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Semi-Annual Report
THE GABELLI
EQUITY TRUST INC.
JUNE 30, 1995
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INVESTMENT OBJECTIVE:
The Gabelli Equity Trust Inc. is a
closed-end, non-diversified management
investment company whose primary
objective is long-term growth of
capital, with income as a secondary
objective.
THIS REPORT IS PRINTED ON RECYCLED PAPER.
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expenses, and should be read carefully prior to investing.
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[PHOTO OF GABELLI]
The Gabelli Equity Trust
Logo
To our Shareholders,
In the second quarter of 1995, the Gabelli Equity Trust Inc.'s
("Equity Trust") net asset value per share, after adjusting for the $0.25
distribution paid on June 27, 1995, increased 4.7% to $9.92 on June 30, 1995.
This compares to the 9.5% return in the unmanaged Standard & Poor's 500
Composite Stock Price Index ("S&P 500") for the quarter. Year to date, the net
asset value has increased 10.3% versus the S&P 500's 20.2% increase. For the
twelve months ended June 30, 1995, the Equity Trust's net asset value increased
14.0%, after adjusting for all distributions and the spin-off of The Gabelli
Global Multimedia Trust Inc. ("Multimedia Trust"). The S&P 500 was up 26.1%
for the same period.
Since inception on August 21, 1986, the Equity Trust's net asset value
has achieved a 200.1% total return, which equates to a 13.2% average annual
return. The three- and five-year average annual returns were 14.4% and 11.0%,
respectively.
The Equity Trust's common shares ended the second quarter at $10.00 per
share on the New York Stock Exchange, an increase of 3.8% for the second
quarter and up 9.3% for the year. For the twelve months ending June 30, 1995,
the common shares had a return of 7.6%, after adjusting for all distributions
and the Multimedia Trust spin-off.
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 graphic on the inside of the front cover further
illustrates the interplay among the four components of our valuation approach.
Our focus is on free cash flow: earnings before interest, taxes,
depreciation and amortization (EBITDA) minus the capital expenditures
necessary to grow the business. We believe free cash flow is the best
barometer of a business' value. Rising free cash flow often foreshadows net
earnings improvement. We also look at earnings per share trends. Unlike Wall
Street's ubiquitous earnings momentum players, we do not try to forecast
earnings with accounting precision and then trade stocks based on quarterly
expectations and realities. We simply try to position ourselves in front of
long-term earnings uptrends. In addition, we analyze on and off balance sheet
assets and liabilities such as plant and equipment, inventories, receivables,
and legal, environmental and health care issues. We want to know everything
and anything that will add to or detract from our private market value (PMV)
estimates. Finally, we look for a catalyst: something happening in the
company's industry or indigenous to the company itself that will surface
value. In the case of the independent telephone stocks, the catalyst is a
regulatory change. In the agricultural equipment business, it is the
increasing worldwide demand for American food and feed crops. In other
instances, it may be a change in management, a sale or spin-off of a division,
or the development of a profitable new business.
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MJG PICTURE
Once we have identified stocks that qualify as fundamental and
conceptual bargains, we then become patient investors. This has been a proven
long-term method for preserving and enhancing wealth in the U.S. equities
market. At the margin, our new investments are focused on businesses that are
well managed and will benefit from sustainable long-term economic dynamics.
These include macro trends such as the globalization of the market in filmed
entertainment and telecommunications, and micro trends such as an increased
focus on productivity enhancing goods and services.
COMMENTARY
Strong corporate profits and declining long-term interest rates pushed
the stock market to record highs in the second quarter of 1995. Technology
related issues as well as financial stocks were particularly buoyant. With
the appetite for transactions whetted by IBM's hostile offer for Lotus, and
with the market likely to ferret out small to medium capitalization companies,
the performance of the Equity Trust should again return to its historical
relationship to other benchmarks.
At the beginning of 1995, we opined that due to cost cutting and
productivity gains, corporate profits would remain strong even in a slowing
economy. We did not anticipate fully the 170 basis point decline in long-term
interest rates that has helped to propel the stock market to its present
levels.
Despite the current conjecture that the Federal Reserve will cut
short-term interest rates to ensure a "soft landing" for the economy, we
suspect long-term and perhaps short-term rates are near an intermediate-term
bottom. This may restrain stocks over the balance of the year. However, we
believe companies that continue to report positive earnings and cash flow
gains will be adequately rewarded. In short, stock pickers will have an
opportunity to excel relative to indexers.
INTERVIEW WITH MARIO GABELLI
We thought we would share with you BARRON'S 1995 midyear interview
with our Chief Investment Officer. Discussion of individual companies is not
necessarily reflective of the Fund's portfolio holdings.
