UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4700
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The Gabelli Equity Trust Inc.
----------------------------------------------------------
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
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(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
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(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, 2003
-----------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Annual Report to Shareholders is attached herewith.
[LOGO OMITTED]
THE GABELLI
EQUITY TRUST INC.
THE GABELLI EQUITY TRUST INC.
Annual Report
December 31, 2003
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/funds.
Enclosed are the audited financial statements and the investment portfolio
as of December 31, 2003.
COMPARATIVE RESULTS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2003 (A)
----------------------------------------------------
SINCE
QUARTER 1 YEAR 3 YEAR 5 YEAR 10 YEAR 15 YEAR INCEPTION (B)
------- ------ ------ ------ ------- ------- -------------
Gabelli Equity Trust NAV Return (c) .......... 18.12% 41.41% 3.02% 6.25% 9.84% 11.05% 11.66%
Gabelli Equity Trust Investment Return (d) ... 11.63% 28.58% 0.53% 5.56% 8.73% 11.84% 11.18%
S&P 500 Index ................................ 12.17% 28.67% (4.05)% (0.57)% 11.06% 12.20% 11.65%
Dow Jones Industrial Average ................. 13.33% 28.27% 1.01% 4.57% 13.09% 13.88% 13.34%
Nasdaq Composite Index ....................... 12.11% 50.01% (6.75)% (1.79)% 9.94% 11.69% 10.03%
(a) Returns represent past performance and do not guarantee future results.
Investment returns and the principal value of an investment will fluctuate.
When shares are sold, they may be worth more or less than their original
cost. The Dow Jones Industrial Average is an unmanaged index of 30 large
industrial stocks. The S&P 500 and the Nasdaq Composite Indices are
unmanaged indicators of stock market performance. Dividends are considered
reinvested (except for the Nasdaq Composite Index). Performance for periods
less than one year is not annualized.
(b) From commencement of investment operations on August 21, 1986.
(c) Total returns and average annual returns reflect changes in net asset
value ("NAV"), reinvestment of distributions 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 initial net asset value of $9.34.
(d) Total returns and average annual returns reflect changes in closing market
values on the New York Stock Exchange, reinvestment of distributions as of
the payable date, 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.
--------------------------------------------------------------------------------
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
February 24, 2004
--------------------------------------------------------------------------------
A description of the Trust's proxy voting policies and procedures is available
(i) without charge, upon request, by calling 800-GABELLI (800-422-3554); (ii)
by writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580; and
(iii) on the Securities and Exchange Commission's website at www.sec.gov.
--------------------------------------------------------------------------------
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES
QUARTER ENDED DECEMBER 31, 2003
(UNAUDITED)
OWNERSHIP AT
DECEMBER 31,
SHARES 2003
------ ------------
NET PURCHASES
COMMON STOCKS
AGCO Corp. .................... 20,000 20,000
Biogen Idec Inc. (a) .......... 29,900 29,900
Bouygues SA ................... 5,000 25,000
Coca-Cola Co. ................. 1,000 35,000
Curtiss-Wright Corp.,
Cl. B (b) ................... 102,320 204,640
Dana Corp. .................... 40,000 380,000
Dial Corp. .................... 450,000 450,000
Dreyer's Grand Ice Cream
Holdings Inc., Cl. A ....... 97,000 100,000
El Paso Corp. ................. 10,000 200,000
Exxon Mobile Corp. ............ 20,000 80,000
Fedders Corp. ................. 70,000 70,000
Fomento Economico Mexicano SA
de CV, ADR ................. 20,000 30,000
FPL Group Inc. ................ 1,700 10,000
Gray Television Inc. .......... 20,000 120,000
Grupo Bimbo SA de CV, Ser. A .. 50,000 500,000
Grupo Televisa SA, ADR ........ 100 185,100
Heinz (H.J.) Co. .............. 10,000 130,000
Honeywell International Inc. .. 17,000 435,000
Hughes Electronics Corp. (c) .. 148,445 148,445
Index Corp. ................... 65 65
Kellogg Co. ................... 1,400 291,400
Knight-Ridder Inc. ............ 1,000 20,000
Matsumotokiyoshi Co. Ltd. ..... 10,000 10,000
Matsumotokiyoshi Co.
Ltd., W/I (d) ............... 10,000 10,000
Mediaset SpA .................. 15,000 165,000
Merck & Co. Inc. .............. 15,000 60,000
Nakanishi Inc. ................ 12,000 12,000
NIWS Co. Ltd. ................. 160 160
Pearson plc ................... 40,000 40,000
Precision Castparts Corp. (e) . 46,898 91,898
Pulitzer Inc. ................. 5,000 45,000
Rayonier Inc. (f) ............. 1,656 16,656
Roche Holding AG .............. 200 18,100
Rohm Co. Ltd. ................. 2,000 9,500
Royce Value Trust Inc. ........ 790 36,790
Sekisui House Ltd. ............ 40,000 40,000
SGS Societe Generale de Surveillance
Holding SA ................. 250 1,250
Shin-Etsu Chemical Co. Ltd. ... 10,000 10,000
Technip SA .................... 4,000 7,500
Telefonica Moviles SA ......... 15,000 90,000
Texas Instruments Inc. ........ 20,000 240,000
Titan Corp. ................... 100,000 100,000
United States Cellular Corp. .. 10,000 20,000
Unitrin Inc. .................. 11,800 71,800
Wyeth ......................... 5,000 70,000
PREFERRED STOCKS
News Corp. Ltd., Pfd., ADR (c) 16,603 771,603
RIGHTS
Fedders Corp. (g) ............. 70,000 70,000
OWNERSHIP AT
DECEMBER 31,
SHARES 2003
------ ------------
NET SALES
COMMON STOCKS
Acuity Brands Inc. ............ (10,700) 189,300
Agere Systems Inc., Cl. B ..... (20,000) 125,000
AGL Resources Inc. ............ (10,000) 50,000
Albertson's Inc. .............. (5,000) 195,000
Allegheny Energy Inc. ......... (5,000) 120,000
Amadeus Global Travel
Distribution SA, Cl. A ..... (10,000) 115,000
America Movil SA de CV, Cl. L,
ADR ........................ (5,000) 90,000
AMETEK Inc. ................... (2,000) 118,000
Amgen Inc. .................... (1,000) 59,000
Andrew Corp. .................. (60,000) 230,000
AT&T Corp. .................... (15,000) 280,000
BAE Systems plc ............... (150,000) --
Bank One Corp. ................ (70,000) --
Biogen Inc. (a) ............... (26,000) --
Boeing Co. .................... (2,000) 110,000
BorgWarner Inc. ............... (2,802) 35,000
BP plc ........................ (120,000) --
BT Group plc, ADR ............. (14,000) 10,000
Cable & Wireless plc, ADR ..... (50,000) 50,000
Cablevision Systems
Corp., Cl. A ................ (15,000) 1,520,000
Catellus Development Corp. .... (186,958) 83,042
Cendant Corp. ................. (10,000) 160,000
Cinergy Corp. ................. (3,000) 20,000
Coca-Cola Enterprises Inc. .... (40,000) 5,000
Comcast Corp., Cl. A .......... (52,000) 420,000
Compagnie Financiere
Richemont AG, Cl. A ........ (10,000) 90,000
Corning Inc. .................. (25,000) 500,000
Crane Co. ..................... (20,000) 250,000
Cypress Semiconductor Corp. ... (200,000) --
Delphi Corp. .................. (10,000) 40,000
Deutsche Bank AG, ADR ......... (1,000) 157,000
Deutsche Telekom AG, ADR ...... (10,000) 180,000
Donaldson Co. Inc. ............ (100,000) 110,000
Duquesne Light Holdings Inc. .. (5,000) 110,000
EMC Corp. ..................... (5,000) 130,000
EMI Group plc, ADR ............ (15,000) 80,000
Fairchild Corp., Cl. A ........ (15,000) 100,000
FleetBoston Financial Corp. ... (45,000) --
Florida East Coast Industries
Inc., Cl. A ................ (1,451) 100,000
Ford Motor Co. ................ (5,000) 15,000
Fortune Brands Inc. ........... (50,000) 40,000
General Motors Corp. .......... (5,000) 150,000
General Motors Corp.,
Cl. H (c) .................. (180,323) --
Gillette Co. .................. (25,000) 240,000
Gray Television Inc., Cl. A ... (500) 27,500
Greif Inc., Cl. A ............. (10,000) 250,000
Gucci Group NV, ADR ........... (5,000) --
Halliburton Co. ............... (5,000) 70,000
IDEX Corp. .................... (5,000) 175,000
Invitrogen Corp. .............. (8,011) 48,000
Japan Telecom Holdings
Co. Ltd. ................... (255) --
Johnson Controls Inc. ......... (11,000) 97,000
Kerr-McGee Corp. .............. (3,632) 35,000
Lockheed Martin Corp. ......... (5,000) 90,000
MeadWestvaco Corp. ............ (30,300) 64,700
Medco Health Solutions Inc. ... (10,427) --
Media General Inc., Cl. A ..... (26,000) 339,000
See accompanying notes to financial statements.
2
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES
QUARTER ENDED DECEMBER 31, 2003
(UNAUDITED)
OWNERSHIP AT
DECEMBER 31,
SHARES 2003
------ ------------
Metro-Goldwyn-Mayer Inc. (h) .. (145,000) 215,000
Mirant Corp. .................. (50,000) 150,000
Modine Manufacturing Co. ...... (3,500) 331,500
Mondavi (Robert) Corp., Cl. A . (5,000) 45,000
Navistar International Corp. .. (7,000) 405,000
Nextel Communications Inc.,
Cl. A ...................... (90,000) 110,000
Northrop Grumman Corp. ........ (14,000) 150,000
Penton Media Inc. ............. (170,000) 305,000
PepsiAmericas Inc. ............ (20,595) 580,000
PepsiCo Inc. .................. (5,000) 415,000
Phoenix Companies Inc. ........ (5,000) 150,000
Pimco RCM Europe Fund Inc. (i) (70,000) --
Reader's Digest Association
Inc. ....................... (3,000) 175,000
Rogers Wireless Communications
Inc., Cl. B ................ (30,000) 195,000
Rollins Inc. .................. (5,000) 690,000
Sara Lee Corp. ................ (30,000) 70,000
Sealed Air Corp. .............. (4,000) 1,000
SPS Technologies Inc. (e) ..... (170,000) --
Starwood Hotel & Resorts
Worldwide Inc. ............. (5,000) 45,000
Telefonica SA, ADR ............ (1,849) 274,000
Telephone & Data Systems Inc. . (25,000) 415,000
TXU Corp. ..................... (5,000) 95,000
Wachovia Corp. ................ (70,000) --
Watts Water Technologies
Inc., Cl. A ................ (15,000) 235,000
Zimmer Holdings Inc. .......... (2,178) 33,001
PREFERRED STOCKS
Hercules Trust I, 9.420% Pfd. . (20,500) 27,000
CORPORATE BONDS
Standard Motor Products Inc., Sub. Deb.
Cv., 6.750%, 07/15/09 ...... 200,000 1,000,000
--------------
(a) Merger -- 1.15 shares of Biogen Idec Inc. for every 1 share of Biogen Inc.
(b) 2 for 1 stock split
(c) Merger -- .82321617 shares of Hughes Electronics Corp. and .09207432 News
Corp. Ltd., Pfd., ADR for every 1 share of General Motors Corp., Cl. H
(d) Bonus Issue -- 1 share of Matsumotokiyoshi Co. Ltd. W/I for every 1 share of
Matsumotokiyoshi Co. Ltd.
(e) Merger -- .709117 shares of Precision Castparts Corp. for every 1 share of
SPS Technologies Inc.
(f) 18.7% stock dividend
(g) Rights Issue -- 1 right of Fedders Corp. for every 1 share of Fedders Corp.
(h) Tender Offer at $16.00 per share
(i) Fund liquidation at 8.07 per share
See accompanying notes to financial statements.
