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THE GABELLI
EQUITY TRUST INC.
Third Quarter Report
September 30,1999
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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,
Through most of the third quarter of 1999, stocks were slowly sinking
under the weight of a declining bond market, a tumbling dollar, and the prospect
of more aggressive Federal Reserve monetary policy tightening. Technology
stocks--the last bastion of strength in an otherwise weak market--finally
cracked in the last two weeks of the quarter, sending virtually all market
indices sharply lower.
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THE GABELLI
EQUITY TRUST INC.
Investment Performance
For the third quarter ended September 30, 1999, The Gabelli Equity Trust
Inc.'s ("Equity Trust") net asset value (NAV) per share decreased 4.33% to
$11.11, after adjusting for the $0.27 per share distribution on September 28,
1999. The Standard & Poor's 500 Index (S&P 500), the Value Line Composite Index
and the Russell 2000 Index decreased 6.24%, 8.18% and 6.32%, respectively, over
the same period. Each is an unmanaged indicator of stock market performance.
Year to date, the Equity Trust is up 9.70%, versus 5.37%, 3.64% and 2.37% for
the S&P 500, the Value Line Composite and the Russell 2000, respectively.
For the twelve months concluded September 30, 1999, the Equity Trust
appreciated 26.10% after adjusting for the $1.185 per share in distributions and
the spin-off of the Gabelli Utility Trust. The S&P 500, the Value Line Composite
and the Russell 2000 rose 27.79%, 22.44% and 19.07%, respectively, over the same
twelve-month period.
For the five year period ended September 30, 1999, the Equity Trust's
return averaged 14.97% annually, compared to average annual returns of 25.03%,
15.73% and 12.39% for the S&P 500, the Value Line Composite and the Russell
2000. Total return includes adjustments of $7.50 per share for the reinvestment
of dividends and distributions, rights offerings and the spin-off of the Gabelli
Utility Trust and the Gabelli Global Multimedia Trust.
For the ten years ended September 30, 1999, the Equity Trust achieved a
total return of 188.61%, including adjustments of $14.53 per share in
distributions, which equates to an average annual return of 11.18%. This
compares to 16.80%, 12.26% and 10.93% 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 September 30, 1999, the
Equity Trust has had a total return of 460.78%, including adjustments of $16.92
per share in distributions, which equates to an average annual return of 14.04%.
Average Annual Returns - September 30, 1999
NAV Average Average Annual
Annual Return Investment Return (a)
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1 Year ................................... 26.10% 26.77%
5 Year ................................... 14.97% 15.10%
10 Year.................................... 11.18% 11.61%
Life of Fund (August 21, 1986)............. 14.04% 13.56%
(a) Based on initial offering price of $10.00
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The Equity Trust's common shares ended the quarter at $11.25 per share on
the New York Stock Exchange, a decrease of 1.52% for the quarter. Year to date,
the common shares are up 10.19%. For the twelve months ended September 30, 1999,
the common shares are up 26.77%, 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 common 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.
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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 13 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.
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
Too Much of a Good Thing?
In the third quarter of 1999, the U.S. economy continued to barrel along
at a pace that investors feared would lead to higher inflation. Paced by the
long anticipated recovery in Japan, Asian economies are perking up. Coupled with
prospects that European economies are gaining momentum, this has spawned concern
that synchronized global growth would further increase inflationary pressure
here at home. All of this positive global economic news was simply too much of a
good thing for the U.S. bond market, which continued to slide.
Long term, synchronized global growth is a blessing--we should all be
thinking in terms of Gross World Product ("GWP") rather than Gross Domestic
Product ("GDP"). However, in the short term it may put additional pressure on
the Fed to press down on the monetary brakes. Investors should view this as a
dose of cod liver oil--bitter medicine, but a tonic that will improve the long
term health of the economy and the stock market. Unfortunately, "Mr. Market"
often does not like to take his medicine and additional Fed interest rate hikes
and higher bond yields are not likely to improve his mood. So, even though third
quarter corporate earnings are likely to be quite strong, price/earnings ("P/E")
multiples (a function of investor psychology and interest rates) may continue to
contract, sending stocks even lower. The good news in this scenario would be the
return of Ben Graham's "margin of safety" to the market.
If the domestic economy begins to decelerate in the fourth quarter and the
Fed declares a monetary cease-fire, "Mr. Market" may be in a better mood.
Although P/E multiples are not likely to expand, they may stabilize, allowing
earnings to rally stocks. However, with equity valuations still at relatively
lofty levels, advances will engender additional speculative risks.
The Dollar in Limbo--How Low Can It Go?
As we write, the dollar has hit a four-year low against the yen. This is
another good news/bad news situation. A cheaper dollar benefits U.S. exporters
and ultimately would help reduce trade deficits, which have been running at
extraordinarily high levels. It also bolsters dollar denominated earnings from
the international operations of U.S. companies. However, over the short term, it
actually increases dollar calculated trade deficits. Perhaps most importantly, a
lower dollar is potentially inflationary, because the prices of imported
products that U.S. consumers treasure will move higher. If the American consumer
is willing to pay these higher prices for Toyota cars and trucks, Sony big
screen televisions, and Sega video games, it will soon be reflected in the
Consumer Price Index ("CPI"). This leads us to another important question...
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Will Fatigue Hit the American Consumer?
High employment and the "wealth effect" of a rising housing and stock
market have buoyed consumer confidence. Discretionary income has risen as a
result of depressed energy prices, low mortgage rates, and rising wages. If the
domestic economy does slow down, consumers may become more concerned about job
security. When investors receive third quarter statements from their brokers,
money managers and mutual funds, they will realize that their net worth has been
trimmed. Americans are paying more at the pump for gasoline and their home
heating bills will be significantly higher this winter. Variable rate mortgage
payments will increase and new fixed rate mortgages are higher. So, consumers
will not be able to raise spending money by leveraging real estate assets--no
more "take the home mortgage from $100,000 to $150,000 with the same monthly
payments and pocket the difference". As aforementioned, the prices for imported
goods are increasing. Will all this be enough to cause the American consumer to
tighten the purse strings? Or, will a significant tax cut--the Republicans are
running on the "3 Fs" (Faith, Finances, and Family)--embolden the American
consumer and keep the economic wheels moving here and abroad?
Deals, Deals, Deals--A Value Investors' Best Friend
We have discussed some of the issues likely to impact the economy and the
stock market over the short term. Being investors, not clairvoyants, we have not
come to any rock solid conclusions. One thing we are much more certain about
that is ongoing, and perhaps accelerating, is global consolidation. As economic
borders continue to be eliminated and regulatory barriers fall, bigger is
better. Companies that can extend their franchises and lower their costs will be
the ultimate winners in the global economic village.
Contrary to popular opinion, the future elimination of pooling of interest
accounting in mergers is not going to slow what we have coined "The Third Great
Wave of Takeovers". In fact, it will accelerate the process over the next year
as deals get done ahead of the accounting rules changes. Beyond 2001, different
accounting rules will be no match for the powerful economic forces that are
driving global consolidation. Wall Street will learn to value companies based on
free cash flow-earnings before interest, taxes, depreciation, and amortization
(or EBITDA) minus capital expenditures. This method is already the valuation
standard for several of the industries we have followed for years, including
broadcasting and cable television. Free cash flow is what any savvy business
buyer looks at when evaluating an acquisition in any industry. As more deals get
done in a wider range of industries, corporate managements will wean Wall Street
analysts and investors from net earnings oriented valuation (price/earnings
ratios) and lead them to understand that free cash flow is the best barometer of
the value of a business.
This Quarter's Scorecard
Wireless stocks performed well this quarter as several deals in the
industry helped surface value. Omnipoint, Nextel, and Vodafone AirTouch made it
to the first page of our performance list. The Federal Communications
Commission's ("FCC") decision to allow broadcasters to own two television
stations in the same market focused investor attention on small group
broadcasters such as Chris-Craft Industries, which delivered attractive returns.
Gold stocks such as Newmont Mining, and Placer Dome glittered this quarter as
gold prices moved higher. Gaming industry holdings Park Place Entertainment and
Aztar also came up winners.
In general, cyclical companies struggled as investors feared that
additional Fed tightening would take the starch out of the economy. Portfolio
disappointments included auto parts manufacturers Modine, Federal-Mogul,
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and Borg-Warner, and aerospace component companies Crane, Curtiss-Wright,
Fairchild, GenCorp, and Precision Castparts. Based on valuations relative to
earnings power through the economic cycle, we believe these cyclicals as well as
other companies in the portfolio are outstanding values.
