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Gabelli Equity Series Funds Inc – ‘N-30D’ for 3/31/97

As of: Tuesday, 6/10/97 · For: 3/31/97 · Accession #: 1005477-97-1646 · File #: 811-06367

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/10/97  Gabelli Equity Series Funds Inc   N-30D       3/31/97    1:60K                                    CT EDGAR123/FA

Annual or Semi-Annual Report Mailed to Shareholders — Rule 30d-1
Filing Table of Contents

Document/Exhibit Description Pages Size

1: N-30D Semi-Annual Report 16 101K

N-30D 1st Page of 16 TOC ↑Top Previous Next ↓Bottom Just 1st
The Gabelli Equity Income Fund
One Corporate Center
Rye, New York 10580-1434
Semi-Annual Report
March 31, 1997(a)

To Our Shareholders:

The stock market roared out of the blocks in January, but quickly lost
momentum as inflation jitters and a slumping bond market muddied the track. In
late March, a rate hike by the Federal Reserve and much stronger than expected
economic data stampeded equities investors, eroding most of the market's earlier
gains. The Dow Jones Industrial Average and Standard & Poor's 500 Index closed
the quarter with modest gains of 1.7% and 2.7%, respectively. Smaller stocks
continued to lag as evidenced by the Russell 2000 Index's 5.2% decline.

INVESTMENT RESULTS (b)
--------------------------------------------------------------------------------
Calendar Quarter
-----------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
1997: Net Asset Value .... $14.27 -- -- -- --
Total Return ....... 1.2% -- -- -- --
--------------------------------------------------------------------------------
1996: Net Asset Value .... $13.47 $13.54 $13.81 $14.16 $14.16
Total Return ....... 5.5% 0.1% 2.5% 8.0% 17.9%
--------------------------------------------------------------------------------
1995: Net Asset Value .... $11.56 $11.99 $12.65 $12.84 $12.84
Total Return ....... 8.5% 4.3% 6.1% 6.9% 28.3%
--------------------------------------------------------------------------------
1994: Net Asset Value .... $11.26 $11.08 $11.54 $10.72 $10.72
Total Return ....... (2.2)% (0.8)% 4.9% (0.7)% 1.1%
--------------------------------------------------------------------------------
1993: Net Asset Value .... $11.35 $11.72 $12.15 $11.57 $11.57
Total Return ....... 7.4% 3.8% 4.2% 1.5% 17.9%
--------------------------------------------------------------------------------
1992: Net Asset Value .... $10.19 $10.36 $10.40 $10.64 $10.64
Total Return ....... 2.4%(c) 2.3% 1.1% 3.7% 9.8%(c)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Average Annual Returns - March 31, 1997 (b)

1 Year .................................................................. 13.1%
5 Year .................................................................. 14.4%
Life of Fund (c) ........................................................ 14.1%
--------------------------------------------------------------------------------

(a) The Fund's fiscal year ends September 30, 1997. (b) Average annual and total
returns reflect changes in share price and reinvestment of dividends and are net
of expenses. The net asset value of the Fund is reduced on the ex-dividend
(payment) date by the amount of the dividend paid. Of course, the returns
represent past performance and do not guarantee future results. Investment
returns and the principal value of an investment will fluctuate. When shares are
redeemed they may be worth more or less than their original cost. (c) From
commencement of operations on January 2, 1992.

--------------------------------------------------------------------------------

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----------------------------------------------------------------------------
Dividend History
----------------------------------------------------------------------------
Rate Reinvestment
---- ------------
Payment (ex) Date Per Share Price
----------------- --------- -----

March 31, 1997 $0.06 $14.27
----------------------------------------------------------------------------
December 27, 1996 $0.76 $14.28
September 30, 1996 $0.07 $13.81
June 28, 1996 $0.06 $13.54
March 31, 1996 $0.07 $13.47
----------------------------------------------------------------------------
December 29, 1995 $0.68 $12.84
September 29,1995 $0.07 $12.65
June 30, 1995 $0.07 $11.99
March 31, 1995 $0.07 $11.56
----------------------------------------------------------------------------
December 30, 1994 $0.74 $10.72
September 30, 1994 $0.08 $11.54
June 30, 1994 $0.09 $11.08
March 31, 1994 $0.06 $11.26
----------------------------------------------------------------------------
December 31, 1993 $0.76 $11.57
September 30, 1993 $0.06 $12.15
June 30, 1993 $0.06 $11.72
March 31, 1993 $0.08 $11.35
----------------------------------------------------------------------------
December 31, 1992 $0.15 $10.64
September 30, 1992 $0.07 $10.40
June 30, 1992 $0.06 $10.36
March 31, 1992 $0.05 $10.19
----------------------------------------------------------------------------

Investment Performance

For the first quarter ended March 31, 1997, The Gabelli Equity Income
Fund's net asset value increased 1.2% to $14.27 after adjusting for the $0.06
per share dividend paid on March 31, 1997. This compares with a 1.7% increase in
the Lipper Analytical Services, Inc. Equity Income Fund Index, which covers 190
equity income funds, and the 2.7% increase in the Standard & Poor's 500 Index, a
widely accepted unmanaged index of stock market performance. For the twelve
months ended March 31, 1997, the Fund's total return was 13.1%, versus the
Lipper Equity Income Fund Index's return of 15.6% and the Standard & Poor's 500
Index's return of 19.8% over the same period.

For the five years ended March 31, 1997, the Fund achieved a total return
of 95.5% which equates to a 14.4% average annual return. Since its inception on
January 2, 1992 through March 31, 1997, the Fund achieved a total return of
100.2%, which equates to an average annual return of 14.1%, assuming
reinvestment of all dividends. The Dividend History chart details each dividend
paid by the Fund since its inception.

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]

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

N-30D 3rd Page of 16 TOC 1st Previous Next ↓Bottom Just 3rd
value (PMV) estimates. Finally, we look for a catalyst; something happening in
the company's industry or indigenous to the company itself that will surface
value. In the case of the independent telephone stocks, the catalyst is a
regulatory change. In the agricultural equipment business, it is the increasing
world-wide demand for American 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.

Energy

A large component of our portfolio relates to the oil industry. From the
mid-1980s to 1995, world-wide oil demand increased, on average, about 1.5% per
year. Now, due mainly to greater economic activity in Asia, this growth rate has
advanced to 3% per year which is expected to be sustained to the year 2000.
Incrementally, this means an additional 2.0 million to 2.5 million barrels per
day (b/d) per year on a current consumption base of over 70 million b/d, to
reach approximately 80 million b/d at the turn of the century.

