Gabelli Equity Trust Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number           811-04700                

                         The Gabelli Equity Trust Inc.                        

(Exact name of registrant as specified in charter)

One Corporate Center

                             Rye, New York 10580-1422                    

(Address of principal executive offices) (Zip code)

Bruce N. Alpert

Gabelli Funds, LLC

One Corporate Center

                             Rye, New York 10580-1422                            

(Name and address of agent for service)

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

Date of fiscal year end:  December 31

Date of reporting period:  December 31, 2016

 

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. § 3507.


Item 1. Reports to Stockholders.

The Report to Shareholders is attached herewith.


The Gabelli Equity Trust Inc.

Annual Report — December 31, 2016

(Y)our Portfolio Management Team

 

LOGO   LOGO   LOGO   LOGO   LOGO

Mario J. Gabelli, CFA

Chief Investment Officer

 

Christopher J. Marangi

Co-Chief Investment Officer

BA, Williams College

MBA, Columbia

Business School

 

Kevin V. Dreyer

Co-Chief Investment Officer

BSE, University of

Pennsylvania

MBA, Columbia

Business School

 

Robert D. Leininger, CFA

Portfolio Manager

BA, Amherst College

MBA, Wharton School,

University of Pennsylvania

 

Daniel M. Miller

Managing Director,

GAMCO Investors

BS, University of Miami

To Our Shareholders,

For the year ended December 31, 2016, the net asset value (“NAV”) total return of The Gabelli Equity Trust Inc. (the “Fund”) was 13.7%, compared with total returns of 12.0% and 16.4% for the Standard & Poor’s (“S&P”) 500 Index and the Dow Jones Industrial Average, respectively. The total return for the Fund’s publicly traded shares was 15.7%. The Fund’s NAV per share was $5.84, while the price of the publicly traded shares closed at $5.52 on the New York Stock Exchange (“NYSE”). See below for additional performance information.

Enclosed are the financial statements, including the schedule of investments, as of December 31, 2016.

Comparative Results

 

Average Annual Returns through December 31, 2016 (a) (Unaudited)

 
     1 Year       5 Year      10 Year      15 Year      20 Year      25 Year      Since
Inception
(08/21/86)
 

Gabelli Equity Trust

                    

NAV Total Return (b)

     13.66%        13.40%        6.96%        8.87%        9.55%        10.20%        10.63%   

Investment Total Return (c)

     15.71           13.37           6.47           7.06           9.34           10.07           10.18      

S&P 500 Index

     11.96           14.66           6.95           6.69           7.68           9.45           9.93(d)  

Dow Jones Industrial Average

     16.37           12.86           7.48           7.26           8.21           10.18           10.87(d)  

Nasdaq Composite Index

     8.92           17.16           9.58           8.13           8.33           9.27           9.44(e)  
(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 carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The Dow Jones Industrial Average is an unmanaged index of 30 large capitalization stocks. The S&P 500 and the Nasdaq Composite Indices are unmanaged indicators of stock market performance. Dividends are considered reinvested except for the Nasdaq Composite Index. You cannot invest directly in an index.

(b)  

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

(c)  

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

(d)  

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

(e)  

From September 30, 1986, the date closest to the Fund’s inception for which data is available.

 


Summary of Portfolio Holdings (Unaudited)

The following table presents portfolio holdings as a percent of total investments as of December 31, 2016:

The Gabelli Equity Trust Inc.

Food and Beverage

     11.3

Financial Services

     9.4

Entertainment

     6.8

Equipment and Supplies

     5.6

Diversified Industrial

     5.0

Health Care

     4.6

Automotive: Parts and Accessories

     4.4

Energy and Utilities

     4.3

Consumer Products

     4.0

Consumer Services

     3.9

Telecommunications

     3.5

Cable and Satellite

     3.3

Retail

     3.3

U.S. Government Obligations

     3.3

Business Services

     3.0

Electronics

     2.4

Broadcasting

     2.4

Specialty Chemicals

     2.3

Machinery

     2.3

Aerospace and Defense

     2.0

Aviation: Parts and Services

     1.7

Hotels and Gaming

     1.6

Environmental Services

     1.6

Computer Software and Services

     1.1

Telecommunication Services

     0.9

Wireless Communications

     0.9

Metals and Mining

     0.7

Communications Equipment

     0.7

Agriculture

     0.7

Automotive

     0.6

Publishing

     0.6

Building and Construction

     0.5

Transportation

     0.5

Real Estate

     0.4

Closed-End Funds

     0.2

Manufactured Housing and Recreational Vehicles

     0.1
  

Real Estate Investment Trusts

     0.1
  

 

 

 
         100.0
  

 

 

 
 

 

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

 

Proxy Voting

 

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

 

2


The Gabelli Equity Trust Inc.

Portfolio Changes — Quarter Ended December 31, 2016 (Unaudited)

 

 

    Shares     Ownership at
December 31,
2016
 

NET PURCHASES

   

Common Stocks

   

Adient plc(a)

    31,350         31,350    

AdvanSix Inc.(b)

    12,320         12,320    

Akorn Inc.

    19,615         49,615    

Alcoa Corp.(c)

    13,888         13,888    

Arconic Inc.

    41,666         41,666    

Armstrong Flooring Inc.

    23,500         42,500    

AutoNation Inc.

    19,000         95,300    

BioScrip Inc.

    910,820         2,841,273    

CNH Industrial NV, New York

    6,500         60,092    

Conagra Brands Inc.(d)

    10,000         135,000    

Contax Participacoes SA(e)

    354         354    

CVS Health Corp.

    1,100         118,900    

Delphi Automotive plc

    12,500         12,500    

Denny’s Corp.

    4,000         4,000    

Endo International plc

    30,000         55,000    

Energizer Holdings Inc.

    20,000         168,000    

General Electric Co.

    4,000         153,000    

Globus Medical Inc., Cl. A

    17,500         17,500    

H&R Block Inc.

    5,000         66,000    

Herc Holdings Inc.

    11,000         53,000    

Hertz Global Holdings Inc.

    238,000         300,000    

Hewlett Packard Enterprise Co.

    5,000         22,000    

Inventure Foods Inc.

    45,000         183,347    

Jason Industries Inc.

    50,000         242,885    

Kellogg Co.

    5,000         27,800    

Lamb Weston Holdings Inc.(d)

    86,666         86,666    

Liberty Broadband Corp., Cl. A

    2,000         66,192    

Liberty Expedia Holdings Inc., Cl. A

    26,642         26,642    

Liberty Interactive Corp. QVC Group., Cl. A

    7,000         225,200    

Liberty Ventures., Cl. A

    45,398         45,398    

Lions Gate Entertainment Corp., Cl. B(f)

    48,641         48,641    

Marathon Petroleum Corp.

    9,000         17,000    

Millicom International Cellular SA

    37,000         93,000    

Modine Manufacturing Co., Cl. A

    5,000         185,000    

Mondelēz International Inc.

    33,000         323,000    

National Fuel Gas Co.

    6,000         25,000    

Pandora Media Inc.

    20,000         20,000    

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

    55,614,000         55,614,000    

ServiceMaster Global Holdings Inc.

    1,000         15,000    

SGL Carbon SE(h)

    9,000         18,000    

Stericycle Inc.

    4,000         4,000    

The Timken Co.

    4,000         80,000    

Time Warner Inc.

    3,000         204,800    

TimkenSteel Corp.

    10,000         130,000    

Twitter Inc.

    50,000         50,000    

Waddell & Reed Financial Inc., Cl. A

    50,000         120,000    

Whole Foods Market Inc.

    20,000         55,000    
    Shares     Ownership at
December 31,
2016
 

Wynn Resorts Ltd.

    1,000          6,000    

Zayo Group Holdings Inc.

    15,000          15,000    

NET SALES

   

Common Stocks

   

AMETEK Inc.

    (16,000)         420,000    

Ascena Retail Group Inc.

    (96,811)         -    

AT&T Inc.

    (62,000)         133,000    

CLARCOR Inc.

    (8,000)         96,900    

Comcast Corp., Cl. A

    (10,000)         80,000    

Corning Inc.

    (45,000)         390,000    

Crane Co.

    (2,000)         173,100    

Curtiss-Wright Corp.

    (6,000)         256,300    

Donaldson Co. Inc.

    (6,093)         337,800    

Ferro Corp.

    (23,000)         457,000    

Flowserve Corp.

    (18,000)         207,000    

GATX Corp.

    (7,600)         131,200    

Greif Inc., Cl. A

    (2,000)         132,000    

Greif Inc., Cl. B

    (2,800)         10,000    

Honeywell International Inc.(b)

    (7,000)         329,000    

IDEX Corp.

    (17,000)         240,000    

Johnson Controls International plc(a)

    (1,688)         345,490    

Liberty Media Corp.-Liberty SiriusXM., Cl. A

    (12,000)         77,000    

MasterCard Inc., Cl. A

    (28,000)         289,000    

Media General Inc.

    (4,000)         139,123    

O’Reilly Automotive Inc.

    (4,000)         73,000    

Rogers Communications Inc., New York., Cl. B

    (10,000)         427,890    

Rollins Inc.

    (104,577)         1,605,000    

Starz, Cl. A(f)

    (71,700)         -    

The Boeing Co.

    (5,000)         55,000    

The Interpublic Group of Companies Inc.

    (12,000)         294,000    

The Madison Square Garden Co., Cl. A

    (933)         102,201    

UnitedHealth Group Inc.

    (5,000)         74,000    

Xylem Inc.

    (12,000)         274,000    

 

(a)

Spin off - 0.1 new shares of Adient plc for every 1 share held of Johnson Controls.

(b)

Spin off - 0.04 new shares for every 3 shares held of Honeywell International Inc.

(c)

Stock Split  - 1 new share for every 3 shares held of Alcoa Inc.

(d)

Spin off - 1 new share for every 3 shares held of Conagra Brands Inc.

(e)

Rights issue- 0.2 Rights for every 1 share held.

(f)

Merger - $18 cash plus 0.68 shares of new Lions Gate Entertainment Corp., Cl. B for every 1 share of Starz Class A.

(g)

Stock dividend - 46 new Cl. C shares for every 1 share held of Rolls-Royce Holdings plc.

(h)

Rights issue- 1 Right for every 1 share held.

 

 

See accompanying notes to financial statements.

 

3


The Gabelli Equity Trust Inc.

Schedule of Investments — December 31, 2016

 

 

 

Shares

       

Cost

   

Market

Value

 
 

COMMON STOCKS — 96.4%

 

 

Food and Beverage — 11.3%

 

  3,000    

Ajinomoto Co. Inc.

  $ 52,866     $ 60,424  
  106,200    

Brown-Forman Corp., Cl. A

    1,837,877       4,911,750  
  35,950    

Brown-Forman Corp., Cl. B

    1,269,227       1,614,874  
  63,800    

Campbell Soup Co.

    1,781,130       3,857,986  
  65,000    

Chr. Hansen Holding A/S

    2,725,303       3,599,504  
  15,000    

Coca-Cola European Partners plc

    275,290       471,000  
  135,000    

Conagra Brands Inc.

    4,266,922       5,339,250  
  30,000    

Constellation Brands Inc., Cl. A

    376,266       4,599,300  
  18,000    

Crimson Wine Group Ltd.†

    91,848       168,660  
  201,500    

Danone SA

    9,779,634       12,769,006  
  652,800    

Davide Campari-Milano SpA

    3,566,380       6,383,831  
  171,000    

Diageo plc, ADR

    11,189,407       17,773,740  
  85,400    

Dr Pepper Snapple Group Inc.

    2,773,198       7,743,218  
  80,000    

Flowers Foods Inc.

    263,976       1,597,600  
  76,200    

Fomento Economico Mexicano SAB de CV, ADR

    1,872,322       5,807,202  
  55,000    

General Mills Inc.

    2,252,522       3,397,350  
  1,848,400    

Grupo Bimbo SAB de CV, Cl. A

    2,624,248       4,180,147  
  41,300    

Heineken NV

    1,962,995       3,098,000  
  11,000    

Ingredion Inc.

    162,440       1,374,560  
  183,347    

Inventure Foods Inc.†

    1,243,853       1,805,968  
  105,000    

ITO EN Ltd.

    2,422,898       3,490,267  
  27,800    

Kellogg Co.

    1,518,251       2,049,138  
  64,000    

Kerry Group plc, Cl. A

    735,609       4,558,917  
  86,666    

Lamb Weston Holdings Inc.†

    2,655,649       3,280,308  
  9,700    

LVMH Moet Hennessy Louis Vuitton SE

    335,341       1,852,228  
  45,000    

Maple Leaf Foods Inc.

    828,035       942,465  
  323,000    

Mondelēz International Inc., Cl. A

    11,184,359       14,318,590  
  70,000    

Morinaga Milk Industry Co. Ltd.

    299,202       504,299  
  41,000    

Nestlé SA.

    1,791,828       2,941,226  
  190,000    

PepsiCo Inc.

    12,049,493       19,879,700  
  39,200    

Pernod Ricard SA

    3,228,300       4,248,132  
  26,000    

Post Holdings Inc.†

    882,170       2,090,140  
  40,000    

Remy Cointreau SA

    2,377,486       3,411,440  
  55,000    

The Kraft Heinz Co.

    2,017,310       4,802,600  
  104,600    

The Coca-Cola Co.

    3,308,008       4,336,716  
  32,000    

The Hain Celestial Group Inc.†

    214,736       1,248,960  
  3,000    

The J.M. Smucker Co.

    149,101       384,180  
  57,000    

The WhiteWave Foods Co.†

    3,167,988       3,169,200  
  128,941    

Tootsie Roll Industries Inc.

    1,771,734       5,125,405  
  50,000    

Tyson Foods Inc., Cl. A

    421,291       3,084,000  
  341,000    

Yakult Honsha Co. Ltd.

    9,700,538       15,813,647  
   

 

 

   

 

 

 
        111,427,031         192,084,928  
   

 

 

   

 

 

 

Shares

        

Cost

   

Market

Value

 
  

Financial Services — 9.4%

 

  417,000     

American Express Co.(a)

  $     27,482,035     $     30,891,360  
  25,000     

American International Group Inc.

    1,374,505       1,632,750  
  14,520     

Argo Group International Holdings Ltd.

    389,834       956,868  
  72,000     

Banco Santander SA, ADR

    545,542       372,960  
  116     

Berkshire Hathaway Inc., Cl. A†

    341,248       28,318,036  
  16,300     

Blackhawk Network Holdings Inc.†

    538,327       614,104  
  10,000     

Calamos Asset Management Inc., Cl. A

    88,164       85,500  
  12,800     

CIT Group Inc.

    548,363       546,304  
  88,000     

Citigroup Inc.

    3,646,777       5,229,840  
  9,000     

Cullen/Frost Bankers Inc.

    665,261       794,070  
  16,000     

Deutsche Bank AG†

    580,703       289,600  
  8,000     

Financial Engines Inc.

    284,394       294,000  
  50,000     

Fortress Investment Group LLC, Cl. A

    273,068       243,000  
  66,000     

H&R Block Inc.

    1,489,550       1,517,340  
  20,000     

Hennessy Capital Acquisition Corp. II†

    200,000       210,400  
  40,000     

Interactive Brokers Group Inc., Cl. A

    643,310       1,460,400  
  340,100     

Janus Capital Group Inc.

    3,838,574       4,513,127  
  61,400     

JPMorgan Chase & Co.

    2,865,137       5,298,206  
  29,800     

Kinnevik AB, Cl. A

    494,015       734,320  
  125,000     

Legg Mason Inc.

    3,312,972       3,738,750  
  88,000     

Leucadia National Corp.

    1,259,355       2,046,000  
  14,000     

Loews Corp.

    558,454       655,620  
  125,000     

Marsh & McLennan Companies Inc.

    3,772,923       8,448,750  
  9,000     

Moody’s Corp.

