Semi-Annual Report
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THE GABELLI
EQUITY TRUST INC.
June 30, 1997
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[LOGO]
THE GABELLI
EQUITY TRUST INC.
Our cover icon represents the underpinnings of Gabelli. The Teton
mountains in Wyoming represent what we believe in 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.
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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[Photograph]
THE GABELLI
EQUITY TRUST INC.
To Our Shareholders,
In the second quarter of 1997, equities investors concluded that inflation
was just a bad dream after all and that "Captain Greenspan" was bringing the
economy in for another soft landing. Blue chip stocks remained in the limelight,
but smaller stocks participated in the surge. The Dow Jones Industrial Average
(DJIA) gained 17.1%.
During the second quarter ended June 30, 1997, the Gabelli Equity Trust
Inc.'s ("Equity Trust") net asset value per share increased 13.6% to $10.73,
after adjusting for the $0.25 distribution on June 27, 1997. This compares to
the 17.5% return in the unmanaged Standard & Poor's 500 Composite Stock Price
Index ("S&P 500") for the quarter. For the six months ended June 30, 1997, the
Equity Trust's net asset value increased 15.5% after adjusting for all
distributions. The S&P 500 was up 20.6% for the same period.
Since inception on August 21, 1986 through June 30, 1997, the Equity
Trust's net asset value has achieved a 313.2% total return, which equates to a
13.9% average annual return. The five- and ten-year average annual returns were
15.6% and 12.6%, respectively, versus 19.8% and 14.6% for the S&P 500 for the
same periods.
The Equity Trust's common shares ended the quarter at $10.0625 per share
on the New York Stock Exchange, an increase of 10.0% for the quarter. For the
six months ended June 30, 1997, the common shares are up 12.9%, after adjusting
for all distributions.
What We Do
We do what is described as bottom-up research: we read annual reports; we
visit the competition; we talk to customers; we go belly to belly with
management. We structure our portfolio by picking stocks.
In past reports, we have tried to articulate our investment philosophy and
methodology. The following graphic further illustrates the interplay among the
four components of our valuation approach.
[Graphic Omitted]
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Our focus is on free cash flow; earnings before interest, taxes,
depreciation and amortization (EBITDA) minus the capital expenditures necessary
to grow the business. We believe free cash flow is the best barometer of a
business' value. Rising free cash flow often foreshadows net earnings
improvement. We also look at earnings per share trends. Unlike Wall Street's
ubiquitous earnings momentum players, we do not try to forecast earnings with
accounting precision and then trade stocks based on quarterly expectations and
realities. We simply try to position ourselves in front of long-term earnings
uptrends. In addition, we analyze on and off balance sheet assets and
liabilities such as plant and equipment, inventories, receivables, and legal,
environmental and health care issues. We want to know everything and anything
that will add to or detract from our private market value (PMV) estimates.
Finally, we look for a catalyst; something happening in the company's industry
or indigenous to the company itself that will surface value. In the case of the
independent telephone stocks, the catalyst is a regulatory change. In the
agricultural equipment business, it is the increasing worldwide demand for
American food and feed crops. In other instances, it may be a change in
management, sale or spin-off of a division or the development of a profitable
new business.
Once we identify stocks that qualify as fundamental and conceptual
bargains, we then become patient investors. This has been a proven long-term
method for preserving and enhancing wealth in the U.S. equities market. At the
margin, our new investments are focused on businesses that are well managed and
will benefit from sustainable long-term economic dynamics. These include macro
trends, such as globalization of the market in filmed entertainment and
telecommunications, and micro trends, such as increased focus on productivity
enhancing goods and services.
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BARRON'S 1997 Roundtable
We thought we would share with you excerpts from BARRON'S 1997 Midyear
Roundtable interview with our Chief Investment Officer. Discussion of individual
companies is not necessarily reflective of the Fund's entire portfolio.
June 30, 1997 BARRON's o Midyear Roundtable
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[PHOTO OMITTED]
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BARRON'S
MIDYEAR
ROUNDTABLE
o
MARIO GABELLI
Gabelli Asset Management
ARCHIE MacALLASTER
MacAllaster Pitfield MacKay
JOHN NEFF
Wellington Management
MARC PERKINS
Perkins Capital Advisers
MICHAEL PRICE
Mutual Shares
JIM ROGERS
Author: Investment Biker
OSCAR SCHAFER
Cumberland Associates
CARLENE MURPHY ZIEGLER
Artisan Partners
FELIX ZULAUF
Zulauf Asset Management
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PHOTOGRAPHS: TOM IANNUZZI for Barron's
Bulls and Bears
Our panelists, of both species, are still buying
ASTONISHED, pleased as punch, looking for more, but also queasy. More than 1,100
points on the Dow in less than six months will do that to mere mortals-which,
when pressed, all nine of the super-investors who graced our January Investment
Roundtable will admit to being.
So now what? The spectrum of market opinion we found when we got on the
phone and polled our panelists over the last couple of weeks ranged from "sell!"
to "what, me worry?" Funny, though. No one had much trouble coming up with
things to buy. For proof see the conversations below.
-- Kathryn M. Welling
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MARIO GABELLI
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Barron's: Nobody, on our panel certainly, expected such a blowout market in the
first half, Mario.
Gabelli: Essentially, the sun, the moon and the stars came into alignment again
in the first half of 1997 and that is that. The economy, GDP--while we were all
optimistic about the first quarter, it came in better than we thought. The
second quarter is unfolding better. It's going to be a very good year,
economically. In 1998 my belief is that the reservoir of growth opportunities in
Europe, Japan and Latin America should help our exports. I see no reason why it
shouldn't be another good year. Honeymoon with Greenspan, Part II; Soft Landing,
Part II. How they throttle and steer and continue to pretty much grow to target.
The earnings of U.S. industry continue to surprise. I mean, we are all cognizant
of productivity gains. But return on sales and return on equity have far
exceeded anything anyone would have ever imagined--and that helped in the first
half.
Q: Everything's wonderful?
A: While earnings surprises, stock-specific or system-specific, could prove
painful, I just don't see it in the companies I look at. Now, to the degree that
expectations run ahead of what are going to be solid results, you are open to
disappointment. But on balance, I see 2 1/2% - 3% growth for the next 12 months.
On inflation, we always worry about the same things - labor, something wild in
commodities and, on a secular basis, energy, since we produce less and consume
more. The wild card is the dollar. You saw the volatility in currencies. We
obviously want to keep an eye on what happens with the EMU. But it looks like,
if something unwinds there, it won't hurt the dollar. The mandate to politicians
on mainland Europe, which is the politically correct name for the Continent, is
to expand. But you had everything go right in the first half--especially money
flows. Money into the mutual funds, despite increased volatility in equities, is
okay. But it's still only a fraction of what's coming into the market from
deals.
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June 30, 1997 BARRON's o Midyear Roundtable
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[PHOTO OMITTED]
[CAPTION: At January's Roundtable: Zulauf, foreground; Perkins, rear,
and Schafer.]
Q: Okay, so you were right about deals.
A: Let me just hammer away. Banks, brokers, broadcasters, I added the Baby
Bells, defense, utilities. The one deal I didn't imagine was AT&T saying, "I
can't do it alone; I have to have control of the local customer. And maybe I
want to do GTE, if I can't do SBC Communications." Anyway, the flow of funds
from deals is continuing to give Mr. Market opportunities to take prices above
where they would be on an intrinsic-value basis. We said a deal a day, but we're
seeing two a day, and more. Anytime a group acts lackluster, a deal occurs to
push it into overdrive. These deals are global and the flow of funds from
transactions -- the cash portion -- comes right back into the market. We also
have new deal techniques. The LBO guys are using leveraged stubs. We saw that
with a couple of companies: Bruno's, which Kohlberg Kravis & Roberts did, and
Amphenol.
Q: What's sparking the creativity?
A: If you're an LBO fund, the way you earn a return is not by buying. You have
to buy right, but to really make money you have to sell right. When you sell,
you either sell it outright, recapitalize it, go public, or sell it to another
LBO group. If you go public, you find that while the Street likes EBITDA, they
don't like amortization of goodwill or a negative net worth on the balance
sheet. But the new technique everybody seems to be doing is leveraged stubs --
leaving a piece of a company they acquire trading publicly. A sufficient piece,
so that they don't have to do fresh start accounting, if they take it public
again; they avoid big goodwill amortization. This means that you and I, as
investors, can buy into these stubs and get the same hurdle rates the LBO firm
gets, plus have liquidity. We like that.
Q: You sound pretty upbeat.
A: Well, the first half way overshot everything we talked about. As much as we
were bulls on earnings, as much as we felt comfortable with the economy, as much
as we felt interest rates would stay in the 6 3/4% - 7% area, as much as we
expected the flow of funds from deals--all of that happened and more than we
thought. And the markets, obviously, continued to march to those drummers. Now,
we are in the camp of those who believe interest rates will edge up a little
between now and year-end. Earnings will be okay, flow of funds will be okay.
There'll be more volatility in the equities markets.
Q: So we're seeing.
A: Not a problem. This is just back to normal volatility. It was almost like it
stopped on a dime when it went down 10% in April. It didn't get to the meltdown
stage, but it's in the melt-up stage now, the way stocks are going here.
Nonetheless, the market is going from one group to another.
Q: So, what are you investing in?
A: Still the same themes. When the Berlin Wall came down, you added 3 1/2
billion consumers to the marketplace. Those new consumers were also 3 1/2
billion new unfettered capitalists, which provided extra energy in the model.
The business model that businessmen looked at was Coca-Cola. That is, you make
it in the U.S., you leverage it up and you distribute it to these new consumers
around the world. That continues to be a major driver. But at some point, this
becomes a market of stocks, as opposed to an overall stock market.
Q: You're not tempted to index, then?
A: No, I have a bunch of companies that I want to talk about. The ideal is to
buy companies in front of takeovers. I touched a little bit in January on
capital-gains taxes. It looks to me like the owners-operators of small companies
that dominate their niches are going to get high-multiple bids from people who
want to buy their companies. And they'll sell, because they'll get a break on
capital-gains taxes if those rates come down. So we're going to continue to see
a lot of deal activity. In fact, it is going to accelerate. So we still want to
be in companies that are the object of the consolidators' affections.
Q: For example?
A: In the category of vendors to Boeing, one of the companies we've identified
is Sequa Corp. SQA.A and SQA.B are the symbols. The B stock is where all the
votes are. There are about 11 million shares. The company provides parts and
engine services to the airline industry through their Chromalloy division.
Revenues for 1997 will probably be close to $1.4 billion. They should earn about
$2.50 this year and that will accelerate to $4.50 and close to $8 by 2000. The
private market value -- that is, what you could get for the pieces if they were
sold to somebody like United Technologies or an informed industrialist -- is
currently $100 a share. We think that marches straight up to $120, $140, then
[PHOTO OMITTED]
[CAPTION: Gabelli: "Returns on sales and equity have far exceeded anything
anyone imagined."]
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June 30, 1997 BARRON's o Midyear Roundtable
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[PHOTO OMITTED]
[CAPTION: In January, from left: Jim Rogers, Michael Price, Mario Gabelli and
John Neff.]
$170 in 2000. My clients own a large percentage. The stock is trading close to
$50. [Sequa CEO] Norman Alexander is very sensitive, not only about what he
sells, but also about what he keeps. He's got a window, in the next 12-18
months, to do something exceptional for his shareholders. He hasn't shown any
signs of doing that in the past, however. That's the negative: He might do
things that don't make sense for holders.
Q: What else attracts you?
A: We've liked companies that are either packagers or creators of programming.
