UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04700
----------
The Gabelli Equity Trust Inc.
------------------------------------------------------
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
------------------------------------------------------
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
------------------------------------------------------
(Name and address of agent for service)
registrant's telephone number, including area code: 1-800-422-3554
---------------
Date of fiscal year end: December 31
------------
Date of reporting period: June 30, 2005
--------------
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.
The Report to Shareholders is attached herewith.
[LOGO OMITTED]
THE GABELLI EQUITY TRUST INC.
THE GABELLI EQUITY TRUST INC.
Semi-Annual Report
June 30, 2005
TO OUR SHAREHOLDERS,
During the second quarter of 2005, the Gabelli Equity Trust's (the "Equity
Trust") total return was 1.9% on a net asset value ("NAV") basis while the
Standard & Poor's ("S&P") 500 Index rose 1.4% and the Dow Jones Industrial
Average ("DJIA") declined 1.6%. For the six month period ended June 30, 2005,
the Equity Trust's NAV total return was 0.6% versus losses of 0.8% and 3.5% for
the S&P 500 Index and the DJIA, respectively. For the one year period ended June
30, 2005, the Equity Trust's NAV total return was 14.8% versus increases for the
S&P 500 Index and DJIA of 6.3% and 0.8%, respectively. The Equity Trust's market
price on June 30, 2005 was $8.98, which equates to a 7.2% premium to its NAV of
$8.38. The Equity Trust's market price rose 1.9% during the second quarter and
has risen 3.8% and 21.8%, respectively, for the six and twelve month periods
ended June 30, 2005.
Enclosed are the financial statements and the investment portfolio as of
June 30, 2005.
COMPARATIVE RESULTS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 2005(a)
------------------------------------------------
Since
Year to Inception
Quarter Date 1 Year 3 Year 5 Year 10 Year 15 Year (8/21/86)
------- ------- ------ ------ ------ ------- ------- ---------
GABELLI EQUITY TRUST NAV RETURN(B) ........... 1.90% 0.57% 14.75% 14.61% 4.99% 10.79% 10.84% 11.77%
GABELLI EQUITY TRUST INVESTMENT RETURN(C) .... 1.89 3.80 21.78 6.26 5.55 11.20 11.25 11.72
S&P 500 Index ................................ 1.37 (0.81) 6.32 8.28 (2.37) 9.94 10.64 11.24
Dow Jones Industrial Average ................. (1.62) (3.50) 0.83 5.99 1.76 10.65 11.42 12.31
Nasdaq Composite Index ....................... 2.89 (5.45) 0.45 12.02 (12.31) 8.22 10.46 9.35
(a) RETURNS REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT
WILL FLUCTUATE. WHEN SHARES ARE SOLD, THEY MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER
THAN THE PERFORMANCE DATA PRESENTED. VISIT WWW.GABELLI.COM FOR
PERFORMANCE INFORMATION AS OF THE MOST RECENT MONTH END. INVESTORS
SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS AND CHARGES AND
EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. PERFORMANCE FIGURES
FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE DOW JONES
INDUSTRIAL AVERAGE IS AN UNMANAGED INDEX OF 30 LARGE INDUSTRIAL
STOCKS. THE S&P 500 AND THE NASDAQ COMPOSITE INDICES ARE UNMANAGED
INDICATORS OF STOCK MARKET PERFORMANCE. DIVIDENDS ARE CONSIDERED
REINVESTED EXCEPT FOR THE NASDAQ COMPOSITE INDEX.
(b) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN NET ASSET
VALUE ("NAV"), REINVESTMENT OF DISTRIBUTIONS AT NAV ON THE EX-DIVIDEND
DATE, ADJUSTMENTS FOR RIGHTS OFFERINGS, SPIN-OFFS AND TAXES PAID ON
UNDISTRIBUTED LONG-TERM CAPITAL GAINS, AND ARE NET OF EXPENSES. SINCE
INCEPTION RETURN BASED ON AN INITIAL NET ASSET VALUE OF $9.34.
(c) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN CLOSING
MARKET VALUES ON THE NEW YORK STOCK EXCHANGE, REINVESTMENT OF
DISTRIBUTIONS ON THE PAYABLE DATE, ADJUSTMENTS FOR RIGHTS OFFERINGS,
SPIN-OFFS AND TAXES PAID ON UNDISTRIBUTED LONG-TERM CAPITAL GAINS.
SINCE INCEPTION RETURN BASED ON AN INITIAL OFFERING PRICE OF $10.00.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
We have separated the portfolio manager's commentary from the financial
statements and investment portfolio due to corporate governance
regulations stipulated by the Sarbanes-Oxley Act of 2002. We have done
this to ensure that the content of the portfolio manager's commentary is
unrestricted. The financial statements and investment portfolio are mailed
separately. Both the commentary and the financial statements, including
the portfolio of investments, will be available on our website at
www.gabelli.com/funds.
--------------------------------------------------------------------------------
THE GABELLI EQUITY TRUST INC.
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total
investments:
Food and Beverage .................................................... 8.2%
Financial Services ................................................... 7.5%
Telecommunications ................................................... 7.5%
Energy and Utilities ................................................. 7.4%
Entertainment ........................................................ 6.1%
Repurchase Agreements ................................................ 6.1%
Publishing ........................................................... 6.1%
Cable and Satellite .................................................. 5.5%
Diversified Industrial ............................................... 5.5%
Consumer Products .................................................... 4.2%
Health Care .......................................................... 3.6%
Automotive: Parts and Accessories .................................... 3.5%
Hotels and Gaming .................................................... 3.3%
Equipment and Supplies ............................................... 3.0%
Retail ............................................................... 2.7%
Aviation: Parts and Services ......................................... 2.0%
Consumer Services .................................................... 1.8%
Wireless Communications .............................................. 1.7%
Aerospace ............................................................ 1.5%
Communications Equipment ............................................. 1.4%
Machinery ............................................................ 1.4%
Agriculture .......................................................... 1.3%
Real Estate .......................................................... 1.3%
Specialty Chemicals .................................................. 1.1%
Broadcasting ......................................................... 1.1%
Environmental Services ............................................... 1.0%
Automotive ........................................................... 0.8%
Electronics .......................................................... 0.7%
Business Services .................................................... 0.7%
Metals and Mining .................................................... 0.5%
U.S. Government Obligations .......................................... 0.3%
Manufactured Housing and Recreational Vehicles ....................... 0.3%
Computer Software and Services ....................................... 0.3%
Closed-End Funds ..................................................... 0.2%
Paper and Forest Products ............................................ 0.2%
Transportation ....................................................... 0.1%
Real Estate Investment Trusts ........................................ 0.1%
------
100.0%
======
THE GABELLI EQUITY TRUST INC. (THE "EQUITY TRUST") FILES A COMPLETE SCHEDULE OF
PORTFOLIO HOLDINGS WITH THE SEC FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL
YEAR ON FORM N-Q, THE LAST OF WHICH WAS FILED FOR THE QUARTER ENDED MARCH 31,
2005. SHAREHOLDERS MAY OBTAIN THIS INFORMATION AT WWW.GABELLI.COM OR BY CALLING
THE EQUITY TRUST AT 800-GABELLI (800-422-3554). THE EQUITY TRUST'S FORM N-Q IS
AVAILABLE ON THE SEC'S WEBSITE AT WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND
COPIED AT THE COMMISSION'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION
ON THE OPERATION OF THE PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING
1-800-SEC-0330.
PROXY VOTING
The Equity Trust files Form N-PX with its complete proxy voting record for
the 12 months ended June 30th, no later than August 31st of each year. A
description of the Equity Trust's proxy voting policies and procedures are
available without charge, upon request, (i) by calling 800-GABELLI
(800-422-3554); (ii) by writing to The Gabelli Funds at One Corporate Center,
Rye, NY 10580-1422; and (iii) by visiting the Securities and Exchange
Commission's website at www.sec.gov.
SHAREHOLDER MEETING -- MAY 9, 2005 -- FINAL RESULTS
The Annual Meeting of Shareholders was held on May 9, 2005 at the Hyatt
Regency in Old Greenwich, Connecticut. At that meeting, common and preferred
shareholders voting together as a single class elected Frank J. Fahrenkopf, Jr.
and Salvatore J. Zizza as Directors of the Trust. There were 134,274,813 votes
cast in favor of Mr. Fahrenkopf and 2,029,382 votes withheld. There were
134,555,946 votes cast in favor of Mr. Zizza and 1,747,709 votes withheld. In
addition, preferred shareholders voting as a single class elected Anthony J.
Colavita as Trustee of the Trust. There were 9,290,343 votes cast in favor and
77,198 votes withheld.
Mario J. Gabelli, Thomas E. Bratter, Anthony J. Colavita, James P. Conn,
Arthur V. Ferrara, Karl Otto Pohl and Anthony R. Pustorino continue to serve in
their capacities as Directors of the Trust.
We thank you for your participation and appreciate your continued support.
2
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES
QUARTER ENDED JUNE 30, 2005 (UNAUDITED)
OWNERSHIP AT
JUNE 30,
SHARES 2005
------------ ------------
NET PURCHASES
COMMON STOCKS
Agere Systems Inc.(a) .......................... 35,000 35,000
Albertson's Inc. ............................... 20,000 200,000
Anheuser-Busch Companies Inc. .................. 6,000 6,000
AT&T Corp. ..................................... 120,000 400,000
Avon Products Inc. ............................. 20,000 20,000
Cadbury Schweppes plc, ADR ..................... 10,000 40,000
Champion Enterprises Inc. ...................... 20,000 70,000
Cinergy Corp. .................................. 20,000 40,000
Citigroup Inc. ................................. 25,000 40,000
Clarcor Inc.(b) ................................ 100,000 200,000
Coca-Cola Co. .................................. 15,000 60,000
ConocoPhillips(b) .............................. 100,000 200,000
Costco Wholesale Corp. ......................... 7,000 10,000
CUNO Inc. ...................................... 10,000 10,000
Curtiss-Wright Corp.(c) ........................ 200,000 200,000
Del Monte Foods Co. ............................ 28,600 88,600
DPL Inc. ....................................... 4,000 30,000
Duquesne Light Holdings Inc. ................... 1,200 110,000
EchoStar Communications Corp., Cl. A ........... 5,000 55,000
Fairchild Corp., Cl. A ......................... 4,600 129,600
Fleetwood Enterprises .......................... 5,000 50,000
Fomento Economico Mexicano SA de CV, ADR ....... 5,641 35,641
Gemstar-TV Guide International Inc. ............ 100,000 600,000
General Mills Inc. ............................. 20,000 170,000
Gillette Co. ................................... 10,000 135,000
Harrah's Entertainment Inc.(d) ................. 8,845 8,845
Hilton Group plc ............................... 350,000 2,875,000
Hospira Inc. ................................... 8,500 10,000
Ito-Yokado Co. Ltd. ............................ 12,000 34,000
ITT Industries Inc. ............................ 10,000 130,000
Ivanhoe Mines Ltd. ............................. 49,400 51,400
Keyence Corp. .................................. 700 5,200
Las Vegas Sands Corp. .......................... 2,000 2,000
Liberty Global Inc., Cl. A(e)(f) ............... 156,770 156,770
Lin TV Corp., Cl. A ............................ 15,000 50,000
Lucent Technologies Inc. ....................... 10,000 140,000
Lufkin Industries Inc.(b) ...................... 53,900 107,900
Maytag Corp. ................................... 15,000 75,000
MBNA Corp. ..................................... 20,000 20,000
McGraw-Hill Companies Inc.(b) .................. 100,000 200,000
MGM Mirage(b) .................................. 55,300 120,300
Moody's Corp.(b) ............................... 30,000 60,000
Nashua Corp. ................................... 2,500 72,500
Next plc ....................................... 30,000 30,000
Nippon Television Network Corp. ................ 1,000 7,800
Nortel Networks Corp. .......................... 50,000 150,000
Novelis Inc. ................................... 10,000 10,000
PetroChina Co. Ltd., ADR ....................... 800 1,000
Ralcorp Holdings Inc. .......................... 8,200 68,200
Rank Group plc ................................. 150,000 150,000
SHARES/ OWNERSHIP AT
PRINCIPAL JUNE 30,
AMOUNT 2005
------------ ------------
Reckitt Benckiser plc .......................... 31,000 33,000
Renal Care Group Inc. .......................... 35,000 35,000
Scripps (E.W.) Co., Cl A ....................... 5,000 150,000
Standard Chartered plc ......................... 50,000 50,000
Storage Technology Corp. ....................... 40,000 40,000
Superior Industries International Inc. ......... 10,000 30,000
Technip SA(g) .................................. 22,500 30,000
Telecom Italia SpA(h) .......................... 67,595 1,788,075
Telefonica SA, ADR(i) .......................... 1,800 254,800
Telefonica SA, BDR(i) .......................... 704 18,299
Telefonos de Mexico SA de CV, Cl. L, ADR(b) .... 32,000 64,000
Telephone & Data Systems Inc., Special(j) ...... 400,000 400,000
Telesp Celular Participacoes SA, Pfd.(k) ....... 5,845 5,845
Tokyo Electron Ltd. ............................ 2,600 17,000
Tribune Co. .................................... 18,300 298,300
UBS AG ......................................... 2,000 25,000
United States Cellular Corp. ................... 50,000 100,000
VNU NV ......................................... 1,000 2,000
Waste Management Inc. .......................... 100,000 500,000
William Demant Holding A/S ..................... 1,100 82,000
Xstrata plc .................................... 45,000 45,000
Yahoo! Inc. .................................... 50,000 80,000
Young Broadcasting Inc., Cl. A ................. 14,500 130,000
PREFERRED STOCKS
Sequa Corp., $5 Cv. Pfd. ....................... 100 3,200
CORPORATE BONDS
Pep Boys - Manny, Moe & Jack, Cv., 4.250%,
06/01/07 ..................................... $ 500,000 $ 500,000
NET SALES
COMMON STOCKS
Agere Systems Inc., Cl. B(a) ................... (350,000) --
Allstate Corp. ................................. (5,000) 5,000
ALLTEL Corp. ................................... (5,000) 5,000
America Movil SA de CV, Cl. L, ADR ............. (4,000) 81,000
AMETEK Inc. .................................... (10,000) 215,000
Andrew Corp. ................................... (15,000) 45,000
Bank of New York Co. Inc. ...................... (2,000) 75,000
BCE Inc. ....................................... (15,000) 265,000
Bristol-Myers Squibb Co. ....................... (10,000) 135,000
Caesars Entertainment Inc.(d) .................. (50,000) --
Charter Communications Inc., Cl. A ............. (20,000) --
Cincinnati Bell Inc. ........................... (10,000) 940,000
Citizens Communications Co. .................... (5,000) 90,000
CMS Energy Corp. ............................... (8,800) 91,200
Coldwater Creek Inc. ........................... (3,500) 40,000
Comcast Corp., Cl. A ........................... (20,000) 330,000
Commonwealth Telephone Enterprises Inc. ........ (35,000) 185,000
See accompanying notes to financial statements.
