UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04700
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The Gabelli Equity Trust Inc.
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(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
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Date of fiscal year end: December 31
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Date of reporting period: June 30, 2007
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
THE GABELLI EQUITY TRUST INC. AND
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
Semi-Annual Report
June 30, 2007
TO OUR SHAREHOLDERS,
We are pleased to announce that The Gabelli Equity Trust Inc. (the "Equity
Trust") successfully completed its spin-off of The Gabelli Healthcare &
Wellness(Rx) Trust (the "Healthcare Trust") on June 28, 2007. On this date, each
shareholder of the Equity Trust received one share of the Healthcare Trust for
every twenty shares owned of Equity Trust common stock. For news and additional
information regarding the spin-off, please visit our website at www.gabelli.com.
Due to the spin-off's completion immediately prior to quarter end, we have
combined the Equity Trust's semi-annual report for the six months ended June 30,
2007 with the Healthcare Trust's initial report for the period ended June 30,
2007. Enclosed are the financial statements and the investment portfolios for
both funds as of June 30, 2007.
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We have separated the portfolio manager's commentary from the financial
statements and investment portfolios due to corporate governance regulations
stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that
the content of the portfolio manager's commentary is unrestricted. The financial
statements and investment portfolios are mailed separately from the commentary.
Both the commentary and the financial statements, including the portfolios of
investments, will be available on our website at www.gabelli.com/funds.
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The Gabelli Equity Trust's net asset value ("NAV") total return was 11.57%
during the first half of 2007, compared with gains of 6.96% and 8.79% for the
Standard & Poor's ("S&P") 500 Index and the Dow Jones Industrial Average,
respectively. The Equity Trust's NAV total return outperformed the benchmark S&P
500 Index for this period, as well as for each of the longer-term intervals
shown in the comparative results table. The total return for the Equity Trust's
publicly traded shares was 13.31% during the first half of the year. On June 30,
2007, the Equity Trust's NAV per share was $9.67, while the price of the
publicly traded shares closed at $9.84 on the New York Stock Exchange.
COMPARATIVE RESULTS
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AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 2007 (A)
------------------------------------------------
Since
Year to Inception
Date 1 Year 3 Year 5 Year 10 Year 15 Year 20 Year (08/21/86)
--------------------------------------------------------------------------
GABELLI EQUITY TRUST
NAV TOTAL RETURN (B) .................. 11.57% 29.71% 19.84% 17.69% 11.83% 12.99% 12.04% 12.75%
INVESTMENT TOTAL RETURN (C) ........... 13.31 37.14 20.09 11.28 12.32 12.86 12.99 12.42
S&P 500 Index ........................... 6.96 20.57 11.67 10.70 7.13 11.18 10.81 11.48(d)
Dow Jones Industrial Average ............ 8.79 22.98 11.26 10.21 7.88 12.20 11.76 12.71(d)
Nasdaq Composite Index .................. 7.78 19.85 8.33 12.21 6.08 10.74 9.49 9.65
(a) REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS. INVESTMENT
RETURNS AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN
SHARES ARE SOLD, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA
PRESENTED. VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST
RECENT MONTH END. PERFORMANCE RETURNS FOR PERIODS LESS THAN ONE YEAR ARE
NOT ANNUALIZED. INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT
OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE FUND BEFORE INVESTING. THE
DOW JONES INDUSTRIAL AVERAGE IS AN UNMANAGED INDEX OF 30 LARGE
CAPITALIZATION STOCKS. THE S&P 500 AND THE NASDAQ COMPOSITE INDICES ARE
UNMANAGED INDICATORS OF STOCK MARKET PERFORMANCE. DIVIDENDS ARE CONSIDERED
REINVESTED EXCEPT FOR THE NASDAQ COMPOSITE INDEX. YOU CANNOT INVEST
DIRECTLY IN AN INDEX.
(b) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN NAV PER SHARE,
REINVESTMENT OF DISTRIBUTIONS AT NAV ON THE EX-DIVIDEND DATE, ADJUSTMENTS
FOR RIGHTS OFFERINGS, SPIN-OFFS, AND TAXES PAID ON UNDISTRIBUTED LONG-TERM
CAPITAL GAINS AND ARE NET OF EXPENSES. SINCE INCEPTION RETURN IS BASED ON
AN INITIAL NAV OF $9.34.
(c) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN CLOSING MARKET
VALUES ON THE NEW YORK STOCK EXCHANGE, REINVESTMENT OF DISTRIBUTIONS, AND
ADJUSTMENTS FOR RIGHTS OFFERINGS, SPIN-OFFS, AND TAXES PAID ON
UNDISTRIBUTED LONG-TERM CAPITAL GAINS. SINCE INCEPTION RETURN IS BASED ON
AN INITIAL OFFERING PRICE OF $10.00.
(d) FROM AUGUST 31, 1986, THE DATE CLOSEST TO THE FUND'S INCEPTION FOR WHICH
DATA IS AVAILABLE.
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SHAREHOLDER MEETING - MAY 14, 2007 AND MAY 30, 2007 - FINAL RESULTS
The Gabelli Equity Trust's Annual Meeting of Shareholders was held in two
sessions: May 14, 2007 at the Greenwich Library in Greenwich, Connecticut and
May 30, 2007 at the office of Gabelli Funds, LLC in Rye, NY. At the meeting,
common and preferred shareholders, voting together as a single class, approved a
proposal to distribute to the Equity Trust's common shareholders approximately
$70 million of the Equity Trust's net assets in the form of shares of The
Gabelli Healthcare & Wellness(Rx) Trust, a newly organized, closed-end
management investment company. A total of 79,666,056 votes were cast in favor of
the proposal, 3,777,950 votes were cast against, and 1,847,563 votes abstained.
In addition, common and preferred shareholders, voting together as a single
class, also elected Mario J. Gabelli, Thomas E. Bratter, and Arthur V. Ferrara
as Directors of the Equity Trust. A total of 111,287,915 votes, 111,130,027
votes, and 110,916,578 votes were cast in favor of each Director and a total of
1,607,342 votes, 1,765,230 votes, and 1,978,679 votes were withheld for each
Director, respectively.
Anthony J. Colavita, James P. Conn, Frank J. Fahrenkopf, Jr., Anthony R.
Pustorino, and Salvatore J. Zizza continue to serve in their capacities as
Directors of the Equity Trust.
We thank you for your participation and appreciate your continued support.
2
THE GABELLI EQUITY TRUST INC. AND
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following tables present portfolio holdings as a percent of total
investments as of June 30, 2007:
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THE GABELLI EQUITY TRUST INC.
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Food and Beverage ................................ 11.3%
Financial Services ............................... 9.8%
Diversified Industrial ........................... 7.4%
Energy and Utilities ............................. 6.9%
Telecommunications ............................... 6.2%
Cable and Satellite .............................. 5.2%
Entertainment .................................... 4.4%
Consumer Products ................................ 4.2%
Repurchase Agreements ............................ 4.2%
Publishing ....................................... 3.9%
Health Care ...................................... 3.8%
Hotels and Gaming ................................ 3.3%
Equipment and Supplies ........................... 3.2%
Automotive: Parts and Accessories ................ 2.5%
Aviation: Parts and Services ..................... 2.5%
Broadcasting ..................................... 2.1%
Business Services ................................ 1.8%
Communications Equipment ......................... 1.8%
Aerospace ........................................ 1.6%
Specialty Chemicals .............................. 1.5%
Consumer Services ................................ 1.4%
Machinery ........................................ 1.4%
Wireless Communications .......................... 1.1%
Environmental Services ........................... 1.1%
Metals and Mining ................................ 1.0%
Electronics ...................................... 1.0%
Agriculture ...................................... 0.9%
Real Estate ...................................... 0.9%
Automotive ....................................... 0.8%
Transportation ................................... 0.7%
Retail ........................................... 0.7%
Closed-End Funds ................................. 0.4%
Computer Software and Services ................... 0.3%
U.S. Treasury Bills .............................. 0.2%
Paper and Forest Products ........................ 0.2%
Manufactured Housing and Recreational Vehicles ... 0.2%
Real Estate Investment Trusts .................... 0.1%
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100.0%
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THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
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U.S. Treasury Bills .............................. 88.5%
Repurchase Agreements ............................ 9.7%
Health Care Equipment and Supplies ............... 0.4%
Food Products .................................... 0.4%
Food and Staples Retailing ....................... 0.3%
Pharmaceuticals .................................. 0.3%
Beverages ........................................ 0.2%
Health Care Providers and Services ............... 0.1%
Biotechnology .................................... 0.1%
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100.0%
======
THE FUNDS FILE A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL
YEAR ON FORM N-Q, THE LAST OF WHICH WAS FILED BY THE GABELLI EQUITY TRUST FOR
THE QUARTER ENDED MARCH 31, 2007. SHAREHOLDERS MAY OBTAIN THIS INFORMATION AT
WWW.GABELLI.COM OR BY CALLING THE GABELLI EQUITY TRUST AT 800-GABELLI
(800-422-3554). THE GABELLI EQUITY TRUST'S FORM N-Q IS AVAILABLE ON THE SEC'S
WEBSITE AT WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE SEC'S PUBLIC
REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.
PROXY VOTING
Each Fund files Form N-PX with its complete proxy voting record for the 12
months ended June 30th, no later than August 31st of each year. A description of
each Fund's proxy voting policies, procedures, and how the Funds voted proxies
relating to portfolio securities is available without charge, upon request, by
(i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One
Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC's website at
www.sec.gov.
3
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES
QUARTER ENDED JUNE 30, 2007 (UNAUDITED)
OWNERSHIP AT
JUNE 30,
SHARES 2007
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NET PURCHASES
COMMON STOCKS
Advanced Medical Optics Inc. .............. 27,000 55,000
Allergan Inc. (a) ......................... 7,023 14,046
Alpharma Inc., Cl. A ...................... 1,000 6,000
Amphenol Corp., Cl. A (a) ................. 2,000 4,000
aQuantive Inc. ............................ 50,000 50,000
Aquila Inc. ............................... 100,000 400,000
Aruze Corp. ............................... 70,000 100,000
Asciano Group (b) ......................... 70,000 70,000
Barclays plc .............................. 20,000 90,000
BCE Inc. .................................. 30,000 250,000
Biomet Inc. ............................... 100,000 100,000
British Sky Broadcasting Group plc ........ 20,000 95,000
Brown-Forman Corp., Cl. A ................. 3,000 24,000
Cadbury Schweppes plc, ADR ................ 63,400 183,400
Canon Inc. ................................ 8,000 30,500
China Mengniu Dairy Co. Ltd. .............. 20,000 40,000
Cincinnati Bell Inc. ...................... 50,000 850,000
Citadel Broadcasting Corp. (c) ............ 6,143 6,143
Citigroup Inc. ............................ 50,000 300,000
Clear Channel Communications Inc. ......... 40,000 300,000
Clearwire Corp., Cl. A .................... 1,000 8,000
Cochlear Ltd. ............................. 2,000 12,000
Constellation Brands Inc., Cl. A .......... 3,000 6,000
CVS Caremark Corp. ........................ 25,000 25,000
Dade Behring Holdings Inc. ................ 5,000 5,000
Deutsche Bank AG, Germany ................. 1,000 9,000
Fanuc Ltd. ................................ 13,000 13,000
Fomento Economico Mexicano
SA de CV, ADR (d) ...................... 66,000 99,000
General Motors Corp. ...................... 15,000 50,000
Greif Inc., Cl. A (a) ..................... 110,000 220,000
Greif Inc., Cl. B (a) ..................... 9,000 18,000
Groupe Danone (a) ......................... 190,000 380,000
Home Inns & Hotels
Management Inc., ADR ................... 2,500 5,000
IDEX Corp. (e) ............................ 105,000 315,000
Imperial Oil Ltd. ......................... 5,000 32,000
Interactive Brokers Group Inc., Cl. A ..... 25,000 25,000
InterContinental Hotels Group plc (f) ..... 46,160 46,160
Jardine Matheson Holdings Ltd. ............ 45,000 45,000
Kraft Foods Inc., Cl. A ................... 215,000 215,000
LSI Corp. (g) ............................. 80,000 80,000
Mandarin Oriental International Ltd. ...... 1,161,000 3,761,000
Marathon Oil Corp. (a) .................... 10,000 20,000
McClatchy Co., Cl. A ...................... 5,788 20,000
Morinaga Milk Industry Co. Ltd. ........... 60,000 60,000
New Hope Corp. Ltd. ....................... 52,000 52,000
Newmont Mining Corp Holding Co. ........... 50,000 155,000
Nintendo Co. Ltd. ......................... 2,500 2,500
Nuveen Investments Inc., Cl. A ............ 30,000 30,000
Orient-Express Hotels Ltd., Cl. A ......... 1,000 16,000
Partners Group ............................ 4,000 4,000
Rinker Group Ltd., ADR .................... 120,000 120,000
Rio Tinto plc ............................. 5,000 23,000
Saipem SpA ................................ 5,000 65,000
Sequa Corp., Cl. B ........................ 10,000 84,600
SMC Corp. ................................. 8,000 8,000
SSL International plc ..................... 50,000 50,000
Standard Chartered plc .................... 10,000 60,000
Svenska Cellulosa Aktiebolaget,
Cl. B (h) .............................. 30,000 30,000
Synthes Inc. .............................. 1,500 11,500
Tele2 AB, Cl. B ........................... 10,000 60,000
Tenaris SA, ADR ........................... 50,000 50,000
Tesco plc ................................. 65,000 65,000
The Blackstone Group LP ................... 100 100
The Fairchild Corp., Cl. A ................ 5,000 210,000
Tokyo Broadcasting System Inc. ............ 20,000 70,000
Toll Holdings Ltd. ........................ 70,000 70,000
Tyco International Ltd. ................... 200,000 300,000
Tyco International Ltd. - WI .............. 61,100 61,100
UniCredito Italiano SpA ................... 30,000 150,000
Westpac Banking Corp. ..................... 5,000 63,000
Xstrata plc ............................... 3,000 69,666
Yahoo! Inc. ............................... 10,000 160,000
NET SALES
COMMON STOCKS
Acuity Brands Inc. ........................ (3,000) 22,000
ADESA Inc. (i) ............................ (400,000) --
Agere Systems Inc. (g) .................... (45,000) --
America Movil SA de CV, Cl. L, ADR ........ (2,000) 98,000
Ashland Inc. .............................. (10,000) 40,000
Autonation Inc. ........................... (68,000) 100,000
Avis Budget Group Inc. .................... (7,000) 18,000
Bank of Ireland ........................... (25,000) 75,000
Biosite Inc. .............................. (10,000) --
Camden Property Trust ..................... (500) 2,000
CLARCOR Inc. .............................. (3,000) 182,000
Dana Corp. ................................ (30,000) 270,000
Dean Foods Co. ............................ (50,000) --
Delta & Pine Land Co. (j) ................. (100,000) --
See accompanying notes to financial statements.
4
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES (CONTINUED)
QUARTER ENDED JUNE 30, 2007 (UNAUDITED)
OWNERSHIP AT
JUNE 30,
SHARES 2007
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NET SALES (CONTINUED)
COMMON STOCKS (CONTINUED)
Duquesne Light Holdings Inc. (k) .......... (84,000) --
Fedders Corp. ............................. (5,000) 60,000
Florida East Coast Industries Inc. ........ (6,000) 92,000
Gallaher Group plc (l) .................... (60,000) --
Gallaher Group plc, ADR (m) ............... (190,000) --
Giant Industries Inc. (n) ................. (16,000) --
Greek Organization of
Football Prognostics ................... (28,000) --
Greif Inc. Cl. A .. ...................... (2,000) 220,000
Groupe Danone ............................. (10,000) 380,000
Grupo Televisa SA, ADR .................... (10,000) 615,000
H.J. Heinz Co. ............................ (5,000) 105,000
Hilton Hotels Corp. ....................... (5,000) 525,000
Hisamitsu Pharmaceutical Co. Inc. ......... (38,300) --
Honeywell International Inc. .............. (5,500) 450,000
Hydril Co. (o) ............................ (30,000) --
Hyperion Solutions Corp. .................. (500,000) --
InterContinental Hotels Group Inc. (f) .... (55,000) --
ION Media Networks Inc. (p). .............. (200,000) --
Janus Capital Group Inc. .................. (1,300) 180,000
John H. Harland Co. (q) ................... (12,000) --
Johnson Controls Inc. ..................... (4,000) 70,000
Kinder Morgan Inc. (r) .................... (350,000) --
Liberty Media Holding Corp. -
Interactive, Cl. A ..................... (164,869) 265,131
MasterCard Inc., Cl. A .................... (1,000) 118,000
Matsumotokiyoshi Co. Ltd. ................. (50,000) --
Navistar International Corp. .............. (5,000) 125,000
New Plan Excel Realty Trust (s) ........... (350,000) --
News Corp., Cl. A ......................... (70,000) 1,580,000
Nikko Cordial Corp. ....................... (78,750) --
Novelis Inc. (t) .......................... (150,000) --
PepsiAmericas Inc. ........................ (8,100) 550,000
PepsiCo Inc. .............................. (5,000) 350,000
Precision Castparts Corp. ................. (4,000) 110,000
Publishing & Broadcasting Ltd. ............ (60,000) 100,000
Rank Group plc ............................ (23,240) 1,150,000
Realogy Corp. (u) ......................... (600,000) --
Rollins Inc. .............................. (15,000) 770,000
Sanofi-Aventis ............................ (3,108) 12,000
Spectra Energy Corp. ...................... (10,000) 115,000
TD Banknorth Inc. (v) ..................... (200,000) --
Telephone & Data Systems Inc. ............. (2,000) 258,000
Telephone & Data Systems Inc.,
Special ................................ (2,000) 368,000
Central Europe and
Russia Fund Inc. ....................... (1,000) 104,000
The McGraw-Hill Companies Inc. ............ (1,000) 182,000
The Walt Disney Co. ....................... (5,000) 80,000
Tootsie Roll Industries Inc. .............. (1) 118,820
Tribune Co. (w) ........................... (25,970) 19,030
Watts Water Technologies Inc., Cl. A ...... (5,000) 190,000
WebEx Communications Inc. (x) ............. (20,000) --
Young Broadcasting Inc., Cl. A ............ (5,000) 110,000
CONVERTIBLE PREFERRED STOCK
Gray Television Inc.,
8.000% Cv. Pfd., Ser. C ................ (90) --
PRINCIPAL
AMOUNT
---------
CONVERTIBLE CORPORATE BOND
Pep Boys - Manny, Moe & Jack, Cv.,
4.250%, 06/01/07 ....................... $(500,000) --
------------------------
(a) 2 for 1 stock split
(b) Spin-off - 1 share of Asciano Group for every 1 shares of Toll Holding Ltd.
