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THE GABELLI EQUITY TRUST INC.
SEMI-ANNUAL REPORT
JUNE 30, 2000
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Our cover icon represents the underpinnings of Gabelli. The Teton mountains in
Wyoming represent what we believe 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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ALABAMA ALASKA ARIZONA ARKANSAS CALIFORNIA COLORADO CONNECTICUT DELAWARE
FLORIDA GEORGIA HAWAII IDAHO ILLINOIS INDIANA IOWA KANSAS KENTUCKY
LOUISIANA MAINE MARYLAND MASSACHUSETTS MICHIGAN MINNESOTA MISSISSIPPI
MISSOURI MONTANA NEBRASKA NEVADA NEW HAMPSHIRE NEW JERSEY NEW MEXICO
NEW YORK N. CAROLINA N. DAKOTA OHIO OKLAHOMA OREGON PENNSYLVANIA
RHODE ISLAND S.CAROLINA S. DAKOTA TENNESSEE TEXAS UTAH VERMONT VIRGINIA
WEST VIRGINIA WASHINGTON WISCONSIN WYOMING
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,
At the end of the first quarter of 2000, long-dormant value stocks were
finally attracting attention. The sharp technology stock correction, which began
in the second week of March, revived the antiquated notion that the severely
depressed stocks of high quality companies in out-of-favor industry groups might
be an attractive alternative to the richly priced technology stocks. This
all-but-forgotten concept gained credence as the previous drivers of the Nasdaq
continued to plummet in April. However, investors quickly lost interest in the
merits of value investing when technology stocks began rebounding in late May.
By the end of the second quarter, all eyes were once again focused on technology
stocks, leaving the rest of the market adrift. The Dow Jones Industrial Average
("DJIA") and Standard & Poor's 500 Index materially outperformed the Nasdaq
Composite Index during the second quarter, but momentum had clearly shifted back
to technology stocks at its close.
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While public market speculators remain ambivalent about fundamentally
inexpensive, high quality companies in more prosaic businesses, the true
connoisseurs of value--corporate acquirers and leveraged buy out groups--are
aggressively taking advantage of all the attractive merchandise in the market's
discount bin. And, of course, value investors like us call this "our space".
INVESTMENT PERFORMANCE
For the second quarter ended June 30, 2000, The Gabelli Equity Trust's
(the "Equity Trust") net asset value ("NAV") slipped 2.72% after adjusting for
the $0.27 per share distribution paid on June 26, 2000. The Standard & Poor's
("S&P") 500, Value Line Composite and Russell 2000 Indices declined 2.66%, 0.41%
and 3.78%, respectively, over the same period. Each index is an unmanaged
indicator of stock market performance.
The Equity Trust was up 11.74% over the trailing twelve-month period after
adjusting for the $1.17 per share in distributions and the $0.75 per share
spin-off of The Gabelli Utility Trust. The S&P 500, Value Line Composite and
Russell 2000 Indices rose 7.24%, 1.47% and 14.32%, respectively, over the same
twelve-month period.
For the ten-year period ended June 30, 2000, the Equity Trust's total
return averaged 13.90% annually, including adjustments of $14.09 share in
distributions, versus average annual returns of 17.79%, 14.04% and 13.57% for
the S&P 500, Value Line Composite and Russell 2000 Indices, respectively. Since
inception on March 3, 1986
<TABLE>
<CAPTION>
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AVERAGE ANNUAL RETURNS - JUNE 30, 2000
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NAV Average Average Annual
Annual Return Investment Return (A)
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<S> <C> <C>
1 Year .......................................... 11.74% 14.69%
5 Year .......................................... 16.90% 16.94%
10 Year ......................................... 13.90% 14.21%
Life of Fund (SINCE AUGUST 21, 1986) ............ 14.51% 14.03%
(A) BASED ON INITIAL OFFERING PRICE OF $10.00
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</TABLE>
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through June 30, 2000, the Equity Trust had a cumulative total return of
554.95%, including adjustments of $17.82 per share in distributions, which
equates to an average annual total return of 14.51%.
The Equity Trust's common shares ended the second quarter at $12.1875 per
share on the New York Stock Exchange, a rise of 0.52% for the second quarter.
The Equity Trust's common shares rose 14.69% over the trailing twelve-month
period after adjusting for all distributions.
COMMENTARY
"WHAT, ME WORRY?"
The labor market remains tight and the threat of wage-driven inflation is
quite real. Despite six Federal Reserve interest rate hikes over the last
eighteen months, the economy is still growing at a pace that troubles the
monetary authorities. This is also an election year. While the campaign has been
a relatively quiet one, the rhetoric is sure to heat up as we approach November.
Political posturing on economic issues, principally how to re-allocate the
growing budget surplus, may rattle the financial markets. Finally, while there
are large pockets of attractive fundamental values in the equity markets, the
overall market, as measured by the S&P 500 Index, is still rather richly priced
relative to historic norms.
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[Pyramid text as follows:]
EPS
PMV
MANAGEMENT
CASH FLOW
RESEARCH
Of concern to us is the soaring trade deficit. Thus far, the world has
been happy to finance this deficit by buying U.S. stocks and bonds. This has
worked out well for all concerned. However, if we see inflation continue to
trend higher and if the U.S. financial markets sputter, international investors
may seek opportunities elsewhere. Reduced global demand for U.S. financial
assets may have a greater impact on stocks and bonds than the aforementioned
economic, political, and market issues. If international demand dries up, the
favorable supply/demand dynamics the U.S. financial markets have enjoyed over
the last decade may be disrupted. In addition, the Federal Reserve may have to
pump up interest rates even further, and at the wrong time, to defend the
dollar.
That is the dark side. The bright side is that we are finally seeing
evidence of economic deceleration. Housing starts and home sales are down
substantially, and with the exception of oil, commodity prices have stabilized.
The most recently released employment numbers were relatively benign and there
are indications that consumer confidence has been dented. For the time being,
the Federal Reserve has spared us an additional rate hike. We just may be
returning to a "Goldilocks" economy--not too hot, not too cool, but just
right--that will help propel stocks higher. We have labeled this rosy economic
scenario "Soft Landing Part II". Ideally, we will see a much broader market
advance in which companies in a wider range of industries participate.
A TUG OF WAR
For brief periods during the second quarter, market activity looked like a
tug-of-war between technology and value stocks. When the tech-heavy Nasdaq
Composite was down, the value-oriented Dow Jones was up, and vice-versa. This
raises the question of whether tech stocks must fall before stocks from value
sectors may rise, and if so, what economic and market phenomena may cause such a
reversal in fortune.
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Let's examine the economic hypothesis being used to glorify technology
stocks and relegate value stocks to investment purgatory. The Nasdaq Composite
and DJIA began to diverge at the end of the second quarter of 1999, when it
became clear the Federal Reserve was determined to raise short-term interest
rates until the economy slowed. Technology company earnings were thought to be
largely immune to higher interest rates and a slower economy--an argument that
had validity due to strong secular growth trends in many tech sectors. Earnings
for economically sensitive companies would trend lower as the economy
decelerated--also a reasonable assumption. Despite the Federal Reserve's best
efforts, the economy continued to barrel along and we saw solid earnings gains
across the industry group spectrum. Tech stocks were grandly rewarded for
meeting or exceeding earnings estimates, but better than expected earnings for
companies in other industries were largely ignored. At the close of this
reporting period, the Nasdaq Composite had a trailing price/earnings ("P/E")
multiple of 128.1, while the Dow Jones Industrials had a trailing P/E of 21.8.
P/Es are a function of earnings growth rates and interest rates. A company
growing earnings at 30% per year deserves a higher P/E than a company growing
earnings at 10% annually. However, P/Es are also a reflection of investor
sentiment. Presently, quality tech stocks are priced as if nothing can go wrong
and quality companies in other industries are priced as if nothing can go right.
This challenges economic reality.
Wall Street analysts are paid to look forward, but their forecasts are
generally strongly biased by the past. Over the last several years, leading
technology companies' earnings have beaten consensus projections. Analysts have
responded by raising the earnings bar, at least in part to justify soaring
valuations. If the economy slows, technology spending may moderate as well, and
tech companies' earnings may fall short of what we believe are overly optimistic
forecasts. High valuations leave little room for even modest earnings
disappointments. Just ask the folks at Qualcomm and Lucent Technologies.
As for the rest of the market, if the economy is slowing, earnings for
economically sensitive companies may have peaked, albeit a year later than many
anticipated. Cyclical stocks have received little tribute for better than
expected earnings. In fact, we believe that significantly lower earnings are
already baked into valuations. So, any pleasant surprises should generate
enthusiasm. Other industry groups such as food and drug stocks suffered more
from investor indifference than any present or potential earnings dislocations.
Media stocks, which stalled in 2000 after exceptionally strong performance in
1998-99, may recapture stock market interest as consolidation in the industry
accelerates. In the last year we have seen AOL combine with Time Warner, Viacom
acquire CBS, and the recently announced Vivendi/Canal Plus/Seagram merger. We
think there are many more deals, big and small, on the horizon as content and
distribution are linked to improve media companies' competitive positions on the
world stage. Telecommunications stocks have also taken a well-deserved rest this
year. However, the three forces driving the industry--technology, deregulation,
and consolidation--remain firmly in place.
We are investment realists. Technology is the pre-eminent growth industry
in the world and over the long term discriminating tech investors should receive
generous rewards. However, the current diet of nothing but super rich technology
stocks is dangerous. The addition of some high protein, low calorie items from
some other investment food groups will help promote healthier long-term results.
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DEALS...DEALS...AND MORE DEALS
A component of our investment methodology is to identify industry and
sector trends and themes ahead of the curve and position ourselves to take
advantage of these developments. Consolidation in a particular industry is one
such dynamic. As we have shared with you in previous quarterly letters, the
continued high level of activity in mergers and acquisitions contributed
significantly to the solid performance of our Equity Trust. The accompanying
table illustrates how deal activity surfaced value in a small sample of the
portfolio holdings.
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2000 COMPLETED DEALS
NUMBER AVERAGE COST CLOSING
FUND HOLDING OF SHARES (a) PER SHARE (b) PRICE (c) CLOSING DATE % RETURN (d)
------------ ------------- ------------- ------- ------------ --------
FIRST QUARTER 2000 ANNOUNCED DEALS
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<S> <C> <C> <C> <C> <C>
Associated Group Inc., Cl. A 133,000 $2.67 $87.88 01/17/00 3,191.39%
Associated Group Inc., Cl. B 133,000 2.67 88.06 01/17/00 3,198.13%
Aliant Inc. 16,670 9.77 19.02 01/28/00 94.68%
Imasco Ltd. 100,000 26.48 28.70 02/02/00 8.38%
Pittway Corp. 370,000 34.23 45.50 02/04/00 32.92%
Public Service Co. of North Carolina 6,000 28.99 33.00 02/16/00 13.83%
Foremost Corp. of America 25,000 27.89 29.25 03/07/00 4.88%
New England Electric System 25,000 48.28 54.19 03/23/00 12.24%
Ascent Entertainment Group Inc. 105,768 9.07 15.25 03/28/00 68.14%
SECOND QUARTER 2000 ANNOUNCED DEALS
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TNP Enterprises Inc. 5,000 38.28 43.94 04/07/00 14.79%
Atlantic Richfield Co. 70,000 53.59 77.00 04/17/00 43.68%
General Cigar Holdings Inc. 180,000 10.93 15.25 05/08/00 39.52%
General Cigar Holdings Inc., Cl. B 105,000 6.22 15.25 05/08/00 145.18%
Celestial Seasonings Inc. 58,500 17.25 38.50 05/30/00 123.19%
Mirage Resorts Inc. 100,000 5.32 20.94 05/31/00 293.61%
Todd A-O Corp., Cl. A 65,000 2.73 26.19 06/12/00 859.34%
Hussmann International Inc. 379,000 17.94 29.00 06/13/00 61.65%
Wynn's International Inc. 60,000 11.24 22.88 07/21/00 103.56%
SECOND QUARTER 2000 FINANCIAL ENGINEERING
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General Motors Corp. 52,058 30.33 86.94 05/19/00 186.65%
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(a) Number of shares held by the Fund on the final day of trading for the
issuer.
(b) Average purchase price of issuer's shares held by the Fund on the final day
of trading for the issuer.
(c) Closing price on the final day of trading for the issuer or the tender price
on the closing date of the tender offer.
(d) Represents average estimated return based on average cost per share and
closing price per share.
