SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
. . . . . . . . . . . . . . . . . . . . . . . The Gabelli
Equity Trust Inc. . . . . . . . . . . . . . . . . . . . . . . .
.
(Name of Registrant as Specified In Its Charter)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-
6(i)(1), or 14a-6(j)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11(set forth the amount
on which the filing fee is calculated and state how it was
determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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[x] PLEASE MARK VOTES AS IN THIS EXAMPLE
For With- For All
hold Except
1.) To elect three Directors of the [ ] [ ]
[ ]
Equity Trust.
James P. Conn, Anthony R. Pustorino, Karl Otto Pohl
If you do not wish your shares voted "FOR" a particular nominee,
mark the "For All Except" box and strike through the nominee(s)
name. You shares will be voted for the remaining nominee(s).
For Against Abstain
2. To ratify the selection of Price
Waterhouse LLP as the
independent accountants of the [ ] [ ] [ ]
Equity Trust for the year
ending December 31, 1997.
3. To approve the revision of
certain fundamental investment
restrictions as follows:
For Against Abstain
a) to amend the restriction [ ] [ ] [ ]
regarding borrowing
For Against Abstain
b) to amend the restriction [ ] [ ] [ ]
regarding senior securities
For Against Abstain
c) to eliminate the restriction [ ] [ ] [ ]
regarding margin and short
sales
For Against Abstain
4.) To approve an amendment [ ] [ ] [ ]
to the Equity Trust's
Articles of Incorporation
relating to the size of the
Board of Directors
5.) To consider and vote upon
such other matters as may
come before said Meeting or
any adjournment thereof.
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date Mark box at
right if comments or address changes have been noted on the
reverse side of this card. [ ]
Shareholder sign here Co-owner sign here.
DETACH CARD DETACH CARD
THE GABELLI EQUITY TRUST INC.
This proxy is solicited on behalf of the Directors
The undersigned hereby appoints Mario J. Gabelli, Anthony R.
Pustorino, Felix J. Christiana and Bruce N. Alpert, and each of
them, attorneys and proxies of the undersigned, with full powers
of substitution and revocation, to represent the undersigned and
to vote on behalf of the undersigned all shares of The Gabelli
Equity Trust Inc. (the "Equity Trust") which the undersigned is
entitled to vote at The Annual Meeting of Shareholders of the
Equity Trust to be held at the Cole Auditorium, Greenwich Public
Library, 101 West Putnam Avenue, Greenwich, Connecticut 06830 on
May 12, 1997 at 9:30 a.m., and at any adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Meeting
and Proxy Statement and hereby instructs said attorneys and
proxies to vote said shares as indicated herein. In their
discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
A majority of the proxies present and acting at the Meeting in
person or by substitute (or, if only one shall be so present, then
that one) shall have and may exercise all of the power and
authority of said proxies hereunder. The undersigned hereby
revokes any proxy previously given.
This proxy, if properly executed, will be voted in the manner
directed by the undersigned shareholder. If no direction is made,
this proxy will be voted FOR election of the nominees as directors
and FOR Proposals 2 and 3. Please refer to the Proxy Statement
for a discussion of the proposals.
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears on the books
of the Equity Trust. If joint owners, either may sign. Trustees
and other fiduciaries should indicate the capacity in which they
sign, and where more than one name appears, a majority must sign.
If a corporation, this signature should be that of an authorized
officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
The Gabelli Equity Trust Inc.
One Corporate Center
Rye, New York 10580-1434
(914) 921-5070
_____________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 12, 1997
_____________
To the Shareholders of
THE GABELLI EQUITY TRUST INC.
Notice is hereby given that the Annual Meeting of
Shareholders of The Gabelli Equity Trust Inc. (the "Equity Trust")
will be held at the Cole Auditorium, Greenwich Public Library, 101
West Putnam Avenue, Greenwich, Connecticut 06830, on Monday, May
12, 1997, at 9:30 a.m., for the following purposes:
1. To elect three Directors of the Equity Trust (PROPOSAL 1);
2. To ratify the selection of Price Waterhouse LLP as the
independent accountants of the Equity Trust for the year ending
December 31, 1997 (PROPOSAL 2);
3. To approve the revision of certain fundamental investment
restrictions as follows:
a) to amend the restriction regarding senior securities
(PROPOSAL 3(a));
b) to amend the restriction regarding borrowing (PROPOSAL
3(b));
c) to eliminate the restriction regarding margin and short
sales (PROPOSAL 3(c)); and
4. To consider and vote upon such other matters as may come
before said meeting or any adjournment thereof.