Viacom and CBS--Dan Rather, Meet The Rugrats
We are not likely to see cartoon characters on the CBS Evening News, but
there is a great deal of synergy in the new Viacom/CBS. The combined company
joins Time Warner, News Corp., and Disney in the pantheon of fully integrated
media companies. They have content--Paramount Pictures, CBS' programming assets,
and Simon & Schuster publishing--and distribution--the CBS Television Network,
CBS Radio, Viacom's thriving cable networks (MTV, VH-1, and Nickelodeon), and
CBS' huge outdoor advertising (billboard) business. Any advertiser looking to
reach any demographic consumer segment will not have to go anywhere else. This
"one stop shopping" feature for advertisers, the complete vertical integration
of the company, and the ability to cross-market its own products should enhance
revenues and drive down costs. In addition, CBS' Mel Karmazin is a worthy heir
apparent to Viacom's energetic Chairman Sumner Redstone, thus diluting Wall
Street's concern regarding the management succession question at Viacom. Both
CBS' and Viacom's stock prices moved higher on the announcement of the merger,
an indication that Wall Street understands that one plus one equals more than
two in this combined company.
Broadcast News
The FCC's August 1999 decision to allow duopolies--ownership of two
television stations in the same market--should accelerate consolidation in the
broadcast industry. Any broadcaster with a station in the top fifty markets will
likely be entertaining overtures from the likes of NBC (owned by General
Electric), ABC (owned by Disney), the new CBS/Viacom, and larger independent
broadcasters, such as Tribune. NBC has already purchased a 32% position in
Paxson Communications. We expect to see portfolio holdings such as Young
Broadcasting, United Television, Granite Broadcasting, and Chris-Craft
Industries receive a lot of attention in the months ahead.
Wireless Works
About one year ago, AT&T began to set a new standard for the wireless
communications industry. By piecing together a nearly seamless national network,
eliminating roaming charges, and lowering prices to 20 cents per minute for
calls to anywhere in the U.S., AT&T has forced other wireless providers to
follow suit. The push is on for low cost national and even global wireless
services. Prices throughout the industry are dropping and usage is increasing.
New programs such as "calling party pays" and prepaid plans are also making
wireless services more attractive. Finally, laptop computer sales continue to
rise, and more data is moving over wireless systems. This further fuels demand
for wireless spectrum and enhances the value of wireless assets.
Toward the end of this quarter, we celebrated a blessed event. Telephone &
Data Systems, one of our larger holdings, sold its personal communications
services ("PCS") business Aerial Communications to VoiceStream Wireless.
Although we like the investment prospects for PCS, TDS obtained a premium price
for this business, and in the process of eliminating an asset that demanded
considerable capital expenditures, improved its net earnings outlook. TDS stock
made a move upward in the midst of the market declines during the last two weeks
of September. In addition, this transaction should help to surface value in our
other wireless communications holdings.
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Gas, Electric and Water...
Deregulation and impending competition in the electric and gas utilities
industry has spawned a wave of consolidation. Cost cutting is a must and the
single quickest way to cut costs is by merging with other utility companies,
realizing economies of scale, saving money on plant and equipment, and
eliminating duplicate corporate functions. Due to high costs and increasing
concern over water quality, water companies have also become takeover targets.
We have seen twenty-one transactions in the utilities industry from June 1 to
September 30. This is not just a domestic phenomenon. Two large British
utilities acquired American electric/gas utilities and the French, who brought
us Perrier and Evian bottled water, are buying municipal water facilities in
America.
The "bigger is better" argument makes sense for utilities. Many electric
utilities own, or are anxious to acquire, gas companies in order to be full
service energy providers. Buying a gas company that overlaps the electric
utility's service territory is particularly attractive to the electric companies
because even more costs can be cut.
Our conclusion is that the once dull utility stocks are becoming much more
exciting. Our strategy is to own shares in fundamentally sound, reasonably
valued mid-cap and small cap utilities and then wait for the buyers to come
calling. Current utility holdings include Eastern Enterprises, Florida Progress,
El Paso Electric, and St. Joseph Light & Power. We will most likely be adding
more utility names to the portfolio in the quarters ahead.
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:
Perhaps the most important sign from the performance of international
markets in the third quarter is that many had positive returns in the absence of
U.S. market leadership. Apart from the Nasdaq Composite Index, other indices
that measure the U.S. equity market's performance declined by about 6.5%. We
believe that there are indications that overseas equity markets may begin to
outperform the U.S. market after lagging for many years. This belief is based on
our positive outlook for Europe and Japan and not due to a bearish view of the
U.S. market.
The baton of leadership in economic growth is probably in the process of
being passed from the U.S. to Europe and Japan. After suffering from very
sluggish economic growth, Japan and Europe appear to be making a comeback.
Recent economic news from Germany (the largest economy in Europe) and Italy
suggest that growth is accelerating. These two countries have been trailing the
Euroland pack in terms of economic activity.
In Japan, the government authorities remain determined to keep in place
the conditions necessary for the slow recovery that Japan is experiencing.
Stronger growth in Europe and Japan should lead to improved corporate earnings.
We believe that monetary conditions also favor international markets. This
belief is based upon the situations of the major economic blocks in relation to
the economic cycle. The U.S. is experiencing higher interest rates as the
Federal Reserve attempts to cool the economy. In Japan, by contrast, the Bank of
Japan remains committed to a zero interest rate policy. In Euroland, short term
interest rates are 2.5% but are likely to rise in the near future to a more
normal level nearer to 3.5%.
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We believe the investment case for Europe and Japan is primarily based
upon what companies themselves are doing and is not dependent upon government
action. In Europe, there are many examples of companies restructuring, cutting
costs, focusing on core activities and attempting to create scale in their
particular activity.
Let's take a look at France. The French have decided to create "National
Champions". BNP bought Paribas to extend its national reach in the banking
industry. TotalFina has agreed to buy Elf Acquitaine to form the world's fourth
largest oil company, and Sanofi has merged with Synthelabo resulting in a world
class pharmaceutical company. Most recently, Carrefour and Promodes have agreed
to merge to become the world's second largest retailer behind Wal-Mart. What's
next? Renault is likely to get together with Peugeot. These French companies
will next look for opportunities outside France in a bid to become European
champions. TotalFina is already making eyes towards ENI, the Italian
state-controlled energy concern, and Seita, the French tobacco firm, is set to
merge with Tabacalera of Spain.
We anticipate that merger and acquisition activity will remain at a high
level in Europe, which will underpin markets. European companies now understand
that national governments will not protect them from a hostile bid but a high
share price will.
In Japan, more sectors of the economy are restructuring. In the last
quarter, the world's largest bank was created when Industrial Bank of Japan, DKB
and Fuji Bank agreed to merge. We expect further restructuring to occur among
institutions operating in Japan's financial industry. Most of the Fund's top
performing international holdings during the past quarter were Japanese stocks.
These included Obic, a software company specializing in small companies, Japan
Telecom and Tokyo Broadcasting Systems. Among European holdings, the Fund's
winners included Vodafone AirTouch, NRJ (the French radio station operator) and
Swatch (the Swiss watch company).
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.
American Express Co. (AXP - $134.625 - NYSE) and its subsidiaries provide
travel-related services, financial advisory services and international banking
services worldwide. Founded in 1850, the company operates in 160 countries
around the world. Best known for its "green" charge card and its travel-related
services, including travelers checks, American Express also offers financial
planning, brokerage services, mutual funds, insurance and other investment
products. Harvey Golub, Chairman and CEO, has focused AXP on its core charge
card and investment management businesses. The company is expanding the
competitive reach of its credit card operations, which should benefit if the
U.S. Department of Justice prevails in its antitrust suit against the Visa and
MasterCard associations.
BCE Inc. (BCE - $49.8125 - NYSE) is Canada's global communications company. BCE
recently completed a major transaction with Ameritech (AIT - $67.1875 - NYSE).
Under the agreement, BCE sold 20% of Bell Canada, its wholly-owned Canadian
telecommunications subsidiary, to Ameritech. BCE also owns strategic stakes in
Nortel Networks (NT - $51.00 - NYSE), Teleglobe (TGO - $15.44 - NYSE), BCE
Emergis and CGI Group. One share of BCE provides ownership of 0.42 shares of
Nortel Networks. The company's positions in satellites, network operations,
information technology, media and e-commerce are expected to provide growth for
the company.
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Chris-Craft Industries Inc. (CCN - $56.125 - NYSE), through its 80% ownership of
BHC Communications (BHC - $139.50 - AMEX), is primarily a television
broadcaster. BHC owns and operates UPN affiliated stations in New York (WWOR),
Los Angeles (KCOP) and Portland, Oregon (KPTV). BHC also owns 59% of United
Television (UTVI - $112.75 - Nasdaq), which operates an NBC affiliate, an ABC
affiliate and five UPN affiliates. United Television recently completed the
purchase of WHSW in Baltimore for $80 million. The station's call letters were
changed to WUTB and the station became a UPN affiliate. UTVI also acquired WRBW,
a UPN affiliate in Orlando, for $60 million in July 1998. Chris-Craft's
television stations constitute one of the nation's largest television station
groups, reaching approximately 22% of U.S. households. Chris-Craft is a major
beneficiary of the recent FCC ruling allowing television duopoly, or ownership
of two stations in a market. The Chris-Craft complex is debt free and strongly
positioned to expand its operations, with roughly $1.5 billion in cash and
marketable securities.