3
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES (CONTINUED)
QUARTER ENDED JUNE 30, 2005 (UNAUDITED)
OWNERSHIP AT
JUNE 30,
SHARES 2005
------------ ------------
NET SALES (CONTINUED)
COMMON STOCKS (CONTINUED)
Compania Assicuratrice Unipol SpA .............. (140,000) --
Corning Inc. ................................... (10,000) 540,000
Curtiss-Wright Corp., Cl. B(c) ................. (202,000) --
Dana Corp. ..................................... (5,000) 395,000
Deutsche Bank AG, ADR .......................... (2,000) 152,000
Dow Jones & Co Inc. ............................ (2,000) 18,000
DTE Energy Co. ................................. (1,000) 14,000
Duke Energy Corp. .............................. (15,000) 280,000
Embratel Participacoes SA, Rights(l) ........... (19,015) --
Energizer Holdings Inc. ........................ (2,000) 32,000
Fedders Corp. .................................. (3,000) 72,000
Ferro Corp. .................................... (5,000) 325,000
Fortune Brands Inc. ............................ (5,000) 30,000
General Motors Corp.(m) ........................ (85,000) --
Greif Inc., Cl. A .............................. (1,000) 233,000
Hilton Hotels Corp. ............................ (10,000) 600,000
Invitrogen Corp. ............................... (3,000) 44,000
Irish Life & Permanent plc, Dublin ............. (15,000) 75,000
Johnson Controls Inc. .......................... (5,000) 125,000
Kellogg Co. .................................... (25,000) 185,000
Kerr-McGee Corp.(n) ............................ (15,001) 19,999
Landauer, Inc. ................................. (1,000) 95,000
Liberty Media Corp., Cl. A ..................... (10,000) 2,200,000
Liberty Media International Inc., Cl. A(e) ..... (130,000) --
Lloyds TSB Group plc ........................... (95,000) --
Lockheed Martin Corp. .......................... (5,000) 40,000
Mandalay Resort Group(o) ....................... (40,000) --
Mattel Inc. .................................... (10,000) 90,000
Media General Inc., Cl. A ...................... (1,000) 337,000
Midland Co. .................................... (300) 189,000
Modine Manufacturing Co. ....................... (1,500) 330,000
National Presto Industries Inc. ................ (10,000) 35,000
Neiman Marcus Group Inc., Cl. B ................ (3,500) 320,000
New York Times Co., Cl. A ...................... (17,500) 100,000
Nextel Communications Inc., Cl. A .............. (5,000) 65,000
Northrop Grumman Corp. ......................... (5,000) 185,000
Paxson Communications Corp. .................... (9,000) 120,000
PepsiAmericas Inc. ............................. (30,000) 520,000
PepsiCo Inc. ................................... (15,000) 355,000
Pfizer Inc. .................................... (5,000) 270,000
PHH Corp. ...................................... (7,500) --
Procter & Gamble Co. ........................... (20,000) 180,000
Pulitzer Inc.(p) ............................... (90,000) --
RAS SpA ........................................ (46,002) --
Regal Entertainment Group, Cl. A ............... (2,000) 12,000
Riggs National Corp.(q) ........................ (60,000) --
Rollins Inc. ................................... (36,400) 890,000
SHARES/ OWNERSHIP AT
PRINCIPAL JUNE 30,
AMOUNT 2005
------------ ------------
Royce Value Trust Inc. ......................... (500) 31,500
SBC Communications Inc. ........................ (10,000) 130,000
Sony Corp., ADR ................................ (45,000) --
St. Joe. Co. ................................... (5,000) 172,000
Telecom Italia Mobile SpA(h) ................... (96,876) --
Telephone & Data Systems Inc. .................. (90,000) 310,000
Telesp Celular Participacoes SA, Pfd.(k) ....... (14,613,537) --
Texas Instruments Inc. ......................... (5,000) 265,000
Titan Corp. .................................... (45,000) 30,000
TRW Automotive Holdings Corp. .................. (18,000) 165,000
TXU Corp. ...................................... (20,500) 62,500
United Defense Industries Inc.(r) .............. (15,000) --
UnitedGlobalCom Inc., Cl. A(f) ................. (461,472) --
CORPORATE BONDS
Charter Communications Inc., Cv., 4.750%,
06/01/06 ..................................... $ (300,000) $ 500,000
-----------------------
(a) Reverse Split -- 1 share of Agere Systems Inc. for 10 shares of Agere
Systems Inc., Cl. B
(b) 2 for 1 stock split
(c) Reclassification -- 1 share of Curtiss-Wright Corp. for every 1 share of
Curtiss-Wright Corp., Cl. B
(d) Merger -- 0.221129 of Harrah's Entertainment Inc. for every 1 share of
Caesars Entertainment Inc.
(e) Merger -- 1 share of Liberty Global Inc., Cl. A for 1 share of Liberty Media
International Inc., Cl. A
(f) Merger 0.058012 share of Liberty Global Inc., Cl. A for 1 share of
UnitedGlobalCom Inc., Cl. A
(g) 4 for 1 stock split
(h) Merger -- 1.73 share of Telecom Italia SpA for every 1 share of Telecom
Italia Mobile SpA
(i) 4% stock dividend
(j) Spin-off -- 1 share of Telephone & Data Systems Inc., Special for every 1
share of Telephone & Data Systems Inc.
(k) Reverse Split -- 0.0004 share of Telesp Celular Participacoes SA, Pfd. for
every 1 share of Telesp Celular Participacoes SA, Pfd. and cusip change
(l) Rights Lapse for Embratel Participacoes SA, Rights
(m) Tender Offer -- $31.00 for every 1 share
(n) Partial Tender Offer -- 0.336438:1 share at $85.00
(o) Cash Merger -- $71.00 for every 1 share
(p) Cash Merger -- $64.00 for every 1 share
(q) Cash Merger -- $19.94 for every 1 share
(r) Cash Merger -- $75.00 for every 1 share
See accompanying notes to financial statements.
4
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2005 (UNAUDITED)
MARKET
SHARES COST VALUE
----------- ------------ ------------
COMMON STOCKS -- 93.1%
FOOD AND BEVERAGE -- 8.2%
85,000 Ajinomoto Co. Inc. ................ $ 998,444 $ 946,488
6,000 Anheuser-Busch Companies Inc. ..... 284,494 274,500
40,000 Cadbury Schweppes plc, ADR ........ 1,144,179 1,533,200
90,000 Campbell Soup Co. ................. 2,383,197 2,769,300
60,000 Coca-Cola Co. ..................... 2,754,114 2,505,000
5,000 Coca-Cola Enterprises Inc. ........ 76,395 110,050
40,000 Coca-Cola Hellenic Bottling Co.
SA ............................. 519,295 1,086,236
100,000 Corn Products International Inc. .. 1,385,122 2,376,000
88,600 Del Monte Foods Co.+ .............. 806,935 954,222
10,108 Denny's Corp.+ .................... 14,358 50,540
100,000 Diageo plc ........................ 1,037,393 1,474,567
224,000 Diageo plc, ADR ................... 9,660,541 13,283,200
200,000 Dreyer's Grand Ice Cream
Holdings Inc., Cl. A ........... 15,737,691 16,280,000
60,000 Flowers Foods Inc. ................ 1,011,842 2,121,600
35,641 Fomento Economico Mexicano SA
de CV, ADR ..................... 1,402,215 2,123,134
170,000 General Mills Inc. ................ 8,096,244 7,954,300
40,000 Groupe Danone ..................... 3,491,214 3,519,133
500,000 Grupo Bimbo SA de CV, Cl. A ....... 1,052,379 1,439,896
20,000 Hain Celestial Group Inc.+ ........ 267,663 390,000
130,000 Heinz (H.J.) Co. .................. 4,668,773 4,604,600
27,000 Hershey Co. ....................... 899,420 1,676,700
185,000 Kellogg Co. ....................... 6,344,427 8,221,400
75,000 Kerry Group plc, Cl. A ............ 860,877 1,872,413
12,100 LVMH Moet Hennessy Louis
Vuitton SA ..................... 419,053 935,680
2,500 Nestle SA ......................... 513,610 639,875
520,000 PepsiAmericas Inc. ................ 9,208,154 13,343,200
355,000 PepsiCo Inc. ...................... 17,170,494 19,145,150
6,750 Pernod-Ricard SA .................. 470,174 1,078,249
68,200 Ralcorp Holdings Inc. ............. 1,308,415 2,806,430
80,000 Sara Lee Corp. .................... 1,480,340 1,584,800
2,000 Smucker (J.M.) Co. ................ 52,993 93,880
112,270 Tootsie Roll Industries Inc. ...... 1,566,039 3,283,897
170,000 Wrigley (Wm.) Jr. Co. ............. 10,436,095 11,702,800
------------ ------------
107,522,579 132,180,440
------------ ------------
FINANCIAL SERVICES -- 7.5%
7,000 Allianz AG ........................ 866,497 804,499
5,000 Allstate Corp. .................... 209,064 298,750
550,000 American Express Co. .............. 21,247,943 29,276,500
34,000 Argonaut Group Inc.+ .............. 893,076 785,060
95,000 Aviva plc ......................... 935,101 1,058,714
90,000 Banco Santander Central Hispano
SA, ADR ........................ 322,130 1,042,200
MARKET
SHARES COST VALUE
----------- ------------ ------------
110,000 Bank of Ireland ................... $ 635,101 $ 1,786,432
75,000 Bank of New York Co. Inc. ......... 2,749,625 2,158,500
275,000 Bankgesellschaft Berlin AG+ ....... 5,495,399 965,099
260 Berkshire Hathaway Inc., Cl. A+ ... 1,074,049 21,710,000
7,500 Calamos Asset Management Inc.,
Cl. A .......................... 135,000 204,300
40,000 Citigroup Inc. .................... 1,908,300 1,849,200
185,000 Commerzbank AG, ADR ............... 3,747,342 4,033,722
152,000 Deutsche Bank AG, ADR ............. 9,838,158 11,840,800
20,000 Dun and Bradstreet Corp.+ ......... 424,266 1,233,000
10,000 H&R Block Inc. .................... 329,930 583,500
23,000 Hibernia Corp., Cl. A ............. 184,942 763,140
75,000 Irish Life & Permanent plc ........ 585,157 1,313,321
200,000 Janus Capital Group Inc. .......... 3,029,352 3,008,000
45,000 JPMorgan Chase & Co. .............. 1,251,002 1,589,400
130,000 Kinnevik Investment AB, Cl. B ..... 617,945 1,094,171
78,000 Leucadia National Corp. ........... 1,905,290 3,013,140
20,000 MBNA Corp. ........................ 524,600 523,200
100,000 Mellon Financial Corp. ............ 3,140,094 2,869,000
189,000 Midland Co. ....................... 1,386,764 6,650,910
60,000 Moody's Corp. ..................... 1,024,050 2,697,600
257,500 Nikko Cordial Corp. ............... 1,725,292 1,132,991
145,000 Phoenix Companies Inc. ............ 2,094,171 1,725,500
2,500 Prudential Financial Inc. ......... 68,750 164,150
45,000 Schwab (Charles) Corp. ............ 657,562 507,600
50,000 Standard Chartered plc ............ 954,007 913,765
80,000 State Street Corp. ................ 4,001,480 3,860,000
20,000 SunTrust Banks Inc. ............... 419,333 1,444,800
78,500 T. Rowe Price Group Inc. .......... 4,816,620 4,914,100
25,000 UBS AG ............................ 1,255,688 1,950,839
60,000 Waddell & Reed Financial
Inc., Cl. A .................... 1,247,250 1,110,000
------------ ------------
81,700,330 120,875,903
------------ ------------
ENERGY AND UTILITIES -- 7.4%
70,000 AES Corp.+ ........................ 397,267 1,146,600
10,000 AGL Resources Inc. ................ 174,924 386,500
120,000 Allegheny Energy Inc.+ ............ 1,090,388 3,026,400
70,000 Apache Corp. ...................... 2,728,670 4,522,000
247,000 BP plc, ADR ....................... 10,490,760 15,407,860
275,000 Burlington Resources Inc. ......... 12,090,077 15,191,000
115,000 CH Energy Group Inc. .............. 4,749,282 5,592,450
40,000 Cinergy Corp. ..................... 1,456,054 1,792,800
91,200 CMS Energy Corp.+ ................. 583,956 1,373,472
200,000 ConocoPhillips . .................. 7,227,891 11,498,000
8,000 Constellation Energy Group ........ 189,742 461,520
30,000 DPL Inc. .......................... 624,493 823,500
14,000 DTE Energy Co. .................... 619,460 654,780
280,000 Duke Energy Corp. ................. 6,201,900 8,324,400
110,000 Duquesne Light
Holdings Inc. .................. 1,845,274 2,054,800
See accompanying notes to financial statements.