    312,150       848,430  
  50,000     

Och-Ziff Capital Management Group LLC, Cl. A†

    196,848       165,500  
  20,000     

PayPal Holdings Inc.†

    651,955       789,400  
  15,000     

Quinpario Acquisition Corp. 2†

    150,000       151,950  
  105,300     

S&P Global Inc.

    4,404,349       11,323,962  
  124,100     

State Street Corp.

    5,232,321       9,645,052  
  17,000     

SunTrust Banks Inc.

    358,050       932,450  
  103,400     

T. Rowe Price Group Inc.

    3,333,961       7,781,884  
  210,500     

The Bank of New York Mellon Corp.

    6,707,443       9,973,490  
  20,000     

The Charles Schwab Corp.

    292,250       789,400  
  12,300     

The Dun & Bradstreet Corp.

    292,691       1,492,236  
  10,000     

The PNC Financial Services Group Inc.

    956,448       1,169,600  
  13,000     

W. R. Berkley Corp.

    476,775       864,630  
  120,000     

Waddell & Reed Financial Inc., Cl. A

    2,866,634       2,341,200  
 

 

See accompanying notes to financial statements.

 

4


The Gabelli Equity Trust Inc.

Schedule of Investments (Continued) — December 31, 2016

 

 

Shares

       

Cost

   

Market

Value

 
 

COMMON STOCKS (Continued)

 

 
 

Financial Services (Continued)

 

 
  235,000    

Wells Fargo & Co.

  $ 7,377,851     $ 12,950,850  
   

 

 

   

 

 

 
        88,802,237         160,111,339  
   

 

 

   

 

 

 
 

Entertainment — 6.8%

   
  30,812    

Charter Communications Inc., Cl. A†

    5,281,969       8,871,391  
  41,600    

Discovery Communications Inc., Cl. A†

    1,391,742       1,140,256  
  235,800    

Discovery Communications Inc., Cl. C†

    2,716,076       6,314,724  
  538,000    

Grupo Televisa SAB, ADR

    8,106,476       11,238,820  
  10,700    

Liberty Media Corp.- Liberty Braves, Cl. A†

    197,899       219,243  
  73,758    

Liberty Media Corp.- Liberty Braves, Cl. C†

    1,204,460       1,518,677  
  48,641    

Lions Gate Entertainment Corp., Cl. B†

    1,269,537       1,193,657  
  139,123    

Media General Inc.†

    2,349,493       2,619,686  
  24,000    

Pinnacle Entertainment Inc.†

    268,320       348,000  
  102,201    

The Madison Square Garden Co, Cl. A†

    5,423,040       17,528,494  
  204,800    

Time Warner Inc.

    12,971,733       19,769,344  
  40,000    

Tokyo Broadcasting System Holdings Inc.

    796,181       640,000  
  560,200    

Twenty-First Century Fox Inc., Cl. A

    5,861,488       15,708,008  
  370,000    

Twenty-First Century Fox Inc., Cl. B

    8,026,295       10,082,500  
  70,000    

Universal Entertainment Corp.†

    1,103,319       2,021,390  
  279,521    

Viacom Inc., Cl. A

    13,193,575       10,761,559  
  270,000    

Vivendi SA.

    6,223,657       5,131,529  
   

 

 

   

 

 

 
      76,385,260       115,107,278  
   

 

 

   

 

 

 
 

Equipment and Supplies — 5.6%

 

  420,000    

AMETEK Inc.

    9,791,462       20,412,000  
  7,000    

Amphenol Corp., Cl. A

    12,928       470,400  
  94,000    

CIRCOR International Inc.

    3,412,305       6,098,720  
  337,800    

Donaldson Co. Inc.

    4,356,185       14,214,624  
  207,000    

Flowserve Corp.

    4,362,047       9,946,350  
  37,400    

Franklin Electric Co. Inc.

    215,706       1,454,860  
  240,000    

IDEX Corp.

    10,190,833       21,614,400  
  43,000    

Ingersoll-Rand plc

    928,418       3,226,720  
  4,000    

Manitowoc Foodservice Inc.†

    19,596       77,320  
  40,100    

Mueller Industries Inc.

    944,025       1,602,396  
  13,000    

Sealed Air Corp.

    208,280       589,420  
  45,000    

Tenaris SA, ADR

    1,981,220       1,606,950  
  10,000    

The Greenbrier Companies Inc.

    198,206       415,500  
  4,000    

The Manitowoc Co. Inc.†

    5,854       23,920  
  80,000    

The Timken Co.

    3,018,718       3,176,000  

Shares

       

Cost

   

Market

Value

 

 

 

 

59,600

 

 

 

The Weir Group plc

  $ 250,790     $ 1,388,233  
  125,000    

Watts Water Technologies Inc., Cl. A

    3,970,158       8,150,000  
   

 

 

   

 

 

 
        43,866,731         94,467,813  
   

 

 

   

 

 

 
 

Diversified Industrial — 4.8%

 

  500    

Acuity Brands Inc.

    12,751       115,430  
  160,000    

Ampco-Pittsburgh Corp.

    2,128,534       2,680,000  
  173,100    

Crane Co.

    4,984,346       12,483,972  
  153,000    

General Electric Co.

    3,712,505       4,834,800  
  132,000    

Greif Inc., Cl. A

    1,955,631       6,772,920  
  10,000    

Greif Inc., Cl. B

    635,644       675,500  
  26,373    

Griffon Corp.

    251,999       690,973  
  329,000    

Honeywell International Inc.

    24,162,780       38,114,650  
  117,000    

ITT Inc.

    1,436,279       4,512,690  
  11,000    

Jardine Strategic Holdings Ltd.

    222,951       365,200  
  40,000    

Kennametal Inc.

    895,654       1,250,400  
  50,000    

Myers Industries Inc.

    818,952       715,000  
  85,000    

Park-Ohio Holdings Corp.

    892,930       3,621,000  
  9,666    

Rayonier Advanced Materials Inc.

    160,768       149,436  
  30,000    

Rexnord Corp.†

    630,867       587,700  
  15,000    

ServiceMaster Global Holdings Inc.†

    553,798       565,050  
  15,000    

Sulzer AG

    739,785       1,546,695  
  100,000    

Toray Industries Inc.

    771,663       809,583  
  12,000    

Tredegar Corp.

    171,530       288,000  
  46,000    

Trinity Industries Inc.

    619,878       1,276,960  
   

 

 

   

 

 

 
      45,759,245       82,055,959  
   

 

 

   

 

 

 
 

Health Care — 4.6%

   
  6,000    

Agilent Technologies Inc.

    247,707       273,360  
  49,615    

Akorn Inc.†

    1,024,666       1,083,095  
  65,000    

Alere Inc.†

    2,566,606       2,533,050  
  14,500    

Allergan plc†

    2,765,098       3,045,145  
  34,000    

Amgen Inc.

    2,470,200       4,971,140  
  17,000    

Baxter International Inc.

    502,032       753,780  
  10,000    

Becton, Dickinson and Co.

    1,225,867       1,655,500  
  9,200    

Biogen Inc.†

    1,551,612       2,608,936  
  2,841,273    

BioScrip Inc.†

    5,569,918       2,954,924  
  270,000    

Boston Scientific Corp.†

    1,927,086       5,840,100  
  76,300    

Bristol-Myers Squibb Co.

    3,518,848       4,458,972  
  15,000    

DaVita Inc.†

    944,551       963,000  
  55,000    

Endo International plc†

    996,823       905,850  
  20,000    

Express Scripts Holding Co.†

    1,359,191       1,375,800  
  17,500    

Globus Medical Inc., Cl. A†

    424,107       434,175  
  28,000    

Henry Schein Inc.†

    1,651,762       4,247,880  
  46,800    

Indivior plc

    28,408       170,838  
  37,000    

Johnson & Johnson

    2,400,670       4,262,770  
  25,000    

Mead Johnson Nutrition Co.

    1,123,205       1,769,000  
  10,000    

Medtronic plc

    737,384       712,300  
  95,200    

Merck & Co. Inc.

    2,219,590       5,604,424  
 

 

See accompanying notes to financial statements.

 

5


The Gabelli Equity Trust Inc.

Schedule of Investments (Continued) — December 31, 2016

 

 

Shares

       

Cost

   

Market

Value

 
 

COMMON STOCKS (Continued)

 

 

Health Care (Continued)

   
  84,000    

Novartis AG, ADR

  $ 3,841,437     $ 6,118,560  
  1,500    

Shire plc, ADR

    289,815       255,570  
  15,000    

Teva Pharmaceutical Industries Ltd., ADR

    581,414       543,750  
  74,000    

UnitedHealth Group Inc.

    4,714,012       11,842,960  
  4,000    

Waters Corp.†

    285,470       537,560  
  268,000    

William Demant Holding A/S†

    2,441,826       4,659,880  
  8,600    

Zimmer Biomet Holdings Inc.

    435,897       887,520  
  35,000    

Zoetis Inc.

    1,122,327       1,873,550  
   

 

 

   

 

 

 
        48,967,529         77,343,389  
   

 

 

   

 

 

 
 

Automotive: Parts and Accessories — 4.4%

 

  31,350    

Adient plc†

    1,473,441       1,837,098  
  107,600    

BorgWarner Inc.

    4,288,790       4,243,744  
  96,900    

CLARCOR Inc.

    7,847,205       7,991,343  
  240,900    

Dana Inc.

    2,144,653       4,572,282  
  12,500    

Delphi Automotive plc

    842,223       841,875  
  241,400    

Genuine Parts Co.

    11,784,671       23,063,356  
  242,885    

Jason Industries Inc.†

    676,637       437,193  
  185,000    

Modine Manufacturing Co.†

    3,549,263       2,756,500  
  73,000    

O’Reilly Automotive Inc.†

    11,982,909       20,323,930  
  111,000    

Standard Motor Products Inc.

    1,220,821       5,907,420  
  73,000    

Superior Industries International Inc.

    1,462,789       1,923,550  
  14,000    

Visteon Corp.

    1,372,450       1,124,760  
   

 

 

   

 

 

 
      48,645,852       75,023,051  
   

 

 

   

 

 

 
 

Energy and Utilities — 4.3%

 

  11,000    

ABB Ltd., ADR

    171,270       231,770  
  39,000    

Anadarko Petroleum Corp.

    2,262,604       2,719,470  
  59,000    

Apache Corp.

    2,771,519       3,744,730  
  80,000    

BP plc, ADR

    3,952,168       2,990,400  
  70,000    

Canadian Solar Inc.†

    977,386       852,600  
  16,000    

CMS Energy Corp.

    102,219       665,920  
  185,100    

ConocoPhillips

    8,559,949       9,280,914  
  204,000    

El Paso Electric Co.

    5,709,272       9,486,000  
  24,000    

Eversource Energy

    545,324       1,325,520  
  57,600    

Exxon Mobil Corp.

    2,675,190       5,198,976  
  140,000    

GenOn Energy Inc., Escrow†

    0       0  
  196,400    

Halliburton Co.

    3,831,496       10,623,276  
  4,000    

Marathon Oil Corp.

    111,366       69,240  
  17,000    

Marathon Petroleum Corp.

    580,884       855,950  
  20,000    

Murphy USA Inc.†

    886,754       1,229,400  
  25,000    

National Fuel Gas Co.

    1,655,495       1,416,000  
  13,500    

NextEra Energy Inc.

    797,687       1,612,710  
  1,000    

Niko Resources Ltd., OTC†

    54,403       70  
  3,000    

Niko Resources Ltd., Toronto†

    923       223  
  32,400    

Oceaneering International Inc.

    437,629       914,004  
  15,100    

Phillips 66

    1,113,603       1,304,791  
  120,000    

Rowan Companies plc, Cl. A†

    4,470,497       2,266,800  

Shares

        

Cost

   

Market

Value

 

 

 

 

20,000

 

 

  

RPC Inc.

  $ 259,649     $ 396,200  
  15,000     

Southwest Gas Holdings Inc.

    347,695       1,149,300  
  100,000     

Spectra Energy Corp.

    2,488,608       4,109,000  
  101,000     

The AES Corp.

    907,143       1,173,620  
  35,000     

Weatherford International plc†

    503,432       174,650  
  162,000     

Westar Energy Inc.

    8,953,713       9,128,700  
    

 

 

   

 

 

 
         55,127,878         72,920,234  
    

 

 

   

 

 

 
  

Consumer Products — 4.0%

 

  125,000     

Avon Products Inc.†

    1,118,829       630,000  
  14,100     

Christian Dior SE

    534,292       2,957,352  
  28,000     

Church & Dwight Co. Inc.

    385,294       1,237,320  
  65,600     

Coty Inc., Cl. A

    1,228,184       1,201,136  
  191,000     

Edgewell Personal Care Co.†

    13,656,124       13,941,090  
  168,000     

Energizer Holdings Inc.

    4,661,967       7,494,480  
  2,100     

Givaudan SA

    725,396       3,848,178  
  90,000     

Hanesbrands Inc.

    788,898       1,941,300  
  23,800     

Harley-Davidson Inc.

    1,105,662       1,388,492  
  1,270     

Hermes International

    444,999       521,379  
  5,000     

Mattel Inc.

    69,500       137,750  
  11,000     

National Presto Industries Inc.

    529,994       1,170,400  
  10,000     

Oil-Dri Corp. of America

    171,255       382,100  
  46,800     

Reckitt Benckiser Group plc

    1,391,995       3,971,615  
  27,600     

Svenska Cellulosa AB, Cl. B

    368,427       779,474  
  816,900     

Swedish Match AB

    9,690,211       25,984,855  
    

 

 

   

 

 

 
       36,871,027       67,586,921  
    

 

 

   

 

 

 
  

Consumer Services — 3.9%

 

  20,000     

eBay Inc.†

    416,823       593,800  
  43,000     

IAC/InterActiveCorp.†

    1,098,767       2,785,970  
  26,642     

Liberty Expedia Holdings Inc., Cl. A†

    558,018       1,056,888  
  225,200     

Liberty Interactive Corp. QVC Group, Cl. A†

    3,714,133       4,499,496  
  21,000     

Liberty TripAdvisor Holdings Inc., Cl. A†

    247,059       316,050  
  45,398     

Liberty Ventures, Cl. A†

    901,142       1,673,824  
  1,605,000     

Rollins Inc.

    17,168,394       54,216,900  
  5,500     

TripAdvisor Inc.†

    194,460       255,035  
    

 

 

   

 

 

 
       24,298,796       65,397,963  
    

 

 

   

 

 

 
  

Telecommunications — 3.4%

 

  133,000     

AT&T Inc.

    4,779,194       5,656,490  
  55,400     

BCE Inc.

    1,851,178       2,395,496  
  914,200     

BT Group plc, Cl. A

    3,780,313       4,133,741  
  135,000     

Cincinnati Bell Inc.†

    2,948,965       3,017,250  
  100,000     

Deutsche Telekom AG, ADR

    1,656,300       1,710,000  
  190,000     

Gogo Inc.†

    1,727,264       1,751,800  
  32,001     

Harris Corp.

    2,556,439       3,279,142  
  36,000     

Hellenic Telecommunications Organization SA

    452,922       338,407  
 

 

See accompanying notes to financial statements.

 

6


The Gabelli Equity Trust Inc.

Schedule of Investments (Continued) — December 31, 2016

 

 

Shares

       

Cost

   

Market

Value

 
 

COMMON STOCKS (Continued)

 

 

Telecommunications(Continued)

 

  15,000    

Hellenic Telecommunications Organization SA, ADR

  $ 91,062     $ 69,450  
  264,732    

Koninklijke KPN NV

    448,166       784,181  
  7,040,836    

LIME†

    128,658       43,715  
  21,000    

Loral Space & Communications Inc.†

    712,576       862,050  
  22,000    

Oi SA, ADR†

    1,739,813       13,970  
  31,053    

Sprint Corp.†

    176,071       261,466  
  21,000    

Telecom Argentina SA, ADR

    127,554       381,570  
  570,000    

Telecom Italia SpA†

    2,217,800       502,211  
  70,000    

Telefonica Brasil SA, ADR

    726,827       936,600  
  595,739    

Telefonica SA, ADR

    8,915,134       5,480,799  
  563,700    

Telephone & Data Systems Inc.

