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[LOGO] THE GABELLI
EQUITY TRUST INC.
Semi-Annual Report
June 30, 1999
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[LOGO] THE GABELLI
EQUITY TRUST INC.
Our cover icon represents the underpinnings of Gabelli.
The Teton mountains in Wyoming represent what we believe
in in America -- that creativity, ingenuity, hard work and
a global uniqueness provide enduring values. They also
stand out in an increasingly complex, interconnected and
interdependent economic world.
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Investment Objective:
The Gabelli Equity Trust Inc. is a closed-end,
non-diversified management investment company whose
primary objective is long-term growth of capital, with
income as a secondary objective.
This report is printed on recycled paper.
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To Our Shareholders,
"But Many Who Are First Will Be Last, and The Last First" (Mark 10:31)
Value stocks excelled in the second quarter of 1999. Cyclical stocks
ignited the rally, with the stronger than anticipated economy bolstering the
earnings outlook for economically sensitive companies. Other value sectors
caught the spark as investors began rotating out of richly valued growth stocks
into more reasonably priced companies in a wide range of industries. The
Internet balloon did not burst, but enough hot air escaped to bring the ".com"
companies closer to earth.
Also, small cap stocks finally emerged from what has been a long and
painful bear market. For the first time in seven quarters, the Russell 2000
outpaced the S&P 500 on its way to posting double digit returns for the quarter.
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[LOGO] THE GABELLI
EQUITY TRUST INC.
Investment Performance
For the second quarter ended June 30, 1999, The Gabelli Equity Trust
Inc.'s ("Equity Trust") net asset value (NAV) per share increased 10.5% to
$12.58, after adjusting for the $0.27 per share distribution on June 28, 1999.
The Standard & Poor's 500 Index (S&P 500), the Value Line Composite Index and
the Russell 2000 Index increased 7.1%, 17.3% and 15.6%, respectively, over the
same period. Each is an unmanaged indicator of stock market performance.
Year-to-date, the Equity Trust is up 14.7%. For the twelve months concluded June
30, 1999, the Equity Trust appreciated 12.7% after adjusting for the $1.185 per
share in distributions. The S&P 500, the Value Line Composite and the Russell
2000 rose 22.8%, 10.4% and 1.5%, respectively, over the same twelve-month
period.
For the five year period ended June 30, 1999, the Equity Trust's return
averaged 17.4% annually, compared to average annual returns of 27.9%, 19.1% and
15.4% for the S&P 500, the Value Line Composite and the Russell 2000. Total
return includes adjustments of $6.50 per share for the reinvestment of dividends
and distributions, rights offerings and the spin-off of the Gabelli Global
Multimedia Trust.
For the ten years ended June 30, 1999, the Equity Trust achieved a total
return of 216.4%, including adjustments of $13.53 per share in distributions,
which equates to an average annual return of 12.2%. This compares to 18.8%,
14.0% and 12.4% average annual returns over the same time period for the S&P
500, the Value Line Composite and the Russell 2000.
Since its inception on August 21, 1986 through June 30, 1999, the Equity
Trust has had a total return of 486.2%, including adjustments of $15.66 per
share in distributions, which equates to an average annual return of 14.7%.
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Average Annual Returns - June 30, 1999
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NAV Average Average Annual
Annual Return Investment Return(a)
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1 Year .................................... 12.7% 16.7%
5 Year .................................... 17.4% 17.4%
10 Year .................................... 12.2% 14.3%
Life of Fund (August 21, 1986) ............. 14.7% 14.0%
(a) Based on initial offering price of $10.00
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The Equity Trust's common shares (GAB - NYSE) ended the quarter at $12.375
per share on the New York Stock Exchange, an increase of 6.0% for the quarter
and up 12.0% year to date. For the twelve months ended June 30, 1999, the common
shares are up 16.7%, after adjusting for all distributions.
Our long-term performance goal is to grow our net asset value by a real
rate of return of 10% per year. In addition, our goal is to have the publicly
traded market price track the net asset value.
Spin-off of The Gabelli Utility Trust
At our Annual Meeting on May 17, 1999, the shareholders of The Gabelli
Equity Trust overwhelmingly approved the spin-off of The Gabelli Utility Trust
(the "Utility Trust"), a newly organized, non-diversified, closed-end management
investment company which will seek long-term growth of capital and income by
investing primarily in utility companies involved in the distribution of
electricity, gas and water.
We are pleased to announce that the spin-off was successfully completed on
the distribution date of July 9, 1999. Each shareholder of the Equity Trust
received one share of the Utility Trust for every ten Equity Trust shares owned.
The Utility Trust is listed on the New York Stock Exchange (NYSE) under the
symbol "GUT" and began trading on a regular way basis on July 12, 1999. The
initial net asset value of the Utility Trust was $7.50 per share.
In addition to receiving a monthly dividend, we believe this transaction
to be beneficial to you because it allows you to participate more directly in
the on-going opportunities presented by deregulation and consolidation in the
utility industry.
What We Do
The success of momentum investing in recent years and investors' desire
for instant gratification have combined to make value investing appear dull. At
the risk of being dull, we will once again describe the "boring" value approach
that has seen us through both good and bad markets over the last 12 years at The
Gabelli Equity Trust and for over 22 years at Gabelli Asset Management Company.
In past reports, we have tried to articulate our investment philosophy and
methodology. The following graphic further illustrates the interplay among the
four components of our valuation approach.
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Our focus is on free cash flow; earnings before interest, taxes,
depreciation and amortization (EBITDA) minus the capital expenditures necessary
to grow the business. We believe free cash flow is the best barometer of a
business' value. Rising free cash flow often foreshadows net earnings
improvement. We also look at earnings per share trends. Unlike Wall Street's
ubiquitous earnings momentum players, we do not try to forecast earnings with
accounting precision and then trade stocks based on quarterly expectations and
realities. We simply try to position ourselves in front of long-term earnings
uptrends. In addition, we analyze on and off balance sheet assets and
liabilities such as plant and equipment, inventories, receivables, and legal,
environmental and health care issues. We want to know everything and anything
that will add to or detract from our private market value (PMV) estimates.
Finally, we look for a catalyst; something happening in the company's industry
or indigenous to the company itself that will surface value. In the case of the
independent telephone stocks, the catalyst is a regulatory change. In the
agricultural equipment business, it is the increasing world-wide demand for
American
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food and feed crops. In other instances, it may be a change in management, sale
or spin-off of a division or the development of a profitable new business.
Once we identify stocks that qualify as fundamental and conceptual
bargains, we then become patient investors. This has been a proven long-term
method for preserving and enhancing wealth in the U.S. equities market. At the
margin, our new investments are focused on businesses that are well-managed and
will benefit from sustainable long-term economic dynamics. These include macro
trends, such as the globalization of the market in filmed entertainment and
telecommunications, and micro trends, such as an increased focus on productivity
enhancing goods and services.
COMMENTARY
Mario Gabelli, our Chief Investment Officer, has appeared in the
prestigious Barron's Roundtable discussion annually since 1980. Many of
our readers have enjoyed the inclusion of selected and edited comments
from Barron's Roundtable in previous reports to shareholders. Once again,
we are including selected comments of Mario Gabelli from Barron's 1999
Midyear Roundtable. For our shareholders who prefer to view the entire
interview, the complete text is available on the Internet at
www.gabelli.com.
Barron's ("Q"): Mario, how does the second half look?
Gabelli ("G"): I said in January that rates would back up to 5.75%-6%. Now
they're a little above where I thought they would be. We don't create an
official inflation model, but look at it this way: Inflation breaks down
into three parts -- labor, commodities and services. Commodity prices have
bottomed out. Services, particularly health care, are accelerating. Unit
labor costs could start picking up. So if inflation nudges above 3%, I
don't see long rates falling below 6%. If rates stay at 6% with the Dow
Jones Industrials at 10,700, the market has no margin of safety unless
earnings pick up dramatically.
Q: Will they?
G: I see U.S. profits roaring ahead. The combination of reasonably good
end demand, reasonably okay cost structures and continuing intensity on
the part of U.S. companies to further lower their costs adds up to a
pretty good outlook.
Q: Where does that leave the stock market?
G: Global financial landscapes are being shaped by mergers and
acquisitions. The Financial Accounting Standards Board proposes to end
pooling-of-interests transactions in January 2001. Between now and then,
over a span of 18 months, there will be an incredible rush of deals. Some
of them will be for cash, and this flow of funds will help the market.
When I add it all up, I expect that as soon as any stock sector gets weak,
a deal will come along to revive it. So the market will be volatile, with
lots of liquidity.
Before we look ahead, I just want to say that we have had very good
success in positioning ourselves in companies that are taken over.
Aeroquip-Vickers, which I mentioned in January at $30, was bought by Eaton
for $58 cash a share. That was a slam-dunk home run. MediaOne Group, which
I also mentioned, has agreed to be acquired by AT&T. That's another
reasonably attractive deal. We think that three or four of our other
holdings could be taken over.
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American Consumers: Will the Engine of Global Economic Growth Continue Steaming
Along?
We want to echo again the question we asked in our September 30, 1998
report and repeated in our March 31, 1999 report: Will the American consumer
continue to carry the rest of the world, or will the consumer eventually run low
on confidence and/or the resources required to nourish the global economy? Put
another way, can the U.S. continue to run enormous balance of payment deficits
that provide hope and sustenance for the other economies of the world as they
attempt to emerge from their economic malaise?
Full employment, higher wages, the wealth effect associated with rising
home values and a vibrant stock market have emboldened consumers, who continue
to spend quite liberally. If rising interest rates discourage consumers from
financing their spending spree, or we see a meaningful correction in the stock
market dent consumer confidence, the engine that has been driving global
economic growth may sputter. Equally important, if the U.S. consumer continues
to be the sole driver of global economic activity, the U.S. balance of payments
deficit will exceed even our dire forecast of a $250 billion run rate. The value
of the U.S. dollar is a wild card in the mix of elements that will determine the
direction of the overall U.S. economy and the stock market.
The Market: Earnings and Interest Rates
In our first quarter 1999 letter to shareholders, we also opined that
earnings and interest rates would call the market tune for the balance of the
year. In general, first quarter earnings met consensus estimates and second
quarter earnings should be stronger than anticipated, with particularly good
comparisons to 1998's second quarter, when General Motors' strike and the plunge
in energy prices crimped reported results. However, interest rates are higher,
and until we see convincing evidence that inflation is firmly under control,
rates are not likely to trend much lower. With the S&P 500's gains already
approximating 1999 earnings growth forecasts, we see an inadequate "margin of
safety" in the stock market. Money flowing into the markets, particularly from
deal activity, is the fuel powering a market that still favors stocks. However,
money is no longer pouring into equity mutual funds at the rates we have seen in
previous years. All this conjecture leads us to the opinion that stock
selectivity remains crucial over the next twelve months.
Value versus Growth, Small Cap versus Large Cap
Growth has outperformed value for five years and large cap stocks have
outperformed small caps for nearly as long. This is not unusual. Style and
capitalization sectors generally take lengthy turns leading the market. Does the
ascent of value and small cap stocks this quarter signify a major change in
market leadership? One quarter of outperformance does not a trend make. But,
fundamentals favor value stocks and small cap equities going forward. Despite
the strong second quarter rally, based on historical measurements, value stocks
remain inexpensive and growth stocks are still overvalued. Small cap stocks
offer the dual advantages of generally better earnings growth prospects than
large caps and materially lower price/earnings and price/cash flow multiples.
The accompanying chart shows the ebbs and flows of growth and value
investing over the last 23 years. The chart tracks large capitalization stocks
but the same would hold true for small and mid-cap stocks.
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Despite our own value bias and the Equity Trust's focus on smaller
companies, our Fund has performed quite well in a market that has strongly
favored large cap growth stocks over all others. We believe we can do even
better relative to the S&P 500 in a market that tilts toward value and smaller
cap stocks.
This Quarter's Scorecard
We are particularly proud of our portfolio's batting average this quarter.
Nearly 75% of our portfolio holdings outperformed the S&P 500. That is almost
three hits in every four at bats. Our cyclical holdings were among our most
productive batters. Industrial cyclicals such as Navistar, Mark IV Industries,
GenCorp. and Caterpillar helped us build a big lead over the benchmark. Energy
and energy service companies such as PennzEnergy also connected at the plate.
AT&T Corp.'s Liberty Media Group is a contender for "Most Valuable Player", as
investors applaud its acquisition of Associated Group. Liberty Media is the
tracking stock for the company being run by former Tele-Communications Inc.
Chairman and "Value Creator Extraordinaire" John Malone.
Some of our previous all-stars, most notably Cablevision, Time Warner and
Viacom, experienced old-fashioned profit taking. After exceptional performance
in 1997-98, momentum investors began purchasing the stocks of these cable and
media sluggers. True to form, the momentum investors abandoned their new
holdings as soon as they fell behind in the count. We believe these dominant
franchises will rebound smartly later this season. We struck out with
pharmaceutical holdings Pfizer, Glaxo Wellcome and Amgen.
A Broadcast Recovery?
American broadcasters suffered through a dismal 1998. They continued to
lose eyeballs and advertising dollars to cable television operators, and the
Internet captured a larger piece of many companies' advertising
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budgets. However, the tide may be turning. Although the national and local spot
markets remain soft, upfront advertising sales are up 13%. Buoyed by spending
from pharmaceutical companies, which are now allowed to market their
prescription products on television, Internet companies that are spending
lavishly on advertising to establish their brand names and big new ad campaigns
planned for the millennium, broadcasters' ad revenues should trend higher.