Ferro Corp. (FOE - $21.3125 - NYSE), based in Cleveland, is a global specialty
chemical manufacturer. The company is a leading producer of frits, powder
coatings, polymer additives and plastic compounds. New CEO Hector Ortino is
positioning Ferro to be a premier specialty chemical provider by focusing on
profitable growth and shareholder value. The company's new strategy of using
mature, cash generating businesses in the portfolio to finance investments in
"springboard" businesses should help to accelerate earnings per share growth.
Greif Bros. Corp. (GBCOA - $28.25 - Nasdaq; GBCOB - $29.875 - Nasdaq), founded
in 1877, is a proven leader in industrial packagings, manufacturing fiber,
steel, plastic drums, IBC's, multiwall bags, corrugated boxes and specialty
products. The company is fully integrated, from its 305,000 acres of timberlands
to corrugated sheet and box operations, including both virgin and recycled paper
mills. Management is striving to become a packaging solutions supplier for major
companies. Earlier this year, Greif obtained a 49% interest in a French fiber
drum business. Greif also expects to repurchase 400,000 shares of its stock
during fiscal 1999.
Media General Inc. (MEG'A - $51.25 - AMEX) is a Richmond, Virginia-based
communications company, publishing newspapers throughout the Southeast with
daily circulation of nearly 250,000. Media General also operates thirteen
network television stations in Southeastern markets, including Tampa and
Jacksonville, Florida. The relaxation of broadcast station ownership
restrictions provided by the Telecommunications Reform Act of 1996 is driving
industry consolidation and is increasing the franchise values of strong,
well-positioned media properties such as those owned by Media General. The
company produces newsprint from recycled newspapers at its Garden State Paper
Co. In April, MEG'A announced the sale of its Virginia cable franchises to Cox
Communications for $1.4 billion. In June, MEG'A sold its equity interest in the
Denver Post to Media News Group and redeemed its preferred stock for a total of
$92 million.
Navistar International Corp. (NAV - $46.50 - NYSE), with world headquarters in
Chicago, is a leading North American manufacturer and marketer of medium and
heavy trucks and school buses, and a worldwide leader in the manufacture of
mid-range diesel engines, produced in a range of 160 to 300 horsepower for the
International(R) brand. The company is also a private label designer and
manufacturer of diesel engines for the full-size pickup truck and van markets.
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
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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 - $88.8125 - 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 owns 81.1% of United States Cellular Corp. (USM - $68.00 -
AMEX), the nation's seventh largest cellular telephone company. It also owns
82.4% of Aerial Communications Inc. (AERL - $27.125 - 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 September 20, 1999, VoiceStream Wireless (VSTR - $61.72 - Nasdaq) announced
the acquisition of Aerial in a $3.3 billion transaction. Pro-forma for this
acquisition, TDS will own over 36 million shares of VoiceStream.
Viacom Inc. (VIA'A - $43.25 - AMEX; VIA'B - $42.25 - AMEX), long a major
provider of entertainment "content", has evolved into one of the world's
dominant media companies. The additions of Paramount Communications, Blockbuster
Entertainment (acquired in 1994), and publisher Simon & Schuster make 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).
Watts Industries Inc. (WTS - $21.75 - NYSE), based in North Andover,
Massachusetts, makes valves for the plumbing, heating and water quality,
industrial, steam, oil and gas markets. In December 1998, the company announced
plans to spin off its Circor International industrial oil and gas unit to
shareholders. The spin-off was completed on October 6, 1999. Watts shareholders
received one Circor share valued at $10.625 per share for every two Watts
shares. Accordingly, the price of Watts was reduced by $5.3125 per share to
reflect the spin-off. Watts will now focus on its existing plumbing and heating
and water quality businesses.
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.
Common Stock 10% Distribution Policy
The Equity Trust continues to maintain its 10% Distribution Policy whereby
the Equity Trust pays out to common stock shareholders 10% of its average net
assets each year. Pursuant to this policy, the Equity Trust distributed $0.27
per share on September 28, 1999. The next distribution is scheduled for December
1999.
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7.25% Tax Advantaged Cumulative Preferred Stock - Dividends
The Equity Trust's 7.25% Tax Advantaged Cumulative Preferred Stock paid a
cash distribution on September 28, 1999 of $0.453125 per share. The next
distribution is scheduled for December 1999.
In Conclusion
The short term outlook for the market is, as always, uncertain. Investor
psychology seems to have reversed itself. Last year, investors shrugged off bad
news--anemic earnings, international economic turmoil, and big losses from
highly leveraged hedge funds. This year, good news--a strong U.S. economy, good
earnings, and the prospect for synchronized global growth--has investors
worried. Mr. Market will eventually sort all this out. In the interim, we will
continue to focus on good companies trading at discounted prices. In his
currently glum mood, Mr. Market may remain ambivalent to value. This will only
increase the appetite of business buyers aggressively looking for bargains.
Sincerely,
/s/ Mario J. Gabelli
Mario J. Gabelli
President and Chief Investment Officer
October 25, 1999
- --------------------------------------------------------------------------------
Top Ten Holdings
September 30, 1999
------------------
Chris-Craft Industries Inc.
Telephone & Data Systems Inc.
Cablevision Systems Corp.
Viacom Inc.
United Television Inc.
Time Warner Inc.
BCE Inc.
American Express Co.
Navistar International Corp.
Media General Inc.
- --------------------------------------------------------------------------------
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.
10
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES
Quarter Ended September 30, 1999
(Unaudited)
Ownership at
September 30,
Shares 1999
------ -------------
NET PURCHASES
Common Stocks
AGL Resources Inc. ................... 30,000 70,000
Allstate Corp. ....................... 17,000 42,000
Alltel Corp. (a) ..................... 28,140 68,140
American General Corp. ............... 8,000 8,000
American Home Products Corp. ......... 47,000 47,000
Archer-Daniels-Midland Co. (b) ....... 40,000 725,000
Arvin Industries Inc. ................ 2,000 52,000
Asatsu-DK Inc. ....................... 5,000 25,000
AT&T Canada Inc. ..................... 2,000 2,000
Avex Inc. (c) ........................ 2,250 2,250
Bank of Ireland (d) .................. 42,000 84,000
Bank One Corp. ....................... 45,000 45,000
Bell Atlantic Corp. .................. 5,000 27,000
Bestfoods Inc. ....................... 2,000 32,000
BF Goodrich Co. (1) .................. 12,208 --
Burlington Resources Inc. ............ 15,000 110,000
Cable & Wireless plc, Sponsored
ADR ................................ 5,500 85,000
CANAL +, Sponsored ADR (e) ........... 120,000 160,000
Centros Comerciales Continente SA .... 20,000 20,000
Church & Dwight Co. Inc. (d) ......... 3,000 58,000
Cilcorp Inc. ......................... 50,000 50,000
Compaq Computer Corp. ................ 55,000 55,000
Conoco Inc. Cl. A .................... 40,000 40,000
Corn Products International Inc. ..... 3,000 53,250
Corus Entertainment Inc. Cl. B (f) ... 16,666 16,666
Crane Co. ............................ 5,000 145,000
Cresco Ltd. .......................... 2,000 2,000
Delhaize America Inc. (g) ............ 50,000 50,000
Delphi Automotive Systems Corp. ...... 5,000 80,001
Devon Energy Corp. (h) ............... 85,000 85,000
Dexter Corp. ......................... 3,000 50,000
Eastman Kodak Co. .................... 9,000 9,000
EchoStar Communications Corp.