These items are discussed in greater detail in the attached
Proxy Statement.
The close of business on March 3, 1997 has been fixed as the
record date for the determination of shareholders entitled to
notice of and to vote at the meeting and any adjournments thereof.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR
HOLDINGS IN THE EQUITY TRUST. WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING, WE ASK THAT YOU PLEASE COMPLETE AND SIGN THE ENCLOSED
PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE WHICH
NEEDS NO POSTAGE IF MAILED IN THE CONTINENTAL UNITED STATES.
INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH ON
THE INSIDE COVER.
By Order of the Directors
/s/James E. McKee
JAMES E. MCKEE
Secretary
March 31, 1997
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be
of assistance to you and avoid the time and expense to the Equity
Trust involved in validating your vote if you fail to sign your
proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears
in the registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the
party signing should conform exactly to a name shown in the
registration.
3. All Other Accounts: The capacity of the individuals signing
the proxy card should be indicated unless it is reflected in the
form of registration. For example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp ABC Corp.
(2) ABC Corp John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe
(4) ABC Corp., Profit Sharing Plan John Doe, Trustee
Trust Accounts
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 Jane Doe
Custodian or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA John B. Smith
(2) John B. Smith John B. Smith, Jr., Executor
THE GABELLI EQUITY TRUST INC.
ANNUAL MEETING OF SHAREHOLDERS
May 12, 1997
__________
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Directors of The Gabelli Equity
Trust Inc. (the "Equity Trust") for use at the Annual Meeting of
Shareholders of the Equity Trust to be held on May 12, 1997, at
9:30 a.m., at the Cole Auditorium, Greenwich Public Library, 101
West Putnam Avenue, Greenwich, Connecticut, and at any adjournments
thereof (the "Meeting"). A Notice of Meeting of Shareholders and a
proxy card accompany this Proxy Statement.
In addition to the solicitation of Proxies by mail, officers
of the Equity Trust and officers and regular employees of Boston
EquiServe, the Equity Trust's transfer agent, affiliates of Boston
EquiServe or other representatives of the Equity Trust also may
solicit proxies by telephone, telegraph or in person. In addition,
the Equity Trust has retained Georgeson and Company Inc. to assist
in the solicitation of Proxies for a fee estimated at $6,000 plus
reimbursement of expenses. The costs of solicitation and the
expenses incurred in connection with preparing the Proxy Statement
and its enclosures will be paid by the Equity Trust. The Equity
Trust will reimburse brokerage firms and others for their expenses
in forwarding solicitation materials to the beneficial owners of
shares. The Equity Trust's most recent annual report is available
upon request, without charge, by writing the Equity Trust at One
Corporate Center, Rye, New York, 10580-1434 or calling the Equity
Trust at (800) 422-3554.
If the enclosed Proxy is properly executed and returned in
time to be voted at the Meeting, the shares represented thereby
will be voted in accordance with the instructions marked thereon.
Unless instructions to the contrary are marked thereon, the Proxy
will be voted FOR the election of the nominees as Directors, FOR
the other matters listed in the accompanying Notice of Annual
Meeting of Shareholders and FOR any other matters deemed
appropriate. Any shareholder who has given a Proxy has the right
to revoke it at any time prior to its exercise either by attending
the Meeting and voting his or her shares in person or by submitting
a letter of revocation or a later-dated Proxy to the Equity Trust
at the above address prior to the date of the Meeting.
In the event a quorum is present at the Meeting but
sufficient votes to approve any of the proposed items are not
received, the persons named as proxies may propose one or more
adjournments of such Meeting to permit further solicitation of
proxies. A shareholder vote may be taken on one or more of the
proposals in this Proxy Statement prior to such adjournment if
sufficient votes have been received and it is otherwise
appropriate. Any such adjournment will require the affirmative
vote of a majority of those shares present at the Meeting in person
or by proxy. The persons named as proxies will vote those proxies
which they are entitled to vote FOR or AGAINST any such proposal in
their discretion.