3
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES COST VALUE
------ ------ ------
COMMON STOCKS -- 87.5%
FINANCIAL SERVICES -- 7.8%
60,000 Allstate Corp. ........ $ 2,508,768 $ 2,581,200
550,000 American Express Co. .. 21,247,943 26,526,500
34,000 Argonaut Group Inc.+ .. 893,076 528,360
90,000 Banco Santander Central
Hispano SA, ADR .... 322,130 1,080,900
110,000 Bank of Ireland ....... 635,101 1,501,261
77,000 Bank of New York
Co. Inc. ........... 2,834,050 2,550,240
275,000 Bankgesellschaft
Berlin AG+ ......... 5,495,399 697,212
260 Berkshire Hathaway Inc.,
Cl. A+ ............. 824,299 21,905,000
185,000 Commerzbank AG, ADR ... 3,747,342 3,609,924
157,000 Deutsche Bank AG, ADR . 8,708,108 12,906,970
20,000 Dun and Bradstreet
Corp.+ ............. 333,130 1,014,200
5,000 H&R Block Inc. ........ 97,625 276,850
25,000 Hibernia Corp., Cl. A . 198,750 587,750
20,000 Invik & Co. AB, Cl. B . 936,800 1,973,510
100,000 Irish Life &
Permanent plc ...... 781,432 1,614,531
25,000 Janus Capital
Group Inc. ......... 393,520 410,250
80,000 John Hancock Financial
Services Inc. ...... 2,892,043 3,000,000
45,000 JP Morgan Chase & Co. . 1,251,002 1,652,850
60,000 Leucadia National Corp. 1,889,682 2,766,000
100,000 Mellon Financial Corp. 3,140,094 3,211,000
190,000 Midland Co. ........... 1,070,105 4,487,800
65,000 Mitsubishi Securities
Co. Ltd. ........... 458,816 707,801
30,000 Moody's Corp. ......... 1,024,050 1,816,500
257,500 Nikko Cordial Corp. ... 1,725,292 1,434,427
150,000 Phoenix Companies Inc. 2,179,395 1,806,000
2,500 Prudential Financial
Inc. ............... 68,750 104,425
46,002 RAS SpA ............... 576,832 783,334
60,000 Riggs National Corp. .. 552,538 991,800
45,000 Schwab (Charles) Corp. 657,562 532,800
80,000 State Street Corp. .... 4,001,480 4,166,400
20,000 SunTrust Banks Inc. ... 419,333 1,430,000
80,000 T. Rowe Price
Group Inc. ......... 2,689,800 3,792,800
20,000 UBS AG ................ 845,648 1,369,719
71,800 Unitrin Inc. .......... 2,324,517 2,973,238
60,000 Waddell & Reed Financial
Inc., Cl. A ........ 1,247,250 1,407,600
-------------- --------------
78,971,662 118,199,152
-------------- --------------
FOOD AND BEVERAGE -- 7.1%
30,000 Cadbury Schweppes
plc, ADR ........... 746,559 896,700
100,000 Campbell Soup Co. ..... 2,694,094 2,680,000
35,000 Coca-Cola Co. ......... 1,624,092 1,776,250
5,000 Coca-Cola
Enterprises Inc. ... 77,195 109,350
40,000 Coca-Cola Hellenic Bottling
Co. SA ............. 519,295 833,502
100,000 Corn Products
International Inc. . 2,916,387 3,445,000
73,592 Del Monte Foods Co.+ .. 623,741 765,357
10,108 Denny's Corp.+ ........ 14,358 4,144
100,000 Diageo plc ............ 1,037,393 1,315,765
224,000 Diageo plc, ADR ....... 8,642,745 11,840,640
100,000 Dreyer's Grand Ice Cream
Holdings Inc., Cl. A 7,749,175 7,775,000
62,400 Flowers Foods Inc. .... 1,055,628 1,609,920
30,000 Fomento Economico
Mexicano SA
de CV, ADR ......... 1,094,322 1,106,400
85,000 General Mills Inc. .... 3,933,248 3,850,500
500,000 Grupo Bimbo SA de CV,
Cl. A .............. 1,052,379 938,397
20,000 Hain Celestial
Group Inc.+ ........ 267,663 464,200
130,000 Heinz (H.J.) Co. ...... 4,668,773 4,735,900
MARKET
SHARES COST VALUE
------ ------ ------
20,000 Hershey Foods Corp. ... $ 1,333,128 $ 1,539,800
291,400 Kellogg Co. ........... 9,226,180 11,096,512
75,000 Kerry Group plc, Cl. A 860,877 1,390,415
12,100 LVMH Moet Hennessy Louis
Vuitton SA ......... 419,053 880,638
45,000 Mondavi (Robert) Corp.,
Cl. A+ ............. 1,286,656 1,747,800
2,500 Nestle SA ............. 513,610 624,621
580,000 PepsiAmericas Inc. .... 7,990,227 9,929,600
415,000 PepsiCo Inc. .......... 18,472,238 19,347,300
6,750 Pernod-Ricard SA ...... 470,174 750,520
60,000 Ralcorp Holdings Inc.+ 940,903 1,881,600
70,000 Sara Lee Corp. ........ 1,266,240 1,519,700
2,000 Smucker (J.M.) Co. .... 52,993 90,580
106,969 Tootsie Roll
Industries Inc. .... 1,580,949 3,850,884
175,000 Wrigley (Wm.) Jr. Co. . 9,501,202 9,836,750
-------------- --------------
92,631,477 108,633,745
-------------- --------------
ENTERTAINMENT -- 6.7%
160,000 Canal Plus, ADR ....... 34,011 194,960
110,000 EMI Group plc ......... 292,543 312,606
80,000 EMI Group plc, ADR .... 947,487 454,704
120,000 Fox Entertainment Group Inc.,
Cl. A+ ............. 2,783,871 3,498,000
50,000 GC Companies Inc.+ .... 54,500 17,500
365,000 Gemstar-TV Guide
International Inc.+ 2,710,973 1,843,250
65 Index Corp. ........... 305,893 382,103
1,916,352 Liberty Media Corp.,
Cl. A+ ............. 9,752,938 22,785,426
215,000 Metro-Goldwyn-
Mayer Inc.+ ........ 2,983,181 3,674,350
160,000 Publishing &
Broadcasting Ltd. .. 893,720 1,509,309
15,000 Regal Entertainment Group,
Cl. A .............. 285,000 307,800
210,000 Six Flags Inc.+ ....... 1,752,972 1,579,200
260,000 The Walt Disney Co. ... 5,453,387 6,065,800
700,000 Time Warner Inc.+ ..... 15,921,711 12,593,000
840,000 Viacom Inc., Cl. A .... 35,321,393 37,186,800
40,900 Vivendi Universal SA+ . 2,169,026 994,126
350,000 Vivendi Universal
SA, ADR+ ........... 10,223,476 8,498,000
-------------- --------------
91,886,082 101,896,934
-------------- --------------
TELECOMMUNICATIONS -- 6.5%
7,000 Aliant Inc. ........... 62,390 173,883
25,000 ALLTEL Corp. .......... 534,554 1,164,500
280,000 AT&T Corp. ............ 9,376,946 5,684,000
90,540 ATX Communications
Inc.+ .............. 151,570 19,919
290,000 BCE Inc. .............. 7,665,817 6,484,400
33,400 Brasil Telecom Participacoes
SA, ADR ............ 1,940,826 1,262,520
1,760,000 BT Group plc .......... 7,277,785 5,931,148
10,000 BT Group plc, ADR ..... 343,423 342,200
4,440,836 Cable & Wireless
Jamaica Ltd. ....... 101,639 60,152
50,000 Cable & Wireless
plc, ADR ........... 650,341 350,500
117,000 CenturyTel Inc. ....... 2,733,061 3,816,540
880,000 Cincinnati Bell Inc.+ . 7,720,293 4,444,000
150,000 Citizens Communications
Co.+ ............... 1,813,288 1,863,000
254,800 Commonwealth Telephone
Enterprises Inc.+ .. 9,416,914 9,618,700
60,000 Compania de
Telecomunicaciones de
Chile SA, ADR ...... 897,938 897,000
180,000 Deutsche Telekom AG,
ADR+ ............... 2,992,534 3,263,400
See accompanying notes to financial statements.
4
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2003
MARKET
SHARES COST VALUE
------ ------ ------
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS (CONTINUED)
15,000 Embratel Participacoes SA,
ADR ................ $ 266,400 $ 249,150
7,000 France Telecom SA, ADR 224,125 200,130
208 KDDI Corp. ............ 685,401 1,191,677
100,000 KPN NV+ ............... 232,728 771,947
800,000 Qwest Communications
International Inc.+ 2,475,505 3,456,000
60,000 RCN Corp.+ ............ 425,991 48,000
9,655 Rogers Communications Inc.,
Cl. B .............. 137,424 159,441
110,345 Rogers Communications Inc.,
Cl. B, ADR ......... 1,537,198 1,820,692
220,000 SBC Communications Inc. 7,272,156 5,735,400
350,000 Sprint Corp. -
FON Group .......... 10,687,538 5,747,000
186,554 Tele Norte Leste Participacoes
SA, ADR ............ 2,554,387 2,878,528
42,000 Telecom Argentina Stet France
Telecom SA, ADR+ ... 360,891 367,500
1,320,480 Telecom Italia SpA+ ... 3,059,314 3,914,137
495,130 Telecom Italia
SpA, RNC+ .......... 572,370 1,008,621
274,000 Telefonica SA, ADR .... 13,264,644 12,108,060
17,595 Telefonica SA, BDR .... 202,143 256,759
36,000 Telefonos de Mexico SA de
CV, Cl. L, ADR+ .... 389,422 1,189,080
12,750 TELUS Corp. ........... 222,542 256,036
52,500 TELUS Corp., ADR ...... 950,397 1,054,266
4,250 TELUS Corp., Non-Voting 74,181 79,590
20,750 TELUS Corp., Non-Voting,
ADR ................ 438,501 388,586
320,000 Verizon Communications
Inc. ............... 14,384,284 11,225,600
-------------- --------------
114,096,861 99,482,062
-------------- --------------
ENERGY AND UTILITIES -- 5.7%
75,000 AES Corp.+ ............ 424,572 708,000
50,000 AGL Resources Inc. .... 891,012 1,455,000
120,000 Allegheny Energy Inc.+ 1,090,388 1,531,200
36,000 Apache Corp. .......... 2,806,632 2,919,600
247,000 BP plc, ADR ........... 10,018,320 12,189,450
140,000 Burlington
Resources Inc. ..... 5,902,202 7,753,200
115,000 CH Energy Group Inc. .. 4,749,282 5,393,500
20,000 Cinergy Corp. ......... 607,416 776,200
100,000 CMS Energy Corp.+ ..... 640,176 852,000
103,217 ConocoPhillips ........ 5,288,737 6,767,939
10,000 Constellation Energy
Group Inc. ......... 237,177 391,600
26,000 DPL Inc. .............. 524,093 542,880
17,000 DTE Energy Co. ........ 750,951 669,800
470,000 Duke Energy Corp. ..... 8,624,500 9,611,500
110,000 Duquesne Light
Holdings Inc. ...... 1,848,062 2,017,400
200,000 El Paso Corp. ......... 2,520,332 1,638,000
400,000 El Paso Electric Co.+ . 3,236,625 5,340,000
40,000 Energy East Corp. ..... 826,233 896,000
50,000 Eni SpA ............... 732,789 943,491
80,000 Exxon Mobil Corp. ..... 2,750,108 3,280,000
10,000 FPL Group Inc. ........ 556,256 654,200
70,000 Halliburton Co. ....... 1,726,011 1,820,000
35,000 Kerr-McGee Corp. ...... 2,046,290 1,627,150
150,000 Mirant Corp.+ ......... 201,190 58,500
100,000 NiSource Inc.+ ........ 200,000 256,000
300,000 Northeast Utilities ... 5,660,050 6,051,000
100,000 Progress Energy
Inc., CVO+ ......... 52,000 23,000
10,000 SJW Corp. ............. 883,106 892,500
20,000 Southwest Gas Corp. ... 415,025 449,000
7,907 Total SA .............. 1,114,624 1,470,096
MARKET
SHARES COST VALUE
------ ------ ------
95,000 TXU Corp. $ 1,557,877 $ 2,253,400
255,000 Westar Energy Inc. 4,319,800 5,163,750
-------------- --------------
73,201,836 86,395,356
-------------- --------------
EQUIPMENT AND SUPPLIES -- 5.4%
118,000 AMETEK Inc. ........... 5,527,719 5,694,680
1,500 Amphenol Corp., Cl. A+ 22,162 95,895
10,000 Caterpillar Inc. ...... 136,559 830,200
95,000 CIRCOR International
Inc. ............... 981,440 2,289,500
320,000 Deere & Co. ........... 15,328,000 20,816,000
110,000 Donaldson Co. Inc. .... 970,341 6,507,600
70,000 Fedders Corp. ......... 444,646 504,000
115,000 Flowserve Corp.+ ...... 1,995,044 2,401,200
13,000 Franklin Electric
Co. Inc. ........... 210,022 786,370
100,000 Gerber Scientific Inc.+ 1,060,701 796,000
70,000 GrafTech International
Ltd.+ .............. 850,486 945,000
175,000 IDEX Corp. ............ 5,657,750 7,278,250
20,000 Ingersoll-Rand Co.,
Cl. A .............. 836,200 1,357,600
60,000 Lufkin Industries Inc. 1,105,223 1,727,400
1,000 Manitowoc Co. Inc. .... 25,450 31,200
12,000 Nakanishi Inc. ........ 525,284 520,108
405,000 Navistar International
Corp.+ ............. 13,980,821 19,395,450
30,000 PACCAR Inc. ........... 450,000 2,553,600
1,000 Sealed Air Corp.+ ..... 17,404 54,140
60,000 Sybron Dental
Specialties Inc.+ .. 1,140,669 1,686,000
235,000 Watts Water Technologies
Inc., Cl. A ........ 3,107,523 5,217,000
100,000 Weir Group plc ........ 420,789 458,728
-------------- --------------
54,794,233 81,945,921
-------------- --------------
PUBLISHING -- 4.9%
20,000 Dow Jones & Co. Inc. .. 1,030,036 997,000
248,266 Independent News &
Media plc .......... 358,456 588,724
20,000 Knight-Ridder Inc. .... 1,345,264 1,547,400
5,000 McClatchy Co., Cl. A .. 240,250 344,000
100,000 McGraw-Hill Companies
Inc. ............... 6,052,805 6,992,000
339,000 Media General Inc.,
Cl. A .............. 20,169,846 22,068,900
125,000 Meredith Corp. ........ 2,091,313 6,101,250
115,000 New York Times Co.,
Cl. A .............. 5,259,249 5,495,850
120,000 News Corp. Ltd. ....... 696,029 1,084,062
10,000 News Corp. Ltd., ADR .. 186,274 361,000
40,000 Pearson plc ........... 432,050 445,391
305,000 Penton Media Inc.+ .... 2,706,367 414,800
400,000 PRIMEDIA Inc.+ ........ 1,948,569 1,132,000
45,000 Pulitzer Inc. ......... 2,085,193 2,430,000
175,000 Reader's Digest
Association Inc. ... 3,181,221 2,565,500
261,319 SCMP Group Ltd. ....... 191,790 115,284
70,000 Scripps (E.W.) Co.,
Cl. A .............. 4,559,387 6,589,800
66,585 Seat Pagine Gialle SpA+ 177,139 63,410
80,000 Thomas Nelson Inc. .... 951,267 1,546,400
250,000 Tribune Co. ........... 11,310,100 12,900,000
-------------- --------------
64,972,605 73,782,771
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 4.7%
189,300 Acuity Brands Inc. .... 3,209,193 4,883,940
195,000 Ampco-Pittsburgh Corp. 2,627,873 2,665,650
125,000 Cooper Industries Ltd.,
Cl. A .............. 6,152,755 7,241,250
250,000 Crane Co. ............. 4,841,093 7,685,000
105,000 GATX Corp. ............ 1,708,946 2,937,900
250,000 Greif Inc., Cl. A ..... 4,682,789 8,877,500
3,400 Greif Inc., Cl. B ..... 69,824 121,550
435,000 Honeywell International
Inc. ............... 14,705,345 14,542,050
See accompanying notes to financial statements.