Consumption-million b/d 1992 1995 1996E 2000E
----------------------- ---- ---- ----- -----
North America 18.0 18.7 19.0 21.0
Europe 15.0 15.3 15.7 16.5
Japan, Australia, New Zealand 6.3 6.7 7.0 7.5
---- ---- ---- ----
Sub-total 39.3 40.7 41.7 45.0

China 2.7 3.3 3.7 4.7
Mexico, Central and South America 5.3 5.7 6.1 7.5
Asia, excluding Japan 6.3 7.9 8.6 11.0
Middle East and Africa 5.6 6.0 6.3 7.1
Former Soviet Union 6.9 4.3 4.5 4.7
---- ---- ---- ----
Total 66.0 68.0 71.0 80.0

Sources: BP Statistical Review; Gabelli & Company, Inc. estimates.

Non-OPEC production is expected to rise from approximately 44 million b/d
in 1996 to about 48 million b/d by 2000. U.S. production is declining, but is
pretty much offset by gradually increasing Canadian output. The net result is
that the call on OPEC crude oil production, which after two million b/d of
natural gas liquids was 26 million b/d in 1996, will increase more than 15% to
30 million b/d to satisfy world-wide demand in 2000.

Commentary

The Economy and the Stock Market: Too Much of a Good Thing

Once again, the economy confounded the Wall Street economists by growing
much faster than

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consensus expectations. Although inflation has not yet shown up in the Producer
Price and Consumer Price indices, Federal Reserve Chairman Alan Greenspan and
bond investors decided to err on the side of caution by taking short- and
long-term interest rates higher.

We applaud Fed Chairman Greenspan's preemptive strike against inflation.
We believe he will continue to take the steps necessary to combat inflation and,
in the process, provide confidence in Soft Landing - Part II. Over the
short-term, this may not be pleasant for equities investors. However, with the
elimination of some of the speculative excesses, the market will be on much
better fundamental footing going forward. We do not believe this is the
beginning of a secular bear market, but rather a healthy correction that is
arguably long overdue.

What can we expect over the balance of this year? We should continue to
see a volatile market as skittish investors wrestle with the latest economic
data trying to determine if inflation is a real threat. While the jury may still
be out on inflation, higher interest rates are a reality and will be problematic
for stocks on several levels. Higher interest rates might trim the economy and
restrain corporate earnings growth, putting consensus estimates of 9% to 10%
gains for 1997 in jeopardy. Higher rates also boost the U.S. dollar, further
crimping the U.S. dollar value of international earnings. Whether you are
looking at stocks on the basis of asset values or using a dividend discount
model, public prices of equities tend to decline as interest rates rise, all
else constant. So, price/cash flow and price/earnings multiples do contract,
should interest rates rise.

The wild card will be how investors react to any sustained decline in
stock prices. A tremendous amount of money has flowed into the equities market
in the last three years. Will it back out at the first sign of serious trouble?
It may not be how the great unwashed public reacts, but rather how the great
unwashed professional investors--those twenty and thirty something mutual fund
managers who have never experienced even a substantial market
correction--respond to the perceived crisis. Will they see the glass half empty
or half full? We don't know.

While we are dwelling on things on our watch list, we should also mention
the strong dollar. Despite the enormous advances in the quality of American made
goods in a wide variety of industries, the strong dollar will restrain exports
and currency translation will have an adverse impact on the earnings of U.S.
based multi-national companies. Longer term, we must also be sensitive to the
fact that substantial cost reductions and productivity gains in American
industry over the last five years may be close to running their course. In other
words, profit margins are unlikely to advance further.

We don't view a market correction as bad news. In general, we are not
exposed to those sectors and individual companies that have benefited most from
investor euphoria and which are, therefore, most vulnerable to a dramatic change
in investor sentiment. If anything, a market correction should provide a more
level playing field for disciplined investors focusing on the fundamental value
of individual stocks. We are just now emerging from a two year period in which
fundamentals mattered much less than market momentum. We are entering what may
prove to be an extended period in which stock pickers excel.

To Index or not Index - The New Rhetoric

In 1995 and 1996, the S&P 500 Index proved to be a difficult benchmark for
active managers of all stripes. It has been a particularly tough hurdle for
value investors who have been unwilling to pay sky

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high price/earnings multiples for the mega-cap market darlings that have such an
enormous impact on S&P 500 returns.

There are several dynamics that have favored the largest S&P 500 stocks
over the last several years. The first is the growth of S&P 500 Index funds
themselves. S&P 500 Index mutual funds have grown at four times the rate of
actively managed mutual funds over the last five years. So, we have seen an
increasing amount of money chasing a finite number of large cap stocks and thus,
on a pure supply/demand basis, indexing has been a self fulfilling prophecy. In
addition, the substantial foreign money coming into the market is largely
devoted to the big cap, household name stocks that dominate the S&P. Finally,
active portfolio managers who have been under increasing pressure to be fully
invested regardless of their concerns over equity valuations have pumped money
into the large liquid stocks that comprise the S&P so that if something does go
wrong, they can get out in a hurry. Finally, stocks like Microsoft, Intel, P&G,
Coca-Cola and General Electric do benefit from faster growth in developing
economies.

With all of these factors favoring S&P 500 indexing, why bother doing
anything else? We offer two answers. The first is that longer term, valuations
do matter. Supply and demand are powerful forces in the market, but at some
stage, economic reality always asserts itself. In the early 1970's the "Nifty
Fifty", a group of terrific large cap growth companies, dominated the market.
The consensus was that these were "one decision" stocks which you simply had to
own and didn't ever have to worry about selling. At the peak, these stocks sold
at ludicrous multiples relative to their economic value. When the fertilizer hit
the market fan in 1973-74, they fell off a cliff. Even after one of the great
long-term bull markets in history, some of these original "nifty-fifty" stocks
still have market capitalizations below their 1972-73 peaks. We have not yet
witnessed that level of speculative excess in today's market favorites, but we
are seeing heady multiples that don't make economic sense. At some point,
investors will come to their senses and realize that even the best (soft drink,
household product, software, semi-conductor, movie company--pick one or more) is
not worth a price/earnings multiple two to three times its annual earnings
growth rate. Moreover, if earnings do not expand faster than revenues, and
interest rates continue to provide present "real" rates of return, then overall
stocks are unlikely to generate double-digit returns to investors.

Our second response is simply that what has gone up the most is likely to
fall the farthest with a major shift in investor sentiment. If and when we do
see net cash outflows from equities mutual funds, we suspect index funds will
get hit the hardest. Supply and demand is a two way street.