The close of business on March 3, 1997 has been fixed as the
record date for the determination of shareholders entitled to
notice of and to vote at the Meeting and all adjournments thereof.
Each shareholder is entitled to one vote for each full share
and an appropriate fraction of a vote for each fractional share
held. On the record date there were 103,919,670 shares of the
Equity Trust outstanding.
To the knowledge of the management of the Equity Trust, no
person owns of record or beneficially 5% or more of the shares of
the Equity Trust except that, as of March 3, 1997, 84,850,083
shares were held of record by Cede & Co., a nominee partnership of
The Depository Trust Company. Of such shares, 21,199,157 shares,
representing 20.4% of the outstanding shares of the Equity Trust,
are held by The Depository Trust Company as nominee for Smith
Barney Inc., representing approximately 15,170 discretionary and
non-discretionary accounts.
This Proxy Statement is first being mailed to shareholders on
or about March 31, 1997.
PROPOSAL 1: TO ELECT THREE DIRECTORS OF THE EQUITY TRUST
At the Meeting, the following three of the eight Directors of
the Equity Trust are to be elected to hold office for a period of
three years and until their successors are elected and qualified.
The Board of Directors is divided into three classes. Each year
the term of office of one class will expire. Unless authority is
withheld, it is the intention of the persons named in the proxy to
vote the proxy FOR the election of the nominees named below. Each
nominee has indicated that he will serve if elected, but if any
nominee should be unable to serve the proxy will be voted for any
other person determined by the persons named in the proxy in
accordance with their judgment. Each of the Directors of the
Equity Trust has served in that capacity since the July 14, 1986
organizational meeting of the Equity Trust with the exception of
Mr. Conn, who became a Director of the Equity Trust on May 15, 1989
and Mr. Pohl, who became a Director of the Equity Trust on February
19, 1992.
Position with Number and
Equity Trust, Percentage of
Business Shares of Capital
Experience Stock Beneficially
During Past Owned** Directly
Five Years and or Indirectly on
Name and Business Address Age March 3, 1997
James P. Conn
One Corporate Center
Rye, NY 10580-1434 Director of the Equity Trust
23,251***
Managing Director of Financial
Security Assurance Holdings Ltd
since 1992; President and Chief
Executive Officer of Bay Meadows
Operating Company from 1988
through 1992. Mr. Conn is 59 years
old. (1)(2)(10)(14)
Anthony R. Pustorino
One Corporate Center
Rye, NY 10580-1434 Director of the
Equity Trust. 8,157***
Certified Public Accountant.
Professor of Accounting
Pace University, since 1965. Mr.
Pustorino is
71 years old. (1)(2)(3)
(4)(5)(7)(10)(11)(13)
*Karl Otto Pohl
One Corporate Center
Rye, NY 10580-1434 Director of the Equity Trust.
Partner of 0
Sal Oppenheim Jr. & Cie (private
investment bank);
Currently Board Member of IBM World
Trade
Europe/Middle East/Africa Corp.;
bertelsmann
AG; Zurich Versicherungs-Gesellschaft
(insurance);
the International Advisory Board for
JP Morgan & Co.;
Supervisory Board Member of Royal
Dutch
(petroleum company) ROBECo/o Group;
Advisory Director
of Unilever N.V. and Unilever
Q Deutschland.
Mr. Pohl is 67 years old.
(1)(2)(3)(4)(5)(6)(7)(8)(9) (10)(11)(12)
The following Directors of the Equity Trust will continue to
serive in such capacity until their terms of office expire and
their successors are elected and qualified.
Name and Business Address Position with the
Equity Trust, Number and
Percentage of
Business Experience During Shares of
Capital Stock
Past Five Years, Beneficially
Owned**
Age and Date Term Expires Directly or
Indirectly on
March 3, 1997
*Mario J. Gabelli, CFA
One Corporate Center
Rye, NY 10580-1434 Chairman of the Board and
1,187,963
President of the Equity Trust; (1.14%)
Chairman of the Board, Chief
Executive Officer and Chief
Investment Officer of Gabelli
Funds, Inc.; Chief Investment
Officer of GAMCO Investors, Inc.