(c) Spin-off - 0.07679613151 share of Citadel Broadcasting Corp. for every 1
share of The Walt Disney Co.
(d) 3 for 1 stock split
(e) 3 for 2 stock split
(f) Purchase of 10,000 shares prior to 47:56 exchange of shares
(g) Merger - 2.16 shares of LSI Corp. for every 1 share of Agere Systems Inc.
(h) Exchange of 1 old share for 3 new shares
(i) Cash Merger - $27.85 for every 1 share
(j) Cash Merger - $42.00 for every 1 share
(k) Cash Merger - $20.00 for every 1 share
(l) Cash Merger - 11.40 British Pounds for every 1 share
(m) Cash Merger - $90.74856 for every 1 share
(n) Cash Merger - $77.00 for every 1 share
(o) Cash Merger - $97.00 for every 1 share
(p) Tender Offer - $1.46 for every 1 share
(q) Cash Merger - $52.75 for every 1 share
(r) Cash Merger - $107.50 for every 1 share
(s) Tender Offer - $33.15 for every 1 share
(t) Cash Merger - $44.93 for every 1 share
(u) Cash Merger - $30.00 for every 1 share
(v) Cash Merger - $32.33 for every 1 share
(w) Tender Offer - $34.00 for 57.71% of shares held
(x) Tender Offer - $57.00 for every 1 share
WI When Issued
See accompanying notes to financial statements.
5
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2007 (UNAUDITED)
MARKET
SHARES COST VALUE
-------- ---- --------
COMMON STOCKS -- 95.3%
FOOD AND BEVERAGE -- 11.3%
85,000 Ajinomoto Co. Inc. ............ $ 998,444 $ 980,995
40,000 Anheuser-Busch
Companies Inc. ............. 1,816,269 2,086,400
36,000 ARIAKE JAPAN Co. Ltd. ......... 857,851 676,873
24,000 Brown-Forman Corp.,
Cl. A ...................... 1,586,639 1,820,880
110,000 Cadbury Schweppes plc ......... 1,136,502 1,502,069
183,400 Cadbury Schweppes plc,
ADR ........................ 7,974,138 9,958,620
72,000 Campbell Soup Co. ............. 1,915,927 2,794,320
32,000 Cermaq ASA .................... 497,341 558,933
40,000 China Mengniu Dairy Co.
Ltd. ....................... 127,345 137,866
20,000 Coca-Cola Enterprises Inc. .... 376,514 480,000
40,000 Coca-Cola Hellenic
Bottling Co. SA ............ 519,295 1,840,698
6,000 Constellation Brands Inc.,
Cl. A+ ..................... 128,849 145,680
60,000 Corn Products
International Inc. ......... 811,122 2,727,000
300,000 Davide Campari-Milano
SpA ........................ 3,133,137 3,148,812
60,000 Del Monte Foods Co. ........... 564,374 729,600
10,108 Denny's Corp.+ ................ 14,358 44,981
80,000 Diageo plc .................... 1,174,064 1,665,931
224,000 Diageo plc, ADR ............... 9,660,541 18,661,440
70,000 Flowers Foods Inc. ............ 771,725 2,335,200
99,000 Fomento Economico
Mexicano SAB de CV,
ADR ........................ 1,356,892 3,892,680
180,000 General Mills Inc. ............ 8,693,258 10,515,600
380,000 Groupe Danone 18,823,537 30,869,053
1,000,000 Grupo Bimbo SA de CV,
Cl. A ...................... 2,705,279 6,294,257
105,000 H.J. Heinz Co. ................ 3,713,539 4,984,350
20,000 Hain Celestial Group Inc.+ .... 267,663 542,800
10,000 Heineken NV ................... 471,537 588,617
200,000 ITO EN Ltd. ................... 6,043,839 6,578,680
105,000 Kellogg Co. ................... 3,784,191 5,437,950
75,000 Kerry Group plc, Cl. A ........ 860,877 2,103,654
215,000 Kraft Foods Inc., Cl. A ....... 6,770,536 7,578,750
12,100 LVMH Moet Hennessy
Louis Vuitton SA ........... 419,052 1,400,872
950,000 Marine Harvest+ ............... 849,752 1,034,263
60,000 Morinaga Milk
Industry Co. Ltd. .......... 262,217 241,706
2,500 Nestle SA ..................... 513,610 953,745
200,000 Nissin Food
Products Co. Ltd. .......... 7,191,196 6,708,629
MARKET
SHARES COST VALUE
-------- ---- --------
550,000 PepsiAmericas Inc. ............ $ 10,181,941 $ 13,508,000
350,000 PepsiCo Inc. .................. 17,660,220 22,697,500
8,100 Pernod-Ricard SA .............. 1,457,288 1,797,381
68,200 Ralcorp Holdings Inc.+ ........ 1,308,415 3,645,290
26,000 Remy Cointreau SA ............. 1,673,518 1,951,276
300,000 Sara Lee Corp. ................ 4,862,162 5,220,000
65,000 Tesco plc ..................... 561,467 546,257
200,000 The Coca-Cola Co. ............. 8,929,955 10,462,000
45,000 The Hershey Co. ............... 1,915,127 2,277,900
2,000 The J.M. Smucker Co. .......... 52,993 127,320
118,820 Tootsie Roll Industries Inc. .. 1,562,913 3,292,502
170,000 Wm. Wrigley Jr. Co. ........... 8,244,515 9,402,700
42,500 Wm. Wrigley Jr. Co., Cl. B .... 2,191,580 2,337,500
535,000 YAKULT
HONSHA Co. Ltd. ............ 15,052,798 13,556,954
-------------- --------------
172,446,302 232,844,484
-------------- --------------
FINANCIAL SERVICES -- 9.8%
7,000 Allianz SE .................... 1,053,147 1,644,623
575,000 American Express Co. .......... 27,278,920 35,178,500
50,000 American International
Group Inc. ................. 3,327,703 3,501,500
65,000 Ameriprise Financial Inc. ..... 1,630,926 4,132,050
30,000 Argonaut Group Inc. ........... 752,879 936,300
95,000 Aviva plc ..................... 1,163,351 1,418,380
90,000 Banco Santander Central
Hispano SA, ADR ............ 322,130 1,654,200
75,000 Bank of Ireland ............... 458,113 1,516,546
90,000 Barclays plc .................. 1,209,056 1,257,882
248 Berkshire Hathaway Inc.,
Cl. A+ ..................... 785,026 27,149,800
7,500 Calamos Asset
Management Inc., Cl. A ..... 135,000 191,625
300,000 Citigroup Inc. ................ 14,750,503 15,387,000
155,000 Commerzbank AG, ADR ........... 3,145,338 7,379,054
149,000 Deutsche Bank AG .............. 13,066,887 21,566,260
9,000 Deutsche Bank AG,
Germany .................... 1,273,827 1,313,244
3,000 Fortress Investment Group
LLC, Cl. A ................. 55,500 71,460
20,000 H&R Block Inc. ................ 329,930 467,400
25,000 Interactive Brokers
Group Inc., Cl. A+ ......... 731,294 678,250
180,000 Janus Capital Group Inc. ...... 3,245,221 5,011,200
52,000 JPMorgan Chase & Co. .......... 1,327,407 2,519,400
260,000 Landesbank Berlin
Holding AG+ ................ 5,263,037 2,146,579
20,000 Legg Mason Inc. ............... 1,778,556 1,967,600
133,000 Leucadia National Corp. ....... 1,662,878 4,688,250
255,000 Marsh & McLennan
Companies Inc. ............. 7,894,028 7,874,400
See accompanying notes to financial statements.
6
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2007 (UNAUDITED)
MARKET
SHARES COST VALUE
-------- ---- --------
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES (CONTINUED)
80,000 Mellon Financial Corp. ........ $ 2,519,801 $ 3,520,000
65,000 Moody's Corp. ................. 3,285,357 4,043,000
30,000 Nuveen Investments Inc.,
Cl. A ...................... 1,895,276 1,864,500
4,000 Partners Group ................ 553,767 538,682
2,500 Prudential Financial Inc. ..... 68,750 243,075
60,000 Standard Chartered plc ........ 1,290,082 1,963,934
80,000 State Street Corp. ............ 4,001,480 5,472,000
20,000 SunTrust Banks Inc. ........... 419,333 1,714,800
150,000 T. Rowe Price Group Inc. ...... 4,610,820 7,783,500
5,000 The Allstate Corp. ............ 209,064 307,550
70,000 The Bank of
New York Co. Inc. .......... 2,490,562 2,900,800
100 The Blackstone Group LP+ ...... 3,004 2,927
44,500 The Charles Schwab Corp. ...... 650,256 913,140
18,000 The Dun &
Bradstreet Corp. ........... 395,898 1,853,640
189,000 The Midland Co. ............... 1,386,765 8,871,660
135,000 The Phoenix
Companies Inc. ............. 1,924,073 2,026,350
80,000 The Shizuoka Bank Ltd. ........ 791,848 812,183
3,000 The Travelers
Companies Inc. ............. 113,277 160,500
40,000 UBS AG ........................ 1,875,967 2,410,151
150,000 UniCredito Italiano SpA ....... 1,168,460 1,346,011
100,000 Waddell & Reed
Financial Inc., Cl. A ...... 2,058,579 2,601,000
63,000 Westpac Banking Corp. ......... 1,035,782 1,370,540
-------------- --------------
125,388,858 202,371,446
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 7.4%
22,000 Acuity Brands Inc. ............ 667,920 1,326,160
55,000 Amano Corp. ................... 956,301 776,366
164,000 Ampco-Pittsburgh Corp. ........ 2,155,086 6,574,760
155,000 Baldor Electric Co. ........... 5,270,000 7,638,400
26,000 Bayer AG ...................... 1,093,829 1,974,149
25,000 Bouygues SA ................... 1,244,322 2,104,284
266,000 Cooper Industries Ltd.,
Cl. A ...................... 7,204,219 15,185,940
260,000 Crane Co. ..................... 5,942,015 11,817,000
77,500 CRH plc ....................... 1,027,655 3,842,221
400,000 Enodis plc .................... 1,399,733 1,586,409
150,000 General Electric Co. .......... 5,455,245 5,742,000
220,000 Greif Inc., Cl. A ............. 2,586,943 13,114,200
18,000 Greif Inc., Cl. B ............. 559,808 1,011,240
450,000 Honeywell
International Inc. ......... 15,285,048 25,326,000
255,000 ITT Corp. ..................... 6,693,277 17,411,400
101,000 Park-Ohio Holdings Corp.+ ..... 1,073,670 2,757,300
MARKET
SHARES COST VALUE
-------- ---- --------
1,000 Pentair Inc. .................. $ 31,908 $ 38,570
120,000 Rinker Group Ltd., ADR ........ 9,411,640 9,552,000
2,000 Sulzer AG ..................... 425,026 2,596,807
30,000 Technip SA .................... 2,101,417 2,489,003
74,000 The Lamson &
Sessions Co.+ .............. 435,944 1,966,180
75,000 Trinity Industries Inc. ....... 945,000 3,265,500
300,000 Tyco International Ltd. ....... 10,032,170 10,137,000
61,100 Tyco International Ltd. - WI .. 3,188,854 3,279,848
-------------- --------------
85,187,030 151,512,737
-------------- --------------
ENERGY AND UTILITIES -- 6.9%
5,000 AGL Resources Inc. ............ 88,898 202,400
70,000 Allegheny Energy Inc.+ ........ 1,099,843 3,621,800
70,000 Apache Corp. .................. 2,728,670 5,711,300
400,000 Aquila Inc.+ .................. 1,671,750 1,636,000
247,000 BP plc, ADR ................... 15,155,797 17,818,580
105,000 CH Energy Group Inc. .......... 4,342,243 4,721,850
70,000 CMS Energy Corp. .............. 448,516 1,204,000
320,000 ConocoPhillips ................ 19,595,465 25,120,000
8,000 Constellation Energy
Group Inc. ................. 449,607 697,360
60,000 DPL Inc. ...................... 1,411,620 1,700,400
14,000 DTE Energy Co. ................ 619,459 675,080
240,000 Duke Energy Corp. ............. 4,322,580 4,392,000
270,000 El Paso Corp. ................. 3,253,601 4,652,100
285,000 El Paso Electric Co.+ ......... 4,563,231 6,999,600
50,000 Energy East Corp. ............. 1,065,733 1,304,500
80,000 Exxon Mobil Corp. ............. 2,750,108 6,710,400
20,000 FPL Group Inc. ................ 556,256 1,134,800
210,000 Halliburton Co. ............... 3,809,429 7,245,000
32,000 Imperial Oil Ltd. ............. 1,248,749 1,489,678
20,000 Marathon Oil Corp. ............ 242,414 1,199,200
10,000 Mirant Corp.+ ................. 192,014 426,500
140,000 Mirant Corp. Escrow+ (a) ...... 0 0
2,000 Niko Resources Ltd.,
New York ................... 110,842 182,120
1,000 Niko Resources Ltd.,
Toronto .................... 55,421 91,058
10,000 NiSource Inc. ................. 215,500 207,100
240,000 Northeast Utilities ........... 4,631,542 6,806,400
20,000 Oceaneering
International Inc.+ ........ 538,223 1,052,800
2,000 PetroChina Co. Ltd., ADR ...... 137,965 297,360
16,000 Petroleo Brasileiro SA, ADR ... 1,125,213 1,940,320
100,000 Progress Energy Inc., CVO+ .... 52,000 36,000
65,000 Saipem SpA .................... 1,284,362 2,231,035
13,000 Sasol Ltd. .................... 500,463 489,282
5,000 SJW Corp. ..................... 68,704 166,500
20,000 Southwest Gas Corp. ........... 451,132 676,200
115,000 Spectra Energy Corp. .......... 3,014,424 2,985,400
See accompanying notes to financial statements.
7
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2007 (UNAUDITED)
SHARES/ MARKET
UNITS COST VALUE
-------- ---- --------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES (CONTINUED)
60,000 The AES Corp.+ ................ $ 342,618 $ 1,312,800
32,628 Total SA ...................... 1,986,057 2,661,113
222,800 TXU Corp. ..................... 13,597,169 14,994,440
270,000 Westar Energy Inc. ............ 4,552,840 6,555,600
-------------- --------------
102,280,458 141,348,076
-------------- --------------
TELECOMMUNICATIONS -- 6.1%
5,000 Alltel Corp. .................. 91,103 337,750
250,000 BCE Inc. ...................... 6,686,522 9,447,500
16,000 Bell Aliant Regional
Communications
Income Fund+ (a)(b) ........ 510,683 470,880
30,000 Brasil Telecom
Participacoes SA, ADR ...... 1,743,257 1,813,800
1,700,000 BT Group plc .................. 7,029,679 11,350,859
4,440,836 Cable & Wireless
Jamaica Ltd.+ (c) .......... 101,639 57,635
850,000 Cincinnati Bell Inc.+ ......... 5,915,403 4,913,000
90,000 Citizens
Communications Co. ......... 1,320,038 1,374,300
110,000 Compania de
Telecomunicaciones de
Chile SA, ADR .............. 1,634,847 1,046,100
168,000 Deutsche Telekom
AG, ADR .................... 2,793,519 3,092,880
5,000 France Telecom SA, ADR ........ 146,305 137,400
100,000 Koninklijke KPN NV ............ 232,728 1,667,456
570,000 Qwest Communications
International Inc.+ ........ 1,958,336 5,529,000
550,000 Sprint Nextel Corp. ........... 15,436,707 11,390,500
186,554 Tele Norte Leste
Participacoes SA, ADR ...... 2,477,755 3,538,930
60,000 Tele2 AB, Cl. B ............... 1,005,048 984,764
48,000 Telecom Argentina SA, Cl. B
ADR+ ....................... 369,540 1,196,160
1,470,000 Telecom Italia SpA ............ 6,015,464 4,038,844
230,000 Telefonica SA, ADR ............ 11,566,157 15,354,800
62,000 Telefonos de Mexico
SAB de CV, Cl. L, ADR ...... 469,422 2,349,180
258,000 Telephone & Data
Systems Inc. ............... 11,983,709 16,143,060
368,000 Telephone & Data
Systems Inc., Special ...... 16,170,379 21,178,400
15,000 TELUS Corp. ................... 280,203 897,958
180,000 Verizon
Communications Inc. ........ 6,606,128 7,410,600
5,169 Windstream Corp. .............. 19,996 76,295
-------------- --------------
102,564,567 125,798,051
-------------- --------------
MARKET
SHARES COST VALUE
-------- ---- --------
CABLE AND SATELLITE -- 5.2%
1,570,000 Cablevision Systems Corp.,
Cl. A+ ..................... $ 33,260,194 $ 56,818,300
75,000 Comcast Corp., Cl. A+ ......... 1,580,271 2,109,000
127,500 Comcast Corp., Cl. A,
Special+ ................... 756,584 3,564,900
55,000 EchoStar Communications
Corp., Cl. A+ .............. 1,722,522 2,385,350
156,770 Liberty Global Inc., Cl. A+ ... 2,194,421 6,433,841
139,001 Liberty Global Inc., Cl. C+ ... 2,941,276 5,462,739
580,690 Rogers Communications Inc.,
Cl. B, New York ............ 4,314,380 24,673,518
19,310 Rogers Communications Inc.,
Cl. B, Toronto ............. 137,424 823,337
80,000 Shaw Communications Inc.,
Cl. B, New York ............ 329,198 3,363,200
20,000 Shaw Communications Inc.,
Cl. B, Toronto ............. 52,983 845,248
10,000 The DIRECTV Group Inc.+ ....... 250,200 231,100
-------------- --------------
47,539,453 106,710,533
-------------- --------------
ENTERTAINMENT -- 4.4%
100,000 Aruze Corp. ................... 3,267,519 3,110,660
32,000 Canal+ Groupe ................. 34,011 342,153
2,002 Chestnut Hill Ventures+ (a) ... 54,500 91,115
220,000 Discovery Holding Co.,
Cl. A+ ..................... 3,185,692 5,057,800
3,000 DreamWorks Animation
SKG Inc., Cl. A+ ........... 68,959 86,520
110,000 EMI Group plc ................. 292,544 591,992
79,500 EMI Group plc, ADR ............ 941,481 854,943
600,603 Gemstar-TV Guide
International Inc.+ ........ 2,825,471 2,954,967
615,000 Grupo Televisa SA, ADR ........ 6,033,842 16,980,150
125 Live Nation Inc.+ ............. 1,296 2,797
40,000 Pinnacle
Entertainment Inc.+ ........ 1,280,000 1,126,000
100,000 Publishing and
Broadcasting Ltd. .......... 1,632,959 1,661,692
1,150,000 Rank Group plc ................ 7,820,172 4,301,127
12,000 Regal Entertainment Group,
Cl. A ...................... 165,788 263,160
75,000 Six Flags Inc.+ ............... 360,725 456,750
80,000 The Walt Disney Co. ........... 1,634,099 2,731,200
810,000 Time Warner Inc. .............. 17,932,501 17,042,400
70,000 Tokyo Broadcasting
System Inc. ................ 2,379,670 2,143,350
20,200 Triple Crown Media Inc.+ ...... 217,899 188,264
370,000 Viacom Inc., Cl. A+ ........... 17,913,756 15,392,000
333,900 Vivendi ....................... 9,061,536 14,420,720
-------------- --------------
77,104,420 89,799,760
-------------- --------------
See accompanying notes to financial statements.