    23,634,535       16,274,019  
  105,000    

Telesites SAB de CV†

    79,714       57,034  
  25,000    

TELUS Corp.

    233,734       796,000  
  125,000    

Verizon Communications Inc.

    5,239,043       6,672,500  
  48,027    

Vodafone Group plc, ADR

    2,096,997       1,173,300  
  15,000    

Zayo Group Holdings Inc.†

    489,418       492,900  
   

 

 

   

 

 

 
        66,809,677         57,084,091  
   

 

 

   

 

 

 
 

Cable and Satellite — 3.3%

 

  257,600    

AMC Networks Inc., Cl. A†

    12,160,769       13,482,784  
  1,600    

Cable One Inc.

    542,085       994,768  
  80,000    

Comcast Corp., Cl. A

    3,263,185       5,524,000  
  60,400    

DISH Network Corp., Cl. A†

    2,044,622       3,498,972  
  70,048    

EchoStar Corp., Cl. A†

    2,725,030       3,599,767  
  21,712    

Liberty Global plc LiLAC, Cl. A†

    407,240       476,796  
  42,918    

Liberty Global plc LiLAC, Cl. C†

    1,218,719       908,574  
  427,890    

Rogers Communications Inc., New York, Cl. B

    4,533,833       16,507,996  
  19,310    

Rogers Communications Inc., Toronto, Cl. B

    137,424       744,844  
  108,800    

Scripps Networks Interactive Inc., Cl. A

    3,513,944       7,765,056  
  120,000    

Shaw Communications Inc., New York, Cl. B

    354,632       2,407,200  
  40,000    

Shaw Communications Inc., Toronto, Cl. B

    52,983       802,592  
   

 

 

   

 

 

 
      30,954,466       56,713,349  
   

 

 

   

 

 

 
 

Retail — 3.3%

   
  5,000    

Advance Auto Parts Inc.

    704,001       845,600  
  95,300    

AutoNation Inc.†

    2,664,951       4,636,345  
  38,000    

Costco Wholesale Corp.

    2,505,816       6,084,180  
  60,500    

CST Brands Inc.

    2,068,656       2,913,075  
  118,900    

CVS Health Corp.

    8,372,944       9,382,399  
  4,000    

Denny’s Corp.†

    42,010       51,320  
  300,000    

Hertz Global Holdings Inc.†

    8,991,221       6,468,000  

Shares

       

Cost

   

Market

Value

 

 

 

 

22,100

 

 

 

HSN Inc.

  $ 597,444     $ 758,030  
  50,000    

J.C. Penney Co. Inc.†

    644,777       415,500  
  326,000    

Macy’s Inc.

    6,367,418       11,674,060  
  15,000    

Penske Automotive Group Inc.

    649,031       777,600  
  33,300    

Sally Beauty Holdings Inc.†

    264,056       879,786  
  17,000    

The Cheesecake Factory Inc.

    553,064       1,017,960  
  3,000    

Tiffany & Co.

    171,090       232,290  
  17,000    

United Natural Foods Inc.†

    595,065       811,240  
  52,000    

Walgreens Boots Alliance Inc.

    1,540,167       4,303,520  
  32,000    

Wal-Mart Stores Inc.

    1,618,504       2,211,840  
  55,000    

Whole Foods Market Inc.

    989,403       1,691,800  
   

 

 

   

 

 

 
        39,339,618         55,154,545  
   

 

 

   

 

 

 
 

Business Services — 3.0%

 

  14,334    

Allegion plc

    232,677       917,376  
  7,500    

Aramark

    194,037       267,900  
  10,000    

Ascent Capital Group Inc., Cl. A†

    242,304       162,600  
  157,000    

Clear Channel Outdoor Holdings Inc., Cl. A

    1,092,453       792,850  
  1,650    

Contax Participacoes SA†

    67,778       4,765  
  90,000    

Diebold Nixdorf Inc.

    3,119,797       2,263,500  
  20,000    

DigitalGlobe Inc.†

    325,466       573,000  
  3,000    

Edenred

    38,786       59,480  
  160,000    

G4S plc

    0       463,385  
  16,000    

Jardine Matheson Holdings Ltd.

    534,478       884,000  
  88,000    

Landauer Inc.

    2,472,818       4,232,800  
  23,300    

Macquarie Infrastructure Corp.

    1,427,993       1,903,610  
  289,000    

MasterCard Inc., Cl. A

    10,603,956       29,839,250  
  4,000    

Stericycle Inc.†

    318,160       308,160  
  294,000    

The Interpublic Group of Companies Inc.

    4,550,584       6,882,540  
  10,000    

Vectrus Inc.†

    106,200       238,500  
  12,800    

Visa Inc., Cl. A

    140,800       998,656  
   

 

 

   

 

 

 
      25,468,287       50,792,372  
   

 

 

   

 

 

 
 

Electronics — 2.4%

 

  20,000    

Bel Fuse Inc., Cl. A

    547,758       506,200  
  4,000    

Emerson Electric Co.

    222,819       223,000  
  4,000    

Hitachi Ltd., ADR

    287,076       216,000  
  32,500    

Integrated Device Technology Inc.†

    620,441       765,700  
  54,000    

Intel Corp.

    1,160,428       1,958,580  
  345,490    

Johnson Controls International plc

    12,611,075       14,230,733  
  34,170    

Koninklijke Philips NV

    180,354       1,044,577  
  2,400    

Mettler-Toledo International Inc.†

    337,270       1,004,544  
  40,000    

TE Connectivity Ltd.

    1,553,958       2,771,200  
 

 

See accompanying notes to financial statements.

 

7


The Gabelli Equity Trust Inc.

Schedule of Investments (Continued) — December 31, 2016

 

 

Shares

       

Cost

   

Market

Value

 
 

COMMON STOCKS (Continued)

 

 

Electronics (Continued)

 

  240,000    

Texas Instruments Inc.

  $ 10,937,263     $ 17,512,800  
   

 

 

   

 

 

 
        28,458,442         40,233,334  
   

 

 

   

 

 

 
 

Broadcasting — 2.4%

 

  247,499    

CBS Corp., Cl. A, Voting

    7,427,347       16,000,810  
  2,000    

Cogeco Inc.

    39,014       84,490  
  17,334    

Corus Entertainment Inc., OTC, Cl. B

    30,215       162,693  
  6,666    

Corus Entertainment Inc., Toronto, Cl. B

    12,406       62,557  
  16,000    

Gray Television Inc.†

    14,422       173,600  
  19,250    

Liberty Broadband Corp., Cl. A†

    608,060       1,394,855  
  66,192    

Liberty Broadband Corp., Cl. C†

    2,236,120       4,902,841  
  19,250    

Liberty Media Corp.-Liberty Media, Cl. A†

    327,003       603,488  
  52,250    

Liberty Media Corp.-Liberty Media, Cl. C†

    1,197,836       1,636,994  
  77,000    

Liberty Media Corp.-Liberty SiriusXM, Cl. A†

    1,653,825       2,658,040  
  158,000    

Liberty Media Corp.-Liberty SiriusXM, Cl. C†

    4,034,747       5,359,360  
  292,400    

MSG Networks Inc., Cl. A†

    1,675,251       6,286,600  
  20,000    

Pandora Media Inc.†

    260,860       260,800  
  85,200    

Television Broadcasts Ltd.

    339,712       280,173  
   

 

 

   

 

 

 
      19,856,818       39,867,301  
   

 

 

   

 

 

 
 

Specialty Chemicals — 2.3%

 

  12,320    

AdvanSix Inc.†

    146,942       272,765  
  10,000    

Ashland Global Holdings Inc.

    979,500       1,092,900  
  30,000    

Chemtura Corp.†

    747,443       996,000  
  20,000    

E. I. du Pont de Nemours and Co.

    854,362       1,468,000  
  457,000    

Ferro Corp.†

    5,579,876       6,548,810  
  8,000    

FMC Corp.

    136,430       452,480  
  39,000    

H.B. Fuller Co.

    1,131,051       1,884,090  
  73,000    

International Flavors & Fragrances Inc.

    4,598,574       8,601,590  
  20,000    

Methanex Corp.

    563,935       876,000  
  250,000    

OMNOVA Solutions Inc.†

    1,510,742       2,500,000  
  177,800    

Sensient Technologies Corp.

    4,609,358       13,971,524  
  18,000    

SGL Carbon SE†

    252,978       158,403  
  2,000    

The Chemours Co.

    22,594       44,180  
   

 

 

   

 

 

 
      21,133,785       38,866,742  
   

 

 

   

 

 

 
 

Machinery — 2.3%

 

  12,800    

Caterpillar Inc.

    86,323       1,187,072  
  60,092    

CNH Industrial NV, New York

    516,109       522,199  
  225,000    

Deere & Co.(a)

    7,473,957       23,184,000  

Shares

       

Cost

   

Market

Value

 

 

 

 

274,000

 

 

 

Xylem Inc.

  $ 8,471,673     $ 13,568,480  
   

 

 

   

 

 

 
      16,548,062       38,461,751  
   

 

 

   

 

 

 
 

Aerospace and Defense — 2.0%

 

  275,000    

Aerojet Rocketdyne Holdings Inc.†

    2,370,094       4,936,250  
  1,246,553    

BBA Aviation plc

    2,811,697       4,352,228  
  35,800    

Kaman Corp.

    881,634       1,751,694  
  17,500    

Northrop Grumman Corp.

    900,365       4,070,150  
  1,209,000    

Rolls-Royce Holdings plc

    9,301,551       9,953,070  
  55,614,000    

Rolls-Royce Holdings plc, Cl. C†

    68,272       68,539  
  55,000    

The Boeing Co.

    7,458,554       8,562,400  
   

 

 

   

 

 

 
        23,792,167         33,694,331  
   

 

 

   

 

 

 
 

Aviation: Parts and Services — 1.7%

 

  41,666    

Arconic Inc.

    880,949       772,488  
  15,000    

B/E Aerospace Inc.

    826,232       902,850  
  256,300    

Curtiss-Wright Corp.

    12,587,116       25,209,668  
  25,500    

KLX Inc.†

    1,033,565       1,150,305  
   

 

 

   

 

 

 
      15,327,862       28,035,311  
   

 

 

   

 

 

 
 

Hotels and Gaming — 1.6%

 

  16,000    

Accor SA

    549,282       596,728  
  45,000    

Belmond Ltd., Cl. A†

    621,367       600,750  
  90,000    

Genting Singapore plc

    74,910       56,244  
  8,000    

Hyatt Hotels Corp., Cl. A†

    263,258       442,080  
  20,000    

ILG Inc.

    338,287       363,400  
  9,095    

International Game Technology plc

    172,350       232,104  
  579,400    

Ladbrokes Coral Group plc

    2,329,980       828,306  
  34,000    

Las Vegas Sands Corp.

    632,350       1,815,940  
  4,569,500    

Mandarin Oriental International Ltd.

    8,011,198       5,826,114  
  23,200    

Marriott International, Inc., Cl. A

    1,734,716       1,918,176  
  70,000    

MGM China Holdings Ltd

    137,917       145,154  
  75,000    

MGM Resorts International†

    1,230,723       2,162,250  
  188,800    

Ryman Hospitality Properties Inc.

    5,121,573       11,896,288  
  200,000    

The Hongkong & Shanghai Hotels Ltd.

    155,450       221,807  
  4,000    

Wyndham Worldwide Corp.

    282,896       305,480  
  6,000    

Wynn Resorts Ltd.

    469,634       519,060  
   

 

 

   

 

 

 
      22,125,891       27,929,881  
   

 

 

   

 

 

 
 

Environmental Services — 1.6%

 

  35,000    

Pentair plc

    1,197,464       1,962,450  
  230,800    

Republic Services Inc.

    6,848,123       13,167,140  
  157,400    

Waste Management Inc.

    4,560,250       11,161,234  
   

 

 

   

 

 

 
      12,605,837       26,290,824  
   

 

 

   

 

 

 
 

Computer Software and Services — 1.1%

 

  4,000    

Alphabet Inc., Cl. C†

    2,656,885       3,087,280  
 

 

See accompanying notes to financial statements.

 

8


The Gabelli Equity Trust Inc.

Schedule of Investments (Continued) — December 31, 2016

 

 

Shares

       

Cost

   

Market

Value

 
 

COMMON STOCKS (Continued)

 

 

Computer Software and Services (Continued)

 

  65,000    

Blucora Inc.†

  $ 369,685     $ 958,750  
  6,000    

Check Point Software Technologies Ltd.†

    101,862       506,760  
  4,733    

CommerceHub Inc., Cl. A†

    31,317       71,042  
  13,466    

CommerceHub Inc., Cl. C†

    84,093       202,394  
  22,000    

Hewlett Packard Enterprise Co.

    435,172       509,080  
  1,000,000    

Internap Corp.†

    2,250,441       1,540,000  
  23,000    

InterXion Holding NV†

    338,737       806,610  
  32,000    

NCR Corp.†

    476,190       1,297,920  
  20,900    

Rockwell Automation Inc.

    648,748       2,808,960  
  50,000    

Twitter Inc.†

    836,965       815,000  
  15,000    

VeriFone Systems Inc.†

    329,752       265,950  
  130,000    

Yahoo! Inc.†

    2,884,194       5,027,100  
   

 

 

   

 

 

 
        11,444,041         17,896,846  
   

 

 

   

 

 

 
 

Telecommunication Services — 0.9%

 

  151,505    

Liberty Global plc, Cl. A†

    2,536,161       4,634,538  
  382,893    

Liberty Global plc, Cl. C†

    7,953,868       11,371,922  
   

 

 

   

 

 

 
      10,490,029       16,006,460  
   

 

 

   

 

 

 
 

Wireless Communications — 0.9%

 

  105,000    

America Movil SAB de CV, Cl. L, ADR

    735,232       1,319,850  
  93,000    

Millicom International Cellular SA, SDR

    6,039,318       3,973,931  
  150,000    

NTT DoCoMo Inc.

    2,980,751       3,417,754  
  46,075    

Tim Participacoes SA, ADR

    352,294       543,685  
  35,000    

T-Mobile US Inc.†

    1,032,838       2,012,850  
  104,600    

United States Cellular Corp.†

    4,965,942       4,573,112  
   

 

 

   

 

 

 
      16,106,375       15,841,182  
   

 

 

   

 

 

 
 

Automotive — 0.7%

 

  95,746    

General Motors Co.

    3,682,527       3,335,791  
  158,000    

Navistar International Corp.†

    4,003,563       4,956,460  
  69,000    

PACCAR Inc.

    299,204       4,409,100  
   

 

 

   

 

 

 
      7,985,294       12,701,351  
   

 

 

   

 

 

 
 

Agriculture — 0.7%

 

  200,000    

Archer Daniels Midland Co.

    9,150,371       9,130,000  
  16,000    

Monsanto Co.

    709,230       1,683,360  
  12,800    

Syngenta AG, ADR

    1,018,941       1,011,840  
  10,000    

The Mosaic Co.

    428,085       293,300  
   

 

 

   

 

 

 
      11,306,627       12,118,500  
   

 

 

   

 

 

 
 

Metals and Mining — 0.7%

 

  37,400    

Agnico Eagle Mines Ltd.

    1,530,570       1,570,800  
  13,888    

Alcoa Corp.

    293,636       389,975  
  54,000    

Barrick Gold Corp.

    1,581,120       862,920  
  30,000    

Cliffs Natural Resources Inc.†

    296,432       252,300  
  50,000    

Freeport-McMoRan Inc.†

    1,021,320       659,500  
  4,800    

Materion Corp.

    108,162       190,080  

Shares

       

Cost

   

Market

Value

 

 

 

 

50,000

 

 

 

New Hope Corp. Ltd.

  $ 67,580     $ 59,717  
  143,600    

Newmont Mining Corp.

