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, 2008
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
(THE GABELLI EQUITY TRUST INC. LOGO)
THE GABELLI EQUITY TRUST INC.
Annual Report
December 31, 2008
TO OUR SHAREHOLDERS,
The Sarbanes-Oxley Act requires a fund's principal executive and financial
officers to certify the entire contents of the semi-annual and annual
shareholder reports in a filing with the Securities and Exchange Commission on
Form N-CSR. This certification would cover the portfolio manager's commentary
and subjective opinions if they are attached to or a part of the financial
statements. Many of these comments and opinions would be difficult or impossible
to certify.
Because we do not want our portfolio managers to eliminate their opinions
and/or restrict their commentary to historical facts, we have separated their
commentary from the financial statements and investment portfolio and have sent
it to you separately. Both the commentary and the financial statements,
including the portfolio of investments, will be available on our website at
www.gabelli.com.
Enclosed are the audited financial statements and the investment portfolio
as of December 31, 2008.
COMPARATIVE RESULTS
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2008 (a)
Since
Inception
Quarter 1 Year 3 Year 5 Year 10 Year 15 Year 20 Year (08/21/86)
------- ------ ------ ------ ------- ------- ------- ----------
GABELLI EQUITY TRUST
NAV TOTAL RETURN (b) ...... (29.04)% (48.99)% (9.82)% (1.47)% 2.37% 5.94% 7.77% 8.56%
INVESTMENT TOTAL RETURN (c) .. (43.64) (54.77) (12.94) (3.80) 0.79 4.38 7.69 7.63
S&P 500 Index ................ (21.95) (36.99) (8.36) (2.19) (1.38) 6.46 8.42 8.40(d)
Dow Jones Industrial Average . (18.41) (31.88) (4.10) (1.09) 1.70 8.15 9.93 9.93(d)
Nasdaq Composite Index ....... (24.61) (40.54) (10.58) (4.67) (3.24) 4.83 7.36 6.56
(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. PERFORMANCE RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED. 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 NET ASSET
VALUE ("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 NEW YORK STOCK EXCHANGE, 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.
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
February 24, 2009 President
THE GABELLI EQUITY TRUST INC.
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total
investments as of December 31, 2008:
LONG POSITIONS
Food and Beverage ............................. 12.0%
Energy and Utilities .......................... 8.4%
Financial Services ............................ 7.7%
Cable and Satellite ........................... 6.2%
Diversified Industrial ........................ 6.1%
Telecommunications ............................ 5.9%
Health Care ................................... 5.4%
Entertainment ................................. 5.3%
U.S. Government Obligations ................... 5.0%
Equipment and Supplies ........................ 4.2%
Consumer Products ............................. 3.9%
Automotive: Parts and Accessories ............. 3.0%
Publishing .................................... 2.4%
Business Services ............................. 2.3%
Consumer Services ............................. 2.1%
Retail ........................................ 1.9%
Aviation: Parts and Services .................. 1.8%
Machinery ..................................... 1.7%
Specialty Chemicals ........................... 1.7%
Aerospace ..................................... 1.5%
Wireless Communications ....................... 1.3%
Agriculture ................................... 1.3%
Metals and Mining ............................. 1.3%
Environmental Services ........................ 1.2%
Hotels and Gaming ............................. 1.2%
Electronics ................................... 1.0%
Communications Equipment ...................... 1.0%
Automotive .................................... 0.6%
Transportation ................................ 0.6%
Real Estate ................................... 0.6%
Computer Software and Services ................ 0.5%
Broadcasting .................................. 0.5%
Closed-End Funds .............................. 0.2%
Manufactured Housing and Recreational
Vehicles ................................... 0.1%
Real Estate Investment Trusts ................. 0.1%
-----
100.0%
=====
THE GABELLI EQUITY TRUST INC. (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, THE LAST OF WHICH
WAS FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2008. 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 1-800-SEC-0330.
PROXY VOTING
The Fund files Form N-PX with its complete proxy voting record for the 12
months ended June 30th, no later than August 31st of each year. A description of
the 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, 2008
(UNAUDITED)
OWNERSHIP AT
DECEMBER 31,
SHARES 2008
-------------- --------------
NET PURCHASES
COMMON STOCKS
Accor SA .................................... 500 2,500
Alcoa Inc. .................................. 37,000 65,000
Aruze Corp. ................................. 10,000 110,000
Ascent Media Corp., Cl. A ................... 1,400 16,850
BCE Inc. .................................... 5,000 65,000
Bel Fuse Inc., Cl. A ........................ 2,000 16,000
British American Tobacco plc (a) ............ 36,182 66,182
Brown-Forman Corp., Cl. A (b) ............... 8,000 32,000
Brown-Forman Corp., Cl. B (b) ............... 6,250 6,250
Cable & Wireless Jamaica Ltd. ............... 872,580 7,040,836
Cadbury plc, ADR ............................ 4,800 120,000
Calamos Asset Management Inc., Cl. A ........ 2,500 10,000
Champion Enterprises Inc. ................... 50,000 150,000
China Mengniu Dairy Co. Ltd. ................ 10,000 50,000
Citadel Broadcasting Corp. .................. 10,000 20,343
Clearwire Corp., Cl. A (c) .................. 14,000 14,000
Compagnie Financiere Richemont SA,
Cl. A (d) ................................. 55,200 55,200
Constellation Energy Group Inc. ............. 37,000 70,000
Dean Foods Co. .............................. 30,000 180,000
Deere & Co. ................................. 10,000 435,000
Eastman Kodak Co. ........................... 20,000 120,000
Finmeccanica SpA ............................ 2,640 32,640
Fortune Brands Inc. ......................... 18,000 78,000
Freeport-McMoRan Copper & Gold Inc. ......... 4,000 4,000
Gaylord Entertainment Co. ................... 10,000 200,000
GenCorp Inc. ................................ 50,000 250,000
General Electric Co. ........................ 20,000 170,000
Gerber Scientific Inc. ...................... 5,000 95,000
GrafTech International Ltd. ................. 5,000 80,000
Halliburton Co. ............................. 10,000 220,000
Heineken NV ................................. 3,000 48,000
Idearc Inc. ................................. 6,000 10,000
Janus Capital Group Inc. .................... 20,000 200,000
Jarden Corp. ................................ 2,000 4,000
JPMorgan Chase & Co. ........................ 8,300 70,088
Las Vegas Sands Corp. ....................... 34,000 40,000
Legg Mason Inc. ............................. 85,000 180,000
Life Technologies Corp. ..................... 80,000 80,000
Macy's Inc. ................................. 10,000 150,000
Mandarin Oriental International Ltd. ........ 89,000 3,900,000
MGM Mirage .................................. 3,000 155,000
Och-Ziff Capital Management Group LLC,
Cl. A .................................... 14,000 22,000
Omnova Solutions Inc. ....................... 61,018 291,018
Orient-Express Hotels Ltd., Cl. A ........... 26,000 44,000
PetroChina Co. Ltd., ADR .................... 200 1,500
Pinnacle Entertainment Inc. ................. 60,000 110,000
Remy Cointreau SA ........................... 4,000 37,000
Rockwell Automation Inc. .................... 6,000 30,000
Rolls-Royce Group plc, Cl. C (e) ............ 68,640,000 68,640,000
Spectra Energy Corp. ........................ 10,000 130,000
Sprint Nextel Corp. ......................... 50,000 750,000
Svenska Cellulosa AB, Cl. B ................. 3,000 33,000
The Bank of New York Mellon Corp. ........... 8,000 154,038
The Blackstone Group LP ..................... 5,000 10,000
The E.W. Scripps Co., Cl. A ................. 7,000 50,333
The Great Atlantic & Pacific Tea Co. Inc. ... 55,000 225,000
The Hongkong & Shanghai Hotels Ltd. ......... 140,000 140,000
The Interpublic Group of Companies Inc. ..... 12,200 265,000
Thomas & Betts Corp. ........................ 15,000 250,000
OWNERSHIP AT
DECEMBER 31,
SHARES 2008
-------------- --------------
Tokyo Broadcasting System Inc. .............. 2,000 122,000
Transocean Ltd. ............................. 10,000 10,000
Tyco International Ltd. ..................... 10,000 210,000
Tyson Foods Inc., Cl. A ..................... 41,000 140,000
Vivo Participacoes SA, ADR (f) .............. 44,377 44,377
Walgreen Co. ................................ 15,000 90,000
Wynn Resorts Ltd. ........................... 1,000 1,000
Zimmer Holdings Inc. ........................ 500 3,500
PRINCIPAL
AMOUNT
--------------
CONVERTIBLE CORPORATE BOND
The Great Atlantic & Pacific Tea Co. Inc.,
Cv., 5.125%, 06/15/11 ....................... $ 200,000 $ 3,300,000
SHARES
--------------
NET SALES
COMMON STOCKS
Abbott Laboratories ......................... (4,000) 4,000
ACCO Brands Corp. ........................... (1,050) 6,000
Acuity Brands Inc. .......................... (5,000) 4,000
Advanced Medical Optics Inc. ................ (10,000) 135,000
Ajinomoto Co. Inc. .......................... (17,000) 68,000
Allianz SE .................................. (600) 2,200
Alpharma Inc., Cl. A (g) .................... (30,000) --
American Express Co. ........................ (15,000) 560,000
AMETEK Inc. ................................. (3,000) 254,000
Amgen Inc. .................................. (1,000) 51,000
Ampco-Pittsburgh Corp. ...................... (1,000) 160,000
Anglo American plc .......................... (6,000) 24,030
Anheuser-Busch Cos Inc. (h) ................. (80,000) --
Archer-Daniels-Midland Co. .................. (65,000) 340,000
Ashland Inc. (i) ............................ (17,000) 13,000
AstraZeneca plc ............................. (3,800) 15,346
AutoNation Inc. ............................. (30,000) 180,000
AutoZone Inc. ............................... (3,000) 1,000
Avis Budget Group Inc. ...................... (15,000) --
Avon Products Inc. .......................... (5,000) 75,000
AXA Asia Pacific Holdings Ltd. .............. (31,700) 126,900
Barrick Gold Corp. .......................... (1,148) 88,000
Bayer AG .................................... (4,800) 19,200
Bell Aliant Regional Communications
Income Fund .............................. (1,000) --
Berkshire Hathaway Inc., Cl. A .............. (5) 137
BHP Billiton Ltd. ........................... (4,000) 16,000
Boeing Co. .................................. (8,000) 102,000
Boston Scientific Corp. ..................... (35,000) 120,000
Bouygues SA ................................. (4,000) 16,000
BP plc ...................................... (20,000) 80,000
Bristol-Myers Squibb Co. .................... (50,000) 85,000
British Sky Broadcasting Group plc .......... (19,000) 76,000
Cablevision Systems Corp., Cl. A ............ (40,000) 1,510,000
Cadbury plc ................................. (18,100) 72,300
Campbell Soup Co. ........................... (10,000) 70,000
Canon Inc. .................................. (6,100) 24,400
CBS Corp., Cl. A ............................ (15,000) 410,000
Cephalon Inc. ............................... (1,000) 2,000
CH Energy Group Inc. ........................ (43,100) 61,900
Cheung Kong (Holdings) Ltd. ................. (14,000) 56,000
China Mobile Ltd. ........................... (13,000) 52,000
Christian Dior SA ........................... (6,400) 35,600
Church & Dwight Co. Inc. .................... (2,000) 12,000
Ciba Holding AG ............................. (20,000) --
See accompanying notes to financial statements.
3
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES (CONTINUED)
QUARTER ENDED DECEMBER 31, 2008
(UNAUDITED)
OWNERSHIP AT
DECEMBER 31,
SHARES 2008
-------------- --------------
NET SALES (CONTINUED)
COMMON STOCKS (CONTINUED)
Cincinnati Bell Inc. ........................ (20,000) 888,300
Citigroup Inc. .............................. (60,000) 300,000
CLARCOR Inc. ................................ (8,000) 173,000
Clearwire Corp. (c) ......................... (14,000) --
Clorox Co. .................................. (18,000) 12,000
CNH Global NV ............................... (3,400) 13,600
Coca-Cola Enterprises Inc. .................. (5,000) 15,000
Cochlear Ltd. ............................... (2,400) 9,600
Comcast Corp., Cl. A ........................ (52,000) --
Comcast Corp., Cl. A, Special ............... (10,000) 110,000
Commerzbank AG, ADR ......................... (5,000) 150,000
Compagnie Financiere Richemont SA,
Cl. A (d) ................................ (69,000) --
Compania de Telecomunicaciones de
Chile SA, ADR (j) ........................ (120,000) --
Constellation Brands Inc., Cl. A ............ (80,000) 10,000
Cooper Industries Ltd., Cl. A ............... (20,000) 225,000
Corn Products International Inc. ............ (5,000) 45,000
CRH plc ..................................... (15,500) 62,000
Deutsche Telekom AG, ADR .................... (20,000) 170,000
Diageo plc .................................. (16,000) 64,000
Diageo plc, ADR ............................. (20,000) 204,000
Diamond Offshore Drilling Inc. .............. (200) 2,800
Diebold Inc. ................................ (10,000) 100,000
DISH Network Corp., Cl. A ................... (8,700) 125,000
Donaldson Co. Inc. .......................... (1,000) 193,000
Dr. Pepper Snapple Group Inc. ............... (2,600) 130,600
DTE Energy Co. .............................. (2,000) 12,000
Duke Energy Corp. ........................... (20,000) 200,000
El Paso Electric Co. ........................ (15,000) 265,000
Energizer Holdings Inc. ..................... (2,000) 110,000
Enodis plc (k) .............................. (300,000) --
Exxon Mobil Corp. ........................... (2,000) 78,000
Fanuc Ltd. .................................. (2,800) 11,200
Fleetwood Enterprises Inc. .................. (50,000) --
Flowers Foods Inc. .......................... (20,000) 70,000
Frontier Communications Corp. ............... (30,000) 50,000
Galp Energia SGPS SA, Cl. B ................. (9,000) 36,000
General Mills Inc. .......................... (152,000) 25,000
Genuine Parts Co. ........................... (40,000) 300,000
GlaxoSmithKline plc ......................... (9,000) 36,036
Gray Television Inc. ........................ (10,000) 110,000
Gray Television Inc., Cl. A ................. (3,000) 23,000
Greatbatch Inc. ............................. (5,000) --
Groupe Danone ............................... (155,000) 200,000
Grupo Bimbo SAB de CV, Cl. A ................ (80,000) 900,000
Grupo Televisa SA, ADR ...................... (5,000) 690,000
Grupo TMM SA, Cl. A, ADR .................... (1,000) 15,000
Harmony Gold Mining Co. Ltd. ................ (17,500) 35,000
Hellenic Telecommunications
Organization SA .......................... (1,000) 32,000
Hennes & Mauritz AB, Cl. B .................. (4,300) 17,200
Hercules Inc. (i) ........................... (175,000) --
Home Inns & Hotels Management Inc., ADR ..... (20,000) --
HSN Inc. .................................... (5,000) 30,000
Huttig Building Products Inc. ............... (4,000) 27,000
IDEX Corp. .................................. (2,000) 318,000
Il Sole 24 Ore .............................. (134,700) 1,825,300
Impala Platinum Holdings Ltd. ............... (5,000) 20,000
Imperial Oil Ltd. ........................... (6,400) 25,600
InterContinental Hotels Group plc ........... (46,160) --
ITO EN Ltd. ................................. (25,000) 175,000
OWNERSHIP AT
DECEMBER 31,
SHARES 2008
-------------- --------------
ITT Corp. ................................... (3,000) 250,000
Japan Tobacco Inc. .......................... (40) 160
Jardine Matheson Holdings Ltd. .............. (9,000) 48,000
Johnson & Johnson ........................... (15,000) 105,000
Kellogg Co. ................................. (32,000) 16,000
Kerry Group plc, Cl. A ...................... (3,000) 72,000
Keyence Corp. ............................... (1,200) 4,720
Kraft Foods Inc., Cl. A ..................... (5,000) 130,000
Ladbrokes plc ............................... (50,000) 1,100,058
Landauer Inc. ............................... (2,000) 92,000
Leucadia National Corp. ..................... (1,000) 132,000
LIN TV Corp., Cl. A ......................... (20,000) 70,000
Lockheed Martin Corp. ....................... (1,000) 8,000
LVMH Moet Hennessy Louis Vuitton SA ......... (600) 11,500
Marsh & McLennan Companies Inc. ............. (5,000) 260,000
Mattel Inc. ................................. (7,000) 8,000
Media General Inc., Cl. A ................... (70,000) 250,000
Merck & Co. Inc. ............................ (10,000) 85,000
Mitsui & Co. Ltd. ........................... (8,000) 32,000
Monster Worldwide Inc. ...................... (5,000) 50,000
National Presto Industries Inc. ............. (5,000) 16,000
Nestle SA ................................... (6,000) 49,000
News Corp., Cl. A ........................... (95,000) 1,430,000
Nintendo Co. Ltd. ........................... (2,000) --
Nissin Foods Holdings Co. Ltd. .............. (220,000) 80,000
Nortel Networks Corp. ....................... (159,900) 100
Northeast Utilities ......................... (25,000) 215,000
Northrop Grumman Corp. ...................... (17,600) 85,000
Novartis AG ................................. (7,800) 31,200
Novartis AG, ADR ............................ (4,000) 98,000
NTT DoCoMo Inc. ............................. (300) 1,700
Orascom Telecom Holding SAE, GDR ............ (3,000) 12,000
Pactiv Corp. ................................ (20,000) 80,000
PepsiAmericas Inc. .......................... (50,000) 550,000
PepsiCo Inc. ................................ (83,000) 155,000
Pernod-Ricard SA ............................ (200) 56,000
Petroleo Brasileiro SA, ADR ................. (8,300) 46,700
Pfizer Inc. ................................. (20,000) 450,000
Precision Castparts Corp. ................... (1,000) 104,000
Procter & Gamble Co. ........................ (285,000) 10,000
Proliance International Inc. ................ (60,000) 100,000
Qwest Communications International Inc. ..... (90,000) 450,000
Ralcorp Holdings Inc. ....................... (4,200) 64,000
Rank Group plc .............................. (150,000) --
Reckitt Benckiser Group plc ................. (2,000) 58,000
Regal Entertainment Group, Cl. A ............ (2,000) 10,000
Republic Services Inc. ...................... (1,800) 97,000
Rio Tinto plc ............................... (5,000) 20,000
Roche Holding AG ............................ (3,300) 13,100
Rogers Communications Inc., Cl. B,
New York ................................. (5,000) 495,690
Rollins Inc. ................................ (10,000) 1,090,000
Royal Philips Electronics NV ................ (3,000) 35,000
Saipem SpA .................................. (13,000) 52,000
Sanofi-Aventis .............................. (2,000) 8,000
Schering-Plough Corp. ....................... (10,000) 100,000
Schroders plc ............................... (9,000) 36,000
Secom Co. Ltd. .............................. (5,000) 20,000
Sensient Technologies Corp. ................. (15,000) 260,000
Six Flags Inc. .............................. (45,000) --
SMC Corp. ................................... (1,600) 6,400
Smith & Nephew plc .......................... (16,000) 64,000
Square Enix Holdings Co. Ltd. ............... (4,800) 19,300
Standard Chartered plc ...................... (8,000) 32,000
See accompanying notes to financial statements.