Snapple, Crack and Pop

In another ring, Quaker Oats Company (OAT - $36.50 - NYSE) has thrown in
the towel on Snapple, selling it to Triarc Companies Inc. (TRY - $17.50 - NYSE)
for $300 million, $1.4 billion below the $1.7 billion it paid for the company
just three years ago. Despite having egg--or is that iced tea--all over its
face, Quaker Oats has become a much more attractive target for a larger food
company like Nestle SA (NESAF - $1,170.95 - NASDAQ) or RJR Nabisco Holdings
Corporation (RN - $32.25 - NYSE) looking for dominant market share brands like
Quaker Oats' Gatorade and ready-to-eat breakfast cereals. We believe the company
is worth well over $50 a share to the right buyer. Even if nothing develops on
this front, Quaker Oats' earnings should be refreshing as they discontinue
writing off all the goodwill on the ill-advised purchase of Snapple.

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Let's Talk Stocks

The following are stock specifics on selected holdings of our Fund.
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 Brands, Inc. (AMB - $50.625 - NYSE), based in Old Greenwich,
Connecticut, is a diversified consumer products holding company operating five
separate business units: international tobacco (Gallaher, the leading tobacco
company in the U.K.), distilled spirits (Jim Beam bourbon), hardware and home
improvement products (Moen faucets), office products (Acco) and golf products
(Titleist and Pinnacle golf balls and Cobra golf clubs). Management has
announced its intention to spin-off Gallaher to AMB's shareholders. This should
occur during the summer of 1997. After the spin-off, American Brands will be
renamed Fortune Brands which we estimate should be able to grow earnings about
15% per year. All units are strong cash flow generators and are leaders in their
respective fields. Guided by Thomas C. Hays, American Brands has become a
focused, marketing-oriented consumer products company.

American Express Company (AXP - $59.875 - 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.
Management's objective is virtual parity with bankcard networks. The company has
joined forces with Microsoft to start an on-line corporate travel service.
Financial Direct, a financial services operation that provides self-directed,
on-line trading, has been launched. 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.

British Petroleum Company, plc (BP - $137.25 - NYSE), with an equity market
capitalization exceeding $60 billion, is one of the largest integrated oil
enterprises in the world. Production, which rose by 5% during 1996 to over 1.5
million barrels of oil equivalent (boe) per day, is anticipated to rise 5% per
year, to at least 1.8 million boe per day, to the year 2000. The company, like
other major oil producers and refiners, has embarked on a major cost-cutting
program. As an example, total lifting costs in 1996 were reduced by 20 cents to
$2.40 per boe. Finding costs also were reduced by 20 cents to $1.30 per boe.
British Petroleum is a substantial cash flow generator which has been used to
reduce debt.

Chevron Corporation (CHV - $69.625 - NYSE) is the third largest U.S. natural gas
producer and is one of the nation's largest crude oil refiners and marketers of
petroleum products. CHV is the largest supplier of California's mandated
reformulated gasolines. World-wide production was more than 1 million barrels of
oil and 2.45 billion cubic feet of natural gas per day. Through its 50% interest
in Caltex Petroleum, Chevron is benefiting from increasing energy consumption in
southeastern Asia. The company's world-wide capital spending is slated to reach
almost $6 billion in 1997, including overseas exploration and development
projects in Kazakstan (building a pipeline linking the giant Tengiz oil field to
the Black Sea and world oil markets) and the North Sea.

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Eastern Enterprises Inc. (EFU - $30.875 - NYSE) owns and operates Boston Gas
Company, New England's largest distributor of natural gas, serving 525,000
residential, commercial and industrial customers. The company also owns and
operates Midland Enterprises, the leading U.S. dry-cargo, inland waterways barge
operator with a fleet of 2,430 barges and 87 tug boats. Headquartered in
Cincinnati, Midland provides low-cost marine transportation to much of the
country's major industrial and agricultural regions. Our interest in the company
stems from management's direction under Woody Ives and from the prospect that
the company's strong balance sheet will be used to make attractive strategic
commitments. The dividend, recently advanced to $1.60 per share on an annual
basis, provides an appealing return approaching 4.7% for this cash rich company.

Exxon Corporation (XON - $102.75 - NYSE), with an equity market value
approaching $130 billion, is the world's largest publicly-owned integrated oil
company. The company produces 1.6 million barrels of crude oil and 6.6 billion
cubic feet of natural gas per day, roughly half of which come from overseas
reserves. Revenues are rebounding as world-wide demand for energy increases.
Profitability has been sustained by management's success in cutting
approximately $1 billion from overhead in each of the last few years. Dividends
have been paid since 1882 and have increased annually since 1983. GTE
Corporation (GTE - $46.625 - NYSE) is one of the largest publicly held
telecommunications companies in the world. The company is the largest U.S.-based
local telephone company. GTE's domestic and international operations serve 25.9
million access lines in the United States, Canada, the Dominican Republic and
Venezuela. GTE is a leading cellular operator in the U.S. with the potential of
serving 62 million cellular and personal communications services customers.
Outside the U.S., GTE operates cellular networks serving some 16.4 million POPs.
GTE is also a leader in government and defense communications systems and
equipment, aircraft-passenger telecommunications, directories and
telecommunications-based information services and systems. Chairman Charles Lee
is structuring the company for accelerated growth.

International Business Machines Corporation (IBM - $137.375 - NYSE) is the
world's largest information technology services company. The company's software
division, now fortified by Lotus and Tivoli, continues to expand at an
accelerating pace and holds significant future potential. IBM is an enormous
cash flow generator, producing $13.6 billion in EBITDA during 1996. During the
same period, IBM devoted $6 billion to capital expenditures and $5 billion to
stock repurchases, bringing its common stock buybacks to $10.6 billion over the
last 2 years. After all these expenditures, IBM still increased its cash
balances from $7.7 billion at the end of 1995 to $8.1 billion at the end of
1996.

Southwest Gas Corporation (SWX - $17.375 - NYSE) is a natural gas utility based
in Las Vegas, Nevada, providing natural gas service to approximately 1.1 million
residential, commercial and industrial customers in the fastest growing regions
of the United States - Arizona, Nevada and parts of northern and southern
California. The company added 63,000 customers during 1996, another
record-breaking year.

Texaco Inc. (TX - $109.50 - NYSE) is a major integrated international oil
company. 50%-owned Caltex (Chevron holds the other 50%) concentrates on refining
and marketing in the Pacific Rim where standards of living and economies are
advancing rapidly. 1997 looks to be a record year for Texaco in generation of
cash flow and earnings.

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No Load - Effective August 12, 1996

Effective August 12, 1996, the Fund no longer imposes a front-end sales
charge. All purchases made after August 12, 1996 are not subject to a sales
charge. The minimum initial investment for all accounts is $1,000. Additionally,
we invite shareholders to start an automatic investment plan whereby no initial
minimum is required. Furthermore, The Gabelli Equity Income Fund and other
Gabelli Funds are available through the no-transaction fee programs at many
major discount brokerage firms.