NOTE: SEE THE PORTFOLIO OF INVESTMENTS FOR A COMPLETE LISTING OF HOLDINGS.
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4
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INTERNATIONAL OUTLOOK
A portion of the Equity Trust's portfolio continues to be managed by
Caesar Bryan. Caesar is the portfolio manager of the Gabelli International
Growth Fund and the co-portfolio manager of the Gabelli Global Opportunity Fund.
Caesar's thoughts on international markets and global economies are provided
below:
As the old cliche goes, a week is a long time in politics. The same can
probably be said for investing. Three months ago, when we wrote our comments
about the first quarter, markets were fearful that economic growth was too
strong and interest rates would be raised significantly in order to prevent a
dangerous rise in the rate of inflation.
Both the Federal Reserve Board (the "Fed") and the European Central Bank
did raise short-term interest rates, but with minimal disruption to the U.S. and
European bond markets. Indeed, between the end of March and the end of June, the
U.S. ten-year government bond yield was unchanged and the German ten-year
government bond yield rose by four basis points to 5.26%. Incidentally, Japanese
bond yields were little changed.
Just as investors' fears about growth being too strong deepened, the
market received data suggesting that the economy is slowing. Now many believe
that the Fed will not need to raise interest rates further. Obviously, we have
no idea whether the Fed will raise rates, let alone when and by how much. Maybe
the next move will be down. However, the action of the last few months provides
further support for a few investment truths.
First, market psychology can shift on a dime, yet as long-term investors,
we cannot be over-influenced by short-term mood swings. Second, the consensus
can sometimes be wrong. Third, markets will find a way to correct excesses most
often at an inconvenient moment.
At the start of the quarter, we began to add to sectors that have solid
growth prospects but which the market had largely ignored. These included
financials, pharmaceuticals and some consumer stocks.
These sectors play into a number of themes to which we remain committed.
Part and parcel of the restructuring that Europe is currently undergoing is a
requirement for individuals to plan for their own retirement, as opposed to
relying on the State. The prime beneficiary of this trend should be large
financial services companies such as Skandia and Allianz.
We added to our pharmaceutical holdings as their valuations became more
attractive on an absolute and relative basis. This sector has excellent growth
prospects and the companies generate large amounts of free cash flow. There is
also the potential for further industry restructuring. The merger of Glaxo
Wellcome and SmithKline Beecham is likely to close in the current quarter. Other
companies such as Roche, Novartis and AstraZeneca are dismantling their life
sciences concept in favor of becoming pure pharmaceutical plays. These moves
should attract a higher multiple.
There are fundamental issues for many consumer companies, such as pricing
power and volume growth. However, these concerns do not apply to all consumer
stocks and, when they do, management is tackling the problem. Many luxury goods
companies still offer growth at an attractive valuation. Portfolio holdings in
this sector include Richemont, Christian Dior and Swatch. Other consumer stocks
such as Diageo and Altadis are restructuring in order to become better, more
focused competitors. Many of these companies possess strong brands with high
market shares, solid margins and excellent free cash flow generating abilities.
5
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INVESTMENT SCOREBOARD
This quarter, Wynn's International was boosted by a sizeable takeover
premium. Wynn's International began the quarter at $13.81, and on June 13,
Parker Hannifin announced that it would purchase all of Wynn's outstanding
shares at a price of $23.00 per share. A deal that closed during the quarter was
also particularly beneficial to Trust performance. On June 13, we tendered all
shares of Hussman International in a deal with Ingersoll Rand that valued our
Hussman shares at $29.00 per share, an 82% premium to our average purchase
price.
Additionally, this quarter's Top Twenty list is distinguished by two other
portfolio companies--Central Newspapers and Bestfoods--that received attractive
bids from corporate acquirers. Harcourt General hired investment bankers to
investigate restructuring options, including the sale of the company. While
nothing has been announced, the stock appreciated more than 50%. Deals continue
to be the value investor's best friend.
Other holdings, including Amgen, Carter-Wallace, and Pfizer also performed
well. Food stocks, which we highlighted as appetizing values in our first
quarter report, nourished returns, with stocks such as Tootsie Roll, Quaker
Oats, Pepsi Bottling Group, PepsiCo, Keebler Foods and H.J. Heinz posting
double-digit gains. Aerospace component manufacturers SPS Technologies and
Precision Castparts were bolstered by recognition that earnings growth prospects
were improving with rising defense spending and a recovery in commercial
aircraft backlog.
Among our biggest winners in quarters past, wired and wireless
telecommunications stocks were the subject of profit taking this quarter. Almost
all of our telecommunications holdings declined, with Latin American operators
getting hit particularly hard. Cable television stocks (Cablevision and
Comcast), cable network holdings (Liberty Media Group), small group broadcasters
(Gray Communications), publishers (Media General and McGraw-Hill) and media
giant Time Warner also weakened.
After a long run of superior performance, stocks in the telecommunications
and media sectors had become somewhat extended and were due for a breather. We
believe they are still long term bargains and expect both earnings growth trends
and ongoing consolidation to help them regain momentum. Going forward, quality
distribution (wired and wireless telecommunications systems and cable television
and broadcast networks) and information and entertainment content (publishers
and film and television production companies) will be among the world's most
prized assets.
THE NEXT BIG MEDIA DEAL
The partnering of Viacom/CBS, AOL/Time Warner, Vivendi/Canal Plus/Seagram,
and Liberty Media Group/UnitedGlobalCom show that media industry mergers
marrying content to distribution are accelerating. There are still plenty of
attractive singles looking to partner up and the band is not ready for a break.
The big multimedia wolves are there, with News Corp's Rupert Murdoch circling
the dance hall, Viacom's Sumner Redstone and Mel Karmazin positioned by the
punch bowl, and AOL/Time Warner's Steve Case and Gerald Levin and Liberty
Media's John Malone catching their breath by the bandstand. Look, there's
Chris-Craft's Herb Siegel snapping his fingers and looking like he's finally
ready to cut the rug with somebody. And off in the corner is NBC's Bob Wright
wondering if GE's Jack Welch will set him free to pursue another liaison. USA
Networks' Barry Diller is flirting with everyone while trying to decide on the
appropriate partner. The whole place is a flutter with the rumor that AT&T's
Michael Armstrong may be showing up later.
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CHEMICAL DEPENDENCE
Specialty chemicals companies are economically sensitive, but do not
generally experience the pricing pressure that could wipe out the earnings of
commodity chemical producers during economic downturns. That has not stopped
investors from dumping these stocks, which we feel are now among the most
attractive bargains in the stock market.
Recently, we have been adding a few names to the portfolio and increasing
our positions in existing specialty chemicals stock holdings. We believe
earnings will be better than expected and that the severely wounded specialty
chemicals stocks will attract a few predators. Lilly Industries, a specialty
coatings manufacturer, has just received a premium bid from Valspar. Putting a
comparable Private Market Value on portfolio holdings such as Ferro and H.B.
Fuller indicates exceptional value. Dexter and Sybron Chemicals, two of our
specialty chemicals holdings, are up for sale. So, we may soon have another test
case of the real world economic value of specialty chemicals companies.
LET'S TALK STOCKS
The following are stock specifics on selected holdings of our Trust.
Favorable earnings 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 - $67.875 - NYSE) is one of the nation's leading
communications and entertainment companies, with a portfolio of operations that
spans state-of-the-art, high-speed multimedia delivery, subscription cable
television services, championship professional sports teams and national cable
television networks. Headquartered in Bethpage, N.Y., Cablevision serves nearly
3 million cable customers in the most important cable TV market--New York.
Cablevision is a leader in delivering cutting-edge technological innovation such
as high-speed cable, to the home. Through its Rainbow Media Holdings subsidiary,
which the company is in the process of spinning-off to shareholders, Cablevision
manages recognized content offerings such as American Movie Classics, Bravo and
The Independent Film Channel. Cablevision owns and operates New York City's
famed Madison Square Garden, which includes the arena complex, the N.Y. Knicks,
the N.Y. Rangers and the MSG network. Cablevision also operates Radio City
Entertainment and holds a long term lease for Radio City Music Hall, home of the
world-famous Rockettes.
CHRIS-CRAFT INDUSTRIES INC. (CCN - $66.0625 - NYSE), through its 80% ownership
of BHC Communications (BHC - $152.00 - 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 58% of United
Television (UTVI - $128.75 - Nasdaq), which operates an NBC affiliate, an ABC
affiliate and five UPN affiliates. 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 single
market. The Chris-Craft complex is debt free, with roughly $1.5 billion in cash
and marketable securities. On August 14, News Corp. (NWS - $54.50 - NYSE)
announced that it would purchase Chris-Craft (along with BHC and United
Television) in a deal worth $5.35 billion. According to the terms of the deal,
CCN shareholders will receive a package of cash and securities having an
"initial" stated value of $85 per share.
FLOWSERVE CORP. (FLS - $15.0625 - NYSE) manufactures engineered pumps, automated
and manual valves, actuators and mechanical seals that provide a range of flow
management services. During the next quarter, Flowserve is expected to complete
the acquisition of Ingersoll-Dresser Pump from Ingersoll-Rand. The combined
company will
7
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be the largest pump company serving the petroleum, chemical and power
industries, and the second largest pump company overall. Of the estimated $2.2
billion of pro-forma revenues, approximately 35% will come from the petroleum
industry, 20% chemical, 15% power, 7% water and 23% from the other general
industrial markets.
LIBERTY MEDIA GROUP (LMG'A - $24.25 - NYSE) is engaged in businesses which
provide programming services (including production, acquisition and distribution
through all media formats) as well as businesses engaged in electronic
retailing, direct marketing and other services. LMG holds interests in
globally-branded entertainment networks such as Discovery Channel, USA Network,
QVC, Encore and STARZ! Liberty's assets also include interests in international
video distribution businesses, international telephony and domestic wireless,
plant and equipment manufacturers, and other businesses related to broadband
services. Liberty Media Group Class A and Class B common stock are tracking
stocks of AT&T.
MEDIA GENERAL INC. (MEG'A - $48.5625 - AMEX) is a Richmond, Virginia-based
communications company, publishing newspapers throughout the Southeast with
daily circulation of around 770,000. The company is also buying 5 daily
newspapers with 90,000 in total daily circulation, clustered in Alabama and
South Carolina, from Thomson Corp. for $237 million. Media General also operates
twenty-one television stations primarily located in Southeastern markets,
including eight purchased from Spartan Communications on March 27, 2000 for $605
million. The company announced on July 13 that it will sell its Garden State
Paper Co. to Enron Corp. (ENE - $64.50 - NYSE) for $72 million.
NAVISTAR INTERNATIONAL CORP. (NAV - $31.0625 - 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[REGISTRATION MARK] 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[REGISTRATION MARK] brand dealer outlets in the
United States, Canada, Brazil and Mexico, and through more than 90 separate
dealers in 75 countries. Navistar provides financing for its customers and
distributors principally through its wholly-owned subsidiary, Navistar Financial
Corporation.
SPRINT CORP. (FON - $51.00 - NYSE) is the third largest long distance carrier
and the second largest independent local telephone company in the U.S. FON faces
risks from prospective new entrants in its long distance business, which may be
offset by the "ION" high bandwidth network that the company is developing, and
by other new services. Sprint PCS Group (PCS - $59.50 - NYSE) is the leading all
digital personal communications service ("PCS") carrier in the U.S., with over 6
million customers and licenses covering over 230 million people. After failing
to receive regulatory approval to complete its merger with MCI WorldCom, Sprint
currently remains independent and represents an attractive acquisition target
for a number of major global telecom providers.
SPS TECHNOLOGIES INC. (ST - $41.0625 - NYSE) is a multinational company engaged
in the design, manufacture and marketing of fasteners, specialty metals,
magnetic products, aerospace structures and precision tools. SPS sells directly
to original equipment manufacturers and industrial, commercial and governmental
users, and also sells through independent stocking distributors and dealers. The
company is organized as seven business groups aggregated into three business
segments: Precision Fasteners and Components, Specialty Materials and Alloys,
and Magnetic Products. We believe earnings, after a lull, are set to rise due to
inventory adjustments at customers Boeing
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and Airbus. The company is ready for accelerated growth. Skillfully guided by
Charles Grigg, acquisitions will add substantially. Our estimates for the next
few years are promising.
TELECOM ITALIA SPA (TIT.MI - $13.72 - MILAN STOCK EXCHANGE; TI - $137.5625 -
NYSE) is the principal provider of domestic and international telecommunications
services in Italy. Telecom Italia is also the seventh largest fixed
telecommunications operator in Europe, as well as the largest mobile operator in
Europe, through its 60% held subsidiary, Telecom Italia Mobile. In addition,
Telecom Italia also provides leased lines, data communications services,
satellite communications services and the development and manufacture of
telecommunications equipment and networks.