8
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2007 (UNAUDITED)
MARKET
SHARES COST VALUE
-------- ---- --------
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS -- 4.2%
25,000 Altadis SA .................... $ 1,070,825 $ 1,664,749
84,000 Avon Products Inc. ............ 2,420,145 3,087,000
42,000 Christian Dior SA ............. 3,082,702 5,469,635
15,000 Church & Dwight Co. Inc. ...... 99,536 726,900
32,000 Clorox Co. .................... 1,776,614 1,987,200
10,000 Colgate-Palmolive Co. ......... 513,338 648,500
69,000 Compagnie Financiere
Richemont SA, Cl. A ........ 2,879,288 4,151,863
114,000 Energizer Holdings Inc.+ ...... 4,929,546 11,354,400
60,000 Fortune Brands Inc. ........... 4,147,453 4,942,200
2,000 Givaudan SA ................... 550,742 1,981,171
60,000 Hanesbrands Inc.+ ............. 1,376,148 1,621,800
32,000 Harley-Davidson Inc. .......... 1,486,605 1,907,520
42,000 Lenox Group Inc.+ ............. 383,261 295,260
15,000 Matsushita Electric
Industrial Co. Ltd., ADR ... 178,325 297,150
15,000 Mattel Inc. ................... 270,000 379,350
21,000 National Presto
Industries Inc. ............ 711,533 1,309,140
2,500 Nintendo Co. Ltd. ............. 775,766 915,736
10,000 Oil-Dri Corp. of America ...... 171,255 175,500
300,000 Procter & Gamble Co. .......... 15,983,165 18,357,000
60,000 Reckitt Benckiser plc ......... 1,849,650 3,295,313
30,000 Svenska Cellulosa
Aktiebolaget, Cl. B ........ 423,932 504,445
7,500 Swatch Group AG ............... 1,587,958 2,142,857
1,000,000 Swedish Match AB .............. 11,131,012 19,373,611
-------------- --------------
57,798,799 86,588,300
-------------- --------------
PUBLISHING -- 3.9%
57,500 Dow Jones & Co. Inc. .......... 2,323,693 3,303,375
9,000 Idearc Inc. ................... 275,255 317,970
348,266 Independent News &
Media plc .................. 663,968 1,767,609
20,000 McClatchy Co., Cl. A .......... 887,354 506,200
320,000 Media General Inc., Cl. A ..... 19,151,873 10,646,400
122,000 Meredith Corp. ................ 5,066,964 7,515,200
1,580,000 News Corp., Cl. A ............. 20,761,079 33,511,800
20,000 News Corp., Cl. B ............. 186,275 458,800
382,000 PRIMEDIA Inc.+ ................ 1,665,474 1,088,700
261,319 SCMP Group Ltd. ............... 191,790 106,610
66,585 Seat Pagine Gialle SpA ........ 177,139 40,058
160,000 The E.W. Scripps Co.,Cl. A .... 5,529,357 7,310,400
182,000 The McGraw-Hill
Companies Inc. ............. 7,122,447 12,390,560
50,000 The New York Times Co.,
Cl. A ...................... 1,945,184 1,270,000
19,030 Tribune Co. ................... 584,121 559,478
-------------- --------------
66,531,973 80,793,160
-------------- --------------
MARKET
SHARES COST VALUE
-------- ---- --------
HEALTH CARE -- 3.8%
8,000 Abbott Laboratories ........... $ 313,458 $ 428,400
55,000 Advanced Medical
Optics Inc.+ ............... 2,177,520 1,918,400
14,046 Allergan Inc. ................. 655,380 809,611
6,000 Alpharma Inc., Cl. A .......... 158,545 156,060
52,000 Amgen Inc.+ ................... 3,039,863 2,875,080
19,146 AstraZeneca plc ............... 949,527 1,027,398
26,000 Biogen Idec Inc.+ ............. 293,835 1,391,000
100,000 Biomet Inc. ................... 4,549,873 4,572,000
135,000 Bristol-Myers Squibb Co. ...... 3,485,673 4,260,600
12,000 Cochlear Ltd. ................. 530,192 620,591
5,000 Dade Behring Holdings Inc. .... 230,659 265,600
45,036 GlaxoSmithKline plc ........... 1,292,245 1,180,208
4,000 GlaxoSmithKline plc, ADR ...... 216,096 209,480
30,000 Henry Schein Inc.+ ............ 764,324 1,602,900
30,000 Hospira Inc.+ ................. 1,049,087 1,171,200
40,000 Invitrogen Corp.+ ............. 2,065,234 2,950,000
95,000 Merck & Co. Inc. .............. 3,625,482 4,731,000
2,000 Nobel Biocare Holding AG ...... 286,712 655,751
39,000 Novartis AG ................... 2,076,654 2,203,029
105,000 Novartis AG, ADR .............. 4,622,998 5,887,350
430,000 Pfizer Inc. ................... 11,887,587 10,995,100
16,400 Roche Holding AG .............. 2,587,332 2,918,837
12,000 Sanofi-Aventis ................ 1,075,668 976,112
100,000 Schering-Plough Corp. ......... 1,917,839 3,044,000
80,000 Smith & Nephew plc ............ 752,722 994,418
50,000 SSL International plc ......... 439,178 438,522
5,250 Straumann Holding AG .......... 1,087,318 1,478,510
11,500 Synthes Inc. .................. 1,376,920 1,383,013
19,000 Takeda Pharmaceutical
Co. Ltd. ................... 909,016 1,228,345
40,000 UnitedHealth Group Inc. ....... 1,873,359 2,045,600
82,000 William Demant Holding
A/S+ ....................... 3,730,842 8,157,646
100,000 Wyeth ......................... 4,105,470 5,734,000
3,500 Zimmer Holdings Inc.+ ......... 217,154 297,115
-------------- --------------
64,343,762 78,606,876
-------------- --------------
HOTELS AND GAMING -- 3.3%
1,200 Accor SA ...................... 103,072 106,739
190,000 Gaylord Entertainment Co.+ .... 5,061,984 10,191,600
70,000 Harrah's Entertainment Inc. ... 5,476,681 5,968,200
525,000 Hilton Hotels Corp. ........... 8,664,173 17,571,750
5,000 Home Inns & Hotels
Management Inc., ADR+ ...... 172,113 161,050
46,160 InterContinental
Hotels Group plc ........... 1,184,541 1,153,120
1,344,116 Ladbrokes plc ................. 14,291,853 11,687,262
6,000 Las Vegas Sands Corp.+ ........ 221,279 458,340
See accompanying notes to financial statements.
9
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2007 (UNAUDITED)
MARKET
SHARES COST VALUE
-------- ---- --------
COMMON STOCKS (CONTINUED)
HOTELS AND GAMING (CONTINUED)
3,761,000 Mandarin Oriental
International Ltd. ......... $ 7,080,930 $ 8,387,030
110,000 MGM Mirage+ ................... 3,730,098 9,072,800
16,000 Orient-Express
Hotels Ltd., Cl. A ......... 715,224 854,400
34,000 Starwood Hotels & Resorts
Worldwide Inc. ............. 520,597 2,280,380
-------------- --------------
47,222,545 67,892,671
-------------- --------------
EQUIPMENT AND SUPPLIES -- 3.2%
265,000 AMETEK Inc. ................... 4,455,847 10,515,200
4,000 Amphenol Corp., Cl. A ......... 14,775 142,600
50,000 Assa Abloy AB, Cl. B .......... 948,665 1,107,586
94,000 CIRCOR International Inc. ..... 974,241 3,800,420
200,000 Donaldson Co. Inc. ............ 2,943,696 7,110,000
60,000 Fedders Corp.+ ................ 253,770 13,800
110,000 Flowserve Corp. ............... 2,075,580 7,876,000
23,000 Franklin Electric Co. Inc. .... 250,434 1,085,140
90,000 Gerber Scientific Inc.+ ....... 988,544 1,045,800
75,000 GrafTech International Ltd.+ .. 785,966 1,263,000
315,000 IDEX Corp. .................... 7,537,793 12,140,100
40,000 Ingersoll-Rand Co. Ltd.,
Cl. A ...................... 855,378 2,192,800
103,000 Lufkin Industries Inc. ........ 1,000,348 6,648,650
11,000 Mueller Industries Inc. ....... 485,034 378,840
2,000 Sealed Air Corp. .............. 17,404 62,040
50,000 Tenaris SA, ADR ............... 2,345,912 2,448,000
2,000 The Manitowoc Co. Inc. ........ 25,450 160,760
100,000 The Weir Group plc ............ 420,789 1,465,922
190,000 Watts Water
Technologies Inc., Cl. A ... 2,957,983 7,119,300
-------------- --------------
29,337,609 66,575,958
-------------- --------------
AVIATION: PARTS AND SERVICES -- 2.5%
370,000 Curtiss-Wright Corp. .......... 5,355,614 17,245,700
200,000 GenCorp Inc.+ ................. 2,572,011 2,614,000
110,000 Precision Castparts Corp. ..... 5,656,491 13,349,600
73,000 Sequa Corp., Cl. A+ ........... 2,963,867 8,176,000
84,600 Sequa Corp., Cl. B+ ........... 4,925,072 9,575,451
210,000 The Fairchild Corp., Cl. A+ ... 1,206,333 466,200
-------------- --------------
22,679,388 51,426,951
-------------- --------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 2.4%
43,000 BorgWarner Inc. ............... 1,126,424 3,699,720
182,000 CLARCOR Inc. .................. 1,488,462 6,812,260
270,000 Dana Corp.+ ................... 2,075,449 545,400
82,500 Earl Scheib Inc.+ ............. 644,854 305,250
345,000 Genuine Parts Co. ............. 12,737,964 17,112,000
70,000 Johnson Controls Inc. ......... 4,272,329 8,103,900
MARKET
SHARES COST VALUE
-------- ---- --------
130,000 Midas Inc.+ ................... $ 1,805,604 $ 2,947,100
317,500 Modine Manufacturing Co. ...... 8,027,340 7,175,500
180,000 Proliance
International Inc.+ ........ 1,288,913 558,000
155,000 Standard Motor
Products Inc. .............. 1,710,838 2,329,650
35,000 Superior Industries
International Inc. ......... 822,800 761,600
27,000 TI Automotive Ltd.,
Cl. A+ (a) ................. 0 0
-------------- --------------
36,000,977 50,350,380
-------------- --------------
BROADCASTING -- 2.1%
95,000 British Sky Broadcasting
Group plc .................. 1,094,350 1,220,933
415,000 CBS Corp., Cl. A .............. 13,320,613 13,831,950
6,143 Citadel Broadcasting Corp. .... 16,505 39,622
300,000 Clear Channel
Communications Inc. ........ 10,866,063 11,346,000
2,000 Cogeco Inc. ................... 39,014 74,743
13,333 Corus Entertainment Inc.,
Cl. B, New York ............ 49,629 624,384
3,333 Corus Entertainment Inc.,
Cl. B, Toronto ............. 12,406 155,816
120,000 Gray Television Inc. .......... 1,060,168 1,112,400
27,000 Gray Television Inc., Cl. A ... 317,211 252,450
77,000 Liberty Media Corp. -
Capital, Cl. A+ ............ 6,188,638 9,061,360
85,000 Lin TV Corp., Cl. A+ .......... 1,185,597 1,598,850
120,000 Mediaset SpA .................. 1,288,354 1,243,284
29,000 Modern Times Group MTG
AB, Cl. B .................. 1,754,858 1,880,556
100,000 Television Broadcasts Ltd. .... 396,239 703,397
110,000 Young Broadcasting Inc.,
Cl. A+ ..................... 960,534 405,900
-------------- --------------
38,550,179 43,551,645
-------------- --------------
BUSINESS SERVICES -- 1.8%
7,050 ACCO Brands Corp.+ ............ 126,069 162,502
50,000 aQuantive Inc.+ ............... 3,183,975 3,190,000
18,000 Avis Budget Group Inc.+ ....... 340,826 511,740
30,500 Canon Inc. .................... 1,330,244 1,790,985
1,000 CheckFree Corp.+ .............. 9,040 40,200
100,000 Clear Channel Outdoor
Holdings Inc., Cl. A+ ...... 2,029,434 2,834,000
186,554 Contax Participacoes SA,
ADR ........................ 76,632 229,555
200,000 G4S plc ....................... 0 849,432
45,000 Jardine Matheson
Holdings Ltd. .............. 1,112,141 1,071,000
94,000 Landauer Inc. ................. 2,511,653 4,629,500
See accompanying notes to financial statements.
10
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2007 (UNAUDITED)
MARKET
SHARES COST VALUE
-------- ---- --------
COMMON STOCKS (CONTINUED)
BUSINESS SERVICES (CONTINUED)
118,000 MasterCard Inc., Cl. A ........ $ 4,735,650 $ 19,572,660
72,500 Nashua Corp.+ ................. 656,627 782,275
25,000 Secom Co. Ltd. ................ 1,095,891 1,179,695
-------------- --------------
17,208,182 36,843,544
-------------- --------------
COMMUNICATIONS EQUIPMENT -- 1.8%
10,000 Andrew Corp.+ ................. 109,277 144,400
480,000 Corning Inc.+ ................. 4,124,295 12,264,000
90,000 Motorola Inc. ................. 1,024,871 1,593,000
200,000 Nortel Networks Corp.+ ........ 5,602,879 4,810,000
305,000 Thomas & Betts Corp.+ ......... 9,229,463 17,690,000
-------------- --------------
20,090,785 36,501,400
-------------- --------------
SPECIALTY CHEMICALS -- 1.5%
40,000 Ashland Inc. .................. 2,531,470 2,558,000
5,400 Ciba Specialty Chemicals
AG, ADR .................... 4,285 175,554
20,000 E.I. du Pont de
Nemours and Co. ............ 802,600 1,016,800
350,000 Ferro Corp. ................... 7,353,490 8,725,500
2,000 FMC Corp. ..................... 136,430 178,780
50,000 H.B. Fuller Co. ............... 668,859 1,494,500
170,000 Hercules Inc.+ ................ 1,979,821 3,340,500
70,000 International Flavors &
Fragrances Inc. ............ 3,296,486 3,649,800
230,000 Omnova Solutions Inc.+ ........ 1,861,571 1,391,500
275,000 Sensient
Technologies Corp. ......... 5,034,936 6,982,250
15,000 Syngenta AG, ADR .............. 189,981 583,950
165,000 Tokai Carbon Co. Ltd. ......... 677,815 1,547,817
4,032 Tronox Inc., Cl. B ............ 44,467 56,650
-------------- --------------
24,582,211 31,701,601
-------------- --------------
AEROSPACE -- 1.5%
105,000 Boeing Co. .................... 6,475,976 10,096,800
10,000 Lockheed Martin Corp. ......... 585,900 941,300
80,000 Northrop Grumman Corp. ........ 4,444,416 6,229,600
1,200,000 Rolls-Royce Group plc+ ........ 9,166,092 12,976,426
71,040,000 Rolls-Royce Group plc,
Cl. B ...................... 139,192 145,510
-------------- --------------
20,811,576 30,389,636
-------------- --------------
CONSUMER SERVICES -- 1.5%
200,000 IAC/InterActiveCorp+ .......... 5,436,750 6,922,000
265,131 Liberty Media Corp. -
Interactive, Cl. A+ ........ 5,791,759 5,920,375
770,000 Rollins Inc. .................. 11,836,909 17,532,900
-------------- --------------
23,065,418 30,375,275
-------------- --------------
MARKET
SHARES COST VALUE
-------- ---- --------
MACHINERY -- 1.4%
20,000 Caterpillar Inc. .............. $ 136,559 $ 1,566,000
220,000 Deere & Co. ................... 12,905,974 26,562,800
8,000 SMC Corp. ..................... 1,033,311 1,065,584
-------------- --------------
14,075,844 29,194,384
-------------- --------------
WIRELESS COMMUNICATIONS -- 1.1%
98,000 America Movil SAB de CV,
Cl. L, ADR ................. 1,362,027 6,069,140
8,000 Clearwire Corp., Cl. A+ ....... 168,858 195,440
2,000 NTT DoCoMo Inc. ............... 4,368,481 3,167,513
3,340 Tele Norte Celular
Participacoes SA, ADR+ ..... 51,601 36,540
8,350 Telemig Celular
Participacoes SA, ADR ...... 241,320 420,339
32,165 Tim Participacoes SA,
ADR ........................ 390,212 1,108,727
100,000 United States
Cellular Corp.+ ............ 4,333,517 9,060,000
270 Vivo Participacoes SA+ ........ 941 2,153
174,122 Vivo Participacoes SA,
ADR ........................ 2,370,461 872,351
5,845 Vivo Participacoes SA,
Preference ................. 89,788 29,058
70,000 Vodafone Group plc, ADR ....... 1,902,872 2,354,100
-------------- --------------
15,280,078 23,315,361
-------------- --------------
ENVIRONMENTAL SERVICES -- 1.1%
97,500 Republic Services Inc. ........ 875,761 2,987,400
500,000 Waste Management Inc. ......... 12,972,510 19,525,000
-------------- --------------
13,848,271 22,512,400
-------------- --------------
METALS AND MINING -- 1.0%
20,000 Alcoa Inc. .................... 602,426 810,600
33,000 Anglo American plc ............ 1,250,229 1,951,585
89,148 Barrick Gold Corp. ............ 2,610,253 2,591,532
280,000 Consolidated Minerals Ltd. .... 498,024 745,388
72,500 Harmony Gold
Mining Co. Ltd.+ ........... 347,738 1,028,592
35,000 Harmony Gold
Mining Co. Ltd., ADR+ ...... 460,008 499,450
75,000 Ivanhoe Mines Ltd.+ ........... 560,208 1,068,000
52,000 New Hope Corp. Ltd. ........... 70,252 97,429
155,000 Newmont Mining Corp. .......... 4,747,145 6,054,300
23,000 Rio Tinto plc ................. 1,324,709 1,767,561
69,666 Xstrata plc ................... 1,525,449 4,178,729
-------------- --------------
13,996,441 20,793,166
-------------- --------------
See accompanying notes to financial statements.