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 us e-mail at info@gabelli.com.

In Conclusion

In our year-end 1996 letter to you, we expressed our doubts about the
market's ability to duplicate its substantial gains in 1995 and 1996. After
getting off to a strong start, the market lost momentum and then sputtered badly
at the end of the quarter as strong economic data re-ignited inflationary fears.
As we write, the jury is still out on inflation, but long interest rates are
above 7%, providing sizeable "real" rates of return. Looking ahead, we
anticipate a continually volatile stock market that will have many investors on
the edge of their seats. We rest somewhat more comfortably having been through
such uneasy times before and having faith that our value oriented discipline
will sustain us as it has in the past.

The Fund's daily net asset value is available in the financial press and
each evening after 6:00 PM (Eastern Time) by calling 1-800-GABELLI
(1-800-422-3554). The Fund's NASDAQ symbol is GABEX. Please call us during the
day for further information.

We thank you for your confidence in our investing abilities and wish you a
productive and financially rewarding 1997.

Sincerely,

/s/ James Foung, CFA /s/ Mario J. Gabelli

James Foung, CFA Mario J. Gabelli, CFA
Associate Portfolio Manager President and
Chief Investment Officer
May 1, 1997

--------------------------------------------------------------------
Top Ten Holdings
March 31, 1997
Exxon Corporation Texaco Inc.
Chevron Corporation GTE Corporation
British Petroleum Company, plc Int'l Business Machines Corp.
American Express Company Southwest Gas Corporation
Eastern Enterprises Inc. American Brands, Inc.
--------------------------------------------------------------------

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.

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The Gabelli Equity Income Fund
Portfolio of Investments -- March 31, 1997 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 84.42%
AUTOMOTIVE -- 1.44%
6,500 Ford Motor Company ................... $ 153,183 $ 203,937
12,000 General Motors Corporation ........... 447,738 664,500
----------- ----------
600,921 868,437
----------- ----------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 1.54%
2,500 Dana Corporation ..................... 65,937 82,188
15,000 GenCorp, Inc. ........................ 184,500 285,000
12,000 Genuine Parts Company ................ 427,123 559,500
----------- ----------
677,560 926,688
----------- ----------
AVIATION: PARTS AND SERVICES -- 5.18%
4,000 Barnes Group ......................... 199,700 287,500
9,168 Boeing Co. ........................... 694,669 904,194
15,000 Curtiss-Wright Corp. ................. 444,138 802,500
1,000 Raytheon Co. ......................... 51,300 45,125
2,000 Rockwell International Corp. ......... 57,806 129,750
17,000 Trinova Corporation .................. 518,818 569,500
5,000 United Technologies Corporation ...... 280,642 376,250
----------- ----------
2,247,073 3,114,819
----------- ----------
BUSINESS SERVICES -- 2.88%
2,000 Cognizant Corp. ...................... 67,510 58,250
4,000 Dun & Bradstreet Corp. ............... 93,161 101,500
300 Imation Corporation .................. 6,743 7,500
10,000 International Business
Machines Corporation ............... 509,359 1,373,750
9,000 Landauer, Inc. ....................... 147,075 189,000
----------- ----------
823,848 1,730,000
----------- ----------
CONSUMER PRODUCTS -- 7.62%
25,000 American Brands, Inc. ................ 1,075,251 1,265,625
4,200 Culbro Corporation ................... 184,485 393,750
5,000 Eastman Kodak Company ................ 296,460 379,375
12,000 General Electric Company ............. 582,099 1,191,000
5,000 Gillette Company ..................... 122,312 363,125
14,000 National Presto Industries, Inc. ..... 591,417 502,250
2,000 Philip Morris Companies Inc. ......... 93,100 228,250
6,000 Tambrands, Inc. ...................... 255,066 257,250
----------- ----------
3,200,190 4,580,625
----------- ----------
DIVERSIFIED INDUSTRIAL -- 3.08%
5,000 GATX Corporation ..................... 250,250 244,375
7,500 Honeywell, Inc. ...................... 323,296 509,062
8,000 Minnesota Mining &
Manufacturing Company .............. 533,340 676,000
14,000 Thomas Industries Inc. ............... 157,975 329,000
3,000 Trinity Industries, Inc. ............. 102,525 91,125
----------- ----------
1,367,386 1,849,562
----------- ----------
ENERGY - ELECTRIC -- 1.13%
1,000 FPL Group, Inc. ...................... 28,613 44,125
40,000 Niagara Mohawk Power Corp. ........... 413,125 340,000
14,000 PacifiCorp ........................... 275,325 299,250
----------- ----------
717,063 683,375
----------- ----------
ENERGY - NATURAL GAS -- 8.10%
19,000 Bay State Gas Company ................ 450,640 486,875
2,000 Berkshire Gas Company ................ 33,290 30,500
3,000 Brooklyn Union Gas Company ........... 74,900 82,500
24,000 Colonial Gas Company ................. 484,600 498,000
26,000 Commonwealth Energy System ........... 514,725 542,750
54,000 Eastern Enterprises Inc. ............. 1,467,890 1,667,250
2,500 Essex County Gas Company ............. 63,375 60,625
4,000 Fall River Gas Company ............... 82,300 64,750
4,000 Peoples Energy Corp. ................. 138,275 132,500
75,000 Southwest Gas Corporation ............ 1,211,650 1,303,125
----------- ----------
4,521,645 4,868,875
----------- ----------
ENERGY - OIL -- 18.01%
6,500 Atlantic Richfield Company ........... 703,893 877,500
14,000 British Petroleum Company, plc ADR ... 614,950 1,921,500
18,000 Burlington Resources, Inc. ........... 758,011 769,500
29,000 Chevron Corporation .................. 952,662 2,019,125
5,000 Elf Aquitane SA ...................... 233,000 246,250
23,000 Exxon Corporation .................... 1,401,537 2,478,250
10,000 Halliburton Company .................. 420,389 677,500
8,000 Pennzoil Company ..................... 362,400 414,000
13,000 Texaco, Inc. ......................... 808,338 1,423,500
----------- ----------
6,255,180 10,827,125
----------- ----------
ENTERTAINMENT -- 0.24%
2,000 Polygram NV ADR ...................... 58,725 98,500
1,000 Time Warner, Inc. .................... 25,888 43,250
----------- ----------
84,613 141,750
----------- ----------
EQUIPMENT AND SUPPLIES -- 4.71%
2,400 Caterpillar, Inc. .................... 56,973 192,600
2,000 Cooper Industries, Inc. .............. 76,305 86,750
27,000 Deere & Company ...................... 374,506 1,174,500
10,000 EG&G Inc. ............................ 175,863 208,750
11,500 Ingersoll Rand Co. ................... 446,262 501,688
1,500 Minerals Technologies, Inc. .......... 37,938 49,875
14,000 Smith (A.O) Corp. Cl. B .............. 468,825 488,250
1,000 Tenneco, Inc. ........................ 35,716 39,000
2,000 Union Carbide Corporation ............ 33,350 88,500
----------- ----------
1,705,738 2,829,913
----------- ----------

The accompanying notes are an integral part of the financial statements.