The packagers have included International Family Entertainment. Pat Robertson
finally saw the light and the deal was done. BET Holdings, or Black
Entertainment Television, we still like; it's still around 30, where it was in
January. BET is taking their strong brand identification with their customers
and leveraging it up. I recently went to see one of their operations in
Landover, Md. -- a music restaurant concept, BET Sound Stage. There are lots of
interesting things that [BET CEO] Bob Johnson is doing. Our favorite is Liberty
Media, which owns a whole bunch of services, ranging from Discovery Channel to a
big 56 million shares of Time Warner, which they received in exchange for their
Turner Communications holdings. Liberty has split 3-for-2 since January. Another
company in that area is Viacom. Its Achilles' heel has been Blockbuster. But by
the time the second half of the year unwinds, Viacom is a major loaded laggard;
it has wonderful cable networks. Besides, the President of the United States
stated in January, "I'm going to take the next four yours of my Administration
and focus on education." At the same time, the states are especially flush now
with tax revenues, and when they put money into education in the form of
textbooks, the adoption cycle is going to be extremely favorable. So Viacom,
through Simon & Schuster, provides electronic capabilities, and it will be a
prime beneficiary. I still like HSN Inc., too, even through it has moved from 23
to 31. I like what Barry Diller has done.
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Gabelli's Picks
Recent
Company SYM EXCH Price
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Sequa SQA.A NYSE 53
Sequa SQA.B NYSE 55
BET Holdings BTV NYSE 33 1/2
Liberty Media LBTYA NNM 24 3/8
Viacom VIA ASE 29 5/16
HSN HSNI NNM 30 3/4
Time Warner TWX NYSE 47 15/16
Cablevision CVC ASE 53 3/16
Chris-Craft Ind. CCN NYSE 46
United Television UTVI NNM 92
Trump Hotels & Casinos DJT NYSE 10 11/16
Thomas Nelson TNM NYSE 12 7/8
IVAX IVX ASE 10 11/16
Giant Foods GFS.A ASE 34
Greif Brothers GBCOA NNM 29 1/4
Carlyle Ind. CRL NYSE 2 1/8
Noel Group NOEL NNM 3 15/16
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Q: What about the cable operators?
A: EBITDA in cable improved dramatically in the '96 fourth quarter. It was
exceptional, for most of the participants--in the high single- to low
double-digits in the first quarter. And I think everyone in the industry,
ranging from TCI to Cablevision to Time Warner, will show low double-digits in
the second quarter. That should continue for the balance of the year. They have
their price/cost relationships in order and have throttled back on capital
spending. And now that [News Corp Chairman] Rupert Murdoch's Death Star has been
grounded, while there will be aggressive competition between satellite and
cable, it will not be a total nuclear meltdown, one industry versus the other.
The other competition to cable, satellite Direct-TV, continues to be vibrant.
That's why we always recommend the cable program suppliers. But on balance,
cable has better fundamentals. The threat of competition has dissipated. On top
of that, Bill Gates came along and said, "I need bandwidth and I'm going to help
the cable guys build it, by helping their cost of capital." He is also very
interested in electronic retailing. I thing that's why he went into QVC,
controlled by Comcast. And why Microsoft's other founder, Paul Allen -- I want
to put him in my Hall of Shame for not negotiating the same deal for his
company's other shareholders--swapped his Ticketmaster Group stake for shares in
Home Shopping Network's parent, HSN. We, as investors, want to participate in
that. Then Cablevision went up 50% in two days because Leo Hindery came on board
at TCI.
Q: You'd better explain.
A: Leo Hindery [TCI's new president] basically said, "Hey, I have to drive my
margins up, either by increasing EBITDA or by taking some debt off my books." So
he took about 820,000 subscribers and essentially traded them to Cablevision for
a third of Cablevision's equity. The significance of the deal is that TCI's John
Malone and Cablevision's Chuck Dolan have always been fighters -- and rivals.
These two are now aligned with a common cause--that is, to help cable deliver
its promise to the customer. Malone will own one-third of Cablevision, so he'll
become a major cheerleader/shareholder and Dolan has accepted that, because he
has to deliver. What's more, in structuring the transaction, Dolan put a
valuation on his company of $120 a share, pre-tax; $90 after-tax.
Q: How so?
A: I should point out, in the interest of full disclosure, that I own one-third
of Cablevision's public float. Dolan added 12.2 million new shares to his
company's capitalization of 24.4 million--and then swapped that third of the
company to TCI in exchange for $200 million of cash flow and absorbing $670
million of related debt. If you put an 11 multiple on that $200 million of cash,
it's $2.2 billion; knock off the $700 million of debt, it's $1.5 billion. You
divide that by the 12.2 million shares, that's $120 a share. That's why the
Street took Cablevision from 34 to 50. They did the math. From TCI's point of
view, it was brilliant, too. First, they sent a signal to the world that these
are what they believe the cable values really are. They're willing to sell their
properties in exchange for someone else's at those values. Secondly, it gives
them center row, orchestra, on sports programming in New York--which is
critical. So I like cable. Time Warner, obviously, is the favored global
critical mass with a big
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June 30, 1997 BARRON's o Midyear Roundtable
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piece of their assets in cable. This dynamic in cable--that is, Gates to
Comcast and Malone to Dolan--has also helped the bidding process, with regards
to [Time Warner CEO] Jerry Levin against SBC Communications.
Q. How about a fresh topic?
A: I'll echo another old favorite, which has not done much. The Herb Siegel
trilogy. Chris-Craft Industries is selling at 45. There are approximately 31
million shares of Chris-Craft out, fully diluted, maybe 40 million. Chris-Craft
owns 18 million shares of BHC Communication's 23 million shares outstanding. BHC
is at 114, so that drives Chris-Craft's value to close to $70 today. It's
lagging. Now, Chris-Craft doesn't have a lot of assets on its own. The real
asset base is in United Television, of which it owns 57%, and BHC. As an
example, BHC has close to $1.5 billion in cash, no debt. It has a bunch of TV
stations and it owns five million shares of United Television. I don't want to
recommend BHC at 114 a share because of the sticker price, but it is extremely
attractive. I want to focus on the other laggard in the trilogy, United
Television, 88-90. It has a bunch of TV stations. It has a lot of cash--at March
31, $255 million--no debt. On 9.3 million shares, that works out to 30-odd
bucks a share in cash. And that grows dramatically, so by 2000, it'll have -
assuming they make no acquisitions--$400 million of cash, no debt. The private
market value could be well in excess of $175 a share. The stock can double in
three years, in other words, which is 24% compounded. In a flat market, that's
okay. At some point I expect Siegel to wrap BHC, United Television and
Chris-Craft all in one bundle.
[GRAPHIC OMITTED]
Q: Okay, now talk new ideas.
A: I'm looking to talk about stocks that are totally depressed and totally out
of favor. So I'll give you three $10 stocks that I haven't talked about before.
The first is Trump Hotels & Casino Resorts. The stock has dropped from 35 1/2 to
10; there about 35 million shares out. They have $1.7-$1.8 billion of debt.
About $300 million of cash flow from casinos in Atlantic City and about $35
million from their Gary, Ind., operation. So it's selling at about six times
EBITDA. I think Atlantic City gets another run, and Trump migrates into Las
Vegas. The stock has been majorly oversold. Everybody knows why.
Q: Sure, The Donald.
A: The Street is turned off for obvious reasons. You cannot trash an analyst
merely for having a point of view. My second $10 stock is Thomas Nelson, down
from a high of 26 1/2 to around 10. This one sells gifts--and one of the gifts
they sell is Bibles. This is my Nashville connection, now that I've had to give
up Pat Robertson.
Q: You're trying to save your soul?
A: Your readers' souls -- by telling them about depressed stocks that can work.
Thomas Nelson sold off its contemporary Christian-music business to Gaylord
Entertainment and emerged with a decent balance sheet. There are about 17
million shares -- I just filed; I own over 5%, and I bought right after the
press release. Symbol is TNM, on the NYSE. The company got trashed because of
what I call channel stuffing. They had a secondary. Business was quite good
before it, and seemed to collapse right after it.
Q: Funny.
A: I don't think it was because everybody stopped reading the Bible. There may
have been too many Bibles on dealers' shelves. Or the trouble may have been in
its other businesses, the bottom line is that in TNM, you have a company, pro
forma, that can probably do 70-75 cents a share this year despite a slow start,
because there is still extra product in inventory. It could do well in excess of
a buck next fiscal year. The current year, ending March 1998, is the transition
year. Then I see accelerated growth and the stock going back to 16-20. They have
to do very little capital spending; it's a wonderful EBITDA generator. For the
faint of heart, there is a convert, a 5 7/8% coupon that comes with a balloon
due in '99, which I like as well. I'm buying that one. There is very limited
risk in the balance sheet. Cash and debt are going to be equal a year from now.
Q: What's your third $10 stock?
A: IVAX Corp. There are 100-plus million shares. I went down to Florida and
visited with them. [IVAX Chairman] Phil Frost terminated a deal with Bergen
Brunswig, and the stock dropped to 7 or 8. They got hammered in the generic-drug
business, lots of problems. But there is new management, not Phil. Phil remains
the guiding light. They're refocusing. They're getting cash from the sale of a
chemical business, so they're funding proprietary drugs. They are selling off --
for $320 million, plus contingency payments of $80 million--an IV-solutions
company called McGaw. Essentially, what I like is that they have wonderful R&D
in proprietary drugs. They still have to sort out the generics. But if they make
this work, you are going to make 50% on the stock, or more, in the next 12
months. It's a wonderful speculation at $10. The balance sheet, pro forma for
the divestments, will look awfully good.
Q: What about Giant Food and Greif Brothers? Both are down a little since
January.
A: At Giant Food, everything is on track, despite the strike and its aftermath.
Someone will come along. Meanwhile, we've had a reaffirmation of the values in
supermarkets via several other mergers. Greif Brothers has continued to turn in
lackluster results in containerboard. But that's going to bottom out; the stock
is very attractive.
Q: Did we see in a filing that you've lightened up your position in Belding
Heminway -- now called Carlyle Industries?
A: No, we had some clients who bought the stock at somewhat higher prices and
we peeled a little bit off. However, we bought Noel Group for those clients--and
Noel controls Carlyle. So, while we have been adjusting portfolios for tax
purposes, we are not necessarily a seller, we're a buyer. You can get it free by
buying Noel at 3 1/2. The balance in Noel's assets are worth more than the price
of the stock. And Noel is being liquidated; their holdings include control of
Lincoln Snacks and this company. Anyway, [Carlyle CEO] Karen Brenner is doing a
decent job. They dominate the button business. The first-quarter 10Q reaffirms
everything I liked about it, though I had thought that by now they would have
negotiated a $1 a share discount to extinguish their preferred debt with Noel.
They have not, yet. But something will happen because they are going to
liquidate Noel. It's just a question of how. That's why we bought some Noel. To
the degree that Carlyle has to pay the extra buck, I get it back in Noel.
Meanwhile, the market keeps growing to the sky.
Q: Thanks, Mario.
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Holdings discussed herein do not necessarily reflect holdings in the Fund. The
views expressed in this article reflect those of Mario J. Gabelli, Chairman and
Chief Investment Officer only through 6/23/97. The Chief Investment Officer's
views are subject to change at any time based on market and other conditions.
6
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Let's Talk Stocks
The following are stock specifics on selected holdings of the Equity
Trust. Favorable EBITDA prospects do not necessarily translate into higher stock
prices, but they do express a positive trend which we believe will develop over
time.
American Express Company (AXP - $74.50 - NYSE), founded in 1850, is a
diversified travel and financial services company operating in 160 countries
around the world. The company is best known for its American Express charge card
and its travel-related services. Minneapolis-based American Express Financial
Advisors, Inc. (formerly IDS Financial Services) sells financial products
ranging from mutual funds to annuities. Harvey Golub, Chairman and CEO, has
refocused AXP on its core charge card and investment management businesses. The
company has significantly expanded the range of merchants who welcome its cards
and is slowly gaining market share. Management's objective is virtual parity
with bankcard networks. American Express has joined forces with Microsoft to
start an on-line corporate travel service. As evidenced by a 15% increase in per
share earnings in 1996, we believe that American Express has been repositioned
to enjoy double-digit earnings growth over the balance of this decade.
BCE Inc. (BCE - $28.00 - NYSE), the holding company for Bell Canada, is Canada's
biggest telecommunications company. BCE has controlling interests in Northern
Telecom Limited (NT - $91.00 - NYSE) and BCEMobile Communications, Inc. (BCX -
$31.06 - TSE). There are substantial values in BCE. For example, "behind" each
share of BCE there are 0.4 shares of Northern Telecom. The company is a possible
split-up candidate. In the interim, The Canadian Radio and Television Commission
is providing a more attractive operating environment in which BCE is becoming
more competitive.