4
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES (CONTINUED)
QUARTER ENDED DECEMBER 31, 2008
(UNAUDITED)
OWNERSHIP AT
DECEMBER 31,
SHARES 2008
-------------- --------------
NET SALES (CONTINUED)
COMMON STOCKS (CONTINUED)
Standard Motor Products Inc., Sub. Deb. Cv .. (1,000,000) --
Straumann Holding AG ........................ (1,050) 4,200
Swire Pacific Ltd., Cl. A ................... (13,800) 55,200
Syngenta AG ................................. (1,000) 4,000
Synthes Inc. ................................ (2,500) 10,000
Takeda Pharmaceutical Co. Ltd. .............. (3,800) 15,200
Technip SA .................................. (6,000) 24,000
Tele Norte Celular Participacoes SA,
ADR (l) .................................. (3,340) --
Tele Norte Leste Participacoes SA, ADR ...... (2,554) 184,000
Tele2 AB, Cl. B ............................. (12,000) 48,000
Telecom Italia SpA .......................... (440,000) 1,000,000
Telefonica SA, ADR .......................... (20,000) 205,000
Telefonos de Mexico SAB de CV, Cl. L, ADR ... (5,000) 55,000
Tesco plc ................................... (22,000) 88,000
The Charles Schwab Corp. .................... (1,500) 43,000
The Coca-Cola Co. ........................... (85,000) 115,000
The DIRECTV Group Inc. ...................... (20,000) 440,000
The Dun & Bradstreet Corp. .................. (3,000) 15,000
The New York Times Co., Cl. A ............... (50,000) --
The Phoenix Companies Inc. .................. (5,000) 130,000
The St. Joe Co. ............................. (7,000) 138,000
The Swatch Group AG ......................... (7,500) 30,000
The Walt Disney Co. ......................... (22,000) 10,000
The Weir Group plc .......................... (5,000) 90,000
Ticketmaster ................................ (20,000) --
Tokai Carbon Co. Ltd. ....................... (33,000) 132,000
Toll Holdings Ltd. .......................... (14,000) 56,000
Tootsie Roll Industries Inc. ................ (384) 122,000
Total SA .................................... (4,800) 19,328
Triple Crown Media Inc. ..................... (20,200) --
UnionBanCal Corp. (m) ....................... (250,000) --
UnitedHealth Group Inc. ..................... (10,000) 115,000
Verizon Communications Inc. ................. (20,000) 160,000
Viacom Inc., Cl. A .......................... (35,000) 320,000
Vivendi ..................................... (21,800) 432,100
Vodafone Group plc, ADR ..................... (5,000) 45,000
Waste Management Inc. ....................... (170,000) 330,000
Whole Foods Market Inc. ..................... (12,000) 32,000
William Demant Holding A/S .................. (2,400) 79,600
Wm. Wrigley Jr. Co. (n) ..................... (390,000) --
Wm. Wrigley Jr. Co., Cl. B (n) .............. (42,500) --
Woolworths Ltd. ............................. (14,600) 58,400
Wyeth ....................................... (10,000) 90,000
Xstrata plc ................................. (13,900) 55,766
Yahoo! Inc. ................................. (5,000) 185,000
Yahoo! Japan Corp. .......................... (400) 1,600
YAKULT HONSHA Co. Ltd. ...................... (135,000) 415,000
Young Broadcasting Inc., Cl. A .............. (80,000) --
OWNERSHIP AT
PRINCIPAL DECEMBER 31,
AMOUNT 2008
-------------- --------------
U.S. GOVERNMENT OBLIGATIONS
U.S. Treasury Note, 4.500%, 04/30/09 ........ $ (125,000) --
----------
(a) Spin-off - 0.61126 share of British American Tobacco plc for every 1 share
of Reinet Investments SCA.
(b) Spin-off - 0.25 share Brown-Forman Corp., Cl. B for every 1 share
Brown-Forman Corp., Cl. A.
(c) Exchange - 1 share of Clearwire Corp., Cl. A for every 1 share of Clearwire
Corp.
(d) Merger - 1 share of Compagnie Financiere Richemont SA, Cl. A (B3DCZF3) and
1 share of Reinet Investments SCA for every 1 share of Compagnie Financiere
Richemont SA, Cl. A.
(e) Spin-off - 57.2 shares of Rolls-Royce Group plc, Cl. C for every 1 share of
Rolls-Royce Group plc.
(f) Reverse Split - 1:4.
(g) Tender Offer - $37.00 for every 1 share.
(h) Cash Merger - $70.00 for every 1 share.
(i) Merger - $18.60 cash plus 0.093 share of Ashland Inc. for every 1 share of
Hercules Inc.
(j) Tender Offer - $6.616939 for every 1 share.
(k) Cash Merger - L3.28 for every 1 share.
(l) Cash Exchange - $14.59482 for every 1 share.
(m) Tender Offer - $73.50 for every 1 share.
(n) Cash Merger - $80.00 for every 1 share.
See accompanying notes to financial statements.
5
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2008
MARKET
SHARES COST VALUE
------------ -------------- --------------
COMMON STOCKS -- 94.7%
FOOD AND BEVERAGE -- 12.0%
68,000 Ajinomoto Co. Inc. .................................... $ 791,868 $ 728,384
32,000 Brown-Forman Corp., Cl. A ............................. 1,556,972 1,619,840
6,250 Brown-Forman Corp., Cl. B ............................. 410,925 321,812
72,300 Cadbury plc ........................................... 828,562 629,414
120,000 Cadbury plc, ADR ...................................... 5,698,877 4,280,400
70,000 Campbell Soup Co. ..................................... 1,928,257 2,100,700
50,000 China Mengniu Dairy Co. Ltd. .......................... 138,064 65,031
15,000 Coca-Cola Enterprises Inc. ............................ 275,289 180,450
57,000 Coca-Cola Hellenic Bottling Co. SA .................... 492,259 824,020
10,000 Constellation Brands Inc., Cl. A+ ..................... 193,731 157,700
45,000 Corn Products International Inc. ...................... 633,413 1,298,250
300,000 Davide Campari-Milano SpA ............................. 3,120,039 2,001,668
180,000 Dean Foods Co.+ ....................................... 3,957,950 3,234,600
60,000 Del Monte Foods Co. ................................... 564,374 428,400
64,000 Diageo plc ............................................ 939,251 884,276
204,000 Diageo plc, ADR ....................................... 8,526,541 11,574,960
130,600 Dr. Pepper Snapple Group Inc.+ ........................ 3,234,965 2,122,250
70,000 Flowers Foods Inc. .................................... 519,947 1,705,200
97,000 Fomento Economico Mexicano SAB de CV, ADR ............. 1,332,725 2,922,610
25,000 General Mills Inc. .................................... 1,213,148 1,518,750
200,000 Groupe Danone ......................................... 10,262,457 12,004,448
900,000 Grupo Bimbo SAB de CV, Cl. A .......................... 2,480,224 3,788,858
100,000 H.J. Heinz Co. ........................................ 3,532,093 3,760,000
20,000 Hain Celestial Group Inc.+ ............................ 267,663 381,800
48,000 Heineken NV ........................................... 2,162,258 1,461,217
175,000 ITO EN Ltd. ........................................... 4,124,961 2,552,124
60,000 ITO EN Ltd., Preference ............................... 1,329,645 596,360
16,000 Kellogg Co. ........................................... 574,418 701,600
72,000 Kerry Group plc, Cl. A ................................ 826,834 1,326,110
130,000 Kraft Foods Inc., Cl. A ............................... 4,110,509 3,490,500
11,500 LVMH Moet Hennessy Louis Vuitton SA ................... 397,547 763,629
10,000 Meiji Seika Kaisha Ltd. ............................... 50,608 47,215
70,000 Morinaga Milk Industry Co. Ltd. ....................... 299,202 269,498
49,000 Nestle SA ............................................. 1,606,474 1,915,159
80,000 Nissin Foods Holdings Co. Ltd. ........................ 2,844,340 2,753,447
550,000 PepsiAmericas Inc. .................................... 10,386,521 11,198,000
155,000 PepsiCo Inc. .......................................... 7,483,104 8,489,350
56,000 Pernod-Ricard SA ...................................... 5,482,901 4,123,325
64,000 Ralcorp Holdings Inc.+ ................................ 1,243,785 3,737,600
37,000 Remy Cointreau SA ..................................... 2,143,700 1,523,923
330,000 Sara Lee Corp. ........................................ 5,273,525 3,230,700
88,000 Tesco plc ............................................. 774,066 455,480
115,000 The Coca-Cola Co. ..................................... 5,040,583 5,206,050
70,000 The Hershey Co. ....................................... 2,941,476 2,431,800
2,000 The J.M. Smucker Co. .................................. 52,993 86,720
122,000 Tootsie Roll Industries Inc. .......................... 1,558,589 3,124,420
140,000 Tyson Foods Inc., Cl. A ............................... 1,805,240 1,226,400
415,000 YAKULT HONSHA Co. Ltd. ................................ 11,645,098 8,739,493
-------------- --------------
127,057,971 127,983,941
-------------- --------------
ENERGY AND UTILITIES -- 8.4%
5,000 AGL Resources Inc. .................................... 88,898 156,750
68,000 Allegheny Energy Inc. ................................. 1,081,525 2,302,480
70,000 Apache Corp. .......................................... 2,728,670 5,217,100
80,000 BP plc ................................................ 991,715 605,006
MARKET
SHARES COST VALUE
------------ -------------- --------------
247,000 BP plc, ADR ........................................... $ 15,155,797 $ 11,544,780
61,900 CH Energy Group Inc. .................................. 2,552,443 3,181,041
65,000 CMS Energy Corp. ...................................... 416,572 657,150
315,000 ConocoPhillips ........................................ 19,291,860 16,317,000
70,000 Constellation Energy Group Inc. ....................... 2,067,062 1,756,300
2,800 Diamond Offshore Drilling Inc. ........................ 313,674 165,032
60,000 DPL Inc. .............................................. 1,411,620 1,370,400
12,000 DTE Energy Co. ........................................ 531,798 428,040
200,000 Duke Energy Corp. ..................................... 3,620,407 3,002,000
300,000 El Paso Corp. ......................................... 3,694,589 2,349,000
265,000 El Paso Electric Co.+ ................................. 4,404,805 4,793,850
78,000 Exxon Mobil Corp. ..................................... 2,685,692 6,226,740
25,000 FPL Group Inc. ........................................ 951,662 1,258,250
36,000 Galp Energia SGPS SA, Cl. B ........................... 965,430 359,299
68,480 Great Plains Energy Inc. .............................. 1,775,002 1,323,718
220,000 Halliburton Co. ....................................... 4,034,029 3,999,600
25,600 Imperial Oil Ltd. ..................................... 1,010,170 850,015
20,000 Marathon Oil Corp. .................................... 242,414 547,200
10,000 Mirant Corp.+ ......................................... 192,014 188,700
140,000 Mirant Corp., Escrow+ (a) ............................. 0 0
2,000 Niko Resources Ltd., New York ......................... 110,842 68,838
1,000 Niko Resources Ltd., Toronto .......................... 55,421 34,419
10,000 NiSource Inc. ......................................... 215,500 109,700
215,000 Northeast Utilities ................................... 4,161,436 5,172,900
19,000 Oceaneering International Inc.+ ....................... 512,207 553,660
1,500 PetroChina Co. Ltd., ADR .............................. 105,964 133,470
46,700 Petroleo Brasileiro SA, ADR ........................... 874,713 1,143,683
100,000 Progress Energy Inc., CVO+ (a) ........................ 52,000 33,000
200,000 Rowan Companies Inc. .................................. 7,306,068 3,180,000
52,000 Saipem SpA ............................................ 1,059,541 854,379
5,000 SJW Corp. ............................................. 68,704 149,700
20,000 Southwest Gas Corp. ................................... 451,132 504,400
130,000 Spectra Energy Corp. .................................. 3,274,110 2,046,200
60,000 The AES Corp.+ ........................................ 342,617 494,400
19,328 Total SA .............................................. 1,176,490 1,045,388
10,000 Transocean Ltd.+ ...................................... 782,489 472,500
270,000 Westar Energy Inc. .................................... 4,552,840 5,537,700
-------------- --------------
95,309,922 90,133,788
-------------- --------------
FINANCIAL SERVICES -- 7.7%
2,200 Allianz SE ............................................ 433,950 229,358
560,000 American Express Co. .................................. 26,496,577 10,388,000
100,000 American International Group Inc. ..................... 327,750 157,000
6,000 Ameriprise Financial Inc. ............................. 174,632 140,160
19,452 Argo Group International Holdings Ltd.+ ............... 752,879 659,812
126,900 AXA Asia Pacific Holdings Ltd. ........................ 758,929 437,064
90,000 Banco Santander SA, ADR ............................... 322,130 854,100
137 Berkshire Hathaway Inc., Cl. A+ ....................... 401,727 13,234,200
10,000 Calamos Asset Management Inc., Cl. A .................. 155,620 74,000
300,000 Citigroup Inc. ........................................ 7,301,605 2,013,000
150,000 Commerzbank AG, ADR ................................... 2,981,150 1,456,500
148,000 Deutsche Bank AG ...................................... 12,095,676 6,022,120
50,000 Federal National Mortgage Association ................. 49,750 38,000
20,000 Fortress Investment Group LLC, Cl. A .................. 176,151 20,000
See accompanying notes to financial statements.
6
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2008
MARKET
SHARES COST VALUE
------------ -------------- --------------
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES (CONTINUED)
20,000 H&R Block Inc. ........................................ $ 329,930 $ 454,400
25,000 Interactive Brokers Group Inc., Cl. A+ ................ 687,185 447,250
200,000 Janus Capital Group Inc. .............................. 3,490,021 1,606,000
70,088 JPMorgan Chase & Co. .................................. 2,006,316 2,209,875
180,000 Legg Mason Inc. ....................................... 6,358,132 3,943,800
132,000 Leucadia National Corp.+ .............................. 1,652,339 2,613,600
5,000 Loews Corp. ........................................... 183,078 141,250
260,000 Marsh & McLennan Companies Inc. ....................... 8,004,551 6,310,200
65,000 Moody's Corp. ......................................... 3,235,338 1,305,850
22,000 Och-Ziff Capital Management Group LLC, Cl. A .......... 214,559 113,300
2,500 Prudential Financial Inc. ............................. 68,750 75,650
36,000 Schroders plc ......................................... 885,171 444,093
32,000 Standard Chartered plc ................................ 753,763 402,571
80,000 State Street Corp. .................................... 4,001,480 3,146,400
20,000 SunTrust Banks Inc. ................................... 419,333 590,800
150,000 T. Rowe Price Group Inc. .............................. 4,610,820 5,316,000
5,000 The Allstate Corp. .................................... 209,064 163,800
154,038 The Bank of New York Mellon Corp. ..................... 5,249,704 4,363,896
10,000 The Blackstone Group LP ............................... 156,323 65,300
43,000 The Charles Schwab Corp. .............................. 628,337 695,310
15,000 The Dun & Bradstreet Corp. ............................ 353,346 1,158,000
130,000 The Phoenix Companies Inc. ............................ 1,784,449 425,100
3,000 The Travelers Companies Inc. .......................... 113,277 135,600
66 Tree.com Inc.+ ........................................ 538 172
100,000 Wachovia Corp. ........................................ 321,730 554,000
100,000 Waddell & Reed Financial Inc., Cl. A .................. 2,058,579 1,546,000
280,000 Wells Fargo & Co. ..................................... 8,659,774 8,254,400
-------------- --------------
108,864,413 82,205,931
-------------- --------------
CABLE AND SATELLITE -- 6.2%
1,510,000 Cablevision Systems Corp., Cl. A ...................... 31,995,082 25,428,400
110,000 Comcast Corp., Cl. A, Special ......................... 658,947 1,776,500
125,000 DISH Network Corp., Cl. A+ ............................ 3,479,676 1,386,250
26,740 EchoStar Corp., Cl. A+ ................................ 841,442 397,624
176,770 Liberty Global Inc., Cl. A+ ........................... 2,780,875 2,814,178
139,001 Liberty Global Inc., Cl. C+ ........................... 2,941,276 2,110,035
495,690 Rogers Communications Inc., Cl. B, New York ........... 4,053,956 14,910,355
19,310 Rogers Communications Inc., Cl. B, Toronto ............ 137,424 572,339
125,000 Scripps Networks Interactive Inc., Cl. A .............. 4,016,039 2,750,000
160,000 Shaw Communications Inc., Cl. B, New York ............. 329,198 2,828,800
40,000 Shaw Communications Inc., Cl. B, Toronto .............. 52,983 700,203
440,000 The DIRECTV Group Inc.+ ............................... 11,196,558 10,080,400
-------------- --------------
62,483,456 65,755,084
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 6.1%
4,000 Acuity Brands Inc. .................................... 102,010 139,640
160,000 Ampco-Pittsburgh Corp. ................................ 2,094,820 3,472,000
155,000 Baldor Electric Co. ................................... 5,270,000 2,766,750
19,200 Bayer AG .............................................. 807,750 1,108,924
16,000 Bouygues SA ........................................... 796,366 671,671
225,000 Cooper Industries Ltd., Cl. A ......................... 6,075,292 6,576,750
260,000 Crane Co. ............................................. 5,942,015 4,482,400
62,000 CRH plc ............................................... 863,592 1,538,365
SHARES/ MARKET
UNITS COST VALUE
------------ -------------- --------------
170,000 General Electric Co. .................................. $ 5,266,590 $ 2,754,000
190,000 Greif Inc., Cl. A ..................................... 2,309,052 6,351,700
18,000 Greif Inc., Cl. B ..................................... 559,808 612,000
450,000 Honeywell International Inc. .......................... 15,285,048 14,773,500
250,000 ITT Corp. ............................................. 6,493,529 11,497,500
32,000 Mitsui & Co. Ltd. ..................................... 739,391 318,058
100,000 Park-Ohio Holdings Corp.+ ............................. 1,062,045 617,000
1,000 Pentair Inc. .......................................... 31,908 23,670
19,000 Sulzer AG ............................................. 403,775 1,071,076
55,200 Swire Pacific Ltd., Cl. A ............................. 622,328 379,980
24,000 Technip SA ............................................ 1,681,134 727,606
70,000 Trinity Industries Inc. ............................... 899,679 1,103,200
210,000 Tyco International Ltd. ............................... 10,072,720 4,536,000
-------------- --------------
67,378,852 65,521,790
-------------- --------------
TELECOMMUNICATIONS -- 5.8%
65,000 BCE Inc. .............................................. 1,607,838 1,331,850
16,000 Bell Aliant Regional Communications
Income Fund (a)(b) ................................. 510,683 305,225
30,000 Brasil Telecom Participacoes SA, ADR .................. 1,743,257 1,158,900
1,700,000 BT Group plc .......................................... 7,029,679 3,304,531
7,040,836 Cable & Wireless Jamaica Ltd.+ (c) .................... 128,658 44,282
888,300 Cincinnati Bell Inc.+ ................................. 6,008,340 1,714,419
170,000 Deutsche Telekom AG, ADR .............................. 2,806,557 2,601,000
3,394 FairPoint Communications Inc. ......................... 32,949 11,132
5,000 France Telecom SA, ADR ................................ 146,305 140,350
50,000 Frontier Communications Corp. ......................... 734,000 437,000
32,000 Hellenic Telecommunications Organization SA ........... 704,508 529,330
8,500 Hellenic Telecommunications Organization SA, ADR ...... 90,649 70,635
100,000 Koninklijke KPN NV .................................... 232,728 1,442,869
12,000 Orascom Telecom Holding SAE, GDR ...................... 842,050 331,613
450,000 Qwest Communications International Inc. ............... 1,756,816 1,638,000
750,000 Sprint Nextel Corp.+ .................................. 13,023,006 1,372,500
184,000 Tele Norte Leste Participacoes SA, ADR ................ 2,443,834 2,561,280
48,000 Tele2 AB, Cl. B ....................................... 804,719 418,819
48,000 Telecom Argentina SA, ADR+ ............................ 369,540 364,800
1,000,000 Telecom Italia SpA .................................... 4,090,270 1,598,554
205,000 Telefonica SA, ADR .................................... 9,753,929 13,814,950
55,000 Telefonos de Mexico SAB de CV, Cl. L, ADR ............. 250,894 1,151,700
265,000 Telephone & Data Systems Inc. ......................... 12,354,090 8,413,750
360,000 Telephone & Data Systems Inc., Special ................ 15,809,811 10,116,000
60,000 Telmex Internacional SAB de CV, ADR ................... 187,288 681,600
15,000 TELUS Corp. ........................................... 280,203 451,640
160,000 Verizon Communications Inc. ........................... 5,797,745 5,424,000
5,169 Windstream Corp. ...................................... 19,996 47,555
-------------- --------------
89,560,342 61,478,284
-------------- --------------
HEALTH CARE -- 5.4%
4,000 Abbott Laboratories ................................... 152,046 213,480
135,000 Advanced Medical Optics Inc.+ ......................... 3,546,626 892,350
14,046 Allergan Inc. ......................................... 655,380 566,335
See accompanying notes to financial statements.