, Chairman of the Board and Chief
Executive Officer of Lynch
Corporation; Director of Morgan
Group, Inc. and Spinnaker Industries,
Inc. Mr. Gabelli is 54
years old. (1998)
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)
Dr. Thomas E. Bratter
One Corporate Center
Rye, NY 10580-1434
Director of the Equity Trust. 8,873***
Director, President and Founder,
The John Dewey Academy
(residential college preparatory
therapeutic high school).
Dr. Bratter is 56 years old. (1998) (10)
Felix J. Christiana
One Corporate Center
Rye, NY 10580-1434
Director of the Equity Trust. 2,913***
Retired; formerly Senior Vice President
of Dollar Dry Dock Savings Bank. Mr.
Christiana is 71 years old. (1998)
(1)(2)(3)(4)(5)(8)(10)(13)
Bill Callaghan
One Corporate Center
Rye, NY 10580-1434
Director of the Equity Trust. President
1,359***
of Bill Callaghan Associates, Ltd.,
an executive search company.
Mr. Callaghan
is 53 years old. (1999) (3)(10)
Salvatore J. Zizza
One Corporate Center
Rye, NY 10580-1434
Director of the Equity Trust. President
14,602**
and Chief Executive Officer of The Lehigh
Group, Inc. (an electrical supply
wholesaler)
and President of Binnings Building
Products.
Mr. Zizza is 51 years old. (1999)
(1)(2)(4)(10)
Directors and Officers as a
Group 1,276,115
(1.23%)
* "Interested person" of the Equity Trust, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"). Mr.
Gabelli is an "interested person" as a result of his employment as
an officer of the Equity Trust and its adviser. Mr. Gabelli is a
registered representative of an affiliated broker-dealer. Mr. Pohl
receives fees from Gabelli Funds, Inc. but has no obligation to
provide any services to it. Although this relationship does not
appear to require designation of Mr. Pohl as an "interested
person," the Equity Trust has made such designation in order to
avoid the possibility that Mr. Pohl's independence would be
questioned.
** For this purpose "beneficial ownership" is defined under
Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The information as to beneficial ownership
is based upon information furnished to the Equity Trust by the
Directors.
*** Less than 1%.
(1) Trustee of The Gabelli Asset Fund. (5) Director of Gabelli
Equity Series Funds, Inc.
(2) Trustee of The Gabelli Growth Fund. (6) Trustee of The
Gabelli Money Market Funds
(3) Director of The Gabelli Value Fund Inc. (7) Director of
Gabelli Investor Funds, Inc.
(4) Director of The Gabelli Convertible Securities Fund, Inc.
(8) Director of Gabelli Global Series Funds, Inc.
(9) Director of Gabelli Gold Fund, Inc. (12) Director of Gabelli
International Growth Fund, Inc.
(10) Director of Gabelli Global Multimedia Trust Inc. (13)
Trustee of The Treasurer's Fund, Inc.
(11) Director of Gabelli Capital Series Funds, Inc. (14) Trustee
of the Westwood Funds
The Equity Trust pays each Director not affiliated with
Gabelli Funds, Inc. (the "Investment Adviser") or its affiliates, a
fee of $12,000 per year plus $1,500 per meeting attended, together
with the Director's actual out-of-pocket expenses relating to
attendance at meetings. Prior to July 1, 1996, the Equity Trust
paid each unaffiliated Director a fee of $10,000 per year plus
$1,000 per meeting attended, together with the Directors actual
out-of-pocket expenses. The aggregate remuneration paid by the
Equity Trust to such Directors during the fiscal year ended
December 31, 1996, amounted to $117,681.31.
During the year ended December 31, 1996, the Directors of the
Equity Trust met four times, none of which were special meetings of
Directors. Each Director then serving in such capacity attended at
least 75% of the meetings of Directors and of any Committee of
which he is a member. Felix J. Christiana and Anthony R. Pustorino
serve on the Equity Trust's Audit Committee and these Directors are
not "interested persons" of the Equity Trust as defined in the 1940
Act. The Audit Committee is responsible for recommending the
selection of the Equity Trust's independent accountants and
reviewing all audit as well as non-audit accounting services
performed for the Equity Trust. During the fiscal year ended
December 31, 1996, the Audit Committee met twice.