Chris-Craft Industries, Inc. (CCN - $48.25 - NYSE), through its 77% ownership of
BHC Communications, Inc. (BHC - $119.50 - ASE), is primarily a television
broadcaster. BHC owns and operates UPN-affiliated TV stations in New York
(WWOR), Los Angeles (KCOP) and Portland (KPTV). BHC also controls over 59% of
United Television, Inc. (UTVI - $99.00 - Nasdaq), which operates an NBC
affiliate, an ABC affiliate and three UPN affiliates. Chris-Craft's eight
television stations constitute one of the nation's largest television station
groups, reaching approximately 20% of the country's households. BHC owned 100%
of United Paramount Network (UPN), but Viacom has exercised its option to
purchase 50% of UPN for $160 million, which is equal to about one-half of UPN's
operating losses to date. The Chris-Craft complex is debt free and strongly
positioned to expand its operations with about $1.6 billion in cash and
marketable securities.
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Chris-Craft Industries
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77%
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BHC Communications
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59%
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United Television
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Deere & Company (DE - $54.875 - NYSE) is the largest manufacturer of farm
equipment in the world. The company's products include tractors and planting,
harvesting and crop handling equipment. With the U.S. government no longer
restricting plantings, additional acreage is likely to be cultivated by the
nation's farmers. Weather permitting, bountiful harvests are likely in 1997, so
farm incomes should show substantial increases. Global demand for U.S. wheat and
other crops should further boost farm income. With raw material costs under
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control, Deere's near-term earnings should be impressive. Long-term prospects
for farm equipment manufacturers like Deere are enhanced as incomes, diets and
standards of living improve overseas.
International Family Entertainment, Inc. (FAM - $34.375 - NYSE) is a
Virginia-based entertainment company with production and distribution operations
around the world. With such key assets as The Family Channel, MTM and Cable
Health Club, FAM is a leading provider of cable programming oriented toward
families. The Family Channel is performing exceptionally well, and MTM has been
re-energized. FAM has created an exceptional franchise which attracted News
Corporation Limited (NWS - $19.25 - NYSE), whose Fox Kids Worldwide Inc. unit
agreed to buy FAM for $35 a share cash in a transaction valued at $1.9 billion.
Media General, Inc. (MEG'A - $40.00 - ASE) is a Richmond, VA-based
communications company, publishing 20 daily newspapers throughout the Southeast.
Media General operates fourteen network television stations in Southeastern
markets, including Birmingham, Tampa and Jacksonville and two cable television
systems in Virginia. The relaxation of broadcast station ownership restrictions
provided by The Telecommunications Reform Act of 1996 is driving industry
consolidation and is increasing the franchise values of strong, well-positioned
media properties such as those owned by Media General. The company also produces
newsprint from recycled newspapers. Through its hubris and thirst for "size",
management has neglected its shareholders.
Sprint Corporation (FON - $52.625 - NYSE) is the third largest long-distance
carrier and the second largest independent local telephone company in the U.S.
Its cellular unit, 360(degrees) Communications Company (XO - $17.125 - NYSE) was
spun off in March 1996. Sprint has positioned itself globally through a joint
venture with France Telecom/Deutsche Telekom which purchased a 20% stake in
Sprint (excluding the cellular unit) in January 1996 for $3.5 billion. Our
interest in Sprint stems from its promising national PCS/wireless joint venture
with three major cable operators: Tele-Communications, Inc., Comcast Corporation
and Cox Communications, Inc. We consider FON an interesting value, with the
risks from prospective new entrants in its long distance business being offset
by the PCS venture and its own pursuit of the $100 billion local telephone
market.
Telecomunicacoes Brasileiras SA (Telebras) (TBR - $151.75 - NYSE) is the
Brazilian government-controlled monopoly telecommunications holding company
consisting of 28 subsidiaries serving more than 14 million telephone lines and
two million cellular customers in a country with a population of 160 million.
The penetration rate is less than 9% for telephone and 1% for cellular. The
stock is attractively priced at less than five times our estimate of 1997 cash
flow. Future opportunities include the prospects of privatization, strong line
growth and improvements in efficiency. Telebras is benefiting from an improved
rate structure which allows the company to recoup inflation-related cost
increases on a more consistent basis.
Time Warner Inc. (TWX - $48.25 - NYSE), having completed its acquisition of
Turner Broadcasting in the fourth quarter of 1996, is the world's largest
diversified media and publishing company. The combined companies have more than
$23 billion in revenues and over $4.5 billion in EBITDA. Together they control a
host of powerful media brands, such as CNN, Warner Brothers film, HBO, Cinemax
and Time and People magazines. Under the leadership of Chairman Gerald Levin and
Vice-Chairman Ted Turner, Time Warner is now focused on reducing its almost $13
billion in debt and simplifying its capital structure. Achievement of both goals
would be greatly aided
8
<PAGE>
by a successful restructuring of the Time Warner Entertainment partnership with
U.S. West Media Group (UMG - $20.25 - NYSE).
United Television, Inc. (UTVI - $99.00 - Nasdaq) is a television broadcasting
company which owns and operates five television stations: one ABC, one NBC and
three UPN affiliates. Its stations cover approximately 6% of the U.S.
population. UTVI is a 59%-owned subsidiary of BHC Communications, Inc. (BHC -
$119.50 - ASE). Strong advertising demand, prospects for favorable regulatory
changes in the industry and corporate cost controls will magnify EBITDA growth
going forward. Our 1997 PMV is estimated at $125 per share, $26 of which is
cash. UTVI's PMV is expected to reach $162 by the year 2000.
Internet
You can now visit us on the Internet. Our home page at
http://www.gabelli.com contains information about Gabelli Funds, Inc., the
Gabelli Mutual Funds, quarterly reports, closing prices, IRAs, 401(k)s and other
current news. You can also send use-mail at [email protected].
10% Distribution Policy
The Equity Trust continues to maintain its 10% Distribution Policy whereby
the Trust pays out 10% of its average net assets each year. Pursuant to this
Policy, the Equity Trust distributed $0.25 per share on June 27, 1997. The next
distribution is scheduled for payment in September 1997.
Shareholder Meeting - May 12, 1997
The annual Meeting of shareholders was held on May 12, 1997 at the
Greenwich Library in Greenwich, Connecticut. At that meeting, shareholders
re-elected James P. Conn, Anthony R. Pustorino and Karl Otto Pohl as Directors
of the Equity Trust. A total of 50,954,359 votes, 50,869,517 votes and
50,444,876 votes were cast in favor of each Director and 1,425,625 votes,
1,510,467 votes and 1,935,108 votes were withheld for each Director,
respectively.
At the meeting, the shareholders also elected Price Waterhouse L.L.P. as
the independent accountants for the Equity Trust for the year ending December
31, 1997. 50,101,954 votes were cast in favor of the approval of this proposal,
610,948 votes were cast against the proposal and 825,095 votes abstained.
In addition, the shareholders approved the revision of the fundamental
restriction regarding senior securities. 39,602,884 votes were cast in favor of
the approval of this proposal, 5,334,096 votes were cast against the proposal
and 2,381,016 votes abstained. We thank you for your participation and
appreciate your continued support.
9
<PAGE>
In Conclusion
The strength of the market is understandable considering today's favorable
economic/earnings/interest rate backdrop and the enormous amount of money being
poured into equities mutual funds. Although high by historical standards,
current equities valuations may be justified as long as these "best of all
possible worlds" market conditions can be sustained. If something happens to
disrupt this comfortable scenario--our best guess is it may come in the form of
more widespread earnings disappointments as the slowing economy begins to impact
corporate profitability--the market could run into some trouble.
We are encouraged by the broadening of this bull market and some evidence
that investors are once again focusing on fundamental value instead of just
momentum. Stock pickers across the land rejoice! Ongoing merger and acquisition
activity should continue to provide a tailwind for our portfolio.
As always, we thank you for your confidence in our investing abilities and
will work hard to preserve and enhance the assets you have entrusted to us.
Sincerely,
/s/ Mario J. Gabelli
Mario J. Gabelli
President and Chief Investment Officer
August 1, 1997
- --------------------------------------------------------------------------------
Top Ten Holdings
June 30, 1997
-------------
Chris-Craft Industries, Inc. International Family Entertainment
United Television, Inc. Deere & Company
Telecomunicacoes Brasileiras SA (Telebras) Media General, Inc.
Time Warner Inc. BCE Inc.