5
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
MARKET
SHARES COST VALUE
----------- ------------ ------------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES (CONTINUED)
210,000 El Paso Corp. ..................... $ 2,558,703 $ 2,419,200
370,000 El Paso Electric Co.+ ............. 3,381,794 7,566,500
50,000 Energy East Corp. ................. 1,065,733 1,449,000
80,000 Eni SpA ........................... 1,367,106 2,063,073
80,000 Exxon Mobil Corp. ................. 2,750,108 4,597,600
20,000 FPL Group Inc. .................... 556,256 841,200
70,000 Halliburton Co. ................... 1,726,011 3,347,400
19,999 Kerr-McGee Corp. .................. 1,111,848 1,526,124
150,000 Mirant Corp.+ ..................... 201,190 76,800
12,270 NiSource Inc. ..................... 264,419 303,437
300,000 Northeast Utilities ............... 5,660,050 6,258,000
1,000 PetroChina Co. Ltd., ADR .......... 62,306 73,450
23,000 Petroleo Brasileiro SA, ADR ....... 986,810 1,198,990
100,000 Progress Energy Inc., CVO+ ........ 52,000 13,500
30,000 SJW Corp. ......................... 883,106 1,410,300
20,000 Southwest Gas Corp. ............... 451,132 510,200
8,657 Total SA .......................... 1,262,555 2,035,549
62,500 TXU Corp. ......................... 1,462,163 5,193,125
255,000 Westar Energy Inc. ................ 4,319,800 6,127,650
------------ ------------
80,593,228 119,267,180
------------ ------------
TELECOMMUNICATIONS -- 7.4%
5,000 ALLTEL Corp. ...................... 111,101 311,400
400,000 AT&T Corp. ........................ 10,994,472 7,616,000
90,540 ATX Communications Inc.+ .......... 151,570 1,032
265,000 BCE Inc. .......................... 6,947,469 6,275,200
30,000 Brasil Telecom Participacoes
SA, ADR ........................ 1,743,257 1,083,000
1,760,000 BT Group plc ...................... 7,277,785 7,252,789
4,440,836 Cable & Wireless Jamaica Ltd.+ .... 101,639 113,365
10,000 CenturyTel Inc. ................... 322,000 346,300
940,000 Cincinnati Bell Inc.+ ............. 7,243,529 4,042,000
90,000 Citizens Communications Co. ....... 1,070,036 1,209,600
185,000 Commonwealth Telephone
Enterprises Inc. ............... 7,065,945 7,753,350
110,000 Compania de Telecomunicaciones de
Chile SA, ADR .................. 1,634,847 1,118,700
170,000 Deutsche Telekom AG, ADR .......... 2,827,195 3,131,400
15,000 Embratel Participacoes SA, ADR+ ... 266,400 158,100
5,000 France Telecom SA, ADR ............ 146,305 145,700
233 KDDI Corp. ........................ 830,434 1,077,712
100,000 KPN NV ............................ 232,728 839,848
1,000,000 Qwest Communications
International Inc.+ ............ 3,357,501 3,710,000
130,000 SBC Communications Inc. ........... 4,107,938 3,087,500
MARKET
SHARES COST VALUE
----------- ------------ ------------
450,000 Sprint Corp. ...................... $ 14,920,599 $ 11,290,500
186,554 Tele Norte Leste Participacoes
SA, ADR ........................ 2,554,387 3,106,124
50,000 Telecom Argentina SA, Cl. B,
ADR+ ........................... 423,451 597,000
1,788,075 Telecom Italia SpA ................ 7,145,332 5,582,732
254,800 Telefonica SA, ADR ................ 12,826,593 12,459,720
18,299 Telefonica SA, BDR ................ 202,143 298,580
64,000 Telefonos de Mexico SA
de CV, Cl. L, ADR .............. 482,044 1,208,960
310,000 Telephone & Data Systems Inc. ..... 14,545,632 12,651,100
400,000 Telephone & Data Systems Inc.,
Special ........................ 16,508,500 15,336,000
2,500 TELUS Corp. ....................... 44,168 87,863
52,500 TELUS Corp., ADR .................. 950,397 1,845,730
135,000 Verizon Communications Inc. ....... 5,330,021 4,664,250
------------ ------------
132,365,418 118,401,555
------------ ------------
ENTERTAINMENT -- 6.1%
160,000 Canal Plus, ADR+ .................. 34,010 260,000
110,000 EMI Group plc ..................... 292,543 500,600
80,000 EMI Group plc, ADR ................ 947,487 728,448
50,000 GC Companies Inc.+(a) ............. 54,500 43,000
600,000 Gemstar-TV Guide International
Inc.+ .......................... 3,810,261 2,154,000
174,000 Grupo Televisa SA, ADR ............ 6,481,375 10,803,660
2,200,000 Liberty Media Corp., Cl. A+ ....... 22,754,943 22,418,000
160,000 Publishing & Broadcasting Ltd. .... 893,720 1,808,604
150,000 Rank Group plc .................... 764,935 722,950
12,000 Regal Entertainment Group, Cl. A .. 165,788 226,560
170,000 Six Flags Inc.+ ................... 1,176,303 790,500
260,000 The Walt Disney Co. ............... 5,453,387 6,546,800
800,000 Time Warner Inc.+ ................. 17,755,191 13,368,000
835,000 Viacom Inc., Cl. A ................ 34,674,976 26,903,700
43,900 Vivendi Universal SA .............. 2,247,329 1,384,459
330,000 Vivendi Universal SA, ADR ......... 8,718,814 10,338,900
------------ ------------
106,225,562 98,998,181
------------ ------------
PUBLISHING -- 6.1%
18,000 Dow Jones & Co. Inc. .............. 933,936 638,100
248,266 Independent News & Media plc ...... 358,456 766,123
20,000 Knight-Ridder Inc. ................ 1,345,264 1,226,800
5,000 McClatchy Co., Cl. A .............. 240,250 327,200
200,000 McGraw-Hill Companies Inc. ........ 7,669,017 8,850,000
337,000 Media General Inc., Cl. A ......... 20,165,073 21,824,120
124,000 Meredith Corp. .................... 2,253,297 6,083,440
See accompanying notes to financial statements.
6
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
MARKET
SHARES COST VALUE
----------- ------------ ------------
COMMON STOCKS (CONTINUED)
PUBLISHING (CONTINUED)
100,000 New York Times Co., Cl. A ......... $ 4,558,429 $ 3,115,000
1,744,800 News Corp., Cl. A ................. 23,233,744 28,230,864
20,000 News Corp., Cl. B ................. 186,274 337,200
60,000 News Corp., Cl. B, CDI ............ 696,029 1,020,765
80,000 Pearson plc ....................... 911,889 942,433
200,000 Penton Media Inc.+ ................ 439,128 70,000
400,000 PRIMEDIA Inc.+ .................... 1,948,569 1,620,000
175,000 Reader's Digest Association Inc. .. 3,181,221 2,887,500
261,319 SCMP Group Ltd. ................... 191,790 114,333
150,000 Scripps (E.W.) Co., Cl. A ......... 5,032,324 7,320,000
66,585 Seat Pagine Gialle SpA+ ........... 177,139 27,799
80,000 Thomas Nelson Inc. ................ 951,267 1,740,800
298,300 Tribune Co. ....................... 13,450,571 10,494,194
2,000 VNU NV ............................ 56,257 55,837
------------ ------------
87,979,924 97,692,508
------------ ------------
CABLE AND SATELLITE -- 5.5%
1,500,000 Cablevision Systems Corp., Cl.
A+ ............................. 33,080,007 48,300,000
330,000 Comcast Corp., Cl. A+ ............. 11,098,996 10,131,000
85,000 Comcast Corp., Cl. A, Special+ .... 756,584 2,545,750
153,444 DIRECTV Group Inc.+ ............... 2,214,257 2,378,382
55,000 EchoStar Communications Corp.,
Cl. A .......................... 1,722,522 1,658,250
156,770 Liberty Global Inc., Cl. A+ ....... 4,302,786 7,316,456
50,000 Loral Space & Communications
Ltd.+ .......................... 11,250 14,500
407,845 Rogers Communications Inc., Cl.
B, New York .................... 5,045,177 13,409,944
9,655 Rogers Communications Inc., Cl.
B, Toronto ..................... 137,424 316,790
80,000 Shaw Communications Inc., Cl.