7
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2008
MARKET
SHARES COST VALUE
------------ -------------- --------------
COMMON STOCKS (CONTINUED)
HEALTH CARE (CONTINUED)
51,000 Amgen Inc.+ ........................................... $ 2,981,404 $ 2,945,250
15,346 AstraZeneca plc ....................................... 761,070 595,758
17,000 Baxter International Inc. ............................. 996,870 911,030
2,000 Becton Dickinson & Co. ................................ 174,354 136,780
35,000 Biogen Idec Inc.+ ..................................... 806,669 1,667,050
120,000 Boston Scientific Corp.+ .............................. 1,655,930 928,800
85,000 Bristol-Myers Squibb Co. .............................. 2,152,363 1,976,250
2,000 Cephalon Inc.+ ........................................ 152,351 154,080
9,600 Cochlear Ltd. ......................................... 431,782 370,798
20,000 Covidien Ltd. ......................................... 876,365 724,800
36,036 GlaxoSmithKline plc ................................... 1,111,118 665,511
4,000 GlaxoSmithKline plc, ADR .............................. 216,096 149,080
30,000 Henry Schein Inc.+ .................................... 764,324 1,100,700
18,000 Hospira Inc.+ ......................................... 635,417 482,760
105,000 Johnson & Johnson ..................................... 6,821,167 6,282,150
80,000 Life Technologies Corp.+ .............................. 2,065,234 1,864,800
85,000 Merck & Co. Inc. ...................................... 3,158,470 2,584,000
10,000 Nobel Biocare Holding AG .............................. 286,712 201,250
31,200 Novartis AG ........................................... 1,661,323 1,544,830
98,000 Novartis AG, ADR ...................................... 4,369,878 4,876,480
450,000 Pfizer Inc. ........................................... 11,897,037 7,969,500
13,100 Roche Holding AG ...................................... 2,066,711 2,000,047
8,000 Sanofi-Aventis ........................................ 717,112 504,865
100,000 Schering-Plough Corp. ................................. 1,707,438 1,703,000
64,000 Smith & Nephew plc .................................... 611,868 403,491
50,000 SSL International plc ................................. 439,178 355,844
4,200 Straumann Holding AG .................................. 870,588 731,996
10,000 Synthes Inc. .......................................... 1,197,005 1,253,347
15,200 Takeda Pharmaceutical Co. Ltd. ........................ 689,373 778,025
115,000 UnitedHealth Group Inc. ............................... 5,470,701 3,059,000
79,600 William Demant Holding A/S+ ........................... 3,610,621 3,248,130
90,000 Wyeth ................................................. 3,565,970 3,375,900
3,500 Zimmer Holdings Inc.+ ................................. 206,742 141,470
-------------- --------------
69,483,293 57,358,937
-------------- --------------
ENTERTAINMENT -- 5.3%
110,000 Aruze Corp. ........................................... 3,345,171 1,089,686
32,000 Canal+ Groupe ......................................... 34,011 183,264
2,002 Chestnut Hill Ventures+ (a) ........................... 54,500 67,427
134,500 Discovery Communications Inc., Cl. A+ ................. 2,306,045 1,904,520
134,500 Discovery Communications Inc., Cl. C+ ................. 1,609,881 1,800,955
3,000 DreamWorks Animation SKG Inc., Cl. A+ ................. 68,959 75,780
690,000 Grupo Televisa SA, ADR ................................ 8,053,491 10,308,600
430,000 Liberty Media Corp. - Entertainment, Cl. A+ ........... 8,493,064 7,516,400
125 Live Nation Inc.+ ..................................... 1,296 718
65,341 Macrovision Solutions Corp.+ .......................... 1,341,728 826,564
110,000 Pinnacle Entertainment Inc.+ .......................... 532,805 844,800
10,000 Regal Entertainment Group, Cl. A ...................... 134,259 102,100
10,000 The Walt Disney Co. ................................... 164,934 226,900
920,000 Time Warner Inc. ...................................... 19,618,517 9,255,200
122,000 Tokyo Broadcasting System Inc. ........................ 3,603,992 1,835,720
320,000 Viacom Inc., Cl. A+ ................................... 15,057,981 6,438,400
432,100 Vivendi ............................................... 13,327,675 13,973,876
-------------- --------------
77,748,309 56,450,910
-------------- --------------
EQUIPMENT AND SUPPLIES -- 4.2%
254,000 AMETEK Inc. ........................................... 4,284,352 7,673,340
4,000 Amphenol Corp., Cl. A ................................. 14,775 95,920
MARKET
SHARES COST VALUE
------------ -------------- --------------
94,000 CIRCOR International Inc. ............................. $ 974,241 $ 2,585,000
193,000 Donaldson Co. Inc. .................................... 2,982,411 6,494,450
50,000 Fedders Corp.+ (a) .................................... 71,252 0
150,000 Flowserve Corp. ....................................... 5,544,523 7,725,000
23,000 Franklin Electric Co. Inc. ............................ 250,434 646,530
95,000 Gerber Scientific Inc.+ ............................... 999,244 485,450
80,000 GrafTech International Ltd.+ .......................... 809,606 665,600
318,000 IDEX Corp. ............................................ 7,631,663 7,679,700
40,000 Ingersoll-Rand Co. Ltd., Cl. A ........................ 855,378 694,000
102,000 Lufkin Industries Inc. ................................ 990,973 3,519,000
11,000 Mueller Industries Inc. ............................... 485,034 275,880
2,000 Sealed Air Corp. ...................................... 17,404 29,880
75,000 Tenaris SA, ADR ....................................... 3,308,011 1,573,500
4,000 The Manitowoc Co. Inc. ................................ 25,450 34,640
90,000 The Weir Group plc .................................... 378,710 401,133
190,000 Watts Water Technologies Inc., Cl. A .................. 2,957,983 4,744,300
-------------- --------------
32,581,444 45,323,323
-------------- --------------
CONSUMER PRODUCTS -- 3.9%
75,000 Avon Products Inc. .................................... 2,108,560 1,802,250
66,182 British American Tobacco plc .......................... 1,941,437 1,712,761
35,600 Christian Dior SA ..................................... 2,542,238 1,991,798
12,000 Church & Dwight Co. Inc. .............................. 79,628 673,440
12,000 Clorox Co. ............................................ 667,921 666,720
120,000 Eastman Kodak Co. ..................................... 1,529,603 789,600
110,000 Energizer Holdings Inc.+ .............................. 4,823,303 5,955,400
78,000 Fortune Brands Inc. ................................... 4,736,771 3,219,840
2,000 Givaudan SA ........................................... 550,742 1,560,577
60,000 Hanesbrands Inc.+ ..................................... 1,376,148 765,000
32,000 Harley-Davidson Inc. .................................. 1,486,605 543,040
160 Japan Tobacco Inc. .................................... 891,860 520,684
4,000 Jarden Corp.+ ......................................... 91,909 46,000
8,000 Mattel Inc. ........................................... 144,000 128,000
16,000 National Presto Industries Inc. ....................... 524,551 1,232,000
10,000 Oil-Dri Corp. of America .............................. 171,255 187,500
80,000 Pactiv Corp.+ ......................................... 828,772 1,990,400
10,000 Procter & Gamble Co. .................................. 438,500 618,200
58,000 Reckitt Benckiser Group plc ........................... 1,787,176 2,149,786
33,000 Svenska Cellulosa AB, Cl. B ........................... 450,176 278,549
1,000,000 Swedish Match AB ...................................... 11,131,012 14,131,349
30,000 The Swatch Group AG ................................... 1,684,101 803,307
-------------- --------------
39,986,268 41,766,201
-------------- --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 3.0%
2,000 BERU AG ............................................... 210,290 205,727
86,000 BorgWarner Inc. ....................................... 1,126,424 1,872,220
173,000 CLARCOR Inc. .......................................... 1,433,218 5,740,140
82,500 Earl Scheib Inc.+ ..................................... 644,854 51,150
300,000 Genuine Parts Co. ..................................... 10,831,178 11,358,000
200,000 Johnson Controls Inc. ................................. 4,137,496 3,632,000
135,000 Midas Inc.+ ........................................... 1,878,589 1,416,150
330,000 Modine Manufacturing Co. .............................. 8,213,644 1,607,100
160,000 O'Reilly Automotive Inc.+ ............................. 4,667,399 4,918,400
100,000 Proliance International Inc.+ ......................... 573,231 36,000
175,000 Standard Motor Products Inc. .......................... 1,873,526 605,500
35,000 Superior Industries International Inc. ................ 822,800 368,200
-------------- --------------
36,412,649 31,810,587
-------------- --------------
PUBLISHING -- 2.4%
10,000 Idearc Inc. ........................................... 1,041 850
1,825,300 Il Sole 24 Ore ........................................ 15,304,545 5,759,565
348,266 Independent News & Media plc .......................... 663,968 203,325
250,000 Media General Inc., Cl. A ............................. 14,458,909 437,500
See accompanying notes to financial statements.
8
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2008
SHARES/ MARKET
UNITS COST VALUE
------------ -------------- --------------
COMMON STOCKS (CONTINUED)
PUBLISHING (CONTINUED)
122,000 Meredith Corp. ........................................ $ 5,066,964 $ 2,088,640
1,430,000 News Corp., Cl. A ..................................... 18,529,673 12,998,700
20,000 News Corp., Cl. B ..................................... 186,274 191,600
66,585 Seat Pagine Gialle SpA+ ............................... 177,139 5,378
50,333 The E.W. Scripps Co., Cl. A ........................... 375,680 111,236
182,000 The McGraw-Hill Companies Inc. ........................ 7,122,447 4,220,580
-------------- --------------
61,886,640 26,017,374
-------------- --------------
BUSINESS SERVICES -- 2.3%
6,000 ACCO Brands Corp.+ .................................... 77,008 20,700
16,850 Ascent Media Corp., Cl. A+ ............................ 523,580 368,004
310,000 BPW Acquisition Corp.+ ................................ 3,097,250 2,821,000
24,400 Canon Inc. ............................................ 1,096,003 745,593
110,000 Clear Channel Outdoor Holdings Inc., Cl. A+ ........... 1,961,320 676,500
186,554 Contax Participacoes SA, ADR .......................... 76,632 139,916
100,000 Diebold Inc. .......................................... 3,841,978 2,809,000
200,000 G4S plc ............................................... 0 589,479
1,000 Hertz Global Holdings Inc.+ ........................... 7,031 5,070
48,000 Jardine Matheson Holdings Ltd. ........................ 1,179,013 888,000
92,000 Landauer Inc. ......................................... 2,498,708 6,743,600
39,500 MasterCard Inc., Cl. A ................................ 1,593,825 5,645,735
50,000 Monster Worldwide Inc.+ ............................... 1,145,594 604,500
72,500 Nashua Corp.+ ......................................... 656,628 380,625
20,000 Secom Co. Ltd. ........................................ 871,059 1,014,892
265,000 The Interpublic Group of Companies Inc.+ .............. 2,478,784 1,049,400
8,000 Visa Inc., Cl. A ...................................... 352,000 419,600
-------------- --------------
21,456,413 24,921,614
-------------- --------------
CONSUMER SERVICES -- 2.1%
100,000 IAC/InterActiveCorp.+ ................................. 2,555,272 1,573,000
210,000 Liberty Media Corp. - Interactive, Cl. A+ ............. 4,593,199 655,200
1,090,000 Rollins Inc. .......................................... 11,170,177 19,707,200
-------------- --------------
18,318,648 21,935,400
-------------- --------------
AVIATION: PARTS AND SERVICES -- 1.8%
350,000 Curtiss-Wright Corp. .................................. 4,965,900 11,686,500
250,000 GenCorp Inc.+ ......................................... 2,734,011 920,000
104,000 Precision Castparts Corp. ............................. 5,728,725 6,185,920
160,000 The Fairchild Corp., Cl. A+ ........................... 543,870 48,000
-------------- --------------
13,972,506 18,840,420
-------------- --------------
RETAIL -- 1.7%
180,000 AutoNation Inc.+ ...................................... 1,951,054 1,778,400
1,000 AutoZone Inc.+ ........................................ 87,930 139,470
40,000 Coldwater Creek Inc.+ ................................. 157,162 114,000
55,200 Compagnie Financiere Richemont SA, Cl. A .............. 1,243,853 1,051,774
40,000 Costco Wholesale Corp. ................................ 1,868,913 2,100,000
75,000 CVS Caremark Corp. .................................... 2,782,778 2,155,500
10,108 Denny's Corp.+ ........................................ 14,357 20,115
17,200 Hennes & Mauritz AB, Cl. B ............................ 742,807 664,471
30,000 HSN Inc.+ ............................................. 530,083 218,100
150,000 Macy's Inc. ........................................... 3,455,543 1,552,500
50,000 Sally Beauty Holdings Inc.+ ........................... 416,927 284,500
50,000 SUPERVALU Inc. ........................................ 1,453,171 730,000
225,000 The Great Atlantic & Pacific Tea Co. Inc.+ ............ 4,663,767 1,410,750
MARKET
SHARES COST VALUE
------------ -------------- --------------
50,000 Wal-Mart Stores Inc. .................................. $ 2,439,000 $ 2,803,000
90,000 Walgreen Co. .......................................... 3,188,463 2,220,300
32,000 Whole Foods Market Inc. ............................... 805,826 302,080
58,400 Woolworths Ltd. ....................................... 862,777 1,085,907
-------------- --------------
26,664,411 18,630,867
-------------- --------------
MACHINERY -- 1.7%
20,000 Caterpillar Inc. ...................................... 136,559 893,400
13,600 CNH Global NV ......................................... 720,020 212,160
435,000 Deere & Co. ........................................... 12,737,846 16,669,200
6,400 SMC Corp. ............................................. 826,649 642,471
-------------- --------------
14,421,074 18,417,231
-------------- --------------
SPECIALTY CHEMICALS -- 1.7%
13,000 Ashland Inc. .......................................... 217,620 136,630
5,400 Ciba Holding AG, ADR .................................. 4,285 123,228
30,000 E.I. du Pont de Nemours and Co. ....................... 1,263,365 759,000
350,000 Ferro Corp. ........................................... 7,353,490 2,467,500
4,000 FMC Corp. ............................................. 136,430 178,920
45,000 H.B. Fuller Co. ....................................... 620,163 724,950
70,000 International Flavors & Fragrances Inc. ............... 3,296,486 2,080,400
291,018 Omnova Solutions Inc.+ ................................ 1,910,452 189,162
40,000 Rohm and Haas Co. ..................................... 1,950,695 2,471,600
260,000 Sensient Technologies Corp. ........................... 4,760,885 6,208,800
132,000 Tokai Carbon Co. Ltd. ................................. 543,332 538,776
100,000 Zep Inc. .............................................. 1,293,508 1,931,000
-------------- --------------
23,350,711 17,809,966
-------------- --------------
AEROSPACE -- 1.5%
102,000 Boeing Co. ............................................ 6,077,497 4,352,340
32,640 Finmeccanica SpA ...................................... 843,311 494,092
25,899 Kaman Corp. ........................................... 586,549 469,549
8,000 Lockheed Martin Corp. ................................. 468,720 672,640
85,000 Northrop Grumman Corp. ................................ 4,892,048 3,828,400
1,200,000 Rolls-Royce Group plc+ ................................ 9,166,092 5,788,394
68,640,000 Rolls-Royce Group plc, Cl. C+ ......................... 107,024 98,687
-------------- --------------
22,141,241 15,704,102
-------------- --------------
WIRELESS COMMUNICATIONS -- 1.3%
95,000 America Movil SAB de CV, Cl. L, ADR ................... 1,335,987 2,944,050
52,000 China Mobile Ltd. ..................................... 637,345 521,999
14,000 Clearwire Corp., Cl. A+ ............................... 250,895 69,020
1,700 NTT DoCoMo Inc. ....................................... 3,438,005 3,308,108
5,087 Telemig Celular Participacoes SA, ADR ................. 147,017 152,559
32,165 Tim Participacoes SA, ADR ............................. 390,212 401,741
115,400 United States Cellular Corp.+ ......................... 5,343,392 4,989,896
44,377 Vivo Participacoes SA, ADR ............................ 2,262,222 556,488
45,000 Vodafone Group plc, ADR ............................... 1,223,275 919,800
-------------- --------------
15,028,350 13,863,661
-------------- --------------
AGRICULTURE -- 1.3%
340,000 Archer-Daniels-Midland Co. ............................ 7,725,192 9,802,200
31,000 Monsanto Co. .......................................... 1,451,491 2,180,850
4,000 Syngenta AG ........................................... 1,197,594 753,136
15,000 Syngenta AG, ADR ...................................... 189,981 587,100
10,000 The Mosaic Co. ........................................ 176,051 346,000
-------------- --------------
10,740,309 13,669,286
-------------- --------------
METALS AND MINING -- 1.3%
65,000 Alcoa Inc. ............................................ 1,385,315 731,900
24,030 Anglo American plc .................................... 943,612 534,131
See accompanying notes to financial statements.