American Express Company Sprint Corporation
- --------------------------------------------------------------------------------
NOTE: The views expressed in this report reflect those of the portfolio manager
only through the end of the period of this report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
10
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES
Quarter Ended June 30, 1997
(Unaudited)
Ownership at
June 30,
Shares 1997
-------- ----------
NET PURCHASES
Common Stocks
Aeroquip-Vickers Inc. (a) ...................... 25,000 25,000
Albertson's, Inc. .............................. 20,000 70,000
AMP, Inc. ...................................... 45,000 45,000
Antofagasta Holdings plc ....................... 35,000 60,000
Archer-Daniels-Midland Co. ..................... 220,000 350,000
Ascent Entertainment Group Inc. ................ 58,768 73,768
Astra AB, Class A (b) (c) ...................... 29,666 39,666
Atlantic Richfield Company (d) ................ 35,000 70,000
Banca Commerciale Italiana ..................... 70,000 320,000
Banco Pastor SA ................................ 10,500 10,500
Banco Santander SA, ADR (e) ................... 42,000 66,000
Bank Negara Indonesia .......................... 500,000 500,000
Bank of Ireland ................................ 10,000 80,000
Bank of Scotland ............................... 35,000 120,000
Bayerische Vereinsbank AG ...................... 11,000 21,000
BCE Inc. (d) ................................... 320,000 560,000
BHC Communications, Inc.,
Class A ....................................... 3,400 51,400
Boeing Co. (d) ................................. 65,000 135,000
British Petroleum Company plc,
ADR (d) ....................................... 75,000 150,000
Bruno's, Inc. .................................. 50,000 50,000
Bure Forvalting AB ............................. 35,000 35,000
Cablevision Systems Corporation,
Class A ....................................... 40,000 240,000
Checkpoint Systems, Inc. ....................... 5,000 5,000
Cheung Kong (Holdings) Limited ................. 25,000 85,000
Christian Dior SA .............................. 5,500 8,500
Cincinnati Bell Inc. (d) ....................... 1,000 2,000
Clariant AG .................................... 200 1,000
Commercial Union plc ........................... 21,342 61,342
Compagnie Financiere
Richemont AG, Class A ......................... 400 650
Corporacion Mapfre ............................. 7,200 7,200
CRH plc ORD .................................... 10,000 70,000
Dundee Bancorp, Inc., Class A .................. 15,000 25,000
Earl Scheib, Inc. .............................. 2,500 70,000
E.I. du Pont de Nemours
and Company (d) ............................... 22,000 44,000
Federal-Mogul Corporation ...................... 5,000 5,000
Fortune Brands, Inc. (f) (g) ................... 195,000 195,000
Foster's Brewing Group Ltd. .................... 450,000 450,000
Frontier Corporation ........................... 20,000 20,000
Gallaher Group plc (f) ......................... 300,000 300,000
GATX Corporation (s) ........................... 4,022 54,022
Gaylord Entertainment
Company, Class A .............................. 5,000 215,000
GenCorp Inc. (h) ............................... 31,123 146,123
Genuine Parts Company (i) ...................... 50,000 160,000
Giant Food Inc., Class A ....................... 146,500 226,500
Glaxo Wellcome plc ORD ......................... 20,000 40,000
Granada Group plc ORD .......................... 30,000 50,000
Greif Bros. Corporation, Class A ............... 1,600 252,000
Halter Marine Group, Inc. ...................... 20,000 20,000
Hanjaya Mandala Sampoerna ...................... 100,000 100,000
Hartwall OY AB ................................. 7,000 7,000
Hellenic Telecommunications
Organization S.A. (OTE) ....................... 60,000 60,000
Hitachi, Ltd., ADR ............................. 20,000 57,000
Holding di Partecipazioni
Industriali SpA (HPI) ......................... 200,000 470,000
Hong Kong & China Gas
Company Ltd. (j) .............................. 150,000 250,000
HSBC Holdings plc .............................. 9,895 26,695
HSN, Inc. ...................................... 6,000 50,000
Hudson's Bay Company ........................... 10,000 10,000
Independent Newspapers Ltd.,
ORD ........................................... 55,000 203,000
Independent Newspapers Plc ..................... 20,000 20,000
International Business Machines
Corporation (d) ............................... 55,000 115,000
International Family
Entertainment, Inc., Class B .................. 103,000 603,000
Invik & Company AB,
Class B (k) ................................... 8,666 16,666
ITT Corporation, New ........................... 10,000 220,000
Johnson Controls, Inc. ......................... 75,000 155,000
Ladbroke Group plc ............................. 16,949 1,016,949
Lai Sun Development
Company Ltd. .................................. 300,000 300,000
Lavipharm S.A .................................. 50,000 50,000
Lillian Vernon Corporation ..................... 14,300 80,300
Mark IV Industries, Inc. (l) ................... 8,250 173,250
McGraw-Hill Companies, Inc. .................... 26,000 50,000
Midland Company ................................ 1,400 39,000
MIF Limited (m) ................................ 5,600 30,600
Mitsubishi Heavy Industries Ltd. ............... 18,000 48,000
National Presto Industries, Inc. ............... 18,000 28,000
Navistar International Corporation ............. 55,000 655,000
NEC Corp., Sponsored ADR ....................... 5,000 36,500
Nestle SA ...................................... 400 700
News Corporation Limited, ADR .................. 110,000 145,000
Nippon Telegraph and
Telephone Corp. ............................... 20 70
Novartis AG, Registered ........................ 1,150 1,150
NRJ SA ......................................... 2,000 2,000
Oerlikon-Buhrle Holding AG ..................... 4,750 7,750
11
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES -- (Continued)
Quarter Ended June 30, 1997
(Unaudited)
Ownership at
June 30,
Shares 1997
-------- ----------
NET PURCHASES (Continued)
Common Stocks (Continued)
Oriental Holdings Berhad ....................... 50,000 50,000
PACCAR Inc. (d) ................................ 10,000 20,000
Pandox Hotellfastigheter AB .................... 25,000 25,000
Pathe SA ....................................... 500 2,500
Pearson plc ORD ................................ 30,000 60,000
Pegasus Gold Inc. .............................. 15,000 175,000
Pennzoil Company ............................... 20,000 20,000
Pheonix AG ..................................... 30,000 50,000
Pittway Corporation ............................ 29,000 135,000
PT Ramayana Lestari Sentosa .................... 30,000 150,000
Publishing & Broadcasting Ltd. ................. 20,000 70,000
Reuters Holdings plc, Class B,
Sponosred ADR ................................. 12,500 12,500
Reynolds & Reynolds Company .................... 223,000 23,000
Rhone-Poulenc Rorer, Inc. ...................... 30,000 30,000
Safra Republic Holdings SA (d) ................. 5,000 7,000
Salomon SA ..................................... 2,000 8,500
Schibsted A/A .................................. 19,000 50,000
SCOR SA ........................................ 3,000 20,000
Selecta Group .................................. 1,000 1,000
Sequa Corporation, Class B ..................... 10,000 60,000
Simint SpA ..................................... 100,000 100,000
Skandia Forsakrings AB ......................... 9,000 26,000
Skandinaviska Enskilda Banken .................. 35,000 35,000
Sony Corporation, ADR .......................... 2,000 28,000
Star Publication Malaysia ...................... 30,000 85,000
State Street Corporation (d) (n) ............... 20,000 40,000
Sulzer AG ...................................... 1,100 1,100
Sun Hung Kai Properties Ltd. ................... 15,000 35,000
Swedish Match AB ............................... 175,000 275,000
Swire Pacific Limited, Class A ................. 35,000 75,000
Sydney Harbour Casino Holdings
Limited ...................................... 150,000 250,000
Tambrands Inc. ................................. 5,000 45,000
TCI Satellite Entertainment Inc.,
Class A ....................................... 25,000 75,000
Telecom Italia Mobile SpA ...................... 270,000 1,670,000
Tele-Communications
International, Inc., Class A .................. 2,400 55,000
Telefonica del Peru S.A ........................ 220,000 220,000
Ticketmaster Group Inc. ........................ 25,000 80,000
Time Warner Inc. ............................... 60,000 360,000
Toyota Motor Corporation ....................... 5,000 20,000
Veba AG ........................................ 2,000 9,000
Viacom Inc., Class A ........................... 50,000 360,000
Vodafone Group plc ORD ......................... 15,000 115,000
Wynn's International, Inc. ..................... 800 30,800
Zeneca Group plc ............................... 11,000 21,000
Preferred Stocks
KSB AG, Pfd. ................................... 2,000 4,000
Telecommunicacoes de Sao Paulo
SA (Telesp), Pfd., Registered ................. 92,852 2,223,575
Village Roadshow Ltd., PFD ..................... 100,000 175,000
Volkswagen AG, Pfd. ............................ 500 1,500
NET SALES
Common Stocks
ADT Ltd. ....................................... 260,000 --
Allen Group Inc. ............................... 100,000 --
American Brands, Inc. (g) ...................... 205,000 --
American Express Company ....................... 15,000 305,000
AptarGroup, Inc. ............................... 4,000 25,000
Arab Malaysian Corporation ..................... 45,000 --
BBN Corporation (o) ............................ 88,000 --
BCE Mobile Communications Inc. ................. 5,000 --
BHI Corporation ................................ 11 --
Bure Investment AB ............................. 15,000 --
BW/IP Holding, Inc. ............................ 20,000 --
Central European Equity
Fund Inc. ..................................... 1,263 59,000
Comcast Corporation, Class A ................... 10,000 50,000
Compania de Telecomunicaciones
de Chile SA, Sponsored ADR .................... 3,000 35,000
Conrail, Inc. (p) .............................. 95,000 --
CTS Corporation ................................ 1,000 79,000
Culbro Corporation ............................. 4,000 26,000
Donaldson Company, Inc. ........................ 5,000 190,000
Eastman Kodak Company .......................... 8,000 12,000
Electronic Data Systems Corp. .................. 22,000 40,000
Enator AB ...................................... 12,000 --
Gemina SPA ..................................... 730,000 --
General Motors Corporation ..................... 15,000 250,000
Goulds Pumps, Incorporated (q) ................ 131,000 --
Hong Kong Telecommunications
Ltd., Sponsored ADR ........................... 5,000 35,000
H&R Block Inc. ................................. 3,000 57,000
IDEX Corporation ............................... 27,000 387,000
Lehman Brothers Holdings Inc. .................. 13,000 87,000
LucasVarity plc ................................ 30,000 65,000
Lucent Technologies Inc. ....................... 3,000 22,000
Media General, Inc., Class A ................... 5,000 440,000
Minnesota Mining and
Manufacturing Company ......................... 70,000 --
Modine Manufacturing Company ................... 10,000 300,000
Neiman Marcus Group, Inc. ...................... 10,000 350,000
New Germany Fund ............................... 2,229 70,000
12
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES -- (Continued)
Quarter Ended June 30, 1997
(Unaudited)
Ownership at
June 30,
Shares 1997
-------- ----------
NET SALES (Continued)
Common Stocks (Continued)
New York Times Company,
Class A ....................................... 5,000 90,000
Novartis AG, ADR ............................... 600 54,000
PepsiCo, Inc. .................................. 80,000 370,000
Pittway Corporation, Class A ................... 25,100 227,000
Precision Castparts Corp. ...................... 6,500 25,000
Ralston Purina Group ........................... 5,000 150,000
Reader's Digest Association, Inc.,
Class B ....................................... 10,000 15,000
Republic Automotive Parts, Inc. ................ 13,000 --
Reuters Holdings, plc .......................... 3,000 --
Rohr Inc. ...................................... 10,000 --
SBC Communications Inc. ........................ 5,000 35,000
Scotts Company, Class A ........................ 10,000 40,000
Sprint Corporation ............................. 10,000 275,000
SPX Corporation ................................ 33,000 7,000
STET-Societa Finanziaria
Telefonica SpA, Sponsored ADR ................. 6,000 190,000
Syratech Corporation (r) ....................... 19,575 10,425
Takefuji Corporation ........................... 3,900 --
Telecomunicacoes Brasileiras SA
(Telebras), Sponsored ADR ..................... 10,000 190,000
Telecomunicacoes Brasileiras SA
(Telebras), Sponsored
ADR, 144A ..................................... 5,927 --
Telefonica de Espana,
Sponsored ADR ................................. 2,000 52,000
TRINOVA Corporation (a) ........................ 21,500 --
Walt Disney Company ............................ 17,000 40,000
Westinghouse Electric Corp. .................... 50,000 50,000
Wrigley (Wm.) Jr. Company ...................... 10,000 90,000
Shares/ Ownership at
Principal June 30,
Amount 1997
-------- ----------
Preferred Stocks
GATX Corporation, 3.875%,
Conv. Pfd. (s) ................................ 3,500 --
Corporate Bond
GenCorp Inc., Conv. Sub. Deb.,
8.000% due 08/01/2002 (h) ..................... 500,000 --
- ----------
(a) Name change from TRINOVA Corp. to Aeroquip-Vickers Inc.
(b) Bonus issue @ 1 for 3
(c) Sub-division @ 2 for 1
(d) 2 for 1 stock split
(e) 3 for 1 stock split
(f) Spinoff - 1 share of Gallagher Group ADR for each share of Fortune Brands
(g) Name change from American Brands, Inc. to Fortune Brands, Inc.