B, New York .................... 329,197 1,661,600
20,000 Shaw Communications Inc.,
Cl. B, Toronto ................. 52,983 416,258
------------ ------------
58,751,183 88,148,930
------------ ------------
DIVERSIFIED INDUSTRIAL -- 5.5%
170,000 Acuity Brands Inc. ................ 5,161,361 4,367,300
195,000 Ampco-Pittsburgh Corp. ............ 2,627,873 2,340,000
25,000 Bouygues SA ....................... 643,811 1,036,498
160,000 Cooper Industries Ltd., Cl. A ..... 8,215,442 10,224,000
250,000 Crane Co. ......................... 4,841,093 6,575,000
100,500 CRH plc ........................... 1,259,458 2,669,573
110,000 GATX Corp. ........................ 2,036,677 3,795,000
233,000 Greif Inc., Cl. A ................. 4,398,568 14,236,300
MARKET
SHARES COST VALUE
----------- ------------ ------------
5,000 Greif Inc., Cl. B ................. $ 135,355 $ 296,750
410,000 Honeywell International Inc. ...... 13,620,787 15,018,300
130,000 ITT Industries Inc. ............... 6,378,721 12,691,900
390,000 Lamson & Sessions Co.+ ............ 2,380,718 4,609,800
98,000 Park-Ohio Holdings Corp.+ ......... 1,023,835 1,633,660
4,000 Sulzer AG ......................... 850,053 1,651,190
30,000 Technip SA ........................ 721,269 1,392,647
100,000 Thomas Industries Inc. ............ 1,388,525 3,996,000
50,000 Trinity Industries Inc. ........... 945,000 1,601,500
------------ ------------
56,628,546 88,135,418
------------ ------------
CONSUMER PRODUCTS -- 4.2%
60,000 Altadis SA ........................ 885,677 2,517,366
20,000 Avon Products Inc. ................ 784,045 757,000
43,000 Christian Dior SA ................. 1,633,717 3,335,552
15,000 Church & Dwight Co. Inc. .......... 99,535 543,000
30,000 Clorox Co. ........................ 1,666,387 1,671,600
3,000 Colgate-Palmolive Co. ............. 151,130 149,730
90,000 Compagnie Financiere Richemont
AG, Cl. A ...................... 1,264,405 3,026,921
50,000 Department 56 Inc.+ ............... 524,317 512,500
32,000 Energizer Holdings Inc.+ .......... 877,206 1,989,440
30,000 Fortune Brands Inc. ............... 2,101,302 2,664,000
30,000 Gallaher Group plc ................ 274,164 445,595
234,000 Gallaher Group plc, ADR ........... 13,788,387 13,876,200
135,000 Gillette Co. ...................... 4,511,761 6,835,050
2,000 Givaudan SA ....................... 550,742 1,163,480
44,000 Harley-Davidson Inc. .............. 2,044,082 2,182,400
15,000 Matsushita Electric Industrial
Co. Ltd., ADR .................. 178,325 227,700
90,000 Mattel Inc. ....................... 1,409,065 1,647,000
75,000 Maytag Corp. ...................... 1,566,099 1,174,500
35,000 National Presto Industries Inc. ... 1,232,270 1,542,450
180,000 Procter & Gamble Co. .............. 8,861,104 9,495,000
33,000 Reckitt Benckiser plc ............. 1,053,255 972,623
10,000 Swatch Group AG, Cl. B ............ 584,263 1,404,604
890,000 Swedish Match AB .................. 9,252,561 10,111,241
------------ ------------
55,293,799 68,244,952
------------ ------------
HEALTH CARE -- 3.6%
10,000 Abbott Laboratories ............... 398,848 490,100
52,000 Amgen Inc.+ ....................... 3,039,863 3,143,920
19,146 AstraZeneca plc ................... 710,674 795,314
27,000 Biogen Idec Inc.+ ................. 163,601 930,150
135,000 Bristol-Myers Squibb Co. .......... 3,509,708 3,372,300
65,036 GlaxoSmithKline plc ............... 1,653,252 1,574,250
4,000 GlaxoSmithKline plc, ADR .......... 216,096 194,040
34,000 Henry Schein Inc.+ ................ 730,758 1,411,680
10,000 Hospira Inc.+ ..................... 342,400 390,000
16,000 INAMED Corp.+ ..................... 698,771 1,071,520
See accompanying notes to financial statements.
7
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
MARKET
SHARES COST VALUE
----------- ------------- -------------
COMMON STOCKS (CONTINUED)
HEALTH CARE (CONTINUED)
44,000 Invitrogen Corp.+ ................. $ 2,223,724 $ 3,664,760
18,750 IVAX Corp.+ ....................... 170,440 403,125
100,000 Merck & Co. Inc. .................. 4,575,501 3,080,000
2,000 Nobel Biocare Holding AG .......... 286,712 405,775
41,000 Novartis AG ....................... 1,292,180 1,953,219
105,000 Novartis AG, ADR .................. 4,622,998 4,981,200
270,000 Pfizer Inc. ....................... 7,805,301 7,446,600
35,000 Renal Care Group Inc.+ ............ 1,613,400 1,613,500
18,100 Roche Holding AG .................. 1,644,615 2,290,925
31,808 Sanofi-Aventis .................... 1,786,486 2,613,650
100,000 Schering-Plough Corp. ............. 1,917,839 1,906,000
80,000 Smith & Nephew plc ................ 752,722 789,780
4,250 Straumann Holding AG .............. 873,571 885,486
60,000 Sybron Dental
Specialties Inc.+ .............. 1,230,090 2,257,200
10,000 Synthes Inc. ...................... 677,094 1,097,932
23,000 Takeda Pharmaceutical
Co. Ltd. ....................... 1,140,219 1,140,564
82,000 William Demant
Holding A/S+ ................... 3,730,842 4,081,921
100,000 Wyeth ............................. 4,105,470 4,450,000
------------- -------------
51,913,175 58,434,911
------------- -------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 3.4%
60,000 BorgWarner Inc. ................... 1,326,210 3,220,200
200,000 CLARCOR Inc. ...................... 1,597,860 5,850,000
395,000 Dana Corp. ........................ 6,261,061 5,928,950
300,000 Genuine Parts Co. ................. 9,098,465 12,327,000
125,000 Johnson Controls Inc. ............. 5,705,052 7,041,250
116,000 Midas Inc.+ ....................... 1,508,953 2,668,000
330,000 Modine Manufacturing Co. .......... 8,787,029 10,744,800
80,500 Scheib (Earl) Inc.+ ............... 637,614 275,713
160,000 Standard Motor
Products Inc. .................. 1,728,738 2,112,000
30,000 Superior Industries
International Inc. ............. 736,730 711,000
27,000 TI Automotive Ltd.+(a) ............ 0 0
105,000 TransPro Inc.+ .................... 936,807 660,450
165,000 TRW Automotive
Holdings Corp.+ ................ 4,315,120 4,044,150
------------- -------------
42,639,639 55,583,513
------------- -------------
HOTELS AND GAMING -- 3.3%
115,000 Aztar Corp.+ ...................... 1,531,188 3,938,750
200,000 Gaylord Entertainment Co.+ ........ 4,949,319 9,298,000
55,000 Greek Organization of
Football Prognostics SA ........ 630,177 1,592,081
16,000 GTECH Holdings Corp. .............. 69,219 467,840
8,845 Harrah's Entertainment Inc. ....... 553,483 637,459
2,875,000 Hilton Group plc .................. 10,988,555 14,745,106
MARKET
SHARES COST VALUE
----------- ------------- -------------
600,000 Hilton Hotels Corp. ............... $ 8,971,865 $ 14,310,000
10,200 Kerzner International Ltd.+........ 516,352 580,890
2,000 Las Vegas Sands Corp.+ ............ 77,365 71,500
120,300 MGM Mirage+ ....................... 2,061,242 4,761,474
38,000 Starwood Hotels & Resorts
Worldwide Inc. ................. 875,103 2,225,660
------------- -------------
31,223,868 52,628,760
------------- -------------
EQUIPMENT AND SUPPLIES -- 3.0%
215,000 AMETEK Inc. ....................... 5,173,517 8,997,750
2,000 Amphenol Corp., Cl. A ............. 14,775 80,340
94,000 CIRCOR International Inc. ......... 974,241 2,318,980
10,000 CUNO Inc.+ ........................ 711,100 714,400
215,000 Donaldson Co. Inc. ................ 2,987,463 6,520,950
72,000 Fedders Corp. ..................... 424,446 158,400
115,000 Flowserve Corp.+ .................. 2,167,080 3,479,900
24,000 Franklin Electric Co. Inc. ........ 258,462 927,600
100,000 Gerber Scientific Inc.+ ........... 1,060,701 696,000
70,000 GrafTech International Ltd.+ ...... 850,486 301,000
250,000 IDEX Corp. ........................ 8,425,135 9,652,500
20,000 Ingersoll-Rand Co. Ltd.,
Cl. A .......................... 870,760 1,427,000
107,900 Lufkin Industries Inc. ............ 1,044,948 3,882,242
1,000 Manitowoc Co. Inc. ................ 25,450 41,020
11,000 Mueller Industries Inc. ........... 485,034 298,100
1,000 Sealed Air Corp.+ ................. 17,404 49,790
230,000 Watts Water Technologies
Inc., Cl. A .................... 3,240,796 7,702,700
100,000 Weir Group plc .................... 420,789 578,718
------------- -------------
29,152,587 47,827,390
------------- -------------
RETAIL -- 2.7%
200,000 Albertson's Inc. .................. 5,178,600 4,136,000
230,000 AutoNation Inc.+ .................. 2,908,065 4,719,600
40,000 Coldwater Creek Inc.+ ............. 142,323 996,400
10,000 Costco Wholesale Corp. ............ 449,309 448,200
34,000 Ito-Yokado Co. Ltd. ............... 1,155,818 1,128,122
38,000 Matsumotokiyoshi Co. Ltd. ......... 1,037,783 1,034,713
320,000 Neiman Marcus Group Inc.,
Cl. B .......................... 7,795,253 30,944,000
30,000 Next plc .......................... 811,183 811,101
------------- -------------
19,478,334 44,218,136
------------- -------------
AVIATION: PARTS AND SERVICES -- 2.0%
200,000 Curtiss-Wright Corp. .............. 5,747,006 10,790,000
129,600 Fairchild Corp., Cl. A+ ........... 997,020 370,656
220,000 GenCorp Inc.+ ..................... 2,587,049 4,237,200
90,000 Precision Castparts Corp. ......... 2,330,982 7,011,000
84,000 Sequa Corp., Cl. A+ ............... 3,347,991 5,558,280
74,600 Sequa Corp., Cl. B+ ............... 3,852,672 4,964,630
------------- -------------
18,862,720 32,931,766
------------- -------------
See accompanying notes to financial statements.
8
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
MARKET
SHARES COST VALUE
----------- ------------- -------------
COMMON STOCKS (CONTINUED)
CONSUMER SERVICES -- 1.8%
460,000 IAC/InterActiveCorp+ .............. $ 11,367,750 $ 11,063,000
890,000 Rollins Inc. ...................... 13,262,314 17,835,600
------------- -------------
24,630,064 28,898,600
------------- -------------
WIRELESS COMMUNICATIONS -- 1.7%
81,000 America Movil SA de CV,
Cl. L, ADR ..................... 2,325,526 4,828,410
65,000 Nextel Communications
Inc., Cl. A+ ................... 1,656,317 2,100,150
1,500 NTT DoCoMo Inc. ................... 3,553,937 2,218,015
2,760,000 O2 plc+ ........................... 3,413,555 6,737,677
24,787 Tele Centro Oeste Celular
Participacoes SA, ADR .......... 74,303 249,605
1,920 Tele Leste Celular
Participacoes SA, ADR+ ......... 51,357 15,264
3,340 Tele Norte Celular
Participacoes SA, ADR+ ......... 51,601 21,209
90,000 Telefonica Moviles SA ............. 660,946 950,819
8,350 Telemig Celular
Participacoes SA, ADR .......... 241,320 272,627
90,217 Telesp Celular
Participacoes SA, ADR+ ......... 2,244,802 385,227
5,845 Telesp Celular
Participacoes SA, Pfd.+ ........ 89,789 24,832
32,165 Tim Participacoes SA, ADR ......... 390,212 508,207
100,000 United States Cellular Corp.+ ..... 4,333,517 4,994,000
553,888 Vodafone Group plc ................ 975,799 1,349,663
100,000 Vodafone Group plc, ADR ........... 2,378,590 2,432,000
------------- -------------
22,441,571 27,087,705
------------- -------------
COMMUNICATIONS EQUIPMENT -- 1.4%
35,000 Agere Systems Inc.+ ............... 648,860 420,000
45,000 Andrew Corp.+ ..................... 491,746 574,200
540,000 Corning Inc.+ ..................... 4,820,591 8,974,800
140,000 Lucent Technologies Inc.+ ......... 829,428 407,400
110,000 Motorola Inc. ..................... 1,378,052 2,008,600
150,000 Nortel Networks Corp.+ ............ 818,085 391,500
44,000 Scientific-Atlanta Inc. ........... 355,750 1,463,880
300,000 Thomas & Betts Corp.+ ............. 5,741,098 8,472,000
------------- -------------
15,083,610 22,712,380
------------- -------------
MACHINERY -- 1.4%
10,000 Caterpillar Inc. .................. 136,559 953,100
320,000 Deere & Co. ....................... 19,641,708 20,956,800
------------- -------------
19,778,267 21,909,900
------------- -------------
AGRICULTURE -- 1.3%
1,000,000 Archer-Daniels-Midland Co. ........ 14,500,966 21,380,000
5,000 Delta & Pine Land Co. ............. 84,396 125,300
10,000 Mosaic Co.+ ....................... 139,584 155,600
------------- -------------
14,724,946 21,660,900
------------- -------------
MARKET
SHARES COST VALUE
----------- ------------- ------------
AEROSPACE -- 1.3%
110,000 Boeing Co. ........................ $ 4,638,808 $ 7,260,000
40,000 Lockheed Martin Corp. ............. 2,293,748 2,594,800
185,000 Northrop Grumman Corp. ............ 9,674,435 10,221,250
30,000 Titan Corp.+ ...................... 480,157 682,200
------------- -------------
17,087,148 20,758,250
------------- -------------
REAL ESTATE -- 1.3%
70,000 Cheung Kong
(Holdings) Ltd. ................ 815,521 682,345
100,000 Florida East Coast
Industries Inc. ................ 2,137,516 4,330,000
55,000 Griffin Land &
Nurseries Inc.+ ................ 513,143 1,354,650
172,000 St. Joe Co. ....................... 4,881,549 14,024,880
------------- -------------
8,347,729 20,391,875
------------- -------------
SPECIALTY CHEMICALS -- 1.1%
5,400 Ciba Specialty
Chemicals AG, ADR .............. 4,285 157,950
20,000 E.I. du Pont de
Nemours and Co. ................ 802,600 860,200
325,000 Ferro Corp. ....................... 6,928,725 6,454,500
40,000 Fuller (H.B.) Co. ................. 968,437 1,362,400
120,000 Hercules Inc.+ .................... 1,543,119 1,698,000
232,300 Omnova Solutions Inc.+ ............ 1,879,166 1,082,518
300,000 Sensient Technologies Corp. ....... 5,529,921 6,183,000
10,000 Syngenta AG, ADR+ ................. 16,177 203,900
------------- -------------
17,672,430 18,002,468
------------- -------------
ENVIRONMENTAL SERVICES -- 1.0%
65,000 Republic Services Inc. ............ 875,761 2,340,650
500,000 Waste Management Inc. ............. 12,434,746 14,170,000
------------- -------------
13,310,507 16,510,650
------------- -------------
BROADCASTING -- 1.0%
2,000 Cogeco Inc. ....................... 39,014 43,846
16,666 Corus Entertainment Inc.,
Cl. B .......................... 62,036 425,764
120,000 Gray Television Inc. .............. 1,204,736 1,447,200
27,500 Gray Television Inc., Cl. A ....... 370,755 310,750
200,000 Liberty Corp. ..................... 8,528,905 7,362,000
50,000 Lin TV Corp., Cl. A+ .............. 947,559 694,500
165,000 Mediaset SpA ...................... 1,326,669 1,944,841
30,000 Modern Times Group, Cl. B+ ........ 823,064 919,756
7,800 Nippon Television
Network Corp. .................. 1,232,257 1,061,239
120,000 Paxson Communications
Corp.+ ......................... 554,012 72,000
100,000 Television Broadcasts Ltd. ........ 396,239 564,921
130,000 Young Broadcasting Inc.,
Cl. A+ ......................... 1,982,535 539,500
------------- -------------
17,467,781 15,386,317
------------- -------------
See accompanying notes to financial statements.