Broadcasters will get an additional boost in the upcoming election year as
politicians open campaign treasure chests to win the hearts and minds of
American voters.
This quarter, our broadcast holdings were mixed. Paxson Communications
posted strong gains. But, Chris-Craft Industries was flat, while Gray
Communications declined. We believe that when investors start focusing on next
year's numbers, they will begin tuning in to our broadcast laggards.
A final wild card for broadcasters is the increasing focus by technology
giants on the ubiquitous nature of television. The "Holy Grail" is to develop a
two way interactive and transaction driven economic model for old fashioned
"POTS" (Plain Old Television Stations).
Free Range Rabbit
The "Energizer Bunny" is running down. Energizer has lost market share to
current industry leader Gillette's Duracell subsidiary and Rayovac is also
gaining ground. Parent company Ralston Purina is about to free the "Energizer
Bunny" in a spin-off. We believe Energizer will be a stronger competitor as an
independent company and that off on its own, it may attract a predator in the
form of a large branded consumer goods company looking for an entry in the
battery business. Releasing Energizer will also help investors more fully
appreciate the nutrition in Ralston Purina's dominant pet food franchise.
Through the years, Ralston Purina management has done an excellent job
building value and enhancing shareholder returns through large share repurchase
programs. We believe Ralston's parts are worth considerably more than the
current market valuation of the whole and that the decision to spin off
Energizer represents another terrific move by this shareholder sensitive
company.
International Segment
A portion of the Equity Trust's portfolio continues to be managed by
Caesar Bryan. Caesar also manages the Gabelli International Growth Fund and is a
co-manager of the recently launched Gabelli Global Opportunity Fund. Below are
Caesar's thoughts on international markets and global economies:
Investors have concluded that the financial crisis of last fall is over.
One consequence of this conclusion has been the increase in money flowing to
emerging markets, particularly those located in Asia. Following the economic
turmoil that began in July of 1997, most of these countries reacted rapidly.
Domestic demand collapsed, capital investments stopped on a dime and,
consequently, imports dried up. Even though exports did not grow, the trade
balances moved into surpluses, which in turn liquefied the economies.
Eventually, capital flowed in, helping to strengthen the currencies. Confidence
improved and, in time, domestic demand returned.
The improved outlook for emerging market economies was a contributing
factor in improving the outlook for the global economy, which in turn led to a
significant outperformance by cyclical sectors in most international equity
markets. Of course, there were additional reasons behind the move into cyclical
stocks. Foremost was the decision of the European Central Bank to reduce
Euroland interest rates by 0.5%, to 2.5%, at the start of April.
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This signaled the determination of the European Central Bank to encourage growth
in Euroland. Also, many of the cyclical sectors of the equity market were priced
to reflect the probability of deflation. Indeed, as the quarter progressed,
investors' fears of deflation increasingly turned to concerns about inflation.
This led to the Federal Reserve Board raising short term U.S. interest rates by
0.25%, to 5.0%, at the end of June.
The biggest economic surprise of the quarter has to have been the report,
announced on June 10, that the Japanese economy grew 1.9% during the first
quarter of 1999, which equates to an annualized rate of 8.0%. These figures were
totally unexpected and the equity markets responded positively to the news.
Looking behind the numbers, much of the rise can be explained by the quarterly
jump of 10.3% in public sector investment reflecting government pump priming.
However, private consumption, which represents about three-fifths of the
economy, rose 1.2% quarter over quarter. This may not sound like much from this
side of the Pacific, but it was the first positive number since the first
quarter of 1998, and certainly a surprise with regard to the rise in
unemployment and the fall in wages.
We believe that the conditions are in place for a sustained upward
movement in the Japanese equity market. Corporations now appear to be embracing
the need to restructure. "Risutora" (re-structuring) will result in improved
profitability for corporate Japan and we believe the agreement between Hitachi
and NEC to merge their "DRAM" operations was a watershed event. These long time
rivals decided to seek profits over market share.
Another bullish signal is that foreign companies are buying Japanese
companies. One example of this was the purchase of International Digital
Communications, a privately held communications company, by Cable & Wireless of
the U.K. Cable & Wireless was the successful acquirer as it outbid NTT. We
anticipate that corporate activity in Japan will accelerate sharply in the
coming year. The ability of companies to offer stock to the shareholders of an
acquired company will serve as one major catalyst for this increased corporate
activity. This basic corporate finance tool is currently not permitted in Japan,
but analysts anticipate that the commercial code will be changed in the near
future to permit paper transactions.
Of course, there are risks to this more optimistic outlook. First, the
economy could continue to deteriorate and the corporate sector could slow their
efforts to improve profitability. However, two recent events have reassured
investors that the authorities remain committed to engineering an economic
turnaround. First, the authorities appear determined to prevent the yen from
strengthening below 120 yen per dollar through intervention. Secondly, the head
of the Bank of Japan has made it clear that interest rates will remain near zero
for the rest of the year. During the quarter, the fund added to its Japanese
weighting which represented nearly 20% of the portfolio by the end of June.
As we have previously mentioned, European markets performed poorly during
the quarter. For example, Italy and Switzerland both fell by more than 5% during
the quarter. The euro was weak, reflecting sluggish economic growth, turmoil at
the European Commission and the war in Kosovo. However, we believe the negative
influences have run their course and expect our European equity holdings to
rebound in the second half of the year.
We have outlined the reasons for our enthusiasm regarding European
equities on many occasions in the past. In short, we believe that Europe is
undergoing a transformation brought about by the single market and the single
currency. Merger activity remains robust and 1999 is on target to be a record
year for merger and acquisition activity.
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The largest European takeover in history was concluded during the quarter
when Olivetti acquired Telecom Italia. Two of the Fund's four top performing
holdings for the quarter were European companies that were acquired. Safra
Republic Holdings, the Swiss private bank, was bid for by HSBC Holdings and rose
56% for the quarter. Pathe, the French entertainment company, agreed to be
purchased by Vivendi, another portfolio holding, and appreciated 47% during the
quarter. The other two top performers were Japanese stocks. Nintendo rose by 63%
following news of new products and Kadokawa Shoten Publishing appreciated by
53%.
On the other hand, the Fund's performance was adversely affected by its
exposure to a number of pharmaceutical and consumer non-durable companies. For
example, Glaxo Wellcome, AstraZeneca and Roche Holding fell by between 15% and
17%. Other poor performers included media holdings Granada Group and Pearson,
which both retreated by more than 10%. We believe that all of these companies
possess sound fundamentals and retain the characteristics that we seek in
investment candidates and we expect that these qualities will be recognized in
the second half of the year.
Let's Talk Stocks
The following are stock specifics on selected holdings of the Equity
Trust. Favorable EBITDA prospects do not necessarily translate into higher stock
prices, but they do express a positive trend which we believe will develop over
time.
Cablevision Systems Corp. (CVC - $70.00 - AMEX) is one of the nation's leading
communications and entertainment companies, with a portfolio of operations that
span state-of-the-art, high-speed multimedia delivery, subscription cable
television services, championship professional sports teams and national cable
television networks. Headquartered in Bethpage, NY, Cablevision serves more than
3.4 million cable customers primarily in three core markets: New York, Boston
and Cleveland. Cablevision is a leader in delivering cutting-edge technological
innovation, such as Optimum TV, to the home. Through its Rainbow Media Holdings
subsidiary, Cablevision manages and develops internationally recognized content
offerings such as the popular national television networks American Movie
Classics, Bravo and The Independent Film Channel. Cablevision has a controlling
interest in New York City's famed Madison Square Garden which includes the arena
complex, the NY Knicks, the NY Rangers and the MSG network. Cablevision operates
Radio City Entertainment and holds a long term lease for Radio City Music Hall,
home of the world famous Radio City Rockettes.
Navistar International Corp. (NAV - $50.00 - NYSE) manufactures and markets
medium and heavy trucks, school buses and mid-range diesel engines in North
America and selected export markets. Navistar has led the U.S. and Canadian
markets in combined sales of medium and heavy trucks and school buses for almost
20 years. The company is also a leading supplier of mid-range diesel engines in
the 160 to 300 horsepower range. The company's products, parts and services are
sold through a network of 1,000 International(R) brand dealer outlets in the
United States, Canada, Brazil and Mexico, and through more than 90 dealers in 75
countries. Navistar provides financing for its customers and distributors
principally through its wholly-owned subsidiary, Navistar Financial Corp.
Telephone & Data Systems Inc. (TDS - $73.0625 - AMEX) is a diversified
telecommunications company with established cellular and local telephone
operations and a developing personal communications services ("PCS") business.
TDS provides high quality telecommunications services to three million customers
in 35 states. TDS
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owns 81.1% of United States Cellular Corp. (USM - $53.50 - AMEX), the nation's
seventh largest cellular telephone company. It also owns 82.4% of Aerial
Communications Inc. (AERL - $13.50 - Nasdaq), TDS's PCS subsidiary which owns
the licenses to provide PCS service in six major trading areas ("MTAs")
encompassing approximately 27.6 million population equivalents. On December 8,
1998, TDS announced its intent to spin-off its Aerial stake to existing TDS
shareholders on a tax-free basis and focus on its core wireline and cellular
operations. The transaction is expected to close by the end of the year.
Tyco International Ltd. (TYC - $94.75 - NYSE), a diversified manufacturing and
service company headquartered in Exeter, New Hampshire, is the world's largest
manufacturer and installer of fire and safety systems, the largest provider of
electronic security services in North America and the United Kingdom and has
strong leadership positions in disposable medical products, packaging materials,
flow control products, electrical and electronic components and underwater
telecommunications systems. The company operates in more than 80 countries
around the world and expects fiscal 1999 revenues in excess of $17 billion.
Viacom Inc. (VIA'A - $44.125 - AMEX), long a major provider of entertainment
"content", has evolved into one of the world's dominant media companies. The
addition of Paramount Communications, Blockbuster Entertainment (acquired in
1994), along with publisher Simon & Schuster, makes Viacom one of the largest
entertainment and publishing companies. Non-core assets are being divested and
debt has been reduced to approximately $8 billion. Viacom is focusing on global
expansion of its media franchises. Viacom is particularly well-positioned in
music (notably MTV) and cable networks (such as Nickelodeon).
Shareholder Meeting - May 17, 1999 - Final Results
The Annual Meeting of Shareholders was held on May 17, 1999 at the
Greenwich Hyatt Regency in Greenwich Connecticut. As we previously mentioned, at
the meeting, shareholders overwhelmingly approved the distribution to Equity
Trust shareholders of approximately $75 million of the Equity Trust's net assets
in the form of shares of The Gabelli Utility Trust, a newly-organized,
closed-end, registered investment company. There were 51,966,317 votes (common
and preferred stock voting together as a single class) cast in favor of the
proposal, 3,583,204 votes were cast against and 1,447,128 votes abstained.
At the meeting, the shareholders also approved the election of Bill
Callaghan, Frank J. Fahrenkopf, Jr. and Salvatore J. Zizza as Directors of the
Equity Trust. A total of 69,517,746 votes, 69,455,518 votes and 69,542,520 votes
were cast in favor of each Director and 1,203,810 votes, 1,266,038 votes and
1,179,037 votes were withheld for each Director, respectively.
Mario J. Gabelli, Thomas E. Bratter, Felix J. Christiana, James P. Conn,
Karl Otto Pohl and Anthony R. Pustorino continue to serve in their capacities as
Directors of the Equity Trust.
In addition, the shareholders ratified the selection of
PricewaterhouseCoopers LLP as the independent accountants for the Equity Trust
for the year ending December 31, 1999. 69,278,738 votes were cast in favor of
this proposal, 596,462 votes were cast against this proposal and 846,356 votes
abstained.
We thank you for your participation and appreciate your continued support.
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Daily NAVs Now Distributed by Nasdaq
Since our inception, we have made the net asset value available on nightly
recordings through 1-800-GABELLI. Now, Nasdaq is also disseminating the daily
per share net asset values (NAVs) for the Equity Trust, which is traded on the
New York Stock Exchange. The NAV ticker symbol via Nasdaq is "XGABX".
The NAVs are available through any stock quote lookup service and on
broker Nasdaq level one terminals. The dissemination of daily NAVs allows
investors and brokers to better track the long-term performance of the Fund's
underlying portfolios. We support Nasdaq's efforts in making closed-end funds'
NAVs available on a daily basis.
10% Distribution Policy
The Equity Trust continues to maintain its 10% Distribution Policy whereby
the Equity Trust pays out 10% of its average net assets each year. Pursuant to
this policy, the Equity Trust distributed $0.27 per share on June 28, 1999. The
next distribution is scheduled for September 1999.
In Conclusion
In the second quarter of 1999, value reasserted itself and small cap
stocks came roaring back. Both of these forces provided a tailwind for our
portfolio. Looking ahead, we have our reservations regarding the stock market,
which, based on fundamentals, appears to be well above intrinsic value. However,
we still see windows of opportunity, particularly in the small and mid-cap value
sectors where we are most active. We will strive to continue to uncover such
opportunities and maintain a diversified portfolio of what we view as long term
fundamental investment bargains.
Sincerely,
/s/ Mario J. Gabelli
Mario J. Gabelli
President and Chief Investment Officer
July 30, 1999
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Top Ten Holdings
June 30, 1999
Chris-Craft Industries Inc.
Viacom Inc.
Cablevision Systems Corp.
Telephone & Data Systems Inc.
Time Warner Inc.
United Television Inc.
American Express Co.
BCE Inc.
Tyco International Ltd.
Navistar International Corp.
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NOTE: The views expressed in this report reflect those of the portfolio managers
only through the end of the period stated in this report. The managers' views
are subject to change at any time based on market and other conditions.