(h) Conversion of Gencorp Inc. convertible subordinate debenture to Gencorp
Inc. common stock @ $16.065 per share
(i) 3 for 2 stock split
(j) Bonus issue 6 for 5
(k) Rights issue 1 for 1
(l) 5% Stock dividend
(m) Bonus issue @ .02 for 1
(n) Name change from State Street Boston Corp. to State Street Corporation
(o) Tender offer - tender @ $29 per share
(p) Tender offer - tender @ $115 per share
(q) Tender offer - tender @ $37 per share
(r) Merger w/ dissenter's rights - Stock option: tender 48.8667% of shares @
$32, retain remainder
(s) Conversion of GATX Corp. convertible preferred stock to GATX Corp. common
stock @ 1.1494 for 1
13
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS
June 30, 1997 (Unaudited)
Market
Shares Cost Value
------ ---- ------
COMMON STOCKS -- 92.0%
Equipment And Supplies -- 10.8%
25,000 Aeroquip-Vickers Inc. ............ $ 750,300 $ 1,181,250
220,000 AMETEK, Inc. ..................... 3,241,129 5,170,000
180,000 Ampco-Pittsburgh
Corporation..................... 2,386,035 2,643,750
150,000 Amphenol Corporation,
Class A+........................ 3,888,750 5,831,250
25,000 AptarGroup, Inc. ................. 367,542 1,131,250
7,000 Caterpillar Inc. ................. 191,305 751,625
70,000 CLARCOR Inc. ..................... 1,297,726 1,732,500
79,000 CTS Corporation .................. 2,080,077 5,446,062
355,000 Deere & Company (d)............... 3,412,671 19,480,625
190,000 Donaldson Company, Inc. .......... 2,205,722 7,220,000
19,125 Durco International Inc. ......... 109,331 559,406
20,000 EG&G Inc. ........................ 354,637 450,000
10,000 Franklin Electric Company ........ 322,425 497,500
100,000 Gerber Scientific, Inc. .......... 1,022,407 1,975,000
387,000 IDEX Corporation ................. 2,509,521 12,771,000
35,000 Keystone International, Inc. ..... 717,912 1,214,063
50,000 Lufkin Industries, Inc. .......... 908,349 1,312,500
30,000 Manitowoc Company, Inc. .......... 403,420 1,402,500
173,250 Mark IV Industries, Inc. ......... 1,763,345 4,158,000
655,000 Navistar International
Corporation+ ................... 9,792,004 11,298,750
20,000 PACCAR Inc. ...................... 450,000 928,750
135,000 Pittway Corporation .............. 4,459,786 6,750,000
227,000 Pittway Corporation, Class A...... 2,193,671 11,293,250
80,000 Sequa Corporation, Class A+ 3,159,916 4,510,000
60,000 Sequa Corporation, Class B+....... 2,851,535 3,735,000
84,000 SPS Technologies, Inc.+ .......... 2,830,863 5,964,000
20,000 Watts Industries, Inc., Class A... 415,830 480,000
------------- -------------
54,086,209 119,888,031
------------- -------------
Telecommunications -- 10.4%
40,000 Aliant Communications Inc. ....... 593,225 780,000
80,000 AT&T Corp. ....................... 2,538,198 2,805,000
100,000 BC TELECOM Inc. .................. 1,788,094 2,346,211
560,000 BCE Inc. ......................... 10,740,463 15,680,000
1,000 British Telecommunications
plc, Sponsored ADR ............. 64,346 74,250
70,000 Cable & Wireless plc,
Sponsored ADR .................. 1,453,923 1,955,625
2,000 Cincinnati Bell Inc. ............. 16,050 63,000
35,000 Compania de
Telecomunicaciones de
Chile SA, Sponsored ADR+........ 592,323 1,155,000
130,500 C-TEC Corporation+ ............... 2,643,433 4,551,187
30,000 C-TEC Corporation, Class B+ ...... 463,817 1,031,250
50 DDI Corp.......................... 297,065 369,062
20,000 Frontier Corporation.............. 354,500 398,750
335,000 GTE Corporation (d)............... 6,545,563 14,698,125
60,000 Hellenic Telecommunications
Organization S.A. OTE........... 1,444,517 1,408,604
35,000 Hong Kong Telecom-
munications Ltd.,
Sponsored ADR................... 619,835 818,125
1,020,000 Jamaica Telephone Ltd. ORD........ 101,641 97,920
10,000 Maritime Telegraph and Tele-
phone Company, Limited.......... 162,919 193,346
10,000 Motorola, Inc. .................. 187,870 760,000
70 Nippon Telegraph and
Telephone Corp.................. 515,599 671,814
35,000 SBC Communications Inc............ 634,185 2,165,625
10,000 Singapore Telecommuni-
cations Limited ORD............. 23,114 18,465
275,000 Sprint Corporation ............... 3,087,577 14,471,875
190,000 STET-Societa Finanziaria
Telefonica SpA,
Sponsored ADR .................. 3,595,934 11,091,250
5,000 Telecom Argentina Stet-
France Telecom S.A.,
Sponsored ADR .................. 227,333 262,500
800,000 Telecom Italia SpA ORD............ 946,214 2,395,435
190,000 Telecomunicacoes
Brasileiras SA (Telebras),
Sponsored ADR................... 3,330,505 28,832,500
10,000 Telefonica de Argentina
S.A., ADR, Class B.............. 274,045 346,250
52,000 Telefonica de Espana,
Sponsored ADR................... 1,776,374 4,485,000
220,000 Telefonica del Peru S.A. ......... 532,165 578,096
20,000 Telefonos De Mexico SA,
Class L, ADR.................... 733,042 955,000
------------- -------------
46,283,869 115,459,265
------------- -------------
Broadcasting -- 8.9%
50,000 Ackerley Group, Inc. ............. 544,975 543,750
51,400 BHC Communications, Inc.,
Class A+ ...................... 2,808,217 6,142,300
335,576 Chris-Craft Industries, Inc....... 4,690,339 16,191,542
542,595 Chris-Craft Industries, Inc.,
Class B (a)..................... 8,836,290 26,180,064
20,500 Gray Communications
Systems, Inc. .................. 377,899 459,969
325,000 Grupo Televisa S.A., GDR+......... 7,027,704 9,871,875
See Notes to Financial Statements.
14
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1997 (Unaudited)
Market
Shares Cost Value
------ ---- ------
COMMON STOCKS (continued)
Broadcasting (continued)
55,000 Liberty Corporation .............. $ 1,613,322 $ 2,241,250
7,000 LIN Television Corporation+....... 148,927 308,875
2,000 NRJ SA............................ 298,130 272,262
2,500 Pathe SA+......................... 647,904 496,027
100,000 Paxson Communications
Corporation, Class A+........... 1,082,126 1,312,500
100,000 Television Broadcasting
Ltd. ORD ....................... 396,239 449,189
341,000 United Television, Inc. .......... 18,301,295 33,759,000
50,000 Westinghouse Electric Corp........ 878,088 1,156,250
------------- -------------
47,651,455 99,384,853
------------- -------------
Financial Services -- 7.2%
305,000 American Express
Company (d)..................... 5,320,448 22,722,500
320,000 Banca Commerciale Italiana........ 633,136 662,627
10,500 Banco Pastor SA .................. 633,260 790,974
66,000 Banco Santander SA, ADR........... 939,291 2,041,875
500,000 Bank Negara Indonesia ............ 280,806 318,668
80,000 Bank of Ireland................... 804,837 878,909
120,000 Bank of Scotland.................. 716,694 767,371
21,000 Bayerische Vereinsbank AG......... 842,238 858,568
260 Berkshire Hathaway Inc.,
Class A+ ....................... 824,299 12,272,000
300,000 Berliner Bank
Aktiengesellschaft.............. 6,004,015 6,278,850
61,342 Commercial Union plc.............. 715,840 645,096
36,000 Commerzbank AG,
Sponsored ADR................... 715,317 1,001,250
7,200 Corporacion Mapfre................ 385,405 383,870
150,000 Deutsche Bank AG,
Sponsored ADR .................. 6,224,445 8,662,500
25,000 Dundee Bancorp, Inc.,
Class A+........................ 536,920 579,311
25,000 Hibernia Corporation ............. 198,750 348,438
57,000 H&R Block Inc. ................... 1,626,015 1,838,250
470,000 Holding di Partecipazioni
Industriali SpA (HPI)+.......... 268,165 225,337
26,695 HSBC Holdings plc................. 673,707 802,852
16,666 Invik & Company AB, Class B....... 749,968 734,679
87,000 Lehman Brothers Holdings Inc...... 1,972,861 3,523,500
39,000 Midland Company .................. 1,245,681 1,950,000
12,000 Morgan (J.P.) & Co.
Incorporated.................... 752,350 1,252,500
6,000 ORIX Corp. ....................... 262,675 444,444
60,000 Riggs National Corporation........ 552,538 1,237,500
12,500 Reuters Holdings plc, Class B,
Sponsored ADR................... 815,812 787,500
7,000 Safra Republic Holdings SA........ 698,000 837,900
20,000 SCOR SA........................... 773,680 805,214
26,000 Skandia Forsakrings AB............ 749,620 957,921
35,000 Skandinaviska Enskilda
Banken......................... 369,327 377,804
40,000 State Street Corporation.......... 1,417,370 1,850,000
20,000 SunTrust Banks, Inc. ............. 419,333 1,101,250
40,000 Unitrin, Inc...................... 1,349,673 2,440,000
------------- -------------
40,472,476 80,379,458
------------- -------------
Cable -- 5.6%
240,000 Cablevision Systems
Corporation, Class A+ .......... 9,950,585 12,840,000
50,000 Comcast Corporation, Class A..... 869,917 1,046,875
60,000 Comcast Corporation,
Class A Special ................ 619,471 1,282,500
40,000 General Instrument
Corporation+ ................... 1,023,563 1,000,000
603,000 International Family
Entertainment, Inc.,
Class B+ (d).................... 10,120,433 20,728,125
50,000 Shaw Communications Inc.,
Class B, Conv. ................. 444,218 367,501
470,000 Tele-Communications, Inc.,
Class A......................... 6,490,741 6,991,250
540,000 Tele-Communications, Inc./
Liberty Media Group,
Class A+ ....................... 8,390,371 12,825,000
55,000 Tele-Communications Inter-
national, Inc., Class A+........ 1,054,626 849,063
230,000 US WEST Media Group+ ............. 4,304,852 4,657,500
------------- -------------
43,268,777 62,587,814
------------- -------------
Food And Beverage -- 4.8%
18,000 Brau and Brunnen+................. 2,282,408 1,424,353
35,000 Bure Forvalting AB............... 442,241 441,148
200,000 Fomento Economico
Mexicano SA, ADR
144A (c)........................ 607,500 1,203,000
450,000 Foster's Brewing Group
Limited......................... 857,334 836,947
40,520 General Mills, Inc. .............. 1,851,311 2,638,865
20,000 Guinness plc,
Sponsored ADR................... 729,362 978,432
7,000 Hartwall Oy AB ................... 355,473 404,410
45,000 Kellogg Company .................. 2,393,384 3,853,125
See Notes to Financial Statements.
15
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1997 (Unaudited)
Market
Shares Cost Value
------ ---- ------
COMMON STOCKS (continued)
Food and Beverage (continued)
11,000 LVHM Moet Hennessy
Louis Vuitton, Sponsored
ADR ............................ $ 416,625 $ 592,625
700 Nestle SA......................... 827,951 922,982
370,000 PepsiCo, Inc. .................... 10,070,725 13,898,125
250,000 Quaker Oats Company ............. 8,396,672 11,218,750
40,000 Ralcorp Holdings, Inc.+ .......... 615,527 590,000
100,000 Seagram Company Ltd. ............. 2,713,688 4,025,000
1,000 Selecta Group .................... 143,225 151,982
41,879 Tootsie Roll Industries, Inc. ... 1,405,052 1,863,615
100,000 Whitman Corporation .............. 1,082,376 2,531,250
90,000 Wrigley (Wm.) Jr. Company......... 3,980,577 6,030,000
------------- -------------
39,171,431 53,604,609
------------- -------------
Consumer Products -- 4.7%
500,000 Carter-Wallace, Inc............... 7,175,843 8,937,500
8,500 Christian Dior SA................. 1,290,874 1,402,998
75,000 Church & Dwight Co., Inc. ........ 1,605,940 2,006,250
650 Compagnie Financiere
Richemont AG, Class A........... 917,208 938,933
26,000 Culbro Corporation+ ............. 769,649 3,618,875
12,000 Eastman Kodak Company............. 715,367 921,000
57,000 First Brands Corporation.......... 735,612 1,307,437
195,000 Fortune Brands, Inc............... 4,641,997 7,275,937
300,000 Gallaher Group plc................ 4,599,557 5,531,250
100,000 Hanjaya Mandala Sampoerna......... 401,118 381,373
27,000 Harley Davidson, Inc.............. 270,075 1,294,312
28,000 National Presto
Industries, Inc................. 1,033,506 1,128,750
3,000 Nintendo Co., Ltd................. 195,473 250,753
150,000 Ralston Purina Group.............. 5,493,407 12,328,125
8,500 Salomon SA........................ 585,697 648,127
40,000 Scotts Company, Class A+.......... 653,470 1,160,000
275,000 Swedish Match AB.................. 933,630 924,310
45,000 Tambrands Inc..................... 1,823,890 2,244,375
------------- -------------
33,842,313 52,300,305
------------- -------------
Entertainment -- 4.6%
73,768 Ascent Entertainment
Group Inc.+ .................... 590,078 673,133
40,000 CANAL+, Sponsored ADR............. 1,355,000 1,557,787
120,000 EMI Group plc,
Sponsored ADR................... 1,363,258 2,175,000
215,000 Gaylord Entertainment
Company, Class A ............... 5,099,028 4,958,438
60,000 GC Companies, Inc.+............... 1,312,774 2,760,000
50,000 Granada Group plc ORD............. 744,223 657,794
125,000 Havas, Sponsored ADR ............. 2,399,506 2,187,500
12,000 PolyGram NV....................... 315,662 645,750
360,000 Time Warner Inc................... 11,077,826 17,370,000
65,000 Todd-AO Corporation,
Class A......................... 177,273 632,734
360,000 Viacom Inc., Class A+ ............ 5,564,484 10,597,500
110,000 Viacom Inc., Class B+ ............ 2,753,953 3,300,000
40,000 Walt Disney Company .............. 1,670,836 3,210,000
------------- -------------
34,423,901 50,725,636
------------- -------------
Wireless Communications -- 4.1%
250,000 AirTouch Communications
Inc.+ .......................... 5,741,806 6,843,750
67,500 Associated Group, Inc.,
Class A+........................ 354,616 2,700,000
67,500 Associated Group, Inc.,
Class B+ ....................... 354,616 2,615,625
83,000 Centennial Cellular Corp.,
Class A+ ....................... 1,027,570 1,317,625
175,000 Century Telephone
Enterprises, Inc................ 947,557 5,895,313
110,000 COMSAT Corporation,
Series 1 ....................... 1,835,686 2,619,375
100,000 Loral Space &
Communications Ltd.+............ 1,242,688 1,500,000
5,000 NEXTEL Communications,
Inc., Class A+ ................. 78,950 94,688
250,000 Securicor Group plc ORD........... 567,956 1,186,527
75,000 TCI Satellite Entertainment
Inc., Class A+.................. 826,904 590,625
1,670,000 Telecom Italia Mobile SpA......... 2,100,135 5,403,259
322,000 Telephone and Data
Systems, Inc. .................. 3,135,658 12,215,875
120,000 360o Communications
Company......................... 946,701 2,055,000
115,000 Vodafone Group plc ORD............ 546,042 560,166
------------- -------------
19,706,885 45,597,828
------------- -------------
Publishing -- 3.9%
30,000 Arnoldo Mondadori
Editore SpA+................... 250,450 173,304
60,000 Dow Jones & Company Inc........... 2,367,375 2,411,250
225,000 Golden Books Family
Entertainment, Inc.+............ 3,535,472 2,812,500
65,000 Harcourt General, Inc. ........... 3,020,312 3,095,625
203,000 Independent Newspapers
Ltd., ORD ...................... 877,069 1,198,634
20,000 Independent Newspapers Plc........ 95,574 105,284
See Notes to Financial Statements.