    5,120,536       4,892,452  
  130,000    

TimkenSteel Corp.†

    2,418,927       2,012,400  
  140,000    

Turquoise Hill Resources Ltd.†

    726,343       452,200  
  15,000    

Vale SA, ADR

    171,892       114,300  
   

 

 

   

 

 

 
        13,336,518         11,456,644  
   

 

 

   

 

 

 
 

Communications Equipment — 0.6%

 

  11,000    

Apple Inc.

    1,091,407       1,274,020  
  390,000    

Corning Inc.

    6,270,736       9,465,300  
   

 

 

   

 

 

 
      7,362,143       10,739,320  
   

 

 

   

 

 

 
 

Publishing — 0.6%

 

  1,100    

Graham Holdings Co., Cl. B

    588,093       563,145  
  96,300    

Meredith Corp.

    4,296,128       5,696,145  
  125,000    

News Corp., Cl. A

    1,939,129       1,432,500  
  146,600    

News Corp., Cl. B

    1,644,464       1,729,880  
  40,000    

The E.W. Scripps Co., Cl. A†

    399,742       773,200  
   

 

 

   

 

 

 
      8,867,556       10,194,870  
   

 

 

   

 

 

 
 

Transportation — 0.5%

 

  131,200    

GATX Corp.

    4,730,843       8,079,296  
   

 

 

   

 

 

 
 

Building and Construction — 0.5%

 

  42,500    

Armstrong Flooring Inc.†

    707,108       846,175  
  18,000    

Assa Abloy AB, Cl. B

    310,378       334,094  
  80,000    

Fortune Brands Home & Security Inc.

    680,866       4,276,800  
  53,000    

Herc Holdings Inc.†

    1,716,695       2,128,480  
  45,000    

Layne Christensen Co.†

    573,982       489,150  
   

 

 

   

 

 

 
      3,989,029       8,074,699  
   

 

 

   

 

 

 
 

Real Estate — 0.4%

 

  40,000    

Forest City Realty Trust Inc., Cl. A

    805,346       833,600  
  56,000    

Griffin Industrial Realty Inc.

    542,694       1,776,880  
  265,000    

The St. Joe Co.†

    4,873,297       5,035,000  
   

 

 

   

 

 

 
      6,221,337       7,645,480  
   

 

 

   

 

 

 
 

Closed-End Funds — 0.2%

 

  4,285    

Royce Global Value Trust Inc.

    37,280       34,623  
  30,000    

Royce Value Trust Inc.

    368,797       401,700  
  88,969    

The Central Europe, Russia, and Turkey Fund Inc.

    2,568,955       1,837,210  
  135,374    

The New Germany Fund Inc.

    1,786,858       1,769,338  
   

 

 

   

 

 

 
      4,761,890       4,042,871  
   

 

 

   

 

 

 
 

Manufactured Housing and Recreational Vehicles — 0.1%

 

  5,000    

Martin Marietta Materials Inc.

    106,125       1,107,650  
  30,000    

Nobility Homes Inc.†

    349,956       502,350  
  42,000    

Skyline Corp.†

    256,482       649,320  
   

 

 

   

 

 

 
      712,563       2,259,320  
   

 

 

   

 

 

 
 

 

See accompanying notes to financial statements.

 

9


The Gabelli Equity Trust Inc.

Schedule of Investments (Continued) — December 31, 2016

 

 

Shares

       

Cost

   

Market

Value

 
 

COMMON STOCKS (Continued)

 

 

Real Estate Investment Trusts — 0.1%

 

  15,000    

Gaming and Leisure Properties Inc.

  $ 189,641     $ 459,300  
  29,000    

Rayonier Inc.

    454,837       771,400  
   

 

 

   

 

 

 
      644,478       1,230,700  
   

 

 

   

 

 

 
 

TOTAL COMMON STOCKS

    1,010,531,221       1,633,510,246  
   

 

 

   

 

 

 
 

CONVERTIBLE PREFERRED STOCKS — 0.1%

 

 

Telecommunications — 0.1%

 

  21,000    

Cincinnati Bell Inc., 6.750%, Ser. B

    515,202       1,032,280  
   

 

 

   

 

 

 
 

RIGHTS — 0.0%

 

 

Business Services — 0.0%

 

  354    

Contax Participacoes SA, expire 01/23/17†

    0       51  
   

 

 

   

 

 

 
 

WARRANTS — 0.0%

 

 

Energy and Utilities — 0.0%

 

  115,800    

Kinder Morgan Inc., expire 05/25/17†

    139,263       637  
   

 

 

   

 

 

 

Principal

Amount

                 
 

CONVERTIBLE CORPORATE BONDS — 0.2%

 

 

Diversified Industrial — 0.2%

 

  $  2,000,000    

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

    2,856,176       3,526,250  
   

 

 

   

 

 

 
 

U.S. GOVERNMENT OBLIGATIONS — 3.3%

 

  56,652,000    

U.S. Treasury Bills, 0.295% to 0.551%††, 01/12/17 to 05/04/17

    56,620,659       56,619,301  
   

 

 

   

 

 

 
  TOTAL INVESTMENTS — 100.0%   $ 1,070,662,521       1,694,688,765  
   

 

 

   

Number of
Contracts

       

Expiration

Date

   

Unrealized
Appreciation

 
 

FUTURES CONTRACTS — SHORT POSITION

 

  (235)    

S&P 500 E-Mini Futures(c)

    03/17/17      $ (405,057
     

 

 

 
   

Market

Value

 

Other Assets and Liabilities (Net)

    (835,328

PREFERRED STOCK
(12,537,334 preferred shares outstanding)

    (413,333,350
 

 

 

 

NET ASSETS — COMMON STOCK
(219,240,166 common shares outstanding)

  $ 1,280,115,030  
 

 

 

 

NET ASSET VALUE PER COMMON SHARE
($1,280,115,030 ÷ 219,240,166 shares outstanding)

  $ 5.84  
 

 

 

 

 

(a)

Securities, or a portion thereof, with a value of $32,928,800 were pledged as collateral for futures contracts.

(b)

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2016, the market value of the Rule 144A security amounted to $3,526,250 or 0.21% of total investments.

(c)

At December 31, 2016, all of the futures contracts sold were held at UBS Securities LLC.

Non-income producing security.

††

Represents annualized yield at date of purchase.

ADR

American Depositary Receipt

SDR

Swedish Depositary Receipt

 

Geographic Diversification

 

% of Total
Investments

   

Market

Value

 

North America

    83.7%          $1,419,078,360  

Europe

    12.7             214,655,549  

Latin America

    2.0             33,419,795  

Japan

    1.6             26,973,365  

Asia/Pacific

        0.0                         561,696  

Total Investments

    100.0%          $1,694,688,765  
 

 

See accompanying notes to financial statements.

 

10


The Gabelli Equity Trust Inc.

 

Statement of Assets and Liabilities

December 31, 2016

 

 

Assets:

  

Investments, at value (cost $1,070,662,521)

   $ 1,694,688,765  

Cash

     71,082  

Deposit at brokers

     1,227,875  

Receivable for investments sold

     119,619  

Receivable for Fund shares sold

     4,320  

Dividends and interest receivable

     2,407,015  

Variation margin receivable

     104,575  

Deferred offering expense

     77,977  
  

 

 

 

Total Assets

     1,698,701,228  
  

 

 

 

Liabilities:

  

Distributions payable

     240,811  

Payable for Fund shares redeemed

     50,000  

Payable for investments purchased

     773,875  

Payable for investment advisory fees

     2,900,071  

Payable for payroll expenses

     72,645  

Payable for accounting fees

     7,500  

Payable for auction agent fees

     873,578  

Other accrued expenses

     334,368  
  

 

 

 

Total Liabilities

     5,252,848  
  

 

 

 

Cumulative Preferred Stock, $0.001 par value:

  

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

     72,000,000  

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

     59,096,500  

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

     28,000,000  

Series G (5.000%, $25 liquidation value, 3,280,477 shares authorized with 2,789,701 shares issued and outstanding)

     69,742,525  

Series H (5.000%, $25 liquidation value, 4,198,880 shares authorized with 4,179,773 shares issued and outstanding)

     104,494,325  

Series J (5.450%, $25 liquidation value, 4,500,000 shares authorized with 3,200,000 shares issued and outstanding)

     80,000,000  
  

 

 

 

Total Preferred Stock

     413,333,350  
  

 

 

 

Net Assets Attributable to Common Shareholders

   $ 1,280,115,030  
  

 

 

 

Net Assets Attributable to Common Shareholders Consist of:

  

Paid-in capital

   $ 667,708,707  

Distributions in excess of net investment income

     (690,575

Distributions in excess of net realized gain on investments, futures contracts, and foreign currency transactions

     (10,508,271

Net unrealized appreciation on investments

     624,026,244  

Net unrealized depreciation on futures contracts

     (405,057

Net unrealized depreciation on foreign currency translations

     (16,018
  

 

 

 

Net Assets

   $ 1,280,115,030  
  

 

 

 

Net Asset Value per Common Share:

  

($1,280,115,030 ÷ 219,240,166 shares outstanding at $0.001 par value; 237,024,900 shares authorized)

   $ 5.84  
  

 

 

 

Statement of Operations

For the Year Ended December 31, 2016

 

 

Investment Income:

  

Dividends (net of foreign withholding taxes of $1,076,175)

   $ 33,876,502  

Interest

     (316,700 )* 
  

 

 

 

Total Investment Income

     33,559,802  
  

 

 

 

Expenses:

  

Investment advisory fees

     16,519,458  

Shareholder communications expenses

     367,626  

Custodian fees

     211,516  

Directors’ fees

     180,000  

Payroll expenses

     157,384  

Shareholder services fees

     146,606  

Legal and audit fees

     98,484  

Shelf registration expense

     71,491  

Accounting fees

     45,000  

Interest expense

     2,630  

Miscellaneous expenses

     351,455  
  

 

 

 

Total Expenses

     18,151,650  
  

 

 

 

Less:

  

Advisory fee reduction on unsupervised assets (See Note 3)

     (3,528

Expenses paid indirectly by broker (See Note 3)

     (11,699

Custodian fee credits

     (334
  

 

 

 

Total Reductions and Credits

     (15,561
  

 

 

 

Net Expenses

     18,136,089  
  

 

 

 

Net Investment Income

     15,423,713  
  

 

 

 

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

  

Net realized gain on investments

     135,968,306  

Net realized loss on futures contracts

     (3,962,478

Net realized loss on foreign currency transactions

     (88,258
  

 

 

 

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

     131,917,570  
  

 

 

 

Net change in unrealized appreciation/depreciation:

 

on investments

     34,550,005  

on futures contracts

     (405,057

on foreign currency translations

     (7,692
  

 

 

 

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

     34,137,256  
  

 

 

 

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

     166,054,826  
  

 

 

 

Net Increase in Net Assets Resulting from Operations

     181,478,539  
  

 

 

 

Total Distributions to Preferred Shareholders

     (16,210,880
  

 

 

 

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

   $ 165,267,659  
  

 

 

 

 

*

Includes amortization of bond premiums which exceeded the aggregate of interest accrued to income for the period.

 

 

See accompanying notes to financial statements.

 

11


The Gabelli Equity Trust Inc.

Statement of Changes in Net Assets Attributable to Common Shareholders

 

 

     Year Ended
December 31, 2016
  Year Ended
December 31, 2015

Operations:

        

Net investment income

     $ 15,423,713     $ 12,876,072

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

       131,917,570       108,195,220

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

       34,137,256       (205,789,442 )
    

 

 

     

 

 

 

Net Increase/(Decrease) in Net Assets Resulting from Operations

       181,478,539       (84,718,150 )
    

 

 

     

 

 

 

Distributions to Preferred Shareholders:

        

Net investment income

       (2,007,644 )       (1,288,253 )

Net realized gain

       (14,203,236 )       (11,017,614 )
    

 

 

     

 

 

 

Total Distributions to Preferred Shareholders

       (16,210,880 )       (12,305,867 )
    

 

 

     

 

 

 

Net Increase/(Decrease) in Net Assets Attributable to Common Shareholders Resulting from Operations

       165,267,659       (97,024,017 )
    

 

 

     

 

 

 

Distributions to Common Shareholders:

        

Net investment income

       (16,172,854 )       (11,363,839 )

Net realized gain

       (114,416,126 )       (97,187,735 )

Return of capital

       (957,245 )       (31,765,154 )
    

 

 

     

 

 

 

Total Distributions to Common Shareholders

       (131,546,225 )       (140,316,728 )
    

 

 

     

 

 

 

Fund Share Transactions:

        

Net decrease in net assets from preferred offering cost charged to capital

       (2,845,000 )      

Net increase in net assets from repurchase of preferred shares

       81,639       6,683
    

 

 

     

 

 

 

Net Increase/(Decrease) in Net Assets from Fund Share Transactions

       (2,763,361 )       6,683
    

 

 

     

 

 

 

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

       30,958,073       (237,334,062 )

Net Assets Attributable to Common Shareholders:

        

Beginning of year

       1,249,156,957       1,486,491,019
    

 

 

     

 

 

 

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

     $ 1,280,115,030     $ 1,249,156,957
    

 

 

     

 

 

 

 

See accompanying notes to financial statements.

 

12


The Gabelli Equity Trust Inc.

Financial Highlights

 

Selected data for a common share outstanding throughout each year:

   

Year Ended December 31,

 
   

2016

   

2015

   

2014

   

2013

   

2012

 

Operating Performance:

                   

Net asset value, beginning of year

         $ 5.70            $ 6.78            $ 7.23            $ 5.60            $ 5.20  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

      0.07         0.06         0.07         0.06         0.09  

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

      0.75         (0.44       0.30         2.26         0.97  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total from investment operations

      0.82         (0.38       0.37         2.32         1.06  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions to Preferred Shareholders: (a)

                   

Net investment income

      (0.01       (0.01       (0.01       (0.01       (0.03

Net realized gain

      (0.06       (0.05       (0.05       (0.06       (0.05
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions to preferred shareholders

      (0.07       (0.06       (0.06       (0.07       (0.08
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net Increase/(Decrease) in Net Assets Attributable to Common Shareholders Resulting from Operations

      0.75         (0.44       0.31         2.25         0.98  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions to Common Shareholders:

                   

Net investment income

      (0.08       (0.05       (0.05       (0.05       (0.06

Net realized gain

      (0.52       (0.44       (0.49       (0.57       (0.11

Return of capital

      (0.00 )(b)        (0.15       (0.10               (0.39
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions to common shareholders

      (0.60       (0.64       (0.64       (0.62       (0.56
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Fund Share Transactions:

                   

Decrease in net asset value from common share transactions

                      (0.12       0.00 (b)         

Increase in net asset value from repurchase of preferred shares

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

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

      (0.01                       0.00 (b)        (0.02
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Fund share transactions

      (0.01       0.00 (b)        (0.12       0.00 (b)        (0.02
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net Asset Value Attributable to Common Shareholders, End of Year

    $ 5.84       $ 5.70       $ 6.78       $ 7.23       $ 5.60  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

NAV total return †

      13.66       (6.85 )%        4.68       41.90       19.05
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Market value, end of year

    $ 5.52       $ 5.31       $ 6.47       $ 7.75       $ 5.58  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Investment total return ††

      15.71       (8.54 )%        (6.08 )%        52.44       23.62
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets and Supplemental Data:

                   

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

    $ 1,693,448       $ 1,582,823       $ 1,820,361       $ 1,712,663       $ 1,384,961  

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

    $ 1,280,115       $ 1,249,157       $ 1,486,491       $ 1,378,436       $ 1,050,451  

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

      1.23       0.91       0.82       0.84       1.54

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

                   

before fee reductions

      1.44 %(c)        1.36 %(c)        1.37       1.40       1.48

net of fee reductions, if any

      1.44 %(c)        1.25 %(c)        1.33       1.40       1.48

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

                   

before fee reductions

      1.10 %(c)        1.10 %(c)        1.10       1.10       1.12

net of fee reductions, if any

      1.10 %(c)        1.01 %(c)        1.07       1.10       1.12

Portfolio turnover rate

      12.7       8.9       10.9       10.0       4.2

 

See accompanying notes to financial statements.