TELEPHONE & DATA SYSTEMS INC. (TDS - $100.25 - AMEX) is a diversified
telecommunications service company with cellular telephone, local telephone and
personal communications services ("PCS") operations. TDS serves 3.7 million
customers in 35 states. TDS conducts the vast majority of its cellular
operations through its 81% owned United States Cellular Corp. (USM - $63.00 -
AMEX) and conducts its telephone operations through its wholly-owned TDS
Telecommunications Corp. ("TDS Telecom") subsidiary, a full-service local
exchange carrier. Having completed a merger of its 82%-owned PCS subsidiary
Aerial Communications with VoiceStream Wireless (VSTR - $116.30 - Nasdaq), TDS
now owns 35.6 million shares of VSTR valued at over $5.0 billion.
TIME WARNER INC. (TWX - $76.00 - NYSE) is the global leader in media and
entertainment, with interests in filmed entertainment, television production and
broadcasting, recorded music, cable television programming, magazine and book
publishing, direct marketing and cable television systems. Time Warner controls
a host of powerful brands, such as Warner Brothers, CNN, HBO, Cinemax, Time and
People magazines. Under the terms of a definitive agreement approved by the
boards of both companies, Time Warner and America Online (AOL - $52.875 - NYSE)
have agreed to merge in an all-stock combination.
UNITED TELEVISION INC. (UTVI - $128.75 - NASDAQ), headquartered in Beverly
Hills, California, is a television broadcasting group which owns and operates
seven of the stations (one ABC, one NBC and five UPN affiliates) that comprise
Chris-Craft's (CCN - $66.0625 - NYSE) television division. UTVI stations cover
approximately nine percent of the U.S. population. UTVI is 58%-owned by BHC
Communications (BHC - $152.00 - AMEX). United Television is a beneficiary of the
recent FCC ruling allowing television duopoly, or ownership of two stations in a
single market. On August 14, News Corp. (NWS - $54.50 - NYSE) announced it would
purchase United Television (along with Chris-Craft and BHC) in a deal worth
$5.35 billion.
VIACOM INC. (VIA'A - $68.375 - NYSE), long a major provider of entertainment
"content", has evolved into one of the world's dominant media companies.
Non-core assets are being divested and debt has been reduced to approximately $8
billion. Viacom is focusing on the global expansion of its media franchises.
Viacom is particularly well-positioned in music (notably MTV) and cable networks
(such as Nickelodeon). On May 3, Viacom closed the merger with CBS in a $49.6
billion transaction.
WHITMAN CORP. (WH - $12.375 - NYSE), through its principal operating company,
Pepsi-Cola General Bottlers, manufactures, packages, sells and distributes
carbonated and non-carbonated Pepsi-Cola beverages as well as a variety of other
non-alcoholic beverages in the United States and Central Europe. Pepsi General
serves a significant portion of a ten state region, primarily in the Midwest,
with a population of approximately 35 million people. In
9
<PAGE>
addition, Pepsi General serves territories in Poland, Hungary, the Czech
Republic and the Republic of Slovakia. Pepsi General's three largest brands in
terms of volume are Pepsi-Cola, Diet Pepsi and Mountain Dew.
WYNN'S INTERNATIONAL INC. (WN - $22.6875 - NYSE), founded in 1939, is a
worldwide supplier of automotive and industrial components and specialty
chemical products. The Automotive and Industrial Components Division includes
Wynn's-Precision Inc. and the Goshen Rubber Companies Inc. These two companies
are leaders in sealing products and technology, serving more than 1,000
customers in 14 industrial markets around the world. Robert Skeels & Company is
a regional wholesale distributor of builders' hardware products. The Specialty
Chemicals Division is comprised of Wynn Oil Company and its subsidiaries, a
worldwide manufacturer and marketer of specialty chemicals, equipment and
related programs for automotive and industrial markets in over 100 countries. On
June 13th, Parker Hannifin and Wynn's International entered into an agreement
for Parker to acquire Wynn's for $23.00 per share cash. The merger closed on
July 21, 2000.
SHAREHOLDER MEETING - MAY 15, 2000 - FINAL RESULTS
The Annual Meeting of Shareholders was held on May 15, 2000 at the
Greenwich Library in Greenwich, Connecticut. At that meeting, common
shareholders and preferred shareholders voting as a single class elected Anthony
J. Colavita, Karl Otto Pohl and Anthony R. Pustorino as Directors of the Equity
Trust. A total of 100,567,720 votes, 100,461,072 votes and 100,690,590 votes
were cast in favor of each Director and 1,057,481 votes, 1,164,130 votes and
934,611 votes were withheld for each Director, respectively. Preferred
shareholders voting as a separate class elected James P. Conn as a Director of
the Equity Trust. A total of 4,874,105 votes were cast in favor of this Director
and 19,338 votes were withheld for this Director, respectively.
Mario J. Gabelli, Thomas E. Bratter, Felix J. Christiana, Frank J.
Fahrenkopf, Jr. and Salvatore J. Zizza continue to serve in their capacities as
Directors of the Equity Trust.
Additionally, shareholders ratified the selection of PricewaterhouseCoopers
LLP as the independent accountants of the Equity Trust for the fiscal year
ending December 31, 2000. 100,729,455 votes were cast in favor of this proposal,
298,125 votes were cast against this proposal and 545,649 votes abstained.
We thank you for you participation and appreciate your continued support.
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 June 26, 2000. The next distribution is scheduled for September
2000.
7.25% TAX ADVANTAGED CUMULATIVE PREFERRED STOCK - DIVIDENDS
The Equity Trust's 7.25% Tax Advantaged Cumulative Preferred Stock paid a
cash distribution on June 26, 2000 of $0.453125 per share. For the twelve-months
ended June 30, 2000, Preferred Stock shareholders received distributions
totaling $1.8125, the annual dividend rate per share of Preferred Stock. The
next distribution is scheduled for September 2000.
10
<PAGE>
WWW.GABELLI.COM
Please visit us on the Internet. Our homepage at http://www.gabelli.com
contains information about Gabelli Asset Management Inc., the Gabelli Mutual
Funds, IRAs, 401(k)s, quarterly reports, closing prices and other current news.
You can send us e-mail at [email protected].
IN CONCLUSION
It has been a dull market for everything but technology stocks this
quarter. After a breathtaking nosedive that temporarily frightened investors
into more reasonably priced market sectors, technology stocks are once again
soaring and attracting almost all of investors' attention and resources. The
rest of the market remains earthbound.
Value honey is attracting bees. The takeover of portfolio companies,
announced plans for the potential sale of others, and investors' focus on other
potential industry group targets helped propel the Fund to a modest
outperformance of the market averages. We believe merger and acquisition
activity will continue to provide a performance tailwind for the portfolio even
in what may continue to be a lackluster market.
Sincerely,
/S/ SIGNATURE
MARIO J. GABELLI, CFA
President and Chief Investment Officer
August 14, 2000
------------------------------------------------------------
TOP TEN HOLDINGS
JUNE 30, 2000
-------------
Viacom Inc. United Television Inc.
Chris-Craft Industries Inc. Telecom Italia SpA
Telephone & Data Systems Inc. Time Warner Inc.
Liberty Media Group Media General Inc.
Cablevision Systems Corp. Sprint Corp.
------------------------------------------------------------
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.
11
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES
QUARTER ENDED JUNE 30, 2000
(UNAUDITED)
OWNERSHIP AT
JUNE 30,
SHARES 2000
-------- -----------
NET PURCHASES
COMMON STOCKS
Advantica Restaurant Group Inc. ...................... 10,000 40,108
Aegon NV ............................................. 26,000 26,000
Altadis SA ........................................... 70,000 70,000
American Express Co. (a) ............................. 125,000 195,000
Amphenol Corp., Cl. A (b) ............................ 36,000 160,000
AT&T Corp. ........................................... 188,500 338,500
AT&T Wireless Group .................................. 10,000 10,000
Bank One Corp. ....................................... 15,000 110,000
Bestfoods Inc. ....................................... 160,000 210,000
BP Amoco plc, ADR (c) ................................ 114,800 248,800
Bristol-Myers Squibb Co. ............................. 10,000 10,000
BroadWing Inc. ....................................... 15,000 22,000
Cheung Kong (Holdings) Ltd. .......................... 50,000 50,000
Computer Associates International Inc. ............... 10,000 10,000
Cooper Industries Inc. ............................... 12,000 22,000
Credit Suisse Group .................................. 5,000 5,000
DDI Corp. ............................................ 5 30
Department 56 Inc. ................................... 30,000 40,000
Dexter Corp. ......................................... 4,000 50,000
Diageo plc, ADR ...................................... 61,000 105,000
Donaldson Co. Inc. ................................... 3,000 255,000
Dynatech Corp. ....................................... 23,340 83,340
Energizer Holdings Inc. (d) .......................... 250,001 250,001
EnergyNorth Inc. ..................................... 10,000 10,000
First Union Corp. .................................... 5,000 110,000
Fortune Brands Inc. .................................. 5,000 125,000
Fuller (H.B.) Co. .................................... 7,000 10,000
General Motors Corp., Cl. H .......................... 45,441 55,441
GenTek Inc. .......................................... 7,000 150,000
Genuity Inc. ......................................... 25,000 25,000
Givaudan (e) ......................................... 140 140
Hain Celestial Group Inc. (f) ........................ 15,503 74,003
Harley Davidson Inc. (b) ............................. 50,000 100,000
Heinz (H.J.) Co. ..................................... 10,000 10,000
Hilton Hotels Corp. .................................. 50,000 700,000
Honeywell International Inc. ......................... 100,000 100,000
IMS Health Inc. ...................................... 20,000 70,000
Independent News & Media plc,
Dublin, New Shares (g) ............................ 323,000 323,000
ITT Industries Inc. .................................. 20,000 120,000
KDD Corp. ............................................ 3,000 5,500
KPN NV (b) ........................................... 12,000 24,000
Liberty Livewire Corp. Cl. A (h) ..................... 26,000 26,000
Liberty Media Group, Cl. A (b)(i) .................... 790,000 1,550,000
Life Technologies Inc. ............................... 5,000 40,294
Loral Space & Communications Ltd. .................... 50,000 150,000
Lufkin Industries Inc. ............................... 2,500 52,500
Mattel Inc. .......................................... 10,000 70,000
MCN Energy Group Inc. ................................ 10,000 60,000
Molex Inc., Cl. A .................................... 1,500 3,000
Motorola Inc. (a) .................................... 16,000 24,000
National Presto Industries Inc. ...................... 5,000 40,000
Navistar International Corp. ......................... 5,000 450,000
OWNERSHIP AT
JUNE 30,
SHARES 2000
-------- -----------
Nextel Communications Inc., Cl. A (b) ................ 9,000 18,000
Nikko Securities Co. Ltd. ............................ 70,000 100,000
Nokia Corp., Cl. A, ADR (j) .......................... 16,500 22,000
Novartis AG, Registered (b) .......................... 54,000 108,000
NRJ Groupe ........................................... 50,375 50,375
Parmalat Finanziaria SpA ............................. 650,000 650,000
PepsiAmericas Inc. ................................... 145,100 145,100
Philips Electronics NV (j) ........................... 9,000 12,000
Philips Electronics NV, ADR .......................... 30,000 40,000
Primark Corp. ........................................ 50,000 50,000
Ralston Purina Group ................................. 25,000 625,000
RAS SpA (k) .......................................... 100,000 100,000
ReliaStar Financial Corp. ............................ 25,000 25,000
Republic Services Inc. ............................... 50,000 50,000
Rohm & Haas Co. ...................................... 75,000 115,000
Rohm Co. Ltd. ........................................ 2,400 2,400
Seagram Co. .......................................... 75,000 195,000
Shared Medical Systems Corp. ......................... 140,000 140,000
Skandia Forsakrings AB (b) ........................... 59,000 118,000
Societe Generale, Cl. A .............................. 15,000 15,000
Sony Corp. (b) ....................................... 8,000 16,000
Sony Corp., ADR (b) .................................. 16,000 32,000
Swiss Re ............................................. 510 510
Tele Norte Leste Participacoes
SA, ADR (l) ....................................... 19,555 186,555
Thomas & Betts Corp. ................................. 40,000 40,000
Thomas Nelson Inc. ................................... 10,000 80,000
TVGuide Inc., Cl. A .................................. 25,000 25,000
UCAR International Inc. .............................. 20,000 150,000
Unilever NV, NY Shares ............................... 15,000 15,000
United Television Inc. ............................... 1,000 245,009
UnitedGlobalCom Inc., Cl. A .......................... 13,000 27,000
Visteon Corp. (m) .................................... 1,571 1,571
Waddell & Reed Financial Inc., Cl. A (n) ............. 10,000 45,000
Waste Management Inc. ................................ 50,000 250,000
Wesley Jessen VisionCare Inc. ........................ 70,000 70,000
PRINCIPAL
AMOUNT
---------
CORPORATE BONDS
Standard Motor Products Inc. Sub. Deb. Cv.