The Directors serving on the Equity Trust's Nominating
Committee are Felix J. Christiana (Chairman) and Salvatore J.
Zizza, and these Directors are not "interested persons" of the
Equity Trust as defined in the 1940 Act. The Nominating Committee
is responsible for recommending qualified candidates to the Board
in the event that a position is vacated or created. The Nominating
Committee will consider recommendations by shareholders if a
vacancy were to exist. Such recommendations should be forwarded to
the Secretary of the Equity Trust. The Nominating Committee did
not meet during the fiscal year ended December 31, 1996. The
Equity Trust does not have a standing compensation committee.
Bruce N. Alpert, Vice President and Treasurer of the Equity
Trust, Marc S. Diagonale, Vice President of the Equity Trust, and
James E. McKee, Secretary of the Equity Trust, are the only
executive officers of the Equity Trust not included in the listing
of Directors above. Mr. Alpert is 45 years old and has served as
an officer of the Equity Trust since August 1988. He currently
serves as Vice President and Chief Operating Officer of the
Investment Advisory Division of the Investment Adviser and as an
officer for each mutual fund managed by the Investment Adviser and
Teton Advisers LLC. Mr. Diagonale is 30 years old and served as a
client services representative for Gabelli & Company, Inc. from
March 1993 until he became Assistant Vice President of the Equity
Trust on May 9, 1994. He was appointed Vice President of the
Equity Trust on February 22, 1995. Prior to 1993, Mr. Diagonale
was a masters of business administration student at New York
University. Mr. McKee is 33 years old and has served as Secretary
of the Equity Trust since August 16, 1995. He has served as Vice
President and General Counsel of GAMCO Investors, Inc. since 1993
and of Gabelli Funds, Inc. since August 1995. Mr. McKee also
serves as Secretary for each mutual fund managed by the Investment
Adviser and Teton Advisers LLC. From 1992 through 1993 Mr. McKee
served as Branch Chief with the U.S. Securities and Exchange
Commission in New York. From 1989 through 1992 he served as a
staff attorney with the Securities and Exchange Commission in New
York. The business address of each of these officers is One
Corporate Center, Rye, New York 10580-1434.
The following table sets forth certain information regarding
the compensation of the Equity Trust's directors and officers.
With the exception of Mr. Diagonale, officers of the Equity Trust
who are employed by the Investment Adviser receive no compensation
or expense reimbursement from the Equity Trust.
Compensation Table
Fiscal Year Ended December 31, 1996
Total
Aggregate Compensation
Name of Person Compensation from from the
and Position the Equity Trust Equity Trust
and Fund
Complex Paid to
Directors and Officer*
Mario J. Gabelli
Chairman of the Board 0 0 (13)
Dr. Thomas E. Bratter $15,500 $20,500 (2)
Director
Bill Callaghan $15,500 $34,500 (3)
Director
Felix J. Christiana $17,500 $74,000 (9)
Director
James P. Conn $15,500 $36,500 (5)
Director
Karl Otto Pohl $14,500 $ 77,750 (13)
Director
Anthony R. Pustorino $17,500 $84,500 (10)
Director
Salvatore J. Zizza Director $15,500 $42,500 (5)
Marc S. Diagonale $125,000 $125,000 (1)
Vice President
_______________
* Represents the total compensation paid to such persons during
the calendar year ended December 31, 1996 by investment companies
(including the Equity Trust) from which such person receives
compensation that are considered part of the same fund complex as
the Equity Trust because they have common or affiliated investment
advisers. The number in parenthesis represents the number of such
investment companies.
Required Vote
In the election of Directors of the Equity Trust, those
candidates receiving the highest number of votes cast at the
Meeting if a quorum is present shall be elected to the three
positions.
THE BOARD OF DIRECTORS, INCLUDING THE NON-INTERESTED
DIRECTORS, RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSAL
TO ELECT THREE DIRECTORS OF THE EQUITY TRUST.