 

13


The Gabelli Equity Trust Inc.

Financial Highlights (Continued)

 

 

   

Year Ended December 31,

 
   

2016

   

2015

   

2014

   

2013

   

2012

 

Cumulative Preferred Stock:

                                                      

Auction Rate Series C

                   

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

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

Total shares outstanding (in 000’s)

      3         3         3         3         3  

Liquidation preference per share

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

Liquidation value(d)

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

Asset coverage per share(e)

    $ 102,426       $ 118,593       $ 136,308       $ 128,106       $ 103,507  

5.875% Series D

                   

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

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

Total shares outstanding (in 000’s)

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

Liquidation preference per share

    $ 25.00       $ 25.00       $ 25.00       $ 25.00       $ 25.00  

Average market value(f)

    $ 26.22       $ 25.69       $ 25.21       $ 25.27       $ 25.75  

Asset coverage per share(e)

    $ 102.43       $ 118.59       $ 136.31       $ 128.11       $ 103.51  

Auction Rate Series E

                   

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

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

Total shares outstanding (in 000’s)

      1         1         1         1         1  

Liquidation preference per share

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

Liquidation value(d)

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

Asset coverage per share(e)

    $ 102,426       $ 118,593       $ 136,308       $ 128,106       $ 103,507  

5.000% Series G

                   

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

    $ 69,743       $ 69,925       $ 70,099       $ 70,373       $ 70,413  

Total shares outstanding (in 000’s)

      2,791         2,797         2,804         2,815         2,817  

Liquidation preference per share

    $ 25.00       $ 25.00       $ 25.00       $ 25.00       $ 25.00  

Average market value(f)

    $ 24.67       $ 23.78       $ 23.32       $ 23.91       $ 26.01  

Asset coverage per share(e)

    $ 102.43       $ 118.59       $ 136.31       $ 128.11       $ 103.51  

5.000% Series H

                   

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

    $ 104,494       $ 104,644       $ 104,674       $ 104,757       $ 105,000  

Total shares outstanding (in 000’s)

      4,180         4,186         4,187         4,190         4,200  

Liquidation preference per share

    $ 25.00       $ 25.00       $ 25.00       $ 25.00       $ 25.00  

Average market value(f)

    $ 25.00       $ 24.33       $ 22.82       $ 23.85       $ 25.55  

Asset coverage per share(e)

    $ 102.43       $ 118.59       $ 136.31       $ 128.11       $ 103.51  

5.450% Series J

                   

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

    $ 80,000                                  

Total shares outstanding (in 000’s)

      3,200                              

Liquidation preference per share

    $ 25.00                                  

Average market value(f)

    $ 25.43                                  

Asset coverage per share(e)

    $ 102.43                                  

Asset Coverage(g)

      410       474       545       512       414

 

For years ended December 31, 2016, 2015, 2014, and 2013 based on net asset value per share, adjusted for reinvestment of distributions at net asset value on the ex-dividend date. The year ended 2012 was based on net asset value per share, adjusted for reinvestment of distributions at prices obtained under the Fund’s dividend reinvestment plan.

††

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

(a)

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

(b)

Amount represents less than $0.005 per share.

(c)

The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the years ended December 31, 2016 and 2015, there was no impact on the expense ratios.

(d)

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

(e)

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

(f)

Based on weekly prices.

(g)

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

 

See accompanying notes to financial statements.

 

14


The Gabelli Equity Trust Inc.

Notes to Financial Statements

 

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

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

2. Significant Accounting Policies. As an investment company, the Fund follows the investment company accounting and reporting guidance, which is part of U.S. generally accepted accounting principles (“GAAP”) that may require the use of management estimates and assumptions in the preparation of its financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.

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

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

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

 

15


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

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

 

  Level 1        quoted prices in active markets for identical securities;

  Level 2      

 other significant  observable  inputs  (including  quoted  prices for  similar  securities,  interest rates,

  prepayment speeds, credit risk, etc.); and

  Level 3      

 significant   unobservable  inputs   (including  the  Board’s  determinations  as  to  the  fair  value  of

  investments).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities and other financial instruments by inputs used to value the Fund’s investments as of December 31, 2016 is as follows:

 

     Valuation Inputs     
     Level 1
Quoted Prices
  Level 2 Other Significant
Observable Inputs
   Level 3 Significant
Unobservable Inputs
   Total Market Value
at 12/31/16
          

INVESTMENTS IN SECURITIES:

                  

ASSETS (Market Value):

                  

Common Stocks:

                  

Aerospace and Defense

     $ 33,625,792     $ 68,539               $     33,694,331

Energy and Utilities

       72,920,234            $ 0        72,920,234

Manufactured Housing and Recreational Vehicles

       1,756,970       502,350               2,259,320

Other Industries (a)

       1,524,636,361                     1,524,636,361

Total Common Stocks

       1,632,939,357       570,889        0        1,633,510,246

Convertible Corporate Bonds (a)

             3,526,250               3,526,250

Convertible Preferred Stocks (a)

       1,032,280                   1,032,280

Rights (a)

       51                     51

Warrants (a)

       637                     637

U.S. Government Obligations

             56,619,301               56,619,301

TOTAL INVESTMENTS IN SECURITIES – ASSETS

     $ 1,633,972,325     $ 60,716,440      $ 0        $1,694,688,765

 

OTHER FINANCIAL INSTRUMENTS:*

                  

LIABILITIES (Net Unrealized Depreciation):

                  

EQUITY CONTRACTS

                  

Index Futures Contracts - Short Position

     $ (405,057 )                     $         (405,057

 

(a)

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

*

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

The Fund did not have material transfers among Level 1, Level 2, and Level 3 during the year ended December 31, 2016. The Fund’s policy is to recognize transfers among Levels as of the beginning of the reporting period.

 

16


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

Additional Information to Evaluate Qualitative Information.

General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds is ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.

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

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

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

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

 

17


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

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

The Fund’s derivative contracts held at December 31, 2016, if any, are not accounted for as hedging instruments under GAAP and are disclosed in the Schedule of Investments together with the related counterparty.

Swap Agreements. The Fund may enter into equity contract for difference swap transactions for the purpose of increasing the income of the Fund. The use of swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. In an equity contract for difference swap, a set of future cash flows is exchanged between two counterparties. One of these cash flow streams will typically be based on a reference interest rate combined with the performance of a notional value of shares of a stock. The other will be based on the performance of the shares of a stock. Depending on the general state of short term interest rates and the returns on the Fund’s portfolio securities at the time an equity contract for difference swap transaction reaches its scheduled termination date, there is a risk that the Fund will not be able to obtain a replacement transaction or that the terms of the replacement will not be as favorable as on the expiring transaction.

During the year ended December 31, 2016, the Fund held no investments in equity contract for difference swap agreements.

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

There are several risks in connection with the use of futures contracts as a hedging instrument. The change in value of futures contracts primarily corresponds with the value of their underlying instruments, which may not correlate with the change in value of the hedged investments. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market. Open positions in futures contracts at December 31, 2016 are presented within the Schedule of Investments.

The Fund’s volume of equity futures contracts held during the year ended December 31, 2016 had an average monthly notional amount of approximately $23,928,969 while outstanding.

 

18


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

At December 31, 2016, the Fund’s derivative assets (by type) are as follows:

 

        Gross Amount of
   Recognized Assets
   Presented in the
   Statement of
   Assets and Liabilities
   

Gross Amount
Available for

Offset in the
Statement of Assets
and Liabilities

   

Net Amount of  
Assets Presented in the  
Statement of  

Assets and Liabilities  

 
  

 

 

 

Assets

      

Futures Contracts

     $104,575             $104,575  

At December 31, 2016, the Fund’s derivative assets (by counterparty) are as follows:

 

     Net Amounts Not Offset in the Statement of
Assets and Liabilities
 
       Net Amount of Assets
  Presented in the
  Statement of Assets and
  Liabilities
     Financial Instruments           Cash Collateral
      Received
          Net Amount            
  

 

 

 

Counterparty

             

UBS Securities LLC

     $104,575        $(104,575)                 —              

As of December 31, 2016, the equity risk exposure associated with the futures contracts can be found in the Statement of Assets and Liabilities, under Assets, Variation margin receivable. For the year ended December 31, 2016, the effect of futures contracts with equity risk exposure can be found in the Statement of Operations, under Net Realized and Unrealized Gain/(Loss) on Investments, Futures Contracts, and Foreign Currency, Net realized loss on futures contracts, and Net change in unrealized appreciation/depreciation on futures contracts.

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

 

19


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

Investments in Other Investment Companies. The Fund may invest, from time to time, in shares of other investment companies (or entities that would be considered investment companies but are excluded from the definition pursuant to certain exceptions under the 1940 Act) (the “Acquired Funds”) in accordance with the 1940 Act and related rules. Shareholders in the Fund would bear the pro rata portion of the periodic expenses of the Acquired Funds in addition to the Fund’s expenses. For the year ended December 31, 2016, the Fund’s pro rata portion of the periodic expenses charged by the Acquired Funds was less than 1 basis point.

Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at current exchange rates. Purchases and sales of investment securities, income, and expenses are translated at the exchange rate prevailing on the respective dates of such transactions. Unrealized gains and losses that result from changes in foreign exchange rates and/or changes in market prices of securities have been included in unrealized appreciation/depreciation on investments and foreign currency translations. Net realized foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade date and settlement date on investment securities transactions, foreign currency transactions, and the difference between the amounts of interest and dividends recorded on the books of the Fund and the amounts actually received. The portion of foreign currency gains and losses related to fluctuation in exchange rates between the initial purchase trade date and subsequent sale trade date is included in realized gain/(loss) on investments.

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

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

Restricted Securities. The Fund may invest up to 10% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than the sale of securities eligible for trading on national securities exchanges or in the over-the-counter markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. Securities freely saleable among qualified institutional investors under special rules adopted by the SEC may be treated as liquid if they satisfy liquidity standards established by the Board. The continued liquidity of such securities is not as well assured as that of publicly traded securities, and, accordingly, the Board will monitor their liquidity. At December 31, 2016, the Fund held no restricted securities.

 

20


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

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

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

Distributions to Shareholders. Distributions to common shareholders are recorded on the ex-dividend date. Distributions to shareholders are based on income and capital gains as determined in accordance with federal income tax regulations, which may differ from income and capital gains as determined under GAAP. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. Distributions from net investment income for federal income tax purposes include net realized gains on foreign currency transactions. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. Permanent differences were primarily due to tax treatment of foreign currency gains and losses, and disallowed expenses. These reclassifications have no impact on the NAV of the Fund. For the year ended December 31, 2016, reclassifications were made to decrease distributions in excess of net investment income by $2,630,498 and increase distributions in excess of net realized gain on investments, futures contracts, and foreign currency transactions by $2,571,348, with an offsetting adjustment to paid-in capital.

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

Distributions to shareholders of the Fund’s Series C Auction Rate Cumulative Preferred Stock, 5.875% Series D Cumulative Preferred Stock, Series E Auction Rate Cumulative Preferred Stock, Series G Cumulative Preferred Stock, 5.000% Series H Cumulative Preferred Stock, and 5.450% Series J Cumulative Preferred Stock (“Preferred Stock”) are recorded on a daily basis and are determined as described in Note 5.

 

21


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

The tax character of distributions paid during the years ended December 31, 2016 and 2015 was as follows:

 

    

        Year Ended           

     December 31, 2016     

     Year Ended
December 31, 2015
 
    

 Common 

    

 Preferred

     Common      Preferred  

Distributions paid from:

           

Ordinary income (inclusive of short term capital gains)

   $ 18,270,058      $ 2,267,984      $ 13,597,676      $ 1,541,490  

Net long term capital gains

     112,318,922        13,942,896        94,953,898        10,764,377  

Return of capital

     957,245               31,765,154         
  

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions paid

   $ 131,546,225      $ 16,210,880      $ 140,316,728      $ 12,305,867  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

As of December 31, 2016, the components of accumulated earnings/losses on a tax basis were as follows:

 

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

   $ 612,647,136  

Other temporary differences*

     (240,813
  

 

 

 

Total

   $ 612,406,323  
  

 

 

 

 

*

Other temporary differences were primarily due to distributions payable.

At December 31, 2016, the temporary differences between book basis and tax basis unrealized appreciation were primarily due to deferral of losses from wash sales for tax purposes, adjustments on the sale of securities no longer deemed passive foreign investment companies, and basis adjustments on investments in partnerships.

The following summarizes the tax cost of investments and the related net unrealized appreciation at December 31, 2016:

 

     Cost         Gross
Unrealized
Appreciation
        Gross
Unrealized
Depreciation
       Net Unrealized
Appreciation

Investments

   $1,082,025,610       $683,096,663       $(70,433,508)      $612,663,155

The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. For the year ended December 31, 2016, the Fund did not incur any income tax, interest, or penalties. As of December 31, 2016, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. The Fund’s federal and state tax returns for the prior three fiscal years remain open, subject to examination. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.

3. Investment Advisory Agreement and Other Transactions. The Fund has entered into an investment advisory agreement (the “Advisory Agreement”) with the Adviser which provides that the Fund will pay the

 

22


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

Adviser a fee, computed weekly and paid monthly, equal on an annual basis to 1.00% of the value of the Fund’s average weekly net assets including the liquidation value of preferred stock. In accordance with the Advisory Agreement, the Adviser provides a continuous investment program for the Fund’s portfolio and oversees the administration of all aspects of the Fund’s business and affairs.

As per the approval of the Board, the Fund compensates officers of the Fund, who are employed by the Fund and are not employed by the Adviser (although the officers may receive incentive based variable compensation from affiliates of the Adviser). For the year ended December 31, 2016, the Fund paid or accrued $157,384 in payroll expenses in the Statement of Operations.

The Adviser has agreed to reduce the management fee on the incremental assets attributable to the Series C, Series D, and Series E Preferred Stock (“C, D, and E Preferred Stock”) if the total return of the NAV of the common shares of the Fund, including distributions and advisory fee subject to reduction, does not exceed the stated dividend rate or corresponding swap rate of the C, D, and E Preferred Stock for the year. The Fund’s total return on the NAV of the common shares is monitored on a monthly basis to assess whether the total return on the NAV of the common shares exceeds the stated dividend rate of the C, D, and E Preferred Stock for the period. For the year ended December 31, 2016, the Fund’s total return on the NAV of the common shares exceeded the dividend rate of the outstanding C, D, and E Preferred Stock. Thus, advisory fees of the C, D, and E Preferred Stock were not reduced.

During the year ended December 31, 2016, the Fund paid $66,268 in brokerage commissions on security trades to G.research, LLC, an affiliate of the Adviser.

During the year ended December 31, 2016, the Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. The amount of such expenses paid through this directed brokerage arrangement during this period was $11,699.

The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement between the Fund and the Adviser. During the year ended December 31, 2016, the Fund paid or accrued $45,000 to the Adviser in connection with the cost of computing the Fund’s NAV.

There was a reduction in the advisory fee paid to the Adviser relating to certain portfolio holdings, i.e., unsupervised assets, of the Fund with respect to which the Adviser transferred dispositive and voting control to the Fund’s Proxy Voting Committee. During the year ended December 31, 2016, the Fund’s Proxy Voting Committee exercised control and discretion over all rights to vote or consent with respect to such securities, and the Adviser reduced its fee with respect to such securities by $3,528.

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

 

23


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

Fund engaged in purchase and sale transactions with funds that have a common investment adviser. These purchase and sales transactions complied with Rule 17a-7 under the Act and amounted to $3,706,730 and $3,467,730, respectively.

4. Portfolio Securities. Purchases and sales of securities during the year ended December 31, 2016, other than short term securities and U.S. Government obligations, aggregated $202,440,557 and $300,410,630, respectively.