9
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2008
MARKET
SHARES COST VALUE
------------ -------------- --------------
COMMON STOCKS (CONTINUED)
METALS AND MINING (CONTINUED)
88,000 Barrick Gold Corp. .................................... $ 2,576,640 $ 3,235,760
16,000 BHP Billiton Ltd. ..................................... 673,778 339,564
4,000 Freeport-McMoRan Copper & Gold Inc. ................... 102,895 97,760
35,000 Harmony Gold Mining Co. Ltd.+ ......................... 176,902 369,876
35,000 Harmony Gold Mining Co. Ltd., ADR+ .................... 460,008 383,950
20,000 Impala Platinum Holdings Ltd. ......................... 789,714 292,050
75,000 Ivanhoe Mines Ltd.+ ................................... 560,208 202,500
52,000 New Hope Corp. Ltd. ................................... 70,252 125,077
155,000 Newmont Mining Corp. .................................. 4,747,145 6,308,500
20,000 Rio Tinto plc ......................................... 1,222,126 428,450
55,766 Xstrata plc ........................................... 1,281,816 513,137
-------------- --------------
14,990,411 13,562,655
-------------- --------------
ENVIRONMENTAL SERVICES -- 1.2%
97,000 Republic Services Inc. ................................ 905,229 2,404,630
330,000 Waste Management Inc. ................................. 8,005,033 10,936,200
-------------- --------------
8,910,262 13,340,830
-------------- --------------
HOTELS AND GAMING -- 1.2%
2,500 Accor SA .............................................. 167,938 122,011
200,000 Gaylord Entertainment Co.+ ............................ 5,147,797 2,168,000
45,000 Interval Leisure Group Inc.+ .......................... 876,000 242,550
1,100,058 Ladbrokes plc ......................................... 11,258,708 2,925,982
40,000 Las Vegas Sands Corp.+ ................................ 508,828 237,200
3,900,000 Mandarin Oriental International Ltd. .................. 7,272,574 3,841,500
155,000 MGM Mirage+ ........................................... 9,710,063 2,132,800
44,000 Orient-Express Hotels Ltd., Cl. A ..................... 1,003,821 337,040
34,000 Starwood Hotels & Resorts Worldwide Inc. .............. 520,597 608,600
140,000 The Hongkong & Shanghai Hotels Ltd. ................... 110,578 105,855
1,000 Wynn Resorts Ltd.+ .................................... 45,383 42,260
-------------- --------------
36,622,287 12,763,798
-------------- --------------
ELECTRONICS -- 1.0%
6,000 Advanced Micro Devices Inc.+ .......................... 57,915 12,960
16,000 Bel Fuse Inc., Cl. A .................................. 500,167 288,640
11,200 Fanuc Ltd. ............................................ 1,145,649 777,143
5,000 Hitachi Ltd., ADR ..................................... 347,376 195,700
180,000 Intel Corp. ........................................... 3,637,892 2,638,800
4,720 Keyence Corp. ......................................... 960,847 947,645
80,000 LSI Corp.+ ............................................ 474,386 263,200
20,000 Molex Inc., Cl. A ..................................... 519,697 259,000
7,500 NEC Corp., ADR ........................................ 43,625 33,938
35,000 Royal Philips Electronics NV .......................... 48,221 695,450
265,000 Texas Instruments Inc. ................................ 6,407,535 4,112,800
62,000 Tyco Electronics Ltd. ................................. 2,392,821 1,005,020
-------------- --------------
16,536,131 11,230,296
-------------- --------------
COMMUNICATIONS EQUIPMENT -- 1.0%
480,000 Corning Inc. .......................................... 4,124,295 4,574,400
90,000 Motorola Inc. ......................................... 1,024,871 398,700
100 Nortel Networks Corp.+ ................................ 688 26
250,000 Thomas & Betts Corp.+ ................................. 8,254,260 6,005,000
-------------- --------------
13,404,114 10,978,126
-------------- --------------
MARKET
SHARES COST VALUE
------------ -------------- --------------
AUTOMOTIVE -- 0.6%
330,000 General Motors Corp. .................................. $ 6,180,347 $ 1,056,000
125,000 Navistar International Corp.+ ......................... 3,272,936 2,672,500
96,750 PACCAR Inc. ........................................... 431,444 2,767,050
-------------- --------------
9,884,727 6,495,550
-------------- --------------
TRANSPORTATION -- 0.6%
100,000 AMR Corp.+ ............................................ 1,924,248 1,067,000
165,000 GATX Corp. ............................................ 4,548,661 5,110,050
15,000 Grupo TMM SA, Cl. A, ADR+ ............................. 70,729 10,650
56,000 Toll Holdings Ltd. .................................... 542,075 240,896
-------------- --------------
7,085,713 6,428,596
-------------- --------------
REAL ESTATE -- 0.6%
2,000 Brookfield Asset Management Inc., Cl. A ............... 70,670 30,540
56,000 Cheung Kong (Holdings) Ltd. ........................... 658,818 529,638
55,500 Griffin Land & Nurseries Inc. ......................... 529,368 2,045,730
138,000 The St. Joe Co.+ ...................................... 7,982,868 3,356,160
-------------- --------------
9,241,724 5,962,068
-------------- --------------
COMPUTER SOFTWARE AND SERVICES -- 0.5%
8,000 Alibaba.com Ltd.+ ..................................... 13,935 5,760
10,000 Check Point Software Technologies Ltd.+ ............... 169,874 189,900
50,000 NCR Corp.+ ............................................ 1,282,708 707,000
30,000 Rockwell Automation Inc. .............................. 1,406,205 967,200
19,300 Square Enix Holdings Co. Ltd. ......................... 519,618 612,107
25,256 Telecom Italia Media SpA+ ............................. 26,868 3,100
185,000 Yahoo! Inc.+ .......................................... 5,607,536 2,257,000
1,600 Yahoo! Japan Corp. .................................... 603,852 644,236
-------------- --------------
9,630,596 5,386,303
-------------- --------------
BROADCASTING -- 0.5%
76,000 British Sky Broadcasting Group plc .................... 883,006 524,492
410,000 CBS Corp., Cl. A ...................................... 12,823,068 3,378,400
20,343 Citadel Broadcasting Corp.+ ........................... 29,042 3,255
2,000 Cogeco Inc. ........................................... 39,014 40,340
25,334 Corus Entertainment Inc., Cl. B, New York ............. 46,981 290,581
6,666 Corus Entertainment Inc., Cl. B, Toronto .............. 12,406 75,435
110,000 Gray Television Inc. .................................. 721,003 44,000
23,000 Gray Television Inc., Cl. A ........................... 274,444 13,340
77,000 Liberty Media Corp. - Capital, Cl. A+ ................. 990,182 362,670
70,000 LIN TV Corp., Cl. A+ .................................. 685,615 76,300
100,000 Television Broadcasts Ltd. ............................ 396,239 325,798
-------------- --------------
16,901,000 5,134,611
-------------- --------------
CLOSED-END FUNDS -- 0.2%
31,500 Royce Value Trust Inc. ................................ 388,297 264,285
104,000 The Central Europe and Russia Fund Inc. ............... 2,391,965 1,708,720
70,000 The New Germany Fund Inc. ............................. 754,518 560,700
-------------- --------------
3,534,780 2,533,705
-------------- --------------
MANUFACTURED HOUSING AND RECREATIONAL VEHICLES -- 0.1%
150,000 Champion Enterprises Inc.+ ............................ 782,392 84,000
27,000 Huttig Building Products Inc.+ ........................ 68,453 12,150
7,000 Martin Marietta Materials Inc. ........................ 144,225 679,560
10,000 Nobility Homes Inc. ................................... 195,123 79,100
30,000 Skyline Corp. ......................................... 1,072,261 599,700
-------------- --------------
2,262,454 1,454,510
-------------- --------------
See accompanying notes to financial statements.
10
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2008
MARKET
SHARES COST VALUE
------------ -------------- --------------
COMMON STOCKS (CONTINUED)
REAL ESTATE INVESTMENT TRUSTS -- 0.1%
2,000 Camden Property Trust ................................. $ 37,490 $ 62,680
24,984 Rayonier Inc. ......................................... 798,811 783,248
-------------- --------------
836,301 845,928
-------------- --------------
TOTAL COMMON STOCKS ................................... 1,184,687,722 1,011,715,673
-------------- --------------
CONVERTIBLE PREFERRED STOCKS -- 0.1%
TELECOMMUNICATIONS -- 0.1%
25,000 Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B ............................ 787,113 575,000
-------------- --------------
WARRANTS -- 0.0%
ENERGY AND UTILITIES -- 0.0%
12,183 Mirant Corp.,
Ser. A, expire 01/03/11+ ........................... 36,353 42,640
-------------- --------------
PRINCIPAL
AMOUNT
------------
CONVERTIBLE CORPORATE BONDS -- 0.2%
RETAIL -- 0.2%
$ 3,300,000 The Great Atlantic & Pacific Tea Co. Inc., Cv.,
5.125%, 06/15/11 ................................... 3,207,436 1,703,625
-------------- --------------
CORPORATE BONDS -- 0.0%
CONSUMER PRODUCTS -- 0.0%
1,000,000 Pillowtex Corp., Sub. Deb.,
9.000%, 12/15/17+ (a) .............................. 0 0
-------------- --------------
U.S. GOVERNMENT OBLIGATIONS -- 5.0%
U.S. TREASURY CASH MANAGEMENT BILLS -- 0.1%
1,417,000 U.S. Treasury Cash Management Bills,
0.030% to 0.137%++,
04/29/09 to 06/24/09 ............................... 1,416,267 1,416,248
-------------- --------------
U.S. TREASURY BILLS -- 4.9%
52,609,000 U.S. Treasury Bills,
0.020% to 1.129%++,
01/02/09 to 06/25/09 ............................... 52,584,451 52,567,164
-------------- --------------
TOTAL U.S. GOVERNMENT OBLIGATIONS ..................... 54,000,718 53,983,412
-------------- --------------
MARKET
COST VALUE
-------------- --------------
TOTAL INVESTMENTS -- 100.0%........................................... $1,242,719,342 $1,068,020,350
==============
OTHER ASSETS AND LIABILITIES (NET).................................... 38,594,103
PREFERRED STOCK
(8,828,015 preferred shares outstanding)........................... (382,538,375)
--------------
NET ASSETS -- COMMON STOCK
(174,919,152 common shares outstanding)............................ $ 724,076,078
==============
NET ASSET VALUE PER COMMON SHARE
($724,076,078/174,919,152 shares outstanding)...................... $ 4.14
==============
----------
(a) Security fair valued under procedures established by the Board of
Directors. The procedures may include reviewing available financial
information about the company and reviewing the valuation of comparable
securities and other factors on a regular basis. At December 31, 2008, the
market value of fair valued securities amounted to $405,652 or 0.04% of
total investments.
(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,
2008, the market value of the Rule 144A security amounted to $305,225 or
0.03% of total investments.
(c) At December 31, 2008, the Fund held an investment in a restricted security
amounting to $44,282 or 0.00% of total investments, which was valued under
methods approved by the Board of Directors as follows:
12/31/08
ACQUISITION ACQUISITION ACQUISITION CARRYING VALUE
SHARES ISSUER DATE COST PER UNIT
----------- ----------------------------- ----------- ----------- --------------
7,040,836 Cable & Wireless
Jamaica Ltd............... 09/30/93 $128,658 $0.0063
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depositary Receipt
CVO Contingent Value Obligation
GDR Global Depositary Receipt
% OF
MARKET MARKET
GEOGRAPHIC DIVERSIFICATION VALUE VALUE
-------------------------- ------ --------------
North America............. 75.8% $ 809,248,821
Europe.................... 16.4 175,780,303
Latin America............. 4.0 42,533,858
Japan..................... 2.8 29,689,302
Asia/Pacific.............. 0.9 9,390,578
South Africa.............. 0.1 1,045,875
Africa/Middle East........ 0.0 331,613
----- --------------
Total Investments......... 100.0% $1,068,020,350
===== ==============
See accompanying notes to financial statements.
11
THE GABELLI EQUITY TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2008
ASSETS:
Investments, at value (cost $1,242,719,342) ................................. $1,068,020,350
Foreign currency, at value (cost $2,218,056) ................................ 2,483,498
Receivable for investments sold ............................................. 41,581,450
Dividends and interest receivable ........................................... 2,247,024
Unrealized appreciation on swap contracts ................................... 77,128
Deferred offering expense ................................................... 143,247
Prepaid expense ............................................................. 45,722
--------------
TOTAL ASSETS ................................................................ 1,114,598,419
--------------
LIABILITIES:
Payable to custodian ........................................................ 4,067
Payable to brokers .......................................................... 171
Payable for investments purchased ........................................... 6,063,503
Distributions payable ....................................................... 226,061
Payable for Preferred shares repurchased .................................... 156,095
Payable for investment advisory fees ........................................ 584,627
Payable for payroll expenses ................................................ 33,890
Payable for accounting fees ................................................. 7,481
Payable for auction agent fees .............................................. 378,656
Other accrued expenses ...................................................... 529,415
--------------
TOTAL LIABILITIES ........................................................... 7,983,966
--------------
PREFERRED STOCK:
Series C Cumulative Preferred Stock (Auction Rate, $25,000 liquidation value,
$0.001 par value, 5,200 shares authorized with 4,680 shares issued
and outstanding) ......................................................... 117,000,000
Series D Cumulative Preferred Stock (5.875%, $25
liquidation value, $0.001 par value, 3,000,000 shares
authorized with 2,901,269 shares issued and outstanding) ................. 72,531,725
Series E Cumulative Preferred Stock (Auction Rate,
$25,000 liquidation value, $0.001 par value, 2,000
shares authorized with 1,800 shares issued and outstanding) .............. 45,000,000
Series F Cumulative Preferred Stock (6.200%, $25
liquidation value, $0.001 par value, 6,000,000 shares
authorized with 5,920,266 shares issued and outstanding) ................. 148,006,650
--------------
TOTAL PREFERRED STOCK ....................................................... 382,538,375
--------------
NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS .............................. $ 724,076,078
==============
NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
CONSIST OF:
Paid-in capital, at $0.001 par value ........................................ $ 920,886,132
Accumulated distributions in excess of net investment income ................ (397,261)
Accumulated net realized loss on investments, written
options, futures contracts, swap contracts, and foreign currency
transactions ............................................................. (22,050,703)
Net unrealized depreciation on investments .................................. (174,698,992)
Net unrealized appreciation on swap contracts ............................... 77,128
Net unrealized appreciation on foreign currency translations ................ 259,774
--------------
NET ASSETS .................................................................. $ 724,076,078
==============
NET ASSET VALUE PER COMMON SHARE
($724,076,078 / 174,919,152 shares outstanding;
246,000,000 shares authorized) .............................................. $ 4.14
==============
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2008
INVESTMENT INCOME:
Dividends (net of foreign taxes of $1,231,680) .............................. $ 34,140,954
Interest .................................................................... 1,190,040
-------------
TOTAL INVESTMENT INCOME ..................................................... 35,330,994
-------------
EXPENSES:
Investment advisory fees .................................................... 16,058,680
Shareholder communications expenses ......................................... 640,041
Auction agent fees .......................................................... 447,756
Custodian fees .............................................................. 309,535
Legal and audit fees ........................................................ 173,224
Directors' fees ............................................................. 144,923
Payroll expenses ............................................................ 143,545
Shareholder services fees ................................................... 112,782
Accounting fees ............................................................. 45,000
Interest expense ............................................................ 21,653
Miscellaneous expenses ...................................................... 299,707
-------------
TOTAL EXPENSES .............................................................. 18,396,846
Less:
Advisory fee reduction ................................................... (4,012,394)
Custodian fee credits .................................................... (3,266)
-------------
NET EXPENSES ................................................................ 14,381,186
-------------
NET INVESTMENT INCOME ....................................................... 20,949,808
-------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS,
WRITTEN OPTIONS, SWAP CONTRACTS, FUTURES CONTRACTS,
AND FOREIGN CURRENCY:
Net realized loss on investments ............................................ (24,839,895)
Net realized gain on written options ........................................ 11,985
Net realized loss on swap contracts ......................................... (1,315,321)
Net realized gain on futures contracts ...................................... 9,531,398
Net realized gain on foreign currency transactions .......................... 182,670
-------------
Net realized gain/(loss) on investments, written options,
swap contracts, futures contracts, and foreign
currency transactions .................................................... (16,429,163)
-------------
Net change in unrealized appreciation/(depreciation):
on investments ........................................................... (729,934,434)
on written options ....................................................... 15
on swap contracts ........................................................ 69,963
on futures contracts ..................................................... (1,088,286)
on foreign currency translations ......................................... 174,827
-------------
Net change in unrealized appreciation/(depreciation) on
investments, written options, swap contracts, futures
contracts, and foreign currency translations ............................. (730,777,915)
-------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS,
WRITTEN OPTIONS, SWAP CONTRACTS, FUTURES CONTRACTS,
AND FOREIGN CURRENCY ..................................................... (747,207,078)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................ (726,257,270)
Total Distributions to Preferred Stock Shareholders ......................... (19,287,568)
-------------
NET DECREASE IN NET ASSETS ATTRIBUTABLE TO COMMON
SHAREHOLDERS RESULTING FROM OPERATIONS ................................... $(745,544,838)
=============
See accompanying notes to financial statements.
12
THE GABELLI EQUITY TRUST INC.
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO COMMON SHARES
YEAR ENDED YEAR ENDED
DECEMBER 31, 2008 DECEMBER 31, 2007
----------------- -----------------
OPERATIONS:
Net investment income .................................................................. $ 20,949,808 $ 19,068,546
Net realized gain/(loss) on investments, written options, swap
contracts, futures contracts, and foreign currency transactions ..................... (16,429,163) 118,021,047
Net change in unrealized appreciation/(depreciation) on investments, written options,
swap contracts, futures contracts, and foreign currency translations ................ (730,777,915) 75,143,139
-------------- --------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........................ (726,257,270) 212,232,732
-------------- --------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
Net investment income .................................................................. (19,287,568) (3,515,786)
Net realized short-term gain ........................................................... -- (1,824,834)
Net realized long-term gain ............................................................ -- (18,025,125)
-------------- --------------
TOTAL DISTRIBUTIONS TO PREFERRED SHAREHOLDERS .......................................... (19,287,568) (23,365,745)
-------------- --------------
NET INCREASE/(DECREASE) IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
RESULTING FROM OPERATIONS ........................................................... (745,544,838) 188,866,987
-------------- --------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income .................................................................. (549,586) (20,158,265)
Net realized short-term gain ........................................................... -- (8,897,143)
Net realized long-term gain ............................................................ -- (88,050,995)
Return of capital ...................................................................... (138,218,574) (103,665,340)
-------------- --------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS ............................................. (138,768,160) (220,771,743)
-------------- --------------
FUND SHARE TRANSACTIONS:
Net increase in net assets from common shares issued upon reinvestment of
distributions ....................................................................... 21,433,746 31,379,440
Net increase in net assets from repurchase of preferred shares ......................... 573,717 --
Offering costs for preferred shares charged to paid-in capital ......................... 650 --
-------------- --------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS ................................ 22,008,113 31,379,440
-------------- --------------
NET DECREASE IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS ......................... (862,304,885) (525,316)
-------------- --------------
NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS:
Beginning of period .................................................................... 1,586,380,963 1,586,906,279
-------------- --------------
End of period (including undistributed net investment income of $0 and $0,
respectively) ....................................................................... $ 724,076,078 $1,586,380,963
============== ==============
See accompanying notes to financial statements.
13
THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
YEAR ENDED DECEMBER 31,
----------------------------------------------------
2008 2007 2006 2005 2004
------- ------ ------ ------ ------
OPERATING PERFORMANCE:
Net asset value, beginning of period ............................... $ 9.22 $ 9.40 $ 8.10 $ 8.69 $ 7.98
------- ------ ------ ------ ------
Net investment income .............................................. 0.12 0.14 0.18 0.09 0.02
Net realized and unrealized gain/(loss) on investments,
written options, swap contracts, futures contracts, and
foreign currency transactions ................................... (4.30) 1.12 2.18 0.47 1.63
------- ------ ------ ------ ------
Total from investment operations ................................... (4.18) 1.26 2.36 0.56 1.65
------- ------ ------ ------ ------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:(a)
Net investment income .............................................. (0.11) (0.02) (0.03) (0.01) (0.00)(d)
Net realized gain .................................................. -- (0.12) (0.12) (0.14) (0.14)
------- ------ ------ ------ ------
Total distributions to preferred shareholders ...................... (0.11) (0.14) (0.15) (0.15) (0.14)
------- ------ ------ ------ ------
NET INCREASE/(DECREASE) IN NET ASSETS ATTRIBUTABLE TO COMMON
SHAREHOLDERS RESULTING FROM OPERATIONS ............................. (4.29) 1.12 2.21 0.41 1.51
------- ------ ------ ------ ------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income .............................................. (0.00)(d) (0.12) (0.16) (0.08) (0.01)
Net realized gain .................................................. -- (0.57) (0.72) (0.77) (0.79)
Return of capital .................................................. (0.80) (0.61) -- -- --
------- ------ ------ ------ ------
Total distributions to common shareholders ......................... (0.80) (1.30) (0.88) (0.85) (0.80)
------- ------ ------ ------ ------
FUND SHARE TRANSACTIONS:
Increase/(decrease) in net asset value from common stock share
transactions .................................................... 0.01 -- -- (0.00)(d) 0.00(d)
Decrease in net asset value from shares issued in rights offering .. -- -- -- (0.15) --
Increase in net asset value from repurchase of preferred shares .... 0.00(d) -- -- -- 0.00(d)
Offering costs for preferred shares charged to paid-in capital ..... 0.00(d) -- (0.03) (0.00)(d) 0.00(d)
Offering costs for issuance of rights charged to paid-in capital ... -- -- (0.00)(d) (0.00)(d) --
------- ------ ------ ------ ------
Total fund share transactions ...................................... 0.01 -- (0.03) (0.15) 0.00(d)
------- ------ ------ ------ ------
NET ASSET VALUE ATTRIBUTABLE TO COMMON SHAREHOLDERS,
END OF PERIOD ................................................... $ 4.14 $ 9.22 $ 9.40 $ 8.10 $ 8.69
======= ====== ====== ====== ======
Net Asset Value Total Return + ..................................... (49.06)% 12.14% 28.17% 5.50% 19.81%
======= ====== ====== ====== ======
Market Value, End of Period ........................................ $ 3.70 $ 9.28 $ 9.41 $ 8.03 $ 9.02
======= ====== ====== ====== ======
Total Investment Return ++ ......................................... (54.77)% 12.75% 29.42% 0.66% 24.04%
======= ====== ====== ====== ======
See accompanying notes to financial statements.