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THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES
Quarter Ended June 30, 1999
(Unaudited)
Ownership at
June 30,
Shares 1999
-------- ------------
NET PURCHASES
Common Stocks
3Com Corp. ......................................... 34,000 34,000
Aerial Commications Inc. ........................... 21,000 21,000
AGL Resources Inc. ................................. 30,000 40,000
Aliant Inc. (a) .................................... 16,670 16,670
Allen Telecom Inc. ................................. 31,800 300,000
Allstate Corp. ..................................... 25,000 25,000
American Bankers Insurance
Group, Inc. ...................................... 25,000 150,000
Anglogold Ltd. ..................................... 3,500 3,500
Antofagasta Holdings plc ........................... 40,000 110,909
Arnoldo Mondadori Editore SpA ...................... 10,000 70,000
Arvin Industries Inc. .............................. 50,000 50,000
Asatsu-DK Inc. ..................................... 20,000 20,000
Astra Zeneca plc (b) ............................... 35,146 35,146
AT&T Corp. (c) ..................................... 75,000 260,000
Audiofina .......................................... 7,700 22,700
AutoNation Inc. .................................... 76,000 350,000
Avondale Industries Inc. ........................... 8,000 8,000
Banco Santander Central
Hispano SA, Sponsored ADR (d) .................... 50,000 170,000
Barrick Gold Corp. ................................. 3,500 13,500
Bell Atlantic Corp. ................................ 22,000 22,000
Biogen Inc. (d) .................................... 13,000 26,000
Burlington Resources Inc. .......................... 25,000 95,000
Cable & Wireless plc,
Sponsored ADR .................................... 4,500 79,500
Case Corp. ......................................... 3,000 3,000
Celestial Seasonings Inc. .......................... 58,500 58,500
Cendant Corp. ...................................... 25,000 155,000
CenturyTel Inc. (c) ................................ 85,000 255,000
Chase Manhattan Corp. .............................. 10,000 10,000
Comcast Corp., Cl. A Special (d) ................... 69,200 98,400
Corn Products International, Inc. .................. 5,000 50,250
CRH plc ORD ........................................ 15,000 105,000
Daiichi Kosho Co. Ltd. ............................. 12,000 12,000
Delphi Automotive
Systems Corp. (e) ................................ 75,001 75,001
Dexter Corp. ....................................... 27,000 47,000
El Paso Electric Co. ............................... 280,000 350,000
EMI Group plc ...................................... 165,000 188,288
Energy East Corporation (d) ........................ 10,000 20,000
ENI SpA ............................................ 112,000 112,000
Ericsson (L.M.) Telephone Co. ...................... 28,500 28,500
Ferro Corp. ........................................ 50,000 300,000
First Union Corp. .................................. 20,000 20,000
Florida Panthers Holdings Inc. ..................... 70,000 90,000
Food Lion Inc., Cl. A .............................. 20,000 160,000
Gallaher Group plc ................................. 32,300 252,300
GC Companies Inc. .................................. 3,000 75,000
General Chemical Group Inc. ........................ 100,000 105,000
General Cigar Holdings Inc. ........................ 20,000 180,000
General Mills Inc. ................................. 5,000 70,000
General Motors Corp., Cl. H ........................ 10,000 10,000
GenTek Inc. (f) .................................... 105,000 105,000
Genuine Parts Co. .................................. 30,000 100,000
Gerald Stevens Inc. ................................ 35,000 35,000
Global TeleSystems Group Inc. ...................... 1,000 1,000
Granada Group plc ORD .............................. 5,000 100,000
Gucci Group NV ..................................... 10,000 10,000
Harmony Gold Mining Co. Ltd. ....................... 12,500 72,500
Harmony Gold Mining Co. Ltd.,
ADR .............................................. 12,500 12,500
Hilton Hotels Corp. ................................ 105,000 650,000
Independent Newspapers Ltd.,
ORD .............................................. 15,000 323,000
Invik & Co. AB, Cl. B .............................. 191 19,307
Ito Yokado Co. Ltd. ................................ 1,000 12,000
Jafco Co. Ltd. ..................................... 7,000 7,000
Japan Telecom Co. Ltd. ............................. 38 38
Kadokawa Shoten
Publishing Co., Ltd. ............................. 1,300 4,800
Kanamoto Co. Ltd. .................................. 49,000 49,000
KAO Corp. .......................................... 5,000 35,000
Kyorin Pharmaceutical Co., Ltd. .................... 21,000 21,000
Lehman Brothers Holdings Inc. ...................... 25,000 63,000
Leucadia National Corporation ...................... 54,500 64,500
Liberty Media Group Cl. A (d) ...................... 224,224 448,448
Life Technologies, Inc. ............................ 31,661 33,661
Lockheed Martin Corp. .............................. 27,000 27,000
Lucent Technologies Inc. (d) ....................... 32,000 65,000
LVHM Moet Hennessy Louis
Vuitton, Sponsored ADR (g) ....................... 1,100 12,100
Lyondell Chemical Co. .............................. 55,000 55,000
Mannesmann AG ...................................... 5,000 5,000
Matsushita Electric
Industrial Co. Ltd., ORD ......................... 13,000 58,000
Mattel Inc. ........................................ 40,000 50,000
Media General Inc., Cl. A .......................... 55,000 400,000
Mellon Bank Corporation (d) ........................ 30,000 60,000
Mizuno Corp. ....................................... 87,000 87,000
Morgan Stanley Dean
Witter & Co. ..................................... 10,000 10,000
Nalco Chemical Co. ................................. 20,000 20,000
Neiman Marcus Group Inc. ........................... 10,000 350,000
11
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES -- (Continued)
Quarter Ended June 30, 1999
(Unaudited)
Ownership at
June 30,
Shares 1999
-------- ------------
NET PURCHASES (continued)
Common Stocks (continued)
Nestle SA .......................................... 100 800
New York Times Co., Cl. A .......................... 30,000 170,000
News Corp. Ltd. .................................... 30,000 170,000
NEXTEL Communications Inc.,
Cl. A ............................................ 5,000 10,000
Nintendo Co. Ltd. .................................. 1,000 10,500
NTL Inc. ........................................... 10,000 10,000
Obic Co. Ltd. ...................................... 5,000 5,000
Omnipoint Corp. .................................... 10,000 10,000
Orogen Minerals Ltd. ............................... 525,000 525,000
Parker-Hannifin Corp. .............................. 20,000 20,000
Park-Ohio Holding Corp. ............................ 3,000 55,715
Pathe SA (h) ....................................... 7,000 10,500
PennzEnergy Co. .................................... 10,000 250,000
Penton Media Inc. .................................. 100,000 400,000
Pepsi Bottling Group Inc. .......................... 2,000 7,000
Placer Dome Inc. ................................... 7,000 47,000
Prudential Corp. plc ............................... 50,000 50,000
Publishing & Broadcasting Ltd. ..................... 40,000 125,000
Pulitzer Inc. ...................................... 17,500 20,000
Rental Services Corp. .............................. 136,300 136,300
Rogers Communications Inc.,
Cl. B , Sponsored ADR (i) ........................ 9,655 29,655
Rohm and Haas Co. .................................. 64,001 64,001
Ryder System Inc. .................................. 50,000 50,000
Sanofi-Synthelabo SA (j) ........................... 20,000 20,000
Schibsted A/A ...................................... 5,000 70,000
Seagram Co. Ltd. ................................... 5,000 125,000
Sekisui House Ltd. ................................. 20,000 72,500
Simsmetal Ltd. ..................................... 146,770 146,770
Sprint Corp. (d) ................................... 170,000 400,000
Standard Motor Products Inc. ....................... 3,000 163,000
Superior Industries
International, Inc. .............................. 30,000 70,000
Telefonica de Espana,
Sponsored ADR .................................... 940 47,940
Telefonica S.A. (k) ................................ 3,320 19,320
Tenneco Inc. ....................................... 85,000 540,000
Thermo Power Corp. ................................. 5,500 5,500
THK Co., Ltd. ...................................... 24,500 24,500
Thomas Nelson Inc. ................................. 8,000 70,000
TNP Enterprises Inc. ............................... 3,000 3,000
Tokyo Broadcasting System Inc. ..................... 10,000 70,000
Toyo Seikan Kaisha Ltd. ............................ 10,000 40,000
Travelers Property Casualty Corp.,
Cl A ............................................. 30,000 30,000
Tyco International Ltd. (l) ........................ 234,000 260,000
Ucar International Inc. ............................ 10,000 100,000
United International
Holdings, Inc. ................................... 3,000 3,000
Viacom Inc., Cl. A (d) ............................. 475,000 950,000
Vivendi (h) ........................................ 10,100 15,150
Vodafone Airtouch plc,
SponsoredADR ..................................... 32,500 32,500
Watts Industries Inc., Cl. A ....................... 15,000 100,000
NET SALES
Common Stocks
Aeroquip-Vickers Inc. .............................. (400,000) --
AirTouch Communications Inc. ....................... (78,000) --
Alltel Corp. ....................................... (10,000) 40,000
American Express Co. ............................... (22,000) 198,000
AMP Inc. (l) ....................................... (515,000) --
Astra AB, Cl. A (b) ................................ (69,666) --
BA Merchant Services Inc. .......................... (344,800) --
Banca Commerciale Italiana ......................... (80,000) 73,000
Banca Nazionale del Lavoro, ORD .................... (170,000) --
Banco Pastor SA .................................... (18,500) --
Bankers Trust Corp. ................................ (10,000) --
BP Amoco plc, Sponsored ADR ........................ (6,000) 69,000
Brylane Inc. ....................................... (55,000) --
Cablevision Systems Corp., Cl. A ................... (38,000) 572,000
CDnow Inc. ......................................... (4,960) 5,000
CGU plc ............................................ (30,000) 45,342
CheckFree Holdings Corp. ........................... (8,000) 10,000
Church & Dwight Co. Inc. ........................... (13,000) 55,000
Colonial Limited Inc. .............................. (75,000) 209,979
Coltec Industries Inc. ............................. (220,200) 169,800
Convergys Corp. .................................... (7,000) 18,000
Cooper Industries Inc. ............................. (2,000) 10,000
Dana Corp. ......................................... (10,223) 290,000
Deere & Co. ........................................ (5,000) 340,000
Donaldson Co. Inc. ................................. (28,400) 252,000
Dow Jones & Co. Inc. ............................... (2,000) 38,000
duPont de Nemours (E.I.) & Co. ..................... (5,000) 15,000
Fortune Brands Inc. ................................ (60,000) 130,000
Frontier Corp. ..................................... (80,000) --
GATX Corp. ......................................... (3,000) 102,000
Gerber Scientific Inc. ............................. (2,500) 105,000
Grupo Televisa S.A., GDR ........................... (15,000) 225,000
Honeywell Inc. ..................................... (60,000) --
Indus Holding AG ................................... (10,000) --
Istitute Nazionale delle
Assicurazioni .................................... (390,000) --
12
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES -- (Continued)
Quarter Ended June 30, 1999
(Unaudited)
Ownership at
June 30,
Shares 1999
-------- ------------
NET SALES (continued)
Common Stocks (continued)
Koninklijke Philips
Electronics N.V. (m) ............................. (960) 11,040
Lawter International Inc. .......................... (100,000) --
Lihir Gold Ltd. .................................... (150,000) --
Loewen Group Inc. .................................. (110,000) 200,000
LucasVarity plc, Sponsored ADR ..................... (160,000) --
Manitowoc Co. Inc. (c) ............................. (5,000) 1,000
Maritime Telegraph and
Telephone Co. Ltd. (a) ........................... (10,000) --
Mark IV Industries Inc. ............................ (5,000) 190,000
McGraw-Hill Companies Inc. ......................... (2,000) 98,000
MediaOne Group Inc. ................................ (5,000) 245,000
Moevenpick Holding AG .............................. (950) --
Morton International Inc. .......................... (175,000) --
Navistar International Corp. ....................... (45,000) 445,000
Northern Telecom Ltd. .............................. (11,000) --
Northrop Grumman Corp. ............................. (5,000) 65,000
Park Place Entertainment Corp. ..................... (50,000) 500,000
Pegasus Gold Inc. .................................. (844,000) --
Pennzoil-Quaker State Inc. ......................... (33,800) 125,000
Pioneer Hi-Bred International Inc. ................. (20,000) --
PLATINUM Technology
International Inc. ............................... (11,000) --
Quaker Oats Co. .................................... (12,000) 110,000
RCN Corporation .................................... (30,000) 240,000
Sanofi SA (j) ...................................... (5,000) --
Schering AG ........................................ (7,000) --
Softbank Corp. ..................................... (9,000) --
Sprint Corp. (PCS Group) ........................... (10,000) 110,000
T. Rowe Price Associates Inc. ...................... (5,000) 55,000
TCI Satellite Entertainment Inc.,
Cl. A ............................................ (10,000) 340,000
Telecom Argentina - Stet France
Telecom S.A., Sponsored ADR ...................... (2,000) 8,000
Telefonica de Argentina S.A.,
ADR, Cl. B ....................................... (2,000) 8,000
Shares/ Ownership at
Principal June 30,
Amount 1999
-------- ------------
NET SALES (continued)
Common Stocks (continued)
Telephone and Data Systems Inc. .................... (5,000) 515,000
Time Warner Inc. ................................... (4,000) 468,000
Unilever plc (n) ................................... (8,486) 70,714
United Television Inc. ............................. (21,400) 247,609
US Filter Corp. .................................... (500,000) --
Veba AG ............................................ (11,000) --
Wrigley (Wm.) Jr. Co. .............................. (3,000) 70,000
Xylan Corp. ........................................ (100,000) --
Zeneca Group plc ................................... (25,000) 10,000
Corporate Bonds
Rogers Communications, Inc.,
7.50% due 09/01/1999 (i) ......................... (200,000) --
- ----------
(a) Merger - 1.667 shares of Aliant Inc. for every 1 share of Maritime
Telegraph and Telephone Co. Ltd.