9
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
MARKET
SHARES COST VALUE
----------- ------------- -------------
COMMON STOCKS (CONTINUED)
AUTOMOTIVE -- 0.8%
335,000 Navistar International
Corp.+ ......................... $ 12,403,039 $ 10,720,000
43,000 PACCAR Inc. ....................... 431,444 2,924,000
------------- -------------
12,834,483 13,644,000
------------- -------------
ELECTRONICS -- 0.7%
3,000 Hitachi Ltd., ADR ................. 218,796 181,860
5,200 Keyence Corp. ..................... 1,092,186 1,165,558
20,000 Molex Inc., Cl. A ................. 519,697 469,600
7,500 NEC Corp., ADR .................... 43,625 40,500
9,500 Rohm Co. Ltd. ..................... 1,408,684 916,509
38,000 Royal Philips Electronics NV,
ADR ............................ 52,354 957,220
265,000 Texas Instruments Inc. ............ 6,407,535 7,438,550
17,000 Tokyo Electron Ltd. ............... 917,536 899,738
------------- -------------
10,660,413 12,069,535
------------- -------------
BUSINESS SERVICES -- 0.7%
60,000 ANC Rental Corp.+ ................. 578,273 6
150,000 Cendant Corp. ..................... 2,832,369 3,355,500
1,000 CheckFree Corp.+ .................. 9,040 34,060
212,500 Group 4 Securicor plc ............. 0 559,681
95,000 Landauer Inc. ..................... 2,475,055 4,931,450
72,500 Nashua Corp.+ ..................... 656,628 685,125
25,000 Secom Co. Ltd. .................... 1,095,891 1,075,196
------------- -------------
7,647,256 10,641,018
------------- -------------
METALS AND MINING -- 0.5%
72,500 Harmony Gold Mining Co. Ltd. ...... 347,738 635,224
35,000 Harmony Gold Mining Co. Ltd.,
ADR ............................ 282,733 299,600
51,400 Ivanhoe Mines Ltd.+ ............... 380,740 399,378
125,000 Newmont Mining Corp. .............. 2,900,512 4,878,750
10,000 Novelis Inc. ...................... 242,915 256,800
50,000 Placer Dome Inc. .................. 487,169 769,000
45,000 Xstrata plc ....................... 827,911 868,346
------------- -------------
5,469,718 8,107,098
------------- -------------
MANUFACTURED HOUSING AND RECREATIONAL VEHICLES -- 0.3%
70,000 Champion Enterprises Inc.+ ........ 659,503 695,800
50,000 Fleetwood Enterprises Inc.+ ....... 602,670 507,500
32,222 Huttig Building Products Inc.+ .... 81,163 351,542
14,000 Martin Marietta Materials Inc. .... 298,638 967,680
10,000 Nobility Homes Inc. ............... 195,123 272,500
80,000 Sekisui House Ltd. ................ 846,007 808,584
20,000 Skyline Corp. ..................... 804,043 798,600
1,000 Southern Energy Homes Inc.+ ....... 3,900 5,740
------------- -------------
3,491,047 4,407,946
------------- -------------
MARKET
SHARES COST VALUE
----------- ------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 0.3%
146 Computer Associates International
Inc. ........................... $ 4,526 $ 4,012
40,000 Storage Technology Corp.+ ......... 1,456,092 1,451,600
25,256 Telecom Italia Media SpA+ ......... 26,868 12,164
80,000 Yahoo! Inc.+ ...................... 2,738,971 2,772,000
------------- -------------
4,226,457 4,239,776
------------- -------------
CLOSED-END FUNDS -- 0.2%
75,000 Central Europe and Russia Fund
Inc. ........................... 1,095,842 2,302,500
70,000 New Germany Fund Inc. ............. 754,518 652,400
31,500 Royce Value Trust Inc. ............ 388,298 594,720
------------- -------------
2,238,658 3,549,620
------------- -------------
PAPER AND FOREST PRODUCTS -- 0.2%
120,000 Pactiv Corp.+ ..................... 1,259,210 2,589,600
------------- -------------
TRANSPORTATION -- 0.1%
100,000 AMR Corp.+ ........................ 1,924,248 1,211,000
15,000 Grupo TMM SA, Cl. A, ADR+ ......... 80,460 45,000
------------- -------------
2,004,708 1,256,000
------------- -------------
REAL ESTATE INVESTMENT TRUSTS -- 0.1%
10,000 Catellus Development Corp. ........ 216,006 328,000
16,656 Rayonier Inc. ..................... 798,811 883,268
------------- -------------
1,014,817 1,211,268
------------- -------------
TOTAL COMMON STOCKS ............... 1,181,721,712 1,498,604,449
------------- -------------
CONVERTIBLE PREFERRED STOCKS -- 0.3%
AEROSPACE -- 0.1%
13,500 Northrop Grumman Corp., 7.000%
Cv. Pfd., Ser. B ............... 1,573,020 1,687,500
------------- -------------
TELECOMMUNICATIONS -- 0.1%
26,000 Cincinnati Bell Inc., 6.750%
Cv. Pfd., Ser. B ............... 820,367 1,172,600
------------- -------------
BROADCASTING -- 0.1%
90 Gray Television Inc., 8.000%
Cv. Pfd., Ser. C(a)(c)(d) ...... 900,000 918,000
------------- -------------
AVIATION: PARTS AND SERVICES -- 0.0%
3,200 Sequa Corp., $5.00 Cv. Pfd. ....... 258,560 313,600
------------- -------------
TOTAL CONVERTIBLE
PREFERRED STOCKS ............... 3,551,947 4,091,700
------------- -------------
See accompanying notes to financial statements.
10
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT COST VALUE
----------- -------------- --------------
CONVERTIBLE CORPORATE BONDS -- 0.2%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.1%
$ 500,000 Pep Boys - Manny, Moe &
Jack, Cv., 4.250%,
06/01/07 ..................... $ 485,512 $ 485,000
1,000,000 Standard Motor Products Inc.,
Sub. Deb. Cv., 6.750%,
07/15/09 ..................... 954,730 950,000
-------------- --------------
1,440,242 1,435,000
-------------- --------------
AEROSPACE -- 0.1%
736,000 Kaman Corp., Sub. Deb. Cv.,
6.000%, 03/15/12 ............. 704,328 728,640
-------------- --------------
CABLE AND SATELLITE -- 0.0%
500,000 Charter Communications Inc.,
Cv., 4.750%, 06/01/06 ........ 405,326 500,000
-------------- --------------
TOTAL CONVERTIBLE CORPORATE
BONDS ........................ 2,549,896 2,663,640
-------------- --------------
SHORT-TERM OBLIGATIONS -- 6.4%
REPURCHASE AGREEMENTS -- 6.1%
98,676,000 ABN Amro, 2.650%, dated
06/30/05, due 07/01/05,
proceeds at maturity,
$98,683,264(b) ............... 98,676,000 98,676,000
-------------- --------------
U.S. GOVERNMENT OBLIGATIONS --
0.3%
5,000,000 U.S. Treasury Bill, 2.864%++,
08/18/05 ..................... 4,981,300 4,981,300
-------------- --------------
TOTAL INVESTMENTS -- 100.0% .................. $1,291,480,855 1,609,017,089
==============
LIABILITIES IN EXCESS OF OTHER ASSETS ......................... (2,317,818)
PREFERRED STOCK
(9,556,900 preferred shares outstanding) .................... (418,742,500)
-------------
NET ASSETS -- COMMON STOCK
(141,702,724 common shares outstanding) ..................... $1,187,956,771
==============
NET ASSET VALUE PER COMMON SHARE
($1,187,956,771 / 141,702,724 shares
outstanding) ................................................ $ 8.38
==============
----------
(a) Security fair valued under procedures established by the Board of
Directors. At June 30, 2005, the market value of fair valued securities
amounted to $961,000 or 0.06% of total investments.
(b) Collateralized by U.S. Treasury Bonds, 6.875%, 7.250%, 8.125% and 8.875%,
due 08/15/25, 08/15/22, 05/15/21 and 02/15/19, market values $38,230,620,
$904,740, $60,321,780 and $1,192,380, respectively.
(c) 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,
2005, the market value of Rule 144A securities amounted to $918,000 or
0.06% of total investments.
(d) At June 30, 2005, the Fund held investments in restricted and illiquid
securities that were valued under methods approved by the Board as
follows:
06/30/2005
ACQUISITION ACQUISITION ACQUISITION CARRYING VALUE
SHARES ISSUER DATE COST PER UNIT
----------- ------ ----------- ----------- --------------
90 Gray Television Inc.,
8.000% Cv. Pfd.,
Ser. C ............... 04/23/02 $ 900,000 $ 10,200.0000
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depository Receipt
BDR Brazilian Depository Receipt
CVO Contingent Value Obligation
CDI Chess Depositary Interest
% OF
MARKET MARKET
VALUE VALUE
------ ---------------
GEOGRAPHIC DIVERSIFICATION
United States ............................. 83.1% $ 1,336,607,763
Europe .................................... 13.7 220,918,846
Latin America ............................. 1.9 31,309,201
Japan ..................................... 0.9 15,055,488
Asia/Pacific .............................. 0.3 4,190,968
South Africa .............................. 0.1 934,824
------ ---------------
Total Investments ......................... 100.0% $ 1,609,017,089
====== ===============
See accompanying notes to financial statements.