5. Capital. The Fund’s Articles of Incorporation, as amended, permit the Fund to issue 237,024,900 shares of common stock (par value $0.001) and authorizes the Board to increase its authorized shares from time to time. The Board has authorized the repurchase of its shares on the open market when the shares are trading on the NYSE at a discount of 10% or more (or such other percentage as the Board may determine from time to time) from the NAV of the shares. During the years ended December 31, 2016 and 2015, the Fund did not repurchase any shares of its common stock in the open market and did not issue new shares upon reinvestment of distributions.

The Fund has an effective shelf registration authorizing the offering of an additional $500 million of common or preferred shares.

On September 19, 2014, the Fund distributed one transferable right for each of the 191,839,279 common shares outstanding on that date. Seven rights were required to purchase one additional common share at the subscription price of $5.75 per share. On October 27, 2014, the Fund issued 27,405,612 common shares receiving net proceeds of $156,969,797, after the deduction of offering expenses of $612,472. The NAV of the Fund was reduced by $0.12 per share on the day the additional shares were issued. The additional shares were issued below NAV.

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

For Series C and Series E Preferred Stocks, the dividend rates, as set by the auction process that is generally held every seven days, are expected to vary with short term interest rates. Since February 2008, the number of shares of Series C and Series E Preferred Stock subject to bid orders by potential holders has been less than the number of shares of Series C and Series E Preferred Stock subject to sell orders. Holders that have

 

24


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

submitted sell orders have not been able to sell any or all of the Series C and Series E Preferred Stock for which they have submitted sell orders. Therefore, the weekly auctions have failed, and the dividend rate has been the maximum rate. For Series C and Series E Preferred Stock, the maximum auction rate is 175% of the “AA” Financial Composite Commercial Paper Rate. Existing Series C and Series E shareholders may submit an order to hold, bid, or sell such shares on each auction date, or trade their shares in the secondary market.

The Fund may redeem at any time, in whole or in part, the Series C, Series D, and Series E Preferred Stock at their respective redemption prices. In addition, the Board has authorized the repurchase of Series D Preferred Stock in the open market at prices less than the $25 liquidation value per share. During the years ended December 31, 2016 and 2015, the Fund did not repurchase or redeem any shares of Series C, Series D, and Series E Preferred Stock.

On March 31, 2016, the Fund received net proceeds of $77,155,000 (after underwriting discounts of $2,520,000 and estimated offering expenses of $325,000) from the public offering of 3,200,000 shares of Series J Preferred.

Commencing July 31, 2017, September 27, 2017, and March 31, 2021, and anytime thereafter, the Fund, at its option, may redeem the Series G, Series H, and Series J Preferred Stock, respectively, in whole or in part at the redemption price. In addition, the Board has authorized the repurchase of the Series G and Series H Preferred Stock in the open market at prices less than the $25 liquidation value per share. During the years ended December 31, 2016 and 2015, the Fund repurchased and retired 7,300 and 6,960 of the Series G Preferred in the open market at an investment of $169,201 and $159,988 and average discounts of approximately 7.33% and 8.09%, respectively from its liquidation preference. During the years ended December 31, 2016 and 2015, the Fund repurchased and retired 6,000 and 1,200 of the Series H Preferred in the open market at an investment of $138,542 and $28,968 and an average discount of approximately 7.68% and 3.60%, respectively, from its liquidation preference.

As of December 31, 2016 after considering the 2014 common share rights offering and the Series J Preferred offering, the Fund has approximately $262 million available for issuance under the current shelf.

The following table summarizes Cumulative Preferred Stock information:

 

Series    Issue Date    Issued/
Authorized
     Number of Shares
Outstanding at
12/31/2016
     Net Proceeds    2016 Dividend
Rate Range
   Dividend
Rate at
12/31/2016
  Accrued
Dividends at
12/31/2016

 

C Auction Rate

   June 27, 2002      5,200         2,880              $128,246,557    0.525% to 1.173%    1.155%   $  9,240

D 5.875%

   October 7, 2003      3,000,000         2,363,860              $  72,375,842    Fixed Rate    5.875%   $48,221

E Auction Rate

   October 7, 2003      2,000         1,120              $  49,350,009    0.525% to 1.155%    1.155%   $  1,797

G 5.000%

   August 1, 2012      3,280,477         2,789,701              $  69,643,042    Fixed Rate    5.000%   $48,432

H 5.000%

   September 28, 2012      4,198,880         4,179,773              $101,028,958    Fixed Rate    5.000%   $72,565

J 5.450%

   March 28, 2016      4,500,000         3,200,000              $  77,155,000    Fixed Rate    5.450%   $60,556

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

 

25


The Gabelli Equity Trust Inc.

Notes to Financial Statements (Continued)

 

 

approval of a majority (as defined in the 1940 Act) of the outstanding preferred stock and a majority (as defined in the 1940 Act) of the Fund’s outstanding voting securities are required to approve certain other actions, including changes in the Fund’s investment objectives or fundamental investment policies.

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

7. Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.

 

26


The Gabelli Equity Trust Inc.

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Shareholders of

The Gabelli Equity Trust Inc.:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets attributable to common shareholders and the financial highlights present fairly, in all material respects, the financial position of The Gabelli Equity Trust Inc. (the “Fund”) as of December 31, 2016, the results of its operations for the year then ended, the changes in its net assets attributable to common shareholders for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of December 31, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

New York, New York

February 28, 2017

 

27


The Gabelli Equity Trust Inc.

Additional Fund Information (Unaudited)

 

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

 

Name, Position(s)

Address1

and Age

 

Term of Office
and Length of
Time Served2

 

Number of

Funds in Fund

Complex

Overseen by

Director

 

Principal Occupation(s)

During Past Five Years

 

Other Directorships

Held by Director3

INTERESTED DIRECTORS4 :

Mario J. Gabelli, CFA

Director and Chief Investment Officer

Age: 74

  Since 1986***   31   Chairman, Chief Executive Officer, and Chief Investment Officer–Value Portfolios of GAMCO Investors, Inc. and Chief Investment Officer– Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Director/ Trustee or Chief Investment Officer of other registered investment companies within the Gabelli/GAMCO Fund Complex; Chief Executive Officer of GGCP, Inc.; Executive Chairman of Associated Capital Group, Inc.   Director of Morgan Group Holdings, Inc. (holding company); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services company); Director of CIBL, Inc. (broadcasting and wireless communications); Director of ICTC Group Inc. (communications); Director of RLJ Acquisition Inc. (blank check company) (2011-2012)

 

INDEPENDENT DIRECTORS5 :

Anthony J. Colavita6

Director

Age: 81

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

James P. Conn6

Director

Age: 78

  Since 1989**   22   Former Managing Director and Chief Investment Officer of Financial Security Assurance Holdings Ltd. (1992-1998)  

Frank J. Fahrenkopf, Jr.

Director

Age: 77

  Since 1998*   11   Co-Chairman of the Commission on Presidential Debates; Former President and Chief Executive Officer of the American Gaming Association (1995-2013); Former Chairman of the Republican National Committee (1983-1989)   Director of First Republic Bank (banking)

Arthur V. Ferrara

Director

Age: 86

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

William F. Heitmann

Director

Age: 67

  Since 2012***   4   Managing Director and Senior Advisor of Perlmutter Investment Company (real estate); Senior Vice President of Finance, Verizon Communications, and President, Verizon Investment Management (1971-2011)  

Anthony R. Pustorino

Director

Age: 91

  Since 1986**   13   Certified Public Accountant; Professor Emeritus, Pace University   Director of The LGL Group, Inc. (diversified manufacturing) (2004-2011)

Salvatore J. Zizza

Director

Age: 71

  Since 1986*   30   President of Zizza & Associates Corp. (private holding company); Chairman of Harbor Diversified, Inc. (pharmaceuticals); Chairman of BAM (semiconductor and aerospace manufacturing); Chairman of Bergen Cove Realty Inc.; Chairman of Metropolitan Paper Recycling Inc. (recycling) (2005-2014)   Director and Vice Chairman of Trans-Lux Corporation (business services); Director and Chairman of Harbor Diversified Inc. (pharmaceuticals); Director, Chairman, and CEO of General Employment Enterprises (staffing services) (2009-2012)

 

28


The Gabelli Equity Trust Inc.

Additional Fund Information (Continued) (Unaudited)

 

 

Name, Position(s)

Address1

and Age

  

Term of Office

and Length of

Time Served2

    

Principal Occupation(s)

During Past Five Years

OFFICERS:        

Bruce N. Alpert

President

Age: 65

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

Andrea R. Mango

Vice President and

Secretary

Age: 44

   Since 2013      Vice President of GAMCO Investors, Inc. since 2016; Counsel of Gabelli Funds, LLC since 2013; Secretary of all registered investment companies within the Gabelli/GAMCO Fund Complex since 2013; Vice President of all closed-end funds within the Gabelli/GAMCO Fund Complex since 2014; Corporate Vice President within the Corporate Compliance Department of New York Life Insurance Company, 2011-2013; Vice President and Counsel of Deutsche Bank, 2006-2011

Agnes Mullady

Treasurer

Age: 58

   Since 2006      President and Chief Operating Officer of the Fund Division of Gabelli Funds, LLC since 2010; Chief Executive Officer of G.distributors, LLC since 2010; Senior Vice President of GAMCO Investors, Inc. since 2009; Vice President of Gabelli Funds, LLC since 2007; Executive Vice President of Associated Capital Group, Inc. since November 2016; Officer of all of the registered investment companies within the Gabelli/GAMCO Fund Complex

Richard J.Walz

Chief Compliance Officer

Age: 57

   Since 2013      Chief Compliance Officer of all of the registered investment companies within the Gabelli/ GAMCO Fund Complex since 2013; Chief Compliance Officer of AEGON USA Investment Management, 2011-2013; Chief Compliance Officer of Cutwater Asset Management, 2004-2011

Carter W. Austin

Vice President

Age: 50

   Since 2000      Vice President and/or Ombudsman of closed-end funds within the Gabelli/GAMCO Fund Complex; Senior Vice President of GAMCO Investors, Inc. since 2015 and Vice President (1996-2015) of Gabelli Funds, LLC

Molly A.F. Marion

Vice President and Ombudsman

Age: 62

   Since 2009      Vice President and/or Ombudsman of closed-end funds within the Gabelli/GAMCO Fund Complex; Vice President of GAMCO Investors, Inc. since 2012

David I. Schachter

Vice President

Age: 63

   Since 2013      Vice President and/or Ombudsman of closed-end funds within the Gabelli/GAMCO Fund Complex; Senior Vice President of GAMCO Investors, Inc. since 2015 and Vice President (1999-2015) of G.research, LLC

 

1 

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

2 

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

*  

– Term expires at the Fund’s 2017 Annual Meeting of Shareholders or until their successors are duly elected and qualified.

**  

– Term expires at the Fund’s 2018 Annual Meeting of Shareholders or until their successors are duly elected and qualified.

***  

– Term expires at the Fund’s 2019 Annual Meeting of Shareholders or until their successors are duly elected and qualified.

  

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

3 

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

4

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

5 

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

6 

Represents holders of the Fund’s Preferred Stock.

 

29


THE GABELLI EQUITY TRUST INC.

INCOME TAX INFORMATION (Unaudited)

December 31, 2016

Cash Dividends and Distributions

 

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

Common Stock

 

                 
    03/23/16        03/16/16        $0.15000        $0.01810        $0.13080        $0.00110        $5.38330  
    06/23/16        06/16/16        0.15000        0.01810        0.13080        0.00110        5.46620  
    09/23/16        09/16/16        0.15000        0.01810        0.13080        0.00110        5.60770  
    12/16/16        12/09/16        0.15000        0.01810        0.13080        0.00110        5.66270  
       

 

 

    

 

 

    

 

 

    

 

 

    
          $0.60000        $0.07240        $0.52320        $0.00440     

5.875% Series D Cumulative Preferred Stock

 

              
    03/28/16        03/21/16        $0.36719        $0.04471        $0.32248        
    06/27/16        06/20/16        0.36719        0.04471        0.32248        
    09/26/16        09/19/16        0.36719        0.04471        0.32248        
    12/27/16        12/19/16        0.36719        0.04471        0.32248        
       

 

 

    

 

 

    

 

 

       
          $1.46875        $0.17884        $1.28992        

5.000% Series G Cumulative Preferred Stock

 

              
    03/28/16        03/21/16        $0.31250        $0.03800        $0.27450        
    06/27/16        06/20/16        0.31250        0.03800        0.27450        
    09/26/16        09/19/16        0.31250        0.03800        0.27450        
    12/27/16        12/19/16        0.31250        0.03800        0.27450        
       

 

 

    

 

 

    

 

 

       
          $1.25000        $0.15200        $1.09800        

5.000% Series H Cumulative Preferred Stock

 

              
    03/28/16        03/21/16        $0.31250        $0.03800        $0.27450        
    06/27/16        06/20/16        0.31250        0.03800        0.27450        
    09/26/16        09/19/16        0.31250        0.03800        0.27450        
    12/27/16        12/19/16        0.31250        0.03800        0.27450        
       

 

 

    

 

 

    

 

 

       
          $1.25000        $0.15200        $1.09800        

5.450% Series J Cumulative Preferred Stock

 

              
    06/27/16        06/20/16        $0.32549        $0.03963        $0.28586        
    09/26/16        09/19/16        0.34062        0.04147        0.29915        
    12/27/16        12/19/16        0.34062        0.04147        0.29915        
       

 

 

    

 

 

    

 

 

       
          $1.00674        $0.12258        $0.88416        

Auction Rate Series C and E Cumulative Preferred Stock

Auction Rate Preferred Stocks pay dividends weekly based on the maximum rate. The distributions derived from long term capital gains for the Auction Rate Series C and Series E Cumulative Preferred Stock were $437,236 and $169,807, respectively.

A Form 1099-DIV has been mailed to all shareholders of record which sets forth specific amounts to be included in the 2016 tax returns. Ordinary income distributions include net investment income and realized net short term capital gains, if any. Ordinary income is reported in box 1a of Form 1099-DIV. Capital gain distributions are reported in box 2a of Form 1099-DIV. The long term gain distributions for the year ended December 31, 2016 were $126,261,818.

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

In 2016, the Fund paid to common, 5.875% Series D, 5.000% Series G, 5.000% Series H, and 5.450% Series J preferred shareholders ordinary income dividends totaling $0.07240, $0.17884, $0.15200, $0.15200, and $0.12258 per share, respectively. The Fund paid weekly distributions to auction rate Series C and Series E preferred shareholders at varying rates throughout the year, including an ordinary income dividend totaling $21.26169 and $21.33110 per share, respectively, in 2016. For the year ended December 31, 2016, 100% of the ordinary income dividend qualified for the dividend received deduction available to corporations, and 100% of the ordinary income distribution was deemed qualified dividend income and is reported in box 1b on Form 1099-DIV. The percentage of the ordinary income dividends paid by the Fund during 2016 derived from U.S. Government securities was 0.47%. Such income is exempt from state and local tax in all states. However, many states, including New York and California, allow a tax exemption for a portion of the income earned only if a mutual fund has invested at least 50% of its assets at the end of each quarter of the Fund’s fiscal year in U.S. Government securities. The Fund did not meet this strict requirement in 2016. The percentage of U.S. Government securities held as of December 31, 2016 was 3.34%. For the year ended December 31, 2016, 0.00% of the ordinary income dividend was qualified interest income.

 

30


THE GABELLI EQUITY TRUST INC.