11
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2007 (UNAUDITED)
MARKET
SHARES COST VALUE
-------- ---- --------
COMMON STOCKS (CONTINUED)
ELECTRONICS -- 1.0%
5,000 Advanced Micro
Devices Inc.+ .............. $ 52,100 $ 71,500
13,000 Fanuc Ltd. .................... 1,320,883 1,343,025
5,000 Hitachi Ltd., ADR ............. 347,376 353,750
180,000 Intel Corp. ................... 3,637,892 4,276,800
4,920 Keyence Corp. ................. 941,170 1,076,107
80,000 LSI Corp.+ .................... 474,386 600,800
20,000 Molex Inc., Cl. A ............. 519,697 531,000
7,500 NEC Corp., ADR ................ 43,625 38,625
38,000 Royal Philips
Electronics NV ............. 52,354 1,608,160
265,000 Texas Instruments Inc. ........ 6,407,535 9,971,950
-------------- --------------
13,797,018 19,871,717
-------------- --------------
AGRICULTURE -- 0.9%
490,000 Archer-Daniels-
Midland Co. ................ 10,962,208 16,214,100
30,000 Monsanto Co. .................. 1,342,682 2,026,200
30,000 The Mosaic Co.+ ............... 491,686 1,170,600
-------------- --------------
12,796,576 19,410,900
-------------- --------------
REAL ESTATE -- 0.8%
70,000 Cheung Kong
(Holdings) Ltd. ............ 815,521 916,718
92,000 Florida East Coast
Industries Inc. ............ 1,851,507 7,634,160
55,500 Griffin Land &
Nurseries Inc.+ ............ 529,369 2,003,550
150,000 The St. Joe Co. ............... 8,609,636 6,951,000
-------------- --------------
11,806,033 17,505,428
-------------- --------------
AUTOMOTIVE -- 0.8%
50,000 General Motors Corp. .......... 1,432,150 1,890,000
125,000 Navistar
International Corp.+ ....... 3,272,936 8,250,000
64,500 PACCAR Inc. ................... 431,444 5,614,080
-------------- --------------
5,136,530 15,754,080
-------------- --------------
TRANSPORTATION -- 0.7%
100,000 AMR Corp.+ .................... 1,924,248 2,635,000
70,000 Asciano Group+ ................ 568,851 601,176
165,000 GATX Corp. .................... 4,548,661 8,126,250
15,000 Grupo TMM SA,
Cl. A, ADR+ ................ 80,459 50,850
50,000 Laidlaw International Inc. .... 1,732,530 1,727,500
70,000 Toll Holdings Ltd. ............ 747,842 859,926
-------------- --------------
9,602,591 14,000,702
-------------- --------------
MARKET
SHARES COST VALUE
-------- ---- --------
RETAIL -- 0.7%
100,000 AutoNation Inc.+ .............. $ 1,156,202 $ 2,244,000
4,000 AutoZone Inc.+ ................ 351,780 546,480
27,000 Coldwater Creek Inc.+ ......... 54,462 627,210
40,000 Costco Wholesale Corp. ........ 1,868,913 2,340,800
25,000 CVS Caremark Corp. ............ 942,127 911,250
21,500 Hennes & Mauritz AB, Cl. B .... 919,237 1,277,891
30,000 Next plc ...................... 811,183 1,210,290
50,000 Sally Beauty Holdings Inc.+ ... 416,928 450,000
39,800 Seven & I Holdings Co. Ltd. ... 1,114,381 1,137,835
20,000 SUPERVALU Inc. ................ 595,000 926,400
10,000 The Home Depot Inc. ........... 342,745 393,500
73,000 Woolworths Ltd. ............... 1,058,044 1,671,018
-------------- --------------
9,631,002 13,736,674
-------------- --------------
CLOSED-END FUNDS -- 0.4%
31,500 Royce Value Trust Inc. ........ 388,298 674,730
104,000 The Central Europe and
Russia Fund Inc. ........... 2,391,965 5,377,840
70,000 The New Germany Fund Inc. ..... 754,518 1,242,500
-------------- --------------
3,534,781 7,295,070
-------------- --------------
COMPUTER SOFTWARE AND SERVICES -- 0.3%
10,000 Check Point Software
Technologies Ltd.+ ......... 169,874 228,100
24,100 Square Enix Co. Ltd. .......... 648,849 608,739
25,256 Telecom Italia Media SpA+ ..... 26,868 9,281
160,000 Yahoo! Inc.+ .................. 5,146,858 4,340,800
-------------- --------------
5,992,449 5,186,920
-------------- --------------
PAPER AND FOREST PRODUCTS -- 0.2%
114,000 Pactiv Corp.+ ................. 1,196,847 3,635,460
-------------- --------------
MANUFACTURED HOUSING AND RECREATIONAL VEHICLES -- 0.2%
70,000 Champion Enterprises Inc.+ .... 659,503 688,100
50,000 Fleetwood Enterprises Inc.+ ... 535,046 452,500
31,000 Huttig Building
Products Inc.+ ............. 78,168 234,670
7,000 Martin Marietta
Materials Inc. ............. 144,225 1,134,140
10,000 Nobility Homes Inc. ........... 195,123 210,300
21,000 Skyline Corp. ................. 842,087 630,210
-------------- --------------
2,454,152 3,349,920
-------------- --------------
REAL ESTATE INVESTMENT TRUSTS -- 0.1%
2,000 Camden Property Trust ......... 37,490 133,940
2,187 Prosperity REIT ............... 616 442
24,984 Rayonier Inc. ................. 798,811 1,127,778
-------------- --------------
836,917 1,262,160
-------------- --------------
TOTAL
COMMON STOCKS .............. 1,314,720,022 1,958,806,826
-------------- --------------
See accompanying notes to financial statements.
12
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2007 (UNAUDITED)
MARKET
SHARES COST VALUE
-------- ---- --------
CONVERTIBLE PREFERRED STOCKS -- 0.1%
AEROSPACE -- 0.1%
13,500 Northrop Grumman Corp.,
7.000% Cv. Pfd., Ser. B .... $ 1,573,020 $ 1,949,400
-------------- --------------
TELECOMMUNICATIONS -- 0.0%
25,000 Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B .... 787,113 1,196,250
-------------- --------------
TOTAL CONVERTIBLE
PREFERRED STOCKS ........... 2,360,133 3,145,650
-------------- --------------
PRINCIPAL MARKET
AMOUNT COST VALUE
------- ---- --------
CONVERTIBLE CORPORATE BONDS -- 0.1%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.1%
$ 1,000,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ........... 974,129 957,500
-------------- --------------
AEROSPACE -- 0.0%
605,000 Kaman Corp., Sub. Deb. Cv.,
6.000%, 03/15/12 ........... 584,944 796,331
-------------- --------------
CONSUMER PRODUCTS -- 0.0%
1,000,000 Pillowtex Corp.,
Sub. Deb. Cv.,
9.000%, 12/15/07 (a) ....... 0 0
-------------- --------------
TOTAL CONVERTIBLE
CORPORATE BONDS ............ 1,559,073 1,753,831
-------------- --------------
SHARES
--------
WARRANTS -- 0.0%
ENERGY AND UTILITIES -- 0.0%
12,183 Mirant Corp., Ser. A,
expire 01/03/11+ ........... 36,353 280,453
-------------- --------------
PRINCIPAL MARKET
AMOUNT COST VALUE
------- ---- --------
SHORT-TERM OBLIGATIONS -- 4.5%
REPURCHASE AGREEMENTS -- 4.2%
$42,872,000 Barclays Capital Inc.,
4.250%, dated 06/29/07,
due 07/02/07, proceeds at
maturity, $42,887,184 (d) .. $ 42,872,000 $ 42,872,000
42,871,000 Daiwa Securities America Inc.,
4.000%, dated 06/29/07,
due 07/02/07, proceeds at
maturity, $42,885,290 (e) .. 42,871,000 42,871,000
-------------- --------------
85,743,000 85,743,000
-------------- --------------
U.S. TREASURY BILLS -- 0.3%
5,500,000 U.S. Treasury Bills,
4.757% to 4.875%++,
08/02/07 to 09/20/07 (f) ... 5,457,362 5,457,869
-------------- --------------
TOTAL SHORT-TERM
OBLIGATIONS ................ 91,200,362 91,200,869
-------------- --------------
TOTAL INVESTMENTS -- 100.0% ................ $1,409,875,943 2,055,187,629
==============
WHEN ISSUED SECURITIES SOLD
(Proceeds received $1,283,295) ............................. (1,232,400)
--------------
FUTURES CONTRACTS
(unrealized depreciation) .................................. (117,174)
OTHER ASSETS AND LIABILITIES (NET) ............................ (3,517,091)
PREFERRED STOCK
(8,956,900 preferred shares outstanding) ................... (403,742,500)
--------------
NET ASSETS -- COMMON STOCK
(170,213,012 common shares outstanding) .................... $1,646,578,464
==============
NET ASSET VALUE PER COMMON SHARE
($1,646,578,464 / 170,213,012 shares outstanding)........... $9.67
=====
MARKET
SHARES PROCEEDS VALUE
-------- ---------- --------
WHEN ISSUED SECURITIES SOLD -- (0.0)%
ELECTRONICS -- 0.0%
15,000 Tyco Electronics Ltd. ......... $ 578,066 $ 585,900
HEALTH CARE -- 0.0%
15,000 Covidien Ltd. ................. 705,229 646,500
-------------- --------------
TOTAL WHEN ISSUED
SECURITIES SOLD ............ $ 1,283,295 $ 1,232,400
============== ==============
See accompanying notes to financial statements.
13
THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 2007 (UNAUDITED)
NUMBER OF UNREALIZED
CONTRACTS EXPIRATION DATE DEPRECIATION
--------- --------------- ------------
FUTURES CONTRACTS -- SHORT POSITION
370 S&P 500 Index Futures ......... 09/20/07 $ (117,174)
==============
------------------
(a) Security fair valued under procedures established by the Board of
Directors. The procedures may include reviewing available financial
information about the company and reviewing valuation of comparable
securities and other factors on a regular basis. At June 30, 2007, the
market value of fair valued securities amounted to $561,995 or 0.03% of
total investments.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At June 30,
2007, the market value of the Rule 144A security amounted to $470,880 or
0.02% of total investments.
(c) At June 30, 2007, the Fund held investments in restricted securities
amounting to $57,635 or 0.00% of total investments, which were valued under
methods approved by the Board, as follows:
06/30/07
ACQUISITION ACQUISITION ACQUISITION CARRYING VALUE
SHARES ISSUER DATE COST PER UNIT
------ ------- ------- ------- -------
4,440,836 Cable & Wireless
Jamaica Ltd. ............. 03/29/01 $101,639 $0.0130
(d) Collateralized by $44,783,000 U.S. Treasury Notes, 3.125% to 3.625%, due
06/30/07 to 04/15/09, market value $43,729,294.
(e) Collateralized by $33,385,000 U.S. Treasury Bond, 8.125%, due 08/15/21,
market value $43,729,440.
(f) At June 30, 2007, $5,500,000 of the principal amount was pledged as
collateral for futures contracts.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depository Receipt
CVO Contingent Value Obligation
REIT Real Estate Investment Trust
WI When Issued
% OF
MARKET MARKET
VALUE VALUE
------ ------
GEOGRAPHIC DIVERSIFICATION
LONG POSITIONS
North America ....................... 75.7% $1,555,255,877
Europe .............................. 16.5 338,710,261
Latin America ....................... 4.3 88,449,203
Japan ............................... 2.5 51,337,744
Asia/Pacific ........................ 0.9 19,417,220
South Africa ........................ 0.1 2,017,324
----- --------------
100.0% $2,055,187,629
===== ==============
WHEN ISSUED SECURITIES
Latin America ....................... (0.0)% $ (1,232,400)
See accompanying notes to financial statements.
14
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
SCHEDULE OF INVESTMENTS
JUNE 30, 2007 (UNAUDITED)
MARKET
SHARES COST VALUE
-------- ---- --------
COMMON STOCKS -- 1.8%
BEVERAGES -- 0.2%
3,000 ITO EN Ltd. ...................... $ 98,338 $ 98,680
200 PepsiCo Inc. ..................... 13,082 12,970
200 The Coca-Cola Co. ................ 10,534 10,462
----------- -----------
121,954 122,112
----------- -----------
BIOTECHNOLOGY -- 0.1%
200 Alkermes Inc.+ ................... 2,994 2,920
200 Alnylam
Pharmaceuticals Inc.+ ......... 3,216 3,038
200 Arena Pharmaceuticals Inc.+ ...... 2,222 2,198
200 Array Biopharma Inc.+ ............ 2,398 2,334
200 Biogen Idec Inc.+ ................ 10,769 10,700
500 Crucell NV, ADR+ ................. 11,188 11,115
200 Gilead Sciences Inc.+ ............ 7,826 7,754
200 MannKind Corp.+ .................. 2,530 2,466
200 Monogram Biosciences Inc.+ ....... 342 338
200 Vanda Pharmaceuticals Inc.+ ...... 4,064 4,052
----------- -----------
47,549 46,915
----------- -----------
FOOD AND STAPLES RETAILING -- 0.3%
5,000 CVS Caremark Corp. ............... 185,080 182,250
200 Pathmark Stores Inc.+ ............ 2,620 2,592
200 The Great Atlantic & Pacific
Tea Co. Inc.+ ................. 6,869 6,708
200 Village Super Market Inc.,
Cl. A ......................... 9,974 9,562
200 Wal-Mart Stores Inc. ............. 9,658 9,622
----------- -----------
214,201 210,734
----------- -----------
FOOD PRODUCTS -- 0.4%
1,000 Cadbury Schweppes plc,
ADR ........................... 54,032 54,300
200 Campbell Soup Co. ................ 7,792 7,762
200 Dean Foods Co. ................... 6,350 6,374
200 Del Monte Foods Co. .............. 2,478 2,432
200 Flowers Foods Inc. ............... 6,815 6,672
200 General Mills Inc. ............... 11,786 11,684
2,000 Groupe Danone, ADR ............... 32,442 32,520
200 H.J. Heinz Co. ................... 9,532 9,494
200 Hain Celestial Group Inc.+ ....... 5,594 5,428
200 Kellogg Co. ...................... 10,368 10,358
500 Lifeway Foods Inc.+ .............. 5,665 5,645
200 Nestle SA, ADR ................... 19,094 19,130
2,000 Rock Field Co. Ltd. .............. 32,771 32,893
50 Wimm-Bill-Dann Foods
OJSC, ADR ..................... 5,180 5,201
2,000 YAKULT HONSHA Co. Ltd. ........... 50,719 50,680
----------- -----------
260,618 260,573
----------- -----------
MARKET
SHARES COST VALUE
-------- ---- --------
HEALTH CARE EQUIPMENT AND SUPPLIES -- 0.4%
200 Advanced Medical
Optics Inc.+ .................. $ 6,888 $ 6,976
200 American Medical Systems
Holdings Inc.+ ................ 3,604 3,608
200 AngioDynamics Inc.+ .............. 3,740 3,602
200 Aspect Medical
Systems Inc.+ ................. 3,018 2,992
1,000 Cutera Inc.+ ..................... 25,070 24,920
200 Cyberonics Inc.+ ................. 3,436 3,364
300 DENTSPLY
International Inc. ............ 11,460 11,478
200 Edwards Lifesciences Corp.+ ...... 9,978 9,868
200 ev3 Inc.+ ........................ 3,406 3,376
500 Exactech Inc.+ ................... 8,053 8,040
200 Greatbatch Inc.+ ................. 6,615 6,480
200 Hospira Inc.+ .................... 7,842 7,808
2,000 I-Flow Corp.+ .................... 33,342 33,480
200 Kinetic Concepts Inc.+ ........... 10,470 10,394
500 Lifecore Biomedical Inc.+ ........ 8,059 7,935
200 Medical Action
Industries Inc.+ .............. 3,738 3,612
200 Medtronic Inc. ................... 10,354 10,372
200 Mentor Corp. ..................... 8,212 8,136
200 Micrus Endovascular Corp.+ ....... 4,884 4,920
200 NeuroMetrix Inc.+ ................ 1,904 1,942
200 Orthofix International NV+ ....... 9,168 8,994
200 Respironics Inc.+ ................ 8,454 8,518
1,000 St. Jude Medical Inc.+ ........... 41,738 41,490
200 Thoratec Corp.+ .................. 3,746 3,678
200 Varian Medical Systems Inc.+ ..... 8,568 8,502
1,000 Vascular Solutions Inc.+ ......... 9,484 9,370
500 Zimmer Holdings Inc.+ ............ 42,697 42,445
----------- -----------
297,928 296,300
----------- -----------
HEALTH CARE PROVIDERS AND SERVICES -- 0.1%
200 Aetna Inc. ....................... 9,984 9,880
200 Amedisys Inc.+ ................... 7,485 7,266
200 Healthways Inc.+ ................. 9,722 9,474
200 Henry Schein Inc.+ ............... 10,729 10,686
200 NightHawk Radiology
Holdings Inc.+ ................ 3,642 3,610
200 Omnicare Inc. .................... 7,266 7,212
1,000 Owens & Minor Inc. ............... 35,498 34,940
200 Patterson Companies Inc.+ ........ 7,478 7,454
200 PSS World Medical Inc.+ .......... 3,722 3,644
200 UnitedHealth Group Inc. .......... 10,368 10,228
----------- -----------
105,894 104,394
----------- -----------
See accompanying notes to financial statements.