11
THE GABELLI EQUITY TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2005 (UNAUDITED)
ASSETS:
Investments, at value (cost $1,291,480,855) ................ $ 1,609,017,089
Cash and foreign currency, at value (cost $259,605) ........ 243,622
Dividends and interest receivable .......................... 1,627,743
Receivable for investments sold ............................ 1,016,163
Other assets ............................................... 26,832
---------------
TOTAL ASSETS ............................................... 1,611,931,449
---------------
LIABILITIES:
Payable for investments purchased .......................... 1,913,344
Dividends payable .......................................... 236,241
Unrealized depreciation on swap contracts .................. 1,747,392
Payable for investment advisory fees ....................... 978,263
Payable for shareholder communication fees ................. 143,354
Other accrued expenses and liabilities ..................... 213,584
---------------
TOTAL LIABILITIES .......................................... 5,232,178
---------------
PREFERRED STOCK:
Series B Cumulative Preferred Stock (7.20%, $25
liquidation value, $0.001 par value, 6,600,000 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, 5,200
shares authorized with 5,200 shares issued and
outstanding) ............................................. 130,000,000
Series D Cumulative Preferred Stock (5.875%, $25 liquidation
value, $0.001 par value, 3,000,000 shares authorized with
2,949,700 shares issued and outstanding) ................. 73,742,500
Series E Cumulative Preferred Stock (Auction Rate, $25,000
liquidation value, $0.001 par value, 2,000 shares
authorized with 2,000 shares issued and outstanding) ..... 50,000,000
---------------
TOTAL PREFERRED STOCK ...................................... 418,742,500
---------------
NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS ....... $ 1,187,956,771
===============
NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS CONSIST
OF:
Capital stock, at par value ................................ $ 141,703
Additional paid-in capital ................................. 879,565,264
Accumulated net realized loss on investments, futures
contracts, swap contracts and foreign currency
transactions ............................................. (7,518,727)
Net unrealized appreciation on investments and swap
contracts ................................................ 315,788,842
Net unrealized depreciation on foreign currency
translations ............................................. (20,311)
---------------
NET ASSETS ................................................. $ 1,187,956,771
===============
NET ASSET VALUE PER COMMON SHARE:
($1,187,956,771 / 141,702,724 shares outstanding;
182,000,000 shares authorized of $0.001 par value)........ $ 8.38
===============
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign taxes of $468,374) ............... $ 16,097,086
Interest ................................................... 1,610,951
---------------
TOTAL INVESTMENT INCOME .................................... 17,708,037
---------------
EXPENSES:
Investment advisory fees ................................... 7,868,054
Shareholder communications expenses ........................ 511,930
Auction agent fees ......................................... 224,620
Custodian fees ............................................. 107,206
Payroll expenses ........................................... 88,594
Shareholder services fees .................................. 78,060
Directors' fees ............................................ 69,233
Legal and audit fees ....................................... 57,453
Miscellaneous expenses ..................................... 166,920
---------------
TOTAL EXPENSES ............................................. 9,172,070
---------------
LESS:
Advisory fee reduction ................................... (2,076,504)
Custodian fee credit ..................................... (2,211)
---------------
TOTAL REDUCTIONS AND CREDITS ............................. (2,078,715)
---------------
TOTAL NET EXPENSES ......................................... 7,093,355
---------------
NET INVESTMENT INCOME ...................................... 10,614,682
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS, SWAP CONTRACTS AND FOREIGN CURRENCY:
Net realized gain on investments ........................... 11,843,523
Net realized gain on futures contracts ..................... 1,073,387
Net realized loss on swap contracts ........................ (1,215,795)
Net realized loss on foreign currency transactions ......... (85,700)
---------------
Net realized gain on investments, futures contracts, swap
contracts and foreign currency transactions .............. 11,615,415
Net change in unrealized appreciation/depreciation on
investments, swap contracts and foreign currency
translations ............................................. (4,170,726)
---------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS, FUTURES
CONTRACTS, SWAP CONTRACTS AND FOREIGN CURRENCY ........... 7,444,689
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....... 18,059,371
Total Distributions to Preferred Stock Shareholders ........ (10,640,930)
---------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON STOCK
SHAREHOLDERS RESULTING FROM OPERATIONS ................... $ 7,418,441
===============
See accompanying notes to financial statements.
12
THE GABELLI EQUITY TRUST INC.
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
SIX MONTHS ENDED
JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
---------------- -----------------
OPERATIONS:
Net investment income ............................................................... $ 10,614,682 $ 7,154,873
Net realized gain on investments, futures contracts, foreign currency transactions
and swap contracts ............................................................... 11,615,415 123,877,687
Net change in unrealized appreciation/depreciation on investments, futures contracts,
swap contracts and foreign currency translations ................................. (4,170,726) 97,428,111
---------------- -----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................ 18,059,371 228,460,671
---------------- -----------------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income ............................................................... (5,476,770)* (200,307)
Net realized short term gains on investments, futures contracts and
foreign currency transactions .................................................... --* (1,205,026)
Net realized long term gains on investments, futures contracts and
foreign currency transactions .................................................... (5,164,160)* (17,540,730)
---------------- -----------------
TOTAL DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS ................................. (10,640,930) (18,946,063)
---------------- -----------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS
RESULTING FROM OPERATIONS ........................................................ 7,418,441 209,514,608
---------------- -----------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income ............................................................... (6,841,781)* (1,170,403)
Net realized short term gains on investments, futures contracts
and foreign currency transactions ................................................ --* (7,041,045)
Net realized long term gains on investments, futures contracts
and foreign currency transactions ................................................ (6,451,255)* (102,491,569)
Return of capital ................................................................... (37,349,102)* --
---------------- -----------------
TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS .................................... (50,642,138) (110,703,017)
---------------- -----------------
TRUST SHARE TRANSACTIONS:
Net increase in net assets from common shares issued upon reinvestment
of dividends and distributions ................................................... 11,697,789 25,998,112
Net increase in net assets from repurchase of preferred shares ...................... -- 72,307
Offering costs for preferred shares charged to paid-in capital ...................... -- 75,457
---------------- -----------------
NET INCREASE IN NET ASSETS FROM TRUST SHARE TRANSACTIONS ............................ 11,697,789 26,145,876
---------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS ..... (31,525,908) 124,957,467
NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS:
Beginning of period ................................................................. 1,219,482,679 1,094,525,212
---------------- -----------------
End of period (including undistributed net investment income of
$0 and $1,703,869, respectively) ................................................. $ 1,187,956,771 $ 1,219,482,679
================ =================
----------
* Amounts are subject to change and recharacterization at fiscal year end.
See accompanying notes to financial statements.
13
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION. The Gabelli Equity Trust Inc. (the "Equity Trust") is a
non-diversified closed-end management investment company organized as a Maryland
corporation on May 20, 1986 and registered under the Investment Company Act of
1940, as amended (the "1940 Act"), whose primary objective is long term growth
of capital. Investment operations commenced on August 21, 1986.
The Equity Trust will invest at least 80% of its assets in equity
securities under normal market conditions (the "80% Policy"). The 80% Policy may
be changed without shareholder approval. The Equity Trust will provide
shareholders with notice at least 60 days prior to the implementation of any
change in the 80% Policy.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with U.S. 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 (the "Board") so determines, by such other method as the
Board shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on foreign markets are generally
valued at the preceding closing values of such securities on their respective
exchanges or if after the close of the foreign markets, but prior to the close
of business on the day the securities are being valued, market conditions change
significantly, certain foreign securities may be fair valued pursuant to
procedures established by the Board. Debt instruments that are not credit
impaired with remaining maturities of 60 days or less are valued at amortized
cost, unless the Board determines such amount does not reflect the securities'
fair value, in which case these securities will be valued at their fair value as
determined by the Board. 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. Futures contracts
are valued at the closing settlement price of the exchange or board of trade on
which the applicable contract is traded.
Securities and assets for which market quotations are not readily
available are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Board. Fair
valuation methodologies and procedures may include, but are not limited to:
analysis and review of available financial and non-financial information about
the company; comparisons to the valuation and changes in valuation of similar
securities, including a comparison of foreign securities to the equivalent U.S.
dollar value ADR securities at the close of the U.S. exchange; and evaluation of
any other information that could be indicative of the value of the security.
REPURCHASE AGREEMENTS. The Equity Trust may enter into repurchase
agreements with primary government securities dealers recognized by the Federal
Reserve Board, 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. Under the terms of a typical
14
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS(CONTINUED)(UNAUDITED)
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 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 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. If there is a default by the counterparty to
a swap contract, the Equity Trust will be limited to contractual remedies
pursuant to the agreements related to the transaction. There is no assurance
that the swap contract counterparties will be able to meet their obligations
pursuant to the swap contracts or that, in the event of default, the Equity
Trust will succeed in pursuing contractual remedies. The Equity Trust thus
assumes the risk that it may be delayed in or prevented from obtaining payments
owed to it pursuant to the swap contracts. The creditworthiness of the swap
contract counterparties is closely monitored in order to minimize this risk.
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 use of derivative instruments involves, to varying degrees, elements
of market risk in excess of the amount recognized in the Statement of Assets and
Liabilities.
Unrealized gains related to swaps are reported as an asset and unrealized
losses are reported as a liability on the Statement of Assets and Liabilities.
The change in value of swaps, including the accrual of periodic amounts of
interest to be paid or received on swaps is reported as unrealized gains or
losses in the Statement of Operations. A realized gain or loss is recorded upon
payment or receipt of a periodic payment or termination of swap agreements. Swap
agreements involve, to varying degrees, elements of market and counterparty
risk, and exposure to loss in excess of the related amounts reflected in the
Statement of Assets and Liabilities.
15
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
The Equity Trust has entered into one interest rate swap agreement with
Citibank N.A. Under the agreement the Equity Trust receives a variable 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, 2005 are as follows:
NOTIONAL VARIABLE RATE* TERMINATION UNREALIZED
AMOUNT FIXED RATE (RATE RESET MONTHLY) DATE DEPRECIATION
------------ ---------- ------------------- ------------ ------------
$130,000,000 4.494% 3.11125% July 2, 2007 $(1,747,392)
----------
*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. At June 30, 2005, there were no open futures contracts.
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. These contracts may involve market
risk in excess of the unrealized gain or loss reflected in the Statement of
Assets and Liabilities. 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.
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 translations. 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 that might result should the value of the currency increase. These
contracts may involve market risk in excess of the unrealized gain or loss
reflected in the Statement of Assets and Liabilities. 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. At June 30, 2005, there were no
open forward foreign exchange contracts.
FOREIGN CURRENCY TRANSLATIONS. 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
16
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
appreciation/depreciation on investments and foreign currency translations. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include foreign currency gains and losses between trade 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.
FOREIGN SECURITIES. The Equity Trust may directly purchase securities of
foreign issuers. Investing in securities of foreign issuers involves special
risks not typically associated with investing in securities of U.S. issuers. The
risks include possible revaluation of currencies, the ability to repatriate
funds, less complete financial information about companies and possible future
adverse political and economic developments. Moreover, securities of many
foreign issuers and their markets may be less liquid and their prices more
volatile than those of securities of comparable U.S. issuers.
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 common
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from that determined under U.S. generally accepted
accounting principles. 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 characterizations of
distributions made by the Equity Trust.
Distributions to shareholders of the Equity Trust's 7.20% Series B
Cumulative Preferred Stock, Series C Auction Rate Cumulative Preferred Stock,
5.875% Series D Cumulative Preferred Stock, and Series E Auction Rate Cumulative
Preferred Stock ("Cumulative Preferred Stock") are recorded on a daily basis and
are determined as described in Note 5.
For the year ended December 31, 2004, reclassifications were made to
decrease accumulated net investment income by $3,816,593 and decrease
accumulated net realized loss on investments, futures contracts, swap contracts
and foreign currency transactions by $3,816,593.
The tax character of distributions paid during the year ended December 31,
2004 was as follows:
YEAR ENDED
DECEMBER 31, 2004
-----------------------------
COMMON PREFERRED
------------- -------------
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short term capital gains).... $ 8,211,448 $ 1,405,333
Net long term capital gains................... 102,491,569 17,540,730
------------- -------------
Total distributions paid...................... $ 110,703,017 $ 18,946,063
============= =============
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 (the "Code"). It is the Equity Trust's policy
to comply with the requirements of the Code applicable to regulated investment
companies and to distribute substantially all of its net investment company
taxable income and net capital gains. Therefore, no provision for Federal income
taxes is required.
17
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
As of December 31, 2004, the components of accumulated earnings/(losses)
on a tax basis were as follows:
Net unrealized appreciation on investments ........ $ 316,119,790
Net unrealized depreciation on foreign currency
and swap contracts ............................. (3,456,909)
Distributions payable ............................. (257,141)
Undistributed ordinary income ..................... 1,718,659
-------------
Total ............................................. $ 314,124,399
=============
The following summarizes the tax cost of investments, swap contracts,
foreign currency and related unrealized appreciation/depreciation at June 30,
2005:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
---- ------------- ------------- --------------
Investments .......... $ 1,298,989,082 $ 388,835,032 $ (78,807,025) $ 310,028,007
Swap contracts ....... -- -- (1,747,392) (1,747,392)
Foreign currency ..... 258,029 -- (20,311) (20,311)
------------- ------------- --------------
$ 388,835,032 $ (80,574,728) $ 308,260,304
============= ============= ==============
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 including the liquidation value
of preferred stock. In accordance with the Advisory Agreement, the Adviser
provides a continuous investment program 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 net swap expense of the Cumulative Preferred Stock for the
fiscal year.