(b) Merger - 0.5045 shares of Astra Zeneca plc for every 1 share of Astra AB,
Cl. A
(c) 3 for 2 stock split
(d) 2 for 1 stock split
(e) Spinoff - 0.6989 shares of Delphi Automotive Systems Corp. for every 1
share of General Motors Corp.
(f) Spinoff - 1 share of GenTek Inc. for every 1 share of General Chemical
Group Inc.
(g) 10% stock dividend
(h) 3 for 1 stock split
(i) Call - Rogers Communications, Inc., 7.50% due 09/01/1999 converted to
Rogers Communications Inc., Cl. B , Sponsored ADR at 48.272 shares per
$1,000 nominal effective 5/26/99
(j) Merger - 4 shares of Sanofi-Synthelabo SA for every 1 share of Sanofi SA
(k) 2% stock dividend
(l) Merger - 0.75 shares of Tyco International Ltd. for every 1 share of AMP
Inc.
(m) 23 for 25 stock split
(n) 25 for 28 stock split
13
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 87.2%
Telecommunications -- 11.5%
42,000 Aliant Communications Inc. ...... $ 649,305 $ 1,939,875
16,670 Aliant Inc. + ................... 162,919 253,981
5,000 Allegiance Telecom Inc. + ....... 74,062 274,375
40,000 Alltel Corp. .................... 468,285 2,860,000
260,000 AT&T Corp. ...................... 3,541,030 14,511,250
515,000 BCE Inc. ........................ 9,932,838 25,395,938
12,750 BCT.Telus Communications Inc. ... 222,542 306,312
52,500 BCT.Telus Communications
Inc., Sponsored ADR ........... 950,397 1,261,283
4,250 BCT.Telus Communications
Inc. Cl. A .................... 74,181 100,517
17,500 BCT.Telus Communications
Inc. Cl. A, Sponsored ADR ..... 316,799 413,895
95,000 Cable & Wireless plc ............ 1,170,181 1,210,678
79,500 Cable & Wireless plc,
Sponsored ADR ................. 1,761,642 3,150,187
2,448,000 Cable & Wireless Jamaica Ltd. ... 101,642 72,583
30,000 Cincinnati Bell Inc. ............ 291,339 748,125
255,466 Commonwealth Telephone
Enterprises, Inc. + ........... 4,424,217 10,330,406
20,000 Commonwealth Telephone
Enterprises, Inc. Cl. B+ ...... 128,902 815,000
35,000 Compania de
Telecomunicaciones de
Chile SA, Sponsored ADR ....... 592,324 866,250
167,000 Embratel Participacoes SA + ..... 3,517,105 2,317,125
28,500 Ericsson (L.M.) Telephone Co. ... 777,364 914,941
1,000 Global TeleSystems Group Inc. + . 77,563 81,000
265,000 GTE Corp. ....................... 11,123,744 20,073,750
55,000 Hong Kong
Telecommunications Ltd.,
Sponsored ADR ................. 977,277 1,481,562
38 Japan Telecom Co. Ltd. .......... 591,739 540,389
10,000 Motorola Inc. ................... 187,870 947,500
150 Nippon Telegraph and
Telephone Corp. ............... 1,183,409 1,748,656
240,000 RCN Corporation ................. 1,679,124 9,990,000
29,655 Rogers Communications Inc.,
Cl. B + ....................... 498,886 475,969
150,000 Rogers Communications Inc.,
Cl. B +, Sponsored ADR ........ 2,022,159 2,428,125
5,000 SBC Communications Inc. ......... 179,793 290,000
400,000 Sprint Corp. .................... 6,619,873 21,125,000
1,800 Swisscom AG ..................... 527,064 676,953
33,400 Tele Centro Sul Participacoes
SA + .......................... 1,940,826 1,853,700
167,000 Tele Norte Leste Participacoes
SA +. ......................... 2,554,394 3,099,938
8,000 Telecom Argentina - Stet France
Telecom S.A., Sponsored
ADR ........................... 164,771 214,000
550,040 Telecom Italia SpA .............. 2,186,062 5,712,676
151,500 Telecom Italia SpA,
Sponsored ADR ................. 3,086,381 15,935,906
167,000 Telecomunicacoes Brasileiras SA
(Telebras), Sponsored ADR ..... 12,836 10,437
19,320 Telefonica S.A. ................. 880,878 929,826
8,000 Telefonica de Argentina S.A.,
ADR, Cl. B .................... 202,420 251,000
47,940 Telefonica de Espana, Sponsored
ADR ........................... 1,743,141 7,053,173
18,000 Telefonos De Mexico SA,
Cl. L, ADR .................... 639,025 1,454,625
167,000 Telesp Participacoes SA ......... 6,264,042 3,820,125
90,000 Telstra Corp. Ltd.+ ............. 483,112 515,044
7,000 U.S. West Inc. .................. 186,029 411,250
---------- -----------
75,169,492 168,863,325
---------- -----------
Equipment and Supplies -- 8.2%
90,000 AMETEK Inc. ..................... 1,219,214 2,070,000
195,000 Ampco-Pittsburgh Corp. .......... 2,627,873 2,498,437
143,000 Amphenol Corp., Cl. A + ......... 3,730,725 5,684,250
3,000 Case Corp. ...................... 146,379 144,375
10,000 Caterpillar Inc. ................ 136,559 600,000
107,000 CLARCOR Inc. .................... 1,347,206 2,053,063
340,000 Deere & Co. ..................... 3,295,471 13,472,500
252,000 Donaldson Co. Inc. .............. 1,607,629 6,174,000
100,000 Flowserve Corp. ................. 1,618,325 1,893,750
6,500 Franklin Electric Co. ........... 210,023 422,500
105,000 Gerber Scientific Inc. .......... 1,157,606 2,316,562
250,000 Hussmann International, Inc. .... 3,040,400 4,140,625
340,000 IDEX Corp. ...................... 2,206,632 11,177,500
See accompanying notes to financial statements.
14
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1999 (Unaudited)
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (continued)
Equipment and Supplies (continued)
49,000 Kanamoto Co. Ltd. ............... $ 370,269 $ 379,603
50,000 Lufkin Industries Inc. .......... 908,348 1,000,000
1,000 Manitowoc Co. Inc. .............. 25,450 41,625
190,000 Mark IV Industries Inc. ......... 2,303,844 4,013,750
445,000 Navistar International Corp. + .. 6,895,709 22,250,000
20,000 PACCAR Inc. ..................... 450,000 1,067,500
20,000 Parker-Hannifin Corp. ........... 944,750 915,000
410,000 Pittway Corp. ................... 7,328,386 13,658,125
115,000 Pittway Corp., Cl. A ............ 1,107,450 3,931,563
85,000 Sequa Corp., Cl. A + ............ 3,395,166 5,950,000
75,000 Sequa Corp., Cl. B + ............ 3,888,160 5,362,500
168,000 SPS Technologies Inc. + ......... 2,900,643 6,300,000
24,500 THK Co., Ltd. ................... 497,151 567,177
40,000 Toyo Seikan Kaisha Ltd. ......... 770,691 899,545
100,000 Watts Industries Inc., Cl. A .... 1,649,116 1,918,750
----------- ------------
55,779,175 120,902,700
Entertainment -- 8.2%
105,768 Ascent Entertainment Group Inc. . 959,442 1,493,973
40,000 CANAL+, Sponsored ADR ........... 1,355,000 2,112,168
12,000 Daiichi Kosho Co. Ltd. .......... 325,455 339,314
188,288 EMI Group plc ................... 1,436,814 1,510,656
118,000 EMI Group plc, Sponsored ADR .... 1,396,019 2,006,000
90,000 Florida Panthers
Holdings Inc.+ ................ 787,000 961,875
20,000 Fox Entertainment Group Inc. .... 437,438 538,750
75,000 GC Companies Inc. + ............. 1,902,049 2,681,250
3,000 King World Productions Inc. ..... 91,650 104,437
448,448 Liberty Media Group Cl. A+ ...... 4,214,521 16,480,464
468,000 Time Warner Inc. ................ 12,888,363 34,398,000
65,000 Todd-AO Corp., Cl. A ............ 177,273 715,000
300,000 USA Networks, Inc. + ............ 5,774,817 12,037,500
950,000 Viacom Inc., Cl. A + ............ 11,327,358 41,918,750
90,000 Walt Disney Co. ................. 1,343,707 2,773,125
----------- ------------
44,416,906 120,071,262
----------- ------------
Wireless Communications -- 7.1%
21,000 Aerial Communications Inc.+ ..... 165,415 283,500
133,000 Associated Group Inc.,
Cl. A+ ........................ 354,616 8,661,625
133,000 Associated Group Inc.,
Cl. B + ....................... 354,616 8,669,937
22,000 Bell Atlantic Corp. ............. 1,322,100 1,438,250
255,000 CenturyTel Inc. ................. 629,025 10,136,250
150,000 COMSAT Corp., Series 1 .......... 3,416,289 4,875,000
100,000 Loral Space &
Communications Ltd. ........... 1,242,687 1,800,000
10,000 NEXTEL Communica-
tions Inc., Cl. A + ........... 268,638 501,875
10,000 Omnipoint Corp. + ............... 144,219 289,375
250,000 Securicor Group plc ORD ......... 567,956 2,192,958
110,000 Sprint Corp. (PCS Group) ........ 287,077 6,283,750
340,000 TCI Satellite Entertain-
ment Inc., Cl. A+ ............. 900,012 998,750
16,700 Tele Celular Sul Partici-
pacoes SA ..................... 266,992 362,181
55,666 Tele Centro Oeste Celular
Participacoes SA + ............ 166,868 219,185
3,340 Tele Leste Celular
Participacoes SA .............. 89,340 99,365
8,350 Tele Nordeste Celular
Participacoes SA .............. 123,227 225,450
3,340 Tele Norte Celular
Participacoes SA + ............ 51,601 90,389
33,400 Tele Sudeste Celular
Participacoes SA + ............ 1,057,699 968,600
8,350 Telemig Celular Partici-
pacoes SA + ................... 241,320 205,619
66,800 Telesp Celular Partici-
pacoes SA + ................... 2,135,936 1,786,900
1,360,000 Telecom Italia Mobile SPA ....... 1,654,776 8,113,388
515,000 Telephone and Data
Systems Inc. .................. 11,641,326 37,627,187
32,500 Vodafone Airtouch plc,
Sponsored ADR. ................ 6,402,500 6,402,500
115,813 Vodafone Group plc ORD .......... 546,042 2,281,878
----------- ------------
34,030,277 104,513,912
----------- ------------
Financial Services -- 7.0%
198,000 American Express Co. (d) ........ 19,438,797 25,764,750
30,000 Argonaut Group, Inc. ............ 855,370 720,000
73,000 Banca Commerciale
Italiana ...................... 372,861 532,526
See accompanying notes to financial statements.
15
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1999 (Unaudited)
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (continued)
Financial Services (continued)
170,000 Banco Santander Central Hispano
SA, Sponsored ADR ............. $ 597,194 $ 1,806,250
300,000 Bankgesellschaft Berlin AG ...... 6,004,015 4,126,552
42,000 Bank of Ireland ................. 427,242 705,378
56,000 Bank of Scotland ................ 350,184 741,468
260 Berkshire Hathaway Inc.,
Cl. A + ....................... 824,299 17,914,000
10,000 Chase Manhattan Corp. ........... 776,675 866,250
209,979 Colonial Limited Inc. + ......... 507,271 742,615
50,000 Commerzbank AG,
Sponsored ADR ................. 1,189,067 1,544,000
150,000 Deutsche Bank AG,
Sponsored ADR ................. 6,224,445 9,225,000
20,000 First Union Corp. ............... 873,126 940,000
25,000 Hibernia Corp. .................. 198,750 392,188
110,000 H&R Block Inc. .................. 3,883,870 5,500,000
63,000 Lehman Brothers
Holdings Inc. ................. 2,331,869 3,921,750
64,500 Leucadia National
Corporation ................... 2,077,138 1,636,687
60,000 Mellon Bank Corporation ......... 1,898,845 2,182,500
50,000 Merrill Lynch & Co. ............. 2,628,064 3,996,875
110,000 Midland Co. ..................... 1,199,131 2,791,250
20,000 Morgan (J.P.) & Co. Inc. ........ 1,925,712 2,810,000
10,000 Morgan Stanley Dean
Witter & Co. .................. 945,500 1,025,000
60,000 Riggs National Corp. ............ 552,538 1,233,750
14,000 Safra Republic Holdings SA ...... 698,000 917,000
40,000 Schroders, plc .................. 903,175 817,128
40,000 State Street Corp. .............. 1,417,370 3,415,000
20,000 SunTrust Banks Inc. ............. 419,333 1,388,750
55,000 T. Rowe Price
Associates Inc. ............... 1,850,000 2,110,625
50,000 Unitrin Inc. .................... 817,863 2,050,000
29,900 Waddell & Reed
Financial Inc., Cl. A ......... 584,313 820,381
----------- ------------
62,772,017 102,637,673
----------- ------------
Broadcasting -- 6.7%
50,000 Ackerley Group Inc. ............. 544,975 909,375
22,700 Audiofina ....................... 980,102 1,088,755
357,073 Chris-Craft Industries Inc. + ... 5,082,460 16,827,065
575,629 Chris-Craft Industries Inc.