5
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2003
MARKET
SHARES COST VALUE
------ ------ ------
COMMON STOCKS (CONTINUED)
DIVERSIFIED INDUSTRIAL (CONTINUED)
118,000 ITT Industries Inc. ...$ 3,585,603 $ 8,756,780
400,600 Lamson & Sessions Co.+ 2,458,185 2,311,462
110,000 Park-Ohio Holdings
Corp.+ ............. 1,072,210 814,000
212,000 Sensient Technologies
Corp. .............. 3,831,251 4,191,240
10,000 Smiths Group plc ...... 171,257 118,330
4,000 Sulzer AG ............. 850,053 1,077,016
7,500 Technip SA ............ 721,269 811,680
100,000 Thomas Industries Inc. 1,388,525 3,466,000
50,000 Trinity Industries Inc. 945,000 1,542,000
-------------- --------------
53,021,171 72,043,348
-------------- --------------
CONSUMER PRODUCTS -- 4.3%
60,000 Altadis SA ............ 885,677 1,702,825
43,000 Christian Dior SA ..... 1,514,055 2,605,058
10,000 Church & Dwight
Co. Inc. ........... 99,536 396,000
90,000 Compagnie Financiere
Richemont AG, Cl. A 1,264,406 2,161,310
50,000 Department 56 Inc.+ ... 524,317 655,000
450,000 Dial Corp. ............ 12,799,740 12,811,500
40,000 Energizer Holdings
Inc.+ .............. 938,568 1,502,400
40,000 Fortune Brands Inc. ... 2,801,736 2,859,600
30,000 Gallaher Group plc .... 274,164 322,228
235,000 Gallaher Group plc, ADR 9,106,250 9,996,900
240,000 Gillette Co. .......... 7,618,928 8,815,200
2,000 Givaudan SA ........... 550,742 1,038,205
50,000 Harley-Davidson Inc. .. 2,322,820 2,376,500
15,000 Matsushita Electric
Industrial
Co. Ltd., ADR ...... 178,325 209,100
100,000 Mattel Inc. ........... 1,549,565 1,927,000
75,000 Maytag Corp. .......... 1,879,366 2,088,750
51,300 National Presto
Industries Inc. .... 1,808,866 1,854,495
10,700 Nintendo Co. Ltd. ..... 919,164 998,414
100,000 Procter & Gamble Co. .. 8,770,000 9,988,000
10,000 Swatch Group AG, Cl. B 584,263 1,200,728
-------------- --------------
56,390,488 65,509,213
-------------- --------------
WIRELESS COMMUNICATIONS -- 4.2%
90,000 America Movil SA de CV,
Cl. L, ADR ......... 2,343,582 2,460,600
600,000 AT&T Wireless
Services Inc.+ ..... 7,409,039 4,794,000
27,900 Leap Wireless
International Inc.+ 8,252 921
1,760,000 mm02 plc+ ............. 1,963,847 2,426,021
109,000 mm02 plc, ADR+ ........ 1,259,992 1,488,940
110,000 Nextel Communications Inc.,
Cl. A+ ............. 2,802,998 3,086,600
1,500 NTT DoCoMo Inc. ....... 3,553,937 3,401,138
195,000 Rogers Wireless
Communications Inc.,
Cl. B+ ............. 2,300,508 4,173,000
230,000 Sprint Corp. -
PCS Group+ ......... 533,587 1,292,600
16,700 Tele Celular Sul
Participacoes
SA, ADR ............ 266,992 239,645
55,666 Tele Centro Oeste Celular
Participacoes SA,
ADR+ ............... 166,868 548,310
3,340 Tele Leste Celular
Participacoes
SA, ADR+ ........... 89,340 46,326
8,350 Tele Nordeste Celular
Participacoes SA, ADR 123,227 233,299
3,340 Tele Norte Celular
Participacoes SA,
ADR+ ............... 51,601 36,473
1,400,000 Telecom Italia
Mobile SpA+ ........ 7,521,308 7,610,999
90,000 Telefonica Moviles SA+ 660,946 939,959
MARKET
SHARES COST VALUE
------ ------ ------
8,350 Telemig Celular
Participacoes
SA, ADR ............$ 241,320 $ 268,035
415,000 Telephone & Data
Systems Inc. ....... 34,755,725 25,958,250
66,800 Telesp Celular
Participacoes
SA, ADR+ ........... 2,135,936 439,544
20,000 United States
Cellular Corp.+ .... 626,250 710,000
553,888 Vodafone Group plc .... 975,799 1,373,292
100,000 Vodafone Group plc, ADR 2,378,590 2,504,000
-------------- --------------
72,169,644 64,031,952
-------------- --------------
CABLE -- 3.7%
1,520,000 Cablevision Systems Corp.,
Cl. A+ ............. 22,609,794 35,552,800
30,000 Charter Communications Inc.,
Cl. A+ ............. 138,876 120,600
420,000 Comcast Corp., Cl. A+ . 13,979,458 13,805,400
85,000 Comcast Corp., Cl. A,
Special+ ........... 756,584 2,658,800
20,000 Shaw Communications Inc.,
Cl. B .............. 52,983 312,169
80,000 Shaw Communications Inc.,
Cl. B, Non-Voting .. 329,198 1,241,600
360,000 UnitedGlobalCom Inc.,
Cl. A+ ............. 2,303,003 3,052,800
-------------- --------------
40,169,896 56,744,169
-------------- --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 3.4%
35,000 BorgWarner Inc. ....... 1,585,347 2,977,450
100,000 CLARCOR Inc. .......... 1,266,455 4,410,000
380,000 Dana Corp. ............ 6,140,866 6,973,000
40,000 Delphi Corp. .......... 594,773 408,400
260,000 GenCorp Inc. .......... 2,470,673 2,800,200
250,000 Genuine Parts Co. ..... 6,819,120 8,300,000
97,000 Johnson Controls Inc. . 7,847,300 11,263,640
115,000 Midas Inc.+ ........... 1,490,603 1,644,500
331,500 Modine Manufacturing
Co. ................ 8,839,589 8,943,870
75,000 Scheib (Earl) Inc.+ ... 619,805 183,750
163,000 Standard Motor
Products Inc. ...... 1,748,388 1,980,450
24,000 Superior Industries
International Inc. . 603,378 1,044,480
105,000 TransPro Inc.+ ........ 936,807 439,950
-------------- --------------
40,963,104 51,369,690
-------------- --------------
HEALTH CARE -- 2.8%
14,000 Abbott Laboratories ... 553,180 652,400
59,000 Amgen Inc.+ ........... 3,449,075 3,646,200
5,000 AstraZeneca plc, London 198,161 239,881
35,146 AstraZeneca plc,
Stockholm .......... 1,255,532 1,712,044
15,000 Aventis SA ............ 1,056,288 991,423
29,900 Biogen Idec Inc.+ ..... 181,025 1,099,722
135,000 Bristol-Myers
Squibb Co. ......... 3,547,915 3,861,000
75,036 GlaxoSmithKline plc ... 1,817,377 1,719,376
4,000 GlaxoSmithKline
plc, ADR ........... 216,096 186,480
18,000 Henry Schein Inc.+ .... 775,800 1,216,440
48,000 Invitrogen Corp.+ ..... 2,378,658 3,360,000
60,000 Merck & Co. Inc. ...... 3,079,701 2,772,000
41,000 Novartis AG ........... 1,292,180 1,861,451
108,000 Novartis AG, Registered 3,905,280 4,956,120
90,000 Pfizer Inc. ........... 2,512,582 3,179,700
18,100 Roche Holding AG ...... 1,644,615 1,825,733
20,000 Sanofi-Synthelabo SA .. 967,750 1,506,055
80,000 Schering-Plough Corp. . 1,589,838 1,391,200
1,000 Synthes-Stratec Inc. .. 677,094 989,691
See accompanying notes to financial statements.
6
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2003
MARKET
SHARES COST VALUE
------ ------ ------
COMMON STOCKS (CONTINUED)
HEALTH CARE (CONTINUED)
18,000 Takeda Chemical
Industries Ltd. ....$ 936,071 $ 713,819
70,000 Wyeth ................. 2,984,097 2,971,500
33,001 Zimmer Holdings Inc.+ . 1,402,872 2,323,256
-------------- --------------
36,421,187 43,175,491
-------------- --------------
HOTELS AND GAMING -- 2.7%
110,000 Aztar Corp.+ .......... 772,707 2,475,000
100,000 Boca Resorts Inc.,
Cl. A+ ............. 921,500 1,496,000
245,000 Gaylord Entertainment
Co.+ ............... 6,257,129 7,313,250
45,000 Greek Organization of
Football Prognostics 465,942 647,074
8,000 GTECH Holdings Corp. .. 69,219 395,920
2,510,000 Hilton Group plc ...... 8,418,704 10,098,678
650,000 Hilton Hotels Corp. ... 6,579,110 11,134,500
50,000 MGM Mirage+ ........... 1,298,240 1,880,500
430,000 Park Place
Entertainment Corp.+ 2,424,893 4,656,900
45,000 Starwood Hotels & Resorts
Worldwide Inc. ..... 963,235 1,618,650
-------------- --------------
28,170,679 41,716,472
-------------- --------------
CONSUMER SERVICES -- 2.1%
475,000 InterActiveCorp.+ ..... 11,476,194 16,116,750
40,000 Loewen Group Inc.+ .... 48,700 0
690,000 Rollins Inc. .......... 14,241,157 15,559,500
-------------- --------------
25,766,051 31,676,250
-------------- --------------
RETAIL -- 1.9%
195,000 Albertson's Inc. ...... 5,337,136 4,416,750
300,000 AutoNation Inc.+ ...... 3,354,597 5,511,000
75,000 Boots Group plc ....... 739,158 927,749
22,500 Coldwater Creek Inc.+ . 181,517 247,500
22,000 Ito-Yokado Co. Ltd. ... 749,555 691,798
10,000 Matsumotokiyoshi
Co. Ltd. ........... 291,926 224,410
10,000 Matsumotokiyoshi
Co. Ltd.
(W/I)+ ............. 291,926 224,410
323,500 Neiman Marcus Group Inc.,
Cl. B+ ............. 7,874,064 16,175,000
-------------- --------------
18,819,879 28,418,617
-------------- --------------
BROADCASTING -- 1.8%
16,666 Corus Entertainment Inc.,
Cl. B .............. 62,036 354,664
120,000 Gray Television Inc. .. 1,204,736 1,814,400
27,500 Gray Television Inc.,
Cl. A .............. 370,755 417,175
185,100 Grupo Televisa SA, ADR 6,385,024 7,378,086
200,000 Liberty Corp. ......... 8,528,905 9,038,000
15,000 Lin TV Corp., Cl. A+ .. 344,736 387,150
165,000 Mediaset SpA .......... 1,326,670 1,960,520
4,000 Nippon Broadcasting
System Inc. ........ 161,709 186,246
40,375 NRJ Group ............. 384,806 860,668
140,000 Paxson Communications
Corp.+ ............. 1,323,628 539,000
17,700 RTL Group ............. 775,136 1,044,854
420 SKY Perfect
Communications Inc.+ 317,218 493,795
100,000 Television Broadcasts
Ltd. ............... 396,239 504,920
115,000 Young Broadcasting Inc.,
Cl. A+ ............. 2,822,920 2,304,600
-------------- --------------
24,404,518 27,284,078
-------------- --------------
MARKET
SHARES COST VALUE
------ ------ ------
AEROSPACE -- 1.7%
110,000 Boeing Co. ............$ 3,680,633 $ 4,635,400
90,000 Lockheed Martin Corp. . 5,002,530 4,626,000
150,000 Northrop Grumman Corp. 14,243,999 14,340,000
100,000 Titan Corp.+ .......... 2,171,880 2,181,000
-------------- --------------
25,099,042 25,782,400
-------------- --------------
AVIATION: PARTS AND SERVICES -- 1.4%
204,640 Curtiss-Wright Corp.,
Cl. B .............. 5,637,891 9,188,336
100,000 Fairchild Corp., Cl. A+ 921,286 504,000
91,898 Precision Castparts
Corp. .............. 2,378,560 4,173,092
84,500 Sequa Corp., Cl. A+ ... 3,371,578 4,140,500
74,600 Sequa Corp., Cl. B+ ... 3,852,673 3,722,540
-------------- --------------
16,161,988 21,728,468
-------------- --------------
ELECTRONICS -- 1.2%
125,000 Agere Systems Inc.,
Cl. B+ ............. 362,157 362,500
3,000 Hitachi Ltd., ADR ..... 218,796 180,210
20,000 Molex Inc., Cl. A ..... 519,697 587,200
7,500 NEC Corp., ADR ........ 43,625 56,317
9,500 Rohm Co. Ltd. ......... 1,408,684 1,113,371
38,800 Royal Philips Electronics
NV, ADR ............ 53,456 1,128,692
45,000 Sony Corp., ADR ....... 1,340,589 1,560,150
240,000 Texas Instruments Inc. 5,860,035 7,051,200
250,000 Thomas & Betts Corp. .. 4,581,748 5,722,500
10,400 Tokyo Electron Ltd. ... 507,989 789,923
-------------- --------------
14,896,776 18,552,063
-------------- --------------
REAL ESTATE -- 1.0%
83,042 Catellus Development
Corp. .............. 1,619,777 2,002,973
70,000 Cheung Kong
(Holdings) Ltd. .... 815,521 556,765
100,000 Florida East Coast
Industries Inc.,
Cl. A .............. 1,458,643 3,310,000
55,000 Griffin Land &
Nurseries Inc.+ .... 513,143 781,605
245,000 St. Joe Co. ........... 1,817,919 9,136,050
-------------- --------------
6,225,003 15,787,393
-------------- --------------
AGRICULTURE -- 1.0%
20,000 AGCO Corp.+ ........... 350,026 402,800
1,000,000 Archer-Daniels-
Midland Co. ........ 13,091,460 15,220,000
5,000 Delta & Pine Land Co. . 84,396 127,000
-------------- --------------
13,525,882 15,749,800
-------------- --------------
SPECIALTY CHEMICALS -- 0.9%
5,400 Ciba Specialty Chemicals,
ADR ................ 14,912 209,196
8,000 du Pont de Nemours (E.I.)
and Co. ............ 262,000 367,120
330,000 Ferro Corp. ........... 6,975,503 8,979,300
40,000 Fuller (H.B.) Co. ..... 968,437 1,189,600
120,000 Hercules Inc.+ ........ 1,543,119 1,464,000
15,000 IVAX Corp.+ ........... 170,440 358,200
215,000 Omnova Solutions Inc.+ 1,788,690 1,032,000
10,000 Shin-Etsu Chemical
Co. Ltd. ........... 415,465 408,696
10,000 Syngenta AG, ADR ...... 18,940 134,800
-------------- --------------
12,157,506 14,142,912
-------------- --------------
COMMUNICATIONS EQUIPMENT -- 0.8%
230,000 Andrew Corp.+ ......... 2,513,371 2,647,300
500,000 Corning Inc.+ ......... 4,402,807 5,215,000
130,000 Lucent Technologies
Inc.+ .............. 800,828 369,200
140,000 Motorola Inc. ......... 1,803,785 1,969,800
100,000 Nortel Networks Corp.+ 686,285 423,000
44,000 Scientific-Atlanta Inc. 355,750 1,201,200
-------------- --------------
10,562,826 11,825,500
-------------- --------------
See accompanying notes to financial statements.