14
THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
2008 2007 2006 2005 2004
---------- ---------- ---------- ---------- ----------
RATIOS AND SUPPLEMENTAL DATA:
Net assets including liquidation value of preferred shares,
end of period (in 000's) ............................... $1,106,614 $1,990,123 $2,114,399 $1,764,634 $1,638,225
Net assets attributable to common shares, end of period
(in 000's) ............................................. $ 724,076 $1,586,381 $1,586,906 $1,345,891 $1,219,483
Ratio of net investment income to average net assets
attributable to common shares before preferred
distributions .......................................... 1.73% 1.16% 2.12% 1.27% 0.64%
Ratio of operating expenses to average net assets
attributable to common shares before fees waived ....... 1.52% -- -- -- --
Ratio of operating expenses to average net assets
attributable to common shares net of fee reduction,
if any ................................................. 1.19% 1.46% 1.43% 1.39% 1.57%
Ratio of operating expenses to average net assets including
liquidation value of preferred shares before fees
waived ................................................. 1.14% -- -- -- --
Ratio of operating expenses to average net assets including
liquidation value of preferred shares net of fee
reduction, if any ...................................... 0.89% 1.17% 1.11% 1.04% 1.14%
Portfolio turnover rate+++ ................................ 13.5% 17.2% 29.5% 22.4% 28.6%
PREFERRED STOCK:
7.200% SERIES B CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ............... -- -- $ 123,750 $ 165,000 $ 165,000
Total shares outstanding (in 000's) ....................... -- -- 4,950 6,600 6,600
Liquidation preference per share .......................... -- -- $ 25.00 $ 25.00 $ 25.00
Average market value (b) .................................. -- -- $ 25.27 $ 25.92 $ 26.57
Asset coverage per share .................................. -- -- $ 100.21 $ 105.35 $ 97.81
AUCTION RATE SERIES C CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ............... $ 117,000 $ 130,000 $ 130,000 $ 130,000 $ 130,000
Total shares outstanding (in 000's) ....................... 5 5 5 5 5
Liquidation preference per share .......................... $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Average market value (b) .................................. $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Asset coverage per share .................................. $ 72,320 $ 123,230 $ 100,211 $ 105,353 $ 97,806
5.875% SERIES D CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ............... $ 72,532 $ 73,743 $ 73,743 $ 73,743 $ 73,743
Total shares outstanding (in 000's) ....................... 2,901 2,950 2,950 2,950 2,950
Liquidation preference per share .......................... $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00
Average market value (b) .................................. $ 22.69 $ 23.86 $ 23.98 $ 24.82 $ 24.81
Asset coverage per share .................................. $ 72.32 $ 123.23 $ 100.21 $ 105.35 $ 97.81
AUCTION RATE SERIES E CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ............... $ 45,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
Total shares outstanding (in 000's) ....................... 2 2 2 2 2
Liquidation preference per share .......................... $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Average market value (b) .................................. $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Asset coverage per share .................................. $ 72,320 $ 123,230 $ 100,211 $ 105,353 $ 97,806
6.200% SERIES F CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ............... $ 148,007 $ 150,000 $ 150,000 -- --
Total shares outstanding (in 000's) ....................... 5,920 6,000 6,000 -- --
Liquidation preference per share .......................... $ 25.00 $ 25.00 $ 25.00 -- --
Average market value (b) .................................. $ 23.48 $ 24.69 $ 25.12 -- --
Asset coverage per share .................................. $ 72.32 $ 123.23 $ 100.21 -- --
ASSET COVERAGE (C) ........................................ 289% 493% 401% 421% 391%
----------
+ Based on net asset value per share, adjusted for reinvestment of
distributions, at prices dependent upon the relationship of the net asset
value per share and the market value per share on the ex-dividend dates,
including the effect of shares issued pursuant to the 2005 rights offering,
assuming full subscription by shareholders.
++ Based on market value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to the 2005
rights offering, assuming full subscription by shareholders.
+++ Effective in 2008, a change in accounting policy was adopted with regard to
the calculation of the portfolio turnover rate to include cash proceeds due
to mergers. Had this policy been adopted retroactively, the portfolio
turnover rate for the years ended December 31, 2007, 2006, 2005, and 2004
would have been 27.3%, 33.1%, 27.0%, and 29.9%, respectively.
(a) Calculated based upon average common shares outstanding on the record dates
throughout the periods.
(b) Based on weekly prices.
(c) Asset coverage is calculated by combining all series of preferred stock.
(d) Amount represents less than $0.005 per share.
See accompanying notes to financial statements.
15
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. The Gabelli Equity Trust Inc. (the "Equity Trust") is a
non-diversified closed-end management investment company organized as a Maryland
corporation on May 20, 1986 and registered under the Investment Company Act of
1940, as amended (the "1940 Act"), whose primary objective is long-term growth
of capital. Investment operations commenced on August 21, 1986.
The Equity Trust will invest at least 80% of its assets in equity
securities under normal market conditions (the "80% Policy"). The 80% Policy may
be changed without shareholder approval. The Equity Trust will provide
shareholders with notice at least 60 days prior to the implementation of any
changes in the 80% Policy.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with United States ("U.S.") generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the 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 60 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 60 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. 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 ADR securities at
the close of the U.S. exchange; and evaluation of any other information that
could be indicative of the value of the security.
Statement of Financial Accounting Standard No. 157, "Fair Value
Measurements" ("SFAS 157") clarifies the definition of fair value for financial
reporting, establishes a framework for measuring fair value, and requires
additional disclosures about the use of fair value measurements. The three
levels of the fair value hierarchy under SFAS 157 are described 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 Fund's
determinations as to the fair value of investments).
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 and other financial instruments, by inputs
used to value the Fund's investments as of December 31, 2008 is, as follows:
OTHER
FINANCIAL
INVESTMENTS IN INSTRUMENTS
SECURITIES (UNREALIZED
(MARKET VALUE) APPRECIATION)*
VALUATION INPUTS ASSETS ASSETS
---------------- -------------- --------------
Level 1 - Quoted Prices $1,011,828,974 --
Level 2 - Other Significant Observable Inputs 56,090,949 $77,128
Level 3 - Significant Unobservable Inputs 100,427 --
-------------- -------
Total $1,068,020,350 $77,128
============== =======
----------
* Other financial instruments are derivative instruments not reflected in the
Schedule of Investments, such as futures, forwards, and swaps which are
valued at the unrealized appreciation/depreciation on the investment.
16
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The following is a reconciliation of Level 3 investments for which
significant unobservable inputs were used to determine fair value:
INVESTMENTS IN
SECURITIES
(MARKET VALUE)
--------------
BALANCE AS OF 12/31/07 $ 89,356
Accrued discounts/(premiums) --
Realized gain/(loss) --
Change in unrealized appreciation/(depreciation)+ 11,071
Net purchases/(sales) --
Transfers in and/or out of Level 3 0
--------
BALANCE AS OF 12/31/08 $100,427
========
Net change in unrealized appreciation/
(depreciation) during the period on Level 3
investments held at 12/31/08+ $(60,181)
--------
----------
+ Net change in unrealized appreciation/(depreciation) is included in the
related amounts on investments in the Statement of Operations.
In March 2008, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standard No. 161, "Disclosures about
Derivative Instruments and Hedging Activities" ("SFAS 161") that is effective
for fiscal years beginning after November 15, 2008. SFAS 161 is intended to
improve financial reporting for derivative instruments by requiring enhanced
disclosure that enables investors to understand how and why an entity uses
derivatives, how derivatives are accounted for, and how derivative instruments
affect an entity's results of operations and financial position. Management is
currently evaluating the implications of SFAS 161 on the Fund's financial
statement disclosures.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System, or with other brokers or
dealers that meet credit guidelines established by the Adviser and reviewed by
the Board. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
It is the policy of the Fund to always receive and maintain securities as
collateral whose market value, including accrued interest, are at least equal to
102% of the dollar amount invested by the Fund in each agreement. The Fund will
make payment for such securities only upon physical delivery or upon evidence of
book entry transfer of the collateral to the account of the custodian. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to maintain the adequacy of
the collateral. If the seller defaults and the value of the collateral declines
or if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or limited.
At December 31, 2008, there were no open repurchase agreements.
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. As a shareholder in the Fund, you 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, 2008, the Fund's pro rata
portion of the periodic expenses charged by the Acquired Funds was less than one
basis point.
OPTIONS. The Fund may purchase or write call or put options on securities
or indices. As a writer of put options, the Fund receives a premium at the
outset and then bears the risk of unfavorable changes in the price of the
financial instrument underlying the option. The Fund would incur a loss if the
price of the underlying financial instrument decreases between the date the
option is written and the date on which the option is terminated. The Fund would
realize a gain, to the extent of the premium, if the price of the financial
instrument increases between those dates. If a written call option is exercised,
the premium is added to the proceeds from the sale of the underlying security in
determining whether there has been a realized gain or loss. If a written put
option is exercised, the premium reduces the cost basis of the security.
As a purchaser of put options, the Fund pays a premium for the right to
sell to the seller of the put option the underlying security at a specified
price. The seller of the put has the obligation to purchase the underlying
security upon exercise at the exercise price. If the price of the underlying
security declines, the Fund would realize a gain upon sale or exercise. If the
price of the underlying security increases or stays the same, the Fund would
realize a loss upon sale or at the expiration date, but only to the extent of
the premium paid.
In the case of call options, these exercise prices are referred to as
"in-the-money", "at-the-money", and "out-of-the-money", respectively. The Fund
may write (a) in-the-money call options when the Adviser expects that the price
of the underlying security will remain stable or decline during the option
period, (b) at-the-money call options when the Adviser expects that the price of
the underlying security will remain stable, decline or advance moderately during
the option period, and (c) out-of-the-money call options when the Adviser
expects that the premiums received from writing the call option will be greater
than the appreciation in the price of the underlying security above the exercise
price. By writing a call option, the Fund limits its opportunity to profit from
any increase
17
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
in the market value of the underlying security above the exercise price of the
option. Out-of-the-money, at-the-money, and in-the-money put options (the
reverse of call options as to the relation of exercise price to market price)
may be utilized in the same market environments that such call options are used
in equivalent transactions. There were no open option contracts at December 31,
2008.
SWAP AGREEMENTS. The Fund may enter into equity, contract for difference,
and interest rate swap or cap transactions. The use of swaps and caps is a
highly specialized activity that involves investment techniques and risks
different from those associated with ordinary portfolio security transactions. A
swap agreement may involve, to varying degrees, elements of market and
counterparty risk and exposure to loss in excess of the related amounts
reflected in the Statement of Assets and Liabilities. In an interest rate swap,
the Fund would agree to pay to the other party to the interest rate swap (which
is known as the "counterparty") periodically a fixed rate payment in exchange
for the counterparty agreeing to pay to the Fund periodically a variable rate
payment that is intended to approximate the Fund's variable rate payment
obligation on Series C Preferred Stock and Series E Preferred Stock. In an
interest rate cap, the Fund would pay a premium to the counterparty and, to the
extent that a specified variable rate index exceeds a predetermined fixed rate,
would receive from that counterparty payments of the difference based on the
notional amount of such cap. In a swap, a set of future cash flows are 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. Swap and cap transactions introduce additional risk because
the Fund would remain obligated to pay preferred stock dividends when due in
accordance with the Articles Supplementary even if the counterparty defaulted.
If there is a default by the counterparty to a swap contract, the Fund will be
limited to contractual remedies pursuant to the agreements related to the
transaction. There is no assurance that the swap contract counterparties will be
able to meet their obligations pursuant to a swap contract or that, in the event
of default, the Fund will succeed in pursuing contractual remedies. The Fund
thus assumes the risk that it may be delayed in or prevented from obtaining
payments owed to it pursuant to a swap contract. The creditworthiness of the
swap contract counterparties is closely monitored in order to minimize this
risk. Depending on the general state of short-term interest rates and the
returns on the Fund's portfolio securities at that point in time, such a default
could negatively affect the Fund's ability to make dividend payments. In
addition, at the time a swap or cap 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.
The use of derivative instruments involves, to varying degrees, elements of
market and counterparty risk in excess of the amount recognized below.
Unrealized gains related to swaps are reported as an asset and unrealized
losses are reported as a liability in the Statement of Assets and Liabilities.
The change in value of swaps, including the accrual of periodic amounts of
interest to be paid or received on swaps, is reported as unrealized gains or
losses in the Statement of Operations. A realized gain or loss is recorded upon
payment or receipt of a periodic payment or termination of swap agreements.
At December 31, 2008, there were no open interest rate swap agreements.
Effective March 16, 2008, Bear, Stearns International Limited entered into
a Guaranty Agreement with JPMorgan Chase & Co., whereby JPMorgan Chase & Co.
unconditionally guarantees the due and punctual payment of certain liabilities
of Bear, Stearns International Limited, including the current liabilities of
Bear, Stearns International Limited to the Fund. As of December 31, 2008, the
Fund held a contract for difference swap with Bear, Stearns International
Limited which is covered by the JPMorgan Chase & Co. Guaranty Agreement as of
the date of the report. Details of the swap at December 31, 2008 are as follows:
NOTIONAL EQUITY SECURITY INTEREST RATE/ TERMINATION NET UNREALIZED
AMOUNT RECEIVED EQUITY SECURITY PAID DATE APPRECIATION
---------------- --------------------- ------------------------ ----------- --------------
Overnight LIBOR plus
Market Value 40 bps plus Market Value
$790,330 Appreciation on: Depreciation on:
(180,000 Shares) Rolls-Royce Group plc Rolls-Royce Group plc 09/15/09 $77,128
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, which are included in unrealized
appreciation/depreciation on investments and 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. At December 31, 2008, there were no
open futures contracts.
18
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency translations. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate
fluctuations in the underlying prices of the Fund's portfolio securities, but it
does establish a rate of exchange that can be achieved in the future. Although
forward foreign exchange contracts limit the risk of loss due to a decline in
the value of the hedged currency, they also limit any potential gain that might
result should the value of the currency increase. In addition, the Fund could be
exposed to risks if the counterparties to the contracts are unable to meet the
terms of their contracts. At December 31, 2008, there were no open forward
foreign exchange contracts.
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 the 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 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 ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
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 AND ILLIQUID SECURITIES. The Fund may invest up to 10% of its
net assets in securities for which the markets are illiquid. Illiquid securities
include securities the disposition of which is subject to substantial legal or
contractual restrictions. The sale of illiquid securities often requires more
time and results in higher brokerage charges or dealer discounts and other
selling expenses than does the sale of securities eligible for trading on
national securities exchanges or in the over-the-counter markets. Restricted
securities may sell at a price lower than similar securities that are not
subject to restrictions on resale. Securities freely saleable among qualified
institutional investors under special rules adopted by the SEC may be treated as
liquid if they satisfy liquidity standards established by the Board. The
continued liquidity of such securities is not as well assured as that of
publicly traded securities, and accordingly the Board will monitor their
liquidity.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded 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 which are recorded as soon as the
Fund is informed of the dividend.
CUSTODIAN FEE CREDITS AND INTEREST EXPENSE. When cash balances are
maintained in the custody account, the Fund receives credits which are used to
offset custodian fees. The gross expenses paid under the custody arrangement are
included in custodian fees in the Statement of Operations with the corresponding
expense offset, if any, shown as "custodian fee credits." When cash balances are
overdrawn, the Fund is charged an overdraft fee equal to 110% of the 90 day
Treasury Bill rate on outstanding balances. This amount, if any, would be
included in "interest expense" 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
U.S. generally accepted accounting principles. 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 include net
19
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
realized gains on foreign currency transactions. These book/tax differences are
either temporary or permanent in nature. To the extent these differences are
permanent, adjustments are made to the appropriate capital accounts in the
period when the differences arise. Permanent differences were primarily due to
reclassifications of distributions and swap investments. These reclassifications
have no impact on the NAV of the Fund. For the year ended December 31, 2008,
reclassifications were made to increase accumulated distributions in excess of
net investment income by $738,712 and decrease accumulated net realized loss on
investments, written options, futures contracts, swap contracts, and foreign
currency transactions by $738,405 with an offsetting adjustment to paid-in
capital.
On June 28, 2007, the Fund contributed $67,695,672 in cash in exchange for
shares of the Gabelli Healthcare & WellnessRx Trust, and on the same date
distributed such shares to holders of the Fund on record as of June 21, 2007 at
the rate of one share of the Gabelli Healthcare & WellnessRx Trust for every
twenty shares of the Fund's common stock.
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, and 6.20% Series F Cumulative Preferred
Stock ("Cumulative Preferred Stock") are recorded on a daily basis and are
determined as described in Note 5.
The tax character of distributions paid during the years ended December 31,
2008 and December 31, 2007 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2008 DECEMBER 31, 2007
-------------------------- --------------------------
COMMON PREFERRED COMMON PREFERRED
------------ ----------- ------------ -----------
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of net short-term capital gains) .. $ 549,586 $19,287,568 $ 27,039,757 $ 5,395,128
Net long-term capital gains ..................... -- -- 90,066,646 17,970,617
Return of capital ............................... 138,218,574 -- 103,665,340 --
------------ ----------- ------------ -----------
Total distributions paid ........................ $138,768,160 $19,287,568 $220,771,743 $23,365,745
============ =========== ============ ===========
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.
At December 31, 2008, the Fund had net capital loss carryforwards for
federal income tax purposes of $5,677,238 which are available to reduce future
required distributions of net capital gains to shareholders through 2016.
At December 31, 2008, the difference between book basis and tax basis
unrealized depreciation was primarily due to deferral of losses from wash sales
for tax purposes and basis adjustments for investments in real estate investment
trusts and partnerships.
As of December 31, 2008, the components of accumulated earnings/losses on a
tax basis were as follows:
Accumulated capital loss carryforward ........................... $ (5,677,238)
Net unrealized depreciation on investments and swap contracts ... (191,166,529)
Net unrealized appreciation on foreign currency translations .... 259,774
Other temporary differences* .................................... (226,061)
-------------
Total $(196,810,054)
=============
----------
* Other temporary differences are primarily due to adjustments on dividend
payables.
The following summarizes the tax cost of investments, swap contracts, and
the related unrealized appreciation/depreciation at December 31, 2008:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
COST APPRECIATION DEPRECIATION (DEPRECIATION)
-------------- ------------ ------------- --------------
Investments ... $1,259,186,879 $170,153,193 $(361,319,722) $(191,166,529)
FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes"
("FIN 48") provides guidance for how uncertain tax positions should be
recognized, measured, presented, and disclosed in the financial statements. FIN
48 requires the evaluation of 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. Tax positions not deemed to meet the "more-likely-than-not" threshold
are recorded as a tax benefit or expense in the current year. In accordance with
FIN 48, management has analyzed the Fund's tax positions taken on the federal
and state income tax returns for all open tax years (the current and prior three
tax years) and has concluded that no provision for income tax is required in the
Fund's financial statements. Management's determination regarding FIN 48 may be
subject to review and adjustment at a later date based on factors including, but
not limited to, an on-going analysis of tax laws, regulations, and
interpretations thereof.
20
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. The Fund has an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed weekly and paid monthly,
equal on an annual basis to 1.00% of the value of the Fund's average weekly net
assets including the liquidation value of preferred stock. In accordance with
the Advisory Agreement, the Adviser provides a continuous investment program for
the Fund's portfolio and oversees the administration of all aspects of the
Fund's business and affairs. The Adviser has agreed to reduce the management fee
on the incremental assets attributable to the Cumulative 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 each particular series of the
Cumulative 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 or the corresponding swap rate of each
particular series of Cumulative Preferred Stock for the period. For the year
ended December 31, 2008, the Fund's total return on the NAV of the common shares
did not exceed the stated dividend rate or the corresponding swap rate on any of
the series of Preferred Stock. Thus, management fees with respect to the
liquidation value of the preferred stock assets were reduced by $4,012,394.