Cl. B + (a) ................... 8,836,249 27,090,540
100,000 Granada Group plc ORD ........... 1,567,534 1,855,247
37,500 Gray Communications
Systems Inc. .................. 493,649 750,000
225,000 Grupo Televisa S.A.,
GDR + ......................... 4,969,540 10,082,812
140,000 Liberty Corp. ................... 5,735,905 7,630,000
3,750 NRJ SA .......................... 560,129 843,470
10,500 Pathe SA ........................ 832,427 1,259,294
120,000 Paxson Communications
Corp. Cl. A ................... 1,206,801 1,620,000
125,000 Publishing & Broad-
casting Ltd. .................. 661,207 823,833
100,000 Television Broadcasting Ltd.
ORD ........................... 396,239 469,157
70,000 Tokyo Broadcasting
System Inc. ................... 791,672 1,012,815
3,000 United International
Holdings, Inc. ................ 219,227 202,875
247,609 United Television Inc. .......... 21,437,098 25,967,994
----------- ------------
54,315,214 98,433,232
----------- ------------
Publishing -- 4.8%
70,000 Arnoldo Mondadori Editore
SpA + ......................... 816,206 1,211,692
3,000 Central Newspapers Inc.,
Cl. A ......................... 105,638 112,875
38,000 Dow Jones & Co. Inc. ............ 1,753,552 2,016,375
50,000 Harcourt General Inc. ........... 2,329,563 2,578,125
323,000 Independent Newspapers Ltd.,
ORD ........................... 1,428,821 1,547,534
4,800 Kadokawa Shoten
Publishing Co., Ltd. .......... 583,491 980,240
98,000 McGraw-Hill
Companies Inc. ................ 2,206,300 5,285,875
400,000 Media General Inc., Cl. A ....... 9,832,031 20,400,000
130,000 Meredith Corp. .................. 2,166,057 4,501,250
170,000 New York Times Co.,
Cl. A ......................... 2,072,499 6,258,125
170,000 News Corp. Ltd. ................. 927,727 1,448,559
5,000 News Corp. Ltd., ADR ............ 54,120 176,562
See accompanying notes to financial statements.
16
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1999 (Unaudited)
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (continued)
Publishing (continued)
70,000 Pearson plc ORD ................. $ 926,104 1,422,251
400,000 Penton Media Inc. ............... 4,849,118 9,700,000
20,000 Pulitzer Inc. ................... 888,500 971,250
160,000 Reader's Digest Association
Inc., Class B ................. 4,110,972 6,000,000
70,000 Schibsted A/A ................... 1,331,230 786,088
1,500,000 Seat Pagine Gialle SpA + ........ 321,923 2,047,821
200,000 South China Morning Post
Holdings ORD .................. 117,763 112,134
70,000 Thomas Nelson Inc. .............. 903,187 778,750
17,000 Tribune Co. ..................... 1,054,162 1,481,125
----------- ------------
38,778,964 69,816,631
----------- ------------
Cable -- 4.6%
572,000 Cablevision Systems Corp.,
Cl. A + ....................... 5,208,453 40,040,000
40,000 Comcast Corp., Cl. A ............ 341,837 1,432,500
98,400 Comcast Corp., Cl. A
Special ....................... 852,231 3,782,250
245,000 MediaOne Group Inc. + ........... 4,700,133 18,221,875
10,000 NTL Inc. + ...................... 841,666 861,875
40,000 Shaw Communications Inc.+ ....... 382,635 1,590,000
10,000 Shaw Communications Inc.,
Cl. B, Conv. .................. 61,583 395,657
200,000 TeleWest Communications
plc+ .......................... 739,839 899,251
----------- ------------
13,128,377 67,223,408
----------- ------------
Food and Beverage -- 4.6%
30,108 Advantica Restaurant Group,
Inc. + ........................ 269,796 103,496
30,000 Bestfoods Inc. .................. 1,507,812 1,485,000
18,000 Brau und Brunnen + .............. 2,282,408 1,186,963
58,500 Celestial Seasonings Inc. + ..... 1,009,118 1,257,750
50,250 Corn Products International,
Inc.+ ......................... 1,590,137 1,529,484
40,000 Diageo plc, Sponsored
ADR ........................... 1,443,102 1,720,000
450,000 Foster's Brewing Group Ltd. ..... 857,334 1,266,638
70,000 General Mills Inc. .............. 4,149,423 5,626,250
2,500 Groupe Danone SA ................ 612,686 643,969
4,000 Keebler Foods Co. + ............. 107,725 121,500
115,000 Kellogg Co. ..................... 3,355,081 3,795,000
12,100 LVHM Moet Hennessy Louis
Vuitton, Sponsored ADR ........ 416,625 722,975
800 Nestle SA ....................... 1,014,437 1,440,566
7,000 Pepsi Bottling Group Inc. ....... 158,808 161,437
350,000 PepsiCo Inc. .................... 9,719,418 13,540,625
110,000 Quaker Oats Co. ................. 4,265,607 7,301,250
60,000 Ralcorp Holdings Inc. + ......... 940,903 963,750
125,000 Seagram Co. Ltd. ................ 3,649,063 6,296,875
93,101 Tootsie Roll Industries Inc. .... 1,501,006 3,596,026
356,000 Whitman Corp. ................... 4,792,266 6,408,000
70,000 Wrigley (Wm.) Jr. Co. ........... 3,173,614 6,300,000
----------- ------------
46,816,369 65,467,554
----------- ------------
Diversified Industrial -- 4.1%
10,000 Cooper Industries Inc. .......... 472,563 520,000
140,000 Crane Co. ....................... 1,607,845 4,401,250
102,000 GATX Corp. ...................... 1,533,375 3,882,375
105,000 GenTek Inc. + ................... 1,039,852 1,456,875
10,000 ITT Industries Inc. + ........... 310,708 381,250
416,300 Lamson & Sessions Co. + ......... 2,598,540 2,497,800
105,000 National Service
Industries Inc. ............... 2,370,998 3,780,000
9,000 Oerlikon-Buhrle Holding
AG ............................ 1,093,579 1,365,477
55,715 Park-Ohio Holding Corp.+ 757,362 943,673
540,000 Tenneco Inc. .................... 17,748,352 12,892,500
5,500 Thermo Power Corp. + ............ 63,869 64,109
75,000 Thomas Industries Inc. .......... 769,882 1,537,500
27,000 TI Group plc 223,040 180,875
50,000 Trinity Industries Inc. ......... 945,000 1,675,000
260,000 Tyco International Ltd. ......... 16,593,863 24,635,000
100,000 Weir Group plc .................. 420,789 419,283
----------- ------------
48,549,617 60,632,967
----------- ------------
Consumer Products -- 3.9%
530,000 Carter-Wallace Inc. ............. 7,693,143 9,639,375
10,750 Christian Dior SA ............... 1,514,055 1,750,049
55,000 Church & Dwight Co. Inc. ........ 1,164,528 2,392,500
1,400 Compagnie Financiere
Richemont AG, Cl. A ........... 1,967,069 2,691,096
10,000 Department 56 Inc.+ ............. 205,417 268,750
See accompanying notes to financial statements.
17
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1999 (Unaudited)
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (continued)
Consumer Products (continued)
130,000 Fortune Brands Inc. (e) ......... $ 3,488,925 $ 5,378,750
252,300 Gallaher Group plc .............. 4,399,848 6,165,581
180,000 General Cigar Holdings Inc. ..... 1,968,118 1,406,250
105,000 General Cigar Holdings Inc.
Class B + (a) ................. 653,399 820,312
10,000 Gucci Group NV .................. 670,469 700,000
52,000 Harley Davidson Inc. ............ 260,650 2,827,500
35,000 KAO Corp. ....................... 733,023 983,878
1,500 Matsushita Electric
Industrial Co. Ltd., ADR ...... 178,325 297,469
58,000 Matsushita Electric Industrial
Co. Ltd., ORD ................. 1,119,102 1,126,912
50,000 Mattel Inc. ..................... 1,240,625 1,321,875
87,000 Mizuno Corp. 348,815 329,442
35,000 National Presto Industries
Inc. .......................... 1,316,099 1,338,750
10,500 Nintendo Co. Ltd. ............... 849,921 1,462,795
422,000 Ralston Purina Co. .............. 5,413,897 12,844,625
20,000 Sony Corp., ADR ................. 1,057,068 2,207,500
1,500 Swatch Group AG, Bearer ......... 892,765 1,008,679
10,425 Syratech Corp. + ................ 333,704 161,588
70,714 Unilever plc .................... 735,843 628,654
----------- ------------
38,204,808 57,752,330
----------- ------------
Automotive: Parts and
Accessories -- 3.6%
50,000 Arvin Industries Inc. ........... 1,960,446 1,893,750
16,302 Borg Warner Automotive Inc. ..... 795,429 896,610
290,000 Dana Corp. ...................... 10,985,276 13,358,125
75,001 Delphi Automotive Systems
Corp. + (d) ................... 536,677 1,392,203
210,000 GenCorp Inc. .................... 3,712,674 5,302,500
100,000 Genuine Parts Co. ............... 2,803,638 3,500,000
118,000 Johnson Controls Inc. ........... 2,059,262 8,178,875
330,000 Modine Manufacturing Co. ........ 4,284,009 10,745,625
6,500 SPX Corp. ....................... 87,669 542,750
163,000 Standard Motor Products Inc. .... 1,748,388 3,993,500
70,000 Superior Industries
International, Inc. ........... 1,819,682 1,911,875
110,000 TransPro Inc. ................... 988,933 577,500
60,000 Wynn's International Inc. ....... 674,354 1,106,250
----------- ------------
32,456,437 53,399,563
----------- ------------
Energy and Utilities -- 2.5%
40,000 AGL Resources Inc. .............. 745,432 737,500
34,000 Apache Corp. .................... 844,013 1,326,000
70,000 Atlantic Richfield Co. .......... 3,751,112 5,849,375
69,000 BP Amoco plc, ORD ............... 1,610,797 7,486,500
60,000 BP Amoco plc, Sponsored
ADR ........................... 725,215 1,075,318
95,000 Burlington Resources Inc. ....... 4,076,454 4,108,750
48,000 Eastern Enterprises ............. 1,933,419 1,908,000
20,000 El Paso Electric Co. + .......... 429,788 520,000
112,000 Energy East Corporation ......... 756,563 668,161
55,000 ENI SpA ......................... 1,201,188 2,488,750
25,000 Halliburton Co. ................. 1,206,926 1,253,125
250,000 New England Electric
System ........................ 5,725,673 4,171,875
125,000 PennzEnergy Co. + ............... 2,993,874 1,875,000
6,000 Pennzoil-Quaker State Inc.+ ..... 173,925 175,500
15,000 Public Service Co. of North
Carolina Inc. ................. 310,677 308,438
3,000 St. Joseph Light & Power Co. .... 113,650 108,750
350,000 TNP Enterprises Inc. + .......... 2,783,644 3,128,125
----------- ------------
29,382,350 37,189,167
----------- ------------
Hotels/Gaming -- 1.8%
110,000 Aztar Corp. + ................... 738,332 1,010,625
180,000 Gaylord Entertainment Co.,
Cl. A ......................... 4,706,220 5,400,000
5,000 GTECH Holdings Corp. + .......... 86,269 117,813
650,000 Hilton Hotels Corp. ............. 8,081,362 9,221,875
1,016,949 Ladbroke Group plc .............. 3,174,247 4,035,467
100,000 Mirage Resorts Inc. + ........... 532,231 1,675,000
500,000 Park Place Entertainment
Corp.+ ........................ 2,827,838 4,843,750
----------- ------------
20,146,499 26,304,530
----------- ------------
Retail -- 1.4%
350,000 AutoNation Inc.+ ................ 5,486,096 6,234,375
20,500 Coldwater Creek Inc. + .......... 407,220 399,750
80,000 Earl Scheib Inc. + .............. 749,281 380,000
160,000 Food Lion Inc., Cl. A ........... 1,739,143 1,900,000
35,000 Gerald Stevens Inc. + ........... 420,000 420,000
12,000 Ito Yokado Co. Ltd. ............. 749,399 803,638
100,000 Lillian Vernon Corp. ............ 1,362,258 1,300,000
350,000 Neiman Marcus Group Inc.+ ....... 5,267,551 8,990,625
----------- ------------
16,180,948 20,428,388
----------- ------------
See accompanying notes to financial statements.