7
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2003
MARKET
SHARES COST VALUE
------ ------ ------
COMMON STOCKS (CONTINUED)
ENVIRONMENTAL SERVICES -- 0.7%
65,000 Republic Services Inc. $ 875,761 $ 1,665,950
300,000 Waste Management Inc. . 6,690,206 8,880,000
-------------- --------------
7,565,967 10,545,950
-------------- --------------
BUSINESS SERVICES -- 0.6%
60,000 ANC Rental Corp.+ ..... 578,273 6
160,000 Cendant Corp.+ ........ 3,192,685 3,563,200
1,000 CheckFree Corp.+ ...... 9,040 27,650
98,000 Landauer Inc. ......... 2,494,473 3,996,440
70,000 Nashua Corp.+ ......... 634,028 595,000
212,500 Securicor plc ......... 0 362,339
1,250 SGS Societe Generale de
Surveillance
Holding SA ......... 598,409 784,314
-------------- --------------
7,506,908 9,328,949
-------------- --------------
METALS AND MINING -- 0.6%
72,500 Harmony Gold Mining
Co. Ltd. ........... 347,738 1,178,464
35,000 Harmony Gold Mining Co.
Ltd., ADR .......... 282,733 568,050
130,000 Newmont Mining Corp. .. 2,977,871 6,319,300
50,000 Placer Dome Inc. ...... 487,169 895,500
-------------- --------------
4,095,511 8,961,314
-------------- --------------
AUTOMOTIVE -- 0.5%
15,000 Ford Motor Co. ........ 334,700 240,000
150,000 General Motors Corp. .. 4,903,032 8,010,000
-------------- --------------
5,237,732 8,250,000
-------------- --------------
PAPER AND FOREST PRODUCTS -- 0.4%
64,700 MeadWestvaco Corp. .... 1,813,944 1,924,825
150,000 Pactiv Corp.+ ......... 1,569,911 3,585,000
16,656 Rayonier Inc. ......... 531,510 691,391
-------------- --------------
3,915,365 6,201,216
-------------- --------------
BUILDING AND CONSTRUCTION -- 0.3%
25,000 Bouygues SA ........... 724,706 874,117
100,500 CRH plc ............... 1,259,458 2,059,946
32,222 Huttig Building
Products Inc.+ ..... 81,163 96,666
15,000 Martin Marietta
Materials Inc. ..... 322,687 704,550
40,000 Sekisui House Ltd. .... 389,946 413,175
-------------- --------------
2,777,960 4,148,454
-------------- --------------
CLOSED END FUNDS -- 0.2%
58,000 Central Europe and Russia
Fund Inc. .......... 722,985 1,331,680
20,000 France Growth
Fund Inc.+ ......... 184,353 149,600
70,000 New Germany Fund Inc. . 754,518 500,500
36,790 Royce Value Trust Inc. 448,512 636,103
-------------- --------------
2,110,368 2,617,883
-------------- --------------
COMPUTER SOFTWARE AND SERVICES -- 0.2%
5,000 Electronic Data
Systems Corp. ...... 69,661 122,700
130,000 EMC Corp.+ ............ 1,936,565 1,679,600
160 NIWS Co. Ltd. ......... 452,235 358,309
25,256 Telecom Italia
Media SpA+ ......... 26,868 12,552
-------------- --------------
2,485,329 2,173,161
-------------- --------------
TRANSPORTATION -- 0.1%
115,000 Amadeus Global Travel
Distribution SA,
Cl. A .............. 679,535 747,036
100,000 AMR Corp.+ ............ 1,924,248 1,295,000
15,000 Grupo TMM SA de CV,
Cl. A, ADR+ ........ 80,460 63,600
-------------- --------------
2,684,243 2,105,636
-------------- --------------
MARKET
SHARES COST VALUE
------ ------ ------
SATELLITE -- 0.2%
148,445 Hughes Electronics
Corp.+ .............$ 2,127,264 $ 2,456,761
50,000 Loral Space &
Communications Ltd.+ 11,250 15,750
-------------- --------------
2,138,514 2,472,511
-------------- --------------
TOTAL COMMON
STOCKS .............. 1,105,998,293 1,332,678,831
-------------- --------------
PREFERRED STOCKS -- 1.9%
PUBLISHING -- 1.5%
771,603 News Corp. Ltd.,
Pfd., ADR .......... 20,984,232 23,340,994
-------------- --------------
TELECOMMUNICATIONS -- 0.1%
26,000 Cincinnati Bell Inc.,
6.750% Cv. Pfd.,
Ser. B ............. 820,366 1,066,000
21,000 Citizens Communications Co.,
5.000% Cv. Pfd. .... 1,020,698 1,071,000
-------------- --------------
1,841,064 2,137,000
-------------- --------------
AEROSPACE -- 0.1%
14,021 Northrop Grumman Corp.,
7.000% Cv. Pfd.,
Ser. B ............. 1,633,727 1,749,120
-------------- --------------
BROADCASTING -- 0.1%
90 Gray Television Inc.,
8.000% Cv. Pfd.,
Ser. C (a) ......... 900,000 945,657
-------------- --------------
SPECIALTY CHEMICALS -- 0.1%
27,000 Hercules Trust I,
9.420% Pfd. ........ 553,660 688,500
-------------- --------------
AVIATION: PARTS AND SERVICES -- 0.0%
3,000 Sequa Corp.,
$5.00 Cv. Pfd. ..... 239,700 266,925
-------------- --------------
WIRELESS COMMUNICATIONS -- 0.0%
10,760,547 Telesp Celular Participacoes
SA, Pfd.+ .......... 82,623 28,235
-------------- --------------
TOTAL PREFERRED
STOCKS .............. 26,235,006 29,156,431
-------------- --------------
PRINCIPAL
AMOUNT
---------
CORPORATE BONDS -- 0.2%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.1%
$1,000,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ... 943,168 940,000
-------------- --------------
CABLE -- 0.1%
1,000,000 Charter Communications Inc., Cv.,
4.750%, 06/01/06 ... 675,823 890,000
-------------- --------------
AVIATION: PARTS AND SERVICES -- 0.0%
868,000 Kaman Corp., Sub. Deb. Cv.,
6.000%, 03/15/12 ... 825,281 859,320
-------------- --------------
ENERGY AND UTILITIES -- 0.0%
900,000 Mirant Corp., Sub. Deb. Cv.,
2.500%, 06/15/21+ (c) 685,613 553,500
-------------- --------------
TOTAL CORPORATE
BONDS ............... 3,129,885 3,242,820
-------------- --------------
See accompanying notes to financial statements.
8
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2003
MARKET
SHARES COST VALUE
------ ------ ------
RIGHTS -- 0.0%
EQUIPMENT AND SUPPLIES -- 0.0%
70,000 Fedders Corp.+ ........$ 0 $ 4,200
-------------- --------------
WARRANTS -- 0.0%
FOOD AND BEVERAGE -- 0.0%
62,463 Denny's Corp.,
expires 01/07/05+ .. 105,603 640
-------------- --------------
PRINCIPAL
AMOUNT
---------
U.S. GOVERNMENT OBLIGATIONS -- 6.5%
$99,000,000 U.S. Treasury Bills,
0.935%++, 01/02/04
to 02/19/04 (d) .... 98,992,563 98,992,563
-------------- --------------
REPURCHASE AGREEMENTS -- 3.9%
58,901,000 Agreement with State Street Bank
and Trust Co., 0.810%, dated
12/31/03, due 01/02/04,
proceeds at maturity,
$58,903,651 (b) .... 58,901,000 58,901,000
-------------- --------------
TOTAL INVESTMENTS-- 100.0% ........$1,293,362,350 $1,522,976,485
==============
LIABILITIES IN EXCESS OF OTHER ASSETS ............ (8,451,273)
PREFERRED STOCK
(9,607,200 preferred shares outstanding) ....... (420,000,000)
--------------
NET ASSETS -- COMMON STOCK
(137,189,884 common shares outstanding) ........ $1,094,525,212
==============
NET ASSET VALUE PER COMMON SHARE
($1,094,525,212 (DIVIDE)
137,189,884 shares outstanding) ............... $7.98
=====
---------------
For Federal tax purposes:
Aggregate cost ...................... $1,300,268,903
==============
Gross unrealized appreciation ....... $ 295,739,176
Gross unrealized depreciation ....... (73,031,594)
--------------
Net unrealized appreciation ......... $ 222,707,582
==============
---------------
(a) Security fair valued under procedures established by the Board of
Directors. At December 31, 2003, the market value of fair valued
securities amounted to $945,657 or 0.06% of total investments.
(b) Collateralized by U.S. Treasury Notes, 1.750%, due 12/31/04, market
value $60,086,022.
(c) Bond in default.
(d) Partially segregated as collateral for when issued security.
+ Non-income producing security.
ADR - American Depository Receipt.
BDR - Brazilian Depository Receipt.
CVO - Contingent Value Obligation.
RNC - Non-Convertible Savings Shares.
USD - U.S. Dollars.
W/I - When Issued.
++ Represents annualized yield at date of purchase.
% OF
MARKET MARKET
VALUE VALUE
------ ------
GEOGRAPHIC DIVERSIFICATION
United States ......................... 82.9% $1,262,650,203
Europe ................................ 11.6 175,405,729
Asia/Pacific .......................... 2.9 43,731,733
Latin America ......................... 1.4 22,048,479
Canada ................................ 1.1 17,393,827
South Africa .......................... 0.1 1,746,514
----- --------------
Total Investments ..................... 100.0% $1,522,976,485
===== ==============
See accompanying notes to financial statements.
9
THE GABELLI EQUITY TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003
ASSETS:
Investments, at value (cost $1,293,362,350) ................ $1,522,976,485
Cash and foreign currency, at value (cost $392,656) ........ 438,602
Dividends and interest receivable .......................... 1,845,509
Receivable for investments sold ............................ 1,773,148
Other assets ............................................... 60,345
--------------
TOTAL ASSETS ............................................... 1,527,094,089
--------------
LIABILITIES:
Dividends payable .......................................... 291,785
Unrealized depreciation on swap contracts .................. 7,197,704
Payable for investment advisory fees ....................... 4,122,083
Interest payable on swap contract .......................... 360,100
Payable for shareholder communication fees ................. 224,798
Payable to custodian ....................................... 28,541
Payable for offering expenses .............................. 186,124
Other accrued expenses and liabilities ..................... 157,742
--------------
TOTAL LIABILITIES .......................................... 12,568,877
--------------
PREFERRED STOCK:
Series B Cumulative Preferred Stock (7.20%,
$25 liquidation value, $0.001 par
value, 6,600,000 shares authorized
with 6,600,000 shares issued and
outstanding) ............................................. 165,000,000
Series C Cumulative Preferred Stock
(Auction Rate, $25,000 liquidation value,
$0.001 par value, 5,200 shares authorized
with 5,200 shares issued and outstanding) .............. 130,000,000
Series D Cumulative Preferred Stock (5.875%,
$25 liquidation value, $0.001 par
value, 3,000,000 shares authorized
with 3,000,000 shares issued and
outstanding) ............................................. 75,000,000
Series E Cumulative Preferred Stock (Auction Rate,
$25,000 liquidation value, $0.001 par value,
2,000 shares authorized with 2,000 shares
issued and outstanding) .................................. 50,000,000
--------------
TOTAL PREFERRED STOCK ...................................... 420,000,000
--------------
NET ASSETS ATTRIBUTABLE TO COMMON
STOCK SHAREHOLDERS ....................................... $1,094,525,212
==============
NET ASSETS ATTRIBUTABLE TO COMMON STOCK
SHAREHOLDERS CONSIST OF:
Capital stock, at par value ................................ $ 137,190
Additional paid-in capital ................................. 879,075,214
Accumulated distributions in excess of net
investment income ........................................ (263,701)
Accumulated distributions in excess of net realized
gain on investments, futures contracts
and foreign currency transactions ........................ (6,934,637)
Net unrealized appreciation on investments, swap
contracts and foreign currency transactions .............. 222,511,146
--------------
TOTAL NET ASSETS ........................................... $1,094,525,212
==============
NET ASSET VALUE PER COMMON SHARE
($1,094,525,212 / 137,189,884 shares outstanding;
182,000,000 shares authorized of $0.001 par value) ......... $7.98
=====
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
INVESTMENT INCOME:
Dividends (net of foreign taxes of $437,295) ................ $ 19,232,727
Interest .................................................... 1,759,509
------------
TOTAL INVESTMENT INCOME ..................................... 20,992,236
------------
EXPENSES:
Investment advisory fees .................................... 12,895,377
Interest expense on swap contracts (Note 2) ................. 4,302,270
Shareholder communications expenses ......................... 702,936
Custodian fees .............................................. 176,109
Directors' fees ............................................. 138,681
Legal and audit fees ........................................ 130,996
Shareholder services fees ................................... 124,565
Payroll ..................................................... 187,625
Miscellaneous expenses ...................................... 497,921
------------
TOTAL EXPENSES .............................................. 19,156,480
------------
NET INVESTMENT INCOME ....................................... 1,835,756
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FUTURES CONTRACTS, SWAP
CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments .......................... 114,488,294
Net realized gain on foreign currency transactions ....... 40,605
Net realized loss on futures contracts ................ (5,099,573)
------------
Net realized gain on investments, futures contracts
and foreign currency transactions ......................... 109,429,326
------------
Net change in unrealized appreciation/depreciation
on investments, swap contracts and foreign
currency transactions ..................................... 234,044,532
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS, FUTURES CONTRACTS, SWAP
CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS ............... 343,473,858
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................................... 345,309,614
------------
Total Distributions to Preferred Stock Shareholders ......... (19,173,715)
------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO
COMMON STOCK SHAREHOLDERS
RESULTING FROM OPERATIONS ................................. $326,135,899
============
See accompanying notes to financial statements.