16
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1997 (Unaudited)
Market
Shares Cost Value
------ ---- ------
COMMON STOCKS (continued)
Publishing (continued)
50,000 McGraw-Hill
Companies, Inc. ................ $ 2,236,763 $ 2,940,625
440,000 Media General, Inc.,
Class A (d)..................... 8,177,142 17,600,000
160,000 Meredith Corporation ............. 2,469,007 4,640,000
90,000 New York Times Company,
Class A ........................ 1,236,677 4,455,000
145,000 News Corporation
Limited, ADR.................... 720,333 768,378
60,000 Pearson plc ORD................... 729,454 694,930
70,000 Publishing & Broadcasting Ltd. ... 366,642 403,806
15,000 Reader's Digest Association,
Inc., Class B................... 426,915 415,313
50,000 Schibsted A/A..................... 1,003,985 989,194
1,500,000 Seat SpA+......................... 297,160 483,558
200,000 South China Morning Post
Holdings ORD.................... 117,763 196,197
85,000 Star Publication Malaysia......... 377,151 363,708
------------- -------------
28,305,244 43,747,306
------------- -------------
Automotive: Parts And Accessories -- 3.3%
25,000 APS Holding Corporation,
Class A+....................... 387,500 218,750
85,000 Echlin Inc........................ 2,034,174 3,060,000
5,000 Federal-Mogul Corporation ........ 146,500 175,000
146,123 GenCorp Inc....................... 1,956,303 3,379,094
160,000 Genuine Parts Company............. 3,960,877 5,420,000
122,660 Handy & Harman.................... 1,851,765 2,131,217
155,000 Johnson Controls, Inc. ........... 2,552,545 6,364,688
65,000 LucasVarity plc................... 1,116,138 2,250,625
300,000 Modine Manufacturing
Company......................... 3,131,264 8,925,000
50,000 Oriental Holdings Berhad.......... 367,808 376,387
50,000 Pheonix AG........................ 812,903 911,723
10,000 Quaker State Corporation ......... 142,637 152,500
7,000 SPX Corporation .................. 94,413 453,688
120,000 Standard Motor Products, Inc...... 818,500 1,650,000
110,000 TransPro Inc...................... 988,933 955,625
30,800 Wynn's International, Inc......... 402,557 873,950
------------- -------------
20,764,817 37,298,247
------------- -------------
Diversified Industrial -- 2.9%
60,000 Antofagasta Holdings plc.......... 406,642 458,124
105,000 Crane Co.......................... 1,801,447 4,390,313
54,022 GATX Corporation ................. 1,338,770 3,119,771
20,000 Honeywell, Inc.................... 926,000 1,517,500
175,000 ITT Industries Inc................ 3,041,489 4,506,250
390,000 Lamson & Sessions Co.+............ 2,439,425 3,241,875
60,000 Lawter International, Inc......... 632,883 757,500
48,000 Mitsubishi Heavy
Industries Ltd.................. 335,380 368,119
100,000 National Service
Industries, Inc................. 2,203,498 4,868,750
26,715 Park-Ohio Industries, Inc.+....... 310,559 407,404
1,100 Sulzer AG ........................ 902,853 941,329
60,000 Tenneco Inc.+..................... 2,336,819 2,711,250
52,000 Thomas Industries Inc. ........... 790,732 1,495,000
95,000 Trinity Industries, Inc. ......... 1,407,042 3,016,250
100,000 Tyler Corporation+ ............... 354,618 206,250
------------- -------------
19,228,157 32,005,685
------------- -------------
Hotels/Gaming -- 2.8%
30,000 Aztar Corporation+................ 211,500 211,875
10,000 GTECH Holdings
Corporation+ ................... 170,269 322,500
380,000 Hilton Hotels Corporation......... 5,238,654 10,093,750
220,000 ITT Corporation, New+ ............ 9,179,529 13,433,750
1,016,949 Ladbroke Group plc ............... 3,174,247 3,979,787
100,000 Mirage Resorts, Incorporated+..... 532,231 2,525,000
250,000 Sydney Harbour Casino
Holdings Limited+............... 427,184 393,146
------------- -------------
18,933,614 30,959,808
------------- -------------
Energy -- 2.0%
34,000 Apache Corporation............... 844,013 1,105,000
70,000 Atlantic Richfield Company........ 3,751,112 4,935,000
150,000 British Petroleum
Company plc, ADR................ 2,810,721 7,484,638
70,000 Burlington Resources Inc.......... 3,113,255 3,088,750
10,000 Chevron Corporation .............. 427,525 739,375
25,000 Halliburton Company .............. 1,064,376 1,981,250
20,000 Halter Marine Group, Inc.......... 224,119 480,000
250,000 Hong Kong & China Gas
Company Ltd. ................... 412,542 500,174
20,000 Pennzoil Company ................. 1,523,356 1,535,000
40,000 Van Der Horst Ltd. ............... 152,257 73,582
9,000 Veba AG........................... 512,363 505,748
------------- -------------
14,835,639 22,428,517
------------- -------------
Health Care -- 2.0%
15,000 Amgen Inc.+ ...................... 256,894 871,875
39,666 Astra AB, Class A................. 692,606 738,408
13,000 Biogen, Inc.+..................... 181,025 440,375
40,000 Glaxo Wellcome plc ORD............ 726,384 825,989
100,000 Johnson & Johnson................. 2,217,141 6,437,500
50,000 Lavipharm S.A..................... 447,612 454,976
24,000 Mallinckrodt, Inc................. 710,919 912,000
See Notes to Financial Statements.
17
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1997 (Unaudited)
Market
Shares Cost Value
------ ---- ------
COMMON STOCKS (continued)
Health Care (continued)
1,150 Novartis AG, Registered+.......... $ 1,431,247 $ 1,837,544
54,000 Novartis AG, ADR+................. 970,641 4,299,750
15,000 Pfizer Inc........................ 486,812 1,792,500
30,000 Rhone-Poulenc Rorer, Inc.......... 2,684,358 2,726,250
21,000 Zeneca Group plc+................. 643,101 694,530
------------- -------------
11,448,740 22,031,697
------------- -------------
Aviation: Parts And Services -- 1.8%
135,000 Boeing Co......................... 5,162,713 7,163,437
400,000 Coltec Industries Inc.+........... 5,417,284 7,800,000
50,000 Curtiss-Wright Corporation........ 2,491,103 2,912,500
145,000 Hi-Shear Industries Inc........... 1,737,757 353,437
25,000 Precision Castparts Corp.......... 992,675 1,490,625
------------- -------------
15,801,532 19,719,999
------------- -------------
Business Services -- 1.4%
40,000 Electronic Data Systems Corp...... 1,433,457 1,640,000
115,000 International Business
Machines Corporation............ 2,726,808 10,371,563
125,000 Landauer, Inc..................... 809,065 2,898,438
23,000 Reynolds & Reynolds
Company......................... 372,205 362,250
------------- -------------
5,341,535 15,272,251
------------- -------------
Automotive -- 1.3%
250,000 General Motors
Corporation (d)................. 7,760,494 13,921,875
20,000 Toyota Motor Corporation.......... 556,685 589,801
------------- -------------
8,317,179 14,511,676
------------- -------------
Paper And Forest Products -- 1.3%
252,000 Greif Bros. Corporation,
Class A......................... 4,620,381 6,804,000
3,400 Greif Bros. Corporation,
Class B (a)..................... 69,824 107,100
90,200 St. Joe Corp...................... 3,036,206 7,554,250
------------- -------------
7,726,411 14,465,350
------------- -------------
Consumer Services -- 1.2%
25,000 CUC International Inc. ........... 111,391 639,062
20,000 Department 56, Inc.+.............. 407,679 443,750
50,000 HSN, Inc.+........................ 1,156,643 1,562,500
450,000 Rollins, Inc. .................... 4,546,119 9,056,250
80,000 Ticketmaster Group Inc.+ ......... 1,128,664 1,330,000
------------- -------------
7,350,496 13,031,562
------------- -------------
Retail -- 1.2%
25,000 Crown Books Corporation+.......... 284,112 256,250
70,000 Earl Scheib, Inc.+................ 668,406 424,375
1,000 Fred Meyer Inc.+.................. 25,050 51,688
95,529 General Host Corporation.......... 528,313 328,381
10,000 Hudson's Bay Company.............. 197,828 224,483
80,300 Lillian Vernon Corporation........ 1,021,629 1,355,063
350,000 Neiman Marcus Group, Inc.+........ 5,136,063 9,187,500
150,000 PT Ramayana Lestari
Sentosa+........................ 356,337 431,743
100,000 Simint SpA........................ 595,336 608,859
10,425 Syratech Corporation+............. 333,704 334,851
30,000 THORN plc, ADR+................... 388,930 346,875
------------- -------------
9,535,708 13,550,068
------------- -------------
Retail Food And Drug -- 0.9%
70,000 Albertson's, Inc. ................ 2,424,750 2,555,000
50,000 Bruno's, Inc. .................... 565,625 575,000
226,500 Giant Food Inc., Class A ......... 7,299,291 7,389,562
------------- -------------
10,289,666 10,519,562
------------- -------------
Specialty Chemical -- 0.9%
5,400 Ciba Specialty Chemicals,
ADR 144A (c)+................... 21,140 253,039
1,000 Clariant AG....................... 478,708 646,950
44,000 E.I. du Pont de Nemours
and Company..................... 1,441,000 2,766,500
165,000 Ferro Corporation................. 3,790,262 6,115,313
------------- -------------
5,731,110 9,781,802
------------- -------------
Agriculture -- 0.7%
350,000 Archer-Daniels-Midland Co......... 6,496,569 8,225,000
------------- -------------
Transportation -- 0.7%
80,000 AMR Corporation+.................. 5,280,952 7,400,000
30,600 MIF Limited+...................... 450,000 480,134
------------- -------------
5,730,952 7,880,134
------------- -------------
Electronics -- 0.6%
45,000 AMP Incorporated.................. 1,818,500 1,878,750
5,000 Checkpoint Systems, Inc........... 59,000 80,312
57,000 Hitachi, Ltd., ADR................ 681,556 840,230
8,500 Imation Corporation+.............. 184,970 224,188
1,500 Matsushita Electric Industrial
Co. Ltd., ADR................... 178,325 306,750
36,500 NEC Corp., Sponsored ADR.......... 459,771 593,405
12,000 Philips Electronics N.V.,
New York........................ 167,918 862,500
28,000 Sony Corporation, ADR............. 1,635,166 2,457,291
------------- -------------
5,185,206 7,243,426
------------- -------------
Communications Equipment -- 0.4%
100,000 Allen Telecom Inc.+............... 1,166,791 2,075,000
22,000 Lucent Technologies Inc........... 929,328 1,585,375
See Notes to Financial Statements.