6.75%, 07/15/09 ....................... $100,000 $1,500,000
See accompanying notes to financial statements.
12
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES (CONTINUED)
QUARTER ENDED JUNE 30, 2000
(UNAUDITED)
OWNERSHIP AT
JUNE 30,
SHARES 2000
-------- -----------
NET SALES
COMMON STOCKS
Albertson's Inc. ..................................... (65,000) 195,000
Alcatel Alsthom SA, ADR .............................. (10,000) --
American Home Products Inc. .......................... (7,000) 40,000
Archer-Daniels-Midland Co. ........................... (25,000) 700,000
Arnoldo Mondadori Editore SpA ........................ (30,300) 39,700
Atlantic Richfield Co. (c) ........................... (70,000) --
Avex Inc. ............................................ (4,400) 20
BCE Inc. ............................................. (160,000) 240,000
Clorox Co. ........................................... (14,000) --
Cordant Technologies Inc. ............................ (250,000) --
Crane Co. ............................................ (10,000) 135,000
Cresco Ltd. .......................................... (10,800) --
Dana Corp. ........................................... (5,000) 295,000
Disney (Walt) Co. .................................... (5,000) 145,000
Dow Jones & Co. Inc. ................................. (5,000) 13,000
Fairchild Corp., Cl. A ............................... (10,000) 115,000
General Cigar Holdings Inc. .......................... (180,000) --
General Cigar Holdings Inc., Cl. B ................... (105,000) --
General Mills Inc. ................................... (5,000) 160,000
General Motors Corp. ................................. (52,058) 157,942
Gillette Co. ......................................... (5,000) 65,000
Grupo Televisa SA, GDR ............................... (2,000) 150,000
Hussman International Inc. ........................... (247,500) --
John Hancock Financial Services Inc. ................. (170,000) 20,000
MediaOne Group Inc. .................................. (230,000) --
Mirage Resorts Inc. .................................. (230,000) --
Net One Systems Co. Ltd. ............................. (15) --
NetCom ASA ........................................... (5,000) --
Northrop Grumman Corp. ............................... (10,000) 82,000
NRJ SA ............................................... (3,250) --
NTL Inc. ............................................. (3,000) 12,625
NTT Mobile Communication Network Inc. ................ (32) --
Pennzoil-Quaker State Co. ............................ (5,000) 80,000
PepsiCo Inc. ......................................... (65,000) 355,000
Quaker Oats Co. ...................................... (5,000) 95,000
Rogers Communications Inc., Cl. B .................... (20,000) 9,655
Rogers Communications Inc., Cl. B, ADR (30,000) 120,345
SBC Communications Inc. .............................. (24,995) 140,000
Sterling Software Inc. ............................... (15,000) --
Square Co. Ltd. ...................................... (10,500) --
OWNERSHIP AT
JUNE 30,
SHARES 2000
-------- -----------
STMicroelectronics NV (a) ............................ (5,000) --
Sumisho Computer Systems Corp. ....................... (11,000) --
Telecom Italia Mobile SpA ............................ (190,000) 1,200,000
Telecom Italia SpA, ADR .............................. (1,000) 124,000
Telefonica SA ........................................ (32,205) 26,914
TeleWest Communications plc .......................... (99,182) 118,999
Time Warner Inc. ..................................... (5,000) 285,000
Times Mirror Co., Cl. A .............................. (20,000) --
TNP Enterprises Inc. ................................. (5,000) --
Todd-AO Corp., Cl. A (h)(i) .......................... (65,000) --
Tokyo Broadcasting System Inc. ....................... (54,000) --
Travelers Property Casualty Corp., Cl. A ............. (600,000) --
Tribune Co. .......................................... (4,000) 30,000
Tyco International Ltd. .............................. (13,000) 187,000
U.S. Foodservice ..................................... (700,000) --
Viacom Inc., Cl. A ................................... (4,000) 925,000
VoiceStream Wireless Corp. (o) ....................... (545) 455
--------
(a) 3 for 1 stock split
(b) 2 for 1 stock split
(c) Merger - 1.64 shares of BP Amoco plc, ADR for every 1 share of Atlantic
Richfield Co.
(d) Spinoff - 1 share of Energizer Holdings Inc. for every 3 shares of Ralston
Purina Group
(e) Spinoff - 1 share of Givaudan for every 1 share of Roche Holding AG
(f) Merger - 1.265 shares of Hain Celestial Seasonings Inc. for every 1 share of
Celestial Seasonings Inc.
(g) Spinoff - 1 share of Independent News & Media plc, Dublin, New Shares for
every 1 share of Independent News & Media plc, Dublin
(h) Spinoff - 2 shares of Liberty Livewire Corp., Cl. A, for every 5 shares of
Todd-AO Corp., Cl. A
(i) Merger - 1 share of Liberty Media Group, Cl. A for every 2 shares of Todd-AO
Corp., Cl. A
(j) 4 for 1 stock split
(k) 20% stock dividend
(l) 11.7093% stock dividend
(m) Spinoff - 0.13093 shares of Visteon Corp. for every 1 share of Ford Motor
Co.
(n) 3 for 2 stock split
(o) Merger - 0.455 shares of VoiceStream Wireless Corp. for every 1 share of
Aerial Communications Inc.
See accompanying notes to financial statements.
13
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ------ -------
COMMON STOCKS -- 94.3%
ENTERTAINMENT -- 11.6%
20 Avex Inc. ......................... $ 3,628 $ 2,074
160,000 Canal Plus, ADR+ .................. 1,355,000 5,910,999
145,000 Disney (Walt) Co. (c) ............. 2,826,757 5,627,812
100,000 EMI Group plc, ADR ................ 1,189,467 1,856,030
25,000 Fox Entertainment Group Inc. 556,125 759,375
75,000 GC Companies Inc.+ ................ 1,902,049 1,678,125
26,000 Liberty Livewire Corp.,
Cl. A+ .......................... 100,868 1,826,500
1,550,000 Liberty Media Group,
Cl. A+ (d) ...................... 5,490,808 37,587,500
145,000 Publishing &
Broadcasting Ltd. ............... 802,475 1,114,317
195,000 Seagram Co. ....................... 8,089,400 11,310,000
285,000 Time Warner Inc. .................. 8,740,875 21,660,000
25,000 TV Guide Inc., Cl. A+ ............. 669,872 856,250
600,000 USA Networks Inc.+ ................ 5,774,817 12,975,000
925,000 Viacom Inc., Cl. A+ ............... 10,676,111 63,246,875
------------ ------------
48,178,252 166,410,857
------------ ------------
TELECOMMUNICATIONS -- 10.6%
8,132 Aliant Inc.+ ...................... 72,479 198,630
7,500 Allegiance Telecom Inc.+ .......... 74,063 480,000
60,000 ALLTEL Corp. ...................... 934,096 3,716,250
4,000 AT&T Canada Inc., Cl. B+ .......... 126,625 132,750
338,500 AT&T Corp. ........................ 8,982,425 10,705,063
240,000 BCE Inc. .......................... 6,877,682 5,715,000
30,000 Bell Atlantic Corp. ............... 1,810,410 1,524,375
22,000 BroadWing Inc.+ ................... 480,335 570,625
50,000 Cable & Wireless
HKT Ltd., ADR ................... 907,298 1,075,000
2,893,090 Cable & Wireless
Jamaica Ltd. .................... 101,642 172,619
95,000 Cable & Wireless plc .............. 1,170,181 1,608,501
145,000 Cable & Wireless plc, ADR ......... 3,983,335 7,259,063
60,000 CenturyTel Inc. ................... 430,644 1,725,000
25,000 Citizens Communications Co. 386,313 431,250
255,466 Commonwealth Telephone
Enterprises Inc.+ ............... 4,424,217 12,022,869
20,000 Commonwealth Telephone
Enterprises Inc., Cl. B+ ........ 128,902 950,000
35,000 Compania de
Telecomunicaciones de
Chile SA, ADR ................... 592,324 634,375
30 DDI Corp. ......................... 394,504 288,421
167,000 Embratel Participacoes
SA, ADR+ .......................... 3,517,106 3,945,375
260,000 GTE Corp. (c) ..................... 11,000,861 16,185,000
MARKET
SHARES COST VALUE
------ ------ -------
21,600 HPY Holding - HTF
Holding Oyj Abp, Cl. A .......... $ 1,175,397 $ 989,884
32 Japan Telecom Co. Ltd. ............ 498,306 1,387,436
5,500 KDD Corp. ......................... 667,638 554,692
24,000 KPN NV ............................ 636,745 1,073,521
160,000 RCN Corp.+ ........................ 1,135,975 4,060,000
9,655 Rogers Communications
Inc., Cl. B+ .................... 137,424 273,667
120,345 Rogers Communications
Inc., Cl. B, ADR+ ............... 1,703,035 3,429,833
140,000 SBC Communications Inc. ........... 4,926,410 6,055,000
330,000 Sprint Corp.+ ..................... 8,411,018 16,830,000
33,400 Tele Centro Sul
Participacoes SA, ADR ........... 1,940,826 2,440,288
186,555 Tele Norte Leste
Participacoes SA, ADR ............. 2,554,394 4,407,351
8,000 Telecom Argentina Stet
France Telecom SA, ADR .......... 164,771 220,000
400,040 Telecom Italia SpA ................ 851,138 5,488,450
124,000 Telecom Italia SpA, ADR ........... 2,599,287 17,057,750
167,000 Telecomunicacoes de Sao
Paulo SA (Telesp), ADR .......... 6,264,042 3,089,500
8,000 Telefonica de Argentina
SA, Cl. B, ADR .................. 202,420 254,000
26,914 Telefonica SA ..................... 400,504 578,163
144,000 Telefonica SA, ADR ................ 1,658,394 9,225,000
36,000 Telefonos de Mexico
SA, Cl. L, ADR .................. 639,025 2,056,500
12,750 TELUS Corp. ....................... 222,542 340,287
52,500 TELUS Corp., ADR .................. 950,397 1,401,182
4,250 TELUS Corp., Non-Voting ........... 74,181 113,285
27,500 TELUS Corp.,
Non-Voting, ADR ................. 557,547 733,024
------------ ------------
84,766,858 151,398,979
------------ ------------
BROADCASTING -- 8.5%
50,000 Ackerley Group Inc. ............... 544,975 587,500
17,700 Audiofina ......................... 775,136 2,281,374
336,192 Chris-Craft Industries Inc.+ ...... 4,285,059 22,209,684
592,897 Chris-Craft Industries Inc.,
Cl. B+ (a) ...................... 8,836,236 39,168,258
16,666 Corus Entertainment Inc.,
Cl. B+ .......................... 62,036 444,802
200,000 Granada Group plc ................. 1,567,534 1,997,292
37,500 Gray Communications
Systems Inc. .................... 493,649 367,969
150,000 Grupo Televisa SA, GDR+ ........... 3,280,629 10,340,625
200,000 Liberty Corp. ..................... 8,528,905 8,400,000
4,000 Nippon Broadcasting
System Inc. ..................... 161,709 246,194
See accompanying notes to financial statements.