10
THE GABELLI EQUITY TRUST INC.
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
----------------- ------------------
OPERATIONS:
Net investment income ......................................................... $ 1,835,756 $ 8,044,586
Net realized gain on investments, futures contracts and foreign
currency transactions ....................................................... 109,429,326 135,274,932
Net change in unrealized appreciation/depreciation on investments,
swap contracts and foreign currency transactions ............................ 234,044,532 (348,434,576)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............... 345,309,614 (205,115,058)
-------------- --------------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income ......................................................... (320,420) (1,241,220)
Net realized short-term gain on investments, futures contracts
and foreign currency transactions ........................................... (1,248,028) (375,336)
Net realized long-term gains on investments, futures contracts
and foreign currency transactions ........................................... (17,605,267) (21,209,095)
-------------- --------------
TOTAL DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS ........................... (19,173,715) (22,825,651)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO COMMON STOCK
SHAREHOLDERS RESULTING FROM OPERATIONS ...................................... 326,135,899 (227,940,709)
-------------- --------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income ......................................................... (1,408,135) (6,579,486)
Net realized short-term gain on investments, futures contracts and
foreign currency transactions ............................................... (6,188,838) (2,051,189)
Net realized long-term gains on investments, futures contracts and
foreign currency transactions ............................................... (85,161,394) (115,905,914)
Return of capital ............................................................. (558,040) (218,677)
-------------- --------------
TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS .............................. (93,316,407) (124,755,266)
-------------- --------------
TRUST SHARE TRANSACTIONS:
Net increase in net assets from common shares issued upon reinvestment
of dividends and distributions .............................................. 22,608,759 30,727,869
Offering costs for preferred shares charged to paid-in capital ................ (3,305,944) (1,800,000)
-------------- --------------
NET INCREASE IN NET ASSETS FROM TRUST SHARE TRANSACTIONS ...................... 19,302,815 28,927,869
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO COMMON
STOCK SHAREHOLDERS .......................................................... 252,122,307 (323,768,106)
NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS:
Beginning of period ........................................................... 842,402,905 1,166,171,011
-------------- --------------
End of period ................................................................. $1,094,525,212 $ 842,402,905
============== ==============
See accompanying notes to financial statements.
11
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. The Gabelli Equity Trust Inc. (the "Equity Trust") is a
closed-end, non-diversified management investment company organized as a
Maryland corporation on May 20, 1986 and registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), whose primary objective is long-term
growth of capital. The Equity Trust had no operations until August 11, 1986,
when it sold 10,696 shares of common stock to Gabelli Funds, LLC (the "Adviser")
for $100,008. Investment operations commenced on August 21, 1986.
Effective August 1, 2002, the Equity Trust modified its non-fundamental
investment policy to increase, from 65% to 80%, the portion of its assets that
it will invest, under normal market conditions in equity securities (the "80%
Policy"). The 80% Policy may be changed without shareholder approval. However,
the Equity Trust has adopted a policy to provide shareholders with at least 60
days' notice of the implementation of any change in the 80% Policy.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Equity Trust in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange or traded in the U.S. over-the-counter market for
which market quotations are readily available are valued at the last quoted sale
price or a market's official closing price as of the close of business on the
day the securities are being valued. If there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day. If no bid or asked prices are quoted on such
day, the security is valued at the most recently available price or, if the
Board of Directors so determines, by such other method as the Board of Directors
shall determine in good faith, to reflect its fair market value. Portfolio
securities traded on more than one national securities exchange or market are
valued according to the broadest and most representative market, as determined
by Gabelli Funds, LLC (the "Adviser"). Portfolio securities primarily traded in
foreign markets are generally valued at the preceding closing values of such
securities on their respective exchanges or markets. Securities and assets for
which market quotations are not readily available are valued at their fair value
as determined in good faith under procedures established by and under the
general supervision of the Board of Directors. Short term debt securities with
remaining maturities of 60 days or less are valued at amortized cost, unless the
Board of Directors determines such does not reflect the securities fair value,
in which case these securities will be valued at their fair value as determined
by the Board of Directors. Debt instruments having a maturity greater than 60
days for which market quotations are readily available are valued at the latest
average of the bid and asked prices. If there were no asked prices quoted on
such day, the security is valued using the closing bid price on that day.
Options are valued at the last sale price on the exchange on which they are
listed. If no sales of such options have taken place that day, they will be
valued at the mean between their closing bid and asked prices.
REPURCHASE AGREEMENTS. The Equity Trust may enter into repurchase
agreements with primary government securities dealers recognized by the Federal
Reserve Bank of New York, with member banks of the Federal Reserve System or
with other brokers or dealers that meet credit guidelines established by the
Adviser and reviewed by the Board of Directors. Under the terms of a typical
repurchase agreement, the Equity Trust takes possession of an underlying debt
obligation subject to an obligation of the seller to repurchase, and the Equity
Trust to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Equity Trust's holding period. The Equity Trust
will always receive and maintain securities as collateral whose market value,
including accrued interest, will be at least equal to 102% of the dollar amount
invested by the Equity Trust in each agreement. The Equity Trust will make
payment for such securities only upon physical delivery or upon evidence of book
entry transfer of the collateral to the account of the custodian. To the extent
that any repurchase transaction exceeds one business day, the value of the
collateral is marked-to-market on a daily basis to maintain the adequacy of the
collateral. If the seller defaults and the value of the collateral declines or
if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Equity Trust may be delayed or
limited.
SWAP AGREEMENTS. The Equity Trust may enter into interest rate swap or cap
transactions. The use of interest rate swaps and caps is a highly specialized
activity that involves investment techniques and risks different from those
associated with ordinary portfolio security transactions. In an interest rate
swap, the Equity Trust would agree to pay to the other party to the interest
rate swap (which is known as the "counterparty") periodically a fixed rate
payment in exchange for the counterparty agreeing to pay to the Equity Trust
periodically a variable rate payment that is intended to approximate the Equity
Trust's variable rate payment obligation on the Series C Preferred Stock. In an
interest rate cap, the Equity Trust would pay a premium to the interest rate cap
to the counterparty and, to the extent that a specified variable rate index
exceeds a predetermined fixed rate, would receive from the counterparty payments
of the difference based on the notional amount of such cap. Interest rate swap
and cap transactions introduce additional risk because the Equity Trust would
remain obligated to pay preferred stock dividends when due in accordance with
the Articles Supplementary even if the counterparty defaulted. Depending on the
general state of short-term interest rates and the returns
12
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
on the Equity Trust's portfolio securities at that point in time, such a default
could negatively affect the Equity Trust's ability to make dividend payments for
the Series C Preferred Stock. In addition, at the time an interest rate swap or
cap transaction reaches its scheduled termination date, there is a risk that the
Equity Trust will not be able to obtain a replacement transaction or that the
terms of the replacement will not be as favorable as on the expiring
transaction. If this occurs, it could have a negative impact on the Equity
Trust's ability to make dividend payments on the Series C Preferred Stock.
The Trust has entered into one interest rate swap agreement with Citibank
N.A. Under the agreement the Trust receives a floating rate of interest and pays
a respective fixed rate of interest on the nominal value of the swap. Details of
the swap at December 31, 2003 are as follows:
NOTIONAL FLOATING RATE* TERMINATION UNREALIZED
AMOUNT FIXED RATE (RATE RESET MONTHLY) DATE DEPRECIATION
---------- ----------- -------------------- ------------ ------------
$130,000,000 4.494% 1.17% July 2, 2007 $(7,197,704)
------------------
*Based on Libor (London Interbank Offered Rate).
FUTURES CONTRACTS. The Equity Trust may engage in futures contracts for the
purpose of hedging against changes in the value of its portfolio securities and
in the value of securities it intends to purchase. Such investments will only be
made if they are economically appropriate to the reduction of risks involved in
the management of the Equity Trust's investments. Upon entering into a futures
contract, the Equity Trust is required to deposit with the broker an amount of
cash or cash equivalents equal to a certain percentage of the contract amount.
This is known as the "initial margin." Subsequent payments ("variation margin")
are made or received by the Equity Trust each day, depending on the daily
fluctuation of the value of the contract. The daily changes in the contract are
included in unrealized appreciation/depreciation on investments and futures
contracts. The Equity Trust recognizes a realized gain or loss when the contract
is closed. There were no open futures contracts at December 31, 2003.
There are several risks in connection with the use of futures contracts as
a hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk the
Equity Trust may not be able to enter into a closing transaction because of an
illiquid secondary market.
FOREIGN CURRENCY TRANSACTION. The books and records of the Equity Trust are
maintained in United States (U.S.) dollars. Foreign currencies, investments and
other assets and liabilities are translated into U.S. dollars at the exchange
rates prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated at the exchange rate prevailing
on the respective dates of such transactions. Unrealized gains and losses, which
result from changes in foreign exchange rates and/or changes in market prices of
securities, have been included in unrealized appreciation/depreciation on
investments and foreign currency transactions. Net realized foreign currency
gains and losses resulting from changes in exchange rates include foreign
currency gains and losses between trade date and settlement date on investment
securities transactions, foreign currency transactions and the difference
between the amounts of interest and dividends recorded on the books of the
Equity Trust and the amounts actually received. The portion of foreign currency
gains and losses related to fluctuation in exchange rates between the initial
trade date and subsequent sale trade date is included in realized gain/(loss) on
investments.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for as of the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders
are recorded on the ex-dividend date. Distributions to shareholders of the
Equity Trust's 7.25% Tax Advantaged Series A Cumulative Preferred Stock, 7.20%
Tax Advantaged Series B Cumulative Preferred Stock, Series C Auction Rate
Cumulative Preferred Stock, 5.875% Series D Cumulative Preferred Stock, and
Series E Auction Rate Cumulative Preferred Stock ("Cumulative Preferred Stock")
are accrued on a daily basis and are determined as described in Note 5.
Income dividends and capital gain distributions are determined in
accordance with Federal income tax regulations which may differ from accounting
principles generally accepted in the United States. These differences are
primarily due to differing treatments of income and gains on various investment
securities held by the Equity Trust, timing differences and differing
characterization of distributions made by the Equity Trust.
For the year ended December 31, 2003, reclassifications were made to
increase accumulated distributions in excess of net investment income for
$35,924 and decrease accumulated distributions in excess of net realized gain on
investments, options, future contracts and foreign currency transactions for
$35,924 with an offsetting adjustment to additional paid-in capital.
13
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The tax character of distributions paid during the fiscal year ended
December 31, 2003 and December 31, 2002 were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
-------------------------------- ---------------------------------
COMMON PREFERRED COMMON PREFERRED
----------- ----------- ------------- -----------
DISTRIBUTIONS PAID FROM:
Ordinary income
(Inclusive of short term capital gain) .. $ 7,596,973 $ 1,568,448 $ 8,877,226 $ 1,616,556
Net long term capital gain ................ 85,161,394 17,605,267 115,659,363 21,209,095
Non-taxable return of capital ............. 558,040 -- 218,677 --
----------- ----------- ------------ -----------
Total distribution paid ................... $93,316,407 $19,173,715 $124,755,266 $22,825,651
=========== =========== ============ ===========
PROVISION FOR INCOME TAXES. The Equity Trust intends to continue to qualify
as a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended. It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its net investment company
taxable income and net capital gains. Therefore, no provision for Federal income
taxes is required.
As of December 31, 2003, the components of accumulated earnings/(losses) on
a tax basis were as follows:
Net unrealized appreciation on investments ................ $222,707,582
Net unrealized depreciation on foreign currency
transactions and interest rate swaps .................... (7,102,989)
Other ..................................................... (291,785)
------------
Total accumulated gain .................................... $215,312,808
============
Other is primarily due to dividends payable on preferred stock at December
31, 2003.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. The Equity Trust has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Equity Trust will pay the Adviser a fee,
computed weekly and paid monthly, equal on an annual basis to 1.00% of the value
of the Equity Trust's average weekly net assets plus liquidation value of
preferred stock. In accordance with the Advisory Agreement, the Adviser provides
a continuous investment program for the Equity Trust's portfolio and oversees
the administration of all aspects of the Equity Trust's business and affairs.
The Adviser has agreed to reduce the management fee on the incremental assets
attributable to the Cumulative Preferred Stock if the total return of the net
asset value of the common shares of the Equity Trust, including distributions
and advisory fee subject to reduction, does not exceed the stated dividend rate
or corresponding swap rate of the Cumulative Preferred Stock.
The Trust's total return on the net asset value of the common shares is
monitored on a monthly basis to assess whether the total return on the net asset
value of the common shares exceeds the stated dividend rate of the Cumulative
Preferred Stock for the period. For the year ended December 31, 2003, the
Trust's total return on the net asset value of the common shares exceeded the
stated dividend rates and net swap expense of all outstanding preferred stock.
Thus, management fees were earned on these assets.
During the year ended December 31, 2003, Gabelli & Company, Inc. received
$426,924 in brokerage commissions as a result of executing agency transactions
in portfolio securities on behalf of the Equity Trust.
The cost of calculating the Trust's net asset value per share is a Trust
expense pursuant to the Investment Advisory Agreement between the Trust and the
Adviser. During fiscal 2003, the Gabelli Equity Trust reimbursed the Adviser
$34,800 in connection with the cost of computing the Trust's net asset value.
4. PORTFOLIO SECURITIES. Cost of purchases and proceeds from sales of
securities, other than short-term securities, for the year ended December 31,
2003 aggregated $230,599,247 and $332,248,556, respectively.
