asset value total return + ............... 14.50% (21.00)% (3.68)% (4.39)% 29.49% 9.55%
========= ======== ======== ========= ========= =========
Market value, end of period .................. $ 7.47 $ 6.85 $ 10.79 $ 11.44 $ 12.56 $ 11.56
========= ======== ======== ========= ========= =========
Total investment return ++ ................... 15.65% (28.36)% 10.32% 1.91% 26.57% 9.23%
========= ======== ======== ========= ========= =========
---------------------------
+ Based on net asset value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to rights
offering, assuming full subscription by shareholder. Total return for the
period of less than one year is not annualized.
++ Based on market value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to rights
offering, assuming full subscription by shareholder. Total return for the
period of less than one year is not annualized.
(a) Per share amounts have been calculated using the monthly average shares
outstanding method.
(b) A distribution equivalent to $0.75 per share for The Gabelli Utility Trust
spin-off from net investment income, realized short-term gains, realized
long-term gains, and paid-in-capital were $0.01029, $0.07453, $0.34218
and $0.32300, respectively.
(c) Amount represents less than $0.005 per share.
(d) Based on weekly prices.
(e) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. Including such custodian
fee credits for the years ended December 31, 2002, 2001 and 2000, the
expense ratios of operating expenses to average net assets attributable to
common stock would be 1.37%, 1.11% and 1.14%, respectively, and the expense
ratios of operating expenses to average total net assets including
liquidation value of preferred shares would be 1.00%, 0.94% and 1.03%,
respectively.
(f) Asset coverage is calculated by combining all series of preferred stock.
(g) The Trust incurred interest expense during the six months ended June 30,
2003 and the year ended December 31, 2002. If interest expense had not been
incurred, the expense ratio of operating expenses to average net assets
attributable to common stock would be 1.37% and 1.19%, respectively, and
the expense ratio of operating expenses to average total net assets
including liquidation value of preferred shares would be 0.92% and 0.87%,
respectively.
(h) Annualized.
See accompanying notes to financial statements.
20
THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2003 ----------------------------------------------------------
(UNAUDITED) 2002(A) 2001(A) 2000(A) 1999(A) 1998(A)
---------------- -------- -------- ------- ------- -------
RATIOS AND SUPPLEMENTAL DATA:
Net assets including liquidation
value of preferred
shares, end of period (in 000's) ............ $1,216,575 $1,271,600 $1,465,369 $1,318,263 $1,503,641 $1,352,190
Net assets attributable to
common shares,
end of period (in 000's) .................... $ 921,575 $ 842,403 $1,166,171 $1,184,041 $1,368,981 $1,217,190
Ratio of net investment income to
average net assets
attributable to common shares ............... 0.73%(h) 0.81% 0.81% 0.42% 0.34% 0.60%
Ratio of operating expenses to
average net assets
attributable to common shares (e)(g) ........ 1.86%(h) 1.37% 1.12% 1.14% 1.27% 1.15%
Ratio of operating expenses to
average total net assets
including liquidation value of
preferred shares (e)(g) ..................... 1.26%(h) 1.00% 0.95% 1.03% 1.15% 1.09%
Portfolio turnover rate ....................... 2.2% 27.1% 23.9% 32.1% 38.0% 39.8%
PREFERRED STOCK:
7.25% CUMULATIVE PREFERRED STOCK
Liquidation value, end of
period (in 000's) ........................... $ -- $ 134,198 $ 134,198 $ 134,223 $ 134,660 $ 135,000
Total shares outstanding (in 000's) ........... -- 5,368 5,368 5,369 5,386 5,400
Liquidation preference per share .............. $ -- $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00
Average market value (d) ...................... $ -- $ 25.75 $ 25.39 $ 22.62 $ 24.43 $ 25.63
7.20% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period
(in 000's) ................................ $ 165,000 $ 165,000 $ 165,000 -- -- --
Total shares outstanding (in 000's) ........... 6,600 6,600 6,600 -- -- --
Liquidation preference per share .............. $ 25.00 $ 25.00 $ 25.00 -- -- --
Average market value (d) ...................... $ 27.12 $ 26.40 $ 25.60 -- -- --
AUCTION RATE CUMULATIVE PREFERRED STOCK
Liquidation value, end of period
(in 000's) ................................. $ 130,000 $ 130,000 -- -- -- --
Total shares outstanding (in 000's) ........... 5 5 -- -- -- --
Liquidation preference per share .............. $ 25,000 $ 25,000 -- -- -- --
Average market value (d) ...................... $ 25,000 $ 25,000 -- -- --
ASSET COVERAGE (f) ............................ 412% 296% 490% 982% 1,117% 1,001%
ASSET COVERAGE PER SHARE (f) .................. $ 184.18 $ 106.20 $ 122.44 $ 245.54 $ 279.16 $ 250.41
-----------------------------
+ Based on net asset value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to rights
offering, assuming full subscription by shareholder. Total return for the
period of less than one year is not annualized.
++ Based on market value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to rights
offering, assuming full subscription by shareholder. Total return for the
period of less than one year is not annualized.
(a) Per share amounts have been calculated using the monthly average shares
outstanding method.
(b) A distribution equivalent to $0.75 per share for The Gabelli Utility Trust
spin-off from net investment income, realized short-term gains, realized
long-term gains, and paid-in-capital were $0.01029, $0.07453, $0.34218
and $0.32300, respectively.
(c) Amount represents less than $0.005 per share.
(d) Based on weekly prices.
(e) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. Including such custodian
fee credits for the years ended December 31, 2002, 2001 and 2000, the
expense ratios of operating expenses to average net assets attributable to
common stock would be 1.37%, 1.11% and 1.14%, respectively, and the expense
ratios of operating expenses to average total net assets including
liquidation value of preferred shares would be 1.00%, 0.94% and 1.03%,
respectively.
(f) Asset coverage is calculated by combining all series of preferred stock.
(g) The Trust incurred interest expense during the six months ended June 30,
2003 and the year ended December 31, 2002. If interest expense had not been
incurred, the expense ratio of operating expenses to average net assets
attributable to common stock would be 1.37% and 1.19%, respectively, and
the expense ratio of operating expenses to average total net assets
including liquidation value of preferred shares would be 0.92% and 0.87%,
respectively.
(h) Annualized.
See accompanying notes to financial statements.
21
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.
22
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 & CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Frank J. Fahrenkopf, Jr.
PRESIDENT & CHIEF EXECUTIVE OFFICER,
AMERICAN GAMING ASSOCIATION
Arthur V. Ferrara
FORMER CHAIRMAN & 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
Bruce N. Alpert
PRESIDENT
Gus Coutsouros
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
7.20%
COMMON PREFERRED
------ ---------
NYSE-Symbol: GAB GAB PrB
Shares Outstanding: 136,014,878 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 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: 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
WWW.GABELLI.COM
SEMI-ANNUAL REPORT
JUNE 30, 2003
GBFCM SA/03
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act
(17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 10. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 are attached hereto.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Gabelli Equity Trust Inc.
------------------------------------------
By (Signature and Title)* /s/ Bruce N. Alpert
-----------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date 09/03/03
-----------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Bruce N. Alpert
-----------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date 09/03/03
-----------------------------------------------
By (Signature and Title)* /s/ Gus A. Coutsouros
-----------------------------------------------
Gus A. Coutsouros, Principal Financial Officer
Date 09/03/03
-----------------------------------------------
* Print the name and title of each signing officer under his or her signature.