14
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ------ -------
COMMON STOCKS (CONTINUED)
BROADCASTING (CONTINUED)
50,375 NRJ Groupe+ ....................... $ 483,579 $ 2,452,871
120,000 Paxson Communications
Corp., Cl. A+ ................... 1,206,801 1,020,000
100,000 Television Broadcasting Ltd. ...... 396,239 667,051
245,009 United Television Inc. ............ 24,632,336 31,544,909
----------- ------------
55,254,823 121,728,529
----------- ------------
FINANCIAL SERVICES -- 6.7%
26,000 Aegon NV .......................... 931,905 925,172
4,100 Allianz AG ........................ 1,413,422 1,487,500
110,000 Allstate Corp. .................... 3,185,026 2,447,500
195,000 American Express Co. (c) .......... 7,575,863 10,164,375
30,000 Argonaut Group Inc. ............... 855,370 513,750
90,000 Banco Santander Central
Hispano SA, ADR ................. 322,130 933,750
84,000 Bank of Ireland ................... 427,242 527,308
56,000 Bank of Scotland .................. 350,184 532,551
110,000 Bank One Corp. .................... 3,953,840 2,921,875
300,000 Bankgesellschaft Berlin AG ........ 6,004,015 4,410,943
260 Berkshire Hathaway Inc.,
Cl. A+ .......................... 824,299 13,988,000
100,000 Block (H&R) Inc. .................. 3,514,145 3,237,500
50,000 Commerzbank AG, ADR ............... 1,189,067 1,762,500
5,000 Credit Suisse Group ............... 999,927 994,575
150,000 Deutsche Bank AG, ADR ............. 6,224,445 12,375,000
30,000 Dun & Bradstreet Corp. ............ 877,625 858,750
110,000 First Union Corp. ................. 3,653,174 2,729,375
25,000 Hibernia Corp., Cl. A ............. 198,750 271,875
20,000 Invik & Co. AB, Cl. B ............. 936,800 2,072,797
90,000 Irish Life &
Permanent plc, Dublin ........... 706,587 759,599
4,000 Jafco Co. Ltd. .................... 1,305,171 652,246
20,000 John Hancock Financial
Services Inc.+ .................. 340,000 473,750
25,000 Lehman Brothers
Holdings Inc. ................... 1,401,503 2,364,062
65,500 Leucadia National Corp. ........... 2,100,438 1,494,219
60,000 Mellon Financial Corp. ............ 1,898,845 2,186,250
110,000 Midland Co. ....................... 1,199,131 2,695,000
14,000 Morgan (J.P.) & Co. Inc. .......... 1,229,575 1,541,750
100,000 Nikko Securities Co. Ltd. ......... 1,088,253 989,679
50,000 Prudential Corp. plc .............. 754,035 732,340
100,000 RAS SpA ........................... 1,011,006 1,109,419
25,000 ReliaStar Financial Corp. ......... 1,274,688 1,310,937
60,000 Riggs National Corp. .............. 552,538 757,500
118,000 Skandia Forsakrings AB ............ 358,218 3,117,587
15,000 Societe Generale, Cl. A ........... 922,356 902,238
40,000 State Street Corp. ................ 1,417,370 4,242,500
20,000 SunTrust Banks Inc. ............... 419,333 913,750
MARKET
SHARES COST VALUE
------ ------ -------
510 Swiss Re .......................... $ 977,697 $ 1,039,477
40,000 T. Rowe Price Associates Inc. ..... 1,341,250 1,700,000
50,000 Unitrin Inc. ...................... 817,863 1,468,750
45,000 Waddell & Reed
Financial Inc., Cl. A ........... 621,962 1,476,562
----------- ------------
65,175,048 95,082,711
----------- ------------
EQUIPMENT AND SUPPLIES -- 6.2%
100,000 AMETEK Inc. ....................... 1,394,214 1,750,000
160,000 Amphenol Corp., Cl. A+ ............ 2,077,625 10,590,000
10,000 Caterpillar Inc. .................. 136,559 338,750
95,000 CIRCOR International Inc.+ ........ 981,440 777,812
107,000 CLARCOR Inc. ...................... 1,347,205 2,126,625
320,000 Deere & Co. (c) ................... 3,134,721 11,840,000
255,000 Donaldson Co. Inc. ................ 1,676,029 5,036,250
105,000 Flowserve Corp. ................... 1,677,950 1,581,562
6,500 Franklin Electric Co. ............. 210,023 440,375
105,000 Gerber Scientific Inc. ............ 1,157,606 1,207,500
298,000 IDEX Corp. ........................ 1,935,965 9,405,625
52,500 Lufkin Industries Inc. ............ 945,849 833,437
1,000 Manitowoc Co. Inc. ................ 25,450 26,750
300,000 Mark IV Industries Inc. ........... 4,548,214 6,262,500
450,000 Navistar International Corp.+ ..... 7,047,997 13,978,125
20,000 PACCAR Inc. ....................... 450,000 793,750
84,500 Sequa Corp., Cl. A+ ............... 3,371,578 3,226,844
75,000 Sequa Corp., Cl. B+ ............... 3,888,160 4,335,937
170,000 SPS Technologies Inc.+ ............ 2,963,443 6,980,625
42,000 THK Co. Ltd. ...................... 1,044,531 2,121,872
150,000 UCAR International Inc.+ .......... 2,785,146 1,959,375
250,000 Watts Industries Inc., Cl. A ...... 3,331,739 3,156,250
100,000 Weir Group plc (The) .............. 420,789 281,437
----------- ------------
46,552,233 89,051,401
----------- ------------
WIRELESS COMMUNICATIONS -- 6.1%
10,000 AT&T Wireless Group+ .............. 295,000 278,750
18,000 Nextel Communications
Inc., Cl. A+ .................... 252,848 1,101,375
25,000 Rogers Cantel Mobile
Communications
Inc., Cl. B+ .................... 614,375 840,625
220,000 Sprint Corp. (PCS Group)+ ......... 287,077 13,090,000
16,700 Tele Celular Sul
Participacoes SA, ADR ........... 266,992 755,675
55,666 Tele Centro Oeste Celular
Participacoes SA, ADR ........... 166,868 667,992
3,340 Tele Leste Celular
Participacoes SA, ADR ........... 89,340 147,795
8,350 Tele Nordeste Celular
Participacoes SA, ADR ........... 123,227 578,238
3,340 Tele Norte Celular
Participacoes SA, ADR 51,601 169,505
See accompanying notes to financial statements.
15
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ------ -------
COMMON STOCKS (CONTINUED)
WIRELESS COMMUNICATIONS (CONTINUED)
33,400 Tele Sudeste Celular
Participacoes SA, ADR ........... $ 1,057,699 $ 1,018,700
1,200,000 Telecom Italia Mobile SpA ......... 1,113,354 12,293,356
8,350 Telemig Celular
Participacoes SA, ADR ........... 241,320 597,025
450,000 Telephone & Data
Systems Inc. .................... 11,087,191 45,112,500
66,800 Telesp Celular
Participacoes SA, ADR ........... 2,135,936 2,997,650
723,888 Vodafone AirTouch plc ............. 1,075,873 2,924,490
100,000 Vodafone AirTouch plc, ADR ........ 927,768 4,143,750
455 VoiceStream Wireless Corp.+ ....... 7,875 52,915
----------- ------------
19,794,344 86,770,341
----------- ------------
FOOD AND BEVERAGE -- 5.5%
40,108 Advantica Restaurant Group
Inc.+ ........................... 283,546 38,855
210,000 Bestfoods Inc. .................... 13,348,306 14,542,500
18,000 Brau und Brunnen AG+ .............. 2,282,408 769,910
15,000 Coca-Cola Co. ..................... 682,313 861,563
77,250 Corn Products International
Inc. ............................ 2,276,487 2,047,125
105,000 Diageo plc, ADR ................... 3,776,989 3,734,063
160,000 General Mills Inc. ................ 4,592,082 6,120,000
74,003 Hain Celestial Group Inc.+ ........ 1,009,118 2,714,967
10,000 Heinz (H.J.) Co. .................. 376,807 437,500
4,000 Keebler Foods Co.+ ................ 107,725 148,500
130,000 Kellogg Co. ....................... 3,855,806 3,867,500
12,100 LVMH Moet Hennessy Louis
Vuitton, ADR .................... 416,625 1,010,350
650,000 Parmalat Finanziaria SpA .......... 746,557 906,057
100,000 Pepsi Bottling Group Inc. ......... 2,042,052 2,918,750
145,100 PepsiAmericas Inc.+ ............... 512,453 435,300
355,000 PepsiCo Inc. (c) .................. 10,927,793 15,775,313
95,000 Quaker Oats Co. ................... 3,913,465 7,136,875
60,000 Ralcorp Holdings Inc.+ ............ 940,903 735,000
95,894 Tootsie Roll Industries Inc. ...... 1,501,005 3,356,290
15,000 Unilever NV, New York ............. 765,900 645,000
411,000 Whitman Corp. ..................... 5,476,166 5,086,125
70,000 Wrigley (Wm.) Jr. Co. ............. 3,173,614 5,613,125
------------ ------------
63,008,120 78,900,668
----------- ------------
PUBLISHING -- 5.4%
39,700 Arnoldo Mondadori
Editore SpA ..................... 561,894 896,419
6,000 Central Newspapers Inc.,
Cl. A ........................... 195,913 379,500
13,000 Dow Jones & Co. Inc. .............. 643,160 952,250
90,000 Harcourt General Inc. ............. 3,486,351 4,893,750
MARKET
SHARES COST VALUE
------ ------ -------
323,000 Independent News & Media
plc, Dublin ..................... $ 714,410 $ 1,187,279
323,000 Independent News & Media
plc, Dublin, New Shares ......... 714,411 1,187,279
98,000 McGraw-Hill Companies Inc. 2,206,300 5,292,000
400,000 Media General Inc., Cl. A ......... 9,832,031 19,425,000
128,000 Meredith Corp. .................... 2,123,657 4,320,000
115,000 New York Times Co., Cl. A ......... 790,115 4,542,500
145,000 News Corp. Ltd. ................... 796,385 1,994,497
5,000 News Corp. Ltd., ADR .............. 54,120 272,500
65,000 Pearson plc ....................... 863,266 2,065,381
400,000 Penton Media Inc. ................. 4,849,118 14,000,000
30,000 PRIMEDIA Inc.+ .................... 374,206 682,500
27,000 Pulitzer Inc. ..................... 1,189,663 1,139,063
160,000 Reader's Digest Association
Inc., Cl. B ..................... 4,110,972 5,850,000
60,000 Schibsted ASA ..................... 1,116,649 1,112,083
1,500,000 Seat-Pagine Gialle SpA ............ 321,923 5,198,612
400,000 South China Morning
Post Holdings ................... 273,726 310,436
80,000 Thomas Nelson Inc. ................ 976,075 685,000
30,000 Tribune Co. ....................... 942,062 1,050,000
------------ ------------
37,136,407 77,436,049
----------- ------------
CONSUMER PRODUCTS -- 4.0%
70,000 Altadis SA ........................ 1,030,995 1,075,335
540,000 Carter-Wallace Inc. ............... 7,872,957 10,867,500
10,750 Christian Dior SA ................. 1,514,055 2,437,595
45,000 Church & Dwight Co. Inc. .......... 460,073 810,000
1,100 Compagnie Financiere
Richemont AG, Cl. A ............. 1,550,184 2,963,496
40,000 Department 56 Inc.+ ............... 509,433 440,000
250,001 Energizer Holdings Inc.+ .......... 3,647,461 4,562,518
125,000 Fortune Brands Inc. (e) ........... 3,458,979 2,882,812
250,000 Gallaher Group plc, ADR ........... 4,342,521 5,359,375
65,000 Gillette Co. ...................... 2,180,149 2,270,937
140 Givaudan+ ......................... 41,223 42,609
100,000 Harley Davidson Inc. .............. 251,225 3,850,000
1,500 Matsushita Electric Industrial
Co. Ltd., ADR ................... 178,325 385,500
70,000 Mattel Inc. ....................... 1,245,437 923,125
25,000 Maytag Corp. ...................... 768,336 921,875
40,000 National Presto Industries Inc. 1,478,912 1,230,000
10,500 Nintendo Co. Ltd. ................. 849,921 1,832,886
20,000 Philip Morris Companies Inc. 600,935 531,250
625,000 Ralston Purina Group .............. 7,675,184 12,460,937
1,500 Swatch Group AG 892,765 1,907,010
10,425 Syratech Corp.+ 333,704 82,097
----------- ------------
40,882,774 57,836,857
----------- ------------
See accompanying notes to financial statements.