5. CAPITAL. The charter permits the Equity Trust to issue 182,000,000 shares of
common stock (par value $0.001). The Board of Directors of the Equity Trust has
authorized the repurchase of its shares on the open market when the shares are
trading at a discount of 10% or more (or such other percentage as the Board of
Directors may determine from time to time) from the net asset value of the
shares. During the year ended December 31, 2003, the Equity Trust did not
repurchase any shares of its common stock in the open market.
Transactions in common stock were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
-------------------------------- ---------------------------------
Shares Amount Shares Amount
----------- ----------- ------------- -----------
Shares issued upon reinvestment
of dividends and distributions .................. 3,129,917 $22,608,759 3,992,168 $30,727,869
--------- ----------- --------- -----------
Net increase ...................................... 3,129,917 $22,608,759 3,992,168 $30,727,869
========= =========== ========= ===========
14
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The holders of Cumulative Preferred Stock have voting rights equivalent to
those of the holders of common stock (one vote per share) and will vote together
with holders of shares of common stock as a single class. In addition, the 1940
Act requires that along with approval of a majority of the holders of common
stock, approval of a majority of the holders of any outstanding shares of
Cumulative Preferred Stock, voting separately as a class, would be required to
(a) adopt any plan of reorganization that would adversely affect the Cumulative
Preferred Stock, and (b) take any action requiring a vote of security holders,
including, among other things, changes in the Trust's subclassification as a
closed-end investment company or changes in its fundamental investment
restrictions. The Equity Trust's Articles of Incorporation, as amended,
authorize the issuance of up to 16,006,000 shares of $0.001 par value Cumulative
Preferred Stock. The Cumulative Preferred Stock is senior to the common stock
and results in the financial leveraging of the common stock. Such leveraging
tends to magnify both the risks and opportunities to common shareholders.
Dividends on shares of the Cumulative Preferred Stock are cumulative. The Equity
Trust is required to meet certain asset coverage tests as required by the 1940
Act and by the Shares' Articles Supplementary with respect to the Cumulative
Preferred Stock. If the Equity Trust fails to meet these requirements and does
not correct such failure, the Equity Trust may be required to redeem, in part or
in full, the 7.20% Series B, Series C Auction Rate, 5.875% Series D, and Series
E Auction Rate Cumulative Preferred Stock at a redemption price of $25, $25,000,
$25, and $25,000, respectively, per share plus an amount equal to the
accumulated and unpaid dividends whether or not declared on such shares in order
to meet these requirements. Additionally, failure to meet the foregoing asset
requirements could restrict the Equity Trust's ability to pay dividends to
common shareholders and could lead to sales of portfolio securities at
inopportune times. The income received on the Equity Trust's assets may vary in
a manner unrelated to the fixed and variable rates, which could have either a
beneficial or detrimental impact on net investment income and gains available to
common shareholders.
Under Emerging Issues Task Force (EITF) promulgating Topic D-98,
CLASSIFICATION AND MEASUREMENT OF REDEEMABLE SECURITIES, which was issued on
July 19, 2001, preferred securities that are redeemable for cash or other assets
are to be classified outside of permanent equity to the extent that the
redemption is at a fixed or determinable price and at the option of the holder
or upon the occurrence of an event that is not solely within the control of the
issuer. In accordance with the guidance of the EITF, the Equity Trust's
Cumulative Preferred Stock is classified outside of permanent equity (net assets
attributable to common stock shareholders) in the accompanying financial
statements.
The Equity Trust, as authorized by the Board of Directors, redeemed all
(5,367,900 shares) of its outstanding 7.25% Series A Cumulative
Preferred Stock. The redemption date was June 17, 2003 and the redemption price
was $25.4078 per Preferred Share, which consisted of $25.00 per Preferred Share
(the "liquidation value") plus accrued dividends through the redemption date of
$0.4078 per Preferred Share. The Preferred Shares were callable at any time at
the liquidation value of $25.00 per share plus accrued dividends following the
expiration of the five-year call protection on June 9, 2003.
On June 27, 2002, the Equity Trust received net proceeds of $128,246,557
(after underwriting discounts of $1,300,000 and offering expenses of $453,443)
from the public offering of 5,200 shares of Series C Auction Rate Cumulative
Preferred Stock. The dividend rate, as set by the auction process, which is
generally held every 7 days, is expected to vary with short-term interest rates.
The Rates of Series C Auction Rate Cumulative Preferred Stock ranged from 1.08%
to 1.68% for the year ended December 31, 2003. Existing shareholders may submit
an order to hold, bid or sell such shares on each auction date. Series C Auction
Rate Cumulative Preferred Stock shareholders may also trade shares in the
secondary market. The Equity Trust, at its option, may redeem the Series C
Auction Rate Cumulative Preferred Stock in whole or in part at the redemption
price at any time. During the year ended December 31, 2003, the Equity Trust did
not repurchase any shares of Series C Auction Rate Cumulative Preferred Stock.
At December 31, 2003, 5,200 shares of the Series C Auction Rate Cumulative
Preferred Stock were outstanding at the annual rate of 1.53 percent and accrued
dividends amounted to $5,525.
On October 7, 2003, the Equity Trust received net proceeds of $72,387,500
(after underwriting discounts of $2,362,500 and estimated offering expenses of
$250,000) from the public offering of 3,000,000 shares of 5.875% Series D
Cumulative Preferred Stock. Commencing October 7, 2008 and thereafter, the
Equity Trust, at its option, may redeem the 5.875% Series D Cumulative Preferred
Stock in whole or in part at the redemption price. During the year ended
December 31, 2003, the Equity Trust did not repurchase any shares of 5.875%
Series D Cumulative Preferred Stock. At December 31, 2003, 3,000,000 shares of
the 5.875% Series D Cumulative Preferred Stock were outstanding at the fixed
rate of 5.875 percent and accrued dividends amounted to $73,438.
On October 7, 2003, the Equity Trust received net proceeds of $49,260,000
(after underwriting discounts of $500,000 and estimated offering expenses of
$240,000) from the public offering of 2,000 shares of Series E Auction Rate
Cumulative Preferred Stock. The dividend rate, as set by the auction process,
which is generally held every 7 days, is expected to vary with short-term
interest rates. The Rates of Series E Auction Rate Cumulative Preferred Stock
ranged from 1.10% to 1.47% from October 7, 2003 to December 31, 2003. Existing
shareholders may submit an order to hold, bid or sell such shares on each
auction date. Series E Auction Rate Cumulative Preferred Stock shareholders may
also trade shares in the secondary market. The Equity Trust, at its option, may
redeem the Series E Auction Rate Cumulative Preferred Stock in whole or in part
at the redemption price at any time. During the year ended December 31, 2003,
the Equity Trust did not repurchase any shares of Series E Auction Rate
Cumulative Preferred Stock. At December 31, 2003, 2,000 shares of the Series E
Auction Rate Cumulative Preferred Stock were outstanding at the annual rate of
1.47 percent and accrued dividends amounted to $12,250.
6. OTHER MATTERS. On October 7, 2003, the Equity Trust's Adviser received a
subpoena from the Attorney General of the State of New York requesting
information on mutual fund shares trading practices. The Adviser is fully
cooperating in responding to the request. The Equity Trust does not believe that
this matter will have a material adverse effect on the Equity Trust's financial
position or results of the operations.
15
THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR AN EQUITY TRUST COMMON SHARE OUTSTANDING THROUGHOUT EACH
PERIOD:
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
OPERATING PERFORMANCE: 2003(A) 2002(A) 2001(A) 2000(A) 1999(A)
---------- ---------- ---------- ---------- -----------
Net asset value, beginning of period .................. $ 6.28 $ 8.97 $ 10.89 $ 12.75 $ 11.47
---------- ---------- ---------- ---------- -----------
Net investment income ................................. 0.01 0.06 0.08 0.05 0.04
Net realized and unrealized gain (loss)
on investments ...................................... 2.53 (1.64) (0.16) (0.51) 3.25
---------- ---------- ---------- ---------- -----------
Total from investment operations ...................... 2.54 (1.58) (0.08) (0.46) 3.29
---------- ---------- ---------- ---------- -----------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income ................................. (0.00)(c) (0.01) (0.01) (0.00)(c) (0.00)(c)
Net realized gain on investments ...................... (0.14) (0.16) (0.11) (0.09) (0.09)
---------- ---------- ---------- ---------- -----------
Total distributions to preferred stock shareholders ... (0.14) (0.17) (0.12) (0.09) (0.09)
---------- ---------- ---------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE
TO COMMON STOCK SHAREHOLDERS RESULTING
FROM OPERATIONS ..................................... 2.40 (1.75) (0.20) (0.55) 3.20
---------- ---------- ---------- ---------- -----------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income ................................. (0.01) (0.05) (0.06) (0.04) (0.03)(b)
Net realized gain on investments ...................... (0.68) (0.90) (1.02) (1.27) (1.21)(b)
Return of capital ..................................... (0.00)(c) (0.00)(c) -- -- (0.68)(b)
---------- ---------- ---------- ---------- -----------
Total distributions to common stock shareholders ...... (0.69) (0.95) (1.08) (1.31) (1.92)
---------- ---------- ---------- ---------- -----------
CAPITAL SHARE TRANSACTIONS:
Increase in net asset value from common stock
share transactions .................................. 0.01 0.02 0.03 -- --
Decrease in net asset value from shares issued
in rights offering .................................. -- -- (0.62) -- --
Offering costs for preferred shares charged to
paid-in capital ..................................... (0.02) (0.01) (0.05) -- --
---------- ---------- ---------- ---------- -----------
Total capital share transactions ...................... (0.01) 0.01 (0.64) -- --
---------- ---------- ---------- ---------- -----------
NET ASSET VALUE ATTRIBUTABLE TO COMMON STOCK
SHAREHOLDERS, END OF PERIOD ......................... $ 7.98 $ 6.28 $ 8.97 $ 10.89 $ 12.75
========== ========== ========== ========== ===========
Net asset value total return + ........................ 39.90% (21.00)% (3.68)% (4.39)% 29.49%
========== ========== ========== ========== ===========
Market value, end of period ........................... $ 8.00 $ 6.85 $ 10.79 $ 11.44 $ 12.56
========== ========== ========== ========== ===========
Total investment return ++ ............................ 28.58% (28.36)% 10.32% 1.91% 26.57%
========== ========== ========== ========== ===========
RATIOS AND SUPPLEMENTAL DATA:
Net assets including liquidation value of
preferred shares, end of period (in 000's) .......... $1,514,525 $1,271,600 $1,465,369 $1,318,263 $ 1,503,641
Net assets attributable to common shares,
end of period (in 000's) ............................ $1,094,525 $ 842,403 $1,166,171 $1,184,041 $ 1,368,981
Ratio of net investment income to average net assets
attributable to common shares ....................... 0.20% 0.81% 0.81% 0.42% 0.34%
Ratio of operating expenses to average net assets
attributable to common shares (e)(g) ................ 2.09% 1.37% 1.12% 1.14% 1.27%
Ratio of operating expenses to average total
net assets including liquidation value of
preferred shares (e)(g) ............................. 1.47% 1.00% 0.95% 1.03% 1.15%
Portfolio turnover rate ............................... 19.2% 27.1% 23.9% 32.1% 38.0%
PREFERRED STOCK:
7.25% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ........... -- $ 134,198 $ 134,198 $ 134,223 $ 134,660
Total shares outstanding (in 000's) ................... -- 5,368 5,368 5,369 5,386
Liquidation preference per share ...................... -- $ 25.00 $ 25.00 $ 25.00 $ 25.00
Average market value (d) .............................. -- $ 25.75 $ 25.39 $ 22.62 $ 24.43
Asset coverage per share .............................. -- $ 74.07 $ 122.44 $ 245.54 $ 279.16
7.20% SERIES B CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ........... $ 165,000 $ 165,000 $ 165,000 -- --
Total shares outstanding (in 000's) ................... 6,600 6,600 6,600 -- --
Liquidation preference per share ...................... $ 25.00 $ 25.00 $ 25.00 -- --
Average market value (d) .............................. $ 27.06 $ 26.40 $ 25.60 -- --
Asset coverage per share .............................. $ 90.15 $ 74.07 $ 122.44 -- --
AUCTION RATE SERIES C CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ........... $ 130,000 $ 130,000 -- -- --
Total shares outstanding (in 000's) ................... 5 5 -- -- --
Liquidation preference per share ...................... $ 25,000 $ 25,000 -- -- --
Average market value (d) .............................. $ 25,000 $ 25,000 -- -- --
Asset coverage per share $ 90,150 $ 74,068 -- -- --
5.875% SERIES D CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ........... $ 75,000 -- -- -- --
Total shares outstanding (in 000's) 3,000 -- -- -- --
Liquidation preference per share ...................... $ 25.00 -- -- -- --
Average market value (d) .............................. $ 25.10 -- -- -- --
Asset coverage per share .............................. $ 90.15 -- -- -- --
AUCTION RATE SERIES E CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ........... $ 50,000 -- -- -- --
Total shares outstanding (in 000's) 2 -- -- -- --
Liquidation preference per share ...................... $ 25,000 -- -- -- --
Average market value (d) .............................. $ 25,000 -- -- -- --
Asset coverage per share .............................. $ 90,150 -- -- -- --
ASSET COVERAGE (f) .................................... 361% 296% 490% 982% 1,117%
--------------------------
+ Based on net asset value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to rights
offering, assuming full subscription by shareholder.
++ Based on market value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to rights
offering, assuming full subscription by shareholder.
(a) Per share amounts have been calculated using the monthly average shares
outstanding method.
(b) A distribution equivalent to $0.75 per share for The Gabelli Utility Trust
spin-off from net investment income, realized short-term gains, realized
long-term gains, and paid-in-capital were $0.01029, $0.07453, $0.34218 and
$0.32300, respectively.
(c) Amount represents less than $0.005 per share.
(d) Based on weekly prices.
(e) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. Including such custodian
fee credits for the years ended 2002, 2001 and 2000, the ratios of
operating expenses to average net assets attributable to common stock would
be 1.37%, 1.11%, and 1.14%, respectively, and the ratios of operating
expenses to average total net assets including liquidation value of
preferred shares would be 1.00%, 0.94% and 1.03%, respectively.
(f) Asset coverage is calculated by combining all series of preferred stock.