PROPOSAL 2: TO RATIFY THE SELECTION OF PRICE WATERHOUSE LLP AS THE
INDEPENDENT ACCOUNTANTS OF THE EQUITY TRUST FOR THE YEAR ENDING
DECEMBER 31, 1997
Upon recommendation by the Audit Committee, Price Waterhouse
LLP, 1177 Avenue of the Americas, New York, New York, 10036, has
been selected by the vote of a majority of those Directors who are
not "interested persons" of the Equity Trust to serve as
independent accountants for the Equity Trust's fiscal year ending
December 31, 1997. Price Waterhouse LLP has advised the Equity
Trust that it is independent with respect to the Equity Trust in
accordance with the applicable requirements of the American
Institute of Certified Public Accountants and the Securities and
Exchange Commission (the "Commission").
Representatives of Price Waterhouse LLP are expected to be
present at the Meeting to answer appropriate questions and will be
given the opportunity to make a statement if they so desire.
Required Vote
Ratification of the selection of Price Waterhouse LLP as
independent accountants requires the affirmative vote of a majority
of the votes cast by holders of shares of the Equity Trust
represented at the Meeting if a quorum is present.
THE BOARD OF DIRECTORS, INCLUDING THE "NON-INTERESTED"
DIRECTORS, RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSAL
TO RATIFY THE SELECTION OF PRICE WATERHOUSE LLP AS THE INDEPENDENT
ACCOUNTANTS OF THE EQUITY TRUST FOR THE YEAR ENDING DECEMBER 31,
1997.
PROPOSAL 3: AMENDMENTS TO THE EQUITY TRUST'S FUNDAMENTAL
INVESTMENT RESTRICTIONS
General
The Equity Trust has adopted investment restrictions that
govern its operations generally. Investment restrictions that are
deemed fundamental may not be changed without a vote of the
outstanding shares of the Equity Trust, while non-fundamental
investment restrictions may be changed by the Equity Trust's Board
of Directors if it deems it in the best interest of the Equity
Trust and its shareholders to do so.
Recently, the U.S. Congress enacted legislation affecting the
regulatory framework governing the mutual fund industry and
prompting a review of the Equity Trust's existing fundamental
investment restrictions and a proposal for certain amendments.
Shareholders should note that certain of the proposed fundamental
investment restrictions are stated in terms of "to the extent
permitted by applicable law." Applicable law can change from time
to time and may become more or less restrictive as a result. The
restrictions have been drafted in this manner so that future
changes in the law would not require the Equity Trust to seek
shareholder approval to amend a restriction to conform it to
applicable law then in effect.
The proposed changes to the investment restrictions are
designed to provide the Equity Trust with greater investment
flexibility, to promote operational efficiencies and facilitate
monitoring of compliance and to provide greater opportunities to
enhance performance for the common shareholders of the Equity
Trust. Shareholders are asked to consider the following proposals
for changes to the Equity Trusts policies, each of which requires
a separate vote.
Except as otherwise indicated, the proposed changes to the
investment restrictions are not expected to affect materially the
current investment techniques employed by the Equity Trust.
a) Amend the Equity Trust's Investment Restriction Regarding the
Issuance of Senior Securities
The Equity Trust currently is prohibited from issuing senior
securities but is allowed to mortgage or pledge securities in
connection with permissible borrowings. The current restriction
reads as follows: "The Fund may not issue senior securities, as
defined in the 1940 Act, or mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any securities it
owns or holds except as may be necessary in connection with
borrowings mentioned . . . above, and then such mortgaging,
pledging or hypothecating may not exceed 10% of the total assets of
the Fund taken at the lesser of cost or market value and except
that collateral arrangements with respect to the writing of options
or any other hedging activity shall not be deemed a pledge of
assets or the issuance of a senior security." The proposed
restriction instead substitutes a limitation on the issuance of
senior securities based upon applicable law, as follows: "The Fund
may not issue senior securities, except to the extent permitted by
applicable law." The purpose of the proposed amendment is to
ensure that the Equity Trust's policy concerning senior securities
affords it the maximum ability to adapt to economic, market and
regulatory conditions as they arise.
Although the definition of "senior security" involves complex
statutory and regulatory concepts, a senior security is considered
generally to be an obligation of the Equity Trust that has a claim
to the assets or earnings of the Equity Trust that takes priority
over the claims of holders of common stock of the Equity Trust.
The 1940 Act generally prohibits closed-end investment companies
such as the Equity Trust from issuing senior securities unless
certain asset coverage tests and other restrictions are satisfied.