N-30D 10th Page of 16 TOC 1st Previous Next ↓Bottom Just 10th
The Gabelli Equity Income Fund
Portfolio of Investments -- March 31, 1997 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (Continued)
FINANCIAL SERVICES -- 11.92%
32,000 American Express Company ............. $ 686,394 $ 1,916,000
10,000 Banco Santander SA ADR ............... 448,234 680,000
5,000 BankAmerica Corporation .............. 211,500 503,750
4,000 Bankers Trust Company ................ 344,825 328,000
25,000 Commerzbank AG Spons ADR ............. 480,410 719,255
16,000 Deutsche Bank AG ADR ................. 739,200 900,507
500 Fidelity National Corp. .............. 6,000 4,875
11,000 Morgan (J.P.) & Co. Incorporated ..... 685,500 1,080,750
3,000 Northern Trust Company ............... 60,300 112,500
12,000 SunTrust Banks, Inc. ................. 251,737 556,500
2,200 Transamerica Corporation ............. 111,528 196,900
4,000 U.S. Trust Corporation ............... 47,394 168,000
----------- ----------
4,073,022 7,167,037
----------- ----------
FOOD AND BEVERAGE -- 1.80%
3,500 Kellogg Company ...................... 176,926 235,375
15,000 PepsiCo, Inc. ........................ 452,762 489,375
3,000 Quaker Oats Company .................. 104,850 109,500
14,000 Rykoff-Sexton, Inc. .................. 176,346 246,750
----------- ----------
910,884 1,081,000
----------- ----------
HEALTH CARE -- 0.97%
11,000 Johnson & Johnson .................... 222,341 581,625
----------- ----------
METALS AND MINING -- 1.23%
21,000 Freeport McMoRan Copper &
Gold Inc. Cl. B+ ................... 407,116 637,875
3,500 Freeport-McMoRan, Inc. ............... 73,644 102,375
----------- ----------
480,760 740,250
----------- ----------
PUBLISHING -- 0.57%
2,000 Dow Jones & Company Inc. ............. 76,850 81,250
5,000 Harcourt General, Inc. ............... 230,250 232,500
1,000 Reader's Digest Association,
Inc. Cl. B ......................... 37,067 27,000
----------- ----------
344,167 340,750
----------- ----------
RAILROADS -- 1.88%
10,000 Conrail, Inc. ........................ 1,129,375 1,127,500
----------- ----------
RETAIL -- 0.43%
5,000 Giant Food, Inc. Cl. A ............... 168,375 160,000
2,000 Sears, Roebuck and Co. ............... 51,242 100,500
----------- ----------
219,617 260,500
----------- ----------
SPECIALTY CHEMICALS -- 1.09%
3,000 E.I. du Pont de Nemours
and Company ........................ 196,500 318,000
5,000 Ferro Corporation .................... 138,500 150,000
4,000 Grace (W.R.) & Co. ................... 211,138 189,500
----------- ----------
546,138 657,500
----------- ----------

Principal
Amount Market
or Shares Cost Value
--------- ---- -----
TELECOMMUNICATIONS -- 0.77%
5,000 ALLTEL Corporation ................... $ 120,500 $ 162,500
20,645 Citizens Utilities Company Cl. A ..... 248,500 240,000
1,000 Motorola, Inc. ....................... 27,263 60,375
----------- ----------
396,263 462,875
----------- ----------
TELECOMMUNICATIONS - INT'L TELEPHONE -- 4.53%
18,000 BC TELECOM, Inc. ..................... 317,456 393,425
25,000 BCE Inc. ............................. 845,709 1,150,000
3,000 British Telecommunications
plc ADR ............................ 176,759 210,000
7,500 Cable & Wireless plc ADR ............. 147,710 178,125
1,000 Deutsche Telekom AG -
SPONS ADR .......................... 19,033 21,875
10,000 Hong Kong Telecommuni-
cations Ltd. ADR ................... 139,671 163,750
4,000 STET - Societa Financiaria
Telefonica SpA ADR ................. 124,319 173,500
6,000 Telefonica de Espana ADR ............. 238,959 430,500
----------- ----------
2,009,616 2,721,175
----------- ----------
TELECOMMUNICATIONS -
SATELLITE COMMUNICATION -- 0.92%
15,000 COMSAT Corporation ................... 333,963 365,625
3,500 General Motors Corporation Cl. H ..... 121,800 189,875
----------- ----------
455,763 555,500
----------- ----------
TELECOMMUNICATIONS - U.S. REGIONAL
OPERATORS -- 4.38%
30,000 GTE Corporation ...................... 1,022,000 1,398,750
3,500 NYNEX Corporation .................... 137,222 159,687
2,000 Pacific Telesis Group, Inc. .......... 55,261 75,500
26,000 Southern New England
Telecommunications Corporation ..... 904,264 932,750
2,000 US WEST Communications Group ......... 49,678 68,000
----------- ----------
2,168,425 2,634,687
----------- ----------
TOTAL COMMON STOCKS 35,157,588 50,751,568
----------- ----------
CONVERTIBLE CORPORATE BONDS -- 7.36%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.73%
375,000 GenCorp Inc. Sub. Deb. Cv.
8.00%, 08/01/02 .................... 370,850 439,688
----------- ----------
CONSUMER PRODUCTS -- 0.75%
600,000 Fieldcrest Cannon, Inc. Sub.
Deb. Cv. 6.00%, 03/15/12 ........... 453,980 450,000
----------- ----------
CONSUMER SERVICES -- 1.73%
1,000,000 HSN, Inc. Sub.Deb. Cv.
5.875%, 03/01/06(a) ................ 1,000,000 1,040,000
----------- ----------

The accompanying notes are an integral part of the financial statements.