(g) The Trust incurred interest expense during the periods ended December 31,
2003 and 2002. If interest expense had not been incurred, the ratio of
operating expenses to average net assets attributable to common stock would
be 1.62% and 1.19%, respectively, and the ratio of operating expenses to
average total net assets including liquidation value of preferred shares
would be 1.14% and 0.87%, respectively.
See accompanying notes to financial statements.
16
THE GABELLI EQUITY TRUST INC.
REPORT OF INDEPENDENT AUDITORS
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 portfolio 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. (the
"Trust") at December 31, 2003, 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 auditing standards generally accepted in
the United States of America, which 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, 2003 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 20, 2004
17
THE GABELLI EQUITY TRUST INC.
ADDITIONAL FUND INFORMATION (UNAUDITED)
The business and affairs of the Trust are managed under the direction of
the Trust's Board of Directors. Information pertaining to the Directors and
officers of the Trust is set forth below. The Trust's Statement of Additional
Information includes additional information about The Gabelli Equity Trust Inc.
Directors 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.
TERM OF NUMBER OF
OFFICE AND FUNDS IN FUND
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED 2 DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR
---------------- --------- ------------- --------------------- -------------------
INTERESTED DIRECTORS 3:
----------------------
MARIO J. GABELLI Since 1986** 24 Chairman of the Board and Chief Executive Director of Morgan Group
Director and Officer of Gabelli Asset Management Inc. and Holdings, Inc. (holding
Chief Investment Officer Chief Investment Officer of Gabelli Funds, company); Vice Chairman
Age: 61 LLC and GAMCO Investors, Inc.; Vice of Lynch Corporation
Chairman and Chief Executive Officer of (diversified manufacturing)
Lynch Interactive Corporation (multimedia
and services)
KARL OTTO POHL Since 1992* 33 Member of the Shareholder Committee of Sal Director of Gabelli Asset
Director Oppenheim Jr. & Cie, Zurich (private Management Inc. (investment
Age: 74 investment bank); Former President of the management); Chairman,
Deutsche Bundesbank and Chairman of its Incentive Capital and
Central Bank Council (1980-1991) Incentive Asset Management
(Zurich); Director at Sal
Oppenheim Jr. & Cie, Zurich
NON-INTERESTED DIRECTORS:
------------------------
THOMAS E. BRATTER Since 1986** 3 Director, President and Founder, The John --
Director Dewey Academy (residential college
Age: 64 preparatory therapeutic high school)
ANTHONY J. COLAVITA 4 Since 1999*** 35 President and Attorney at Law in the law firm --
Director of Anthony J. Colavita, P.C.
Age: 68
JAMES P. CONN 4 Since 1989* 12 Former Managing Director and Chief Investment Director of LaQuinta Corp.
Director Officer of Financial Security Assurance (hotels) and First Republic
Age: 65 Holdings Ltd. (1992-1998) Bank
FRANK J. FAHRENKOPF JR. Since 1998*** 4 President and Chief Executive Officer of the Director of First Republic
Director American Gaming Association since June Bank
Age: 64 1995; Partner in the law firm of Hogan &
Hartson; Co-Chairman of the Commission
on Presidential Debates; Former Chairman
of the Republican National Committee
ARTHUR V. FERRARA Since 2001*** 9 Formerly, Chairman of the Board and Chief Director of The Guardian Life
Director Executive Officer of The Guardian Life Insurance Company of America;
Age: 73 Insurance Company of America from January and 25 mutual funds within
1993 to December 1995; President, Chief the Guardian Fund Complex
Executive Officer and a Director prior thereto
ANTHONY R. PUSTORINO Since 1986* 17 Certified Public Accountant; Professor Director of Lynch Corporation
Director Emeritus, Pace University (diversified manufacturing)
Age: 78
SALVATORE J. ZIZZA Since 1986*** 11 Chairman, Hallmark Electrical Supplies Corp. Director of Hollis Eden
Director Pharmaceuticals
Age: 58
18
THE GABELLI EQUITY TRUST INC.
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
TERM OF NUMBER OF
OFFICE AND FUNDS IN FUND
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S)
AND AGE SERVED 2 DIRECTOR DURING PAST FIVE YEARS
---------------- --------- ------------- ---------------------
OFFICERS:
--------
BRUCE N. ALPERT Since 2003 -- Executive Vice President and Chief Operating
President Officer of Gabelli Funds, LLC since 1988 and
Age: 52 an officer of all mutual funds advised by
Gabelli Funds, LLC and its affiliates.
Director and President of the Gabelli Advisers,
Inc.
CARTER W. AUSTIN Since 2000 -- Vice President at the Trust since 2000.
Vice President Vice President of Gabelli Funds, LLC
Age: 36 since 1996.
JAMES E. MCKEE Since 1995 -- Vice President, General Counsel and Secretary
Secretary of Gabelli Asset Management Inc. since 1999
Age: 40 and GAMCO Investors, Inc. since 1993; Secretary
of all mutual funds advised by Gabelli Advisers,
Inc. and Gabelli Funds, LLC
--------------------------------------------------------------------------------
1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
2 The Trust'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 Trust's 2006 Annual Meeting of Shareholders and until
their successors are duly elected and qualified.
** - Term expires at the Trust's 2004 Annual Meeting of Shareholders and until
their successors are duly elected and qualified.
*** - Term expires at the Trust's 2005 Annual Meeting of Shareholders and
until their successors are duly elected and qualified.
3 "Interested person" of the Trust as defined in the Investment Company Act of
1940. Messrs. Gabelli and Pohl are each considered an "interested
person" because of their affiliation with Gabelli Funds, LLC which acts as
the Trust's investment adviser.
4 Represents holders of the Trust's Preferred Stock.
--------------------------------------------------------------------------------
THE GABELLI EQUITY TRUST INC.
AND YOUR PERSONAL PRIVACY
WHO ARE WE?
The Gabelli Equity Trust Inc. (the "Trust") is a closed-end investment
company registered with the Securities and Exchange Commission under the
Investment Company Act of 1940. We are managed by Gabelli Funds LLC, which
is affiliated with Gabelli Asset Management Inc. Gabelli Asset Management
is a publicly-held company that has subsidiaries that provide investment
advisory or brokerage services for a variety of clients.
WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A
GABELLI CUSTOMER? When you purchase shares of the Trust on the New York
Stock Exchange, you have the option of registering directly with our
transfer agent in order, for example, to participate in our dividend
reinvestment plan.
o INFORMATION YOU GIVE US ON YOUR APPLICATION FORM. This could include your
name, address, telephone number, social security number, bank account
number, and other information.
o INFORMATION ABOUT YOUR TRANSACTIONS WITH US. This would include
information about the shares that you buy or sell, it may also include
information about whether you sell or exercise rights that we have issued
from time to time. If we hire someone else to provide services--like a
transfer agent--we will also have information about the transactions that
you conduct through them.
WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT?
We do not disclose any non-public personal information about our customers
or former customers to anyone, other than our affiliates, our service
providers who need to know such information and as otherwise permitted by
law. If you want to find out what the law permits, you can read the privacy
rules adopted by the Securities and Exchange Commission. They are in volume
17 of the Code of Federal Regulations, Part 248. The Commission often posts
information about its regulations on its web site, WWW.SEC.GOV.
WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION?
We restrict access to non-public personal information about you to the
people who need to know that information in order to provide services to
you or the Fund and to ensure that we are complying with the laws governing
the securities business. We maintain physical, electronic, and procedural
safeguards to keep your personal information confidential.
--------------------------------------------------------------------------------
19
THE GABELLI EQUITY TRUST INC.
INCOME TAX INFORMATION (UNAUDITED)
DECEMBER 31, 2003
CASH DIVIDENDS AND DISTRIBUTIONS
TOTAL AMOUNT ORDINARY LONG-TERM DIVIDEND
PAYABLE RECORD PAID INVESTMENT CAPITAL REINVESTMENT
DATE DATE PER SHARE (A) INCOME (A) GAINS (A) PRICE
-------- -------- ------------ --------- -------- --------
COMMON SHARES
03/25/03 03/17/03 $0.2700 $0.0220 $0.2480 $6.7546
06/24/03 06/16/03 0.1400 0.0114 0.1286 7.0775
09/24/03 09/16/03 0.1400 0.0114 0.1286 7.3100
12/24/03 12/16/03 0.1400 0.0114 0.1286 8.3980
------- ------- -------
$0.6900 $0.0562 $0.6338
7.25% PREFERRED SHARES
03/26/03 03/19/03 $0.4531 $0.0368 $0.4163
06/26/03 06/19/03 0.4078 0.0332 0.3746
------- ------- -------
$0.8609 $0.0700 $0.7909
7.20% PREFERRED SHARES
03/26/03 03/19/03 $0.4500 $0.0366 $0.4134
06/26/03 06/19/03 0.4500 0.0366 0.4134
09/26/03 09/19/03 0.4500 0.0366 0.4134
12/26/03 12/18/03 0.4500 0.0366 0.4134
------- ------- -------
$1.8000 $0.1464 $1.6536
5.875% PREFERRED SHARES
12/26/03 12/18/03 $0.3223 $0.0262 $0.2961
SERIES C AND E AUCTION RATE PREFERRED SHARES
Auction Rate Preferred Shares pay dividends weekly based on a rate set at
auction, usually held every seven days.
A Form 1099-DIV has been mailed to all shareholders of record for the
distributions mentioned above, setting forth specific amounts to be included in
the 2003 tax returns. Ordinary income distributions include net investment
income and realized net short-term capital gains. Ordinary income is reported in
box 1a of Form 1099-DIV. Capital gain distributions are reported in box 2a of
Form 1099-DIV. 100% of the long-term capital gains paid by the Gabelli Equity
Trust in 2003 were classified as "Post May 5 Capital Gains" and reported in box
2b of Form 1099-DIV.
CORPORATE DIVIDENDS RECEIVED DEDUCTION, QUALIFIED DIVIDEND INCOME AND U.S.
GOVERNMENT SECURITIES INCOME
The Equity Trust paid to common shareholders an ordinary income dividend
totalling $0.0562 per share in 2003. The Equity Trust paid to 7.25% Series A
preferred shareholders, 7.20% Series B preferred shareholders and 5.875% Series
D preferred shareholders an ordinary income dividend totalling $0.0700 per
share, $0.1464 per share, and $0.0262 per share, respectively, in 2003. The
Equity Trust paid to Series C and E Auction Rate preferred shareholders an
ordinary income dividend totalling $26.47 per share and $5.25 per share,
respectively, in 2003. For the fiscal year ended December 31, 2003, 100% of the
ordinary income dividend qualifies for the dividend received deduction available
to corporations, and 100% of the ordinary income distribution was deemed
qualifying dividend income. The percentage of the ordinary income dividends paid
by the Equity Trust during 2003 derived from U.S. Government Securities was
0.10%. However, it should be noted that the Equity Trust did not hold more than
50% of its assets in U.S. Government Securities at the end of each calendar
quarter during 2003.
20
THE GABELLI EQUITY TRUST INC.
INCOME TAX INFORMATION (CONTINUED) (UNAUDITED)
DECEMBER 31, 2003
HISTORICAL DISTRIBUTION SUMMARY
COMMON STOCK
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
---------- --------- ------- ------------- ------------ -------------- ----------------- -----------
2003 ........ $0.01140 $0.04480 $0.63380 -- -- -- $0.69000 --
2002 ........ 0.05180 0.01550 0.88270 -- -- -- 0.95000 --
2001 (d) .... 0.06700 0.06400 0.94900 -- -- -- 1.08000 --
2000 ........ 0.04070 0.15500 1.11430 -- -- -- 1.31000 --
1999 (e) .... 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 (f) .... 0.12890 -- 0.49310 0.37800 -- -- 1.00000 0.37800 -
1994 (g) .... 0.13536 0.06527 0.30300 1.38262 -- -- 1.88625 1.38262 -
1993 (h) .... 0.13050 0.02030 0.72930 0.22990 -- -- 1.11000 0.22990 -
1992 (i) .... 0.20530 0.04050 0.29660 0.51760 -- -- 1.06000 0.51760 -
1991 (j) .... 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 -- $0.6288 $0.2138 1.31000 0.41500 +
1988 ........ 0.14500 0.20900 0.19600 -- 0.2513 0.0854 0.55000 0.16590 +
1987 ........ 0.25600 0.49100 0.33500 -- -- -- 1.08200 --
7.25% PREFERRED STOCK
2003 ........ $0.01430 $0.05571 $0.79091 -- -- -- $0.86092 --
2002 ........ 0.09860 0.02980 1.68410 -- -- -- 1.81250 --
2001 ........ 0.11440 0.10610 1.59200 -- -- -- 1.81250 --
2000 ........ 0.05670 0.21430 1.54150 -- -- -- 1.81250 --
1999 ........ 0.04370 0.31640 1.45240 -- -- -- 1.81250 --
1998 ........ 0.05600 -- 0.96100 -- -- -- 1.01700 --
7.20% PREFERRED STOCK
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% PREFERRED STOCK
2003 ........ $0.00535 $0.02086 $0.29610 -- -- -- $0.32231 --
AUCTION RATE PREFERRED C SHARES
2003 ........ $5.42000 $21.05000 $298.41000 -- -- -- $324.88000 --
2002 ........ 12.28350 3.71450 209.89200 -- -- -- 225.89000 --
AUCTION RATE PREFERRED E SHARES
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 is reduced by this amount on the last business day of the
year.
(d) On January 10, 2001, the Company also distributed Rights equivalent to $0.56
per share based upon full subscription of all issued shares.
(e) On July 9, 1999, the Company also distributed shares of The Gabelli Utility
Trust valued at $9.8125 per share.
(f) On October 19, 1995, the Company also distributed Rights equivalent to $0.37
per share based upon full subscription of all issued shares.
(g) On November 15, 1994, the Company also distributed shares of The Gabelli
Global Multimedia Trust Inc. valued at $8.0625 per share.
(h) On July 14, 1993, the Company also distributed Rights equivalent to $0.50
per share based upon full subscription of all issued shares.
(i) On September 28, 1992, the Company also distributed Rights equivalent
to $0.36 per share based upon full subscription of all issued shares.
(j) On October 21, 1991, the Company 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.