15
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
SCHEDULE OF INVESTMENTS
JUNE 30, 2007 (UNAUDITED)
MARKET
SHARES COST VALUE
-------- ---- --------
COMMON STOCKS (CONTINUED)
PHARMACEUTICALS -- 0.3%
200 Abbott Laboratories .............. $ 10,774 $ 10,710
200 Alpharma Inc., Cl. A ............. 5,280 5,202
200 Aspreva Pharmaceuticals
Corp.+ ........................ 3,498 3,460
200 Barr Pharmaceuticals Inc.+ ....... 10,122 10,046
200 Endo Pharmaceuticals
Holdings Inc.+ ................ 6,958 6,846
2,000 Johnson & Johnson ................ 123,072 123,240
200 K-V Pharmaceutical Co.,
Cl. A+ ........................ 5,510 5,448
200 Matrixx Initiatives Inc.+ ........ 4,002 4,186
200 Merck & Co. Inc. ................. 10,028 9,960
200 Pain Therapeutics Inc.+ .......... 1,782 1,742
200 Sepracor Inc.+ ................... 8,126 8,204
200 Teva Pharmaceutical
Industries Ltd., ADR .......... 8,202 8,250
----------- -----------
197,354 197,294
----------- -----------
TOTAL
COMMON STOCKS ................. 1,245,498 1,238,322
----------- -----------
PRINCIPAL MARKET
AMOUNT COST VALUE
------- ---- --------
SHORT-TERM OBLIGATIONS -- 98.2%
REPURCHASE AGREEMENTS -- 9.7%
$ 6,700,000 Daiwa Securities America Inc.,
4.000%, dated 06/29/07,
due 07/02/07,
proceeds at maturity,
$6,702,233 (a) ................ $ 6,700,000 $ 6,700,000
----------- -----------
U.S. TREASURY BILLS -- 88.5%
61,812,000 U.S. Treasury Bill,
4.760%++, 09/27/07 ............ 61,118,881 61,114,390
----------- -----------
TOTAL SHORT-TERM
OBLIGATIONS ................... 67,818,881 67,814,390
----------- -----------
TOTAL INVESTMENTS -- 100.0% ................... $69,064,379 69,052,712
===========
OTHER ASSETS AND LIABILITIES (NET) .......................... (1,252,206)
-----------
NET ASSETS COMMON SHARES
(8,474,459 common shares outstanding) ..................... $67,800,506
===========
NET ASSET VALUE PER COMMON SHARE
($67,800,506 / 8,474,459 shares outstanding).............. $8.00
=====
------------------
(a) Collateralized by $6,692,000 U.S. Treasury Note, 5.500%, due 02/15/08,
market value $6,834,205.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depository Receipt
OJSC Open Joint Stock Company
% OF
MARKET MARKET
VALUE VALUE
------ ------
GEOGRAPHIC DIVERSIFICATION
North America ........................ 99.5% $68,730,949
Japan ................................ 0.3 182,254
Europe ............................... 0.2 130,515
Latin America ........................ 0.0 8,994
------ -----------
100.0% $69,052,712
====== ===========
See accompanying notes to financial statements.
16
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2007 (UNAUDITED)
THE GABELLI
THE GABELLI HEALTHCARE &
EQUITY TRUST INC. WELLNESS(RX) TRUST
----------------- ------------------
ASSETS:
Investments, at value (cost $1,324,132,943 and $62,364,379, respectively) .......... $1,969,444,629 $62,352,712
Repurchase agreements, at value (cost $85,743,000 and $6,700,000, respectively) .... 85,743,000 6,700,000
Foreign currency, at value (cost $1,381,573 and $0, respectively) .................. 1,388,667 --
Deposit at broker .................................................................. 46,804 --
Cash ............................................................................... -- 691
Receivable for investments sold .................................................... 2,370,884 --
Dividends and interest receivable .................................................. 2,812,056 2,233
Unrealized appreciation on swap contracts .......................................... 175,929 --
Variation margin ................................................................... 170,200 --
Prepaid expense .................................................................... 32,224 --
-------------- -----------
TOTAL ASSETS ....................................................................... 2,062,184,393 69,055,636
-------------- -----------
LIABILITIES:
When issued securities sold (proceeds received $1,283,295) ......................... 1,232,400 --
Payable to custodian ............................................................... 1,291,537 --
Payable for investments purchased .................................................. 4,441,537 1,245,498
Payable for spin-off expenses ...................................................... 700,000 --
Distributions payable .............................................................. 213,943 --
Payable for investment advisory fees ............................................... 3,358,863 5,572
Payable for offering expenses ...................................................... 65,960 --
Payable for payroll expenses ....................................................... 15,652 608
Payable for accounting fees ........................................................ 3,606 371
Payable for Directors'/Trustees' fees .............................................. -- 405
Other accrued expenses ............................................................. 539,931 2,676
-------------- -----------
TOTAL LIABILITIES .................................................................. 11,863,429 1,255,130
-------------- -----------
PREFERRED STOCK:
Series C Cumulative Preferred Stock (Auction Rate, $25,000 liquidation value, $0.001
par value, 5,200 shares authorized with 5,200 shares issued and outstanding) ..... 130,000,000
Series D Cumulative Preferred Stock (5.875%, $25 liquidation value, $0.001 par value,
3,000,000 shares authorized with 2,949,700 shares issued and outstanding) ......... 73,742,500
Series E Cumulative Preferred Stock (Auction Rate, $25,000 liquidation value, $0.001
par value, 2,000 shares authorized with 2,000 shares issued and outstanding) ..... 50,000,000
Series F Cumulative Preferred Stock (6.20%, $25 liquidation value, $0.001 par value,
6,000,000 shares authorized with 6,000,000 shares issued and outstanding) ........ 150,000,000
--------------
TOTAL PREFERRED STOCK .............................................................. 403,742,500
--------------
NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS ..................................... $1,646,578,464 $67,800,506
============== ===========
NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS CONSIST OF:
Paid-in capital, at $0.001 par value ............................................... $1,056,278,088 $67,795,672
Accumulated net investment income .................................................. -- 16,501
Accumulated distributions in excess of net realized
gain on investments, futures contracts,
swap contracts, and foreign currency transactions ................................ (55,123,565) --
Net unrealized appreciation (depreciation) on investments .......................... 645,311,686 (11,667)
Net unrealized appreciation on when issued securities sold ......................... 50,895 --
Net unrealized appreciation on swap contracts ...................................... 175,929 --
Net unrealized depreciation on futures contracts ................................... (117,174) --
Net unrealized appreciation on foreign currency translations ....................... 2,605 --
-------------- -----------
NET ASSETS ......................................................................... $1,646,578,464 $67,800,506
============== ===========
NET ASSET VALUE PER COMMON SHARE
Net Assets ......................................................................... $1,646,578,464 $67,800,506
============== ===========
Shares outstanding ................................................................. 170,213,012 8,474,459
============== ===========
Net Asset Value per Common Share ................................................... $9.67 $8.00
===== =====
See accompanying notes to financial statements.
17
STATEMENTS OF OPERATIONS
THE GABELLI THE GABELLI
EQUITY TRUST INC. HEALTHCARE &
FOR THE SIX WELLNESS(RX) TRUST
MONTHS ENDED FOR THE PERIOD ENDED
JUNE 30, 2007 JUNE 30, 2007 (A)
(UNAUDITED) (UNAUDITED)
----------------- --------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes of $745,664 and $0, respectively) ...................... $ 19,861,410 --
Interest ............................................................................... 4,020,449 $26,134
------------ --------
TOTAL INVESTMENT INCOME ................................................................ 23,881,859 26,134
------------ --------
EXPENSES:
Investment advisory fees ............................................................... 10,172,602 5,572
Healthcare & Wellness(Rx) Trust spin-off expenses ...................................... 700,000 --
Shareholder communications expenses .................................................... 350,768 1,216
Auction agent fees ..................................................................... 224,620 --
Custodian fees ......................................................................... 163,528 203
Payroll expenses ....................................................................... 120,107 608
Legal and audit fees ................................................................... 71,148 406
Directors'/Trustees' fees .............................................................. 70,086 405
Shareholder services fees .............................................................. 68,158 487
Accounting fees ........................................................................ 22,375 371
Interest expense ....................................................................... 1,044 --
Miscellaneous expenses ................................................................. 168,353 365
------------ --------
TOTAL EXPENSES ......................................................................... 12,132,789 9,633
Less: Custodian fee credits ............................................................ (53,726) --
------------ --------
NET EXPENSES ........................................................................... 12,079,063 9,633
------------ --------
NET INVESTMENT INCOME .................................................................. 11,802,796 16,501
------------ --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, WHEN ISSUED SECURITIES SOLD,
SWAP CONTRACTS, FUTURES CONTRACTS, AND FOREIGN CURRENCY:
Net realized gain on investments ....................................................... 19,340,668 --
Capital gain distributions from investment company ..................................... 52,465 --
Net realized gain on swap contracts .................................................... 546,871 --
Net realized loss on futures contracts ................................................. (3,308,465) --
Net realized loss on foreign currency transactions ..................................... (5,652) --
------------ --------
Net realized gain on investments, swap contracts, futures contracts, and
foreign currency transactions ........................................................ 16,625,887 --
------------ --------
Net change in unrealized appreciation/depreciation:
on investments ....................................................................... 164,581,839 (11,667)
on sale of when issued securities .................................................... 50,895 --
on swap contracts .................................................................... (449,901) --
on futures contracts ................................................................. (29,754) --
on foreign currency translations ..................................................... (1,824) --
------------ --------
Net change in unrealized appreciation/depreciation on investments, on sale of when issued
securities, swap contracts, futures contracts, and foreign currency translations ..... 164,151,255 (11,667)
------------ --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, WHEN ISSUED SECURITIES SOLD,
SWAP CONTRACTS, FUTURES CONTRACTS, AND FOREIGN CURRENCY .............................. 180,777,142 (11,667)
------------ --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................... 192,579,938 4,834
Total Distributions to Preferred Stock Shareholders .................................... (11,306,167) --
------------ --------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
RESULTING FROM OPERATIONS ............................................................ $181,273,771 $ 4,834
============ ========
---------------
(a) The Gabelli Healthcare & Wellness(Rx) Trust commenced investment operations
on June 28, 2007.
See accompanying notes to financial statements.
18
STATEMENTS OF CHANGES IN NET ASSETS
ATTRIBUTABLE TO COMMON SHAREHOLDERS
THE GABELLI
THE GABELLI HEALTHCARE &
EQUITY TRUST INC. WELLNESS(RX) TRUST
------------------------------------- ------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 2007 YEAR ENDED JUNE 30, 2007 (A)
(UNAUDITED) DECEMBER 31, 2006 (UNAUDITED)
--------------- ----------------- -----------
OPERATIONS:
Net investment income ............................................. $ 11,802,796 $ 30,936,093 $ 16,501
Net realized gain on investments, swap contracts,
futures contracts, and foreign currency transactions ............ 16,625,887 143,621,025 --
Net change in unrealized appreciation/depreciation on
investments, on sale of when issued securities, swap contracts,
futures contracts, and foreign currency translations ............ 164,151,255 219,969,621 (11,667)
-------------- -------------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .............. 192,579,938 394,526,739 4,834
-------------- -------------- -----------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
Net investment income ............................................. (1,786,044)* (4,468,454) --
Net realized short-term gains on investments,
swap contracts, futures contracts,
and foreign currency transactions ............................... -- (1,813,678) --
Net realized long-term gains on investments,
swap contracts, futures contracts,
and foreign currency transactions ............................... (9,520,123)* (18,665,359) --
-------------- -------------- -----------
TOTAL DISTRIBUTIONS TO PREFERRED SHAREHOLDERS ..................... (11,306,167) (24,947,491) --
-------------- -------------- -----------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS
RESULTING FROM OPERATIONS ....................................... 181,273,771 369,579,248 4,834
-------------- -------------- -----------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income ............................................. (10,710,025)* (26,337,625) --
Net realized short-term gains on investments,
swap contracts, futures contracts,
and foreign currency transactions ............................... -- (10,620,934) --
Net realized long-term gains on investments,
swap contracts, futures contracts,
and foreign currency transactions ............................... (7,105,764)* (109,810,607) --
Return of capital ................................................. (117,777,371)*(b) -- --
-------------- -------------- -----------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS ........................ (135,593,160) (146,769,166) --
-------------- -------------- -----------
FUND SHARE TRANSACTIONS:
Net increase in net assets from common shares
issued in offering, upon reorganization, and
reinvestment of distributions ................................... 13,991,574 23,591,621 67,695,672
Offering costs for preferred shares charged to paid-in capital .... -- (5,235,000) --
Offering costs for issuance of rights charged to paid-in capital .. -- (151,821) --
-------------- -------------- -----------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS ........... 13,991,574 18,204,800 67,695,672
-------------- -------------- -----------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS .... 59,672,185 241,014,882 67,700,506
NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS:
Beginning of period ............................................... 1,586,906,279 1,345,891,397 100,000
-------------- -------------- -----------
End of period (including undistributed net investment
income of $0, $693,273, and $16,501, respectively) .............. $1,646,578,464 $1,586,906,279 $67,800,506
============== ============== ===========
--------------------
* Based on fiscal year to date book income. Amounts are subject to change and
recharacterization at fiscal year end.
(a) The Gabelli Healthcare & Wellness(Rx) Trust commenced investment operations
on June 28, 2007.
(b) A distribution of $67,795,672 for The Gabelli Healthcare & Wellness (Rx)
Trust spin-off was from paid-in-capital.
See accompanying notes to financial statements.
19
THE GABELLI EQUITY TRUST INC. AND
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION. The Gabelli Equity Trust Inc. (the "Equity Trust") is a
non-diversified closed-end management investment company organized as a Maryland
corporation on May 20, 1986 and registered under the Investment Company Act of
1940, as amended (the "1940 Act"), whose primary objective is long-term growth
of capital. Investment operations commenced on August 21, 1986.
The Equity Trust will invest at least 80% of its assets in equity
securities under normal market conditions (the "80% Policy"). The 80% Policy may
be changed without shareholder approval. The Equity Trust will provide
shareholders with notice at least 60 days prior to the implementation of any
changes in the 80% Policy.
The Gabelli Healthcare & Wellness(Rx) Trust ("Healthcare Trust") is a
non-diversified closed-end management investment company organized as a Delaware
statutory trust on February 20, 2007 and registered under the 1940 Act, whose
objective is long-term growth of capital. Investment operations commenced on
June 28, 2007. The Healthcare Trust had no operations prior to June 28, 2007,
other than the sale of 12,500 common shares for $100,000 to the Equity Trust. On
June 28, 2007, the Equity Trust contributed $67,695,672 in cash in exchange for
shares of the Healthcare Trust, and on the same date distributed such shares to
the holders of record on June 21, 2007 at the rate of one share of the
Healthcare Trust for every twenty shares of the Equity Trust common stock.
Under normal market conditions, the Healthcare Trust will invest at least
80% of its assets in equity securities and income producing securities of
domestic and foreign companies in the healthcare and wellness industries.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with United States ("U.S.") generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the Equity Trust and the Healthcare Trust (each a "Fund",
collectively, the "Funds") in the preparation of their 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 for the Equity Trust or the Board of Trustees for the
Healthcare Trust (the "Board" or the "Boards") so determines, by such other
method as the respective Board shall determine in good faith to reflect its fair
market value. Portfolio securities traded on more than one national securities
exchange or market are valued according to the broadest and most representative
market, as determined by Gabelli Funds, LLC (the "Adviser").
Portfolio securities primarily traded on a foreign market are generally
valued at the preceding closing values of such securities on the relevant
market, but may be fair valued pursuant to procedures established by the
respective Board if market conditions change significantly after the close of
the foreign market but prior to the close of business on the day the securities
are being valued. Debt instruments with remaining maturities of 60 days or less
that are not credit impaired are valued at amortized cost, unless the respective
Board determines such amount does not reflect the securities' fair value, in
which case these securities will be fair valued as determined by the respective
Board. Debt instruments having a maturity greater than 60 days for which market
quotations are readily available are valued at the average of the latest bid and
asked prices. If there were no asked prices quoted on such day, the security is
valued using the closing bid price. Futures contracts are valued at the closing
settlement price of the exchange or board of trade on which the applicable
contract is traded.
20
THE GABELLI EQUITY TRUST INC. AND
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
Securities and assets for which market quotations are not readily available
are fair valued as determined by the Boards. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available
financial and non-financial information about the company; comparisons to the
valuation and changes in valuation of similar securities, including a comparison
of foreign securities to the equivalent U.S. dollar value ADR securities at the
close of the U.S. exchange; and evaluation of any other information that could
be indicative of the value of the security.
In September 2006, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards ("SFAS") 157, Fair Value
Measurements, which clarifies the definition of fair value and requires
companies to expand their disclosure about the use of fair value to measure
assets and liabilities in interim and annual periods subsequent to initial
recognition. Adoption of SFAS 157 requires the use of the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. At this time,
management is in the process of reviewing the requirements of SFAS 157 against
its current valuation policies to determine future applicability.
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System, or with other brokers or
dealers that meet credit guidelines established by the Adviser and reviewed by
the Board. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
The Fund 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 Fund in each agreement. The Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the adequacy of the collateral.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At June 30,
2007, the Equity Trust and the Healthcare Trust had investments of $85,743,000
and $6,700,000 in repurchase agreements, respectively.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. Each Fund may invest, from time
to time, in shares of other investment companies (or entities that would be
considered investment companies but are excluded from the definition pursuant to
certain exceptions under the 1940 Act) (the "Acquired Funds") in accordance with
the 1940 Act and related rules. As a shareholder in the Fund, you would bear the
pro rata portion of the periodic expenses of the Acquired Funds in addition to
the Fund's expenses. For the six months ended June 30, 2007, the Equity Trust
and the Healthcare Trust's pro rata portion of the periodic expenses charged by
the Acquired Funds was less than one basis point.
OPTIONS. Each Fund may purchase or write call or put options on securities
or indices. As a writer of put options, the Fund receives a premium at the
outset and then bears the risk of unfavorable changes in the price of the
financial instrument underlying the option. The Fund would incur a loss if the
price of the underlying financial instrument decreases between the date the
option is written and the date on which the option is terminated. The Fund would
realize a gain, to the extent of the premium, if the price of the financial
instrument increases between those dates.
As a purchaser of put options, the Fund pays a premium for the right to
sell to the seller of the put option the underlying security at a specified
price. The seller of the put has the obligation to purchase the underlying
security upon exercise at the exercise price. If the price of the underlying
security declines, the Fund would realize a gain upon sale or
21
THE GABELLI EQUITY TRUST INC. AND
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
exercise. If the price of the underlying security increases or stays the same,
the Fund would realize a loss upon sale or at expiration date, but only to the
extent of the premium paid.
In the case of call options, these exercise prices are referred to as
"in-the-money", "at-the-money", and "out-of-the-money", respectively. The Fund
may write (a) in-the-money call options when the Adviser expects that the price
of the underlying security will remain stable or decline moderately during the
option period, (b) at-the-money call options when the Adviser expects that the
price of the underlying security will remain stable or advance moderately during
the option period, and (c) out-of-the-money call options when the Adviser
expects that the premiums received from writing the call option will be greater
than the appreciation in the price of the underlying security above the exercise
price. By writing a call option, the Fund limits its opportunity to profit from
any increase in the market value of the underlying security above the exercise
price of the option. Out-of-the-money, at-the-money, and in-the-money put
options (the reverse of call options as to the relation of exercise price to
market price) may be utilized in the same market environments that such call
options are used in equivalent transactions.