The Equity Trust's total return on the net asset value of the common
shares is monitored on a monthly basis to assess whether the total return on the
net asset value of the common shares exceeds the stated dividend rate or
corresponding swap rate of each particular series of Cumulative Preferred Stock
for the period. For the six months ended June 30, 2005, the Equity Trust's total
return on the net asset value of the common shares did not exceed the stated
dividend rate or net swap expense of all outstanding preferred stock. Thus,
management fees with respect to the liquidation value of the preferred stock
assets in the amount of $2,076,504 were not accrued.
During the six months ended June 30, 2005, Gabelli & Company, Inc.,
("Gabelli & Company") an affiliate of the Adviser, received $94,647 in brokerage
commissions as a result of executing agency transactions in portfolio securities
on behalf of the Equity Trust.
The cost of calculating the Equity Trust's net asset value per share is an
Equity Trust expense pursuant to the Advisory Agreement. During the six months
ended June 30, 2005, the Equity Trust reimbursed the Adviser $22,500 in
connection with the cost of computing the Equity Trust's net asset value, which
is included in miscellaneous expenses in the Statement of Operations.
The Equity Trust is assuming its portion of the allocated cost of the
Gabelli Funds' Chief Compliance Officer in the amount of $13,938 for the six
months ended June 30, 2005, which is included in payroll expenses in the
Statement of Operations.
4. PORTFOLIO SECURITIES. Cost of purchases and proceeds from the sales of
securities, other than short term securities, for the six months ended June 30,
2005 aggregated $52,897,885 and $57,973,563, respectively.
18
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
5. CAPITAL. The charter permits the Equity Trust to issue 182,000,000 shares of
common stock (par value $0.001). The Board 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 may determine
from time to time) from the net asset value of the shares. During the six months
ended June 30, 2005, 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, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
------------------------ ------------------------
Shares Amount Shares Amount
--------- ------------ --------- ------------
Shares issued upon reinvestment
of dividends and distributions ... 1,369,760 $ 11,697,789 3,143,080 $ 25,998,112
--------- ------------ --------- ------------
Net increase ........................ 1,369,760 $ 11,697,789 3,143,080 $ 25,998,112
========= ============ ========= ============
The Equity Trust's Articles of Incorporation, as amended, authorize the
issuance of up to 18,000,000 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. The Equity Trust is
required by the 1940 Act and by the Articles Supplementary to meet certain asset
coverage tests 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,
Series C Auction Rate, 5.875% Series D, and Series E Auction Rate Cumulative
Preferred Stock at redemption prices of $25, $25,000, $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 preferred dividend rates, which could have
either a beneficial or detrimental impact on net investment income and gains
available to common shareholders.
On June 17, 2003, the Equity Trust, as authorized by the Board, redeemed
all (5,367,900 shares) of its outstanding 7.25% Series A Cumulative Preferred
Stock, at the redemption price of $25.00 per Preferred Share (the "liquidation
value"), plus accumulated and unpaid dividends through the redemption date of
$0.4078 per Preferred Share. The Preferred Shares were callable at any time at
the liquidation value 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 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 at any time. During the six months ended June
30, 2005, the Equity Trust did not repurchase any shares of 7.20% Series B
Cumulative Preferred Stock. At June 30, 2005, 6,600,000 shares of the 7.20%
Series B Cumulative Preferred Stock were outstanding and accrued dividends
amounted to $132,000.
On June 27, 2002, the Equity Trust received net proceeds of $128,246,557
(after underwriting discounts of $1,300,000 and offering expenses of $453,443)
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.
The dividend rates of Series C Auction Rate Cumulative Preferred Stock ranged
from 2.15% to 3.38%
19
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
for the six months ended June 30, 2005. 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, 2005, the Equity Trust
did not redeem any shares of Series C Auction Rate Cumulative Preferred Stock.
At June 30, 2005, 5,200 shares of the Series C Auction Rate Cumulative Preferred
Stock were outstanding with an annualized dividend rate of 3.38% per share and
accrued dividends amounted to $24,411.
On October 7, 2003, the Equity Trust received net proceeds of $72,387,500
(after underwriting discounts of $2,362,500 and offering expenses of $264,522)
from the public offering of 3,000,000 shares of 5.875% Series D Cumulative
Preferred Stock. Commencing October 7, 2008 and thereafter, the Equity Trust, at
its option, may redeem the 5.875% Series D Cumulative Preferred Stock in whole
or in part at the redemption price at any time. During the six months ended June
30, 2005, the Equity Trust did not repurchase any shares of 5.875% Series D
Cumulative Preferred Stock. At June 30, 2005, 2,949,700 shares of the 5.875%
Series D Cumulative Preferred Stock were outstanding and accrued dividends
amounted to $48,137.
On October 7, 2003, the Equity Trust received net proceeds of $49,260,000
(after underwriting discounts of $500,000 and offering expenses of $149,991)
from the public offering of 2,000 shares of Series E 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.
The dividend rates of Series E Auction Rate Cumulative Preferred Stock ranged
from 2.20% to 3.36% for the six months ended June 30, 2005. Existing
shareholders may submit an order to hold, bid or sell such shares on each
auction date. Series E Auction Rate Cumulative Preferred Stock shareholders may
also trade shares in the secondary market. The Equity Trust, at its option, may
redeem the Series E Auction Rate Cumulative Preferred Stock in whole or in part
at the redemption price at any time. During the six months ended June 30, 2005,
the Equity Trust did not redeem any shares of Series E Auction Rate Cumulative
Preferred Stock. At June 30, 2005, 2,000 shares of the Series E Auction Rate
Cumulative Preferred Stock were outstanding with an annualized dividend rate of
3.15% and accrued dividends amounted to $30,625.
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 Equity Trust's subclassification
as a closed-end investment company or changes in its fundamental investment
restrictions.
The Board has approved the acquisition of substantially all of the net
assets from Sterling Capital Corporation, a closed-end investment company, with
the issuance of common stock of the Equity Trust. The acquisition is subject to
approval by the shareholders of Sterling Capital Corporation.
6. OTHER MATTERS. The Adviser and/or affiliates have received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund shares trading practices. Gabelli Asset Management Inc., the
Adviser's parent company, is responding to these requests for documents and
testimony. The Equity Trust does not believe that these matters will have a
material adverse effect on the Equity Trust's financial position or the results
of its operations.
7. INDEMNIFICATIONS. The Equity Trust enters into contracts that contain a
variety of indemnifications. The Equity Trust's maximum exposure under these
arrangements is unknown. However, the Equity Trust has not had prior claims or
losses pursuant to these contracts and expects the risk of loss to be remote.
20
THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2005 --------------------------------------------------------------------
(UNAUDITED)(a)(b) 2004(a)(b) 2003(a)(b) 2002(a)(b) 2001(a) 2000(a)
----------------- ---------- ---------- ---------- ---------- ----------
OPERATING PERFORMANCE:
Net asset value, beginning of
period .......................... $ 8.69 $ 7.98 $ 6.28 $ 8.97 $ 10.89 $ 12.75
---------- ---------- ---------- ---------- ---------- ----------
Net investment income (loss) ....... 0.08 0.02 0.04 0.07 0.08 0.05
Net realized and unrealized gain
(loss) on investments ........... 0.05 1.63 2.50 (1.65) (0.16) (0.51)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations ... 0.13 1.65 2.54 (1.58) (0.08) (0.46)
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS TO PREFERRED STOCK
SHAREHOLDERS:
Net investment income .............. (0.04)(h) (0.00)(c) (0.00)(c) (0.01) (0.01) (0.00)(c)
Net realized gain on investments ... (0.04)(h) (0.14) (0.14) (0.16) (0.11) (0.09)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions to preferred
stock shareholders .............. (0.08) (0.14) (0.14) (0.17) (0.12) (0.09)
---------- ---------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS ATTRIBUTABLE TO COMMON
STOCK SHAREHOLDERS RESULTING
FROM OPERATIONS .................... 0.05 1.51 2.40 (1.75) (0.20) (0.55)
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS TO COMMON STOCK
SHAREHOLDERS:
Net investment income .............. (0.05)(h) (0.01) (0.01) (0.05) (0.06) (0.04)
Net realized gain on investments ... (0.04)(h) (0.79) (0.68) (0.90) (1.02) (1.27)
Return of capital .................. (0.27)(h) -- (0.00)(c) (0.00)(c) -- --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions to common
stock shareholders .............. (0.36) (0.80) (0.69) (0.95) (1.08) (1.31)
---------- ---------- ---------- ---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Increase in net asset value
from common stock share
transactions .................... 0.00(c) 0.00(c) 0.01 0.02 0.03 --
Decrease in net asset value from
shares issued in rights
offering ........................ -- -- -- -- (0.62) --
Increase in net asset value from
repurchase of preferred shares .. -- 0.00(c) -- -- -- --
Offering costs for preferred
shares charged to paid-in
capital ......................... -- 0.00(c) (0.02) (0.01) (0.05) --
---------- ---------- ---------- ---------- ---------- ----------
Total capital share transactions ... 0.00(c) 0.00(c) (0.01) 0.01 (0.64) --
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE ATTRIBUTABLE TO
COMMON STOCK SHAREHOLDERS,
END OF PERIOD ...................... $ 8.38 $ 8.69 $ 7.98 $ 6.28 $ 8.97 $ 10.89
========== ========== ========== ========== ========== ==========
Net Asset Value Total Return + ..... 0.57% 19.81% 39.90% (21.00)% (3.68)% (4.39)%
========== ========== ========== ========== ========== ==========
Market Value, End of Period ........ $ 8.98 $ 9.02 $ 8.00 $ 6.85 $ 10.79 $ 11.44
========== ========== ========== ========== ========== ==========
Total Investment Return ++ ......... 3.80% 24.04% 28.58% (28.36)% 10.32% 1.91%
========== ========== ========== ========== ========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets including liquidation
value of preferred shares,
end of period (in 000's) ........ $1,606,699 $1,638,225 $1,514,525 $1,271,600 $1,465,369 $1,318,263
Net assets attributable to common
shares, end of period
(in 000's) ...................... $1,187,957 $1,219,483 $1,094,525 $ 842,403 $1,166,171 $1,184,041
Ratio of net investment
income to average net assets
attributable to common shares ... 1.80%(g) 0.64% 0.67% 0.99% 0.81% 0.42%
Ratio of operating expenses to
average net assets attributable
to common shares before fee
reduction ....................... 1.56%(g) 1.95% 1.62% 1.20% 1.13% 1.14%
Ratio of operating expenses to
average net assets attributable
to common shares net of fee
reduction(b)(e) ................. 1.20%(g) 1.57% 1.62% 1.19% 1.12% 1.14%
Ratio of operating expenses to
average net assets including
liquidation value of preferred
shares before fee reduction ..... 1.15%(g) 1.41% 1.14% 0.88% 0.96% 1.03%
Ratio of operating expenses to
average net assets including
liquidation value of preferred
shares net of fee reduction
(b)(e) .......................... 0.89%(g) 1.14% 1.14% 0.87% 0.95% 1.03%
Portfolio turnover rate ............ 3.5% 28.6% 19.2% 27.1% 23.9% 32.1%
See accompanying notes to financial statements.