16
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ------ -------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES -- 4.0%
73,400 AGL Resources Inc. ................ $ 1,322,958 $ 1,169,812
34,000 Apache Corp. ...................... 844,013 1,999,625
120,000 BP Amoco plc ...................... 725,215 1,151,166
248,800 BP Amoco plc, ADR ................. 5,313,984 14,072,750
110,000 Burlington Resources Inc. ......... 4,698,198 4,207,500
100,000 Columbia Energy Group ............. 6,262,712 6,562,500
100,000 Conoco Inc., Cl. A ................ 2,233,409 2,200,000
150,000 Eastern Enterprises ............... 7,662,833 9,450,000
400,000 El Paso Electric Co.+ ............. 3,236,625 4,475,000
20,000 Energy East Corp. ................. 429,788 381,250
10,000 EnergyNorth Inc. .................. 579,562 592,500
100,000 Florida Progress Corp. ............ 4,698,010 4,687,500
55,000 Halliburton Co. ................... 1,201,188 2,595,312
60,000 MCN Energy Group Inc. ............. 1,440,680 1,282,500
30,000 Northeast Utilities ............... 648,375 652,500
80,000 Pennzoil-Quaker State Co.+ ........ 1,478,490 965,000
15,000 St. Joseph Light &
Power Co. ....................... 310,677 315,000
2,907 TotalFina Elf ..................... 355,660 445,738
5,000 Vastar Resources Inc. ............. 354,812 410,625
------------ ------------
43,797,189 57,616,278
------------ ------------
CABLE -- 3.2%
515,000 Cablevision Systems Corp.,
Cl. A+ .......................... 5,813,325 34,955,625
40,000 Comcast Corp., Cl. A .............. 341,837 1,555,000
90,000 Comcast Corp., Cl. A,
Special ......................... 797,342 3,645,000
12,625 NTL Inc.+ ......................... 680,066 755,922
20,000 Shaw Communications Inc.,
Cl. B ........................... 52,983 493,243
80,000 Shaw Communications Inc.,
Cl. B, Non-Voting+ .............. 329,198 1,975,000
118,999 TeleWest Communications
plc+ ............................ 467,975 410,531
27,000 UnitedGlobalCom Inc.,
Cl. A+ .......................... 1,196,992 1,262,250
----------- ------------
9,679,718 45,052,571
----------- ------------
HEALTH CARE -- 2.8%
40,000 American Home
Products Corp. .................. 1,929,781 2,350,000
60,000 Amgen Inc.+ ....................... 256,894 4,215,000
10,000 AstraZeneca plc, London ........... 394,772 466,791
35,146 AstraZeneca plc,
Stockholm ....................... 1,283,381 1,633,956
26,000 Biogen Inc.+ ...................... 181,025 1,677,000
10,000 Bristol-Myers Squibb Co. .......... 545,500 582,500
50,000 Glaxo Wellcome plc ................ 1,009,390 1,457,872
MARKET
SHARES COST VALUE
------ ------ -------
4,000 Glaxo Wellcome plc, ADR $ 216,096 $ 231,250
40,294 Life Technologies Inc. 1,576,263 2,054,994
1,150 Novartis AG ....................... 1,431,247 1,821,559
108,000 Novartis AG, Registered ........... 970,641 4,178,250
45,000 Pfizer Inc. ....................... 240,750 2,160,000
140 Roche Holding AG .................. 1,332,861 1,362,798
20,000 Sanofi Synthelabo SA .............. 967,750 952,840
140,000 Shared Medical
Systems Corp. ................... 10,137,316 10,211,250
55,000 SmithKline Beecham plc ............ 807,987 719,857
14,000 Takeda Chemical
Industries Ltd. ................. 809,212 918,422
70,000 Wesley Jessen
VisionCare Inc.+ ................ 2,594,065 2,629,375
------------ ------------
26,684,931 39,623,714
----------- ------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 2.8%
60,000 Arvin Industries Inc. ............. 2,242,888 1,042,500
25,302 Borg-Warner Automotive
Inc. ............................ 1,125,246 888,733
295,000 Dana Corp. ........................ 11,059,278 6,250,312
75,000 Delphi Automotive
Systems Corp.+ (c) .............. 835,469 1,092,187
40,000 Federal-Mogul Corp. ............... 787,938 382,500
255,000 GenCorp Inc. ...................... 2,433,673 2,040,000
270,000 Genuine Parts Co. ................. 7,208,450 5,400,000
117,000 Johnson Controls Inc. ............. 2,017,008 6,003,562
49,167 Midas Inc. ........................ 746,806 983,340
330,000 Modine Manufacturing Co. .......... 4,284,009 8,910,000
80,000 Scheib (Earl) Inc.+ ............... 749,281 257,500
1,000 SPX Corp. ......................... 13,487 120,937
163,000 Standard Motor Products Inc. 1,748,388 1,385,500
70,000 Superior Industries
International Inc. .............. 1,819,682 1,802,500
160,000 Tenneco Automotive Inc. ........... 2,273,638 840,000
110,000 TransPro Inc. ..................... 988,933 556,875
1,571 Visteon Corp.+ .................... 25,504 19,050
60,000 Wynn's International Inc. ......... 674,354 1,361,250
------------ ------------
41,034,032 39,336,746
----------- ------------
DIVERSIFIED INDUSTRIAL -- 2.7%
195,000 Ampco-Pittsburgh Corp. ............ 2,627,873 2,169,375
22,000 Cooper Industries Inc. ............ 888,457 716,375
135,000 Crane Co. ......................... 1,537,227 3,282,187
102,000 GATX Corp. ........................ 1,533,375 3,468,000
150,000 GenTek Inc. ....................... 1,491,896 1,678,125
100,000 Honeywell Inc. .................... 3,432,578 3,368,750
120,000 ITT Industries Inc.+ .............. 3,677,361 3,645,000
416,300 Lamson & Sessions Co.+ ............ 2,598,540 6,374,594
120,000 National Service Industries
Inc. ............................ 2,755,529 2,340,000
See accompanying notes to financial statements.
17
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ------ -------
COMMON STOCKS (CONTINUED)
DIVERSIFIED INDUSTRIAL (CONTINUED)
73,715 Park-Ohio Holdings Corp.+ ............ $ 945,987 $ 635,792
75,000 Thomas Industries Inc. ............... 769,882 1,326,562
27,000 TI Group plc ......................... 223,040 145,439
50,000 Trinity Industries Inc. .............. 945,000 925,000
187,000 Tyco International Ltd. .............. 5,965,560 8,859,125
----------- ------------
29,392,305 38,934,324
----------- ------------
RETAIL -- 1.6%
195,000 Albertson's Inc. ..................... 5,770,992 6,483,750
360,000 AutoNation Inc.+ ..................... 5,358,190 2,542,500
19,000 Coldwater Creek Inc.+ ................ 369,251 572,375
70,000 Delhaize America Inc.,
Cl. A .............................. 2,012,145 1,238,125
20,000 Gerald Stevens Inc.+ ................. 240,000 28,750
20,000 Hannaford Bros. Co. .................. 1,433,896 1,437,500
100,000 Lillian Vernon Corp. ................. 1,362,258 1,050,000
350,000 Neiman Marcus Group
Inc., Cl. B+ ....................... 8,521,973 9,712,500
------------ ------------
25,068,705 23,065,500
------------ ------------
HOTELS AND GAMING -- 1.6
120,000 Aztar Corp.+ ......................... 843,207 1,860,000
90,000 Boca Resorts Inc., Cl. A+ ............ 787,000 888,750
190,000 Gaylord Entertainment Co. ............ 5,007,832 4,085,000
5,000 GTECH Holdings Corp.+ ................ 86,269 113,438
1,045,000 Hilton Group plc ..................... 3,273,996 3,668,359
700,000 Hilton Hotels Corp. .................. 8,480,737 6,562,500
5,000 MGM Grand Inc. ....................... 97,036 160,625
430,000 Park Place
Entertainment Corp.+ ............... 2,424,893 5,240,625
------------ ------------
21,000,970 22,579,297
------------ ------------
PAPER AND FOREST PRODUCTS -- 1.5%
260,000 Greif Bros. Corp., Cl. A ............. 4,845,131 7,995,000
3,400 Greif Bros. Corp., Cl. B ............. 69,825 105,400
650,000 Pactiv Corp.+ ........................ 16,386,954 5,118,750
253,000 St. Joe Co. .......................... 2,838,193 7,590,000
------------ ------------
24,140,103 20,809,150
------------ ------------
SPECIALTY CHEMICALS -- 1.2%
5,400 Ciba Specialty Chemicals,
ADR+ (b) ........................... 21,140 168,535
50,000 Dexter Corp. ......................... 1,633,246 2,400,000
10,000 du Pont de Nemours
(E.I.) & Co. ....................... 327,500 437,500
315,000 Ferro Corp. .......................... 5,692,776 6,615,000
10,000 Fuller (H.B.) Co. .................... 396,969 455,625
MARKET
SHARES COST VALUE
------ ------ -------
105,000 General Chemical
Group Inc. ................... $ 348,186 $ 72,188
210,000 Omnova Solutions Inc. .......... 1,767,940 1,312,500
115,000 Rohm & Haas Co. ................ 4,033,507 3,967,500
105,000 Sybron Chemicals Inc.+ ......... 2,249,913 2,296,875
------------ ------------
16,471,177 17,725,723
------------ ------------
COMMUNICATIONS EQUIPMENT -- 1.0%
290,000 Allen Telecom Inc.+ ............ 2,191,166 5,129,375
83,340 Dynatech Corp.+ ................ 314,484 1,510,537
17,000 Furukawa Electric Co. Ltd. ..... 277,193 354,918
40,000 Lucent Technologies Inc. ....... 442,339 2,370,000
24,000 Motorola Inc. .................. 150,168 697,500
22,000 Nokia Corp., Cl. A, ADR ........ 627,321 1,098,625
44,000 Scientific-Atlanta Inc. ........ 355,750 3,278,000
------------ ------------
4,358,421 14,438,955
------------ ------------
BUSINESS SERVICES -- 0.8%
100,000 Cendant Corp.+ ................. 1,994,908 1,400,000
1,500 CheckFree Holdings Corp.+ 13,560 77,344
70,000 IMS Health Inc. ................ 1,141,315 1,260,000
100,000 Landauer Inc. .................. 647,252 1,556,250
58,500 Nashua Corp.+ .................. 548,437 482,625
50,000 Primark Corp. .................. 1,871,250 1,862,500
10,833 Reuters Holdings plc, ADR ...... 815,788 1,082,623
13,000 Secom Co. Ltd. ................. 813,097 949,621
250,000 Securicor Group plc ............ 0 515,400
30,900 Vivendi ........................ 2,117,043 2,727,438
------------ ------------
9,962,650 11,913,801
----------- ------------
SATELLITE -- 0.8%
100,000 COMSAT Corp. ................... 2,641,248 2,468,750
55,441 General Motors Corp.,
Cl. H+ ....................... 2,250,939 4,864,948
150,000 Loral Space &
Communications Ltd.+ ......... 1,701,438 1,040,625
340,000 TCI Satellite Entertainment
Inc., Cl. A+ ................. 900,012 2,953,750
----------- ------------
7,493,637 11,328,073
----------- ------------
ELECTRONICS -- 0.7%
43,000 Fujitsu Ltd. ................... 1,290,916 1,487,440
3,000 Hitachi Ltd., ADR .............. 218,796 432,375
3,000 Molex Inc., Cl. A .............. 115,188 105,000
1,500 NEC Corp., ADR ................. 43,625 237,750
12,000 Philips Electronics NV ......... 492,186 565,976
40,000 Philips Electronics NV, ADR .... 100,439 1,900,000
2,400 Rohm Co. Ltd. .................. 766,221 701,258
16,000 Sony Corp. ..................... 1,305,897 1,493,002
See accompanying notes to financial statements.