Cl. A .............................. 14,000 14,000
ELF Aquitaine SA ..................... 2,000 2,000
Federal-Mogul Corp. .................. 3,000 3,000
First Union Corp. .................... 5,000 25,000
Florida Progress Corp. ............... 100,000 100,000
Ford Motor Co. ....................... 12,000 12,000
Fort James Corp. ..................... 25,000 25,000
Fox Entertainment Group Inc. ......... 5,000 25,000
Fujitsu Ltd. ......................... 30,000 30,000
General Motors Corp. ................. 7,000 195,000
General Motors Corp., Cl. h .......... 10,000 20,000
Granada Group plc (d) ................ 100,000 200,000
Hannaford Bros. Co. .................. 17,000 17,000
Harcourt General Inc. ................ 5,000 55,000
Imasco Ltd. .......................... 100,000 100,000
Jafco Co. Ltd. ....................... 5,000 12,000
Japan Lifeline Co. Ltd. .............. 10,000 10,000
K N Energy Inc. ...................... 40,000 40,000
Kellogg Co. .......................... 15,000 130,000
Kmart Corp. .......................... 50,000 50,000
Mark IV Industries Inc. .............. 10,000 200,000
McKesson HBOC Inc. ................... 15,000 15,000
Merrill Lynch & Co. .................. 7,000 57,000
Nalco Chemical Co. ................... 190,000 210,000
Nashua Corp. ......................... 58,500 58,500
Nielsen Media Research ............... 40,000 40,000
Nikko Securities Co. Ltd. ............ 47,000 47,000
Nissin Co. Ltd. ...................... 4,000 4,000
NTT Mobile Communication
Network Inc. ....................... 25 25
Nucor Corp. .......................... 8,000 8,000
Obic Co. Ltd. (i) .................... 1,000 6,000
Park-Ohio Holding Corp. .............. 3,000 58,715
Pepsi Bottling Group Inc. ............ 43,000 50,000
PepsiCo Inc. ......................... 29,000 379,000
Pfizer Inc. (j) ...................... 30,000 45,000
Philip Morris Companies Inc. ......... 14,000 14,000
Providian Financial Corp. ............ 10,000 10,000
Pulitzer Inc. ........................ 5,000 25,000
Republic New York Corp. .............. 5,000 5,000
Reynolds Metals Co. .................. 10,000 10,000
Seagate Technology Inc. .............. 30,000 30,000
Secom Co. Ltd. (k) ................... 6,000 6,000
Secom Co. Ltd. New Shares (k) ........ 6,000 6,000
Shohkoh Fund & Co. Ltd. .............. 450 450
Sony Corp. ........................... 7,000 7,000
Square Co. Ltd. ...................... 8,000 8,000
SRL Inc. ............................. 20,000 20,000
Sumisho Computer Systems Corp. ....... 6,000 6,000
Telefonica SA (j) .................... 38,640 57,960
Telefonica SA, Sponsored ADR (j) ..... 95,880 143,820
THK Co., Ltd. ........................ 20,500 45,000
Travelers Property Casualty Corp.,
Cl. A .............................. 12,000 42,000
Tribune Co. (d) ...................... 17,000 34,000
Union Planters Corp. ................. 10,000 10,000
UnitedGlobalCom Inc. ................. 1,000 4,000
United Television Inc. ............... 2,700 250,309
UnumProvident Corp. .................. 15,000 15,000
US West Inc. ......................... 20,000 27,000
Vulcan Materials Co. ................. 17,000 17,000
Walt Disney Co. ...................... 35,000 125,000
Waste Management Inc. ................ 80,000 80,000
Corporate Bonds
Standard Motor Products Inc.,
6.75% due 07/15/09 ................. 1,250,000 1,250,000
11
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES -- (Continued)
Quarter Ended September 30, 1999
(Unaudited)
Ownership at
September 30,
Shares 1999
------ -------------
NET SALES
Common Stocks
3Com Corp. ........................... (4,000) 30,000
Aliant Inc. (a) ...................... (42,000) --
American Bankers Insurance
Group Inc. ......................... (150,000) --
American Express Co. ................. (35,000) 163,000
AT&T Corp. ........................... (50,000) 210,000
AutoNation Inc. ...................... (10,000) 340,000
Avondale Industries Inc. ............. (8,000) --
Banca Commerciale Italiana ........... (73,000) --
Banco Santander Central Hispano SA,
Sponsored ADR ...................... (80,000) 90,000
Barrick Gold Corp. ................... (13,500) --
BCE Inc. ............................. (5,000) 510,000
BF Goodrich Co. (1) .................. (12,208) --
Block (H&R) Inc. ..................... (2,000) 108,000
Cablevision Systems Corp., Cl. A ..... (3,000) 569,000
Cendant Corp. ........................ (52,016) 102,984
CenturyTel Inc. ...................... (202,600) 52,400
CGU plc .............................. (45,342) --
Checkfree Holdings Corp. ............ (3,000) 7,000
Coltec Industries Inc. (l) ........... (169,800) --
COMSAT Corp., Series 1................ (82,335) 67,665
Convergys Corp. ...................... (13,000) 5,000
Deere & Co. .......................... (20,000) 320,000
Ericsson (L.M.) Telephone Co. ........ (28,500) --
Fairchild Corp., Cl. A ............... (5,000) 125,000
Food Lion Inc., Cl. A (h) ............ (160,000) --
Fortune Brands Inc. .................. (20,000) 110,000
Gabelli Utility Trust ................ (10,000) --
Global Telesystems Group Inc. (d) .... (1,000) --
Grupo Televisa SA, GDR ............... (5,000) 220,000
Gucci Group NV ....................... (10,000) --
Harley Davidson Inc. ................. (2,000) 50,000
IDEX Corp. ........................... (40,500) 299,500
Kadokawa Shoten Publishing Co. Ltd. .. (4,800) --
Kanamoto Co. Ltd. .................... (49,000) --
Kyorin Pharmaceutical Co. Ltd. ....... (21,000) --
Liberty Media Group Cl. A ............ (5,000) 443,448
Lockheed Martin Corp. ................ (17,000) 10,000
Loewen Group Inc. .................... (160,000) 40,000
Lyondell Chemical Co. ................ (5,000) 50,000
Matsushita Electric Industrial Co.
Ltd., ORD ......................... (58,000) --
Mattel Inc. .......................... (10,000) 40,000
MediaOne Group Inc. .................. (5,000) 240,000
Mizuno Corp. ......................... (87,000) --
New York Times Co., Cl. A ............ (5,000) 165,000
Northrop Grumman Corp. ............... (5,000) 60,000
Oerlikon-Buhrle Holding AG ........... (9,000) --
Orogen Minerals Ltd. ................. (525,000) --
Park Place Entertainment Corp. ....... (40,000) 460,000
PennzEnergy Co. (g) .................. (250,000) --
Pennzoil-Quaker State Inc. ........... (25,000) 100,000
Pittway Corp. ........................ (2,000) 408,000
Pittway Corp., Cl. A ................. (45,000) 70,000
Placer Dome Inc. ..................... (27,000) 20,000
Precision Castparts Corp. ............ (3,000) 20,000
RCN Corp. ............................ (3,000) 237,000
Rental Services Corp. ................ (136,300) --
Rohm and Haas Co. .................... (24,001) 40,000
SCOR SA .............................. (20,000) --
Seagram Co. Ltd. ..................... (5,000) 120,000
Sekisui House Ltd. ................... (72,500) --
Sequa Corp., Cl. A ................... (500) 84,500
Simsmetal Ltd. ....................... (146,770) --
Sprint Corp. ......................... (45,000) 355,000
St. Joe Co. .......................... (2,000) 253,000
Swisscom AG .......................... (1,800) --
Telecom Italia SpA ................... (150,000) 400,040
Telephone and Data Systems Inc. ...... (15,000) 500,000
Tenneco Inc. ......................... (10,000) 530,000
Time Warner Inc. ..................... (13,000) 455,000
Toyo Seikan Kaisha Ltd. .............. (40,000) --
Tyco International Ltd. .............. (105,000) 155,000
- ----------
(a) Merger - 0.67 shares of Alltel Corp. for every 1 share of Aliant Inc.
(b) 5% stock dividend
(c) 3 for 2 stock split
(d) 2 for 1 stock split
(e) 4 for 1 stock split
(f) Spinoff - 1 share of Corus Entertainment Inc. Cl. B for every 3 shares of
Shaw Communications Inc., Cl. B, Conv.
(g) Merger - 0.33 shares of Delhaize America Inc. for every 1 share of Food
Lion Inc., Cl. A
(h) Merger - 0.4475 shares of Devon Energy Corp. for every 1 share of
PennzEnergy Co.
(i) 6 for 5 stock split
(j) 3 for 1 stock split
(k) Spinoff - 1 share of Secom Co. Ltd. New Shares Cl. B for every 1 share of
Secom Co. Ltd.
(l) Merger - 0.56 shares of BF Goodrich Co. for every 1 share of Coltec
Industries Inc.