SWAP AGREEMENTS. The Funds may enter into interest rate swap or cap
transactions. The use of swaps and caps is a highly specialized activity that
involves investment techniques and risks different from those associated with
ordinary portfolio transactions. Swap agreements may involve, to varying
degrees, elements of market and counterparty risk, and exposure to loss in
excess of the related amounts reflected in the Statements of Assets and
Liabilities. In an interest rate swap, a Fund would agree to pay to the other
party to the interest rate swap (which is known as the "counterparty")
periodically a fixed rate payment in exchange for the counterparty agreeing to
pay to the Fund periodically a variable rate payment that, for the Equity Trust,
is intended to approximate the Equity Trust's variable rate payment obligation
on Series C Preferred Stock. In an interest rate cap, a Fund would pay a premium
to the counterparty and, to the extent that a specified variable rate index
exceeds a predetermined fixed rate, would receive from that counterparty
payments of the difference based on the notional amount of such cap. Interest
rate swap and cap transactions introduce additional risk because the Equity
Trust would remain obligated to pay preferred stock dividends when due in
accordance with the Articles Supplementary even if the counterparty defaulted.
If there is a default by the counterparty to a swap contract, that Fund will be
limited to contractual remedies pursuant to the agreements related to the
transaction. There is no assurance that the swap contract counterparties will be
able to meet their obligations pursuant to a swap contract or that, in the event
of default, the Fund will succeed in pursuing contractual remedies. The Fund
thus assumes the risk that it may be delayed in or prevented from obtaining
payments owed to it pursuant to a swap contract. The creditworthiness of the
swap contract counterparties is closely monitored in order to minimize this
risk. Depending on the general state of short-term interest rates and the
returns on a Fund's portfolio securities at that point in time, such a default
could negatively affect the Fund's ability to make dividend payments. In
addition, at the time an interest rate swap or cap transaction reaches its
scheduled termination date, there is a risk that a Fund will not be able to
obtain a replacement transaction or that the terms of the replacement will not
be as favorable as on the expiring transaction. If this occurs, it could have a
negative impact on the Fund's ability to make dividend payments.
The use of derivative instruments involves, to varying degrees, elements of
market and counterparty risk in excess of the amount recognized in the
Statements of Assets and Liabilities.
Unrealized gains related to swaps are reported as an asset and unrealized
losses are reported as a liability in the Statements of Assets and Liabilities.
The change in value of swaps, including the accrual of periodic amounts of
interest to be paid or received on swaps is reported as unrealized gains or
losses in the Statements of Operations. A realized gain or loss is recorded upon
payment or receipt of a periodic payment or termination of swap agreements.
22
THE GABELLI EQUITY TRUST INC. AND
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
The Equity Trust has entered into an interest rate swap agreement with
Citibank N.A. Under the agreement, the Equity Trust receives a floating rate of
interest and pays a respective fixed rate of interest on the nominal value of
the swap. Details of the swap at June 30, 2007 are as follows:
NET
NOTIONAL VARIABLE RATE* TERMINATION UNREALIZED
AMOUNT FIXED RATE (RATE RESET MONTHLY) DATE APPRECIATION
------ ---------- -------------------- ---- ------------
$130,000,000 4.494% 5.32% July 2, 2007 $175,929
--------------------
* Based on Libor (London Interbank Offered Rate).
FUTURES CONTRACTS. Each Fund may engage in futures contracts for the
purpose of hedging against changes in the value of its portfolio securities and
in the value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin". Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuations in the
value of the contract, which are included in unrealized
appreciation/(depreciation) on investments and futures contracts. The Fund
recognizes a realized gain or loss when the contract is closed.
There are several risks in connection with the use of futures contracts as
a hedging instrument. The change in value of futures contracts primarily
corresponds with the value of their underlying instruments, which may not
correlate with the change in value of the hedged investments. In addition, there
is the risk that the Fund may not be able to enter into a closing transaction
because of an illiquid secondary market. Open futures contracts at June 30, 2007
are reflected within the Schedules of Investments.
FORWARD FOREIGN EXCHANGE CONTRACTS. Each Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/(depreciation) on investments and foreign
currency translations. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate
fluctuations in the underlying prices of the Fund's portfolio securities, but it
does establish a rate of exchange that can be achieved in the future. Although
forward foreign exchange contracts limit the risk of loss due to a decline in
the value of the hedged currency, they also limit any potential gain that might
result should the value of the currency increase. In addition, the Fund could be
exposed to risks if the counterparties to the contracts are unable to meet the
terms of their contracts. At June 30, 2007, there were no open forward foreign
exchange contracts in the Funds.
FOREIGN CURRENCY TRANSLATIONS. The books and records of each Fund are
maintained in U.S. dollars. Foreign currencies, investments, and other assets
and liabilities are translated into U.S. dollars at the current exchange rates.
Purchases and sales of investment securities, income, and expenses are
translated at the exchange rate prevailing on the respective dates of such
transactions. Unrealized gains and losses that result from changes in foreign
exchange rates and/or changes in market prices of securities have been included
in unrealized appreciation/(depreciation) on investments and foreign currency
translations. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions, and the
23
THE GABELLI EQUITY TRUST INC. AND
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
difference between the amounts of interest and dividends recorded on the books
of the Fund and the amounts actually received. The portion of foreign currency
gains and losses related to fluctuation in exchange rates between the initial
trade date and subsequent sale trade date is included in realized gain/(loss) on
investments.
FOREIGN SECURITIES. Each Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
FOREIGN TAXES. The Funds may be subject to foreign taxes on income, gains
on investments, or currency repatriation, a portion of which may be recoverable.
The Funds will accrue such taxes and recoveries as applicable, based upon its
current interpretation of tax rules and regulations that exist in the markets in
which it invests.
RESTRICTED AND ILLIQUID SECURITIES. The Equity Trust may invest up to 10%
of its net assets in securities for which the markets are illiquid. The
Healthcare Trust may invest without limit in illiquid securities. Illiquid
securities include securities the disposition of which is subject to substantial
legal or contractual restrictions. The sale of illiquid securities often
requires more time and results in higher brokerage charges or dealer discounts
and other selling expenses than does the sale of securities eligible for trading
on national securities exchanges or in the over-the-counter markets. Restricted
securities may sell at a price lower than similar securities that are not
subject to restrictions on resale. Securities freely saleable among qualified
institutional investors under special rules adopted by the SEC may be treated as
liquid if they satisfy liquidity standards established by the Board. The
continued liquidity of such securities is not as well assured as that of
publicly traded securities, and accordingly the Board will monitor their
liquidity.
CONCENTRATION RISKS. The Healthcare Trust will invest a significant portion
of its assets in companies in the healthcare and wellness industries. As a
result, the Healthcare Trust may be more susceptible to economic, political, and
regulatory developments in this particular sector of the market, positive or
negative, and may experience increased volatility to the Healthcare Trust's NAV
and a magnified effect in its total return.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.
CUSTODIAN FEE CREDITS AND INTEREST EXPENSE. When cash balances are
maintained in the custody account, each Fund receives credits which are used to
offset custodian fees. The gross expenses paid under the custody arrangement are
included in custodian fees in the Statements of Operations with the
corresponding expense offset, if any, shown as "custodian fee credits". When
cash balances are overdrawn, the respective Fund is charged an overdraft fee
equal to 110% of the 90 day Treasury Bill rate on outstanding balances. This
amount, if any, would be shown as "interest expense" in the Statements of
Operations.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to common shareholders are
recorded on the ex-dividend date. Distributions to shareholders are based on
income and capital gains as determined in accordance with federal income tax
regulations, which may differ from income and capital gains as determined under
U.S. generally accepted accounting principles. These differences are primarily
due to differing treatments of income and gains on various investment securities
and foreign currency transactions held by the respective Fund, timing
differences, and differing characterizations of
24
THE GABELLI EQUITY TRUST INC. AND
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
distributions made by the Funds. Distributions from net investment income
include net realized gains on foreign currency transactions. These book/tax
differences are either temporary or permanent in nature. To the extent these
differences are permanent, adjustments are made to the appropriate capital
accounts in the period when the differences arise. These reclassifications have
no impact on the NAV of the Funds.
Distributions to shareholders of the Equity Trust's 7.20% Series B
Cumulative Preferred Stock, Series C Auction Rate Cumulative Preferred Stock,
5.875% Series D Cumulative Preferred Stock, Series E Auction Rate Cumulative
Preferred Stock, and 6.20% Series F Cumulative Preferred Stock ("Cumulative
Preferred Stock") are recorded on a daily basis and are determined as described
in Note 5.
The tax character of distributions paid during the fiscal year ended
December 31, 2006 for the Equity Trust was as follows:
COMMON PREFERRED
----------- -----------
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short-term capital gains) $ 36,958,559 $ 6,282,132
Net long-term capital gains .............. 109,810,607 18,665,359
------------ -----------
Total distributions paid ................. $146,769,166 $24,947,491
============ ===========
PROVISION FOR INCOME TAXES. The Equity Trust intends to continue to qualify
as, and the Healthcare Trust intends to elect to be treated and to qualify as,
regulated investment companies under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). It is the policy of each Fund to comply with
the requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provisions for federal income taxes are
required.
As of December 31, 2006, the components of accumulated earnings/(losses) on
a tax basis were as follows:
Net unrealized appreciation on investments ........... $475,036,839
Net unrealized appreciation on foreign currency
and swap contracts ................................. 537,593
Undistributed ordinary income (inclusive of
short-term capital gains) .......................... 777,037
Undistributed long-term capital gains ................ 472,624
------------
Total ................................................ $476,824,093
============
The following summarizes the tax cost of investments, swap contracts, and
the related unrealized appreciation/(depreciation) at June 30, 2007:
EQUITY TRUST
GROSS UNREALIZED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION APPRECIATION
---- ------------ ------------ ------------
Investments .......... $1,414,400,503 $693,590,947 $(52,803,821) $640,787,126
When issued
securities sold .... (1,283,295) 58,729 (7,834) 50,895
Swap contracts ....... -- 175,929 -- 175,929
-------------- ------------ ------------ ------------
$1,413,117,208 $693,825,605 $(52,811,655) $641,013,950
============== ============ ============ ============
HEALTHCARE TRUST
GROSS UNREALIZED GROSS UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION DEPRECIATION
---- ------------ ------------ ------------
Investments .......... $69,064,379 $1,773 $(13,440) $(11,667)
25
THE GABELLI EQUITY TRUST INC. AND
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
In July 2006, the FASB issued Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109" ("the
Interpretation"). The Interpretation established for all entities, including
pass-through entities such as the Funds, a minimum threshold for financial
statement recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction), and
required certain expanded tax disclosures. The Interpretation was implemented by
the Funds on June 29, 2007 and applied to all open tax years as of the effective
date. Management has evaluated the application of the Interpretation to the
Funds, and the adoption of the Interpretation had no impact on the amounts
reported in the Funds' financial statements.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. Each Fund has entered into an
investment advisory agreement (the "Advisory Agreement") with the Adviser which
provides that the Fund will pay the Adviser a fee, computed weekly and paid
monthly, equal on an annual basis to 1.00% of the value of the Fund's average
weekly net assets including the liquidation value of preferred stock for the
Equity Trust. In accordance with the Advisory Agreements, the Adviser provides a
continuous investment program for each Fund's portfolio and oversees the
administration of all aspects of the Fund's business and affairs. For the Equity
Trust, the Adviser has agreed to reduce the management fee on the incremental
assets attributable to the Cumulative Preferred Stock if the total return of the
NAV of the common shares of the Equity Trust, including distributions and
advisory fee subject to reduction, does not exceed the stated dividend rate or
corresponding swap rate of each particular series of the Cumulative Preferred
Stock for the fiscal year.
The Equity Trust's total return on the NAV of the common shares is
monitored on a monthly basis to assess whether the total return on the NAV of
the common shares exceeds the stated dividend rate or corresponding swap rate of
each particular series of Cumulative Preferred Stock for the period. For the six
months ended June 30, 2007, the Equity Trust's total return on the NAV of the
common shares exceeded the stated dividend rate on corresponding swap rate of
Series C Auction Rate, 5.875% Series D, Series E Auction Rate, and 6.20% Series
F Cumulative Preferred Stock. Thus, management fees were accrued on these
assets. The Equity Trust's total return on the net asset value of the common
shares did not exceed the stated dividend rate or corresponding swap rate of
7.20% Series B Cumulative Preferred Stock. Thus, management fees with respect to
the liquidation value of these preferred stock assets in the amount of $23,733
were not accrued.
During the period ended June 30, 2007, the Equity Trust and the Healthcare
Trust paid brokerage commissions of $208,934 and $718, respectively, to Gabelli
& Company, Inc. ("Gabelli & Company"), an affiliate of the Adviser.
The cost of calculating each Fund's NAV per share is a Fund expense
pursuant to the Advisory Agreement between the Fund and the Adviser. During the
period ended June 30, 2007, the Equity Trust and the Healthcare Trust paid or
accrued $22,375 and $371, respectively, to the Adviser in connection with the
cost of computing each Fund's NAV.
The Equity Trust and the Healthcare Trust are assuming their portion of the
allocated cost of the Gabelli Funds' Chief Compliance Officer in the amount of
$16,894 and $0, respectively, for the period ended June 30, 2007, which is
included in payroll expenses in the Statements of Operations.
As per the approval of the Board, the Equity Trust compensates officers of
the Equity Trust that are employed by the Equity Trust and are not employed by
the Adviser (although the officers may receive incentive-based variable
compensation from affiliates of the Adviser). For the six months ended June 30,
2007, the Fund paid $103,213, which is included in payroll expenses in the
Statement of Operations.
The Equity Trust pays each Director that is not considered to be an
affiliated person an annual retainer of $12,000 plus $1,500 for each Board
meeting attended in person and $500 per telephonic meeting, and they are
reimbursed for any out of
26
THE GABELLI EQUITY TRUST INC. AND
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
pocket expenses incurred in attending meetings. All Board committee members
receive $1,000 per meeting attended. In addition, the Audit Committee Chairman
receives an annual fee of $3,000, the Proxy Voting Committee Chairman receives
an annual fee of $1,500, and the Nominating Committee Chairman receives an
annual fee of $2,000. Directors who are directors or employees of the Adviser or
an affiliated company receive no compensation or expense reimbursement from the
Equity Trust.
The Healthcare Trust pays each Trustee who is not considered to be an
affiliated person an annual retainer of $3,000 plus $1,000 for each Board
meeting attended in person and $500 per telephonic meeting, and they are
reimbursed for any out of pocket expenses incurred in attending meetings. In
addition, the Audit Committee Chairman receives an annual fee of $3,000, and the
Nominating Committee Chairman receives an annual fee of $3,000. Trustees who are
directors or employees of the Adviser or an affiliated company receive no
compensation or expense reimbursement from the Healthcare Trust.
4. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the period ended June 30, 2007, other than short-term securities, aggregated
$297,311,898 and $128,740,863, respectively, for the Equity Trust and $1,245,498
and $0, respectively, for the Healthcare Trust.
5. CAPITAL. The charter permits the Equity Trust to issue 246,000,000 shares of
common stock (par value $0.001) and authorizes the Board to increase its
authorized shares from time to time. The Board has authorized the repurchase of
its shares on the open market when the shares are trading on the New York Stock
Exchange ("NYSE") at a discount of 10% or more (or such other percentage as the
Board may determine from time to time) from the NAV of the shares. During the
six months ended June 30, 2007, the Equity Trust did not repurchase any shares
of its common stock in the open market.
The Healthcare Trust is authorized to issue an unlimited number of shares
of beneficial interest (par value $0.001). The Board has authorized the
repurchase of its shares on the open market when the shares are trading on the
NYSE at a discount of 10% or more (or such other percentage as the Board may
determine from time to time) from the NAV of the shares. During the period ended
June 30, 2007, the Healthcare Trust did not repurchase any of its common shares
in the open market.
Transactions in common shares were as follows:
SIX MONTHS ENDED
JUNE 30, 2007 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2006
----------------------- -------------------------
EQUITY TRUST EQUITY TRUST
----------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
Shares issued upon reinvestment of
distributions .............................. 1,456,740 $13,991,574 2,677,002 $23,591,621
--------- ----------- --------- -----------
Net increase ................................. 1,456,740 $13,991,574 2,677,002 $23,591,621
========= =========== ========= ===========
PERIOD ENDED
JUNE 30, 2007 (A)
(UNAUDITED)
-------------------------
HEALTHCARE TRUST
-------------------------
SHARES AMOUNT
--------- -----------
Initial seed capital ......................... 12,500 $ 100,000
Additional shares issued immediately
prior to the spin-off from the
Equity Trust ............................... 8,461,959 67,695,672
--------- -----------
Net increase ................................. 8,474,459 $67,795,672
========= ===========
---------------------
(a) The Gabelli Healthcare & Wellness(Rx) Trust commenced investment operations
on June 28, 2007.
27
THE GABELLI EQUITY TRUST INC. AND
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
The Equity Trust's Articles of Incorporation, as amended, authorizes the
issuance of up to 18,000,000 shares of $0.001 par value Cumulative Preferred
Stock. The Cumulative Preferred Stock is senior to the common stock and results
in the financial leveraging of the common stock. Such leveraging tends to
magnify both the risks and opportunities to common shareholders. Dividends on
shares of the Cumulative Preferred Stock are cumulative. The Equity Trust is
required by the 1940 Act and by the Articles Supplementary to meet certain asset
coverage tests with respect to the Cumulative Preferred Stock. If the Equity
Trust fails to meet these requirements and does not correct such failure, the
Equity Trust may be required to redeem, in part or in full, the 7.20% Series B,
Series C Auction Rate, 5.875% Series D, Series E Auction Rate, and 6.20% Series
F Cumulative Preferred Stock at redemption prices of $25, $25,000, $25, $25,000,
and $25, respectively, per share plus an amount equal to the accumulated and
unpaid dividends whether or not declared on such shares in order to meet these
requirements. Additionally, failure to meet the foregoing asset coverage
requirements could restrict the 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.
On September 21, 2005, the Equity Trust distributed one transferable right
for each of the 143,681,301 shares of common stock outstanding to shareholders
of record on that date. Seven rights were required to purchase one additional
common share at the subscription price of $7.00 per share. Shareholders who
exercised their full primary subscription rights were eligible for an
over-subscription privilege entitling them to subscribe, subject to certain
limitations and a pro-rata allotment, for any additional shares not purchased
pursuant to the primary subscription plus such additional amounts as authorized
by the Board in accordance with the registration statement. The subscription
period expired on October 26, 2005. The rights offering was fully subscribed,
having received over-subscription requests in excess of the shares available for
primary subscription resulting in the issuance of 20,525,901 shares of common
stock and proceeds of $143,681,307 to the Fund, prior to the deduction of
estimated expenses of $600,000. Additional expenses of $151,821 were recorded in
the year ended December 31, 2006. The NAV of the Equity Trust's common shares
was reduced by approximately $0.15 per share as a result of the issuance of
shares below NAV.