18
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1999 (Unaudited)
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (continued)
Health Care -- 1.3%
30,000 Amgen Inc. + .................... $ 256,894 $ 1,826,250
35,146 Astra Zeneca plc ................ 1,283,381 1,370,521
26,000 Biogen Inc. + ................... 181,025 1,672,125
50,000 Glaxo Wellcome plc ADR .......... 1,009,390 1,389,465
4,000 Glaxo Wellcome plc ORD .......... 216,096 226,500
21,000 Kyorin Pharmaceutical Co.,
Ltd ........................... 501,545 522,613
33,661 Life Technologies, Inc. ......... 1,244,159 1,216,004
54,000 Novartis AG, ADR + .............. 970,641 4,009,500
1,150 Novartis AG, Registered ......... 1,431,247 1,678,239
15,000 Pfizer Inc. ..................... 240,750 1,646,250
140 Roche Holding AG ................ 1,374,084 1,438,251
20,000 Sanofi-Synthelabo SA. ........... 967,750 847,978
55,000 SmithKline Beecham plc .......... 807,987 714,790
10,000 Zeneca Group plc+ ............... 394,791 386,831
----------- ------------
10,879,740 18,945,317
----------- ------------
Specialty Chemical -- 1.3%
5,400 Ciba Specialty Chemicals,
ADR 144A (c) + ................ 21,140 198,785
47,000 Dexter Corp. .................... 1,432,574 1,918,187
15,000 duPont de Nemours
(E.I.) & Co. .................. 491,250 1,024,688
300,000 Ferro Corp. ..................... 5,402,963 8,250,000
105,000 General Chemical
Group Inc. .................... 348,186 328,125
55,000 Lyondell Chemical Co. ........... 1,149,000 1,134,375
20,000 Nalco Chemical Co. .............. 1,031,000 1,037,500
64,001 Rohm and Haas Co. ............... 2,992,037 2,744,034
105,000 Sybron Chemicals Inc. ........... 2,249,913 1,863,750
----------- ------------
15,118,063 18,499,444
----------- ------------
Financial Services: Insurance -- 1.0%
25,000 Allstate Corp. .................. 973,750 896,875
150,000 American Bankers Insurance
Group, Inc. ................... 8,260,083 8,165,625
45,342 CGU plc ......................... 542,409 655,026
50,000 Prudential Corp. plc ............ 754,035 736,109
20,000 SCOR SA ......................... 773,680 991,197
84,000 Skandia Forsakrings AB .......... 503,754 1,573,469
30,000 Travelers Property Casualty
Corp., Cl A ................... 1,182,175 1,173,750
----------- ------------
12,989,886 14,192,051
----------- ------------
Business Services -- 0.9%
20,000 Asatsu-DK Inc ................... 537,134 529,144
155,000 Cendant Corp. ................... 2,022,986 3,177,500
10,000 CheckFree Holdings Corp. + ...... 115,950 275,625
18,000 Convergys Corp.+ ................ 237,324 346,500
7,000 Jafco Co. Ltd. .................. 360,733 463,001
100,000 Landauer Inc. ................... 647,252 2,950,000
136,300 Rental Services Corp. ........... 3,899,884 3,901,588
10,833 Reuters Holdings plc, Cl. B,
Sponsored ADR ................. 815,788 878,150
15,150 Vivendi ......................... 1,284,616 1,226,150
----------- ------------
9,921,667 13,747,658
----------- ------------
Paper and Forest Products -- 0.9%
252,000 Greif Bros. Corp., Cl. A ........ 4,620,381 6,426,000
3,400 Greif Bros. Corp., Cl. B ........ 69,825 100,088
255,000 St. Joe Co. ..................... 2,859,868 6,885,000
----------- ------------
7,550,074 13,411,088
----------- ------------
Automotive -- 0.8%
188,000 General Motors Corp. (d) 4,722,005 12,408,000
---------- ----------
Aviation: Parts and Services -- 0.7%
169,800 Coltec Industries Inc. + ........ 2,497,679 3,682,538
100,000 Curtiss-Wright Corp. ............ 2,491,103 3,887,500
130,000 Fairchild Corp., Cl. A .......... 2,434,126 1,657,500
145,000 Hi-Shear Industries Inc. + ...... 1,737,757 373,828
23,000 Precision Castparts Corp. ....... 914,575 977,500
----------- ------------
10,075,240 10,578,866
----------- ------------
Agriculture -- 0.7%
685,000 Archer-Daniels-
Midland Co. ................... 11,770,412 10,574,688
----------- ------------
Communications Equipment -- 0.7%
34,000 3Com Corp. + .................... 999,418 907,375
300,000 Allen Telecom Inc.+ ............. 2,242,812 3,225,000
60,000 Dynatech Corporation + .......... 221,124 206,250
65,000 Lucent Technologies Inc. ........ 724,122 4,383,438
5,000 Mannesmann AG ................... 668,362 745,458
22,000 Scientific-Atlanta Inc. ......... 355,750 792,000
----------- ------------
5,211,588 10,259,521
----------- ------------
See accompanying notes to financial statements.
19
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1999 (Unaudited)
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (continued)
Real Estate -- 0.6%
430,000 Catellus Development
Corp.+ ...................... $ 6,521,589 $ 6,665,000
44,000 Florida East Coast
Industries Inc. ............. 523,108 1,947,000
55,000 Griffin Land & Nurseries
Inc. + ...................... 513,143 653,125
------------ --------------
7,557,840 9,265,125
------------ --------------
Consumer Services -- 0.6%
200,000 Loewen Group Inc. ............. 1,504,486 112,500
30,000 Midas, Inc. ................... 334,014 851,259
510,000 Rollins Inc. .................. 5,737,037 8,128,125
------------ --------------
7,575,537 9,091,884
------------ --------------
Transportation -- 0.6%
79,000 AMR Corp. + ................... 2,696,163 5,391,750
15,000 Kansas City Southern
Industries, Inc. ............ 484,941 957,188
31,273 MIF Ltd. + .................... 449,997 539,682
50,000 Ryder System Inc .............. 1,344,314 1,300,000
------------ --------------
4,975,415 8,188,620
------------ --------------
Aerospace / Defense -- 0.4%
27,000 Lockheed Martin Corp. ......... 949,100 1,005,750
65,000 Northrop Grumman Corp. ........ 4,683,413 4,310,312
------------ --------------
5,632,513 5,316,062
------------ --------------
Housing Related -- 0.3%
150,000 Nortek Inc. + ................. 1,988,594 4,696,875
5,000 Nortek Inc., Special
Common + (a) ................ 72,155 156,250
------------ --------------
2,060,749 4,853,125
------------ --------------
Electronics -- 0.3%
10,000 General Motors Corp.,
Cl. H ....................... 574,250 562,500
3,000 Hitachi Ltd., ADR ............. 218,796 283,313
11,040 Koninklijke Philips
Electronics N.V. ............ 110,885 1,113,660
1,500 NEC Corp., ADR ................ 43,625 94,687
100,000 Ucar International Inc. + ..... 2,055,976 2,525,000
------------ --------------
3,003,532 4,579,160
------------ --------------
Closed-End Funds -- 0.3%
59,000 Central European Equity
Fund Inc. ................... 740,735 770,688
70,000 Dresdner RCM Europe
Fund ........................ 512,662 882,700
25,000 France Growth Fund Inc. ....... 246,844 343,750
10,000 Gabelli Utility Fund (a) ...... 100,000 100,000
40,250 Italy Fund Inc. ............... 360,845 588,656
68,000 New Germany Fund .............. 750,658 828,750
45,942 Royce Value Trust Inc. ........ 519,501 608,731
------------ --------------
3,231,245 4,123,275
------------ --------------
Metals and Mining -- 0.3%
3,500 Anglogold Ltd ................. 168,824 150,812
10,000 Anglogold Ltd.,
Sponsored ADR ............... 226,750 215,000
110,909 Antofagasta Holdings plc ...... 654,678 515,720
13,500 Barrick Gold Corp. ............ 281,425 261,562
72,500 Harmony Gold Mining
Co. Ltd. .................... 347,738 341,233
12,500 Harmony Gold Mining
Co. Ltd., ADR. .............. 77,344 60,547
38,000 Newmont Mining Corp. .......... 996,944 755,250
525,000 Orogen Minerals Ltd. .......... 667,000 569,164
47,000 Placer Dome Inc. .............. 613,956 555,188
146,770 Simsmetal Ltd. ................ 594,659 649,079
------------ --------------
4,629,318 4,073,555
------------ --------------
Building and Construction -- 0.2%
105,000 CRH plc ORD ................... 1,309,846 1,860,812
15,000 Martin Marietta
Materials Inc. .............. 322,688 885,000
72,500 Sekisui House Ltd. ............ 767,892 782,844
------------ --------------
2,400,426 3,528,656
------------ --------------
Computer Software and Services -- 0.1%
5,000 CDnow Inc.+ ................... 74,908 88,125
5,000 Obic Co. Ltd. ................. 766,393 1,368,334
95,000 Tyler Technologies Inc. ....... 345,519 653,125
------------ --------------
1,186,820 2,109,584
------------ --------------
Conglomerates -- 0.1%
19,307 Invik & Co. AB, Cl. B ......... 890,980 1,136,141
------------ --------------
Shipbuilding -- 0.0%
8,000 Avondale Industries Inc. ...... 305,555 312,000
------------ --------------
TOTAL COMMON STOCKS ........................... 741,816,055 1,352,830,462
------------ --------------
See accompanying notes to financial statements.
20
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1999 (Unaudited)
Market
Shares Cost Value
------ ---- -----
PREFERRED STOCKS -- 0.4%
Telecommunications -- 0.3%
10,000 Citizens Utilities Co., 5.000%
Conv. Pfd. (EPPICS) ......... 467,375 486,250
40,000 Sprint Corp., 8.250%,
Conv. Pfd. .................. 1,419,782 3,480,000
2,223,575 Telecomunicacoes de
Sao Paulo (Telesp),
Pfd., Registered ............ 206,541 263,739
------------ --------------
2,093,698 4,229,989
------------ --------------
Publishing -- 0.1%
43,500 News Corp. Ltd.,
Sponsored ADR, Pfd. ......... 656,340 1,372,969
------------ --------------
Cable -- 0.0%
8,000 Tele-Communications Inc.,
Cl. B, 6.000%,
Ex. Jr. Pfd. ................ 408,017 816,000
------------ --------------
Wireless Communications -- 0.0%
2,223,575 Telecomunicacoes de
Sao Paulo Celular,
Pfd., B ..................... 82,623 110,645
------------ --------------
TOTAL PREFERRED STOCKS ........................ 3,240,678 6,529,603
------------ --------------
COMMON STOCK WARRANTS AND RIGHTS -- 0.0%
Food and Beverage -- 0.0%
62,463 Advantica Restaurant
Group, Inc.,Warrants,
expires 01/07/2005 + .......... 105,603 37,087
------------ --------------
TOTAL WARRANTS AND RIGHTS ..................... 105,603 37,087
------------ --------------
CORPORATE BONDS -- 0.0%
Principal
Amount
------
Publishing -- 0.0%
$ 200,000 News American Holdings Inc.,
Gtd. Ex. Sub. Note,Zero
Coupon due 03/31/2002 ....... 162,445 299,750
------------ --------------
TOTAL CORPORATE BONDS ......................... 162,445 299,750
------------ --------------
U.S. TREASURY BILLS -- 7.2%
106,378,000 U.S. Treasury Bills,
4.45% to 4.78% ++
due 08/26/1999 to
09/30/1999 (d) ................ $105,527,851 $105,529,417
------------ --------------
TOTAL INVESTMENTS (b) -- 99.7% ................ $850,852,632 1,465,226,319
============
Market
Value
-----
OTHER ASSETS, LIABILITIES AND
LIQUIDATION VALUE OF CUMULATIVE
PREFERRED STOCK -- (8.9%) ................... (126,252,588)
--------------
NET ASSETS -- COMMON STOCK ..
(106,478,504 common
shares outstanding) -- 90.8% .............. 1,338,973,731
--------------
NET ASSETS -- PREFERRED STOCK
(5,400,000 preferred shares
outstanding) -- 9.2% ...................... 135,000,000
--------------
TOTAL NET ASSETS -- 100.0% .................... 1,473,973,731
--------------
NET ASSET VALUE PER COMMON SHARE
($1,338,973,731 / 106,478,504
shares outstanding ) ...................... $12.58
======
FUTURES CONTRACTS -- SHORT POSITION
Number of Unrealized
Contracts Depreciation
------------
(380) S&P 500 Index Futures,
September 1999 .............. ($5,666,750)
============
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS
Expiration Unrealized
Forward Foreign Exchange Contracts to Deliver Date Appreciation
14,657,129 (f) Hong Kong Dollars in exchange ---------- ------------
for USD $1,887,074 .......... 08/24/99 $ 1,926
=======
- ----------
(a) Security fair valued under procedures established by the Board of
Directors.
(b) For Federal tax purposes:
Aggregate cost $850,852,632
============
Gross unrealized appreciation $640,126,195
Gross unrealized depreciation (25,752,508)
------------
Net unrealized appreciation $614,373,687
============
(c) 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. The market
value of these securities at June 30, 1999 was $198,785 representing 0.01%
of total net assets.
(d) Security was pledged as collateral for futures contracts.
(e) At June 30, 1999, 100,000 shares were pledged as collateral for futures
contracts.
(f) Principal amount denoted in Hong Kong Dollars.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR - American Depositary Receipt
USD - United States Dollar
ORD - Ordinary Share
GDR - Global Depositary Receipt
See accompanying notes to financial statements.