INCOME TAX INFORMATION (Unaudited) (Continued)

December 31, 2016

 

Historical Distribution Summary

 

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

Common Stock

                 

2016

     $0.06280        $0.00960        $0.52320        $0.00440        $0.60000        $0.00440  

2015

     0.05210        0.01020        0.43270        0.14500        0.64000        0.14500  

2014

     0.04848        0.01772        0.47238        0.10143        0.64000        0.10143  

2013

     0.05000        0.06250        0.50750               0.62000         

2012

     0.05800        0.10800               0.39400        0.56000        0.39400  

2011

     0.01676        0.00430               0.54895        0.57000        0.54895  

2010

                          0.51000        0.51000        0.51000  

2009

     0.00040                      0.71960        0.72000        0.71960  

2008

     0.01000                      0.79000        0.80000        0.79000  

2007 (e)

     0.10455        0.05323        0.52679        0.63543        1.32000        0.63543  

5.875% Series D Cumulative Preferred Stock

                 

2016

     $0.15523        $0.02360        $1.28992               $1.46875         

2015

     0.15444        0.03023        1.28409               1.46876         

2014

     0.13222        0.04831        1.28822               1.46875         

2013

     0.11822        0.14819        1.20234               1.46875         

2012

     0.51428        0.95447                      1.46875         

2011

     1.16910        0.29965                      1.46875         

2010

     1.05723                      $0.41152        1.46875        $0.41152  

2009

     1.46875                             1.46875         

2008

     1.46875                             1.46875         

2007

     0.22096        0.11474        1.13305               1.46875         

5.000% Series G Cumulative Preferred Stock

                 

2016

     $0.13200        $0.02000        $1.09800               $1.25000         

2015

     0.13160        0.02560        1.09280               1.25000         

2014

     0.11240        0.04120        1.09640               1.25000         

2013

     0.11270        0.14110        1.14550               1.39930         

2012

     0.21155        0.39262                      0.60417         

5.000% Series H Cumulative Preferred Stock

                 

2016

     $0.13200        $0.02000        $1.09800               $1.25000         

2015

     0.13160        0.02560        1.09280               1.25000         

2014

     0.11240        0.04120        1.09640               1.25000         

2013

     0.10080        0.12600        1.02320               1.25000         

2012

     0.10700        0.19860                      0.30560         

5.450% Series J Cumulative Preferred Stock

                 

2016

     $0.10640        $0.01618        $0.88416               $1.00674         

 

31


THE GABELLI EQUITY TRUST INC.

INCOME TAX INFORMATION (Unaudited) (Continued)

December 31, 2016

Historical Distribution Summary (Continued)

 

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

Auction Rate Series C Cumulative Preferred Stock

 

              

2016

     $  18.45541        $    2.80628        $   153.35831               $   174.62000         

2015

     4.58660        0.89764        38.13575               43.61999         

2014

     2.81131        1.02727        27.39142               31.23000         

2013

     2.49523        3.12766        25.37712               31.00000         

2012

     13.04312        24.20688                      37.25000         

2011

     29.61842        7.59158                      37.21000         

2010

     47.84624                      $18.62376        66.47000        $18.62376  

2009

     70.60000                             70.60000         

2008

     760.66000                             760.66000         

2007

     203.92150        105.89030        1,045.88200               1,355.50000         

Auction Rate Series E Cumulative Preferred Stock

 

              

2016

     $  18.51566        $    2.81544        $   153.85890               $   175.19000         

2015

     4.84737        0.94868        40.30395               46.10000         

2014

     2.68709        0.98187        26.18104               29.85000         

2013

     2.56686        3.21745        26.10568               31.89000         

2012

     12.47587        23.15413                      35.63000         

2011

     27.47723        7.04277                      34.52000         

2010

     48.73162                      $18.96838        67.70000        $18.96838  

2009

     65.24000                             65.24000         

2008

     783.29000                             783.29000         

2007

     199.17211        103.42412        1,021.33377               1,323.93000         

(a) Total amounts may differ due to rounding.

(b) Non-taxable.

(c) Taxable as ordinary income.

(d) Decrease in cost basis

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

 

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

 

32


AUTOMATIC DIVIDEND REINVESTMENT

AND VOLUNTARY CASH PURCHASE PLANS

Enrollment in the Plan

It is the policy of The Gabelli Equity Trust Inc. (the “Fund”) to automatically reinvest dividends payable to common shareholders. As a “registered” shareholder, you automatically become a participant in the Fund’s Automatic Dividend Reinvestment Plan (the “Plan”). The Plan authorizes the Fund to credit shares of common stock 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 Fund. Plan participants may send their stock certificates to Computershare Trust Company, N.A. (“Computershare”) 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 Computershare

P.O. Box 30170

College Station, TX 77842-3170

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 or requesting a copy of the terms of the Plan may contact Computershare at (800) 336-6983.

If your shares are held in the name of a broker, bank, or nominee, you should contact such institution. If such institution is not participating in the Plan, your account will be credited with a cash dividend. In order to participate in the Plan through such institution, it may be necessary for you to have your shares taken out of “street name” and re-registered in your own name. Once registered in your own name, your dividends will be automatically reinvested. Certain brokers participate in the Plan. Shareholders holding shares in “street name” at participating institutions will have dividends automatically reinvested. Shareholders wishing a cash dividend at such institution must contact their broker to make this change.

The number of shares of common stock distributed to participants in the Plan in lieu of cash dividends is determined in the following manner. Under the Plan, whenever the market price of the Fund’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 Fund’s common stock. The valuation date is the dividend or distribution payment date or, if that date is not a New York Stock Exchange (“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 Fund valued at market price. If the Fund should declare a dividend or capital gains distribution payable only in cash, Computershare will buy common stock in the open market, or on the NYSE or elsewhere, for the participants’ accounts, except that Computershare will endeavor to terminate purchases in the open market and cause the Fund to issue shares at net asset value if, following the commencement of such purchases, the market value of the common stock exceeds the then current net asset value.

The automatic reinvestment of dividends and capital gains distributions will not relieve participants of any income tax which may be payable on such distributions. A participant in the Plan will be treated for federal income tax purposes as having received, on a dividend payment date, a dividend or distribution in an amount equal to the cash the participant could have received instead of shares.

Voluntary Cash Purchase Plan

The Voluntary Cash Purchase Plan is yet another vehicle for our shareholders to increase their investment in the Fund. In order to participate in the Voluntary Cash Purchase Plan, shareholders must have their shares registered in their own name.

Participants in the Voluntary Cash Purchase Plan have the option of making additional cash payments to Computershare for investments in the Fund’s shares at the then current market price. Shareholders may send an amount from $250 to $10,000. Computershare will use these funds to purchase shares in the open market on or about the 1st and 15th of each month. Computershare 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 Computershare, P.O. Box 43010, Providence, RI 02940–3010 such that Computershare receives such payments approximately 10 days before the 1st and 15th of the month. 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 Computershare at least 48 hours before such payment is to be invested.

Shareholders wishing to liquidate shares held at Computershare 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.

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 Fund.

The Fund 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 Computershare on at least 90 days written notice to participants in the Plan.

 

33


THE GABELLI EQUITY TRUST INC.

AND YOUR PERSONAL PRIVACY

Who are we?

The Gabelli Equity Trust Inc. (the “Fund”) is a closed-end management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940. We are managed by Gabelli Funds, LLC, which is affiliated with GAMCO Investors, Inc. GAMCO Investors, Inc. is a publicly held company that has subsidiaries that provide investment advisory services for a variety of clients.

What kind of non-public information do we collect about you if you become a Fund shareholder?

When you purchase shares of the Fund on the New York Stock Exchange, you have the option of registering directly with our transfer agent in order, for example, to participate in our dividend reinvestment plan.

 

   

Information you give us on your application form. This could include your name, address, telephone number, social security number, bank account number, and other information.

 

 

   

Information about your transactions with us. This would include information about the shares that you buy or sell; it may also include information about whether you sell or exercise rights that we have issued from time to time. If we hire someone else to provide services — like a transfer agent — we will also have information about the transactions that you conduct through them.

 

What information do we disclose and to whom do we disclose it?

We do not disclose any non-public personal information about our customers or former customers to anyone other than our affiliates, our service providers who need to know such information, and as otherwise permitted by law. If you want to find out what the law permits, you can read the privacy rules adopted by the Securities and Exchange Commission. They are in volume 17 of the Code of Federal Regulations, Part 248. The Commission often posts information about its regulations on its website, www.sec.gov.

What do we do to protect your personal information?

We restrict access to non-public personal information about you to the people who need to know that information in order to provide services to you or the Fund and to ensure that we are complying with the laws governing the securities business. We maintain physical, electronic, and procedural safeguards to keep your personal information confidential.


THE GABELLI EQUITY TRUST INC.

One Corporate Center

Rye, NY 10580-1422

Portfolio Management Team Biographies

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

Christopher J. Marangi joined Gabelli in 2003 as a research analyst. Currently he is a Managing Director and Co-Chief Investment Officer for GAMCO Investors, Inc.’s Value team. In addition, he serves as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Gabelli/GAMCO Fund Complex. Mr. Marangi graduated magna cum laude and Phi Beta Kappa with a BA in Political Economy from Williams College and holds an MBA degree with honors from Columbia Business School.

Kevin V. Dreyer joined Gabelli in 2005 as a research analyst covering companies within the consumer sector. Currently he is a Managing Director and Co-Chief Investment Officer for GAMCO Investors, Inc.’s Value team. In addition, he serves as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Gabelli/GAMCO Fund Complex. Mr. Dreyer received a BSE from the University of Pennsylvania and an MBA degree from Columbia Business School.

Robert D. Leininger, CFA, joined GAMCO Investors, Inc. in 1993 as an equity analyst. Subsequently, he was a partner and portfolio manager at Rorer Asset Management before rejoining GAMCO in 2010 where he currently serves as a portfolio manager of Gabelli Funds, LLC. Mr. Leininger is a magna cum laude graduate of Amherst College with a degree in Economics and holds an MBA degree from the Wharton School at the University of Pennsylvania.

Daniel M. Miller has been the portfolio manager of The Gabelli Focus Five Fund since inception of the investment strategy on January 1, 2012. He is also a Managing Director of GAMCO Investors, Inc. Mr. Miller joined the Firm in 2002 and graduated magna cum laude with a degree in finance from the University of Miami in Coral Gables, Florida.

 

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

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

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

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

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


 

THE GABELLI EQUITY TRUST INC.

One Corporate Center

Rye, NY 10580-1422

t   800-GABELLI (800-422-3554)

f   914-921-5118

e  info@gabelli.com

 GABELLI.COM

 

 

DIRECTORS

 

Mario J. Gabelli, CFA

Chairman and

Chief Executive Officer,

GAMCO Investors, Inc.

Executive Chairman,

Associated Capital Group, Inc.

 

Anthony J. Colavita

President,

Anthony J. Colavita, P.C.

 

James P. Conn

Former Managing Director &

Chief Investment Officer,

Financial Security Assurance

Holdings Ltd.

 

Frank J. Fahrenkopf, Jr.

Former President &

Chief Executive Officer,

American Gaming Association

 

Arthur V. Ferrara

Former Chairman &

Chief Executive Officer,

Guardian Life Insurance

Company of America

 

William F. Heitmann

Former Senior Vice President of Finance,

Verizon Communications, Inc.

 

Anthony R. Pustorino

Certified Public Accountant,

Professor Emeritus,

Pace University

 

Salvatore J. Zizza

Chairman,

Zizza & Associates Corp.

 

OFFICERS

 

Bruce N. Alpert

President

 

Andrea R. Mango

Secretary & Vice President

 

Agnes Mullady

Treasurer

 

Richard J. Walz

Chief Compliance Officer

 

Carter W. Austin

Vice President

 

Molly A.F. Marion

Vice President & Ombudsman

 

David I. Schachter

Vice President

 

INVESTMENT ADVISER

 

Gabelli Funds, LLC

One Corporate Center

Rye, New York 10580-1422

 

CUSTODIAN

 

The Bank of New York Mellon

 

COUNSEL

 

Willkie Farr & Gallagher LLP

 

TRANSFER AGENT AND REGISTRAR

 

Computershare Trust Company, N.A.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 

 

GAB Q4/2016

LOGO

 


Item 2. Code of Ethics.

 

  (a)

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

 

  (b)

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

 

  (d)

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

Item 3. Audit Committee Financial Expert.

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

Effective February 22, 2017, Mr. Pustorino retired from the Board of Directors and Mr. William F. Heitmann was appointed as a member and the chairman of the audit committee. The Board of Directors has determined that Mr. Heitmann is qualified to serve as an audit committee financial expert serving on its audit committee and that he is “independent,” as defined by Item 3 of Form N-CSR.

Item 4. Principal Accountant Fees and Services.

Audit Fees

 

  (a)

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $50,362 for 2015 and $51,621 for 2016.


Audit-Related Fees

 

  (b)

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item are $0 for 2015 and $0 for 2016. Audit-related fees represent services provided in the preparation of Preferred Shares Reports.

Tax Fees

 

  (c)

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $4,635 for 2015 and $4,751 for 2016. Tax fees represent tax compliance services provided in connection with the review of the Registrant’s tax returns.

All Other Fees

 

  (d)

The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 for 2015 and $0 for 2016. All other fees represent services provided in review of registration statement.

 

(e)(1)

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

 

      

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

 

(e)(2)

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

(b) N/A

(c) 100%


(d) N/A

 

  (f)

The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was 0%.

 

  (g)

The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $0 for 2015 and $0 for 2016.

 

  (h)

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

Item 5. Audit Committee of Listed registrants.

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

Mr. Pustorino was a member of the registrant’s audit committee for the entire fiscal year ended December 31, 2016. Effective February 22, 2017, Mr. Pustorino retired from the Board of Directors and Mr. William F. Heitmann was appointed as a member and the chairman of the audit committee.

Item 6. Investments.

 

(a)

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

 

(b)

Not applicable.

 

Item 7.

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

The Proxy Voting Policies are attached herewith.


SECTION HH

The Voting of Proxies on Behalf of Clients

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

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

 

  I.

Proxy Voting Committee

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

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

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

 

Revised – June 1, 2016

INTERNAL USE ONLY

HH-1


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

 

  A.

Conflicts of Interest.

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

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

 

  B.

Operation of Proxy Voting Committee

For matters submitted to the Committee, each member of the Committee will receive, prior to the meeting, a copy of the proxy statement, any relevant third party research, a summary of any views provided by the

 

Revised – June 1, 2016

INTERNAL USE ONLY

HH-2


Chief Investment Officer and any recommendations by G.research, Inc. analysts. The Chief Investment Officer or the G.research, Inc. analysts may be invited to present their viewpoints. If the Director of Proxy Voting Services or the Legal Department believe that the matter before the committee is one with respect to which a conflict of interest may exist between the Advisers and their clients, counsel will provide an opinion to the Committee concerning the conflict. If the matter is one in which the interests of the clients of one or more of the Advisers may diverge, counsel will so advise and the Committee may make different recommendations as to different clients. For any matters where the recommendation may trigger appraisal rights, counsel will provide an opinion concerning the likely risks and merits of such an appraisal action.

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

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

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

 

  II.

Social Issues and Other Client Guidelines

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

Specific to the Gabelli ESG Fund, the Proxy Voting Committee will rely on the advice of the portfolio managers of the Gabelli ESG Fund to provide voting recommendations on the securities held in the portfolio.

 

Revised – June 1, 2016

INTERNAL USE ONLY

HH-3


  III.

Client Retention of Voting Rights

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

- Operations

- Proxy Department

- Investment professional assigned to the account

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

 

  IV.

Proxies of Certain Non-U.S. Issuers

Proxy voting in certain countries requires “share-blocking.” Shareholders wishing to vote their proxies must deposit their shares shortly before the date of the meeting with a designated depository. During the period in which the shares are held with a depository, shares that will be voted at the meeting cannot be sold until the meeting has taken place and the shares are returned to the clients’ custodian. Absent a compelling reason to the contrary, the Advisers believe that the benefit to the client of exercising the vote is outweighed by the cost of voting and therefore, the Advisers will not typically vote the securities of non-U.S. issuers that require share-blocking.

In addition, voting proxies of issuers in non-US markets may also give rise to a number of administrative issues to prevent the Advisers from voting such proxies. For example, the Advisers may receive the notices for shareholder meetings without adequate time to consider the proposals in the proxy or after the cut-off date for voting. In these cases the Advisers will look to Glass Lewis or other third party service for recommendations on how to vote. Other markets require the Advisers to provide local agents with power of attorney prior to implementing their respective voting instructions on the proxy. Although it is the Advisers’ policies to vote the proxies for its clients for which they have proxy voting authority, in the case of issuers in non-US markets, we vote client proxies on a best efforts basis.