18
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1997 (Unaudited)
Market
Shares Cost Value
------ ---- ------
COMMON STOCKS (continued)
Communications Equipment (continued)
20,000 Scientific-Atlanta, Inc........... $ 319,775 $ 437,500
------------- -------------
2,415,894 4,097,875
------------- -------------
Country/Closed-End Funds -- 0.4%
59,000 Central European Equity
Fund Inc. ...................... 740,735 1,416,000
70,000 Emerging Germany Fund Inc.+....... 512,662 726,250
25,000 France Growth Fund, Inc........... 246,844 279,687
34,250 Italy Fund, Inc................... 300,170 327,516
70,000 New Germany Fund.................. 771,780 1,102,500
45,942 Royce Value Trust, Inc............ 519,501 631,703
------------- -------------
3,091,692 4,483,656
------------- -------------
Real Estate -- 0.4%
74,500 Catellus Development
Corporation+.................... 631,394 1,350,312
11,000 Florida East Coast
Industries, Inc................. 523,108 1,221,000
300,000 Lai Sun
Development Co., Ltd............ 378,635 336,892
30,000 Mitsubishi Estate
Company., Limited............... 322,449 434,498
50,000 NK Cityfastigheter AB+............ 410,860 355,504
25,000 Pandox Hotellfastigheter AB....... 167,267 168,056
35,000 Sun Hung Kai Properties Ltd....... 406,818 421,276
------------- -------------
2,840,531 4,287,538
------------- -------------
Housing Related -- 0.3%
130,000 Nortek, Inc.+..................... 808,129 3,136,250
5,000 Nortek, Inc., Special Common+..... 72,155 77,500
------------- -------------
880,284 3,213,750
------------- -------------
Conglomerates -- 0.2%
85,000 Cheung Kong (Holdings)
Limited......................... 820,760 839,325
7,750 Oerlikon-Buhrle Holding AG........ 846,224 907,270
75,000 Swire Pacific Limited,
Class A......................... 635,490 675,235
------------- -------------
2,302,474 2,421,830
------------- -------------
Metals And Mining -- 0.2%.........
10,000 Golden Star Resources Ltd.+....... 127,640 82,122
20,000 Newmont Gold Company.............. 800,047 798,750
175,000 Pegasus Gold Inc.+................ 2,032,358 1,071,875
10,000 Placer Dome Inc................... 175,162 163,750
------------- -------------
3,135,207 2,116,497
------------- -------------
Building and Construction -- 0.1%
70,000 CRH plc ORD....................... 720,634 732,026
15,000 Martin Marietta
Materials, Inc. ................ 322,688 485,625
------------- -------------
1,043,322 1,217,651
------------- -------------
Shipbuilding -- 0.0%
120,000 Mitsui Engineering &
Shipbuilding Co., Ltd.+......... 242,750 261,746
------------- -------------
Textiles -- 0.0%
20,000 Kyokuichi Corporation............. 185,106 197,182
------------- -------------
TOTAL COMMON
STOCKS 576,067,151 1,024,897,614
------------- -------------
PREFERRED STOCKS -- 0.6%
Consumer Products -- 0.1%
30,000 Fieldcrest Cannon, Inc.,
Series A, 6.000%, Conv.
Pfd., 144A (c).................. 1,657,500 1,380,000
------------- -------------
Telecommunications -- 0.1%........
15,000 Sprint Corporation, 8.250%,
Conv. Pfd....................... 478,125 541,875
2,223,575 Telecomunicacoes de Sao
Paulo SA (Telesp), Pfd.,
Registered...................... 289,142 726,011
------------- -------------
767,267 1,267,886
------------- -------------
Diversified Industrial -- 0.1%
4,000 KSB AG, Pfd....................... 830,754 986,267
------------- -------------
Automotive -- 0.1%
1,500 Volkswagen AG, Pfd................ 665,292 842,914
------------- -------------
Publishing -- 0.1%
43,500 News Corporation Limited.,
Sponsored ADR, Pfd.............. 656,340 679,688
------------- -------------
Cable -- 0.1%
8,000 Tele-Communications, Inc.,
Class B, 6.000%,
Ex. Jr. Pfd..................... 408,018 588,000
------------- -------------
Entertainment -- 0.0%
175,000 Village Roadshow Ltd., PFD........ 440,781 443,234
------------- -------------
TOTAL PREFERRED
STOCKS 5,425,952 6,187,989
------------- -------------
COMMON STOCK WARRANTS AND RIGHTS -- 0.0%
29,900 Oriental Press Group, War-
rants, expires 10/02/1998+...... 0 1,660
------------- -------------
See Notes to Financial Statements.
19
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1997 (Unaudited)
Principal Market
Amount Cost Value
--------- ---- ------
CORPORATE BONDS -- 0.8%
Entertainment -- 0.7%
FRF 125,000 Havas, Conv. Bonds,
Payment-in-kind, 3.000%
due 12/31/1997.................. $ 26,357 $ 27,447
$ 2,400,000 Time Warner Inc., Deb.,
8.110% due 08/15/2006........... 2,407,265 2,499,000
2,400,000 Time Warner Inc., Deb.,
8.180% due 08/15/2007........... 2,398,284 2,511,000
2,000,000 Time Warner Inc., Floating
Rate Note, 7.975%
due 08/15/2000 ................. 2,018,671 2,005,000
1,200,000 Time Warner Inc., Note,
7.975% due 08/15/2004 .......... 1,194,652 1,242,000
------------- -------------
8,045,229 8,284,447
------------- -------------
Publishing -- 0.1%
200,000 News American Holdings
Incorporated, Gtd. Ex.
Sub. Note, Zero Coupon
due 03/31/2002 ................. 139,889 159,500
1,000,000 Thomas Nelson Inc., Conv.
Sub. Note, 5.750% due
11/30/1999 144A (c)............. 993,601 968,750
------------- -------------
1,133,490 1,128,250
------------- -------------
Food And Beverage-- 0.0%..........
1,550,000 Flagstar Companies, Inc.,
Conv. Jr. Sub. Deb.,
10.000% due 11/01/2014.......... 364,205 466,937
------------- -------------
Retail -- 0.0%
50,000 General Host Corporation,
Class D, Conv. Sub. Note,
8.000% due 02/15/2002........... 43,787 42,125
------------- -------------
TOTAL CORPORATE
BONDS.......................... 9,586,711 9,921,759
------------- -------------
U.S. TREASURY BILLS -- 6.1%
68,000,000 5.00%++ due 08/14/1997 (d) 67,591,753 67,591,753
------------- -------------
REPURCHASE AGREEMENT -- 0.8%
$9,441,000 Agreement with Morgan (J.P.)
& Co. Incorporated,
6.000% dated 06/30/1997,
to be repurchased at $9,442,552
on 07/01/1997, collateralized
by $9,638,334 U.S. Treasury
Note, 9.25% due 02/15/2006
(value $9,442,574)............... $ 9,441,000 $ 9,441,000
------------- --------------
TOTAL INVESTMENTS ..................... 100.3% $ 668,112,567(b) 1,118,041,775
=============
OTHER ASSETS AND
LIABILITIES (Net)..................... (0.3) (3,296,672)
==============
NET ASSETS ............................ 100.0% $1,114,745,103
===== ==============
(a) Security fair valued under procedures established by the Board of
Directors.
(b) Aggregate cost for Federal tax purposes was $668,548,044. Net unrealized
appreciation for Federal tax purposes was $449,493,731 (gross unrealized
appreciation was $456,741,954 and gross unrealized depreciation was
$7,248,223).
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. The market
value of these securities at June 30, 1997 was $3,804,789 representing
0.34% of total net assets.
(d) Securities held in a segregated account by the custodian for futures
contracts total $163,027,043.
+ Non-income producing security
++ Represents annualized yield at date of purchase.
ADR - American Depositary Receipt, ADS - American Depositary Share, FRF -
French Franc, GDR - Global Depositary Receipt, ORD - Ordinary Share
FUTURES CONTRACTS - SHORT POSITION
Number of Unrealized
Contracts Depreciation
- --------- ------------
290 S&P 500 Index Futures,
September 1997 .............................. $2,240,250
==========
See Notes to Financial Statements.
20
<PAGE>
THE GABELLI EQUITY TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997 (Unaudited)
ASSETS:
Investments, at value (Cost $668,112,567)
See accompanying portfolio:
Investment securities .................................. $ 1,041,009,022
U.S. Government obligations ............................ 67,591,753
Repurchase agreement ................................... 9,441,000
---------------
1,118,041,775
Cash and foreign currency (Cost $1,605,610) ............ 1,596,327
Receivable for investment securities sold .............. 6,649,198
Variation margin ....................................... 964,250
Dividends receivable ................................... 2,486,137
Interest receivable .................................... 332,839
---------------
Total Assets ..................................... 1,130,070,526
---------------
LIABILITIES:
Dividend payable ....................................... 7,668,371
Payable for investment securities purchased ............ 5,869,760
Payable for investment advisory fee .................... 914,014
Accrued Directors' fees ................................ 39,848
Net unrealized depreciation of forward
foreign exchange contracts ........................... 122
Accrued expenses and other payables .................... 833,308
---------------
Total Liabilities ................................ 15,325,423
---------------
NET ASSETS for 103,919,670 shares outstanding ............ $ 1,114,745,103
===============
NET ASSETS consist of:
Common stock at par value .............................. $ 103,920
Additional paid-in capital ............................. 702,469,606
Distributions in excess of net investment income ....... (45,743,510)
Accumulated net realized gain on investments sold ...... 10,235,412
Net unrealized appreciation of investments ............. 447,679,675
---------------
Total Net Assets ................................. $ 1,114,745,103
===============
NET ASSET VALUE ($1,114,745,103 / 103,919,670 shares
outstanding; 200,000,000 shares authorized of
$0.001 par value) .................................... $ 10.73
===============
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year
06/30/97 Ended
(Unaudited) 12/31/96
--------------- ---------------
<S> <C> <C>
Net investment income .............................. $ 6,216,325 $ 11,083,439
Net realized gain on investments during the period . 10,338,147 81,151,706
Net change in unrealized appreciation/(depreciation)
of investments during the period ................. 134,713,894 (6,972,846)
--------------- ---------------
Net increase in net assets resulting from operations 151,268,366 85,262,299
Distributions to shareholders from:
Net investment income ............................ (6,216,325) (10,886,116)
Distributions in excess of net investment income . (45,743,510) --
Net realized gain on investments ................. -- (81,110,584)
Distributions in excess of net realized gains .... -- (68,227)
Paid-in capital .................................. -- (11,851,508)
--------------- ---------------
Net increase/(decrease) in net assets .............. 99,308,531 (18,654,136)
NET ASSETS:
Beginning of period ................................ 1,015,436,572 1,034,090,708
--------------- ---------------
End of period ...................................... $ 1,114,745,103 $ 1,015,436,572
=============== ===============
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
THE GABELLI EQUITY TRUST INC.