N-30D 11th Page of 16 TOC 1st Previous Next ↓Bottom Just 11th
The Gabelli Equity Income Fund
Portfolio of Investments -- March 31, 1997 (Unaudited)
================================================================================
Principal
Amount Market
or Shares Cost Value
--------- ---- -----
CONVERTIBLE CORPORATE BONDS (Continued)
ENERGY - OIL -- 0.43%
$ 150,000 Pennzoil Company Sub. Deb. Cv
6.50%, 01/15/02 .................... $ 150,000 $ 258,375
----------- ----------
ENTERTAINMENT -- 0.21%
150,000 Savoy Pictures Entertainment,
Inc. Sub. Deb. Cv. 7.00%, 07/01/03 . 130,435 125,250
----------- ----------
EQUIPMENT AND SUPPLIES -- 1.34%
362,000 Cooper Industries, Inc. Sub.
Deb. Cv. 7.050%, 01/01/15 .......... 368,922 390,960
419,000 Kollmorgen Corporation
Sub. Deb. Cv. 8.75%, 05/01/09 ...... 362,901 419,000
----------- ----------
731,823 809,960
----------- ----------
HOTELS/GAMING -- 0.08%
50,000 Hilton Hotels Corporation Sub.
Deb. Cv. 5.00%, 05/15/06 ........... 50,000 50,375
----------- ----------
PUBLISHING -- 0.76%
100,000 News America Holdings
Incorporated Sub.
Deb. Cv. Zero Cpn., 03/31/02 ....... 68,374 81,314
400,000 Thomas Nelson Inc. Sub.
Deb. Cv. 5.75%, 11/30/99 ........... 397,196 375,000
----------- ----------
465,570 456,314
----------- ----------
RETAIL -- 0.55%
400,000 General Host Corporation Sub.
Deb. Cv. 8.00%, 02/15/02 ........... 394,042 328,000
----------- ----------
TRANSPORTATION -- 0.41%
250,000 Greyhound Lines, Inc. Sub.
Deb. Cv. 8.50%, 03/31/07 ........... 142,339 245,000
----------- ----------
WIRELESS COMMUNICATIONS -- 0.37%
300,000 COMCAST Cellular
Communications Inc.
Redeemable Notes, Zero Cpn.,
03/05/00 ........................... 220,670 220,500
----------- ----------
TOTAL CONVERTIBLE
CORPORATE BONDS .................... 4,109,709 4,423,462
----------- ----------
CONVERTIBLE PREFERRED STOCKS -- 1.59%
BROADCASTING -- 0.12%
1,500 Granite Broadcasting
Corporation $1.938 Cv. Pfd. ........ 93,000 73,500
----------- ----------
CONSUMER PRODUCTS -- 0.03%
4,000 Kerr Group, Inc.
Cl. B $1.70 Cv. Pfd. Ser. D ........ 57,637 18,500
----------- ----------
DIVERSIFIED INDUSTRIAL -- 0.35%
3,600 GATX Corporation
$3.875 Cv. Pfd. ..................... 169,905 211,950
----------- ----------
INDUSTRIAL EQUIPMENT AND SUPPLIES -- 0.69%
20,000 Flagstar Companies, Inc.
$2.25 Cv. Pfd. Ser. A .............. 85,000 20,625
2,500 Navistar International
Corporation $6.00
Cv. Pfd. Ser. G ...................... 68,625 148,437
3,200 Sequa Corporation
$5.00 Cv. Pfd. ...................... 204,510 241,600
----------- ----------
358,135 410,662
----------- ----------
METALS AND MINING -- 0.23%
5,000 Freeport-McMoRan Copper
& Gold, Inc. 5.00% Cv. Pfd. ........ 106,500 141,250
----------- ----------
PUBLISHING -- 0.17%
2,000 Golden Books Family
Entertainment, Inc.
8.75% Cv Pfd. ...................... 100,000 104,000
----------- ----------
TOTAL CONVERTIBLE
PREFERRED STOCKS ................... 885,177 959,862
----------- ----------

U.S. GOVERNMENT OBLIGATIONS -- 7.13%
$4,300,000 U.S. Treasury Bills, 4.850%
to 5.150% due 04/03/97 to 05/22/97 . 4,287,404 4,287,404
----------- ----------
TOTAL U.S. GOVERNMENT
OBLIGATIONS ........................ 4,287,404 4,287,404
----------- ----------
TOTAL INVESTMENTS --
100.50% ............................ $44,439,878 60,422,296
===========
Liabilities, in excess of
Other Assets -- (0.50%) ............ (303,202)
-----------
NET ASSETS -- 100.00%
(4,214,250 shares outstanding) $60,119,094
===========
Net Asset Value And
Redemption Price Per Share ......... $14.27
======
------------
+ Non-income producing security.
ADR -- American Depositary Receipt.
(a) Security-exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At March 31,
1997, Rule 144A securities amounted to $1,040,000 or 1.7% of net assets.
The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements.

N-30D 12th Page of 16 TOC 1st Previous Next ↓Bottom Just 12th
The Gabelli Equity Income Fund
Statement of Assets and Liabilities (Unaudited)
March 31, 1997
===============================================================================
Assets:
Investments in securities, at value
(Cost $44,439,878) (Note 1) ....................... $60,422,296
Cash ................................................ 306,965
Receivable for Fund shares sold ..................... 280,106
Dividends receivable ................................ 135,059
Accrued interest receivable ......................... 61,191
Deferred organizational expenses (Note 5) ........... 3,705
-----------
Total assets ...................................... 61,209,322
-----------
Liabilities:
Payable to Advisor (Note 4) ......................... 52,191
Payable for distribution fees (Note 6) .............. 25,120
Dividends payable ................................... 17,785
Variation margin payable ............................ 9,325
Payable for investments purchased ................... 791,350
Payable for Fund shares redeemed .................... 140,484
Other accrued expenses .............................. 53,973
-----------
Total liabilities ................................. 1,090,228
-----------
Net assets (applicable to 4,214,250
shares outstanding) (Note 2) .................... $60,119,094
===========
Net asset value and redemption
price per share ................................. $14.27
===========
Net Assets Consist of:
Capital Stock, at par value (Note 2) ................ $ 4,214
Additional paid-in capital .......................... 41,919,749
Distributions in excess of accumulated
net investment income ............................. (42,784)
Accumulated net realized gain on investments
and futures transactions .......................... 2,255,510
Net unrealized appreciation on investments
and assets and liabilities denominated
in foreign currencies ............................. 15,982,405
-----------
Net assets ........................................ $60,119,094
===========

Statement of Operations (Unaudited)
For the Six Months Ended March 31, 1997
================================================================================