18
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ------ -------
COMMON STOCKS (CONTINUED)
ELECTRONICS (CONTINUED)
32,000 Sony Corp., ADR ......... $ 828,824 $ 3,018,000
40,000 Thomas & Betts Corp. .... 753,242 765,000
----------- -----------
5,915,334 10,705,801
----------- -----------
REAL ESTATE -- 0.7%
450,000 Catellus Development
Corp.+ ................ 6,751,839 6,750,000
50,000 Cheung Kong
(Holdings) Ltd. ....... 559,654 553,204
44,000 Florida East Coast
Industries Inc. ....... 523,108 1,760,000
55,000 Griffin Land &
Nurseries Inc.+ ....... 513,143 677,188
4,753 HomeFed Corp.+ .......... 851 3,327
----------- -----------
8,348,595 9,743,719
----------- -----------
AUTOMOTIVE -- 0.7%
12,000 Ford Motor Co. .......... 612,096 516,000
157,942 General Motors Corp. .... 4,799,093 9,170,507
----------- -----------
5,411,189 9,686,507
----------- -----------
CONSUMER SERVICES -- 0.5%
40,000 Loewen Group Inc. ....... 48,700 21,200
510,000 Rollins Inc. ............ 5,737,037 7,586,250
----------- -----------
5,785,737 7,607,450
----------- -----------
AGRICULTURE -- 0.5%
700,000 Archer-Daniels-Midland
Co. (c) ............... 11,360,784 6,868,750
5,000 Delta & Pine Land Co. ... 84,396 125,312
----------- -----------
11,445,180 6,994,062
----------- -----------
AVIATION: PARTS AND SERVICES -- 0.4%
100,000 Curtiss-Wright Corp. .... 2,491,103 3,718,750
115,000 Fairchild Corp., Cl. A+ . 1,514,398 560,625
145,000 Hi-Shear Industries Inc. 1,737,757 371,562
30,000 Precision Castparts Corp. 1,059,862 1,357,500
----------- -----------
6,803,120 6,008,437
----------- -----------
ENVIRONMENTAL SERVICES -- 0.4%
50,000 Republic Services Inc.+ . 632,322 800,000
250,000 Waste Management Inc. ... 4,648,440 4,750,000
----------- -----------
5,280,762 5,550,000
----------- -----------
AEROSPACE -- 0.4%
82,000 Northrop Grumman Corp. .. 5,352,630 5,432,500
----------- -----------
MARKET
SHARES COST VALUE
------ ------ -------
BUILDING AND CONSTRUCTION -- 0.4%
90,000 CRH plc .................. $ 1,150,986 $ 1,619,733
32,222 Huttig Building
Products Inc.+ ......... 81,163 132,916
15,000 Martin Marietta
Materials Inc. ......... 322,687 606,562
150,000 Nortek Inc.+ ............. 1,988,594 2,962,500
5,000 Nortek Inc.,
Special Common+ (a) .... 72,155 97,187
----------- ------------
3,615,585 5,418,898
----------- ------------
CLOSED-END FUNDS -- 0.3%
59,000 Central European Equity
Fund Inc. .............. 740,735 870,250
70,000 Dresdner RCM
Europe Fund Inc. ....... 512,662 1,148,700
25,000 France Growth Fund Inc. .. 246,844 375,000
40,250 Italy Fund Inc. .......... 360,845 729,531
68,000 New Germany Fund Inc. .... 750,658 943,500
45,942 Royce Value Trust Inc. ... 519,501 625,960
----------- ------------
3,131,245 4,692,941
----------- ------------
TRANSPORTATION -- 0.3%
73,000 AMR Corp.+ ............... 1,415,510 1,929,938
15,000 Kansas City Southern
Industries Inc. ........ 484,941 1,330,313
31,273 MIF Ltd.+ ................ 449,997 286,172
25,000 Ryder System Inc. ........ 664,907 473,438
----------- ------------
3,015,355 4,019,861
----------- ------------
COMPUTER SOFTWARE AND SERVICES -- 0.2%
10,000 Computer Associates
International Inc. ..... 555,359 511,875
25,000 Genuity Inc.+ ............ 231,791 228,906
3,300 Obic Co. Ltd. ............ 419,600 1,493,002
88,000 Tyler Technologies Inc. .. 334,579 225,500
----------- ------------
1,541,329 2,459,283
----------- ------------
METALS AND MINING -- 0.2%
3,500 Anglogold Ltd. ........... 168,824 142,889
10,000 Anglogold Ltd., ADR ...... 226,750 205,625
110,909 Antofagasta Holdings plc . 654,678 593,231
72,500 Harmony Gold Mining Co.
Ltd. ................... 347,738 400,700
12,500 Harmony Gold Mining Co.
Ltd., ADR .............. 77,344 69,531
38,000 Newmont Mining Corp. ..... 996,944 821,750
20,000 Placer Dome Inc. ......... 225,856 191,250
----------- ------------
2,698,134 2,424,976
----------- ------------
See accompanying notes to financial statements.
19
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
MARKET
SHARES COST VALUE
------ ------ -------
COMMON STOCKS (CONTINUED)
EDUCATIONAL SERVICES -- 0.0%
10,000 Benesse Corp. ............ $ 1,029,239 $ 692,775
----------- -------------
COMPUTER HARDWARE -- 0.0%
15,000 Xerox Corp. .............. 352,625 311,250
----------- -------------
TOTAL COMMON
STOCKS ................. 789,558,756 1,348,788,984
----------- -------------
PREFERRED STOCKS -- 0.3%
PUBLISHING -- 0.1%
43,500 News Corp. Ltd., Pfd., ADR 656,340 2,066,250
----------- -------------
BROADCASTING -- 0.1%
10,000 ProSieben Media AG, Pfd. . 568,909 1,250,722
----------- -------------
TELECOMMUNICATIONS -- 0.1%
15,000 Citizens Communications Co.,
5.00% Cv. Pfd. ......... 772,625 1,010,625
12,045,773 Telecomunicacoes de Sao
Paulo SA (Telesp), Pfd. 206,541 226,221
----------- -------------
979,166 1,236,846
----------- -------------
WIRELESS COMMUNICATIONS -- 0.0%
10,760,547 Telesp Celular
Participacoes SA, Pfd.+ 82,623 194,507
----------- -------------
TOTAL PREFERRED
STOCKS ................. 2,287,038 4,748,325
----------- -------------
PRINCIPAL
AMOUNT
---------
CORPORATE BONDS -- 0.2%
AVIATION: PARTS AND SERVICES -- 0.1%
$ 941,000 Kaman Corp.,
Sub. Deb. Cv.
6.00%, 03/15/12 ........ 888,033 801,026
----------- -------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.1%
1,500,000 Standard Motor Products Inc.,
Sub. Deb. Cv.
6.75%, 07/15/09 ........ 1,422,541 776,250
----------- -------------
PUBLISHING -- 0.0%
200,000 News America Holdings Inc.,
Sub. Deb. Cv.
Zero Coupon, 03/31/02 .. 175,222 464,000
----------- -------------
CONSUMER PRODUCTS -- 0.0%
1,000,000 Pillowtex Corp.,
Sub. Deb. Cv.
6.00%, 03/15/12 ........ 387,250 310,000
----------- -------------
PRINCIPAL MARKET
AMOUNT COST VALUE
------ ------ -------
HOTELS AND GAMING -- 0.0%
$200,000 Hilton Hotels Corp.,
Sub. Deb. Cv.
5.00%, 05/15/06 ........ $ 154,907 $ 159,000
----------- --------------
TOTAL CORPORATE
BONDS .................. 3,027,953 2,510,276
----------- --------------
SHARES
--------
WARRANTS -- 0.0%
FOOD AND BEVERAGE -- 0.0%
62,463 Advantica Restaurant
Group Inc. Warrants,
expire 01/07/05+ ....... 105,603 13,664
----------- --------------
PRINCIPAL
AMOUNT
-------
U.S. GOVERNMENT OBLIGATIONS -- 2.7%
$39,500,000 U.S. Treasury Bills,
4.68% to 5.74%++,
due 07/27/00 to 08/31/00 39,218,752 39,170,205
----------- --------------
REPURCHASE AGREEMENTS -- 2.2%
30,718,000 State Street Bank & Trust Co.,
6.50%, dated 06/30/00,
due 07/03/00, proceeds at
maturity $30,734,639 (f) 30,718,000 30,718,000
----------- --------------
TOTAL INVESTMENTS -- 99.7% .......... $864,916,102 1,425,949,454
============
OTHER ASSETS, LIABILITIES
AND LIQUIDATION VALUE
OF CUMULATIVE PREFERRED STOCK -- (9.1)% (130,423,040)
NET ASSETS -- COMMON STOCK -- 90.6%
(107,376,617 common shares outstanding) 1,295,526,414
--------------
NET ASSETS -- PREFERRED STOCK -- 9.4%
(5,375,600 preferred shares outstanding) 134,390,000
--------------
TOTAL NET ASSETS -- 100.0% .......... $1,429,916,414
==============
NET ASSET VALUE PER COMMON SHARE
($1,295,526,414 / 107,376,617 shares outstanding) $12.07
======
See accompanying notes to financial statements.
20
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
FORWARD FOREIGN EXCHANGE CONTRACTS
PRINCIPAL SETTLEMENT UNREALIZED
AMOUNT DATE DEPRECIATION
------- ---------- -------------
14,657,129 (g) Deliver Hong Kong Dollars
in exchange for
USD 1,881,352 .................. 08/24/00 $(20,602)
========
FUTURES CONTRACTS -- SHORT POSITION
NUMBER OF UNREALIZED
CONTRACTS APPRECIATION
--------- ------------
310 S&P 500 Index Futures
09/14/00 ......................... $2,260,430
==========
-------------------------
For Federal tax purposes:
Aggregate cost ..................................... $864,916,102
============
Gross unrealized appreciation ...................... $623,947,457
Gross unrealized depreciation ...................... (62,914,105)
------------
Net unrealized appreciation ........................ $561,033,352
============
-------------------------
(a) Security fair valued under procedures established by the Board of
Directors.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At June 30,
2000, the market value of Rule 144A securities amounted to $168,535 or
0.0% of total net assets.
(c) Security was pledged as collateral for futures contracts.
(d) At June 30, 2000, 1,520,000 shares were pledged as collateral for futures
contracts.
(e) At June 30, 2000, 115,000 shares were pledged as collateral for futures
contracts.
(f) Collateralized by U.S. Treasury Note, 6.125%, due 12/30/01, market value
$31,332,550.
(g) 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 Dollars
GDR - Global Depositary Receipt
% of
Market Market
Value Value
------- -------
GEOGRAPHIC DIVERSIFICATION
United States ............................ 79.7% $1,136,564,979
Europe ................................... 12.8 182,702,008
Latin America ............................ 3.1 43,773,066
Asia/Pacific Rim ......................... 2.4 34,476,878
Canada ................................... 1.9 27,613,778
South Africa ............................. 0.1 818,745
------ --------------
Total Investments ........................ 100.0% $1,425,949,454
====== ==============
See accompanying notes to financial statements.
21
<PAGE>
THE GABELLI EQUITY TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
ASSETS:
Investments, at value (Cost $864,916,102) .......... $1,425,949,454
Cash and foreign currency, at value
(Cost $5,676,875) ............................... 5,739,037
Dividends and interest receivable .................. 1,762,194
Receivable for investments sold .................... 14,318,090
Variation margin ................................... 782,750
--------------
TOTAL ASSETS ....................................... 1,448,551,525
--------------
LIABILITIES:
Payable for investments purchased .................. 9,888,443
Dividends payable .................................. 6,572,663
Payable for investment advisory fees ............... 1,685,203
Unrealized depreciation on forward
foreign exchange contracts ...................... 20,602
Payable for custodian fees ......................... 73,050
Other accrued expenses ............................. 395,150
--------------
TOTAL LIABILITIES .................................. 18,635,111
--------------
NET ASSETS ......................................... $1,429,916,414
==============
NET ASSETS CONSIST OF:
Cumulative Preferred Stock (7.25%, $25.00
liquidation value, $0.001 par value,
8,000,000 shares authorized, 5,375,600
shares issued and outstanding) ................... $ 134,390,000
Trust shares, at par value ......................... 107,377
Additional paid-in capital ......................... 662,980,799
Accumulated net realized gain on
investments, futures contracts and
foreign currency transactions ................... 69,128,090
Net unrealized appreciation on investments, futures
contracts and foreign currency transactions ..... 563,310,148
--------------
TOTAL NET ASSETS ................................... $1,429,916,414
==============
NET ASSET VALUE
($1,295,526,414 / 107,376,617 shares
outstanding; 200,000,000 shares
authorized of $0.001 par value) ................. $12.07
======
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
INVESTMENT INCOME:
Dividends (net of foreign taxes of $145,122) ....... $ 8,334,815
Interest ........................................... 2,177,196
--------------
TOTAL INVESTMENT INCOME ............................ 10,512,011
--------------
EXPENSES:
Investment advisory fees ........................... 7,322,507
Legal and audit fees ............................... 371,664
Shareholder communications expenses ................ 138,275
Shareholder services fees .......................... 128,681
Payroll expenses ................................... 89,057
Custodian fees ..................................... 74,408
Directors' fees .................................... 64,817
Miscellaneous expenses ............................. 64,478
--------------
TOTAL EXPENSES ..................................... 8,253,887
--------------
NET INVESTMENT INCOME .............................. 2,258,124
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS, FUTURES CONTRACTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments ................... 126,899,631
Net realized gain on foreign currency transactions . 5,868
Net realized loss on futures contracts ............. (755,971)
--------------
Net realized gain on investments, futures
contracts and foreign currency transactions ..... 126,149,528
--------------
Net change in unrealized appreciation on
investments, futures contracts and foreign
currency transactions ........................... (139,035,194)
--------------
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS, FUTURES CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS ................... (12,885,666)
--------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................. $(10,627,542)
==============
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
--------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income ................................................ $ 2,258,124 $ 4,337,238
Net realized gain on investments, futures contracts and foreign
currency transactions ............................................. 126,149,528 133,912,661
Net change in unrealized appreciation on investments, futures contracts
and foreign currency transactions ................................. (139,035,194) 212,400,838
-------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...... (10,627,542) 350,650,737
-------------- -------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income ................................................ (2,082,622) (3,195,371)(a)
Net realized gain on investments, futures contracts and foreign
currency transactions .............................................. (55,900,479) (128,585,766)(a)
Paid-in capital ...................................................... -- (72,433,677)(a)
-------------- -------------
TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS ..................... (57,983,101) (204,214,814)
-------------- -------------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income ................................................ (175,502) (235,810)
Net realized gain on investments, futures contracts and foreign
currency transactions .............................................. (4,699,307) (9,545,528)
-------------- -------------
TOTAL DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS .................. (4,874,809) (9,781,338)
-------------- -------------
TRUST SHARE TRANSACTIONS:
Net increase in net assets from Equity Trust share transactions ...... -- 15,103,360
Net decrease from repurchase of preferred stock ...................... (239,229) (306,572)
-------------- -------------
NET INCREASE IN NET ASSETS ........................................... (73,724,681) (151,451,373)
NET ASSETS:
Beginning of period .................................................. 1,503,641,095 1,352,189,722
-------------- -------------
End of period ........................................................ $1,429,916,414 $1,503,641,095
============== ==============
(a)A distribution of $79,587,260 for The Gabelli Utility Trust spin-off from
net investment income, realized short-term gains, realized long-term
gains, and paid-in-capital were $1,091,937, $7,908,851, $36,310,892 and
$34,275,580, respectively.