12
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS
September 30, 1999 (Unaudited)
Market
Shares Value
------ -----
COMMON STOCKS -- 97.2%
Telecommunications -- 11.7%
16,670 Aliant Inc.+ .................................... $ 249,500
5,000 Allegiance Telecom Inc.+ ........................ 263,125
68,140 Alltel Corp. .................................... 4,795,352
210,000 AT&T Corp. ...................................... 9,135,000
2,000 AT&T Canada Inc.+ ............................... 125,625
510,000 BCE Inc. ........................................ 25,404,375
52,500 BCT.Telus Communications Inc. ................... 1,094,717
12,750 BCT.Telus Communications Inc.,
Sponsored ADR ................................. 265,860
4,250 BCT.Telus Communications Inc. Cl. A ............. 87,463
17,500 BCT.Telus Communications Inc. Cl. A,
Sponsored ADR ................................. 360,144
95,000 Cable & Wireless plc ............................ 1,033,794
85,000 Cable & Wireless plc, Sponsored ADR ............. 2,815,625
55,000 Cable & Wireless HKT Ltd. ....................... 1,196,250
2,448,000 Cable & Wireless Jamaica Ltd. ................... 86,079
30,000 Cincinnati Bell Inc. ............................ 583,125
255,466 Commonwealth Telephone Enterprises,
Inc.+ ......................................... 11,240,504
20,000 Commonwealth Telephone Enterprises,
Inc. Cl. B+ ................................... 868,750
35,000 Compania de Telecomunicaciones
de Chile SA, Sponsored ADR .................... 632,187
167,000 Embratel Participacoes SA+ ...................... 1,910,062
265,000 GTE Corp. ....................................... 20,371,875
38 Japan Telecom Co. Ltd. .......................... 889,388
10,000 Motorola Inc. ................................... 880,000
150 Nippon Telegraph and Telephone Corp. ............ 1,839,629
237,000 RCN Corporation ................................. 9,717,000
29,655 Rogers Communications Inc., Cl. B+ .............. 501,345
150,000 Rogers Communications Inc., Cl. B+,
Sponsored ADR ................................. 2,521,875
5,000 SBC Communications Inc. ......................... 255,312
355,000 Sprint Corp. .................................... 19,258,750
33,400 Tele Centro Sul Participacoes SA+ ............... 1,853,700
167,000 Tele Norte Leste Participacoes SA+ .............. 2,588,500
8,000 Telecom Argentina - Stet France
Telecom S.A., Sponsored ADR ................... 213,500
400,040 Telecom Italia SpA .............................. 3,474,059
151,500 Telecom Italia SpA, Sponsored ADR ............... 13,057,406
167,000 Telecomunicacoes Brasileiras SA (Telebras),
Sponsored ADR ................................. 5,219
8,000 Telefonica de Argentina SA, ADR, Cl. B .......... 211,000
57,960 Telefonica SA ................................... 927,109
143,820 Telefonica SA, Sponsored ADR .................... 6,903,360
18,000 Telefonos De Mexico SA, Cl. L, ADR .............. 1,282,500
167,000 Telesp Participacoes SA ......................... 2,630,250
90,000 Telstra Corp. Ltd.+ ............................. 466,573
27,000 U.S. West Inc. ................................. 1,540,687
--------------
153,536,574
--------------
Equipment and Supplies -- 8.4%
90,000 AMETEK Inc. ..................................... 1,783,125
195,000 Ampco-Pittsburgh Corp. .......................... 2,632,500
143,000 Amphenol Corp., Cl. A+ .......................... 7,087,437
3,000 Case Corp. ...................................... 149,437
10,000 Caterpillar Inc. ................................ 548,125
107,000 CLARCOR Inc. .................................... 1,798,937
320,000 Deere & Co. ..................................... 12,380,000
252,000 Donaldson Co. Inc. .............................. 5,843,250
100,000 Flowserve Corp. ................................. 1,662,500
6,500 Franklin Electric Co. ........................... 429,000
105,000 Gerber Scientific Inc. .......................... 2,349,375
250,000 Hussmann International, Inc. .................... 4,250,000
299,500 IDEX Corp. ...................................... 8,479,594
50,000 Lufkin Industries Inc. .......................... 762,500
1,000 Manitowoc Co. Inc. .............................. 34,125
200,000 Mark IV Industries Inc. ......................... 3,950,000
445,000 Navistar International Corp.+ ................... 20,692,500
20,000 PACCAR Inc. ..................................... 1,017,500
20,000 Parker-Hannifin Corp. ........................... 896,250
408,000 Pittway Corp. ................................... 11,526,000
70,000 Pittway Corp., Cl. A ............................ 2,205,000
84,500 Sequa Corp., Cl. A+ ............................. 5,323,500
75,000 Sequa Corp., Cl. B+ ............................. 4,950,000
168,000 SPS Technologies Inc.+ .......................... 6,373,500
45,000 THK Co., Ltd. ................................... 1,322,848
100,000 Watts Industries Inc., Cl. A .................... 2,175,000
--------------
110,622,003
--------------
Entertainment -- 8.4%
105,768 Ascent Entertainment Group Inc. ................ 1,454,310
2,250 Avex Inc. ....................................... 417,076
160,000 CANAL +, Sponsored ADR .......................... 1,682,474
12,000 Daiichi Kosho Co. Ltd. .......................... 505,547
188,288 EMI Group plc ................................... 1,376,304
118,000 EMI Group plc, Sponsored ADR .................... 1,711,000
13
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
September 30, 1999 (Unaudited)
Market
Shares Value
------ -----
COMMON STOCKS (Continued)
Entertainment (Continued)
25,000 Fox Entertainment Group Inc. .................... $ 528,125
75,000 GC Companies Inc.+ .............................. 2,250,000
3,000 King World Productions Inc. ..................... 112,500
443,448 Liberty Media Group Cl. A+ ...................... 16,463,007
455,000 Time Warner Inc. ................................ 27,641,250
65,000 Todd-AO Corp., Cl. A ............................ 975,000
300,000 USA Networks, Inc.+ ............................. 11,625,000
950,000 Viacom Inc., Cl. A+ ............................. 41,087,500
125,000 Walt Disney Co. ................................. 3,234,375
--------------
111,063,468
--------------
Broadcasting -- 8.1%
50,000 Ackerley Group Inc. ............................. 615,625
22,700 Audiofina ....................................... 1,147,527
357,073 Chris-Craft Industries Inc.+ .................... 20,040,722
575,629 Chris-Craft Industries Inc. Cl. B+ (a) .......... 32,307,178
16,666 Corus Entertainment Inc. Cl. B+ ................. 269,282
200,000 Granada Group plc+ .............................. 1,713,797
37,500 Gray Communications Systems Inc. ................ 646,875
220,000 Grupo Televisa SA, GDR+ ......................... 8,786,250
140,000 Liberty Corp. ................................... 6,492,500
3,750 NRJ SA .......................................... 1,017,689
10,500 Pathe SA ........................................ 1,085,056
120,000 Paxson Communications Corp. Cl. A ............... 1,470,000
125,000 Publishing & Broadcasting Ltd. .................. 746,583
100,000 Television Broadcasting Ltd. ORD ................ 427,400
70,000 Tokyo Broadcasting System Inc. .................. 1,405,701
250,309 United Television Inc. .......................... 28,222,340
--------------
106,394,525
--------------
Wireless Communications -- 8.1%
21,000 Aerial Commications Inc.+ ....................... 569,625
133,000 Associated Group Inc., Cl. A+ ................... 8,046,500
133,000 Associated Group Inc., Cl. B+ ................... 8,054,812
27,000 Bell Atlantic Corp. ............................. 1,817,437
52,400 CenturyTel Inc. ................................. 2,128,750
67,665 COMSAT Corp., Series 1 ......................... 2,004,576
14,000 EchoStar Communications Corp. Cl. A+ ............ 1,271,375
100,000 Loral Space & Communications Ltd. ............... 1,718,750
10,000 NEXTEL Communications Inc., Cl. A+ .............. 678,125
25 NTT Mobile Communication Network Inc. ........... 491,504
10,000 Omnipoint Corp.+ ................................ 558,750
250,000 Securicor Group plc ORD ......................... 2,467,391
110,000 Sprint Corp. (PCS Group) ........................ 8,201,875
340,000 TCI Satellite Entertainment Inc., Cl. A+ ........ 1,360,000
16,700 Tele Celular Sul Participacoes SA ............... 316,256
55,666 Tele Centro Oeste Celular Participacoes SA+ ..... 184,394
3,340 Tele Leste Celular Participacoes SA ............. 105,627
8,350 Tele Nordeste Celular Participacoes SA .......... 189,962
3,340 Tele Norte Celular Participacoes SA+ ............ 95,190
33,400 Tele Sudeste Celular Participacoes SA+ .......... 718,100
1,360,000 Telecom Italia Mobile SPA ....................... 8,452,698
8,350 Telemig Celular Participacoes SA+ ............... 246,325
500,000 Telephone and Data Systems Inc. ................. 44,406,250
66,800 Telesp Celular Participacoes SA+ ................ 1,745,150