During the year ended December 31, 2008, the Fund paid brokerage
commissions on security trades of $331,715 to Gabelli & Company, Inc. ("Gabelli
& Company"), an affiliate of the Adviser.
The cost of calculating the Fund's NAV per share is a Fund expense pursuant
to the Advisory Agreement between the Fund and the Adviser. During the year
ended December 31, 2008, the Fund paid or accrued $45,000 to the Adviser in
connection with the cost of computing the Fund's NAV.
As per the approval of the Board, the Fund compensates officers 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) and pays its allocated portion of the cost of the Fund's Chief
Compliance Officer. For the year ended December 31, 2008, the Fund paid
$143,545, which is included in payroll expenses in the Statement of Operations.
The Fund pays each Director who is not considered to be an affiliated
person an annual retainer of $12,000 plus $1,500 for each Board meeting attended
in person and $500 per telephonic meeting, and they are reimbursed for any out
of pocket expenses incurred in attending meetings. All Board committee members
receive $1,000 per meeting attended. In addition, the Audit Committee Chairman
receives an annual fee of $3,000, the Proxy Voting Committee Chairman receives
an annual fee of $1,500, the Nominating Committee Chairman receives an annual
fee of $2,000, and the Lead Director receives an annual fee of $1,000. Directors
who are directors or employees of the Adviser or an affiliated company receive
no compensation or expense reimbursement from the Fund.
4. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the year ended December 31, 2008, other than short-term securities and U.S.
Government obligations, aggregated $211,346,272 and $316,095,409, respectively.
Purchases and proceeds from the sales of U.S. Government obligations for
the year ended December 31, 2008, other than short-term obligations, aggregated
$127,500 and $127,031, respectively.
Written options activity for the Fund for the year ended December 31, 2008
was as follows:
NUMBER OF
CONTRACTS PREMIUMS
--------- --------
Options outstanding at December 31, 2007 ... 10 $ 11,985
Options expired ............................ (10) (11,985)
--- --------
Options outstanding at December 31, 2008 ... -- --
=== ========
5. CAPITAL. The charter permits the Fund to issue 246,000,000 shares of common
stock (par value $0.001) and authorizes the Board to increase its authorized
shares from time to time. The Board has authorized the repurchase of its shares
on the open market when the shares are trading on the New York Stock Exchange
("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 year ended
December 31, 2008, the Fund did not repurchase any shares of its common stock in
the open market.
21
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Transactions in common shares were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2008 DECEMBER 31, 2007
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
Net increase from shares issued
upon reinvestment of distributions ... 2,814,862 $21,433,746 3,348,018 $31,379,440
The Fund's Articles of Incorporation, as amended, authorizes the issuance
of up to 18,000,000 shares of $0.001 par value Cumulative Preferred Stock. The
Cumulative Preferred Stock is senior to the common stock and results in the
financial leveraging of the common stock. Such leveraging tends to magnify both
the risks and opportunities to common shareholders. Dividends on shares of the
Cumulative Preferred Stock are cumulative. The Fund is required by the 1940 Act
and by the Articles Supplementary to meet certain asset coverage tests with
respect to the Cumulative Preferred Stock. If the 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 Auction Rate, 5.875% Series D, Series E
Auction Rate, and 6.20% Series F Cumulative Preferred Stock at redemption prices
of $25,000, $25, $25,000, 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.
At the Fund's August 15, 2007 Board meeting, the Board approved the filing
of a shelf registration with the SEC, to give the Fund the ability to offer
additional preferred shares. The shelf registration was declared effective by
the SEC on March 20, 2008.
On June 27, 2002, the Fund received net proceeds of $128,246,557 (after
underwriting discounts of $1,300,000 and offering expenses of $453,443) from the
public offering of 5,200 shares of Series C Auction Rate Cumulative Preferred
Stock ("Series C Stock"). The dividend rate, as set by the auction process,
which is generally held every seven days, is expected to vary with short-term
interest rates. Since February 2008, the number of Series C Stock subject to bid
orders by potential holders has been less than the number of Series C Stock
subject to sell orders. Therefore, the weekly auctions have failed, and the
dividend rate has been the maximum rate. Holders that have submitted sell orders
have not been able to sell any or all of the Series C Stock for which they have
submitted sell orders. The current maximum rate is 150% of the "AA" Financial
Composite Commercial Paper Rate. The dividend rates of Series C Stock ranged
from 0.135% to 5.350% during the year ended December 31, 2008. Existing
shareholders may submit an order to hold, bid, or sell such shares on each
auction date. Shareholders of Series C Stock may also trade their shares in the
secondary market. The Fund, at its option, may redeem the Series C Stock in
whole or in part at the redemption price at any time. During the year ended
December 31, 2008, the Fund redeemed and retired 520 shares of Series C Stock.
Shareholders received the redemption price of $25,000 per share, which was equal
to the liquidation preference, together with any accumulated and unpaid
dividends, for each share redeemed. At December 31, 2008, 4,680 shares of Series
C Stock were outstanding with an annualized dividend rate of 0.300% and accrued
dividends amounted to $975.
On October 7, 2003, the Fund received net proceeds of $72,375,842 (after
underwriting discounts of $2,362,500 and offering expenses of $261,658) from the
public offering of 3,000,000 shares of 5.875% Series D Cumulative Preferred
Stock ("Series D Stock"). Commencing October 7, 2008 and thereafter, the Fund,
at its option, may redeem the 5.875% Series D Stock in whole or in part at the
redemption price at any time. The Board has authorized the repurchase of Series
D Stock in the open market at prices less than the $25 liquidation value per
share. During the year ended December 31, 2008, the Fund repurchased 48,431
shares of 6.00% Series D Stock in the open market at a cost of $977,750 and an
average discount of approximately 19.29% from its liquidation preference. All
6.00% Series D Stock repurchased have been retired. At December 31, 2008,
2,901,269 shares of 5.875% Series D Stock were outstanding and accrued dividends
amounted to $71,021.
On October 7, 2003, the Fund received net proceeds of $49,350,009 (after
underwriting discounts of $500,000 and offering expenses of $149,991) from the
public offering of 2,000 shares of Series E Auction Rate Cumulative Preferred
Stock ("Series E Stock"). The dividend rate, as set by the auction process,
which is generally held every seven days, is expected to vary with short-term
interest rates. Since February 2008, the number of Series E Stock subject to bid
orders by potential holders has been less than the number of Series E Stock
subject to sell orders. Therefore, the weekly auctions have failed, and the
dividend rate has been the maximum rate. In that event, holders that have
submitted sell orders have not been able to sell any or all of the Series E
Stock for which they have submitted sell orders. The current maximum rate is
150% of the "AA" Financial Composite Commercial Paper Rate. The dividend rates
of Series E Stock ranged from 0.105% to 5.510% during the year ended December
31, 2008. Existing shareholders may submit an order to hold, bid, or sell such
shares on each auction date. Shareholders of Series E Stock may also trade
shares in the secondary market. The Fund, at its option, may redeem the Series E
Stock in whole or in part at the redemption price at any time. During the year
ended December 31, 2008, the Fund redeemed and retired 200 shares of Series E
Stock.
22
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Shareholders received the redemption price of $25,000 per share, which was equal
to the liquidation preference, together with any accumulated and unpaid
dividends, for each share redeemed. At December 31, 2008, 1,800 shares of Series
E Stock were outstanding with an annualized dividend rate of 0.150% and accrued
dividends amounted to $1,125.
On November 10, 2006, the Fund received net proceeds of $144,765,000 (after
underwriting discounts of $4,725,000 and estimated offering expenses of
$510,000) from the public offering of 6,000,000 shares of 6.20% Series F
Cumulative Preferred Stock ("Series F Stock"). Commencing November 10, 2011 and
thereafter, the Fund, at its option, may redeem the 6.20% Series F in whole or
in part at the redemption price at any time. The Board has authorized the
repurchase of Series F Stock in the open market at prices less than the $25
liquidation value per share. During the year ended December 31, 2008, the Fund
repurchased and retired 79,734 shares of Series F Stock in the open market at a
cost of $1,652,658 and an average discount of approximately 13.93% from its
liquidation preference. At December 31, 2008, 5,920,266 shares of Series F Stock
were outstanding and accrued dividends amounted to $152,940.
The holders of Cumulative 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 Cumulative Preferred Stock voting together as a single class also
have the right currently to elect two Directors and under certain circumstances
are entitled to elect a majority of the Board of Directors. In addition, the
affirmative vote of a majority of the votes entitled to be cast by holders of
all outstanding shares of the preferred stock, voting as a single class, will be
required to approve any plan of reorganization adversely affecting the preferred
stock, and the approval of two-thirds of each class, voting separately, of the
Fund's outstanding voting stock must approve the conversion of the Fund from a
closed-end to an open-end investment company. The approval of a majority (as
defined in the 1940 Act) of the outstanding preferred stock and a majority (as
defined in the 1940 Act) of the Fund's outstanding voting securities are
required to approve certain other actions, including changes in the Fund's
investment objectives or fundamental investment policies.
6. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
7. OTHER MATTERS. On April 24, 2008, the Adviser entered into an administrative
settlement with the SEC to resolve the SEC's inquiry regarding prior frequent
trading activity in shares of the GAMCO Global Growth Fund (the "Global Growth
Fund") by one investor who was banned from the Global Growth Fund in August
2002. In the settlement, the SEC found that the Adviser had violated Section
206(2) of the Investment Advisers Act, Section 17(d) of the 1940 Act, and Rule
17d-1 thereunder and had aided and abetted and caused violations of Section
12(d)(1)(B)(i) of the 1940 Act. Under the terms of the settlement, the Adviser,
while neither admitting nor denying the SEC's findings and allegations, agreed,
among other things, to pay the previously reserved total of $16 million
(including a $5 million penalty), of which at least $11 million will be
distributed to shareholders of the Global Growth Fund in accordance with a plan
to be developed by an independent distribution consultant and approved by the
independent directors of the Global Growth Fund and the staff of the SEC and to
cease and desist from future violations of the above referenced federal
securities laws. The settlement is not expected to impact the Fund and will not
have a material adverse impact on the Adviser or its ability to fulfill its
obligations under the Advisory Agreement. On the same day, the SEC filed a civil
action against the Executive Vice President and Chief Operating Officer of the
Adviser, alleging violations of certain federal securities laws arising from the
same matter. The officer is also an officer of the Global Growth Fund and other
funds in the Gabelli/GAMCO fund complex including the Fund. The officer denies
the allegations and is continuing in his positions with the Adviser and the
funds. The Adviser currently expects that any resolution of the action against
the officer will not have a material adverse impact on the Adviser or its
ability to fulfill its obligations under the Advisory Agreement.
In a separate matter, on January 12, 2009, the SEC issued an administrative
action approving a final settlement of a previously disclosed matter with the
Adviser involving compliance with Section 19(a) of the Investment Company Act of
1940 and Rule 19a-1 thereunder by two closed-end funds. These provisions require
registered investment companies when making a distribution in the nature of a
dividend from sources other than net investment income to contemporaneously
provide written statements to shareholders, which adequately disclose the source
or sources of such distribution. While the two funds sent annual statements and
provided other materials containing this information, the shareholders did not
receive the notices required by Rule 19a-1 with any of the distributions that
were made for 2002 and 2003. The Adviser believes that the funds have been in
compliance with Section 19(a) and Rule 19a-1 since the beginning of 2004. As
part of the settlement, in which the Adviser neither admits nor denies the
findings by the SEC, the Adviser agreed to pay a civil monetary penalty of
$450,000 and to cease and desist from causing violations of Section 19(a) and
Rule 19a-1. In connection with the settlement, the SEC noted the remedial
actions previously undertaken by the Adviser. The staff's notice to the Adviser
did not relate to the Fund.
23
THE GABELLI EQUITY TRUST INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
The Gabelli Equity Trust Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Equity Trust Inc.
(hereafter referred to as the "Trust") at December 31, 2008, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2008 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 27, 2009
24
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.
NUMBER OF
TERM OF FUNDS IN FUND
NAME, POSITION(S) OFFICE AND COMPLEX
ADDRESS(1) LENGTH OF OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE TIME SERVED(2) DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR(5)
------------------------- -------------- ------------- ---------------------------------------- ---------------------------------
INTERESTED DIRECTORS(3):
MARIO J. GABELLI Since 1986** 26 Chairman and Chief Executive Officer of Director of Morgan Group
Director and GAMCO Investors, Inc. and Chief Holdings, Inc. (holding
Chief Investment Officer Investment Officer - Value Portfolios company); Chairman of the
Age: 66 of Gabelli Funds, LLC and GAMCO Asset Board of LICT Corp.
Management Inc.; Director/Trustee or (multimedia and
Chief Investment Officer of other communication services
registered investment companies in the company)
Gabelli/GAMCO Funds complex; Chairman
and Chief Executive Officer of GGCP, Inc.
INDEPENDENT DIRECTORS(6):
THOMAS E. BRATTER Since 1986** 4 Director, President, and Founder of The --
Director John Dewey Academy (residential college
Age: 69 preparatory therapeutic high school)
ANTHONY J. COLAVITA(4) Since 1999*** 36 Partner in the law firm of --
Director Anthony J. Colavita, P.C.
Age: 73
JAMES P. CONN(4) Since 1989* 18 Former Managing Director and Chief --
Director Investment Officer of Financial
Age: 70 Security Assurance Holdings Ltd.
(insurance holding company) (1992-1998)
FRANK J. FAHRENKOPF JR. Since 1998*** 6 President and Chief Executive Officer of --
Director the American Gaming Association;
Age: 69 Co-Chairman of the Commission on
Presidential Debates; Former Chairman of
the Republican National Committee
(1983-1989)
ARTHUR V. FERRARA Since 2001** 8 Former Chairman of the Board and Chief --
Director Executive Officer of The Guardian Life
Age: 78 Insurance Company of America
(1993-1995)
ANTHONY R. PUSTORINO Since 1986* 13 Certified Public Accountant; Professor Director of The LGL Group, Inc.
Director Emeritus, Pace University (diversified manufacturing)
Age: 83
SALVATORE J. ZIZZA Since 1986*** 28 Chairman of Zizza & Co., Ltd. Director of Hollis-Eden
Director (consulting) Pharmaceuticals (biotechnology)
Age: 63 and Earl Scheib, Inc. (automotive
services)
25
THE GABELLI EQUITY TRUST INC.
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
TERM OF
NAME, POSITION(S) OFFICE AND
ADDRESS(1) LENGTH OF PRINCIPAL OCCUPATION(S)
AND AGE TIME SERVED(2) DURING PAST FIVE YEARS
---------------------------- -------------- ----------------------------------------------------------------------------------------
OFFICERS:
BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC since 1988
President and an officer of all of the registered investment companies in the Gabelli/GAMCO
Age: 57 Funds complex. Director and President of Teton Advisors, Inc. (formerly Gabelli
Advisers, Inc.) since 1998
CARTER W. AUSTIN Since 2000 Vice President of the Fund since 2000, Vice President of The Gabelli Dividend & Income
Vice President Trust since 2003, The Gabelli Global Gold, Natural Resources & Income Trust since
Age: 42 2005, The Gabelli Global Deal Fund since 2006, and The Gabelli Healthcare & WellnessRx
Trust since 2007; Vice President of Gabelli Funds, LLC since 1996
AGNES MULLADY Since 2006 Vice President of Gabelli Funds, LLC since 2007; Officer of all of the registered
Treasurer and Secretary investment companies in the Gabelli/GAMCO Funds complex; Senior Vice President of U.S.
Age: 50 Trust Company, N.A. and Treasurer and Chief Financial Officer of Excelsior Funds from
2004 through 2005; Chief Financial Officer of AMIC Distribution Partners from 2002
through 2004
PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs at GAMCO Investors, Inc. since 2004; Chief Compliance
Chief Compliance Officer Officer of all of the registered investment companies in the Gabelli/GAMCO Funds
Age: 55 complex; Vice President of Goldman Sachs Asset Management from 2000 through 2004
MARC C. RINALDI Since 2008 Vice President of the Fund since 2008; Vice President of Gabelli Funds, LLC, since
Vice President and Ombudsman 2007; Student at Georgetown University 2005-2007
Age: 35
----------
(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 2009 Annual Meeting of Shareholders or until
their successors are duly elected and qualified.
** - Term expires at the Fund's 2010 Annual Meeting of Shareholders or until
their successors are duly elected and qualified.
*** - Term expires at the Fund's 2011 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) "Interested person" of the Fund as defined in the 1940 Act. Mr. Gabelli is
considered an "interested person" of the Fund because of his affiliation
with Gabelli Funds, LLC which acts as the Fund's investment adviser.
(4) Represents holders of the Fund's Preferred Stock.
(5) 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.
(6) Directors who are not interested persons are considered "Independent"
Directors.
CERTIFICATIONS
The Fund's Chief Executive Officer has certified to the New York Stock
Exchange ("NYSE") that, as of June 17, 2008, he was not aware of any violation
by the Fund of applicable NYSE corporate governance listing standards. The Fund
reports to the SEC on Form N-CSR which contains certifications by the Fund's
principal executive officer and principal financial officer that relate to the
Fund's disclosure in such reports and that are required by Rule 30a-2(a) under
the 1940 Act.
26
THE GABELLI EQUITY TRUST INC.
INCOME TAX INFORMATION (UNAUDITED)
DECEMBER 31, 2008
CASH DIVIDENDS AND DISTRIBUTIONS
TOTAL AMOUNT ORDINARY LONG-TERM DIVIDEND
PAYABLE RECORD PAID INVESTMENT CAPITAL RETURN OF REINVESTMENT
DATE DATE PER SHARE (A) INCOME (A) GAINS (A) CAPITAL (C) PRICE
------------ -------- ------------- ---------- --------- ----------- ------------
COMMON STOCK
03/25/08 03/17/08 $0.20000 $0.00250 -- $0.19750 $8.19850
06/24/08 06/16/08 0.20000 0.00250 -- 0.19750 7.99000
09/24/08 09/16/08 0.20000 0.00250 -- 0.19750 6.81150
12/17/08 12/12/08 0.20000 0.00250 -- 0.19750 --
-------- -------- --- --------
$0.80000 $0.01000 -- $0.79000
5.875% SERIES D CUMULATIVE PREFERRED STOCK
03/26/08 03/18/08 $0.36719 $0.36719 --
06/26/08 06/19/08 0.36719 0.36719 --
09/26/08 09/19/08 0.36719 0.36719 --
12/26/08 12/18/08 0.36719 0.36719 --
-------- -------- ---
$1.46876 $1.46876 --
6.200% SERIES F CUMULATIVE PREFERRED STOCK
03/26/08 03/18/08 $0.38750 $0.38750 --
06/26/08 06/19/08 0.38750 0.38750 --
09/26/08 09/19/08 0.38750 0.38750 --
12/26/08 12/18/08 0.38750 0.38750 --
-------- -------- ---
$1.55000 $1.55000 --
AUCTION RATE SERIES C AND E CUMULATIVE PREFERRED STOCK
Auction Rate Preferred Stock pays dividends weekly based on a rate set at
auction, usually held every seven days. There were no 2008 distributions derived
from long-term capital gains for the Auction Rate Series C and Series E
Cumulative Preferred Stock.
A Form 1099-DIV has been mailed to all shareholders of record which sets
forth specific amounts to be included in the 2008 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. There were no
long-term gain distributions for the year ended December 31, 2008.
CORPORATE DIVIDENDS RECEIVED DEDUCTION, QUALIFIED DIVIDEND INCOME, AND U.S.