The proposed amendment would enable the Equity Trust to issue
debt securities or preferred stock whose holders would have
priority over holders of the Equity Trusts common shares as to
distribution of assets or payment of dividends or interest. If
this proposal is approved, the Board of Directors intends to
consider the issuance of preferred stock, the preferences, rights,
powers and restrictions of which will be determined by the Board
prior to issuance.
A leveraged capital structure creates certain special risks
and benefits not associated with unleveraged funds having similar
investment objectives and policies. If the Equity Trust were to
issue preferred stock or debt and incur an obligation to pay
dividends or interest, any investment income or gains earned from
the capital contributed by the purchase of the senior securities
which is in excess of the interest or dividends due thereon will
cause the net asset value of the Equity Trust's shares to increase
to a greater extent than would otherwise be the case. Conversely,
if the investment performance of the capital contributed by the
purchasers of the senior securities fails to cover the interest or
dividends on such capital, the net asset value of the Equity Trust
would decrease to a greater extent than would otherwise be the
case, and dividends on the shares from earnings may be reduced or
eliminated. A leveraged capital structure may be implemented only
if the Board of Directors of the Equity Trust determines in light
of all relevant circumstances that to do so would be in the best
interests of the Equity Trust and its shareholders.
b) Amend the Equity Trust's Investment Restriction Regarding
Borrowing
Under the 1940 Act, the Equity Trust is required to state its
policy relating to borrowing. The Equity Trust's current
fundamental policy provides that "the Fund may not borrow money,
except that the Fund may borrow from banks and other financial
institutions on an unsecured basis, in an amount not exceeding 10%
of its total assets, to finance the repurchase of its shares. The
Fund also may borrow money on a secured basis from banks as a
temporary measure for extraordinary or emergency purposes.
Temporary borrowings may not exceed 5% of the value of the total
assets of the Fund at the time the loan is made. The Fund may
pledge up to 10% of the lesser of the cost or value of its total
assets to secure temporary borrowings. The Fund will not borrow
for investment purposes. Immediately after any borrowing, the Fund
will maintain asset coverage of not less than 300% with respect to
all borrowings. While the borrowing of the Fund exceeds 5% of its
respective total assets, the Fund will make no further purchases of
securities, although this limitation will not apply to repurchase
transactions as described above." The proposed investment
restriction would read as follows: "The Fund may not borrow money,
except to the extent permitted by applicable law."
The purpose of the proposed amendment is to ensure that the
Equity Trusts policy concerning borrowing affords it the maximum
ability to adapt to economic, market and regulatory conditions as
they arise. The 1940 Act limits the ability of the Equity Trust to
engage in borrowing to protect shareholders. Generally, under the
1940 Act limitations, the Equity Trust may borrow only from banks
and then must set aside high quality liquid assets in an amount
equal to 300% of the borrowed amount. In addition, the 1940 Act
would permit the Equity Trust to obtain a temporary loan in an
amount not to exceed 5% of its total assets at the time of
borrowing.
Although the proposed investment restriction would in effect
raise the limitation on borrowing to a maximum of 33 1/3% of the
Funds assets, the Equity Trust currently does not plan to change
any of its borrowing limitations.
c) Elimination of the Equity Trust's Fundamental Investment
Restriction Regarding Margin and Short Sales
Currently, the Equity Trust maintains a fundamental policy
limiting its use of margin and short sales, as follows: "The Fund
may not purchase any securities on margin or make short sales of
securities, except that the Equity Trust may obtain such short term
credit as may be necessary for the clearance of purchases and sales
of portfolio securities." This policy is not required to be
fundamental. If the proposal is approved by shareholders, the
Equity Trust's Board of Directors intends to adopt non-fundamental
policies addressing these issues.
The Equity Trust intends to permit certain short sales. A
short sale is a transaction in which a fund sells a security it
does not own. The Equity Trust would permit short sales of
securities so long as the market value of the securities sold short
of any one issuer will not exceed 5% of the Equity Trust's total
assets. The Equity Trust will not make a short sale if, after
giving effect to such sale, the market value of all securities sold
short by the Equity Trust exceeds 25% of the value of its total
assets or the Equity Trust's aggregate short sales of a particular
class of securities exceeds 25% of the outstanding securities of
that class. However, the Equity Trust would be permitted to make
short sales "against the box" without regard to such limitations.