32,500 Vodafone Airtouch plc, Sponsored ADR ............ 7,726,875
115,813 Vodafone Group plc ORD .......................... 2,741,732
--------------
106,298,029
--------------
Financial Services -- 7.2%
163,000 American Express Co. (d) ........................ 21,943,875
30,000 Argonaut Group, Inc. ............................ 753,750
90,000 Banco Santander Central Hispano SA,
Sponsored ADR ................................. 928,125
300,000 Bankgesellschaft Berlin AG ...................... 5,315,928
84,000 Bank of Ireland ................................. 683,887
56,000 Bank of Scotland ................................ 667,937
45,000 Bank One Corp. .................................. 1,566,562
260 Berkshire Hathaway Inc., Cl. A+ ................. 14,300,000
10,000 Chase Manhattan Corp. ........................... 753,750
209,979 Colonial Limited Inc.+ .......................... 762,075
50,000 Commerzbank AG, Sponsored ADR ................... 1,962,500
150,000 Deutsche Bank AG, Sponsored ADR ................. 10,387,500
25,000 First Union Corp. ............................... 889,063
25,000 Hibernia Corp. .................................. 290,625
108,000 H&R Block Inc. .................................. 4,691,250
63,000 Lehman Brothers Holdings Inc. ................... 3,673,687
64,500 Leucadia National Corporation ................... 1,354,500
60,000 Mellon Bank Corporation ......................... 2,025,000
57,000 Merrill Lynch & Co. ............................. 3,829,687
110,000 Midland Co. ..................................... 2,310,000
20,000 Morgan (J.P.) & Co. Inc. ........................ 2,285,000
10,000 Morgan Stanley Dean Witter & Co. ................ 891,875
47,000 Nikko Securities Co. Ltd. ....................... 396,012
4,000 Nissin Co. Ltd. ................................ 267,004
10,000 Providian Financial Corp. ....................... 791,875
14
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
September 30, 1999 (Unaudited)
Market
Shares Value
------ -----
COMMON STOCKS (Continued)
Financial Services (Continued)
5,000 Republic New York Corp. ......................... $ 307,187
60,000 Riggs National Corp. ............................ 1,012,500
14,000 Safra Republic Holdings SA ...................... 812,000
40,000 Schroders, plc .................................. 833,686
450 Shohkoh Fund & Co. Ltd. ......................... 334,925
40,000 State Street Corp. .............................. 2,585,000
20,000 SunTrust Banks Inc. ............................. 1,315,000
55,000 T. Rowe Price Associates Inc. ................... 1,509,062
10,000 Union Planters Corp. ............................ 407,500
50,000 Unitrin Inc. .................................... 1,737,500
29,900 Waddell & Reed Financial Inc., Cl. A ............ 663,406
--------------
95,239,233
--------------
Cable -- 5.1%
569,000 Cablevision Systems Corp., Cl. A+ ............... 41,394,750
40,000 Comcast Corp., Cl. A ............................ 1,442,500
98,400 Comcast Corp., Cl. A Special .................... 3,923,700
240,000 MediaOne Group Inc.+ ............................ 16,395,000
10,000 NTL Inc.+ ....................................... 960,938
40,000 Shaw Communications Inc.+ ....................... 1,102,500
10,000 Shaw Communications Inc., Cl. B, Conv ........... 274,849
200,000 TeleWest Communications plc+ .................... 737,542
4,000 UnitedGlobalCom Inc.+ ........................... 286,500
--------------
66,518,279
--------------
Publishing -- 4.8%
70,000 Arnoldo Mondadori Editore SpA+ .................. 1,221,759
3,000 Central Newspapers Inc., Cl. A .................. 133,499
38,000 Dow Jones & Co. Inc. ............................ 2,028,250
55,000 Harcourt General Inc. ........................... 2,289,375
323,000 Independent Newspapers Ltd., ORD ................ 1,701,576
98,000 McGraw-Hill Companies Inc. ...................... 4,740,750
400,000 Media General Inc., Cl. A ....................... 20,500,000
130,000 Meredith Corp. .................................. 4,720,625
165,000 New York Times Co., Cl. A ....................... 6,187,500
170,000 News Corp. Ltd. ................................. 1,193,123
5,000 News Corp. Ltd., ADR ............................ 142,187
70,000 Pearson plc ORD ................................. 1,501,589
400,000 Penton Media Inc. ............................... 6,500,000
25,000 Pulitzer Inc. ................................... 1,135,937
160,000 Reader's Digest Association Inc., Cl. B ......... 4,220,000
70,000 Schibsted A/A ................................... 691,369
1,500,000 Seat Pagine Gialle SpA+ ......................... 2,190,226
200,000 South China Morning Post Holdings ORD ........... 133,884
70,000 Thomas Nelson Inc. .............................. 682,500
34,000 Tribune Co. ..................................... 1,691,500
--------------
63,605,649
--------------
Food and Beverage -- 4.6%
30,108 Advantica Restaurant Group, Inc.+ ............... 91,265
32,000 Bestfoods Inc. .................................. 1,552,000
18,000 Brau und Brunnen+ ............................... 1,187,703
58,500 Celestial Seasonings Inc.+ ...................... 1,126,125
53,250 Corn Products International, Inc.+ .............. 1,620,797
40,000 Diageo plc, Sponsored ADR ....................... 1,657,500
450,000 Foster's Brewing Group Ltd. ..................... 1,268,946
70,000 General Mills Inc. .............................. 5,678,750
2,500 Groupe Danone SA ................................ 607,953
4,000 Keebler Foods Co.+ .............................. 119,500
130,000 Kellogg Co. ..................................... 4,866,875
12,100 LVHM Moet Hennessy Louis Vuitton,
Sponsored ADR ................................. 726,000
800 Nestle SA ....................................... 1,501,697
50,000 Pepsi Bottling Group Inc. ....................... 853,125
379,000 PepsiCo Inc. .................................... 11,464,750
110,000 Quaker Oats Co. ................................. 6,806,250
60,000 Ralcorp Holdings Inc.+ .......................... 1,061,250
120,000 Seagram Co. Ltd. ................................ 5,460,000
93,101 Tootsie Roll Industries Inc. .................... 3,060,695
356,000 Whitman Corp. ................................... 5,073,000
70,000 Wrigley (Wm.) Jr. Co. ........................... 4,816,875
--------------
60,601,056
--------------
Consumer Products -- 4.3%
530,000 Carter-Wallace Inc. ............................. 9,473,750
10,750 Christian Dior SA ............................... 1,750,425
58,000 Church & Dwight Co. Inc. ........................ 1,450,000
1,400 Compagnie Financiere Richemont AG, Cl. A. ....... 2,831,126
10,000 Department 56 Inc.+ ............................. 239,375
9,000 Eastman Kodak Co. ............................... 678,938
110,000 Fortune Brands Inc. (e) ......................... 3,547,500
252,300 Gallaher Group plc .............................. 6,859,406
180,000 General Cigar Holdings Inc. ..................... 1,215,000
105,000 General Cigar Holdings Inc. Cl. B+ (a) .......... 708,750
50,000 Harley Davidson Inc. ............................ 2,503,125
100,000 Imasco Ltd. ..................................... 2,612,423
35,000 KAO Corp. ....................................... 986,285
15
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
September 30, 1999 (Unaudited)
Market
Shares Value
------ -----
COMMON STOCKS (Continued)
Consumer Products (Continued)
1,500 Matsushita Electric Industrial Co. Ltd., ADR .... $ 313,500
40,000 Mattel Inc. ..................................... 760,000
35,000 National Presto Industries Inc. ................. 1,351,875
10,500 Nintendo Co. Ltd. ............................... 1,669,148
14,000 Philip Morris Companies Inc. .................... 478,625
422,000 Ralston Purina Co. .............................. 11,736,875
20,000 Sony Corp., ADR ................................. 3,001,250
1,500 Swatch Group AG, Bearer ......................... 1,166,212
10,425 Syratech Corp.+ ................................. 114,675
70,714 Unilever plc .................................... 665,905
--------------
56,114,168
--------------
Energy and Utilities -- 3.6%
70,000 AGL Resources Inc. .............................. 1,137,500
34,000 Apache Corp. .................................... 1,468,375
70,000 Atlantic Richfield Co. .......................... 6,203,750
60,000 BP Amoco plc, ORD ............................... 1,095,447
69,000 BP Amoco plc, Sponsored ADR ..................... 7,646,063
110,000 Burlington Resources Inc. ....................... 4,042,500
50,000 Cilcorp Inc. .................................... 3,240,625
40,000 Conoco Inc. Cl. A ............................... 1,110,000
85,000 Devon Energy Corp. .............................. 3,522,188
48,000 Eastern Enterprises.............................. 2,229,000
350,000 El Paso Electric Co.+ ........................... 3,150,000
2,000 ELF Aquitaine SA ................................ 349,074