Investment Income:
Dividends (net of foreign taxes of $15,165) ........... $ 784,332
Interest .............................................. 246,009
----------
Total income ........................................ 1,030,341
----------
Expenses:
Investment advisory fee (Note 4) ...................... 301,876
Transfer and shareholder
servicing agent fees ................................ 76,032
Distribution expenses (Note 6) ........................ 75,437
Printing and mailing expenses ......................... 26,080
Legal and audit fees .................................. 20,090
Custodian fees and expenses ........................... 19,400
Directors' fees ....................................... 17,409
Registration fees ..................................... 7,476
Amortization of organization expenses
(Note 5) ............................................ 3,729
Miscellaneous ......................................... 2,704
----------
Total expenses ...................................... 550,233
----------
Investment income - net ............................... 480,108
----------
Net Realized and Unrealized Gain on Investments
and Foreign Currency Transactions:
Net realized gain on:
Investments and foreign currency
transactions ...................................... 2,481,346
Futures contracts ................................... 39,011
Net change in net unrealized appreciation ............. 2,250,070
----------
Net gain on investments ............................. 4,770,427
----------
Net increase in net assets resulting from
operations ............................................ $5,250,535
==========

Statement of Changes in Net Assets (Unaudited)
================================================================================

[Enlarge/Download Table]

Six Months Year Ended
Ended September 30,
March 31, 1997 1996
-------------- -------------

Increase (decrease) in Net Assets:
Investment income - net ............................ $ 480,108 $ 1,117,055
Net realized gain (loss) on:
Investments and foreign currency transactions .... 2,481,346 2,552,798
Futures contracts ................................ 39,011 8,721
Net change in unrealized appreciation .............. 2,250,070 4,939,022
----------- -----------
Net increase in net assets resulting from operations 5,250,535 8,617,596
----------- -----------
Distributions to shareholders from:
Net investment income .......................... (480,108) (1,142,065)
In excess of net investment income ............. (15,428) (27,356)
Net realized gains ............................. (2,841,942) (2,515,013)
----------- -----------
Total Distributions to Shareholders ......................... (3,337,478) (3,684,434)
----------- -----------
Share transactions - net (Note 2) ................ 1,199,776 (2,732,464)
----------- -----------
Net increase (decrease) in net assets .......... 3,112,833 2,200,698
Net Assets:
Beginning of period ................................ 57,006,261 54,805,563
----------- -----------
End of period ...................................... $60,119,094 $57,006,261
=========== ===========

The accompanying notes are an integral part of the financial statements.

N-30D 13th Page of 16 TOC 1st Previous Next ↓Bottom Just 13th
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited)
================================================================================

1. Significant Accounting Policies. The Gabelli Equity Income Fund (the "Fund")
is a series of Gabelli Equity Series Funds, Inc. (the "Corporation"). The Fund
is an open-end, diversified management investment company and one of two
separately managed portfolios of the Corporation. The Corporation was
incorporated in Maryland on July 25, 1991. Prior to January 2, 1992
(commencement of operations), the Fund had no operations other than the sale of
10,000 shares of common stock at $10.00 per share to Gabelli Funds, Inc., the
Fund's advisor, on November 12, 1991. 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
Fund.

Security Valuation. Portfolio securities listed or traded on the New York or
American Stock Exchanges or quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("NASDAQ") are valued at the last sale price
on that exchange (if there were no sales that day, the security is valued at the
average of the bid and asked prices). All other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest average of the bid and asked prices. When market quotations are not
readily available, portfolio securities are valued at their fair value as
determined in good faith under procedures established by and under the general
supervision of the Corporation's Directors. Short-term debt securities with
remaining maturities of 60 days or fewer are valued at amortized cost, unless
the Directors determine such does not reflect the securities' fair value, in
which case these securities will be valued at their fair value as determined by
the Directors. Options are valued at the last sale price on the exchange on
which they are listed, unless no sales of such options have taken place that
day, in which case they will be valued at the mean between their closing bid and
asked prices.

Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars as follows:

(i) market value of investment securities and other assets and liabilities are
recorded at the exchange rate on the valuation date.

(ii) purchases and sales of investment securities, income and expenses are
recorded at the exchange rate prevailing on the respective date of such
transactions.

The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.

Security Transactions and Investment Income. Security transactions are accounted
for on the dates the securities are purchased or sold (the trade dates), with
realized gain or loss on investments determined by using specific identification
as the cost method. Interest income (including amortization of premium and
discount) is recorded as earned. Dividend income and dividend and capital gain
distributions to shareholders are recorded on the ex-dividend date.

Federal Income Taxes. The Fund intends to continue to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986 and
distribute all of its taxable income to its shareholders. Therefore, no Federal
income tax provision is required.

N-30D 14th Page of 16 TOC 1st Previous Next ↓Bottom Just 14th
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
================================================================================

2. Capital Stock Transactions. The Articles of Incorporation, dated July 25,
1991, permit the Fund to issue 100,000,000 shares (par value $0.001) of capital
stock. Transactions in shares of capital stock were as follows:

Six months ended Year ended
March 31, 1997 September 30, 1997
----------------------- ------------------------
Shares Amount Shares Amount
------- ----------- ------- ------------
Shares sold ...... 514,885 $ 7,473,320 303,716 $ 4,038,337
Shares issued upon
reinvestment of
dividends ...... 220,156 3,143,660 267,164 3,474,191
Shares redeemed .. (648,504) (9,417,204) (775,940) (10,244,991)
-------- ----------- -------- ------------
Net decrease ... 86,537 $ 1,199,776 (205,060) $ (2,732,463)
-------- ----------- -------- ------------

3. Purchases and Sales of Securities. Purchases and sales of securities for the
six months ended March 31, 1997, other than U.S. Government obligations and
short-term securities, aggregated $6,700,143 and $11,362,910, respectively.

Futures Contracts. The Fund 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. Upon entering into a futures
contract, the Fund is required to deposit cash or pledge securities in an amount
equal to a certain percentage of the purchase price indicated in the futures
contract (initial margin). Subsequent payments, which are dependant on the daily
fluctuations in the value of the underlying security, are made or received by
the Fund each day (variation margin) and are recorded as unrealized gains or
losses until the contracts are closed, at which time the Fund recognizes a
realized gain or loss. The Fund sold short futures contracts aggregating
$11,274,875 and closed short futures contracts aggregating $11,314,375 during
the six months ended March 31, 1997.

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 that
the Fund may not be able to enter into a closing transaction because of an
illiquid secondary market.

4. Investment Advisory Contract. The Fund employs Gabelli Funds, Inc., (the
"Advisor") to provide a continuous investment program for the Fund's portfolio,
provide all facilities and personnel, including officers, required for its
administrative management, and to pay the compensation of all officers and
Directors of the Fund who are its affiliates. As compensation for the services
rendered and related expenses borne by the Advisor, the Fund pays the Advisor a
fee, computed and accrued daily and payable monthly, equal to 1.00% per annum of
the Fund's average daily net assets. The Advisor is obligated to reimburse the
Fund in the event the Fund's expenses exceed certain prescribed limits. No such
reimbursement was required during the six months ended March 31, 1997.