Short sales "against the box" are short sales in which, at the time
of the short sale, the Equity Trust owns or holds an immediate and
unconditional right to acquire the security at no additional cost.
The Equity Trust would be limited to not more than 25% of its total
assets being held as collateral for such sales. The Equity Trust
does not expect to purchase securities on margin.
The Board of Directors believes that the Equity Trust's
current policy prohibiting short sales unnecessarily restricts the
Equity Trust from taking advantage of potential investment
opportunities and techniques. Shareholders should note, however,
that the short sale of a security is considered a speculative
investment technique.
Required Vote
The proposed changes to the Equity Trusts fundamental
investment restrictions as set forth in proposals 3(a) through (c)
require a separate vote on each restriction. Approval of each
restriction requires the affirmative vote of a majority of the
outstanding voting securities of the Equity Trust which, as defined
in the 1940 Act, means the lesser of (a) 67% of the shares present
at a meeting of its shareholders if a quorum is present or (b) more
than 50% of the outstanding shares of the Equity Trust.
THE BOARD OF DIRECTORS, INCLUDING THE "NON-INTERESTED"
DIRECTORS, RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS TO AMEND
OR ELIMINATE CERTAIN OF THE EQUITY TRUSTS FUNDAMENTAL INVESTMENT
RESTRICTIONS.
The Investment Adviser and Administrator
Gabelli Funds, Inc. acts as investment adviser and
administrator to the Equity Trust. The business address for
Gabelli Funds, Inc. is One Corporate Center, Rye, New York 10580-
1434.
Compliance with the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act and Section 30(f) of the
1940 Act and the rules thereunder require the Equity Trust's
officers and directors, officers and directors of the investment
adviser, affiliated persons of the investment adviser, and persons
who own more than ten percent of a registered class of the Equity
Trust's securities, to file reports of ownership and changes in
ownership with the Commission and the New York Stock Exchange and
to furnish the Equity Trust with copies of all Section 16(a) forms
they file. Based solely on its review of the copies of such forms
received by it, the Equity Trust believes that during 1996, such
persons complied with all such applicable filing requirements.
Broker Non-Votes and Abstentions
If a proxy which is properly executed and returned
accompanied by instructions to withhold authority to vote
represents a broker "non-vote" (that is, a proxy from a broker or
nominee indicating that such person has not received instructions
from the beneficial owner or other person entitled to vote shares
on a particular matter with respect to which the broker or nominee
does not have discretionary power), is unmarked or marked with an
abstention (collectively, "abstentions"), the shares represented
thereby will be considered to be present at the Meeting for
purposes of determining the existence of a quorum for the
transaction of business. Under Maryland law, abstentions do not
constitute a vote "for" or "against" a matter and will be
disregarded in determining the "votes cast" on an issue. The
election of Directors (Proposal 1) provides that the three
candidates who receive the highest number of votes cast at the
meeting are elected; therefore, abstentions will be disregarded.
The ratification of Price Waterhouse LLP as independent accountants
of the Equity Trust (Proposal 2) requires the affirmative vote of a
majority of the votes cast at the Meeting; therefore, abstentions
will be disregarded. The consideration of the amendment or
elimination of certain fundamental investment restrictions
(Proposals 3(a) through (c)) requires approval of a 1940 Act
majority; therefore, abstentions and broker non-votes have the
effect of a negative vote on the proposal.
Shareholders of the Equity Trust will be informed of the
voting results of the Meeting in the Equity Trust's Semi-Annual
Report dated June 30, 1997.
OTHER MATTERS TO COME BEFORE THE MEETING
The Directors do not intend to present any other business at
the Meeting, nor are they aware that any shareholder intends to do
so. If, however, any other matters are properly brought before the
Meeting, the persons named in the accompanying form of proxy will
vote thereon in accordance with their judgment.
SHAREHOLDER PROPOSALS
All proposals by shareholders of the Equity Trust, which are
intended to be presented at the Equity Trust's next Annual Meeting
of Shareholders to be held in 1998, must be received by the Equity
Trust for consideration for inclusion in the Equity Trust's proxy
statement and proxy relating to that meeting no later than December 1, 1997.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS
WHO DO NOT EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO
COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD AS SOON AS POSSIBLE
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