 

  V.

Voting Records

The Proxy Voting Department will retain a record of matters voted upon by the Advisers for their clients. The Advisers will supply information on how they voted a client’s proxy upon request from the client.

 

Revised – June 1, 2016

INTERNAL USE ONLY

HH-4


The complete voting records for each registered investment company (the “Fund”) that is managed by the Advisers will be filed on Form N-PX for the twelve months ended June 30th, no later than August 31st of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to Gabelli Funds, LLC at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.

The Advisers’ proxy voting records will be retained in compliance with Rule 204-2 under the Investment Advisers Act.

 

  VI.

Voting Procedures

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

Proxies are received in one of two forms:

 

   

Shareholder Vote Instruction Forms (“VIFs”) - Issued by Broadridge Financial Solutions, Inc. (“Broadridge”). Broadridge is an outside service contracted by the various institutions to issue proxy materials.

   

Proxy cards which may be voted directly.

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

3. Upon receipt of instructions from the proxy committee, the votes are cast and recorded for each account.

Records have been maintained on the ProxyEdge system.

ProxyEdge records include:

Security Name and Cusip Number

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

Client Name

Adviser or Fund Account Number

Directors’ Recommendation

How the Adviser voted for the client on item

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

5. If a proxy card or VIF is received too late to be voted in the conventional matter, every attempt is made to vote including:

 

Revised – June 1, 2016

INTERNAL USE ONLY

HH-5


   

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

   

In some circumstances VIFs can be faxed or sent electronically to Broadridge up until the time of the meeting.

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

7. Voting in Person

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

 

 

Banks and brokerage firms using the services at Broadridge:

Broadridge is notified that we wish to vote in person. Broadridge issues individual legal proxies and sends them back via email or overnight (or the Adviser can pay messenger charges). A lead-time of at least two weeks prior to the meeting is needed to do this. Alternatively, the procedures detailed below for banks not using Broadridge may be implemented.

 

 

Banks and brokerage firms issuing proxies directly:

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

All legal proxies should appoint:

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

b) The legal proxies are given to the person attending the meeting along with the limited power of attorney.

 

Revised – June 1, 2016

INTERNAL USE ONLY

HH-6


Appendix A

Proxy Guidelines

PROXY VOTING GUIDELINES

General Policy Statement

It is the policy of GAMCO Investors, Inc, and its affiliated advisers (collectively “the Advisers”) to vote in the best economic interests of our clients. As we state in our Magna Carta of Shareholders Rights, established in May 1988, we are neither for nor against management. We are for shareholders.

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

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

Board of Directors

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

Factors taken into consideration include:

 

 

Historical responsiveness to shareholders

This may include such areas as:

-Paying greenmail

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

 

Qualifications

 

Nominating committee in place

 

Number of outside directors on the board

 

Attendance at meetings

 

Overall performance

 

Revised – June 1, 2016

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HH-7


Selection of Auditors

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

Blank Check Preferred Stock

We oppose the issuance of blank check preferred stock.

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

Classified Board

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

While a classified board promotes continuity of directors facilitating long range planning, we feel directors should be accountable to shareholders on an annual basis. We will look at this proposal on a case-by-case basis taking into consideration the board’s historical responsiveness to the rights of shareholders.

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

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

Increase Authorized Common Stock

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

Factors taken into consideration include:

 

 

Future use of additional shares

-Stock split

-Stock option or other executive compensation plan

-Finance growth of company/strengthen balance sheet

-Aid in restructuring

-Improve credit rating

-Implement a poison pill or other takeover defense

 

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HH-8


 

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

 

Amount of additional stock to be authorized and its dilutive effect

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

Confidential Ballot

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

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

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

Cumulative Voting

In general, we support cumulative voting.

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

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

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

Director Liability and Indemnification

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

 

Revised – June 1, 2016

INTERNAL USE ONLY

HH-9


Equal Access to the Proxy

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

Fair Price Provisions

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

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

Reviewed on a case-by-case basis.

Golden Parachutes

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

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

Anti-Greenmail Proposals

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

 

Revised – June 1, 2016

INTERNAL USE ONLY

HH-10


Limit Shareholders’ Rights to Call Special Meetings

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

Reviewed on a case-by-case basis.

Consideration of Nonfinancial Effects of a Merger

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

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

Reviewed on a case-by-case basis.

Mergers, Buyouts, Spin-Offs, Restructurings

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

Military Issues

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

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


Northern Ireland

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

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

Opt Out of State Anti-Takeover Law

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

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

 

 

State of Incorporation

 

Management history of responsiveness to shareholders

 

Other mitigating factors

Poison Pill

In general, we do not endorse poison pills.

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

Reincorporation

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


Stock Incentive Plans

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

 

 

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

 

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

 

Method of payment.

 

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

 

The successful steps taken by management to maximize shareholder value.

Supermajority Vote Requirements

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

Reviewed on a case-by-case basis.

Limit Shareholders Right to Act by Written Consent

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

Reviewed on a case-by-case basis.

“Say-on-Pay” / “Say-When-on-Pay” / “Say-on-Golden-Parachutes”

Required under the Dodd-Frank Act; these proposals are non-binding advisory votes on executive compensation. We will generally vote with the Board of Directors’ recommendation(s) on advisory votes on executive compensation (“Say-on-Pay”), advisory votes on the frequency of voting on executive compensation (“Say-When-on-Pay”) and advisory votes relating to extraordinary transaction executive compensation (“Say-on-Golden-Parachutes”). In those instances when we believe that it is in our clients’ best interest, we may abstain or vote against executive compensation and/or the frequency of votes on executive compensation and/or extraordinary transaction executive compensation advisory votes.


Proxy Access

We generally believe that proxy access is a useful tool to promote board accountability by requiring that a company’s proxy materials contain not only the names of management nominees, but also any candidates nominated by long-term shareholders holding at least a certain stake in the company. We will review proposals regarding proxy access on a case by case basis taking into account the provisions of the proposal, the company’s current governance structure, the successful steps taken by management to maximize shareholder value, as well as other applicable factors.


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

PORTFOLIO MANAGERS

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

Kevin V. Dreyer joined Gabelli in 2005 as a research analyst covering companies within the consumer sector. He currently serves as Co-Chief Investment Officer of GAMCO Investors, Inc.’s Value team and a portfolio manager of Gabelli Funds, LLC. He manages several funds within the Gabelli/GAMCO Fund Complex. Mr. Dreyer received a BSE from the University of Pennsylvania and an MBA from Columbia Business School.

Robert Leininger, CFA, joined GAMCO Investors, Inc. in 1993 as an equity analyst. Subsequently, he was a partner and portfolio manager at Rorer Asset Management before rejoining GAMCO in 2010 where he currently serves as a portfolio manager of Gabelli Funds, LLC and co-manages the Fund. Mr. Leininger is a magna cum laude graduate of Amherst College with a degree in economics and holds an MBA from the Wharton School at the University of Pennsylvania.

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

Daniel M. Miller currently serves as a portfolio manager of Gabelli Funds, LLC. He is also a Managing Director of GAMCO Investors, Inc. Mr. Miller graduated magna cum laude with a degree in finance from the University of Miami in Coral Gables, Florida.

MANAGEMENT OF OTHER ACCOUNTS

Information provided as of December 31, 2016

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

 

Name of Portfolio Manager   

Type of

Accounts

  

Total

No. of Accounts
Managed

   Total Assets   

No. of

Accounts

where

Advisory Fee

is Based on
Performance

   Total Assets in
Accounts where
Advisory Fee is
Based on
Performance

1. Mario J. Gabelli

   Registered Investment Companies:      26    20.8B    6    5.1B
     Other Pooled Investment    Vehicles:         29    1.2B    18    1.1B
    

Other          

Accounts:    

 

   1,559    15.2B    13    1.3B


                          

2. Kevin V. Dreyer

   Registered   Investment   Companies:     6    5.5B    1    2.4B
     Other Pooled Investment   Vehicles:        1    127.5M    0    0
    

Other          

Accounts:    

   327    1.3B    1    50.8M
                          

3. Christopher J. Marangi

   Registered   Investment  Companies:    7    5.9B    2    2.6B
     Other Pooled Investment  Vehicles:        1    127.5M    0    0
    

Other         

Accounts:  

   335    1.3B    0    0
                          

4. Daniel M. Miller

  

Registered  Investment Companies:

 

   1    187.0M    0    0
    

Other Pooled Investment Vehicles:  

 

   0    0    0    0
    

Other       

Accounts:

 

   13    12.3M    0    0
                          

5. Robert D. Leininger

  

Registered Investment Companies:

 

   2   

2.5B

   1    2.4B
    

Other Pooled Investment Vehicles: 

 

   0    0    0    0
    

Other      

Accounts:

 

   75    290.0M    1    50.8M


POTENTIAL CONFLICTS OF INTEREST

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

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

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

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

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

VARIATION IN COMPENSATION. A conflict of interest may arise where the financial or other benefits available to the portfolio manager differ among the accounts that they manage. If the structure of the Adviser’s management fee or the portfolio manager’s compensation differs among accounts (such as where certain accounts pay higher management fees or performance-based management fees), the portfolio managers may be motivated to favor certain accounts over others. The portfolio managers also may be motivated to favor accounts in which they have an investment interest, or in which the Adviser, or its affiliates have investment interests. Similarly, the desire to maintain assets under management or to enhance a Portfolio Manager’s performance record or to derive other rewards, financial or otherwise, could influence the Portfolio Manager in affording preferential treatment to those accounts that could most significantly benefit the Portfolio Manager. For example, as reflected above, if the Portfolio Manager manages accounts which have performance fee arrangements, certain portions of his/her compensation will depend on the achievement of performance milestones on those accounts. The Portfolio Manager could be incented to afford preferential treatment to those accounts and thereby be subject to a potential conflict of interest.

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


COMPENSATION STRUCTURE FOR MARIO J. GABELLI

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

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

The compensation of the Portfolio Managers for the Fund is structure to enable the Adviser to attract and retain highly qualified professionals in a competitive environment. The Portfolio Managers receive a compensation package that includes a minimum draw or base salary, equity-based incentive compensation via awards of restricted stock, and incentive-based variable compensation based on a percentage of net revenue received by the Adviser for managing a Fund to the extent that the amount exceeds a minimum level of compensation. Net revenues are determined by deducting from gross investment management fees certain of the firm’s expenses (other than the respective Portfolio Manager’s compensation) allocable to the respective Fund (the incentive-based variable compensation for managing other accounts is also based on a percentage of net revenues to the investment adviser for managing the account). This method of compensation is based on the premise that superior long-term performance in managing a portfolio should be rewarded with higher compensation as a result of growth of assets through appreciation and net investment activity. The level of equity-based incentive and incentive-based variable compensation is based on an evaluation by the Adviser’s parent, GBL, of quantitative and qualitative performance evaluation criteria. This evaluation takes into account, in a broad sense, the performance of the accounts managed by the Portfolio Manager, but the level of compensation is not determined with specific reference to the performance of any account against any specific benchmark. Generally, greater consideration is given to the performance of larger accounts and to longer term performance over smaller accounts and short-term performance.

OWNERSHIP OF SHARES IN THE FUND

Mario J. Gabelli, Kevin V. Dreyer, Christopher J. Marangi, Robert D. Leininger and Daniel M. Miller each owned over $1,000,000, $10,001-$50,000, $1-$10,000, $0 and $0, respectively, of shares of the Trust as of December 31, 2016.


(b)

Not applicable.

 

Item 9.

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

REGISTRANT PURCHASES OF EQUITY SECURITIES

 

Period    (a) Total Number of
Shares (or Units)
Purchased
   (b) Average Price Paid
per Share (or Unit)
   (c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs
   (d) Maximum Number (or
Approximate Dollar Value)
of Shares (or  Units) that May
Yet Be Purchased Under the
Plans or Programs

Month # 1 07/01/16

through

07/31/16

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – 219,244,891

 

Preferred Series D – 2,363,860

 

Preferred Series G – 2,797,001

 

Preferred Series H – 4,186,973

 

Preferred Series J – 3,200,000

 

Month #2 08/01/16

through 08/31/16

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – 219,244,891

 

Preferred Series D – 2,363,860

 

Preferred Series G – 2,797,001

 

Preferred Series H – 4,185,773

 

Preferred Series J – 3,200,000

 

Month #3 09/01/16

through

09/30/16

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – 219,244,891

 

Preferred Series D – 2,363,860

 

Preferred Series G – 2,797,001

 

Preferred Series H – 4,185,773

 

Preferred Series J – 3,200,000

 

Month #4 10/01/16

through

10/31/16

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – N/A

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – 219,240,166

 

Preferred Series D – 2,363,860

 

Preferred Series G – 2,797,001

 

Preferred Series H – 4,185,773

 

Preferred Series J – 3,200,000

 


Month #5 11/01/16

through

11/30/16

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – 500

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – $23.0900

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – 500

 

Preferred Series H – N/A

 

Preferred Series J – N/A

 

  

Common – 219,240,166

 

Preferred Series D – 2,363,860

 

Preferred Series G – 2,797,001
– 500 = 2,796,501

 

Preferred Series H – 4,185,773

 

Preferred Series J – 3,200,000

 

Month #6 12/01/16

through -

12/31/16

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – 6,800

 

Preferred Series H – 6,000

 

Preferred Series J – N/A

 

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – $23.1001

 

Preferred Series H – $23.0804

 

Preferred Series J – N/A

 

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – 6,800

 

Preferred Series H – 6,000

 

Preferred Series J – N/A

 

  

Common – 219,240,166

 

Preferred Series D – 2,363,860

 

Preferred Series G – 2,796,501
– 6,800 = 2,789,701

 

Preferred Series H – 4,185,773
– 6,000 = 4,179,773

 

Preferred Series J – 3,200,000

 

Total   

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – 7,300

 

Preferred Series H – 6,000

 

Preferred Series J – N/A

 

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – $23.2043

 

Preferred Series H – $23.0804

 

Preferred Series J – N/A

 

  

Common – N/A

 

Preferred Series D – N/A

 

Preferred Series G – 7,300

 

Preferred Series H – 6,000

 

Preferred Series J – N/A

 

   N/A

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

 

a. The date each plan or program was announced – The notice of the potential repurchase of common and preferred shares occurs quarterly in the Fund’s quarterly report in accordance with Section 23(c) of the Investment Company Act of 1940, as amended.
b. The dollar amount (or share or unit amount) approved – Any or all common shares outstanding may be repurchased when the Fund’s common shares are trading at a discount of 10% or more from the net asset value of the shares.

Any or all preferred shares outstanding may be repurchased when the Fund’s preferred shares are trading at a discount to the liquidation value of $25.00.

c. The expiration date (if any) of each plan or program – The Fund’s repurchase plans are ongoing.
d. Each plan or program that has expired during the period covered by the table – The Fund’s repurchase plans are ongoing.
e. Each plan or program the registrant has determined to terminate prior to expiration, or under which the registrant does not intend to make further purchases. – The Fund’s repurchase plans are ongoing.


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

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

Item 11. Controls and Procedures.

 

  (a)

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

 

  (b)

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

Item 12. Exhibits.

 

  (a)(1)

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

 

  (a)(2)

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

 

  (a)(3)

Not applicable.

 

  (b)

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

(12.other) Not applicable.


SIGNATURES

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

 

(Registrant)              The Gabelli Equity Trust Inc.                                                                    
By (Signature and Title)*    /s/ Bruce N. Alpert                                                                         

 Bruce N. Alpert, Principal Executive Officer

Date    3/09/2017                                                                                                                         

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

 

By (Signature and Title)*     /s/ Bruce N. Alpert                                                                       

 Bruce N. Alpert, Principal Executive Officer

Date    3/09/2017                                                                                                                         
By (Signature and Title)*    /s/ Agnes Mullady                                                                         

 Agnes Mullady, Principal Financial Officer and Treasurer

Date    3/09/2017                                                                                                                         

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