5. Organization Expenses. The organization expenses of the Fund are being
amortized on a straight-line basis over a period of 60 months.

6. Distribution Plan. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") under Section 12(b) if the Investment Company Act of 1940 and
Rule 12b-1 thereunder. For the six months ended March 31, 1997, the Fund has
incurred distribution costs payable to Gabelli & Company, Inc., an affiliate of
the Advisor, of $75,437, or 0.25% of average net assets, the annual limitation
under the Plan. The Board of Directors has approved that Distribution costs
incurred by Gabelli & Company, Inc., totaling $190,300, which are in excess of
the 0.25% limitation may be recovered from the Fund in future periods.

N-30D 15th Page of 16 TOC 1st Previous Next ↓Bottom Just 15th
The Gabelli Equity Income Fund
Notes to Financial Statements (Unaudited) (Continued)
================================================================================

7. Transactions with Affiliates. During the six months ended March 31, 1997, the
Fund paid $5,804 in brokerage commissions to Gabelli & Company, Inc., an
affiliate of the Advisor.

Financial Highlights (Unaudited)
================================================================================

Selected data for a share of capital stock outstanding throughout each period:

[Enlarge/Download Table]

Six Months Year Ended September 30,
Ended March 31, --------------------------------------------------------
1997 1996 1995 1994 1993 1992(a)
-------------- ---- ---- ---- ---- -------

Operating Performance:
Net asset value, beginning of period .......... $13.81 $12.65 $11.54 $12.15 $10.40 $10.00
------- ------- ------- ------- ------- -------
Net investment income ......................... 0.12 0.28 0.29 0.30 0.29 0.21
Net realized and unrealized gain on securities 1.16 1.76 1.77 0.08 1.81 0.37
------- ------- ------- ------- ------- -------
Total from investment operations .............. 1.28 2.04 2.06 0.38 2.10 0.58
------- ------- ------- ------- ------- -------

Less Distributions:
Dividends from net investment income .......... (0.12) (0.28) (0.29) (0.31) (0.29) (0.18)
Distributions from net realized gain
on investments .............................. (0.70) (0.01) (0.66) (0.68) (0.0 --
------- ------- ------- ------- ------- -------
Total distributions ........................... (0.82) (0.88) (0.95) (0.99) (0.35) (0.18)
------- ------- ------- ------- ------- -------
Net asset value, end of period ................ $14.27 $13.81 $12.65 $11.54 $12.15 $10.40
------- ------- ------- ------- ------- -------

Total Return (b) .............................. 9.29% 16.65% 19.24% 3.30% 20.50% 5.80%

Ratios to average net assets/supplemental data:
Net assets, end of period (in thousands) ...... $60,119 $57,006 $54,806 $50,191 $54,585 $44,940
Ratio of operating expenses to
average net assets .......................... 1.82%* 1.93% 1.83% 1.81% 1.78% 1.93%
Ratio of net investment income to
average net assets .......................... 1.59%* 1.99% 2.50% 2.58% 2.62% 2.65%
Portfolio turnover rate ....................... 12% 20% 30% 20% 76% 22%
Average commission rate ....................... $0.036 $0.048 -- -- -- --

----------
* Annualized
(a) Fund commenced operations on January 2, 1992.
(b) Total return is calculated assuming a purchase of shares at the net asset
value on the first day and a sale on the last day of each year reported
and includes reinvestment of dividends and distributions.

N-30D Last Page of 16 TOC 1st Previous Next ↓Bottom Just 16th
Gabelli Equity Series Funds, Inc.
The Gabelli Equity Income Fund
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
fax: 1-914-921-5118
http://www.gabelli.com
e-mail: info@gabelli.com
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 P.M.)

Board of Directors

Mario J. Gabelli, CFA Felix J. Christiana
Chairman and Chief Former Senior
Investment Officer Vice President
Gabelli Funds, Inc. Dollar Dry Dock Savings Bank

Anthony J. Colavita Vincent D. Enright
Attorney-at-Law Senior Vice President and
Anthony J. Colavita, P.C. Chief Financial Officer
The Brooklyn Union Gas Company
John D. Gabelli
Vice President Robert J. Morrissey
Gabelli & Company, Inc. Attorney-at-Law
Morrissey & Hawkins
Karl Otto Pohl
Former President Anthonie C. van Ekris
Deutsche Bundesbank Managing Director
BALMAC International, Inc.
Anthony R. Pustorino
Certified Public Accountant
Professor, Pace University

Officers

Mario J. Gabelli, CFA James E. McKee
President and Secretary
Chief Investment Officer

Bruce N. Alpert James Foung, CFA
Vice President and Treasurer Associate Portfolio Manager

Distributor
Gabelli & Company, Inc.

Custodian, Transfer Agent and Dividend Agent
State Street Bank and Trust Company

Legal Counsel
Skadden, Arps, Slate, Meagher & Flom, LLP

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This report is submitted for the general information of the shareholders of The
Gabelli Equity Income Fund. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
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The
Gabelli
Equity
Income
Fund

SEMI-ANNUAL REPORT
MARCH 31, 1997

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘N-30D’ Filing	Date	First	Last	Other Filings

	9/30/97	1	14	24F-2NT, N-30D, NSAR-B, NSAR-B/A
Filed on:	6/10/97			N-30D
	5/1/97	8
For Period End:	3/31/97	1	16	N-30D, NSAR-A
	12/27/96	2
	9/30/96	2		24F-2NT, N-30D, NSAR-B
	8/12/96	8
	6/28/96	2
	3/31/96	2		NSAR-A
	12/29/95	2
	6/30/95	2
	3/31/95	2		NSAR-A
	12/30/94	2
	9/30/94	2		NSAR-B
	6/30/94	2
	3/31/94	2		NSAR-A
	12/31/93	2
	9/30/93	2
	6/30/93	2
	3/31/93	2
	12/31/92	2
	9/30/92	2
	6/30/92	2
	3/31/92	2
	1/2/92	1	15
				List all Filings

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Filing Submission 0001005477-97-001646 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Gabelli Equity Series Funds Inc – ‘N-30D’ for 3/31/97

As of: Tuesday, 6/10/97 · For: 3/31/97 · Accession #: 1005477-97-1646 · File #: 811-06367

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Annual or Semi-Annual Report Mailed to Shareholders — Rule 30d-1Filing Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Annual or Semi-Annual Report Mailed to Shareholders — Rule 30d-1
Filing Table of Contents