GOVERNMENT SECURITIES INCOME
In 2008, the Fund paid to common, 5.875% Series D, and 6.200% Series F
cumulative preferred shareholders ordinary income totaling $0.01000, $1.46875,
and $1.55000 per share, respectively. The Fund paid weekly distributions to
auction rate Series C and Series E cumulative preferred shareholders at varying
rates throughout the year, including an ordinary income dividend totaling
$760.66000 and $783.29000 per share, respectively, in 2008. For the year ended
December 31, 2008, 94.57% 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 2008 derived from U.S. Government securities was 0.33%. 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 2008. The percentage of net
assets of U.S. Government securities held as of December 31, 2008 was 5.00%.
The Annual Meeting of The Gabelli Equity Trust's shareholders will be held
on Monday, May 18, 2009 at the Greenwich Library in Greenwich, Connecticut.
27
THE GABELLI EQUITY TRUST INC.
INCOME TAX INFORMATION (CONTINUED) (UNAUDITED)
DECEMBER 31, 2008
HISTORICAL DISTRIBUTION SUMMARY
SHORT- LONG- UNDISTRIBUTED TAXES PAID ON
TERM TERM NON-TAXABLE LONG-TERM UNDISTRIBUTED ADJUSTMENT
INVESTMENT CAPITAL CAPITAL RETURN OF CAPITAL CAPITAL TOTAL TO
INCOME GAINS (b) GAINS CAPITAL GAINS GAINS (c) DISTRIBUTIONS (a) COST BASIS
---------- ---------- ------------ ----------- ------------- -------------- ----------------- ----------
COMMON STOCK
2008....... $ 0.01000 -- -- $0.79000 -- -- $ 0.80000 0.79000-
2007 (d)... 0.10455 $ 0.05323 $ 0.52679 0.63543 -- -- 1.32000 0.63543-
2006....... 0.15690 0.06400 0.65910 -- -- -- 0.88000 --
2005 (e)... 0.08756 0.00672 0.75572 -- -- -- 0.85000 --
2004....... 0.01930 0.04990 0.73080 -- -- -- 0.80000 --
2003 0.01140 0.04480 0.63380 -- -- -- 0.69000 --
2002....... 0.05180 0.01550 0.88270 -- -- -- 0.95000 --
2001 (f)... 0.06700 0.06400 0.94900 -- -- -- 1.08000 --
2000....... 0.04070 0.15500 1.11430 -- -- -- 1.31000 --
1999 (g)... 0.03010 0.21378 0.99561 0.91176 -- -- 2.15125 0.91176-
1998....... 0.06420 -- 1.10080 -- -- -- 1.16500 --
1997....... 0.07610 0.00210 0.93670 0.02510 -- -- 1.04000 0.02500-
1996....... 0.10480 -- 0.78120 0.11400 -- -- 1.00000 0.11400-
1995 (h)... 0.12890 -- 0.49310 0.37800 -- -- 1.00000 0.37800-
1994 (i)... 0.13536 0.06527 0.30300 1.38262 -- -- 1.88625 1.38262-
1993 (j)... 0.13050 0.02030 0.72930 0.22990 -- -- 1.11000 0.22990-
1992 (k)... 0.20530 0.04050 0.29660 0.51760 -- -- 1.06000 0.51760-
1991 (l)... 0.22590 0.03990 0.14420 0.68000 -- -- 1.09000 0.68000-
1990....... 0.50470 -- 0.22950 0.44580 -- -- 1.18000 0.44580-
1989....... 0.29100 0.35650 0.66250 -- $0.62880 $0.21380 1.31000 0.41500+
1988....... 0.14500 0.20900 0.19600 -- 0.25130 0.08540 0.55000 0.16590+
1987....... 0.25600 0.49100 0.33500 -- -- -- 1.08200 --
7.200% SERIES B CUMULATIVE PREFERRED STOCK
2008....... -- -- -- -- -- -- -- --
2007...... $ 0.00900 $ 0.00470 $ 0.04630 -- -- -- $ 0.06000 --
2006....... 0.32000 0.13100 1.34900 -- -- -- 1.80000 --
2005....... 0.17650 0.01430 1.60920 -- -- -- 1.80000 --
2004....... 0.04340 0.11224 1.64436 -- -- -- 1.80000 --
2003....... 0.03000 0.11640 1.65360 -- -- -- 1.80000 --
2002....... 0.09800 0.02960 1.67240 -- -- -- 1.80000 --
2001....... 0.05870 0.05440 0.81690 -- -- -- 0.93000 --
5.875% SERIES D CUMULATIVE PREFERRED STOCK
2008....... $ 1.46875 -- -- -- -- -- $ 1.46875 --
2007....... 0.22096 $ 0.11474 $ 1.13305 -- -- -- 1.46875 --
2006....... 0.26193 0.10688 1.09994 -- -- -- 1.46875 --
2005....... 0.14405 0.01170 1.31300 -- -- -- 1.46875 --
2004....... 0.03542 0.09159 1.34174 -- -- -- 1.46875 --
2003....... 0.00535 0.02086 0.29610 -- -- -- 0.32231 --
6.200% SERIES F CUMULATIVE PREFERRED STOCK
2008....... $ 1.55000 -- -- -- -- -- $ 1.55000 --
2007....... 0.23330 $ 0.12100 $ 1.19570 -- -- -- 1.55000 --
2006....... 0.03527 0.01480 0.15229 -- -- -- 0.20236 --
AUCTION RATE SERIES C CUMULATIVE PREFERRED STOCK
2008....... $760.66000 -- -- -- -- -- $ 760.66000 --
2007....... 203.92150 $105.89030 $1,045.68820 -- -- -- 1,355.50000 --
2006....... 219.92983 89.73249 923.57769 -- -- -- 1,233.24000 --
2005....... 83.01020 6.73650 756.60330 -- -- -- 846.35000 --
2004....... 9.15570 23.67550 346.83810 -- -- -- 379.66930 --
2003....... 5.42000 21.05000 298.41000 -- -- -- 324.88000 --
2002....... 12.28350 3.71450 209.89200 -- -- -- 225.89000 --
AUCTION RATE SERIES E CUMULATIVE PREFERRED STOCK
2008....... $783.29000 -- -- -- -- -- $ 783.29000 --
2007....... 199.17211 $103.42412 $1,021.33377 -- -- -- 1,323.93000 --
2006....... 218.22316 89.03616 916.41068 -- -- -- 1,223.67000 --
2005....... 82.44330 6.69050 751.43620 -- -- -- 840.57000 --
2004....... 9.30280 2.05620 352.41090 -- -- -- 385.76000 --
2003....... 1.07000 4.18000 59.32000 -- -- -- 64.57000 --
----------
(a) Total amounts may differ due to rounding.
(b) Taxable as ordinary income.
(c) Net Asset Value was reduced by this amount on the last business day of the
year.
(d) On June 28, 2007, the Fund distributed shares of The Gabelli Healthcare &
WellnessRx Trust valued at $8.40 per share.
(e) On September 21, 2005, the Fund also distributed Rights equivalent to $0.21
per share based upon full subscription of all issued shares.
(f) On January 10, 2001, the Fund also distributed Rights equivalent to $0.56
per share based upon full subscription of all issued shares.
(g) On July 9, 1999, the Fund also distributed shares of The Gabelli Utility
Trust valued at $9.8125 per share.
(h) On October 19, 1995, the Fund also distributed Rights equivalent to $0.37
per share based upon full subscription of all issued shares.
(i) On November 15, 1994, the Fund also distributed shares of The Gabelli
Global Multimedia Trust Inc. valued at $8.0625 per share.
(j) On July 14, 1993, the Fund also distributed Rights equivalent to $0.50 per
share based upon full subscription of all issued shares.
(k) On September 28, 1992, the Fund also distributed Rights equivalent to $0.36
per share based upon full subscription of all issued shares.
(l) On October 21, 1991, the Fund also distributed Rights equivalent to $0.42
per share based upon full subscription of all issued shares.
- Decrease in cost basis.
+ Increase in cost basis.
All designations are based on financial information available as of the
date of this annual report and, accordingly, are subject to change. For each
item, it is the intention of the Fund to designate the maximum amount permitted
under the Internal Revenue Code and the regulations thereunder.
28
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 43010
Providence, RI 02940-3010
Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan 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 reregistered 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.
29
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.
30
DIRECTORS AND OFFICERS
THE GABELLI EQUITY TRUST INC.
ONE CORPORATE CENTER, RYE, NY 10580-1422
DIRECTORS
Mario J. Gabelli, CFA
CHAIRMAN & CHIEF EXECUTIVE OFFICER,
GAMCO INVESTORS, INC.
Dr. Thomas E. Bratter
PRESIDENT & FOUNDER, JOHN DEWEY ACADEMY
Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.
James P. Conn
FORMER MANAGING DIRECTOR & CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Frank J. Fahrenkopf, Jr.
PRESIDENT & CHIEF EXECUTIVE OFFICER,
AMERICAN GAMING ASSOCIATION
Arthur V. Ferrara
FORMER CHAIRMAN & CHIEF EXECUTIVE OFFICER,
GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
Anthony R. Pustorino
CERTIFIED PUBLIC ACCOUNTANT,
PROFESSOR EMERITUS, PACE UNIVERSITY
Salvatore J. Zizza
CHAIRMAN, ZIZZA & CO., LTD.
OFFICERS
Bruce N. Alpert
PRESIDENT
Carter W. Austin
VICE PRESIDENT
Peter D. Goldstein
CHIEF COMPLIANCE OFFICER
Agnes Mullady
TREASURER AND SECRETARY
Marc C. Rinaldi
VICE PRESIDENT & OMBUDSMAN
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.
STOCK EXCHANGE LISTING
5.875% 6.20%
Common Preferred Preferred
----------- --------- ---------
NYSE-Symbol: GAB GAB PrD GAB PrF
Shares Outstanding: 174,919,152 2,901,269 5,920,266
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.
For general information about the Gabelli Funds, call 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: WWW.GABELLI.COM, or e-mail us at: closedend@gabelli.com
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may, from time to time, purchase
shares of its common stock 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 shares of its preferred stock 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
PHONE: 800-GABELLI (800-422-3554)
FAX: 914-921-5118 INTERNET: WWW.GABELLI.COM
E-MAIL: CLOSEDEND@GABELLI.COM GAB Q4/2008
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's Board of
Directors has determined that Anthony R. Pustorino is qualified to serve as an
audit committee financial expert serving on its audit committee and that he is
"independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$71,000 for 2007 and $64,250 for 2008.
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $7,900 for 2007 and $10,580 for 2008. 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 $4,350 for 2007 and $5,000
for 2008. 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 2007 and $0 for 2008.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pre-Approval Policies and Procedures. The Audit Committee ("Committee")
of the registrant is responsible for pre-approving (i) all audit and
permissible non-audit services to be provided by the independent
registered public accounting firm to the registrant and (ii) all
permissible non-audit services to be provided by the independent
registered public accounting firm to the Adviser, Gabelli Funds, LLC,
and any affiliate of Gabelli Funds, LLC ("Gabelli") that provides
services to the registrant (a "Covered Services Provider") if the
independent registered public accounting firm's engagement related
directly to the operations and financial reporting of the registrant.
The Committee may delegate its responsibility to pre-approve any such
audit and permissible non-audit services to the Chairperson of the
Committee, and the Chairperson must report to the Committee, at its
next regularly scheduled meeting after the Chairperson's pre-approval
of such services, his or her decision(s). The Committee may also
establish detailed pre-approval policies and procedures for
pre-approval of such services in accordance with applicable laws,
including the delegation of some or all of the Committee's pre-approval
responsibilities to the other persons (other than Gabelli or the
registrant's officers). Pre-approval by the Committee of any
permissible non-audit services is not required so long as: (i) the
permissible non-audit services were not recognized by the registrant at
the time of the engagement to be non-audit services; and (ii) such
services are promptly brought to the attention of the Committee and
approved by the Committee or Chairperson prior to the completion of the
audit.
(e)(2) The percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) 100%
(c) 100%
(d) N/A
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was zero percent (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 2007 and $0 for 2008.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately designated audit committee consisting of the
following members: Anthony J. Colavita, Anthony R Pustorino and Salvatore J.
Zizza.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are attached herewith.
THE VOTING OF PROXIES ON BEHALF OF CLIENTS
Rules 204(4)-2 and 204-2 under the Investment Advisers Act of 1940 and
Rule 30b1-4 under the Investment Company Act of 1940 require investment advisers
to adopt written policies and procedures governing the voting of proxies on
behalf of their clients.
These procedures will be used by GAMCO Asset Management Inc., Gabelli
Funds, LLC, Gabelli Securities, Inc., and Teton Advisors, Inc. (collectively,
the "Advisers") to determine how to vote proxies relating to portfolio
securities held by their clients, including the procedures that the Advisers use
when a vote presents a conflict between the interests of the shareholders of an
investment company managed by one of the Advisers, on the one hand, and those of
the Advisers; the principal underwriter; or any affiliated person of the
investment company, the Advisers, or the principal underwriter. These procedures
will not apply where the Advisers do not have voting discretion or where the
Advisers have agreed to with a client to vote the client's proxies in accordance
with specific guidelines or procedures supplied by the client (to the extent
permitted by ERISA).
I. PROXY VOTING COMMITTEE
The Proxy Voting Committee was originally formed in April 1989 for the
purpose of formulating guidelines and reviewing proxy statements within the
parameters set by the substantive proxy voting guidelines originally published
in 1988 and updated periodically, a copy of which are appended as Exhibit A. The
Committee will include representatives of Research, Administration, Legal, and
the Advisers. Additional or replacement members of the Committee will be
nominated by the Chairman and voted upon by the entire Committee.
Meetings are held as needed basis to form views on the manner in
which the Advisers should vote proxies on behalf of their clients.
In general, the Director of Proxy Voting Services, using the Proxy
Guidelines, recommendations of Institutional Shareholder Corporate Governance
Service ("ISS"), other third-party services and the analysts of Gabelli &
Company, Inc., will determine how to vote on each issue. For non-controversial
matters, the Director of Proxy Voting Services may vote the proxy if the vote is
(1) consistent with the recommendations of the issuer's Board of Directors and
not contrary to the Proxy Guidelines; (2) consistent with the recommendations of
the issuer's Board of Directors and is a non-controversial issue not covered by
the Proxy Guidelines; or (3) the vote is contrary to the recommendations of the
Board of Directors but is consistent with the Proxy Guidelines. In those
instances, the Director of Proxy Voting Services or the Chairman of the
Committee may sign and date the proxy statement indicating how each issue will
be voted.
All matters identified by the Chairman of the Committee, the Director
of Proxy Voting Services or the Legal Department as controversial, taking into
account the recommendations of ISS or other third party services and the
analysts of Gabelli & Company, Inc., will be presented to the Proxy Voting
Committee. If the Chairman of the Committee, the Director of Proxy Voting
Services or the Legal Department has identified the matter as one that (1) is
controversial; (2) would benefit from deliberation by the Proxy Voting
Committee; or (3) may give rise to a conflict of interest between the Advisers
and their clients, the Chairman of the Committee will initially determine what
vote to recommend that the Advisers should cast and the matter will go before
the Committee.
1
A. CONFLICTS OF INTEREST.
The Advisers have implemented these proxy voting procedures in
order to prevent conflicts of interest from influencing their
proxy voting decisions. By following the Proxy Guidelines, as
well as the recommendations of ISS, other third-party services
and the analysts of Gabelli & Company, the Advisers are able
to avoid, wherever possible, the influence of potential
conflicts of interest. Nevertheless, circumstances may arise
in which one or more of the Advisers are faced with a conflict
of interest or the appearance of a conflict of interest in
connection with its vote. In general, a conflict of interest
may arise when an Adviser knowingly does business with an
issuer, and may appear to have a material conflict between its
own interests and the interests of the shareholders of an
investment company managed by one of the Advisers regarding
how the proxy is to be voted. A conflict also may exist when
an Adviser has actual knowledge of a material business
arrangement between an issuer and an affiliate of the Adviser.
In practical terms, a conflict of interest may arise, for
example, when a proxy is voted for a company that is a client
of one of the Advisers, such as GAMCO Asset Management Inc. A
conflict also may arise when a client of one of the Advisers
has made a shareholder proposal in a proxy to be voted upon by
one or more of the Advisers. The Director of Proxy Voting
Services, together with the Legal Department, will scrutinize
all proxies for these or other situations that may give rise
to a conflict of interest with respect to the voting of
proxies.
B. OPERATION OF PROXY VOTING COMMITTEE
For matters submitted to the Committee, each member of the
Committee will receive, prior to the meeting, a copy of the
proxy statement, any relevant third party research, a summary
of any views provided by the Chief Investment Officer and any
recommendations by Gabelli & Company, Inc. analysts. The Chief
Investment Officer or the Gabelli & Company, Inc. analysts may
be invited to present their viewpoints. If the Director of
Proxy Voting Services or the Legal Department believe that the
matter before the committee is one with respect to which a
conflict of interest may exist between the Advisers and their
clients, counsel will provide an opinion to the Committee
concerning the conflict. If the matter is one in which the
interests of the clients of one or more of Advisers may
diverge, counsel will so advise and the Committee may make
different recommendations as to different clients. For any
matters where the recommendation may trigger appraisal rights,
counsel will provide an opinion concerning the likely risks
and merits of such an appraisal action.
2
Each matter submitted to the Committee will be determined by the vote
of a majority of the members present at the meeting. Should the vote concerning
one or more recommendations be tied in a vote of the Committee, the Chairman of
the Committee will cast the deciding vote. The Committee will notify the proxy
department of its decisions and the proxies will be voted accordingly.
Although the Proxy Guidelines express the normal preferences for the
voting of any shares not covered by a contrary investment guideline provided by
the client, the Committee is not bound by the preferences set forth in the Proxy
Guidelines and will review each matter on its own merits. Written minutes of all
Proxy Voting Committee meetings will be maintained. The Advisers subscribe to
ISS, which supplies current information on companies, matters being voted on,
regulations, trends in proxy voting and information on corporate governance
issues.
If the vote cast either by the analyst or as a result of the
deliberations of the Proxy Voting Committee runs contrary to the recommendation
of the Board of Directors of the issuer, the matter will be referred to legal
counsel to determine whether an amendment to the most recently filed Schedule
13D is appropriate.
II. SOCIAL ISSUES AND OTHER CLIENT GUIDELINES
If a client has provided special instructions relating to the voting of
proxies, they should be noted in the client's account file and forwarded to the
proxy department. This is the responsibility of the investment professional or
sales assistant for the client. In accordance with Department of Labor
guidelines, the Advisers' policy is to vote on behalf of ERISA accounts in the
best interest of the plan participants with regard to social issues that carry
an economic impact. Where an account is not governed by ERISA, the Advisers will
vote shares held on behalf of the client in a manner consistent with any
individual investment/voting guidelines provided by the client. Otherwise the
Advisers will abstain with respect to those shares.
III. CLIENT RETENTION OF VOTING RIGHTS
If a client chooses to retain the right to vote proxies or if there is
any change in voting authority, the following should be notified by the
investment professional or sales assistant for the client.
- Operations
- Legal Department
- Proxy Department
- Investment professional assigned to the account
3
In the event that the Board of Directors (or a Committee thereof) of
one or more of the investment companies managed by one of the Advisers has
retained direct voting control over any security, the Proxy Voting Department
will provide each Board Member (or Committee member) with a copy of the proxy
statement together with any other relevant information including recommendations
of ISS or other third-party services.
IV. VOTING RECORDS
The Proxy Voting Department will retain a record of matters voted upon
by the Advisers for their clients. The Advisers will supply information on how
an account voted its proxies upon request.
A letter is sent to the custodians for all clients for which the
Advisers have voting responsibility instructing them to forward all proxy
materials to:
[Adviser name]
Attn: Proxy Voting Department
One Corporate Center
Rye, New York 10580-1433
The sales assistant sends the letters to the custodians along with the
trading/DTC instructions. Proxy voting records will be retained in compliance
with Rule 204-2 under the Investment Advisers Act.
V. VOTING PROCEDURES
1. Custodian banks, outside brokerage firms and clearing firms are responsible
for forwarding proxies directly to the Advisers.