21
<PAGE>
THE GABELLI EQUITY TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Assets:
Investments, at value (Cost $850,852,632) .............. $1,465,226,319
Cash and foriegn currency,
at value (Cost $193,510) ............................. 163,272
Dividends and interest receivable ...................... 1,770,307
Receivable for investments sold ........................ 33,027,548
Unrealized appreciation on forward
exchange contracts ..................................... 1,926
--------------
Total Assets ........................................ 1,500,189,372
--------------
Liabilities:
Payable for investments purchased ...................... 17,897,342
Dividend payable ....................................... 3,631,602
Payable for investment advisory fee .................... 1,753,788
Variation margin ....................................... 2,375,000
Payable to custodian ................................... 304,063
Accrued expenses and other payables .................... 253,846
--------------
Total Liabilities ................................... 26,215,641
--------------
Net Assets .......................................... 1,473,973,731
==============
Net Assets consist of:
Cumulative Preferred Stock (7.25% $25
liquidation value, $0.001 par value,
8,000,000 shares authorized with 5,400,000
shares issued and outstanding) ....................... $ 135,000,000
Capital stock, at par value ............................ 106,116
Additional paid-in capital ............................. 724,510,449
Accumulated net realized gain on
investments, futures contracts
and foreign currency transactions .................... 5,678,541
Net unrealized appreciation of investments,
futures contracts and foreign currency
transactions ......................................... 608,678,625
--------------
Total Net Assets ....................................... $1,473,973,731
==============
Net Asset Value ($1,338,973,731 /
106,478,504 shares outstanding;
200,000,000 shares authorized of
$0.001 par value) .................................... $12.58
======
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1999 (Unaudited)
Investment Income:
Dividends (net of foreign withholding
taxes of $153,524) ..................................... $ 9,311,941
Interest ................................................. 2,593,166
-------------
Total Investment Income .................................. 11,905,107
=============
Expenses:
Investment advisory fees ................................. 6,991,924
Legal and audit fees ..................................... 255,916
Custodian fees ........................................... 199,350
Shareholder communications ............................... 128,757
Shareholder service fees ................................. 103,367
Payroll .................................................. 65,000
Directors' Fees .......................................... 64,580
Miscellaneous ............................................ 57,330
-------------
Total Expenses ........................................... 7,866,224
-------------
Net Investment Income .................................... 4,038,883
=============
Net Realized and Unrealized Gain/(Loss)
on Investments,
Futures Contracts and Foreign Currency Transactions:
Net realized gain on investments ......................... 69,500,023
Net realized loss on foriegn currency
transactions ........................................... (799,897)
Net realized loss on futures contracts ................... (11,768,960)
-------------
Net realized gain on investments,
futures contracts and foreign currency
transactions ........................................... 56,931,166
-------------
Net unrealized appreciation on investments futures
contracts and foreign currency transactions:
Beginning of period ....................................... 489,944,504
End of period ............................................. 608,678,625
-------------
Change in net unrealized appreciation on
investments futures contracts and foreign
currency transactions .................................. 118,734,121
-------------
Net Realized and Unrealized Gain on
Investments, Futures Contracts and Foreign
Currency Transactions .................................... 175,665,287
-------------
Net Increase in Net Assets Resulting
from Operations ........................................ $ 179,704,170
=============
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31,
(Unaudited) 1998
---------------- ----------------
<S> <C> <C>
Operations:
Net investment income ....................................... $ 4,038,883 $ 7,455,206
Net realized gain on investments, futures contracts
and foreign currency transactions ......................... 56,931,166 128,440,199
Net change in unrealized appreciation of investments
futures contracts and foreign currency transactions ....... 118,734,121 (13,195,552)
--------------- ---------------
Net increase in net assets resulting from operations ...... 179,704,170 122,699,853
--------------- ---------------
Distributions to common stock shareholders:
Net investment income ....................................... (3,776,819) (6,729,645)
Net realized gain on investments,
futures contracts and foreign currency transactions ....... (53,497,694) (115,514,223)
Total distributions to common stock shareholders .......... (57,274,513) (122,243,868)
Distributions To Preferred Stock Shareholders:
Net investment income ....................................... (317,932) (302,666)
Net realized gain on investments, futures contracts and
foreign currency transactions ............................. (4,575,818) (5,189,134)
Total distributions to preferred stock shareholders ....... (4,893,750) (5,491,800)
Net increase in net assets from Equity Trust share transactions 4,248,102 16,367,192
Net proceeds from issuance of preferred stock ................. -- 130,288,751
--------------- ---------------
Net increase in net assets ................................ 121,784,009 141,620,128
Net Assets:
Beginning of period ......................................... 1,352,189,722 1,210,569,594
--------------- ---------------
End of period (Including undistributed net investment income
of $0 and $55,868, respectively) .......................... $ 1,473,973,731 $ 1,352,189,722
=============== ===============
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. Organization. The Gabelli Equity Trust Inc. ("Equity Trust") is a closed-end,
non-diversified management investment company organized as a Maryland
corporation and registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), whose primary objective is long-term growth of capital. The
Equity Trust had no operations until August 11, 1986, when it sold 10,696 shares
of common stock to Gabelli Funds, LLC (formerly Gabelli Funds, Inc.) (the
"Adviser") for $100,008. Investment operations commenced on August 21, 1986.
2. Significant Accounting Policies. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Equity Trust in the preparation of its financial statements.
Security Valuation. Portfolio securities listed or traded on a nationally
recognized securities exchange, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("Nasdaq") or traded on foreign exchanges are
valued at the last sale price on that exchange 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 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). All other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest average of the bid and asked prices. 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 the Adviser.
Securities and assets for which market quotations are not readily available are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Board of Directors.
Short term debt securities with remaining maturities of 60 days or less are
valued at amortized cost, unless the Directors determine such does not reflect
the securities' fair value, in which case these securities will be valued at
their fair value as determined by the Directors. Short term debt instruments
having a greater maturity are valued at the highest bid price obtained from a
dealer maintaining an active market in those securities. Options are valued at
the last sale price on the exchange on which they are listed. If no sales of
such options have taken place that day, they will be valued at the mean between
their closing bid and asked prices.
Repurchase Agreements. The Equity Trust may enter into repurchase
agreements with government securities dealers recognized by the Federal Reserve
Bank of New York, with member banks of the Federal Reserve System or with other
brokers or dealers that meet credit guidelines established by the Directors.
Under the terms of a typical repurchase agreement, the Equity Trust takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Equity Trust to resell, the obligation at an
agreed-upon price and time, thereby determining the yield during the Equity
Trust's holding period. The Equity Trust will always receive and maintain
securities whose market value, including accrued interest, will be at least
equal to 100% of the dollar amount invested by the Equity Trust in each
agreement. The Equity Trust will make payment for such securities only upon
physical delivery or upon evidence of book entry transfer of the collateral to
the account of the custodian. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market on a
daily basis to maintain the adequacy of the collateral. If the seller defaults
and the value of the collateral declines or if bankruptcy proceedings are
commenced with respect to the seller of the security, realization of the
collateral by the Equity Trust may be delayed or limited.
23
<PAGE>
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
Futures Contracts. The Equity Trust may engage in futures contracts for
the purpose of hedging against changes in the value of its portfolio securities
and in the value of securities it intends to purchase. Such investments will
only be made if they are economically appropriate to the reduction of risks
involved in the management of the Equity Trust's investments. Upon entering into
a futures contract, the Equity Trust is required to deposit with the broker an
amount of cash or cash equivalents equal to a certain percentage of the contract
amount. This is known as the "initial margin." Subsequent payments ("variation
margin") are made or received by the Equity Trust each day, depending on the
daily fluctuation of the value of the contract. The daily changes in the
contract are included in unrealized appreciation/depreciation on investments.
The Equity Trust recognizes a realized gain or loss when the contract is closed.
The net unrealized appreciation/depreciation is shown in the financial
statements.
There are several risks in connection with the use of futures contracts as
a hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk the
Equity Trust may not be able to enter into a closing transaction because of an
illiquid secondary market.
Forward Foreign Exchange Contracts. The Equity Trust 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 recorded by the Equity Trust as an unrealized gain or loss. When the
contract is closed, the Equity Trust 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 Equity Trust'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 Equity Trust could be exposed to risks if the counterparties to the
contracts are unable to meet the terms of their contracts.
Foreign Currency. The books and records of the Equity Trust are maintained
in United States (U.S.) dollars. Foreign currencies, investments and other
assets and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated on the respective dates of such
transactions. Unrealized gains and losses, which result from changes in foreign
exchange rates as well as changes in market prices of securities, have been
included in unrealized appreciation/depreciation on investments. Net realized
foreign currency gains and losses resulting from changes in exchange rates
include foreign currency gains and losses between trade date and settlement date
on investment securities transactions, foreign currency transactions and the
difference between the amounts of interest and dividends recorded on the books
of the Equity Trust and the amounts actually received. The portion of foreign
currency gains and losses related to fluctuation in exchange rates between the
initial trade date and subsequent sale trade date is included in realized
gain/(loss) on securities transactions.
Securities Transactions and Investment Income. Securities transactions are
accounted for as of the trade date with realized gain or loss on investments
determined using specific identification as the cost method. Interest income
(including amortization of premium and accretion of discount) is recorded as
earned. Dividend income is recorded on the ex-dividend date.
24
<PAGE>
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
Dividends and Distributions to Shareholders. Distributions to shareholders
are recorded on the ex-dividend date. Income distributions and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to differing treatments of income and gains on various investment
securities held by the Equity Trust, timing differences and differing
characterization of distributions made by the Equity Trust. Distributions to
shareholders of The Gabelli Equity Trust Inc., 7.25% Tax Advantaged Cumulative
Preferred Stock ("Cumulative Preferred Stock") are accrued on a daily basis and
are determined as described in Note 5.
Provision for Income Taxes. The Equity Trust has qualified and intends to
continue to qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended. As a result, a Federal income tax
provision is not required.
Dividends and interest from non-U.S. sources received by the Equity Trust
are generally subject to non-U.S. withholding taxes at rates ranging up to 30%.
Such withholding taxes may be reduced or eliminated under the terms of
applicable U.S. income tax treaties, and the Equity Trust intends to undertake
any procedural steps required to claim the benefits of such treaties. If the
value of more than 50% of the Equity Trust's total net assets at the close of
any taxable year consists of stocks or securities of non-U.S. corporations, the
Equity Trust is permitted and may elect to treat any non-U.S. taxes paid by it
as paid by its shareholders.
3. Agreements and Transactions with Affiliates. The Equity Trust has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Equity Trust will pay the Adviser a fee,
computed weekly and paid monthly, equal on an annual basis to 1.00 percent of
the value of the Equity Trust's average weekly net assets. In accordance with
the Advisory Agreement, the Adviser manages the Equity Trust's portfolio, makes
investment decisions for the Equity Trust, places orders to purchase and sell
securities on behalf of the Equity Trust and oversees the administration of all
aspects of the Equity Trust's business and affairs. The Adviser has agreed to
reduce the management fee on the incremental assets attributable to the
Cumulative Preferred Stock if the total return of the net asset value of the
common shares of the Equity Trust, including distributions and advisory fee
subject to reduction, does not exceed the stated dividend rate of the Cumulative
Preferred Stock. For the six months ended June 30, 1999, the Equity Trust's
total return on the net asset value of the common shares exceeded the stated
dividend rate of the Cumulative Preferred Stock. The management fee earned on
the assets attributable to the Cumulative Preferred Stock was $669,452 for the
six months ended June 30, 1999.
During the six months ended June 30, 1999, Gabelli & Company, Inc.
("Gabelli & Company") and its affiliates received $266,823 in brokerage
commissions as a result of executing agency transactions in portfolio securities
on behalf of the Equity Trust.
On March 29, 1999, the Equity Trust acquired 10,000 shares of the Gabelli
Utility Trust at $10.00 per share. The Gabelli Utility Trust will be spun off to
Equity Trust shareholders in the form of a distribution, pending effectiveness
of its registration statement and funding by the Equity Trust of approximately
$80 million.
4. Portfolio Securities. Cost of purchases and proceeds from sales of
securities, other than short-term securities, aggregated $296,644,452 and
$318,066,114, respectively, for the six months ended June 30, 1999.
25
<PAGE>
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
5. Capital. The Articles of Incorporation, dated May 19, 1986, permit the Equity
Trust to issue 200,000,000 shares of common stock (par value $0.001).
Capital stock transactions were as follows:
<TABLE>
<CAPTION>
Six months ended Year ended
June 30, 1999 December 31, 1998
------------------------- -------------------------
Shares Amount Shares Amount
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares issued upon reinvestment
of dividends and distributions ... 362,157 $ 4,248,102 1,439,964 $16,367,192
----------- ----------- ----------- -----------
Net Increase ....................... 362,157 $ 4,248,102 1,439,964 $16,367,192
=========== =========== =========== ===========
</TABLE>
The Equity Trust's Articles of Incorporation authorize the issuance of up
to 8,000,000 shares of $0.001 par value Cumulative Preferred Stock. On June 9,
1998, the Equity Trust received net proceeds of $130,288,751 (after offering
costs and underwriting discounts of $4,711,249) from the public offering of
5,400,000 shares of Cumulative Preferred Stock. The Cumulative Preferred Stock
is senior to the common stock and results in the financial leveraging of the
common stock. Such leveraging tends to magnify both the risks and opportunities
to Common Shareholders. Dividends on shares of the Cumulative Preferred Stock
are cumulative. The Equity Trust is required to meet certain asset coverage
tests 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 Cumulative Preferred Stock at
a redemption price of $25.00 per share plus an amount equal to the accumulated
and unpaid dividends whether or not declared on such shares in order to meet
these requirements. Additionally, failure to meet the foregoing asset
requirements could restrict the Equity Trust's ability to pay dividends to
Common Shareholders and could lead to sales of portfolio securities at
inopportune times. Commencing June 9, 2003 and thereafter, the Equity Trust, at
its option, may redeem the Cumulative Preferred Stock in whole or in part at the
redemption price. At June 30, 1999, 5,400,000 shares of the Cumulative Preferred
Stock were outstanding at the fixed dividend rate of 7.25 percent per share and
accrued dividends amounted to $81,563. The income received on the Equity Trust's
assets may vary in a manner unrelated to the fixed rate, which could have either
a beneficial or detrimental impact on net investment income and gains available
to Common Shareholders.