See accompanying notes to financial statements.
</TABLE>
22
<PAGE>
THE GABELLI EQUITYTRUST 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 on May 20, 1986 and registered under the Investment Company Act of
1940, as amended (the "1940 Act"), whose primary objective is long-term growth
of capital. The Equity Trust had no operations until August 11, 1986, when it
sold 10,696 shares of common stock to Gabelli Funds, LLC (the "Adviser") for
$100,008. Investment operations commenced on August 21, 1986.
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 the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day, except for open short positions, which are
valued at the last asked price). 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 Gabelli Funds, LLC
(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. Debt instruments
having a maturity greater than 60 days 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 Adviser and
reviewed by the Board of Directors. Under the terms of a typical repurchase
agreement, the Equity Trust takes possession of an underlying debt obligation
subject to an obligation of the seller to repurchase, and the Equity Trust to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Equity Trust's holding period. The Equity Trust will always
receive and maintain securities as collateral whose market value, including
accrued interest, will be at least equal to 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 EQUITYTRUST 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 and
futures contracts. The Equity Trust recognizes a realized gain or loss when the
contract is closed.
There are several risks in connection with the use of futures contracts as
a hedging 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 included in unrealized appreciation/depreciation on investments and
foreign currency transactions. 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/(loss) 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 TRANSLATION. The books and records of the Equity Trust
are maintained in United States (U.S.) dollars. Foreign currencies, investments
and other assets and liabilities are translated into U.S. dollars at the
exchange rates prevailing at the end of the period, and purchases and sales of
investment securities, income and expenses are translated at the exchange rate
prevailing on the respective dates of such transactions. Unrealized gains and
losses, which result from changes in foreign exchange rates and/or changes in
market prices of securities, have been included in unrealized
appreciation/depreciation on investments and foreign currency transactions. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Equity Trust and the amounts actually received. The
portion of foreign currency gains and losses related to fluctuation in exchange
rates between the initial trade date and subsequent sale trade date is included
in realized gain/(loss) on investments.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for as of the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
24
<PAGE>
THE GABELLI EQUITYTRUST 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 Equity Trust's 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 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% of the value
of the Equity Trust's average weekly net assets. In accordance with the Advisory
Agreement, the Adviser provides a continuous investment program for the Equity
Trust's portfolio and oversees the administration of all aspects of the Equity
Trust's business and affairs. The Adviser has agreed to reduce the management
fee on the incremental assets attributable to the Cumulative Preferred Stock if
the total return of the net asset value of the common shares of the Equity
Trust, including distributions and advisory fee subject to reduction, does not
exceed the stated dividend rate of the Cumulative Preferred Stock. For the six
months ended June 30, 2000, the Equity Trust's total return on the net asset
value of the common shares did not exceed the stated dividend rate of the
Cumulative Preferred Stock. Thus, such management fees were not earned on the
incremental assets.
During the six months ended June 30, 2000, Gabelli & Company, Inc. and its
affiliates received $287,916 in brokerage commissions as a result of executing
agency transactions in portfolio securities on behalf of the Equity Trust.
4. PORTFOLIO SECURITIES. Cost of purchases and proceeds from sales of
securities, other than short-term securities, for the six months ended June 30,
2000 aggregated $220,436,142 and $310,888,824, respectively.
25
<PAGE>
THE GABELLI EQUITYTRUST 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).
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 (UNAUDITED) DECEMBER 31, 1999
----------------------------- -------------------------
Shares Amount Shares Amount
--------------------------- ---------- -----------
<S> <C> <C> <C> <C>
Shares issued upon reinvestment
of dividends and distributions ...... -- $ -- 1,260,270 $15,103,360
--------- ------ --------- -----------
Net increase .......................... -- $ -- 1,260,270 $15,103,360
========= ====== ========= ===========
</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. 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. During the six months ended June 30, 2000,
the Equity Trust repurchased 10,800 shares of Cumulative Preferred Stock at a
cost of $239,229 and at an average price of $22.151 per share. During the year
ended December 31, 1999, the Equity Trust repurchased 13,600 shares of
Cumulative Preferred Stock at a cost of $306,572 and at an average price of
$22.542 per share. At June 30, 2000, 5,375,600 shares of the Cumulative
Preferred Stock were outstanding at the fixed dividend rate of 7.25 percent per
share and accrued dividends amounted to $135,323. 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
Investment Company Act of 1940 requires that along with approval of a majority
of the holders of common stock, approval of a majority of the holders of any
outstanding shares of Cumulative Preferred Stock, voting separately as a class,
would be required to (a) adopt any plan of reorganization that would adversely
affect the Cumulative Preferred Stock, and (b) take any action requiring a vote
of security holders, including, among other things, changes in the Trust's
subclassification as a closed-end investment company or changes in its
fundamental investment restrictions.
26
<PAGE>
THE GABELLI EQUITYTRUST INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR AN EQUITY TRUST COMMON
SHARE OUTSTANDING THROUGHOUT EACH PERIOD: SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000(A) -------------------------------------------------------------
OPERATING PERFORMANCE: (UNAUDITED) 1999(A) 1998(A) 1997(A) 1996(A) 1995(A)
----------- ------- ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ... $ 12.75 $ 11.47 $ 11.56 $ 9.77 $ 9.95 $ 9.46
---------- ---------- ---------- ---------- -------- --------
Net investment income .................. 0.02 0.04 0.07 0.08 0.11 0.13
Net realized and unrealized gain (loss)
on investments ....................... (0.12) 3.25 1.09 2.75 0.71 1.74
---------- ---------- ---------- ---------- -------- --------
Total from investment operations ....... (0.10) 3.29 1.16 2.83 0.82 1.87
---------- ---------- ---------- ---------- -------- --------
Decrease in net asset value from
Equity Trust share transactions ...... -- -- -- -- -- (0.37)
Offering expenses charged to capital surplus -- -- (0.04) -- -- (0.01)
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income .................. (0.02) (0.03)(c) (0.06) (0.08) (0.11) (0.13)(b)
In excess of net investment income ..... -- -- -- (0.00)(d) -- --
Net realized gain on investments ....... (0.52) (1.21)(c) (1.10) (0.92) (0.78) (0.47)(b)
In excess of net realized gain on investments -- -- -- (0.01) (0.00)(d) (0.02)
Paid-in capital ........................ -- (0.68)(c) -- (0.03) (0.11) (0.38)(b)
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income .................. (0.00)(d) (0.00)(d) (0.00)(d) -- -- --
Net realized gain on investments ....... (0.04) (0.09) (0.05) -- -- --
---------- ---------- ---------- ---------- -------- --------
Total distributions .................... (0.58) (2.01) (1.21) (1.04) (1.00) (1.00)
---------- ---------- ---------- ---------- -------- --------
NET ASSET VALUE, END OF PERIOD ......... $ 12.07 $ 12.75 $ 11.47 $ 11.56 $ 9.77 $ 9.95
========== ========== ========== ========== ========== ========
Market value, end of period ............ $ 12.19 $ 12.56 $ 11.56 $ 11.69 $ 9.38 $ 9.38
========== ========== ========== ========== ========== ========
Net asset value total return++ ......... (1.06)% 29.49% 9.55% 30.46% 9.00% 20.60%
========== ========== ========== ========== ========== ========
Total investment return+ ............... 1.39% 26.57% 9.23% 37.46% 11.00% 11.70%
========== ========== ========== ========== ========== ========
RATIOS TO AVERAGE NET ASSETS AVAILABLE
TO COMMON STOCK SHAREHOLDERS AND
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ... $1,429,916 $1,503,641 $1,352,190 $1,210,570 $1,015,437 $1,034,091
Net assets attributable to common shares,
end of period (in 000's) ............. $1,295,526 $1,368,981 $1,217,190 $1,210,570 $1,015,437 $1,034,091
Ratio of net investment income to average
net assets attributable to common stock 0.34%(g) 0.34% 0.60% 0.76% 1.07% 1.26%
Ratio of operating expenses to average
net assets attributable to common stock 1.25%(g) 1.27% 1.15% 1.14% 1.18% 1.21%
Ratio of operating expenses to average
total net assets (f) ................. 1.13%(g) 1.15% 1.09% 1.14% 1.18% 1.21%
Portfolio turnover rate ................ 15.7% 38.0% 39.8% 39.2% 18.9% 25.1%
PREFERRED STOCK:
Liquidation value, end of period
(in 000's) $ 134,390 $134,660 $ 135,000 -- -- --
Total shares outstanding (in 000's) .... 5,376 5,386 5,400 -- -- --
Asset coverage ......................... 1,064% 1,117% 1,001% -- -- --
Liquidation preference per share ....... $ 25.00 $ 25.00 $ 25.00 -- -- --
Average market value (e) ............... $ 22.19 $ 24.43 $ 25.63 -- -- --
</TABLE>
--------------------------
+ Based on market value per share, adjusted for reinvestment of distributions,
including the effect of shares issued pursuant to rights offering, assuming
full subscription by shareholder.
++ Based on net asset value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to rights
offering, assuming full subscription by shareholder.
(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) A distribution equivalent to $0.75 per share for the Gabelli Utility Trust
spin-off from net investment income, realized short-term gains, realized
long-term gains, and paid-in-capital were $0.01029, $0.07453, $0.34218 and
$0.32300, respectively.
(d) Amount represents less than $0.005 per share.
(e) Based on weekly prices.
(f) Amounts are attributable to both common and preferred stock assets. Prior to
1998, there was no preferred stock outstanding.
(g) 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 ASSET MANAGEMENT INC.
Dr. Thomas E. Bratter
PRESIDENT, JOHN DEWEY ACADEMY
Felix J. Christiana
FORMER SENIOR VICE PRESIDENT,
DOLLAR DRY DOCK SAVINGS BANK
Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.
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
Carter W. Austin
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: 10,376,617 5,375,600
The Net Asset Value appears in the Publicly Traded Funds column, under the
heading "General Equity Funds," in Sunday's The New York Times and in Monday's
The Wall Street Journal. It is also listed in Barron's Mutual Funds/Closed End
Funds section under the heading "General Equity Funds".
The Net Asset Value may be obtained each day by calling (914) 921-5071.
------------------------------------------------
For general information about the Gabelli Funds,
call 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]
-------------------------------------------------
--------------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Equity Trust may, from time to time,
purchase shares of its common stock in the open market when the Equity Trust
shares are trading at a discount of 10% or more from the net asset value of
the shares. The Equity Trust may also, from time to time, purchase shares of
its Cumulative Preferred Stock in the open market when the shares are trading
at a discount to the Liquidation Value of $25.00.
--------------------------------------------------------------------------------
29
<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, 2000
GBFCM 06/00