On June 20, 2001, the Equity Trust received net proceeds of $159,329,175
(after underwriting discounts of $5,197,500 and offering expenses of $473,325)
from the public offering of 6,600,000 shares of 7.20% Series B Cumulative
Preferred Stock. The Series B Preferred Shares were callable at any time at the
liquidation value plus accrued dividends following the expiration of the five
year call protection on June 20, 2006. On June 26, 2006, the Equity Trust, as
authorized by the Board, redeemed 25% (1,650,000 shares) of its outstanding
7.20% Series B Cumulative Preferred Stock at the redemption price of $25.00 per
share (the liquidation value). On January 8, 2007, the Fund, as authorized by
the Board, redeemed the balance (4,950,000 shares) of its outstanding 7.20%
Series B Cumulative Preferred Stock at the redemption price of $25.00 per share,
plus accumulated and unpaid dividends through the redemption date of $0.06 per
share.
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 seven days, is expected to vary with short-term interest
rates. The dividend rates of Series C Auction Rate Cumulative Preferred Stock
ranged from 4.80% to 5.25% for the six months ended June 30, 2007. 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
28
THE GABELLI EQUITY TRUST INC. AND
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
Preferred Stock in whole or in part at the redemption price at any time. During
the six months ended June 30, 2007, the Equity Trust did not redeem any shares
of Series C Auction Rate Cumulative Preferred Stock. At June 30, 2007, 5,200
shares of Series C Auction Rate Cumulative Preferred Stock were outstanding with
an annualized dividend rate of 5.10% and accrued dividends amounted to $55,250.
On October 7, 2003, the Equity Trust received net proceeds of $72,375,842
(after underwriting discounts of $2,362,500 and offering expenses of $261,658)
from the public offering of 3,000,000 shares of 5.875% Series D Cumulative
Preferred Stock. Commencing October 7, 2008 and thereafter, the Fund, at its
option, may redeem the 5.875% Series D Cumulative Preferred Stock in whole or in
part at the redemption price at any time. During the six months ended June 30,
2007, the Equity Trust did not repurchase any shares of 5.875% Series D
Cumulative Preferred Stock. At June 30, 2007, 2,949,700 shares of 5.875% Series
D Cumulative Preferred Stock were outstanding and accrued dividends amounted to
$48,138.
On October 7, 2003, the Equity Trust received net proceeds of $49,350,009
(after underwriting discounts of $500,000 and offering expenses of $149,991)
from the public offering of 2,000 shares of Series E Auction Rate Cumulative
Preferred Stock. The dividend rate, as set by the auction process, which is
generally held every seven days, is expected to vary with short-term interest
rates. The dividend rates of Series E Auction Rate Cumulative Preferred Stock
ranged from 4.65% to 5.20% for the six months ended June 30, 2007. Existing
shareholders may submit an order to hold, bid, or sell such shares on each
auction date. Series E Auction Rate Cumulative Preferred Stock shareholders may
also trade shares in the secondary market. The Equity Trust, at its option, may
redeem the Series E Auction Rate Cumulative Preferred Stock in whole or in part
at the redemption price at any time. During the six months ended June 30, 2007,
the Equity Trust did not redeem any shares of Series E Auction Rate Cumulative
Preferred Stock. At June 30, 2007, 2,000 shares of Series E Auction Rate
Cumulative Preferred Stock were outstanding with an annualized dividend rate of
5.20% and accrued dividends amounted to $7,222.
On November 10, 2006, the Equity Trust received net proceeds of
$144,765,000 (after underwriting discounts of $4,725,000 and estimated offering
expenses of $510,000) from the public offering of 6,000,000 shares of 6.20%
Series F Cumulative Preferred Stock. Commencing November 10, 2011 and
thereafter, the Equity Trust, at its option, may redeem the 6.20% Series F
Cumulative Preferred Stock in whole or in part at the redemption price at any
time. During the six months ended June 30, 2007, the Equity Trust did not
repurchase any shares of 6.20% Series F Cumulative Preferred Stock. At June 30,
2007, 6,000,000 shares of 6.20% Series F Cumulative Preferred Stock were
outstanding and accrued dividends amounted to $103,333.
The holders of Equity Trust Cumulative Preferred Stock generally are
entitled to one vote per share held on each matter submitted to a vote of
shareholders of the Equity Trust and will vote together with holders of common
stock as a single class. The holders of Equity Trust Cumulative Preferred Stock
voting together as a single class also have the right currently to elect two
Directors and under certain circumstances are entitled to elect a majority of
the Board of Directors. In addition, the affirmative vote of a majority of the
votes entitled to be cast by holders of all outstanding shares of the preferred
stock, voting as a single class, will be required to approve any plan of
reorganization adversely affecting the preferred stock, and the approval of
two-thirds of each class, voting separately, of the Equity Trust's outstanding
voting stock must approve the conversion of the Equity Trust from a closed-end
to an open-end investment company. The approval of a majority (as defined in the
1940 Act) of the outstanding preferred stock and a majority (as defined in the
1940 Act) of the Fund's outstanding voting securities are required to approve
certain other actions, including changes in the Fund's investment objectives or
fundamental investment policies.
29
THE GABELLI EQUITY TRUST INC. AND
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
6. INDEMNIFICATIONS. Each Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Funds have not had prior claims or losses pursuant to
these contracts and expect the risk of loss to be remote.
7. OTHER MATTERS. The Adviser and/or affiliates received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund share trading practices involving certain funds managed by the
Adviser. GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company,
responded to these requests for documents and testimony. In June 2006, GAMCO
began discussions with the SEC regarding a possible resolution of their inquiry.
In February 2007, the Adviser made an offer of settlement to the staff of the
SEC for communication to the Commission for its consideration to resolve this
matter. This offer of settlement is subject to agreement regarding the specific
language of the SEC's administrative order and other settlement documents. On a
separate matter, in September 2005, the Adviser was informed by the staff of the
SEC that the staff may recommend to the Commission that an administrative remedy
and a monetary penalty be sought from the Adviser in connection with the actions
of two of seven closed-end funds managed by the Adviser relating to Section
19(a) and Rule 19a-1 of the 1940 Act. These provisions require registered
investment companies to provide written statements to shareholders when a
dividend is made from a source other than net investment income. While the two
closed-end funds sent annual statements and provided other materials containing
this information, the funds did not send written statements to shareholders with
each distribution in 2002 and 2003. The Adviser believes that all of the funds
are now in compliance. The Adviser believes that these matters would have no
effect on the Funds or any material adverse effect on the Adviser or its ability
to manage the Funds. The staff's notice to the Adviser did not relate to the
Funds.
8. SUBSEQUENT EVENTS. Effective July 9, 2007, Kevin V. Dreyer and Jeffrey J.
Jonas, CFA were named Associate Portfolio Managers of the Healthcare Trust. Mr.
Dreyer and Mr. Jonas will manage a portion of the assets of the portfolio and
report to Mario J. Gabelli, Portfolio Manager of the Healthcare Trust and Chief
Investment Officer - Value Portfolios for the Adviser.
Mr. Dreyer joined Gabelli & Company, Inc. in 2005 as a research analyst upon
earning an MBA from Columbia Business School. Mr. Dreyer previously worked as an
investment banking analyst at Banc of America Securities following his
graduation from the University of Pennsylvania.
Mr. Jonas joined Gabelli & Company, Inc. in 2003 as a research analyst. Prior to
his appointment as Associate Portfolio Manager of the Healthcare Trust, Mr.Jonas
served as co-portfolio manager of GAMCO Medical Opportunities LP. Mr. Jonas was
a Presidential Scholar at Boston College where he received a BS in finance and
management information systems.
30
THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
OUTSTANDING THROUGHOUT EACH PERIOD: JUNE 30, 2007 ------------------------------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
---------- ---------- ---------- ---------- ---------- ----------
OPERATING PERFORMANCE:
Net asset value, beginning of period ...... $ 9.40 $ 8.10 $ 8.69 $ 7.98 $ 6.28 $ 8.97
---------- ---------- ---------- ---------- ---------- ----------
Net investment income ..................... 0.07 0.18 0.09 0.02 0.04 0.07
Net realized and unrealized gain
(loss) on investments ................... 1.07 2.18 0.47 1.63 2.50 (1.65)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations .......... 1.14 2.36 0.56 1.65 2.54 (1.58)
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:(A)
Net investment income ..................... (0.01)* (0.03) (0.01) (0.00)(g) (0.00)(g) (0.01)
Net realized gain on investments .......... (0.06)* (0.12) (0.14) (0.14) (0.14) (0.16)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions to
preferred shareholders .................. (0.07)* (0.15) (0.15) (0.14) (0.14) (0.17)
---------- ---------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO COMMON SHAREHOLDERS
RESULTING FROM OPERATIONS ................. 1.07 2.21 0.41 1.51 2.40 (1.75)
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income ..................... (0.06)* (0.16) (0.08) (0.01) (0.01) (0.05)
Net realized gain on investments .......... (0.04)* (0.72) (0.77) (0.79) (0.68) (0.90)
Return of capital ......................... (0.70)*(e) -- -- -- (0.00)(g) (0.00)(g)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions to common shareholders (0.80)* (0.88) (0.85) (0.80) (0.69) (0.95)
---------- ---------- ---------- ---------- ---------- ----------
FUND SHARE TRANSACTIONS:
Increase (decrease) in net asset value
from common stock share transactions .... -- -- (0.00)(g) 0.00(g) 0.01 0.02
Decrease in net asset value from shares
issued in rights offering ............... -- -- (0.15) -- -- --
Increase in net asset value from
repurchase of preferred shares .......... -- -- -- 0.00(g) -- --
Offering costs for preferred shares
charged to paid-in capital .............. -- (0.03) (0.00)(g) 0.00(g) (0.02) (0.01)
Offering costs for issuance of rights
charged to paid-in capital .............. -- (0.00)(g) (0.00)(g) -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total fund share transactions ............. -- (0.03) (0.15) 0.00(g) (0.01) 0.01
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE ATTRIBUTABLE TO COMMON
SHAREHOLDERS, END OF PERIOD ............. $ 9.67 $ 9.40 $ 8.10 $ 8.69 $ 7.98 $ 6.28
========== ========== ========== ========== ========== ==========
NAV Total Return + ........................ 11.47% 28.17% 5.50% 19.81% 39.90% (21.00)%
========== ========== ========== ========== ========== ==========
Market Value, End of Period ............... $ 9.84 $ 9.41 $ 8.03 $ 9.02 $ 8.00 $ 6.85
========== ========== ========== ========== ========== ==========
Total Investment Return ++ ................ 13.31% 29.42% 0.66% 24.04% 28.58% (28.36)%
========== ========== ========== ========== ========== ==========
See accompanying notes to financial statements.
31
THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A COMMON SHARE SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
OUTSTANDING THROUGHOUT EACH PERIOD: JUNE 30, 2007 ------------------------------------------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002
---------- ---------- ---------- ---------- ---------- ----------
RATIOS AND SUPPLEMENTAL DATA:
Net assets including liquidation
value of preferred shares,
end of period (in 000's) ................ $2,050,321 $2,114,399 $1,764,634 $1,638,225 $1,514,525 $1,271,600
Net assets attributable to
common shares,
end of period (in 000's) ................ $1,646,578 $1,586,906 $1,345,891 $1,219,483 $1,094,525 $ 842,403
Ratio of net investment
income to average
net assets attributable
to common shares ........................ 1.44(f) 2.12% 1.27% 0.64% 0.67% 0.99%
Ratio of operating expenses
to average net
assets attributable to
common shares net of
fee reduction (b) ....................... 1.48(f) 1.43% 1.39% 1.57% 1.62% 1.19%
Ratio of operating expenses
to average net assets
including liquidation value
of preferred shares
net of fee reduction (b) ................ 1.19(f) 1.11% 1.04% 1.14% 1.14% 0.87%
Portfolio turnover rate ................... 6.8% 29.5% 22.4% 28.6% 19.2% 27.1%
PREFERRED STOCK:
7.25% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) -- -- -- -- -- $ 134,198
Total shares outstanding (in 000's) ....... -- -- -- -- -- 5,368
Liquidation preference per share .......... -- -- -- -- -- $ 25.00
Average market value (c) .................. -- -- -- -- -- $ 25.75
Asset coverage per share .................. -- -- -- -- -- $ 74.07
7.20% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) -- $ 123,750 $ 165,000 $ 165,000 $ 165,000 $ 165,000
Total shares outstanding (in 000's) ....... -- 4,950 6,600 6,600 6,600 6,600
Liquidation preference per share .......... -- $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00
Average market value (c) .................. -- $ 25.27 $ 25.92 $ 26.57 $ 27.06 $ 26.40
Asset coverage per share .................. -- $ 100.21 $ 105.35 $ 97.81 $ 90.15 $ 74.07
AUCTION RATE SERIES C CUMULATIVE
PREFERRED STOCK
Liquidation value, end of period (in 000's) $ 130,000 $ 130,000 $ 130,000 $ 130,000 $ 130,000 $ 130,000
Total shares outstanding (in 000's) ....... 5 5 5 5 5 5
Liquidation preference per share .......... $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Average market value (c) .................. $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Asset coverage per share .................. $ 126,957 $ 100,211 $ 105,353 $ 97,806 $ 90,150 $ 74,068
5.875% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) $ 73,743 $ 73,743 $ 73,743 $ 73,743 $ 75,000 --
Total shares outstanding (in 000's) ....... 2,950 2,950 2,950 2,950 3,000 --
Liquidation preference per share .......... $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 --
Average market value (c) .................. $ 24.65 $ 23.98 $ 24.82 $ 24.81 $ 25.10 --
Asset coverage per share .................. $ 126.96 $ 100.21 $ 105.35 $ 97.81 $ 90.15 --
AUCTION RATE SERIES E CUMULATIVE
PREFERRED STOCK
Liquidation value,
end of period (in 000's) ................ $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 --
Total shares outstanding (in 000's) ....... 2 2 2 2 2 --
Liquidation preference per share .......... $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 --
Average market value (c) .................. $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 --
Asset coverage per share .................. $ 126,957 $ 100,211 $ 105,353 $ 97,806 $ 90,150
6.200% CUMULATIVE PREFERRED STOCK
Liquidation value,
end of period (in 000's) ................ $ 150,000 $ 150,000 -- -- -- --
Total shares outstanding (in 000's) ....... 6,000 6,000 -- -- -- --
Liquidation preference per share .......... $ 25.00 $ 25.00 -- -- -- --
Average market value (c) .................. $ 25.36 $ 25.12 -- -- -- --
Asset coverage per share .................. $ 126.96 $ 100.21 -- -- -- --
ASSET COVERAGE (D) ........................ 508% 401% 421% 391% 361% 296%
+ Based on net asset value per share, adjusted for reinvestment of
distributions, at prices dependent upon the relationship of the net asset
value per share and the market value per share on the ex-dividend dates,
including the effect of shares issued pursuant to the 2005 rights offering,
assuming full subscription by shareholder. Total return for a period of
less than one year is not annualized.
++ Based on market value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to the 2005
rights offering, assuming full subscription by shareholder. Total return
for a period of less one year is not annualized.
* Based on fiscal year to date book income. Amounts are subject to change and
recharacterization at fiscal year end.
(a) Calculated based upon average common shares outstanding on the record dates
throughout the periods.
(b) 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 six months ended June 30, 2007, the ratios of
operating expenses to average net assets attributable to common shares net
of fee reduction would have been 1.47% and the ratios of operating expenses
to average total net assets including liquidation value of preferred shares
net of fee reduction would have been 1.18%. For the fiscal years ended
December 31, 2006, 2005, 2004, 2003, and 2002, the effect of the custodian
fee credits was minimal.
(c) Based on weekly prices.
(d) Asset coverage is calculated by combining all series of preferred stock.
(e) A distribution equivalent to $0.40 per share for The Gabelli Healthcare &
Wellness(Rx) Trust spin-off was from paid-in capital.
(f) Annualized.
(g) Amount represents less than $0.005 per share.
See accompanying notes to financial statements.
32
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE PERIOD ENDED
OUTSTANDING THROUGHOUT EACH PERIOD: JUNE 30, 2007 (A)
(UNAUDITED)
-----------------
OPERATING PERFORMANCE:
Net asset value, beginning of period ....................... $ 8.00
-------
Net investment income ...................................... 0.00(b)
Net unrealized loss on investments ......................... (0.00)(b)
-------
Total from investment operations ........................... 0.00
-------
NET ASSET VALUE END OF PERIOD .............................. $ 8.00
=======
NAV Total Return + ......................................... 0.00%
=======
Market Value, End of Period ................................ $ 7.95
=======
Total Investment Return ++ ................................. (0.63)%
=======
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA:
Net assets end of period (in 000's) ........................ $67,801
Ratio of net investment income to average net assets ....... 2.96%(c)
Ratio of operating expenses to average net assets .......... 1.73%(c)
Portfolio turnover rate .................................... 0.0%
------------
+ Based on net asset value per share at commencement of operations of $8.00
per share. Total return for a period of less than one year is not
annualized.
++ Based on market value per share at initial public offering of $8.00 per
share. Total return for a period of less one year is not annualized.
(a) The Gabelli Healthcare & Wellness(Rx) Trust commenced investment operations
on June 28, 2007.
(b) Amount represents less than $0.005 per share.
(c) Annualized.
See accompanying notes to financial statements.
33
THE GABELLI EQUITY TRUST INC.
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
Section 15(c) of the Investment Company Act of 1940, as amended (the "1940
Act"), contemplates that the Board of Directors (the "Board") of The Gabelli
Equity Trust Inc. (the "Fund"), including a majority of the Directors who have
no direct or indirect interest in the investment advisory agreement and are not
"interested persons" of the Fund, as defined in the 1940 Act (the "Independent
Board Members"), are required annually to review and re-approve the terms of the
Fund's existing investment advisory agreement and approve any newly proposed
terms therein. In this regard, the Board reviewed and re-approved, during the
most recent six month period covered by this report, the Investment Advisory
Agreement (the "Advisory Agreement") with Gabelli Funds, LLC (the "Adviser") for
the Fund.
More specifically, at a meeting held on May 16, 2007, the Board, including the
Independent Board Members, considered the factors and reached the conclusions
described below relating to the selection of the Adviser and the re-approval of
the Advisory Agreement.
NATURE, EXTENT, AND QUALITY OF SERVICES. The Independent Board Members
considered the nature, quality, and extent of administrative and shareholder
services performed by the Adviser, including portfolio management, supervision
of Fund operations and compliance and regulatory filings and disclosures to
shareholders, general oversight of other service providers, review of Fund legal
issues, assisting the Independent Board Members in their capacity as directors,
and other services. The Independent Board Members concluded that the services
are extensive in nature and that the Adviser consistently delivered a high level
of service.