Proxies are received in one of two forms:
o Shareholder Vote Authorization Forms ("VAFs") - Issued by Broadridge
Financial Solutions, Inc. ("Broadridge") VAFs must be voted through the
issuing institution causing a time lag. Broadridge is an outside service
contracted by the various institutions to issue proxy materials.
o Proxy cards which may be voted directly.
2. Upon receipt of the proxy, the number of shares each form represents is
logged into the proxy system according to security.
3. In the case of a discrepancy such as an incorrect number of shares, an
improperly signed or dated card, wrong class of security, etc., the issuing
custodian is notified by phone. A corrected proxy is requested. Any arrangements
are made to insure that a proper proxy is received in time to be voted
(overnight delivery, fax, etc.). When securities are out on loan on record date,
the custodian is requested to supply written verification.
4
4. Upon receipt of instructions from the proxy committee (see Administrative),
the votes are cast and recorded for each account on an individual basis.
Records have been maintained on the Proxy Edge system. The system is backed up
regularly.
Proxy Edge records include:
Security Name and Cusip Number
Date and Type of Meeting (Annual, Special, Contest)
Client Name
Adviser or Fund Account Number
Directors' Recommendation
How GAMCO voted for the client on each issue
5. VAFs are kept alphabetically by security. Records for the current proxy
season are located in the Proxy Voting Department office. In preparation for the
upcoming season, files are transferred to an offsite storage facility during
January/February.
6. Shareholder Vote Authorization Forms issued by Broadridge are always sent
directly to a specific individual at Broadridge.
7. If a proxy card or VAF is received too late to be voted in the conventional
matter, every attempt is made to vote on one of the following manners:
o VAFs can be faxed to Broadridge up until the time of the meeting. This is
followed up by mailing the original form.
o When a solicitor has been retained, the solicitor is called. At the
solicitor's direction, the proxy is faxed.
8. In the case of a proxy contest, records are maintained for each opposing
entity.
9. Voting in Person
a) At times it may be necessary to vote the shares in person. In this case, a
"legal proxy" is obtained in the following manner:
o Banks and brokerage firms using the services at Broadridge:
The back of the VAF is stamped indicating that we wish to vote in person.
The forms are then sent overnight to Broadridge. Broadridge issues individual
legal proxies and sends them back via overnight (or the Adviser can pay
messenger charges). A lead-time of at least two weeks prior to the meeting is
needed to do this. Alternatively, the procedures detailed below for banks not
using Broadridge may be implemented.
5
o Banks and brokerage firms issuing proxies directly:
The bank is called and/or faxed and a legal proxy is requested.
All legal proxies should appoint:
"REPRESENTATIVE OF [ADVISER NAME] WITH FULL POWER OF SUBSTITUTION."
b) The legal proxies are given to the person attending the meeting along with
the following supplemental material:
o A limited Power of Attorney appointing the attendee an Adviser
representative.
o A list of all shares being voted by custodian only. Client names and
account numbers are not included. This list must be presented, along with
the proxies, to the Inspectors of Elections and/or tabulator at least
one-half hour prior to the scheduled start of the meeting. The tabulator
must "qualify" the votes (i.e. determine if the vote have previously been
cast, if the votes have been rescinded, etc. vote have previously been
cast, etc.).
o A sample ERISA and Individual contract.
o A sample of the annual authorization to vote proxies form.
o A copy of our most recent Schedule 13D filing (if applicable).
6
APPENDIX A
PROXY GUIDELINES
PROXY VOTING GUIDELINES
GENERAL POLICY STATEMENT
It is the policy of GAMCO INVESTORS, INC. to vote in the best economic interests
of our clients. As we state in our Magna Carta of Shareholders Rights,
established in May 1988, we are neither FOR nor AGAINST management. We are for
shareholders.
At our first proxy committee meeting in 1989, it was decided that each proxy
statement should be evaluated on its own merits within the framework first
established by our Magna Carta of Shareholders Rights. The attached guidelines
serve to enhance that broad framework.
We do not consider any issue routine. We take into consideration all of our
research on the company, its directors, and their short and long-term goals for
the company. In cases where issues that we generally do not approve of are
combined with other issues, the negative aspects of the issues will be factored
into the evaluation of the overall proposals but will not necessitate a vote in
opposition to the overall proposals.
7
BOARD OF DIRECTORS
The advisers do not consider the election of the Board of Directors a routine
issue. Each slate of directors is evaluated on a case-by-case basis.
Factors taken into consideration include:
o Historical responsiveness to shareholders
This may include such areas as:
-Paying greenmail
-Failure to adopt shareholder resolutions receiving a majority of
shareholder votes
o Qualifications
o Nominating committee in place
o Number of outside directors on the board
o Attendance at meetings
o Overall performance
SELECTION OF AUDITORS
In general, we support the Board of Directors' recommendation for auditors.
BLANK CHECK PREFERRED STOCK
We oppose the issuance of blank check preferred stock.
Blank check preferred stock allows the company to issue stock and establish
dividends, voting rights, etc. without further shareholder approval.
CLASSIFIED BOARD
A classified board is one where the directors are divided into classes with
overlapping terms. A different class is elected at each annual meeting.
While a classified board promotes continuity of directors facilitating long
range planning, we feel directors should be accountable to shareholders on an
annual basis. We will look at this proposal on a case-by-case basis taking into
consideration the board's historical responsiveness to the rights of
shareholders.
8
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:
o 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
o Amount of stock currently authorized but not yet issued or reserved for
stock option plans
o Amount of additional stock to be authorized and its dilutive effect
We will support this proposal if a detailed and verifiable plan for the use of
the additional shares is contained in the proxy statement.
CONFIDENTIAL BALLOT
We support the idea that a shareholder's identity and vote should be treated
with confidentiality.
However, we look at this issue on a case-by-case basis.
In order to promote confidentiality in the voting process, we endorse the use of
independent Inspectors of Election.
9
CUMULATIVE VOTING
In general, we support cumulative voting.
Cumulative voting is a process by which a shareholder may multiply the number of
directors being elected by the number of shares held on record date and cast the
total number for one candidate or allocate the voting among two or more
candidates.
Where cumulative voting is in place, we will vote against any proposal to
rescind this shareholder right.
Cumulative voting may result in a minority block of stock gaining representation
on the board. When a proposal is made to institute cumulative voting, the
proposal will be reviewed on a case-by-case basis. While we feel that each board
member should represent all shareholders, cumulative voting provides minority
shareholders an opportunity to have their views represented.
DIRECTOR LIABILITY AND INDEMNIFICATION
We support efforts to attract the best possible directors by limiting the
liability and increasing the indemnification of directors, except in the case of
insider dealing.
EQUAL ACCESS TO THE PROXY
The SEC's rules provide for shareholder resolutions. However, the resolutions
are limited in scope and there is a 500 word limit on proponents' written
arguments. Management has no such limitations. While we support equal access to
the proxy, we would look at such variables as length of time required to
respond, percentage of ownership, etc.
FAIR PRICE PROVISIONS
Charter provisions requiring a bidder to pay all shareholders a fair price are
intended to prevent two-tier tender offers that may be abusive. Typically, these
provisions do not apply to board-approved transactions.
10
We support fair price provisions because we feel all shareholders should be
entitled to receive the same benefits.
Reviewed on a case-by-case basis.
GOLDEN PARACHUTES
Golden parachutes are severance payments to top executives who are terminated or
demoted after a takeover.
We support any proposal that would assure management of its own welfare so that
they may continue to make decisions in the best interest of the company and
shareholders even if the decision results in them losing their job. We do not,
however, support excessive golden parachutes. Therefore, each proposal will be
decided on a case-by-case basis.
NOTE: CONGRESS HAS IMPOSED A TAX ON ANY PARACHUTE THAT IS MORE THAN THREE TIMES
THE EXECUTIVE'S AVERAGE ANNUAL COMPENSATION.
ANTI-GREENMAIL PROPOSALS
We do not support greenmail. An offer extended to one shareholder should be
extended to all shareholders equally across the board.
LIMIT SHAREHOLDERS' RIGHTS TO CALL SPECIAL MEETINGS
We support the right of shareholders to call a special meeting.
CONSIDERATION OF NONFINANCIAL EFFECTS OF A MERGER
This proposal releases the directors from only looking at the financial effects
of a merger and allows them the opportunity to consider the merger's effects on
employees, the community, and consumers.
11
As a fiduciary, we are obligated to vote in the best economic interests of our
clients. In general, this proposal does not allow us to do that. Therefore, we
generally cannot support this proposal.
Reviewed on a case-by-case basis.
MERGERS, BUYOUTS, SPIN-OFFS, RESTRUCTURINGS
Each of the above is considered on a case-by-case basis. According to the
Department of Labor, we are not required to vote for a proposal simply because
the offering price is at a premium to the current market price. We may take into
consideration the long term interests of the shareholders.
MILITARY ISSUES
Shareholder proposals regarding military production must be evaluated on a
purely economic set of criteria for our ERISA clients. As such, decisions will
be made on a case-by-case basis.
In voting on this proposal for our non-ERISA clients, we will vote according to
the client's direction when applicable. Where no direction has been given, we
will vote in the best economic interests of our clients. It is not our duty to
impose our social judgment on others.
NORTHERN IRELAND
Shareholder proposals requesting the signing of the MacBride principles for the
purpose of countering the discrimination of Catholics in hiring practices must
be evaluated on a purely economic set of criteria for our ERISA clients. As
such, decisions will be made on a case-by-case basis.
In voting on this proposal for our non-ERISA clients, we will vote according to
client direction when applicable. Where no direction has been given, we will
vote in the best economic interests of our clients. It is not our duty to impose
our social judgment on others.
12
OPT OUT OF STATE ANTI-TAKEOVER LAW
This shareholder proposal requests that a company opt out of the coverage of the
state's takeover statutes. Example: Delaware law requires that a buyer must
acquire at least 85% of the company's stock before the buyer can exercise
control unless the board approves.
We consider this on a case-by-case basis. Our decision will be based on the
following:
o State of Incorporation
o Management history of responsiveness to shareholders
o Other mitigating factors
POISON PILL
In general, we do not endorse poison pills.
In certain cases where management has a history of being responsive to the needs
of shareholders and the stock is very liquid, we will reconsider this position.
REINCORPORATION
Generally, we support reincorporation for well-defined business reasons. We
oppose reincorporation if proposed solely for the purpose of reincorporating in
a state with more stringent anti-takeover statutes that may negatively impact
the value of the stock.
STOCK OPTION PLANS
Stock option plans are an excellent way to attract, hold and motivate directors
and employees. However, each stock option plan must be evaluated on its own
merits, taking into consideration the following:
o Dilution of voting power or earnings per share by more than 10%
o Kind of stock to be awarded, to whom, when and how much
o Method of payment
o Amount of stock already authorized but not yet issued under existing stock
option plans
13
SUPERMAJORITY VOTE REQUIREMENTS
Supermajority vote requirements in a company's charter or bylaws require a level
of voting approval in excess of a simple majority of the outstanding shares. In
general, we oppose supermajority-voting requirements. Supermajority requirements
often exceed the average level of shareholder participation. We support
proposals' approvals by a simple majority of the shares voting.
LIMIT SHAREHOLDERS RIGHT TO ACT BY WRITTEN CONSENT
Written consent allows shareholders to initiate and carry on a shareholder
action without having to wait until the next annual meeting or to call a special
meeting. It permits action to be taken by the written consent of the same
percentage of the shares that would be required to effect proposed action at a
shareholder meeting.
Reviewed on a case-by-case basis.
14
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
PORTFOLIO MANAGER
Mr. Mario J. Gabelli, CFA, is primarily responsible for the day-to-day
management of The Gabelli Equity Trust Inc., (the Trust). Mr. Gabelli has served
as Chairman, Chief Executive Officer, and Chief Investment Officer -Value
Portfolios of GAMCO Investors, Inc. and its affiliates since their organization.
Additionally, Mr. Caesar M. P. Bryan manages a portion of the Trust's assets.
Mr. Bryan is a Senior Vice President and Portfolio Manager with GAMCO Asset
Management Inc. (a wholly owned subsidiary of GAMCO Investors, Inc.) since 1994.
MANAGEMENT OF OTHER ACCOUNTS
The table below shows the number of other accounts managed by the Portfolio
Managers 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.
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Total Assets
No. of Accounts in Accounts
Total where Advisory where Advisory
Name of Portfolio Type of No. of Accounts Total Fee is Based on Fee is Based
Manager Accounts Managed Assets Performance on Performance
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
1. Mario J. Gabelli Registered 24 9.4B 6 2.3B
Investment
Companies:
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Other Pooled 22 355.1M 19 316.4M
Investment
Vehicles:
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Other Accounts: 2,049 8.1B 6 994.1M
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
2. Caesar M.P. Bryan Registered 4 728.7M 0 0
Investment
Companies:
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Other Pooled 2 6.0M 2 6.0M
Investment
Vehicles:
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Other Accounts: 5 33.5M 0 0
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
POTENTIAL CONFLICTS OF INTEREST
As reflected above, the Portfolio Managers manage accounts in addition to the
Trust. 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. As indicated above, the Portfolio
Managers manage multiple accounts. As a result, they will not be able to devote
all of their time to management of the Trust. The Portfolio Manager, therefore,
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 he were to devote all of his attention to the management of only the
Trust.
ALLOCATION OF LIMITED INVESTMENT OPPORTUNITIES. As indicated above, the
Portfolio Managers manage managed accounts with investment strategies and/or
policies that are similar to the Trust. In these cases, if he identifies an
investment opportunity that may be suitable for multiple accounts, a 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. In
addition, in the event the Portfolio Manager determines to purchase a security
for more than one account in an aggregate amount that may influence the market
price of the security, accounts that purchased or sold the security first may
receive a more favorable price than accounts that made subsequent transactions.
SELECTION OF BROKER/DEALERS. Because of Mr. Gabelli's position with the
Distributor and his indirect majority ownership interest in the Distributor, he
may have an incentive to use the Distributor to execute portfolio transactions
for a Fund.
PURSUIT OF DIFFERING STRATEGIES. At times, the Portfolio Manager may determine
that an investment opportunity may be appropriate for only some of the accounts
for which he exercises investment responsibility, or may decide that certain of
the funds or accounts should take differing positions with respect to a
particular security. In these cases, he 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 other accounts.
VARIATION IN COMPENSATION. A conflict of interest may arise where the financial
or other benefits available to the Portfolio Managers 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 Manager may be motivated to favor certain accounts over others. The
Portfolio Manager also may be motivated to favor accounts in which he has an
investment interest, or in which the Adviser, or their 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 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 by 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 Trust. Net revenues are
determined by deducting from gross investment management fees the firm's
expenses (other than Mr. Gabelli's compensation) allocable to this Trust. Five
closed-end registered investment companies (including this Trust) managed by Mr.
Gabelli have arrangements whereby the Adviser will only receive its investment
advisory fee attributable to the liquidation value of outstanding preferred
stock (and Mr. Gabelli would only receive his percentage of such advisory fee)
if certain performance levels are met. Additionally, he receives similar
incentive based variable compensation for managing other accounts within the
firm and its affiliates. This method of compensation is based on the premise
that superior long-term performance in managing a portfolio should be rewarded
with higher compensation as a result of growth of assets through appreciation
and net investment activity. The level of compensation is not determined with
specific reference to the performance of any account against any specific
benchmark. One of the other registered investment companies managed by Mr.
Gabelli has a performance (fulcrum) fee arrangement for which his compensation
is adjusted up or down based on the performance of the investment company
relative to an index. Mr. Gabelli manages other accounts with performance fees.
Compensation for managing these accounts has two components. One component is
based on a percentage of net revenues to the investment adviser for managing the
account. The second component is based on absolute performance of the account,
with respect to which a percentage of such performance fee is paid to Mr.
Gabelli. As an executive officer of the Adviser's parent company, GBL, Mr.
Gabelli also receives ten percent of the net operating profits of the parent
company. He receives no base salary, no annual bonus, and no stock options.
COMPENSATION STRUCTURE FOR CAESAR M. P. BRYAN
The compensation of Mr. Bryan for the Trust is structured to enable the Adviser
to attract and retain highly qualified professionals in a competitive
environment. The Portfolio Manager receives a compensation package that includes
a minimum draw or base salary, equity-based incentive compensation via awards of
stock options, and incentive based variable compensation based on a percentage
of net revenue received by the Adviser for managing the Trust 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 Portfolio Managers' compensation) allocable to the
Trust (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 Gabelli and Caesar M. P. Bryan owned over $1,000,000 and $0 - $10,000,
respectively, of shares of the Trust as of December 31, 2008.
(B) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
============= ========================= ============================= =========================== ==============================
(C) TOTAL NUMBER OF (D) MAXIMUM NUMBER (OR
SHARES (OR UNITS) APPROXIMATE DOLLAR VALUE) OF
(A) TOTAL NUMBER OF PURCHASED AS PART OF SHARES (OR UNITS) THAT MAY
SHARES (OR UNITS) (B) AVERAGE PRICE PAID PER PUBLICLY ANNOUNCED PLANS YET BE PURCHASED UNDER THE
PERIOD PURCHASED SHARE (OR UNIT) OR PROGRAMS PLANS OR PROGRAMS
============= ========================= ============================= =========================== ==============================
Month #1 Common - N/A Common - N/A Common - N/A Common - 173,862,271
07/01/08
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
07/31/08
Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - 6,000,000
================================================================================================================================
================================================================================================================================
Month #2 Common - N/A Common - N/A Common - N/A Common - 173,862,271
08/01/08
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
08/31/08
Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - 6,000,000
================================================================================================================================
================================================================================================================================
Month #3 Common - N/A Common - N/A Common - N/A Common - 174,919,152
09/01/08
through Preferred Series D - 600 Preferred Series D - Preferred Series D - 600 Preferred Series D - 2,949,700
09/30/08 $21.0850 - 600 = 2,949,100
Preferred Series F - Preferred Series F - 6,000,000
Preferred Series F - 500 $21.2020 Preferred Series F - 500 -500 = 5,999,500
================================================================================================================================
================================================================================================================================
Month #4 Common - N/A Common - N/A Common - N/A Common - 174,919,152
10/01/08
through Preferred Series D - Preferred Series D - Preferred Series D - 16,659 Preferred Series D - 2,949,100
10/31/08 16,659 $20.2215 - 16,659 = 2,932,441
Preferred Series F - 46,674
Preferred Series F - Preferred Series F - Preferred Series F - 5,999,500
45,674 $20.6743 - 46,674 = 5,953,826
================================================================================================================================
================================================================================================================================
Month #5 Common - N/A Common - N/A Common - N/A Common - 174,919,152
11/01/08
through Preferred Series D - Preferred Series D - Preferred Series D - 6,278 Preferred Series D - 2,932,441
11/30/08 6,278 $20.7925 - 6,278 = 2,926,163
Preferred Series F - Preferred Series F - Preferred Series F - 5,953,826
10,028 $20.6655 Preferred Series F - 10,028 - 10,028 = 5,943,798
================================================================================================================================
================================================================================================================================
Month #6 Common - N/A Common - N/A Common - N/A Common - 174,919,152
12/01/08
through Preferred Series D - Preferred Series D - Preferred Series D - 24,894 Preferred Series D - 2,926,153
12/31/08 24,894 $20.2688 - 24,894 = 2,901,269
Preferred Series F - 23,532
Preferred Series F - Preferred Series F - Preferred Series F - 5,943,798
23,532 $21.3009 - 23,532 = 5,940,266
================================================================================================================================
================================================================================================================================
Total Common - N/A Common - N/A Common - N/A N/A
Preferred Series D - Preferred Series D - Preferred Series D - 48,431
48,431 $20.1885
Preferred Series F - 79,734
Preferred Series F - Preferred Series F -
79,734 $20.7271
================================================================================================================================
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.
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 3/9/09
----------------------------------------------------------------------------
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 3/9/09
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady,
Principal Financial Officer and Treasurer
Date 3/9/09
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.