21
THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2005 --------------------------------------------------------------
(UNAUDITED)(a)(b) 2004(a)(b) 2003(a)(b) 2002(a)(b) 2001(a) 2000(a)
----------------- ---------- ---------- ---------- --------- ---------
PREFERRED STOCK:
7.25% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period
(in 000's) .............................. -- -- -- $ 134,198 $ 134,198 $ 134,223
Total shares outstanding (in 000's) ........ -- -- 5,368 5,368 5,369
Liquidation preference per share ........... -- -- -- $ 25.00 $ 25.00 $ 25.00
Average market value(d) .................... -- -- -- $ 25.75 $ 25.39 $ 22.62
Asset coverage per share ................... -- -- -- $ 74.07 $ 122.44 $ 245.54
7.20% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period
(in 000's) .............................. $ 165,000 $ 165,000 $ 165,000 $ 165,000 $ 165,000 --
Total shares outstanding (in 000's) ........ 6,600 6,600 6,600 6,600 6,600 --
Liquidation preference per share ........... $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 --
Average market value(d) .................... $ 26.17 $ 26.57 $ 27.06 $ 26.40 $ 25.60 --
Asset coverage per share ................... $ 95.92 $ 97.81 $ 90.15 $ 74.07 $ 122.44 --
AUCTION RATE SERIES C CUMULATIVE
PREFERRED STOCK
Liquidation value, end of period
(in 000's) .............................. $ 130,000 $ 130,000 $ 130,000 $ 130,000 -- --
Total shares outstanding (in 000's) ........ 5 5 5 5 -- --
Liquidation preference per share ........... $ 25,000 $ 25,000 $ 25,000 $ 25,000 -- --
Average market value(d) .................... $ 25,000 $ 25,000 $ 25,000 $ 25,000 -- --
Asset coverage per share ................... $ 95,924 $ 97,806 $ 90,150 $ 74,068 -- --
5.875% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period
(in 000's) .............................. $ 73,743 $ 73,743 $ 75,000 -- -- --
Total shares outstanding (in 000's) ........ 2,950 2,950 3,000 -- -- --
Liquidation preference per share ........... $ 25.00 $ 25.00 $ 25.00 -- -- --
Average market value(d) .................... $ 24.80 $ 24.81 $ 25.10 -- -- --
Asset coverage per share ................... $ 95.92 $ 97.81 $ 90.15 -- -- --
AUCTION RATE SERIES E CUMULATIVE
PREFERRED STOCK
Liquidation value, end of period
(in 000's) .............................. $ 50,000 $ 50,000 $ 50,000 -- -- --
Total shares outstanding (in 000's) ........ 2 2 2 -- -- --
Liquidation preference per share ........... $ 25,000 $ 25,000 $ 25,000 -- -- --
Average market value(d) .................... $ 25,000 $ 25,000 $ 25,000 -- -- --
Asset coverage per share ................... $ 95,924 $ 97,806 $ 90,150 -- -- --
ASSET COVERAGE(f) .......................... 384% 391% 361% 296% 490% 982%
----------
+ Based on net asset value per share, adjusted for reinvestment of
distributions at net asset value on the ex-dividend date, 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 on the payment date, 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) See Note 2 to Financial Statements (Swap Agreements).
(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 year ended December 31, 2001, the ratio of
operating expenses to average net assets attributable to common shares net
of fee reduction would be 1.11%, and the ratio of operating expenses to
average total net assets including liquidation value of preferred shares
net of fee reduction would be 0.94%. For the six months ended June 30,
2005 and the years ended December 31, 2004, 2003, 2002 and 2000, the
effect of the custodian fee credits was minimal.
(f) Asset coverage is calculated by combining all series of preferred stock.
(g) Annualized.
(h) Amounts are subject to change and recharacterization at fiscal year end.
See accompanying notes to financial statements.
22
THE GABELLI EQUITY TRUST INC.
BOARD CONSIDERATION AND RE-APPROVAL OF MANAGEMENT AGREEMENT
Section 15(c) of the Investment Company Act of 1940, as amended (the "1940
Act"), contemplates that the Board of Directors (the "Board") of The Gabelli
Equity Trust Inc. (the "Fund"), including a majority of the Directors who have
no direct or indirect interest in the investment advisory agreement and are not
"interested persons" of the Fund, as defined in the 1940 Act (the "Independent
Directors"), are required to annually review and re-approve the terms of the
Fund's existing investment advisory agreement and approve any newly proposed
terms therein. In this regard, the Board reviewed and re-approved, during the
most recent six month period covered by this report, the Management Agreement
(the "Management Agreement") with Gabelli Funds, LLC (the "Adviser") for the
Fund.
More specifically, at a meeting held on May 18, 2005, the Board, including the
Independent Directors, considered the factors and reached the conclusions
described below relating to the selection of the Adviser and the re-approval of
the Management Agreement.
NATURE, EXTENT AND QUALITY OF SERVICES. The Board received and considered
various data and information regarding the nature, extent and quality of
administrative and shareholder services provided to the Fund by the Adviser
under the Management Agreement, including portfolio management, supervision of
Fund operations and compliance and regulatory filings and disclosures to
shareholders, general oversight of other service providers, review of Fund legal
issues, assisting the Independent Directors in their capacity as Directors and
other services. Specifically, the Board received and considered information
regarding the size, education and experience of the Adviser's staff, the
Adviser's fundamental research capabilities and the Adviser's approach to
recruiting, training and retaining portfolio managers and other research and
management personnel.
Based on the above factors, together with those referenced below, the Board
concluded that the services were extensive in nature and that the Adviser
consistently delivered a high level of service.
FUND PERFORMANCE. The Board reviewed and considered information as to short-term
and long-term investment performance for the Fund over various periods of time
as compared to the performance of the Fund's Lipper, Inc. peer group. The Board
concluded that the Adviser was delivering satisfactory performance results
consistent with the investment strategies being pursued by the Fund.
FUND FEES AND EXPENSES. The Board reviewed and considered the Fund's contractual
management fee rate and expense ratio relative to industry averages for the
Fund's peer group category and the advisory fees charged by the Adviser and its
affiliates to other fund and non-fund clients. The Board noted that the services
provided under the Management Agreement were much more extensive than those
under the advisory agreements for non-fund clients. The Board recognized that
the contractual management fee of the Fund was marginally lower than average for
its peer group and concluded that the fee was acceptable based upon the
qualifications, experience, reputation and performance of the Adviser and the
fact that the Fund's overall expense ratio is approximately the same as its peer
group.
PROFITABILITY. The Board received and considered information regarding the
Adviser's overall profitability and costs and an estimated analysis of the
Adviser's profitability attributable to the Fund. The Board concluded that the
Adviser's profitability was at an acceptable level.
23
ECONOMIES OF SCALE. The Board received and considered information regarding
whether there have been economies of scale with respect to the management of the
Fund and whether the Fund has appropriately benefited from any economies of
scale. The Board noted that economies of scale may develop for certain funds as
their assets increase and their fund-level expenses decline as a percentage of
assets, but that fund-level economies of scale may not necessarily result in
Adviser-level economies of scale. The Board was aware that the Adviser waives
fees attributable to the liquidation value of the preferred shares if the total
return of the common shares does not exceed a specified amount, and concluded
that there was an appropriate sharing of economies of scale.
The Board also considered whether the management fee rate is reasonable in
relation to the asset size of the Fund and any economies of scale that may
exist, and concluded that it currently was reasonable.
OTHER BENEFITS TO THE ADVISER. The Board also received and considered
information regarding the character and amount of other incidental benefits
received by the Adviser and its affiliates from its association with the Fund.
The Board considered the brokerage commissions paid to an affiliate of the
Adviser. The Board concluded that potential "fall-out" benefits that the Adviser
and its affiliates may receive, such as affiliated brokerage commissions,
greater name recognition or increased ability to obtain research services,
appear to be reasonable.
CONCLUSIONS. As discussed above, the Board reviewed detailed materials received
from the Adviser as part of the re-approval process under Section 15(c) of the
1940 Act. The Board also regularly reviews and assesses the quality of the
services that the Fund receives throughout the year. In this regard, the Board
reviews reports of the Adviser at least in each of its regular meetings, which
include, among other things, Fund performance reports.
As a part of its decision-making process, the Board noted that the Adviser has
managed the Fund since its inception, and the Board believed that a long-term
relationship with a capable, conscientious adviser is in the best interests of
the Fund. The Board considered, generally, that shareholders invested in the
Fund knowing that the Adviser managed the Fund and knowing its investment
management fee schedule. As such, the Board considered, in particular, whether
the Adviser managed the Fund in accordance with its investment objectives and
policies as disclosed to shareholders. The Board concluded that the Fund was
managed by the Adviser consistent with its investment objectives and policies.
In considering the Management Agreement, the Board did not identify any factor
as all-important or all-controlling and instead considered these factors
collectively in light of the Fund's surrounding circumstances. Based on this
review, it was the Board's judgment that shareholders had consistently received
satisfactory absolute and relative performance at reasonable fees. After
considering the above-described factors and based on the deliberations and its
evaluation of the information provided to it, the Board concluded that
re-approval of the Management Agreement was in the best interests of the Fund
and its shareholders. Accordingly, the Board unanimously re-approved the
Management Agreement.
24
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLANS
ENROLLMENT IN THE PLAN
It is the policy of The Gabelli Equity Trust Inc. ("Equity Trust") to
automatically reinvest dividends payable to common shareholders. 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 43010
Providence, RI 02940-3010
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 (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 such 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 NYSE
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 NYSE 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.
25
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 and participate in the Dividend Reinvestment
Plan.
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 43010, Providence, RI
02940-3010 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 until the next purchase date. 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.
26
[GRAPHIC]
DIRECTORS AND OFFICERS
THE GABELLI EQUITY TRUST INC.
ONE CORPORATE CENTER, RYE, NY 10580-1422
DIRECTORS
Mario J. Gabelli, CFA
CHAIRMAN & CHIEF EXECUTIVE 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 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 AND TREASURER
Carter W. Austin
VICE PRESIDENT
Dawn M. Donato
ASSISTANT VICE PRESIDENT
Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
James E. McKee
SECRETARY
INVESTMENT ADVISER
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
CUSTODIAN
Mellon Trust of New England, N.A.
COUNSEL
Willkie Farr & Gallagher LLP
TRANSFER AGENT AND REGISTRAR
EquiServe Trust Company
STOCK EXCHANGE LISTING
7.20% 5.875%
Common Preferred Preferred
----------- --------- ---------
NYSE-Symbol: GAB GAB PrB GAB PrD
Shares Outstanding: 141,702,724 6,600,000 2,949,700
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, 2005
GAB-SA-Q2/05
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. SCHEDULE OF INVESTMENTS
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
=============================================================================================================================
(C) TOTAL NUMBER OF (D) MAXIMUM NUMBER (OR
SHARES (OR UNITS) APPROXIMATE DOLLAR VALUE) OF
(A) TOTAL NUMBER OF PURCHASED AS PART OF SHARES (OR UNITS) THAT MAY
SHARES (OR UNITS) (B) AVERAGE PRICE PAID PUBLICLY ANNOUNCED YET BE PURCHASED UNDER THE
PERIOD PURCHASED PER SHARE (OR UNIT) PLANS OR PROGRAMS PLANS OR PROGRAMS
=============================================================================================================================
Month #1 Common - N/A Common - N/A Common - N/A Common - 140,332,964
01/01/05
through Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - 6,600,000
01/31/05
Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
=============================================================================================================================
Month #2 Common - N/A Common - N/A Common - N/A Common - 140,332,964
02/01/05
through Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - 6,600,000
02/28/05
Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
=============================================================================================================================
Month #3 Common - N/A Common - N/A Common - N/A Common - 141,012,252
03/01/05
through Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - 6,600,000
03/31/05
Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
=============================================================================================================================
Month #4 Common - N/A Common - N/A Common - N/A Common - 141,012,252
04/01/05
through Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - 6,600,000
04/30/05
Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
=============================================================================================================================
Month #5 Common - N/A Common - N/A Common - N/A Common - 141,012,252
05/01/05
through Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - 6,600,000
05/31/05
Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
=============================================================================================================================
Month #6 Common - N/A Common - N/A Common - N/A Common - 141,702,724
06/01/05
through Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - 6,600,000
06/30/05
Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
=============================================================================================================================
Total Common - N/A Common - N/A Common - N/A N/A
Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - N/A
Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A
=============================================================================================================================
Footnote columns (c) and (d) of the table, by disclosing the following
information in the aggregate for all plans or programs publicly announced:
a. The date each plan or program was announced - The notice of the potential
repurchase of common and preferred shares occurs quarterly in the Fund's
quarterly report in accordance with Section 23(c) of the Investment Company
Act of 1940, as amended.
b. The dollar amount (or share or unit amount) approved - Any or all common
shares outstanding may be repurchased when the Fund's common shares are
trading at a discount of 10% or more from the net asset value of the
shares.
Any or all preferred shares outstanding may be repurchased when the Fund's
preferred shares are trading at a discount to the liquidation value of
$25.00.
c. The expiration date (if any) of each plan or program - The Fund's
repurchase plans are ongoing.
d. Each plan or program that has expired during the period covered by the
table - The Fund's repurchase plans are ongoing.
e. Each plan or program the registrant has determined to terminate prior to
expiration, or under which the registrant does not intend to make further
purchases. - The Fund's repurchase plans are ongoing.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act
and Section 906 of the Sarbanes-Oxley Act of 2002 are attached
hereto.
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 September 7, 2005
----------------------------------------------------------------------------
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 &
Principal Financial Officer
Date September 7, 2005
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.