20,000 Energy East Corporation ......................... 475,000
112,000 ENI SpA ......................................... 702,064
100,000 Florida Progress Corp. .......................... 4,625,000
55,000 Halliburton Co. ................................. 2,255,000
40,000 K N Energy Inc.+ ................................ 897,500
25,000 New England Electric System ..................... 1,296,875
100,000 Pennzoil-Quaker State Inc.+ ..................... 1,262,500
6,000 Public Service Co. of North Carolina Inc. ....... 186,000
15,000 St. Joseph Light & Power Co. .................... 309,375
3,000 TNP Enterprises Inc.+ ........................... 116,813
--------------
47,320,649
--------------
Diversified Industrial -- 3.3%
10,000 Cooper Industries Inc. .......................... 467,500
145,000 Crane Co. ....................................... 3,253,438
102,000 GATX Corp. ...................................... 3,168,375
105,000 GenTek Inc.+ .................................... 1,194,375
10,000 ITT Industries Inc.+ ............................ 318,125
416,300 Lamson & Sessions Co.+ .......................... 2,159,556
105,000 National Service Industries Inc. ................ 3,307,500
58,715 Park-Ohio Holding Corp.+ ........................ 733,938
10,000 Reynolds Metals Co. ............................. 603,750
530,000 Tenneco Inc. .................................... 9,010,000
5,500 Thermo Power Corp.+ ............................. 64,969
75,000 Thomas Industries Inc. .......................... 1,401,563
27,000 TI Group plc .................................... 197,358
50,000 Trinity Industries Inc. ......................... 1,543,750
155,000 Tyco International Ltd. ......................... 16,003,750
100,000 Weir Group plc .................................. 460,141
--------------
43,888,088
--------------
Automotive: Parts and Accessories -- 3.3%
52,000 Arvin Industries Inc. ........................... 1,608,750
16,302 Borg Warner Automotive Inc. ..................... 700,986
290,000 Dana Corp. ...................................... 10,766,250
80,001 Delphi Automotive Systems Corp.+ (d) ............ 1,285,013
3,000 Federal-Mogul Corp. ............................. 82,688
210,000 GenCorp Inc. .................................... 3,845,625
100,000 Genuine Parts Co. ............................... 2,656,250
118,000 Johnson Controls Inc. ........................... 7,824,875
330,000 Modine Manufacturing Co. ........................ 7,693,125
6,500 SPX Corp. ....................................... 589,875
163,000 Standard Motor Products Inc. .................... 3,168,313
70,000 Superior Industries International, Inc. ......... 1,960,000
110,000 TransPro Inc. ................................... 543,125
60,000 Wynn's International Inc. ....................... 956,250
--------------
43,681,125
--------------
Hotels and Gaming -- 1.9%
110,000 Aztar Corp.+ .................................... 1,127,500
90,000 Boca Resorts Inc.+ .............................. 945,000
180,000 Gaylord Entertainment Co., Cl. A ................ 5,310,000
5,000 GTECH Holdings Corp.+ ........................... 107,188
650,000 Hilton Hotels Corp. ............................. 6,418,750
1,016,949 Ladbroke Group plc .............................. 3,545,123
100,000 Mirage Resorts Inc.+ ............................ 1,406,250
460,000 Park Place Entertainment Corp.+ ................. 5,750,000
--------------
24,609,811
--------------
Specialty Chemical -- 1.8%
5,400 Ciba Specialty Chemicals, ADR 144A (c)+ ......... 205,200
50,000 Dexter Corp. .................................... 1,865,625
16
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
September 30, 1999 (Unaudited)
Market
Shares Value
------ -----
COMMON STOCKS (Continued)
Specialty Chemical (Continued)
15,000 duPont de Nemours (E.I.) & Co. .................. $ 913,125
300,000 Ferro Corp. ..................................... 6,393,750
105,000 General Chemical Group Inc. ..................... 360,938
50,000 Lyondell Chemical Co. ........................... 668,750
210,000 Nalco Chemical Co. .............................. 10,605,000
40,000 Rohm and Haas Co. ............................... 1,445,000
105,000 Sybron Chemicals Inc. ........................... 1,601,250
--------------
24,058,638
--------------
Health Care -- 1.7%
47,000 American Home Products Corp. .................... 1,950,500
30,000 Amgen Inc.+ ..................................... 2,445,000
35,146 Astra Zeneca plc ................................ 1,464,953
26,000 Biogen Inc.+ .................................... 2,049,125
4,000 Glaxo Wellcome plc ADR .......................... 208,000
50,000 Glaxo Wellcome plc ORD .......................... 1,303,869
10,000 Japan Lifeline Co. Ltd. ......................... 224,688
33,661 Life Technologies, Inc. ......................... 1,380,101
15,000 McKesson HBOC Inc. .............................. 435,000
1,150 Novartis AG, ADR+ ............................... 1,703,987
54,000 Novartis AG, Registered.......................... 4,050,000
45,000 Pfizer Inc. ..................................... 1,617,188
140 Roche Holding AG ................................ 1,618,252
20,000 Sanofi-Synthelabo SA ............................ 851,400
55,000 SmithKline Beecham plc .......................... 632,467
20,000 SRL Inc. ........................................ 355,755
10,000 Zeneca Group plc+ ............................... 419,333
--------------
22,709,618
--------------
Retail -- 1.5%
340,000 AutoNation Inc.+ ................................ 4,271,250
20,000 Centros Comerciales Continente SA ............... 485,511
20,500 Coldwater Creek Inc.+ ........................... 410,000
50,000 Delhaize America Inc. ........................... 1,059,375
80,000 Earl Scheib Inc.+ ............................... 220,000
35,000 Gerald Stevens Inc.+ ............................ 490,000
17,000 Hannaford Bros. Co. ............................. 1,197,438
12,000 Ito Yokado Co. Ltd. ............................. 988,625
50,000 Kmart Corp.+ .................................... 584,375
100,000 Lillian Vernon Corp. ............................ 1,250,000
350,000 Neiman Marcus Group Inc.+ ....................... 8,181,250
--------------
19,137,824
--------------
Automotive -- 1.0%
12,000 Ford Motor Co. .................................. 602,250
195,000 General Motors Corp. (d) ........................ 12,272,812
--------------
12,875,062
--------------
Paper and Forest Products -- 1.0%
25,000 Fort James Corp. ................................ 667,188
252,000 Greif Bros. Corp., Cl. A ........................ 7,119,000
3,400 Greif Bros. Corp., Cl. B ........................ 101,575
253,000 St. Joe Co. ..................................... 5,455,312
--------------
13,343,075
--------------
Business Services -- 0.9%
25,000 Asatsu-DK Inc. .................................. 814,492
102,984 Cendant Corp. ................................... 1,827,966
7,000 CheckFree Holdings Corp.+ ....................... 287,875
5,000 Convergys Corp.+ ................................ 99,062
12,000 Jafco Co. Ltd. .................................. 1,005,477
100,000 Landauer Inc. ................................... 2,512,500
58,500 Nashua Corp.+ ................................... 519,187
40,000 Nielsen Media Research Inc. ..................... 1,487,500
10,833 Reuters Holdings plc, Cl. B, Sponsored ADR ...... 746,123
30,000 Seagate Technology Inc.+ ........................ 924,375
6,000 Secom Co. Ltd. .................................. 533,633
6,000 Secom Co. Ltd., New Shares+ ..................... 544,867
15,150 Vivendi ......................................... 1,063,337
--------------
12,366,394
--------------
Communications Equipment -- 0.8%
30,000 3Com Corp.+ ..................................... 862,500
300,000 Allen Telecom Inc.+ ............................. 2,925,000
60,000 Dynatech Corporation+ ........................... 300,000
65,000 Lucent Technologies Inc. ........................ 4,216,875
5,000 Mannesmann AG ................................... 801,806
22,000 Scientific-Atlanta Inc. ......................... 1,090,375
--------------
10,196,556
--------------
Agriculture -- 0.7%
725,000 Archer-Daniels-Midland Co. ...................... 8,835,937
--------------
Consumer Services -- 0.6%
40,000 Loewen Group Inc. ............................... 22,500
30,000 Midas, Inc. ..................................... 618,757
17
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
September 30, 1999 (Unaudited)
Market
Shares Value
------ -----
COMMON STOCKS (Continued)
Consumer Services (Continued)
510,000 Rollins Inc. .................................... $ 7,873,125
--------------
8,514,382
--------------
Real Estate -- 0.5%
430,000 Catellus Development Corp.+ ..................... 5,052,500
44,000 Florida East Coast Industries Inc. .............. 1,377,750
55,000 Griffin Land & Nurseries Inc.+ .................. 594,687
--------------