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1997 (Unaudited)
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $197,592) ..... $ 8,661,512
Interrest .................................................... 3,579,797
-------------
Total Investment Income .................................... 12,241,309
-------------
EXPENSES:
Investment advisory fee ...................................... 5,219,921
Shareholder communications expense ........................... 201,871
Shareholder services fees .................................... 116,391
Custodian fees ............................................... 166,767
Directors' fees .............................................. 51,777
Payroll ...................................................... 58,799
Legal and audit fees ......................................... 56,016
Other ........................................................ 153,442
-------------
Total Expenses ............................................. 6,024,984
-------------
NET INVESTMENT INCOME .......................................... 6,216,325
-------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) on:
Securities transactions .................................... 29,452,474
Futures transactions ....................................... (19,083,493)
Foreign exchange contracts and foreign currency transactions (30,834)
-------------
Net realized gain on investments during the period ........... 10,338,147
-------------
Net change in unrealized appreciation/(depreciation) of:
Securities ................................................. 136,963,427
Futures transactions ....................................... (2,240,250)
Foreign currency and other assets and liabilities .......... (9,283)
-------------
Net change in unrealized appreciation of
investments during the period .............................. 134,713,894
-------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS ................ 145,052,041
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........... $ 151,268,366
=============
See Notes to Financial Statements.
22
<PAGE>
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. Significant Accounting Policies
The Gabelli Equity Trust Inc. ("Equity Trust") is a closed-end,
non-diversified management investment company organized as a Maryland
corporation and registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), whose primary objective is long-term growth of capital. The
Equity Trust had no operations until August 11, 1986, when it sold 10,696 shares
of common stock to Gabelli Funds, Inc. (the "Adviser") for $100,008. Investment
operations commenced on August 21, 1986. 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 which are traded on a stock
exchange or Nasdaq National Market System are valued at the last sale price as
of the close of regular trading on the day the securities are being valued, or
lacking any sales, at the mean between closing bid and asked prices. Other
over-the-counter securities are valued at the mean of the current bid and asked
prices as reported by Nasdaq, or in the case of securities not quoted by Nasdaq,
the National Quotation Bureau or other comparable sources as the Board of
Directors deems appropriate to reflect their fair value. If no asked prices are
quoted on such day, then the security is valued at the closing bid price on such
day. If no bid or asked prices are quoted on that day, then the security is
valued by such method as the Board of Directors shall determine in good faith to
reflect its fair market value. Portfolio securities which are traded on more
than one national securities exchange or market are valued according to the
broadest and most representative market, as determined by the Adviser.
Securities traded primarily on foreign exchanges are valued at the closing price
on such exchange immediately prior to the close of the New York Stock Exchange.
Securities and assets for which market quotations are not readily available are
valued at fair market value as determined in good faith by or under the
direction of the Board of Directors of the Equity Trust. Short-term investments
that mature in more than 60 days are valued at the highest bid price obtained
from a dealer maintaining an active market in that security or on the basis of
prices obtained from a pricing service approved as reliable by the Board of
Directors. Short-term investments that mature in 60 days or fewer are valued at
amortized cost, unless the Board of Directors determines that such valuation
does not constitute fair value.
Repurchase Agreements. The Equity Trust may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Equity
Trust takes possession of an underlying debt obligation for a relatively short
period (usually not more than one week) 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. This arrangement results in a fixed rate of return that is not subject
to market fluctuations during the Equity Trust's holding period. The value of
the collateral is at least equal at all times to the total amount of the
repurchase obligation, including interest. The Equity Trust bears a risk of loss
in the event that the other party to a repurchase agreement defaults on its
obligations and the Equity Trust is delayed or prevented from exercising its
rights to dispose of the collateral securities, including the risk of a possible
decline in the value of
23
<PAGE>
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
the underlying securities during the period while the Equity Trust seeks to
assert its rights. The Adviser, acting under the supervision of the Board of
Directors, reviews the value of the collateral and the creditworthiness of those
banks and dealers with which the Equity Trust enters into repurchase agreements
to evaluate potential risks.
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 recorded as unrealized gains or losses. The Equity Trust recognizes
a realized gain or loss when the contract is closed. The net unrealized
appreciation/depreciation is shown in the financial statements.
There are several risks in connection with the use of futures contracts as
a hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk the
Equity Trust may not be able to enter into a closing transaction because of an
illiquid secondary market.
Forward Foreign Exchange Contracts. The Equity Trust may engage in forward
foreign exchange contracts for hedging a specific transaction with respect to
either the currency in which the transaction is denominated or another currency
as deemed appropriate by the Adviser. Forward foreign exchange contracts are
valued at the forward rate and are marked-to-market daily. The change in market
value is recorded by the Equity Trust as an unrealized gain or loss. When the
contract is closed, the Equity Trust records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate
fluctuations in the underlying prices of the Equity Trust's portfolio
securities, but it does establish a rate of excahnge that can be achieved in the
future. Although forward foreign exchange contracts limit the risk of loss due
to a decline in the value of the hedged currency, they also limit any potential
gain that might result should the value of the currency increase. In addition,
the Equity Trust could be exposed to risks if the counterparties to the
contracts are unable to meet the terms of their contracts.
Foreign Currency. The books and records of the Equity Trust are maintained
in United States (U.S.) dollars. Foreign currencies, investments and other
assets and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated on the respective dates of such
transactions. Unrealized gains and losses, not relating to securities, which
result from changes in foreign currency exchange rates have been included in
unrealized appreciation/depreciation of foreign currency and other assets and
liabilities. Unrealized gains and losses of securities, which result from
changes in foreign exchange rates as well as changes in market prices of
securities, have been included in unrealized appreciation/depreciation of
investment securities. 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
24
<PAGE>
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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) from investment
securities sold.
Securities Transactions and Investment Income. Securities transactions are
accounted for as of the trade date with realized gain or loss on investments
determined using specific identification as the cost method. Interest income
(including amortization of premium and accretion of discount) is recorded as
earned. Dividend income is recorded on the ex-dividend date.
Dividends and Distributions to Shareholders. Dividend income and
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,
temporary differences and differing characterization of distributions made by
the Equity Trust.
Provision for Income Taxes. The Equity Trust has qualified and intends to
continue to qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended. As a result, a Federal income tax
provision is not required.
2. Agreements and Transactions with Affiliates
The Equity Trust has entered into an investment advisory agreement (the
"Advisory Agreement") with the Adviser which provides that the Equity Trust will
pay the Adviser a fee, computed weekly and paid monthly, equal on an annual
basis, to 1.00 percent of the value of the Equity Trust's average weekly net
assets. In accordance with the Advisory Agreement, the Adviser manages the
Equity Trust's portfolio, makes investment decisions for the Equity Trust,
places orders to purchase and sell securities of the Equity Trust and oversees
the administration of all aspects of the Equity Trust's business and affairs.
During the six months ended June 30, 1997, Gabelli & Company, Inc.
("Gabelli & Company") and its affiliates received $77,528 in brokerage
commissions as a result of executing agency transactions in portfolio securities
on behalf of the Equity Trust.
3. Portfolio Securities
Cost of purchases and proceeds from sales of securities, other than
short-term securities, aggregated $225,872,776 and $169,304,912, respectively,
for the six months ended June 30, 1997.
4. Capital
For the six months ended June 30, 1997 and the year ended December 31,
1996, there were no capital stock transactions.
25
<PAGE>
THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS
Per share amount for an Equity Trust share outstanding throughout each period.
<TABLE>
<CAPTION>
Six
Months
Ended Year Ended December 31,
06/30/97 ------------------------------------------------------------
(Unaudited) 1996(a) 1995(a) 1994(a) 1993(a) 1992
-----------
<S> <C> <C> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of period ................. $ 9.77 $ 9.95 $ 9.46 $ 11.23 $ 10.58 $ 10.61
---------- ---------- ---------- -------- -------- --------
Net investment income ................................ 0.06 0.11 0.13 0.14 0.14 0.19
Net realized and unrealized gain (loss) on investments 1.40 0.71 1.74 (0.08) 2.13 1.21
Provision for income taxes ........................... -- -- -- -- -- --
---------- ---------- ---------- -------- -------- --------
Total from investment operations ..................... 1.46 0.82 1.87 0.06 2.27 1.40
Increase (decrease) in net asset
value from Equity Trust share transactions ......... -- -- (0.37) -- (0.50) (0.36)
Offering expenses charged to capital surplus ......... -- -- (0.01) -- (0.01) (0.01)
Distributions to shareholders from:
Net investment income .............................. (0.06) (0.11) (0.13) (0.14)(b) (0.11) (0.19)
Distributions in excess of net investment income ... (0.44) -- -- -- -- --
Net realized gains ................................. -- (0.78) (0.47) (0.37) (0.77) (0.38)
Distributions in excess of net realized gains ...... -- (0.00)(d)0. (0.02) -- (0.02) --
Paid-in capital .................................... -- (0.11) (0.38) (1.32)(b) (0.21) (0.49)
---------- ---------- ---------- -------- -------- --------
Total distributions .................................. (0.50) (1.00) (1.00) (1.83) (1.11) (1.06)
========== ========== ========== ======== ======== ========
Net asset value, end of period ....................... $ 10.73 $ 9.77 $ 9.95 $ 9.46 $ 11.23 $ 10.58
========== ========== ========== ======== ======== ========
Market value, end of period .......................... $ 10.063 $ 9.375 $ 9.375 $ 9.625 $ 12.125 $ 10.250
========== ========== ========== ======== ======== ========
Total Investment Return* ............................. 12.9% 11.0% 11.7% (5.1)% 36.5% 15.9%
========== ========== ========== ======== ======== ========
Net Asset Value Total Return** ....................... 15.5% 9.0% 20.6% 0.5% 22.4% 14.2%
========== ========== ========== ======== ======== ========
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) ................. $1,114,745 $1,015,437 $1,034,091 $825,193 $937,773 $725,263
Net investment income .............................. 1.20%+ 1.07% 1.26% 1.29% 1.25% 1.88%
Operating expenses ................................. 1.16%+ 1.18% 1.21% 1.19% 1.20% 1.22%
Portfolio turnover rate .............................. 18.4% 18.9% 25.1% 22.2% 24.4% 12.5%
Average commission rate (per share of security) (c) .. $ 0.0287 $ 0.0335 N/A N/A N/A N/A
</TABLE>
- ----------
* Based on market value per share, adjusted for reinvesment of distributions
and taxes, 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 and taxes, including the effect of shares issued pursuant to
rights offering, assuming full subscription by shareholder.
+ Annualized.
(a) Per share amounts have been calculated using the monthly average shares
outstanding method.
(b) A distribution equivalent to $0.75 per share for The Gabelli Global
Multimedia Trust Inc. spin-off from net investment income, realized
short-term gains, and paid-in capital were $0.064, $0.031 and $0.655,
respectively.
(c) Average commission rate (per share of security) as required by amended sec
disclosure requirements effective for fiscal years beginning after
September 1, 1995.
(d) Amount represents less than $0.05 per share.
26
<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
27
<PAGE>
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
Dr. Thomas E. Bratter
President, John Dewey Academy
Bill Callaghan
President, Bill Callaghan Associates
Felix J. Christiana
Former Senior Vice President
Dollar Dry Dock Savings Bank
James P. Conn
Managing Director/Chief Investment Officer,
Financial Security Assurance Holdings Ltd.
Karl Otto Pohl
Former President, Deutsche Bundesbank
Anthony R. Pustorino
Certified Public Accountant
Professor, Pace University
Salvatore J. Zizza
Chairman & Chief Executive Officer,
The Lehigh Group, Inc.
Officers
Mario J. Gabelli, CFA
President & Chief Investment Officer
Bruce N. Alpert
Vice President & Treasurer
Marc S. Diagonale
Vice President
James E. McKee
Secretary
Investment Advisor
Gabelli Funds, Inc.
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
NYSE-Symbol: GAB
Shares Outstanding 103,919,670
The Net Asset Value appears in the Publicly Traded
Funds column, under the heading "General Equity
Funds," in Saturday's The New York Times and
Mondays in 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 or, 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 capital stock in the open market when the Equity Trust
shares are trading at a discount of 10% or more from the net asset value of the
shares.
- --------------------------------------------------------------------------------
<PAGE>
THE GABELLI EQUITY TRUST INC.
One Corporate Center
Rye, NY 10580-1434
(914) 921-5070
-----------------
FIRST CLASS MAIL
U.S. POSTAGE
PAID
RYE, NY
PERMIT No. 109
-----------------
Semi-Annual Report
June 30, 1997
GAB06/97