INVESTMENT PERFORMANCE OF THE FUND AND ADVISER. The Independent Board Members
considered short-term and long-term investment performance for the Fund over
various periods of time as compared to both relevant equity indices and the
performance of the Fund's Lipper Inc. peer group, and concluded that the Adviser
was delivering good performance results consistent with the investment
strategies being pursued by the Fund.
COSTS OF SERVICES AND PROFITS REALIZED BY THE ADVISER.
(A) COSTS OF SERVICES TO FUND: FEES AND EXPENSES. The Independent Board Members
considered the Fund's management fee rate and expense ratio relative to industry
averages for the Fund's peer group category and the advisory fees charged by the
Adviser and its affiliates to other fund and non-fund clients. The Independent
Board Members noted that the mix of services under the Agreement are much more
extensive than those under the advisory agreements for non-fund clients. The
Independent Board Members recognized that the investment advisory fee paid by
the Fund and the Fund's overall expense ratio is higher than the average for its
peer group, but concluded that the fee is acceptable based upon the performance,
experience, reputation, and qualifications of the Adviser.
(B) PROFITABILITY AND COSTS OF SERVICES TO ADVISER. The Independent Board
Members considered the Adviser's overall profitability and costs, and pro forma
estimates of the Adviser's profitability and costs attributable to the Fund (i)
as part of the Gabelli fund complex and (ii) assuming the Fund constituted the
Adviser's only investment company under its management. The Independent Board
Members also considered whether the amount of profit is a fair entrepreneurial
profit for the management of the Fund and noted that the Adviser has
substantially increased its resources devoted to Fund matters in response to
regulatory requirements and enhanced Fund policies and procedures. The
Independent Board Members concluded that the Adviser's profitability was at an
acceptable level.
34
EXTENT OF ECONOMIES OF SCALE AS FUND GROWS. The Independent Board Members
considered whether there have been economies of scale with respect to the
management of the Fund and whether the Fund has appropriately benefited from any
economies of scale. The Independent Board Members noted that economies of scale
may develop for certain funds as their assets increase and their fund level
expenses decline as a percentage of assets, but that fund level economies of
scale may not necessarily result in Adviser level economies of scale. They also
recognized that the Adviser has agreed to reduce the advisory fee on incremental
assets attributable to the preferred shares if the total return of the common
shares does not exceed a specified amount (i.e., the dividend rate paid on
preferred shares.) The Board Members concluded that there was an appropriate
sharing of economies of scale.
WHETHER FEE LEVELS REFLECT ECONOMIES OF SCALE. The Independent Board Members
also considered whether the advisory fee rate is reasonable in relation to the
asset size of the Fund and any economies of scale that may exist and concluded
that the Fund's current fee schedule (without breakpoints) was considered
reasonable.
OTHER RELEVANT CONSIDERATIONS.
(A) ADVISER PERSONNEL AND METHODS. The Independent Board Members considered the
size, education, and experience of the Adviser's staff, the Adviser's
fundamental research capabilities and the Adviser's approach to recruiting,
training, and retaining portfolio managers and other research and management
personnel, and concluded that in each of these areas the Adviser was structured
in such a way to support the high level of services being provided to the Fund.
(B) OTHER BENEFITS TO THE ADVISER. The Independent Board Members also considered
the character and amount of other incidental benefits received by the Adviser
and its affiliates from its association with the Fund. The Independent Board
Members considered the brokerage commissions paid to an affiliate of the
Adviser. The Independent Board Members concluded that potential "fall-out"
benefits that the Adviser and its affiliates may receive, such as affiliated
brokerage commissions, greater name recognition, or increased ability to obtain
research services, appear to be reasonable.
CONCLUSIONS. In considering the Advisory Agreement, the Independent Board
Members did not identify any factor as all-important or all-controlling and
instead considered these factors collectively in light of the Fund's surrounding
circumstances. Based on this review, it was the judgment of the Independent
Board Members that shareholders had received over the long term good absolute
and relative performance at reasonable fees and, therefore, re-approval of the
Advisory Agreement was in the best interests of the Fund and its shareholders.
As a part of its decision making process, the Independent Board Members noted
that the Adviser has managed the Fund since its inception, and the Independent
Board Members believe that a long-term relationship with a capable,
conscientious adviser is in the best interests of the Fund. The Independent
Board Members considered, generally, that shareholders invested in the Fund
knowing that the Adviser managed the Fund and knowing its investment advisory
fee schedule. As such, the Independent Board Members considered, in particular,
whether the Adviser managed the Fund in accordance with its investment
objectives and policies as disclosed to shareholders. The Independent Board
Members concluded that the Fund was managed by the Adviser consistent with its
investment objectives and policies.
Upon conclusion of their review and discussion, the Independent Board Members
unanimously agreed to recommend the continuation of the Advisory Agreement for
the Fund.
35
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
BOARD CONSIDERATION AND APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
Section 15(c) of the Investment Company Act of 1940, as amended (the "1940
Act"), contemplates that the Board of Trustees (the "Board") of The Gabelli
Healthcare & Wellness(Rx) Trust (the "Fund"), including a majority of the
Trustees who have no direct or indirect interest in the investment advisory
agreement and are not "interested persons" of the Fund, as defined in the 1940
Act (the "Independent Board Members"), are required to review and approve the
terms of the Fund's proposed investment advisory agreement. In this regard, the
Board reviewed and approved, during the most recent six month period covered by
this report, the Investment Advisory Agreement (the "Advisory Agreement") with
Gabelli Funds, LLC (the "Adviser") for the Fund.
More specifically, at a meeting held on February 22, 2007, the Board, including
the Independent Board Members, considered the factors and reached the
conclusions described below relating to the selection of the Adviser and the
approval of the Advisory Agreement.
NATURE, EXTENT, AND QUALITY OF SERVICES. The Independent Board Members
considered the nature, quality, and extent of proposed administrative and
shareholder services to be performed by the Adviser, including portfolio
management, supervision of Fund operations and compliance and regulatory filings
and disclosures to shareholders, general oversight of other service providers,
review of Fund legal issues, assisting the Independent Board Members in their
capacity as trustees, and other services. The Independent Board members
concluded that the proposed services are extensive in nature.
INVESTMENT PERFORMANCE OF THE FUND AND THE ADVISER. The Independent Board
Members considered short-term and long-term investment performance for other
registered and unregistered funds advised or subadvised by the Adviser and its
affiliates that invest regularly in healthcare and wellness companies over
various periods of time as compared with both relevant equity indices and the
performance of the Fund's Lipper, Inc. peer group and concluded that, although
the Fund had no performance history as it had not yet commenced operations, the
Adviser appeared to have the capability of delivering satisfactory performance
results consistent with the investment strategies to be pursued by the Fund.
COST OF SERVICES AND PROFITS REALIZED BY THE ADVISER.
(A) COSTS OF SERVICES TO THE FUND: FEES AND EXPENSES. The Independent Board
Members considered the Fund's proposed advisory fee rate and expense ratio
relative to industry averages for the Fund's peer group category and the
advisory fees charged by the Adviser and its affiliates to other fund and
non-fund clients. The Independent Board members noted that the mix of services
under the Advisory Agreement is more extensive than those under the advisory
agreements for non-fund clients. The Independent Board Members recognized that
the advisory fee to be paid by the Fund was slightly higher than the median fee
to its peer group, but concluded that the fee is acceptable based on the
qualifications, experience, reputation, and performance of the Adviser.
(B) PROFITABILITY AND COSTS OF SERVICES TO ADVISER. The Independent Board
Members considered the Adviser's overall profitability and costs and discussed
the potential profitability of the Fund. The Independent Board Members concluded
that the potential profitability of the Fund to the Adviser was acceptable.
EXTENT OF ECONOMIES OF SCALE AS FUND GROWS. The Independent Board Members
considered whether economies of scale would occur with respect to the management
of the Fund and whether the Fund would benefit from any economies of scale. The
Independent Board members noted that economies of scale may develop for certain
funds as their assets increase and their fund level expenses decline as a
percentage of assets, but that fund level economies of scale may not necessarily
result in Adviser level economies of scale. The Independent Board members
concluded that after the completion of the offering, meaningful economies of
scale could not occur in the absence of secondary offerings.
36
WHETHER FEE LEVELS REFLECT ECONOMIES OF SCALE. The Independent Board Members
also considered whether the advisory fee rate is reasonable in relation to the
initial asset size of the Fund and any economies of scale that could exist. The
Independent Board members concluded that the investment advisory fee for the
Fund did not take into account any potential economies of scale that might
develop.
OTHER RELEVANT CONSIDERATIONS.
(A)ADVISER PERSONNEL AND METHODS. The Independent Board Members considered the
size, education, and experience of the Adviser's staff, the Adviser's
fundamental research capabilities, and the Adviser's approach to recruiting,
training, and retaining portfolio managers and other research and management
personnel and concluded that, in each of these areas, the Adviser was structured
in such a way to support the high level of services being provided to the Fund.
(B) OTHER BENEFITS TO THE ADVISER. The Independent Board members also considered
the character and amount of other incidental benefits received by the Adviser
and its affiliates from its association with the Fund. The Independent Board
Members considered that brokerage commissions could be paid to an affiliate of
the Adviser. The Independent Board Members concluded that potential "fall out"
benefits that the Adviser and its affiliates may receive, such as affiliated
brokerage commissions, greater name recognition, or increased ability to obtain
research services, appear to be reasonable.
CONCLUSION. In considering the proposed Advisory Agreement, the Independent
Board Members did not identify any factor as all-important and instead
considered these factors collectively in light of the Fund's surrounding
circumstances. Based on their review, it was the judgment of the Independent
Board members that the Fund would enjoy highly experienced portfolio advisory
services and good ancillary services at an acceptable fee and, therefore,
approval of the Advisory Agreement would be in the best interests of
shareholders. Upon conclusion of their review and discussion, the Independent
Board Members unanimously agreed to recommend the approval of the Advisory
Agreement for the Fund.
37
DIRECTORS AND OFFICERS
THE GABELLI EQUITY TRUST INC.
ONE CORPORATE CENTER, RYE, NY 10580-1422
DIRECTORS OFFICERS
Mario J. Gabelli, CFA Bruce N. Alpert
CHAIRMAN & CHIEF EXECUTIVE OFFICER, PRESIDENT
GAMCO INVESTORS, INC.
Carter W. Austin
Dr. Thomas E. Bratter VICE PRESIDENT
PRESIDENT & FOUNDER, JOHN DEWEY ACADEMY
Peter D. Goldstein
Anthony J. Colavita CHIEF COMPLIANCE OFFICER
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C. James E. McKee
SECRETARY
James P. Conn
FORMER MANAGING DIRECTOR & Agnes Mullady
CHIEF INVESTMENT OFFICER, TREASURER
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
LoAn P. Nguyen
Frank J. Fahrenkopf, Jr. VICE PRESIDENT & OMBUDSMAN
PRESIDENT & CHIEF EXECUTIVE OFFICER,
AMERICAN GAMING ASSOCIATION INVESTMENT ADVISER
Gabelli Funds, LLC
Arthur V. Ferrara One Corporate Center
FORMER CHAIRMAN & CHIEF EXECUTIVE OFFICER, Rye, New York 10580-1422
GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
CUSTODIAN
Anthony R. Pustorino Bank of New York Mellon
CERTIFIED PUBLIC ACCOUNTANT,
PROFESSOR EMERITUS, PACE UNIVERSITY COUNSEL
Willkie Farr & Gallagher LLP
Salvatore J. Zizza
CHAIRMAN, ZIZZA & CO., LTD. TRANSFER AGENT AND REGISTRAR
Computershare Trust Company, N.A.
STOCK EXCHANGE LISTING
5.875% 6.20%
Common Preferred Preferred
------ --------- ---------
NYSE-Symbol: GAB GAB PrD GAB PrF
Shares Outstanding: 170,213,012 2,949,700 6,000,000
The Net Asset Value per share appears in
the Publicly Traded Funds column, under
the heading "General Equity Funds," in
Monday's The Wall Street Journal. It is
also listed in Barron's Mutual
Funds/Closed End Funds section under the
heading "General Equity Funds."
The Net Asset Value per share may be
obtained each day by calling (914)
921-5070 or visiting www.gabelli.com.
--------------------------------------------------------------------------------
For general information about the Gabelli Funds, call 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: WWW.GABELLI.COM, or e-mail us at: closedend@gabelli.com
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may, from time to time, purchase
shares of its common stock in the open market when the Fund's shares are trading
at a discount of 10% or more from the net asset value of the shares. The Fund
may also, from time to time, purchase shares of its Series D and Series F
Cumulative Preferred Stock in the open market when the shares are trading at a
discount to the Liquidation Value of $25.00.
--------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
ONE CORPORATE CENTER, RYE, NY 10580-1422
TRUSTEES OFFICERS
Mario J. Gabelli, CFA Agnes Mullady
CHAIRMAN & CHIEF EXECUTIVE OFFICER, PRESIDENT AND TREASURER
GAMCO INVESTORS, INC.
Carter W. Austin
Dr. Thomas E. Bratter VICE PRESIDENT
PRESIDENT & FOUNDER, JOHN DEWEY ACADEMY
Peter D. Goldstein
Anthony J. Colavita CHIEF COMPLIANCE OFFICER
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C. James E. McKee
SECRETARY
James P. Conn
FORMER MANAGING DIRECTOR & David I. Schachter
CHIEF INVESTMENT OFFICER, VICE PRESIDENT
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Adam E. Tokar
Vincent D. Enright ASSISTANT VICE PRESIDENT & OMBUDSMAN
FORMER SENIOR VICE PRESIDENT &
CHIEF FINANCIAL OFFICER, INVESTMENT ADVISER
KEYSPAN CORP. Gabelli Funds, LLC
One Corporate Center
Robert C. Kolodny, MD Rye, New York 10580-1422
AUTHOR, AND LECTURER,
GENERAL PARTNER OF KBS PARTNERSHIP CUSTODIAN
Bank of New York Mellon
Anthonie C. van Ekris
CHAIRMAN, BALMAC INTERNATIONAL, INC. COUNSEL
Willkie Farr & Gallagher LLP
Salvatore J. Zizza
CHAIRMAN, ZIZZA & CO., LTD. TRANSFER AGENT AND REGISTRAR
Computershare Trust Company, N.A.
STOCK EXCHANGE LISTING
Common
----------
NYSE-Symbol: GRX
Shares Outstanding: 8,474,459
The Net Asset Value per share appears in
the Publicly Traded Funds column, under
the heading "General Equity Funds," in
Monday's The Wall Street Journal. It is
also listed in Barron's Mutual
Funds/Closed End Funds section under the
heading "General Equity Funds."
The Net Asset Value per share may be
obtained each day by calling (914)
921-5070 or visiting www.gabelli.com.
--------------------------------------------------------------------------------
For general information about the Gabelli Funds, call 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: WWW.GABELLI.COM, or e-mail us at: closedend@gabelli.com
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may, from time to time, purchase
its common shares in the open market when the Fund's shares are trading at a
discount of 10% or more from the net asset value of the shares.
--------------------------------------------------------------------------------
THE GABELLI EQUITY TRUST INC. AND
THE GABELLI HEALTHCARE & WELLNESS(RX) TRUST
ONE CORPORATE CENTER
RYE, NY 10580-1422
(914) 921-5070
WWW.GABELLI.COM
SEMI-ANNUAL REPORT
JUNE 30, 2007
GAB Q2/2007
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
There has been no change, as of the date of this filing, in any of the portfolio
managers identified in response to paragraph (a)(1) of this Item in the
registrant's most recently filed annual report on Form N-CSR.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
=============================================================================================================================
(C) TOTAL NUMBER OF (D) MAXIMUM NUMBER (OR
SHARES (OR UNITS) APPROXIMATE DOLLAR VALUE) OF
(A) TOTAL NUMBER OF PURCHASED AS PART OF SHARES (OR UNITS) THAT MAY YET
SHARES (OR UNITS) (B) AVERAGE PRICE PAID PUBLICLY ANNOUNCED PLANS BE PURCHASED UNDER THE PLANS
PERIOD PURCHASED PER SHARE (OR UNIT) OR PROGRAMS OR PROGRAMS
=============================================================================================================================
Month #1 Common - N/A Common - N/A Common - N/A Common - 168,756,272
01/01/07
through Preferred Series B - Preferred Series B - Preferred Series B - Preferred Series B - 4,950,000
01/31/07 4,950,000 $25.00 4,950,000 - 4,950,000 = 0
Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - 6,000,000
=============================================================================================================================
Month #2 Common - N/A Common - N/A Common - N/A Common - 168,756,272
02/01/07
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
02/28/07
Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - 6,000,000
=============================================================================================================================
Month #3 Common - N/A Common - N/A Common - N/A Common - 169,489,166
03/01/07
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
03/31/07
Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - 6,000,000
=============================================================================================================================
Month #4 Common - N/A Common - N/A Common - N/A Common - 169,489,166
04/01/07
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
04/30/07
Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - 6,000,000
=============================================================================================================================
Month #5 Common - N/A Common - N/A Common - N/A Common - 169,489,166
05/01/07
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
05/31/07
Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - 6,000,000
=============================================================================================================================
Month #6 Common - N/A Common - N/A Common - N/A Common - 170,213,012
06/01/07
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
06/30/07
Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - 6,000,000
=============================================================================================================================
Total Common - N/A Common - N/A Common - N/A N/A
Preferred Series B - Preferred Series B - Preferred Series B -
4,950,000 $25.00 4,950,000
Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A
Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - N/A
=============================================================================================================================
Footnote columns (c) and (d) of the table, by disclosing the following
information in the aggregate for all plans or programs publicly announced:
a. The date each plan or program was announced - The notice of the
potential repurchase of common and preferred shares occurs quarterly in
the Fund's quarterly report in accordance with Section 23(c) of the
Investment Company Act of 1940, as amended.
b. The dollar amount (or share or unit amount) approved - Any or all
common shares outstanding may be repurchased when the Fund's common
shares are trading at a discount of 10% or more from the net asset
value of the shares.
Any or all preferred shares outstanding may be repurchased when the
Fund's preferred shares are trading at a discount to the liquidation
value of $25.00.
c. The expiration date (if any) of each plan or program - The Fund's
repurchase plans are ongoing.
d. Each plan or program that has expired during the period covered by the
table - The Fund's repurchase plans are ongoing.
e. Each plan or program the registrant has determined to terminate prior
to expiration, or under which the registrant does not intend to make
further purchases. - The Fund's repurchase plans are ongoing.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The Gabelli Equity Trust Inc.
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By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date August 31, 2007
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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
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date August 31, 2007
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By (Signature and Title)* /s/ Agnes Mullady
-------------------------------------------------------
Agnes Mullady,
Principal Financial Officer and Treasurer
Date August 31, 2007
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.