The holders of Cumulative Preferred Stock have voting rights equivalent to
those of the holders of common stock (one vote per share) and will vote together
with holders of shares of common stock as a single class. In addition, the 1940
Act requires that along with the approval of a majority of the holders of common
stock, the approval of a majority of the holders of any outstanding shares of
Cumulative Preferred Stock, voting separately as a class, would be required to
(a) adopt any plan of reorganization that would adversely affect the Cumulative
Preferred Stock, and (b) take any action requiring a vote of security holders,
including, among other things, changes in the Equity Trust's subclassification
as a closed-end investment company or changes in its fundamental investment
restrictions.
6. Subsequent Events. On July 9, 1999, after contributing a total of
$79,587,259.35 in cash and securities, the Equity Trust distributed
10,611,634.5806 shares of The Gabelli Utility Trust pro rata to the shareholders
of record on July 1, 1999 of the Equity Trust.
26
<PAGE>
THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
06/30/99 --------------------------------------------------
Per share amount for an Equity Trust (Unaudited)(a) 1998(a) 1997(a) 1996(a)
share outstanding throughout each period. -------------- ------- ------- -------
<S> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of period ............... $ 11.47 $ 11.56 $ 9.77 $ 9.95
---------- ----------- ----------- ----------
Net investment income .............................. 0.04 0.07 0.08 0.11
Net realized and unrealized gain (loss)
on investments ................................... 1.65 1.09 2.75 0.71
---------- ----------- ----------- ----------
Total from investment operations ................... 1.69 1.16 2.83 0.82
---------- ----------- ----------- ----------
Decrease in net asset value from
Equity Trust share transactions .................. -- -- -- --
Offering expenses charged to capital surplus ....... -- (0.04) -- --
Distributions to common stock shareholders:
Net investment income .............................. (0.04) (0.06) (0.08) (0.11)
In excess of net investment income ................. -- -- (0.00)(c) --
Net realized gains ................................. (0.50) (1.10) (0.92) (0.78)
In excess of net realized gains .................... -- -- (0.01) (0.00)(c)
Paid-in capital .................................... -- -- (0.03) (0.11)
---------- ----------- ----------- ----------
Distributions to preferred shareholders:
Net investment income .............................. (0.00)(c) (0.00)(c) -- --
Net realized gains ................................. (0.04) (0.05) -- --
---------- ----------- ----------- ----------
Total distributions ................................ (0.58) (1.21) (1.04) (1.00)
---------- ----------- ----------- ----------
Net Asset Value, end of period ..................... $ 12.58 $ 11.47 $ 11.56 $ 9.77
========== =========== =========== ==========
Market value, end of period ........................ $ 12.375 $ 11.563 $ 11.688 $ 9.375
========== =========== =========== ==========
Total Investment Return* ........................... 12.00% 9.23% 37.46% 11.00%
========== =========== =========== ==========
Total Return** ..................................... 14.70% 9.55% 30.46% 9.00%
========== =========== =========== ==========
Ratios to average net assets available to
common stock shareholders and
supplemental data:
Net assets, end of period (in 000's) ............... $1,469,726 $ 1,352,190 $ 1,210,570 $1,015,437
Net assets attributable to common shares,
end of year (in 000's) ........................... $1,334,726 $ 1,217,190 $ 1,210,570 $1,015,437
Ratio of net investment income to average net assets
attributable to common stock ..................... 0.64%(f) 0.60% 0.76% 1.07%
Ratio of operating expenses to average net assets
attributable to common stock ..................... 1.24%(f) 1.15% 1.14% 1.18%
Ratio of operating expenses to average
total net assets(e) .............................. 1.13%(f) 1.09% 1.14% 1.18%
Portfolio turnover rate ............................ 22.9% 39.8% 39.2% 18.9%
Preferred Stock:
Liquidation value, end of period (in 000's) ........ $ 135,000 $ 135,000 -- --
Total shares outstanding (in 000's) ................ 5,400 5,400 -- --
Asset coverage ..................................... 1,089% 1,001% -- --
Liquidation preference per share ................... $ 25.00 $ 25.00 -- --
Average market value (d) ........................... $ 25.57 $ 25.63 -- --
<CAPTION>
Year Ended December 31,
--------------------------
Per share amount for an Equity Trust 1995(a) 1994(a)
share outstanding throughout each period. ------- -------
<S> <C> <C>
Operating performance:
Net asset value, beginning of period ............... $ 9.46 $ 11.23
---------- ---------
Net investment income .............................. 0.13 0.14
Net realized and unrealized gain (loss)
on investments ................................... 1.74 (0.08)
---------- ---------
Total from investment operations ................... 1.87 0.06
---------- ---------
Decrease in net asset value from
Equity Trust share transactions .................. (0.37) --
Offering expenses charged to capital surplus ....... (0.01) --
Distributions to common stock shareholders:
Net investment income .............................. (0.13) (0.14)(b)
In excess of net investment income ................. -- --
Net realized gains ................................. (0.47) (0.37)(b)
In excess of net realized gains .................... (0.02)(a) --
Paid-in capital .................................... (0.38) (1.32)(b)
---------- ---------
Distributions to preferred shareholders:
Net investment income .............................. -- --
Net realized gains ................................. -- --
---------- ---------
Total distributions ................................ (1.00) (1.83)
---------- ---------
Net Asset Value, end of period ..................... $ 9.95 $ 9.46
========== =========
Market value, end of period ........................ $ 9.375 $ 9.625
========== =========
Total Investment Return* ........................... 11.70% (5.10)%
========== =========
Total Return** ..................................... 20.60% 0.50%
========== =========
Ratios to average net assets available to
common stock shareholders and
supplemental data:
Net assets, end of period (in 000's) ............... $1,034,091 $ 825,193
Net assets attributable to common shares,
end of year (in 000's) ........................... $1,034,091 $ 825,193
Ratio of net investment income to average net assets
attributable to common stock ..................... 1.26% 1.29%
Ratio of operating expenses to average net assets
attributable to common stock ..................... 1.21% 1.19%
Ratio of operating expenses to average
total net assets(e) .............................. 1.21% 1.19%
Portfolio turnover rate ............................ 25.1% 22.2%
Preferred Stock:
Liquidation value, end of period (in 000's) ........ -- --
Total shares outstanding (in 000's) ................ -- --
Asset coverage ..................................... -- --
Liquidation preference per share ................... -- --
Average market value (d) ........................... -- --
</TABLE>
- ----------
* Based on market value per share, adjusted for reinvestment of
distributions and taxes, including the effect of shares issued pursuant to
rights offering, assuming full subscription by shareholder. Total return
for the period of less than one year is not annualized.
** Based on net asset value per share, adjusted for reinvestment of
distributions and taxes, including the effect of shares issued pursuant to
rights offering, assuming full subscription by shareholder. Total return
for the period of less than one year is not annualized.
(a) Per share amounts have been calculated using the monthly average shares
outstanding method.
(b) A distribution equivalent to $0.75 per share for The Gabelli Global
Multimedia Trust Inc. spin-off from net investment income, realized
short-term gains, and paid-in-capital were $0.064, $0.031 and $0.655,
respectively.
(c) Amount represents less than $0.005 per share.
(d) Based on weekly prices.
(e) Amounts are attributable to both common and preferred stock assets. Prior
to 1998, there was no preferred stock outstanding.
(f) Annualized.
See accompanying notes to financial statements.
27
<PAGE>
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLAN
Enrollment in the Plan
It is the policy of The Gabelli Equity Trust Inc. ("Equity Trust") to
automatically reinvest dividends. As a "registered" shareholder you
automatically become a participant in the Equity Trust's Automatic Dividend
Reinvestment Plan (the "Plan"). The Plan authorizes the Equity Trust to issue
shares to participants upon an income dividend or a capital gains distribution
regardless of whether the shares are trading at a discount or a premium to net
asset value. All distributions to shareholders whose shares are registered in
their own names will be automatically reinvested pursuant to the Plan in
additional shares of the Equity Trust. Plan participants may send their stock
certificates to State Street Bank and Trust Company ("State Street") to be held
in their dividend reinvestment account. Registered shareholders wishing to
receive their distribution in cash must submit this request in writing to:
The Gabelli Equity Trust Inc.
c/o State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan may contact State Street at 1 (800)
336-6983.
Shareholders wishing to liquidate reinvested shares held at State Street
Bank must do so in writing or by telephone. Please submit your request to the
above mentioned address or telephone number. Include in your request your name,
address and account number. The cost to liquidate shares is $2.50 per
transaction as well as the brokerage commission incurred. Brokerage charges are
expected to be less than the usual brokerage charge for such transactions.
If your shares are held in the name of a broker, bank or nominee, you
should contact such institution. If such institution is not participating in the
Plan, your account will be credited with a cash dividend. In order to
participate in the Plan through such institution, it may be necessary for you to
have your shares taken out of "street name" and re-registered in your own name.
Once registered in your own name your dividends will be automatically
reinvested. Certain brokers participate in the Plan. Shareholders holding shares
in "street name" at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must
contact their broker to make this change.
The number of shares of Common Stock distributed to participants in the
Plan in lieu of cash dividends is determined in the following manner. Under the
Plan, whenever the market price of the Equity Trust's Common Stock is equal to
or exceeds net asset value at the time shares are valued for purposes of
determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued shares of Common Stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current market price of the Equity Trust's Common Stock. The valuation
date is the dividend or distribution payment date or, if that date is not a New
York Stock Exchange trading day, the next trading day. If the net asset value of
the Common Stock at the time of valuation exceeds the market price of the Common
Stock, participants will receive shares from the Equity Trust valued at market
price. If the Equity Trust should declare a dividend or capital gains
distribution payable only in cash, State Street will buy Common Stock in the
open market, or on the New York Stock Exchange or elsewhere, for the
participants' accounts, except that State Street will endeavor to terminate
purchases in the open market and cause the Equity Trust to issue shares at net
asset value if, following the commencement of such purchases, the market value
of the Common Stock exceeds the then current net asset value.
The automatic reinvestment of dividends and capital gains distributions
will not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for Federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.
The Equity Trust reserves the right to amend or terminate the Plan as
applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to written notice of the change sent to the members of the Plan
at least 90 days before the record date for such dividend or distribution. The
Plan also may be amended or terminated by State Street on at least 90 days'
written notice to participants in the Plan.
Voluntary Cash Purchase Plan
The Voluntary Cash Purchase Plan is yet another vehicle for our
shareholders to increase their investment in the Equity Trust. In order to
participate in the Voluntary Cash Purchase Plan, shareholders must have their
shares registered in their own name.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to State Street for investments in the Equity Trust's
shares at the then current market price. Shareholders may send an amount from
$250 to $10,000. State Street will use these funds to purchase shares in the
open market on or about the 15th of each month. State Street will charge each
shareholder who participates $0.75, plus a pro rata share of the brokerage
commissions. Brokerage charges for such purchases are expected to be less than
the usual brokerage charge for such transactions. It is suggested that any
voluntary cash payments be sent to State Street Bank and Trust Company, P.O. Box
8200, Boston, MA 02266-8200 such that State Street receives such payments
approximately 10 days before the 15th of the month. Funds not received at least
five days before the investment date shall be held for investment in the
following month. A payment may be withdrawn without charge if notice is received
by State Street at least 48 hours before such payment is to be invested.
For more information regarding the Dividend Reinvestment Plan and
Voluntary Cash Purchase Plan, brochures are available by calling (914) 921-5070
or by writing directly to the Equity Trust.
28
<PAGE>
DIRECTORS AND OFFICERS
THE GABELLI EQUITY TRUST INC.
One Corporate Center, Rye, NY 10580-1434
Directors
Mario J. Gabelli, CFA
Chairman & Chief Investment Officer,
Gabelli Funds, Inc.
Dr. Thomas E. Bratter
President, John Dewey Academy
Bill Callaghan
President, Bill Callaghan Associates
Felix J. Christiana
Former Senior Vice President,
Dollar Dry Dock Savings Bank
James P. Conn
Former Managing Director and Chief Investment Officer,
Financial Security Assurance Holdings Ltd.
Frank J. Fahrenkopf, Jr.
President and Chief Executive Officer,
American Gaming Association
Karl Otto Pohl
Former President, Deutsche Bundesbank
Anthony R. Pustorino
Certified Public Accountant
Professor, Pace University
Salvatore J. Zizza
Chairman,
The Bethlehem Corp.
Officers
Mario J. Gabelli, CFA
President & Chief Investment Officer
Bruce N. Alpert
Vice President & Treasurer
Marc S. Diagonale
Vice President
James E. McKee
Secretary
Investment Advisor
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1434
Custodian
Boston Safe Deposit and Trust Company
Counsel
Willkie Farr & Gallagher
Transfer Agent and Registrar
State Street Bank and Trust Company
Stock Exchange Listing
Common 7.25% Preferred
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NYSE-Symbol: GAB GAB Pr
Shares Outstanding: 106,478,504 5,400,000
The Net Asset Value appears in the Publicly Traded Funds column, under the
heading "General Equity Funds," in Sunday's The New York Times and in Monday's
The Wall Street Journal. It is also listed in Barron's Mutual Funds/Closed End
Funds section under the heading "General Equity Funds".
The Net Asset Value may be obtained each day by calling (914) 921-5071.
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For general information about the Gabelli Funds, call 1-800-GABELLI
(1-800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: http://www.gabelli.com or e-mail us at: [email protected]
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Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Equity Trust may from time to time
purchase shares of its capital stock in the open market when the Equity Trust
shares are trading at a discount of 10% or more from the net asset value of the
shares.
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<PAGE>
THE GABELLI EQUITY TRUST INC.
One Corporate Center
Rye, NY 10580-1434
(914) 921-5070
http://www.gabelli.com
Semi-Annual Report
June 30, 1999
GBFCM 06/99