7,024,937
--------------
Electronics -- 0.5%
30,000 Fujitsu Ltd. .................................... 932,453
20,000 General Motors Corp., Cl. h ..................... 1,145,000
3,000 Hitachi Ltd., ADR ............................... 327,375
11,040 Koninklijke Philips Electronics N.V. ............ 1,115,040
1,500 NEC Corp., ADR .................................. 150,750
7,000 Sony Corp. ...................................... 1,042,644
100,000 Ucar International Inc.+ ........................ 2,281,250
--------------
6,994,512
--------------
Transportation -- 0.5%
79,000 AMR Corp.+ ...................................... 4,305,500
15,000 Kansas City Southern Industries, Inc. ........... 696,562
31,273 MIF Ltd.+ ....................................... 605,636
50,000 Ryder System Inc. ............................... 1,018,750
--------------
6,626,448
--------------
Aviation: Parts and Services -- 0.4%
100,000 Curtiss-Wright Corp. ............................ 3,225,000
125,000 Fairchild Corp., Cl. A .......................... 1,281,250
145,000 Hi-Shear Industries Inc.+ ....................... 373,828
20,000 Precision Castparts Corp. ....................... 610,000
--------------
5,490,078
--------------
Financial Services: Insurance -- 0.4%
42,000 Allstate Corp. .................................. 1,047,375
8,000 American General Corp. .......................... 505,500
50,000 Prudential Corp. plc ............................ 767,999
84,000 Skandia Forsakrings AB .......................... 1,753,204
42,000 Travelers Property Casualty Corp., Cl. A ........ 1,239,000
15,000 UnumProvident Corp. ............................. 441,563
--------------
5,754,641
--------------
Housing Related -- 0.4%
150,000 Nortek Inc.+ .................................... 5,118,750
5,000 Nortek Inc., Special Common+ (a) ................ 170,625
--------------
5,289,375
--------------
Aerospace / Defense -- 0.3%
10,000 Lockheed Martin Corp. ........................... 326,875
60,000 Northrop Grumman Corp. .......................... 3,813,750
--------------
4,140,625
--------------
Closed-End Funds -- 0.3%
59,000 Central European Equity Fund Inc. ............... 726,438
70,000 Dresdner RCM Europe Fund ........................ 867,300
25,000 France Growth Fund Inc. ......................... 353,125
40,250 Italy Fund Inc. ................................. 586,141
68,000 New Germany Fund ................................ 803,250
45,942 Royce Value Trust Inc. .......................... 568,532
--------------
3,904,786
--------------
Metals and Mining -- 0.3%
3,500 Anglogold Ltd. .................................. 220,408
10,000 Anglogold Ltd., Sponsored ADR ................... 314,375
110,909 Antofagasta Holdings plc ........................ 723,054
72,500 Harmony Gold Mining Co. Ltd. .................... 436,631
12,500 Harmony Gold Mining Co. Ltd., ADR ............... 75,000
38,000 Newmont Mining Corp. ............................ 983,250
8,000 Nucor Corp. ..................................... 381,000
20,000 Placer Dome Inc. ................................ 297,500
--------------
3,431,218
--------------
Computer Software and Services -- 0.3%
5,000 CDNow Inc.+ ..................................... 62,188
2,000 Cresco Ltd. ..................................... 151,664
6,000 Obic Co. Ltd. ................................... 2,794,551
8,000 Square Co. Ltd. ................................. 587,183
6,000 Sumisho Computer Systems Corp. .................. 342,649
95,000 Tyler Technologies Inc. ......................... 421,563
--------------
4,359,798
--------------
Building and Construction -- 0.2%
105,000 CRH plc ORD ..................................... 2,009,197
15,000 Martin Marietta Materials Inc. .................. 599,063
17,000 Vulcan Materials Co. ............................ 622,625
--------------
3,230,885
--------------
Environmental Services -- 0.1%
80,000 Waste Management Inc. ........................... 1,540,000
--------------
Technology -- 0.1%
55,000 Compaq Computer Corp. ........................... 1,261,563
--------------
Conglomerates -- 0.1%
19,307 Invik & Co. AB, Cl. B ........................... 1,237,175
--------------
TOTAL COMMON STOCKS.......................................... 1,281,816,184
--------------
18
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
September 30, 1999 (Unaudited)
Market
Shares Value
------ -----
PREFERRED STOCKS -- 0.5%
Telecommunications -- 0.3%
10,000 Citizens Utilities Co., 5.000%
Conv. Pfd. (EPPICS) ........................... $ 497,500
40,000 Sprint Corp., 8.250%, Conv. Pfd. ................ 3,135,000
2,223,575 Telecomunicacoes de Sao Paulo (Telesp),
Pfd., Registered .............................. 197,053
--------------
3,829,553
--------------
Publishing -- 0.1%
43,500 News Corp. Ltd., Sponsored ADR, Pfd ............. 1,160,906
--------------
Cable -- 0.1%
8,000 Tele-Communications Inc., Cl. B, 6.000%,
Ex. Jr. Pfd ................................... 800,000
--------------
Wireless Communications -- 0.0%
2,223,575 Telecomunicacoes de Sao Paulo Celular,
Pfd., B ....................................... 115,811
--------------
TOTAL PREFERRED STOCKS ...................................... 5,906,270
--------------
COMMON STOCK WARRANTS AND RIGHTS -- 0.0%
Food and Beverage -- 0.0%
62,463 Advantica Restaurant Group, Inc.,
Warrants, expires 01/07/05+ ................... 19,520
--------------
TOTAL WARRANTS AND RIGHTS ................................... 19,520
--------------
CORPORATE BONDS -- 0.1%
Principal
Amount
------
Automotive: Parts and Accessories -- 0.1%
$1,250,000 Standard Motor Products Inc.,
6.75% due 07/15/09 ............................ 1,100,781
--------------
Publishing -- 0.0%
200,000 News American Holdings Inc., Gtd. Ex.
Sub. Note, Zero Coupon
due 03/31/02 .................................. 251,000
--------------
TOTAL CORPORATE BONDS ....................................... 1,351,781
--------------
U.S. TREASURY BILLS -- 2.6%
33,827,000 U.S. Treasury Bills
4.42% to 4.50%++
due 11/4/1999 to 11/8/1999 (d) ................ 33,644,077
--------------
TOTAL INVESTMENTS (b) -- 100.4% ............................. 1,322,737,832
==============
OTHER ASSETS, LIABILITIES AND
LIQUIDATION VALUE OF CUMULATIVE
PREFERRED STOCK -- (10.4%) ................................ (132,123,351)
--------------
Market
Shares Value
------ ------
NET ASSETS - COMMON STOCK
(107,096,103 common shares
outstanding) -- 89.8% ..................................... $1,190,614,481
==============
NET ASSETS - PREFERRED STOCK
(5,394,000 preferred shares outstanding)-- 10.2% .......... 134,850,000
--------------
TOTAL NET ASSETS -- 100.0% .................................. $1,325,464,481
==============
NET ASSET VALUE PER COMMON SHARE
($1,190,078,809 / 107,096,103 shares outstanding) $11.11
==============
FUTURES CONTRACTS -- SHORT POSITION
Number of Unrealized
Contracts Appreciation
--------- ------------
(380) S&P 500 Index Futures,
December 1999 ........................... $ 3,307,300
==============
SCHEDULE OF FORWARD FOREIGN
EXCHANGE CONTRACTS
Settlement Unrealized
Date Depreciation
---- ------------
Forward Foreign Exchange
Contracts to Deliver
14,657,129(f) Hong Kong Dollars in exchange
for USD1,860,749 ............... 08/24/00 $ (9,898)
==============
- ----------
(a) Security fair valued under procedures established by the Board of
Directors.
(b) For Federal tax purposes:
Aggregate cost $ 789,682,898
==============
Gross unrealized appreciation $ 576,107,583
Gross unrealized depreciation (43,052,649)
--------------
Net unrealized appreciation $ 533,054,934
==============
(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
September 30, 1999 was $205,200 representing 0.01% of total net
assets.
(d) Security was pledged as collateral for futures contracts.
(e) At September 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
19
<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 1st and 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 1st or 15th of the month. Funds not received at
least five days before the investment date shall be held for investment on the
following investment date. 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.
20
<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
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
------ ---------------
NYSE-Symbol: GAB GAB Pr
Shares Outstanding: 107,096,103 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 common stock in the open market when the Equity Trust
shares are trading at a discount of 10% or more from the net asset value of the
shares. The Equity Trust also may, from time to time, purchase shares of its
Cumulative Preferred Stock in the open market when the shares are trading at a
discount to the Liquidation Value of $25.00.
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THE GABELLI EQUITY TRUST INC.
One Corporate Center
Rye, NY 10580-1434
(914) 921-5070
http://www.gabelli.com
Third-Quarter Report
September 30, 1999
GBFCM 09/99