21
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLAN
ENROLLMENT IN THE PLAN
It is the policy of The Gabelli Equity Trust Inc. ("Equity Trust") to
automatically reinvest dividends. As a "registered" shareholder you
automatically become a participant in the Equity Trust's Automatic Dividend
Reinvestment Plan (the "Plan"). The Plan authorizes the Equity Trust to issue
shares to participants upon an income dividend or a capital gains distribution
regardless of whether the shares are trading at a discount or a premium to net
asset value. All distributions to shareholders whose shares are registered in
their own names will be automatically reinvested pursuant to the Plan in
additional shares of the Equity Trust. Plan participants may send their stock
certificates to EquiServe Trust Company ("EquiServe") to be held in their
dividend reinvestment account. Registered shareholders wishing to receive their
distribution in cash must submit this request in writing to:
The Gabelli Equity Trust Inc.
c/o EquiServe
P.O. Box 43011
Providence, RI 02940-3011
Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan may contact EquiServe at 1 (800)
336-6983.
SHAREHOLDERS WISHING TO LIQUIDATE REINVESTED SHARES held at EquiServe must do
so in writing or by telephone. Please submit your request to the above mentioned
address or telephone number. Include in your request your name, address and
account number. The cost to liquidate shares is $2.50 per transaction as well as
the brokerage commission incurred. Brokerage charges are expected to be less
than the usual brokerage charge for such transactions.
If your shares are held in the name of a broker, bank or nominee, you should
contact such institution. If such institution is not participating in the Plan,
your account will be credited with a cash dividend. In order to participate in
the Plan through such institution, it may be necessary for you to have your
shares taken out of "street name" and re-registered in your own name. Once
registered in your own name your dividends will be automatically reinvested.
Certain brokers participate in the Plan. Shareholders holding shares in "street
name" at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must
contact their broker to make this change.
The number of shares of Common Stock distributed to participants in the Plan
in lieu of cash dividends is determined in the following manner. Under the Plan,
whenever the market price of the Equity Trust's Common Stock is equal to or
exceeds net asset value at the time shares are valued for purposes of
determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued shares of Common Stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current market price of the Equity Trust's Common Stock. The valuation
date is the dividend or distribution payment date or, if that date is not a New
York Stock Exchange trading day, the next trading day. If the net asset value of
the Common Stock at the time of valuation exceeds the market price of the Common
Stock, participants will receive shares from the Equity Trust valued at market
price. If the Equity Trust should declare a dividend or capital gains
distribution payable only in cash, EquiServe will buy Common Stock in the open
market, or on the New York Stock Exchange or elsewhere, for the participants'
accounts, except that EquiServe will endeavor to terminate purchases in the open
market and cause the Equity Trust to issue shares at net asset value if,
following the commencement of such purchases, the market value of the Common
Stock exceeds the then current net asset value.
The automatic reinvestment of dividends and capital gains distributions will
not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for Federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.
The Equity Trust reserves the right to amend or terminate the Plan as applied
to any voluntary cash payments made and any dividend or distribution paid
subsequent to written notice of the change sent to the members of the Plan at
least 90 days before the record date for such dividend or distribution. The Plan
also may be amended or terminated by EquiServe on at least 90 days' written
notice to participants in the Plan.
VOLUNTARY CASH PURCHASE PLAN
The Voluntary Cash Purchase Plan is yet another vehicle for our shareholders
to increase their investment in the Equity Trust. In order to participate in the
Voluntary Cash Purchase Plan, shareholders must have their shares registered in
their own name.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to EquiServe for investments in the Equity Trust's
shares at the then current market price. Shareholders may send an amount from
$250 to $10,000. EquiServe will use these funds to purchase shares in the open
market on or about the 1st and 15th of each month. EquiServe will charge each
shareholder who participates $0.75, plus a pro rata share of the brokerage
commissions. Brokerage charges for such purchases are expected to be less than
the usual brokerage charge for such transactions. It is suggested that any
voluntary cash payments be sent to EquiServe, P.O. Box 43011, Providence, RI
02940-3011 such that EquiServe receives such payments approximately 10 days
before the investment date. Funds not received at least five days before the
investment date shall be held for investment in the following period. A payment
may be withdrawn without charge if notice is received by EquiServe at least 48
hours before such payment is to be invested.
For more information regarding the Dividend Reinvestment Plan and Voluntary
Cash Purchase Plan, brochures are available by calling (914) 921-5070 or by
writing directly to the Equity Trust.
--------------------------------------------------------------------------------
The Annual Meeting of The Gabelli Equity Trust's stockholders will be held at
9:00 A.M. on Monday, May 10, 2004, at the Greenwich Public Library, 101 West
Putnam Avenue in Greenwich, Connecticut.
--------------------------------------------------------------------------------
22
DIRECTORS AND OFFICERS
THE GABELLI EQUITY TRUST INC.
ONE CORPORATE CENTER, RYE, NY 10580-1422
DIRECTORS
Mario J. Gabelli, CFA
CHAIRMAN & CHIEF INVESTMENT OFFICER,
GABELLI ASSET MANAGEMENT INC.
Dr. Thomas E. Bratter
PRESIDENT, JOHN DEWEY ACADEMY
Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.
James P. Conn
FORMER MANAGING DIRECTOR & CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Frank J. Fahrenkopf, Jr.
PRESIDENT & CHIEF EXECUTIVE OFFICER,
AMERICAN GAMING ASSOCIATION
Arthur V. Ferrara
FORMER CHAIRMAN & CHIEF EXECUTIVE OFFICER,
GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
Karl Otto Pohl
FORMER PRESIDENT, DEUTSCHE BUNDESBANK
Anthony R. Pustorino
CERTIFIED PUBLIC ACCOUNTANT
PROFESSOR EMERITUS, PACE UNIVERSITY
Salvatore J. Zizza
CHAIRMAN, HALLMARK ELECTRICAL SUPPLIES CORP.
OFFICERS
Bruce N. Alpert
PRESIDENT
Carter W. Austin
VICE PRESIDENT
James E. McKee
SECRETARY
INVESTMENT ADVISOR
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
CUSTODIAN
Boston Safe Deposit and Trust Company
COUNSEL
Willkie Farr & Gallagher
TRANSFER AGENT AND REGISTRAR
EquiServe Trust Company
STOCK EXCHANGE LISTING
7.20% 5.875%
COMMON PREFERRED PREFERRED
------ --------- ---------
NYSE-Symbol: GAB GABPrB GAB PrD
Shares Outstanding: 137,189,884 6,600,000 3,000,000
The Net Asset Value appears in the Publicly Traded Funds column, under the
heading "General Equity Funds," in Sunday's The New York Times and in Monday's
The Wall Street Journal. It is also listed in Barron's Mutual Funds/Closed End
Funds section under the heading "General Equity Funds".
The Net Asset Value may be obtained each day by calling (914) 921-5071.
--------------------------------------------------------------------------------
For general information about the Gabelli Funds, call 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: WWW.GABELLI.COM or e-mail us at: closedend@gabelli.com
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Equity Trust may, from time to time,
purchase shares of its common stock in the open market when the Equity Trust
shares are trading at a discount of 10% or more from the net asset value of
the shares. The Equity Trust may also, from time to time, purchase shares of
its Cumulative Preferred Stock in the open market when the shares are trading
at a discount to the Liquidation Value of $25.00.
--------------------------------------------------------------------------------
THE GABELLI EQUITY TRUST INC.
ONE CORPORATE CENTER, RYE, NY 10580-1422
PHONE: 800-GABELLI (800-422-3554)
FAX: 914-921-5118 INTERNET: WWW.GABELLI.COM
E-MAIL: CLOSEDEND@GABELLI.COM
GBFCM-AR-12/03
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(b) No response required.
(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 this Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES: 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 $82,229 in 2003 and $86,565 in 2002.
(b) AUDIT-RELATED FEES: 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 $12,500 in 2003 and $86,750 in 2002.
Audit-related fees represent services provided in the preparation of
Preferred Shares Reports to Moody's.
(c) TAX FEES: 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 $2,350 in 2003 and
$2,250 in 2002.
Tax fees represent tax compliance services provided in connection with
the review of the Registrant's tax returns.
(d) ALL OTHER FEES: 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 2003 and $0 for 2002.
(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 auditors to the registrant and (ii) all
permissible non-audit services to be provided by the independent
auditors to Gabelli and any affiliate of Gabelli that provides
services to the registrant (a "Covered Services Provider") if the
independent auditors' engagement relates 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 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 aggregate amount of all such permissible
non-audit services provided to the registrant, Gabelli and any
Covered Services Provider constitutes not more than 5% of the
total amount of revenues paid by the registrant to its independent
auditors during the fiscal year in which the permissible non-audit
services are provided; (ii) the permissible non-audit services
were not recognized by the registrant at the time of the
engagement to be non-audit services; and (iii) such services are
promptly brought to the attention of the Committee and approved by
the Committee or the 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 in 2003 and
$0 in 2002.
(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.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are attached herewith.
GABELLI ASSET MANAGEMENT INC. AND AFFILIATES
--------------------------------------------------------------------------------
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 Investors, Inc., Gabelli Funds,
LLC and Gabelli Advisers, 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
by GAMCO Investors, Inc. 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. As of June 30, 2003, the members are:
Bruce N. Alpert, Chief Operating Officer of Gabelli Funds, LLC
Ivan Arteaga, Research Analyst
Caesar M. P. Bryan, Portfolio Manager
Stephen DeTore, Deputy General Counsel
Joshua Fenton, Director of Research
Douglas R. Jamieson, Chief Operating Officer of GAMCO
James E. McKee, General Counsel
Karyn M. Nappi, Director of Proxy Voting Services
William S. Selby, Managing Director of GAMCO
Howard F. Ward, Portfolio Manager
Peter D. Zaglio, Senior Vice President
Peter D. Zaglio currently chairs the Committee. In his absence, the
Director of Research will chair the 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.
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 Legal Department believes 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.
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
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' staff may request proxy-voting
records for use in presentations to current or prospective clients. Requests for
proxy voting records should be made at least ten days prior to client meetings.
If a client wishes to receive a proxy voting record on a quarterly,
semi-annual or annual basis, please notify the Proxy Voting Department. The
reports will be available for mailing approximately ten days after the quarter
end of the period. First quarter reports may be delayed since the end of the
quarter falls during the height of the proxy season.
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 Wexford Clearing Services
Corporation are responsible for forwarding proxies directly to GAMCO.
Proxies are received in one of two forms:
o Shareholder Vote Authorization Forms (VAFs) - Issued by ADP. VAFs must be
voted through the issuing institution causing a time lag. ADP 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. Upon receipt of instructions from the proxy committee (see Administrative),
the votes are cast and recorded for each account on an individual basis.
Since January 1, 1992, records have been maintained on the Proxy Edge system.
The system is backed up regularly. From 1990 through 1991, records were
maintained on the PROXY VOTER system and in hardcopy format. Prior to 1990,
records were maintained on diskette and in hardcopy format.
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
The rationale for the vote when it appropriate
Records prior to the institution of the PROXY EDGE system include:
Security name
Type of Meeting (Annual, Special, Contest)
Date of Meeting
Name of Custodian
Name of Client
Custodian Account Number
Adviser or Fund Account Number
Directors' recommendation
How the Adviser voted for the client on each issue
Date the proxy statement was received and by whom
Name of person posting the vote
Date and method by which the vote was cast
o From these records individual client proxy voting records are compiled. It is
our policy to provide institutional clients with a proxy voting record during
client reviews. In addition, we will supply a proxy voting record at the
request of the client on a quarterly, semi-annual or annual basis.
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 ADP are always sent directly
to a specific individual at ADP.
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 ADP 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 ADP:
A call is placed to ADP requesting legal proxies. The VAFs are then sent
overnight to ADP. ADP issues individual legal proxies and sends them back
via overnight. 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 ADP may be implemented.
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).
APPENDIX A
PROXY GUIDELINES
-------------------------------
PROXY VOTING GUIDELINES
-------------------------------
GENERAL POLICY STATEMENT
It is the policy of GABELLI ASSET MANAGEMENT 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.
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.
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.
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.
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.
As a fiduciary, we are obligated to vote in the best economic interests of our
clients. In general, this proposal does not allow us to do that. Therefore, we
generally cannot support this proposal.
Reviewed on a case-by-case basis.
MERGERS, BUYOUTS, SPIN-OFFS, RESTRUCTURINGS
Each of the above is considered on a case-by-case basis. According to the
Department of Labor, we are not required to vote for a proposal simply because
the offering price is at a premium to the current market price. We may take into
consideration the long term interests of the shareholders.
MILITARY ISSUES
Shareholder proposals regarding military production must be evaluated on a
purely economic set of criteria for our ERISA clients. As such, decisions will
be made on a case-by-case basis.
In voting on this proposal for our non-ERISA clients, we will vote according to
the client's direction when applicable. Where no direction has been given, we
will vote in the best economic interests of our clients. It is not our duty to
impose our social judgment on others.
NORTHERN IRELAND
Shareholder proposals requesting the signing of the MacBride principles for the
purpose of countering the discrimination of Catholics in hiring practices must
be evaluated on a purely economic set of criteria for our ERISA clients. As
such, decisions will be made on a case-by-case basis.
In voting on this proposal for our non-ERISA clients, we will vote according to
client direction when applicable. Where no direction has been given, we will
vote in the best economic interests of our clients. It is not our duty to impose
our social judgment on others.
OPT OUT OF STATE ANTI-TAKEOVER LAW
This shareholder proposal requests that a company opt out of the coverage of the
state's takeover statutes. Example: Delaware law requires that a buyer must
acquire at least 85% of the company's stock before the buyer can exercise
control unless the board approves.
We consider this on a case-by-case basis. Our decision will be based on the
following:
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
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.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not yet applicable.
ITEM 10. 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 last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 11. 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 Rule 30a-2(a) of the Investment Company
Act of 1940, as amended, are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) of the Investment Company
Act of 1940, as amended, 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.
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By (Signature and Title)* /s/ Bruce N. Alpert
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Bruce N. Alpert, Principal Executive
Officer
Date March 9, 2004
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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
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Bruce N. Alpert, Principal Executive
Officer and Principal Financial
Officer
Date March 9, 2004
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* Print the name and title of each signing officer under his or her signature.