BARRON'S 1995 MIDYEAR ROUNDTABLE
BARRON'S: TELL US, MARIO, WILL THE REST OF '95 BE AS GOOD AS THE FIRST HALF?
GABELLI: When we started the year, I basically said, "Look, every company
I follow has been cutting costs and earnings are going to be good. Well,
earnings have been terrific".
Q: OKAY. WE'LL GRANT, TOO, THAT THERE'S MORE DEAL ACTIVITY, AS YOU
PREDICTED.
GABELLI: My prescription for 1995 was that we were going to have a deal a
day; that the phenomenon was going to be global and focused; that certain
companies would buy other companies to gain distribution or product niches.
I also pointed to Jack Welch and Kemper as the beginning of the third wave
of takeovers, in which hostile deals would become increasingly common.
And you saw, just in the last three months - what's that company? - IBM
launched a hostile bid for a company they wanted. And Ingersoll-Rand,
which is a really sleepy company that you would never dream would do a
hostile, took over Clark Equipment. You also saw it with International
Paper trying to overbid a Swiss paper company, taking it to court. What I
did not get right was the level of interest rates. I felt rates wouldn't
back off from 8% - and they've had one of the bigger rallies in the last
six months.
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Q: SO NOW WHAT?
GABELLI: Going forward, I see earnings continuing to be quite good.
However - and this is important - the Street is starting to up their
expectations, so you're going to start seeing some disappointments. And
when you see disappointments, you're going to see some air pockets in
stocks. For example, in the last couple of days consumer related companies
like Sunbeam and Ethan Allen got absolutely blasted in the market. Certain
niches in the health care area, where they've had earnings disappointments,
are other examples. So the earnings front could be terrific over the next
12 months, but if the Street is starting to discount a lot, what turns out
to be just a good quarter is going to look lousy.
On the interest-rate front I'll try again: at 6.5%, rates are not going
to go down from here.
Q: WHY NOT?
GABELLI: I'm looking at cyclical inflation at 3.6%. In addition, I see a
couple of things, like the LDCs' huge need for capital. Since they have a
higher return, they can pay more for debt. So you have an embedded
structural demand for capital in emerging countries that probably will
keep real rates of return higher than they have historically been.
Therefore, on balance, the things that have lifted the market are not
there anymore.
Q: BUT - DON'T TELL US - INDIVIDUAL STOCKS ARE ANOTHER MATTER FOR A SAVVY
STOCK PICKER LIKE YOU.
GABELLI: How did you guess? Individual stocks are going to do quite well
in their sectors. In the takeover game, even you can identify some fairly
obvious trends.
Q: WHY NOT JUST TELL US ABOUT THEM?
GABELLI: There are the broadcasters, the banks, the brokers - you can take
a triple-B approach. The broadcasters, because of changes in regulations.
I identified this back in January and they have done spectacularly well.
The brokers, because Glass-Steagall is going to be changed, as we also
discussed at the Roundtable. We've already seen the Germans going into
Britain and buying Kleinwort; the Dresdner Bank did the deal. You're
going to see, if Glass-Steagall is changed, that it rings a big bell for
banks to get into the brokerage business. Then there are the banks
themselves. Every day, you're seeing a bank deal in the headlines. Those
8,000 banks - or whatever the number is - are going to be consolidated.
At the same time, people want industrial companies in America. You
continue to have restructurings, ITT being the most visible. In that
particular case, it's happening because Rand Araskog was a real Latin
scholar and remembers "Gallia est omnis divisa in partes tres," except
that he thought it was "ITT est omnis divisa in partes tres" [ITT's parts
are worth more than the whole].
My conclusion is that over the next six months, the next twelve months,
you're going to have some fairly strong stocks.
Q: WHICH, IS THE QUESTION.
GABELLI: I just got back from a quick trip abroad - six countries in six
days or something. Being in Kuwait and driving to the border there, I got
the feeling I wouldn't want to play golf on the border because I slice.
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Being in Jerusalem, one hopes there is peace and a great deal of
opportunity. Being in Italy, which is about 30 minutes by F16 to
Bosnia, you worry about those pockets of conflict. But I was also in
Paris and stopped off at the Paris Air Show, where I saw some other
dynamics.
Q: SURE, AERODYNAMICS.
GABELLI: Those too! But one of the dynamics that is very clear to me,
and which I talked about at the Roundtable, is that there are three
billion new consumers out there. You have them in China. You have them
in India. The 5% of the population in India that's middle-class is
bigger than the population of Italy. It's almost as big as the
population of Germany. And they are going to travel. I was on enough
airplanes to make me sensitive to the age of those machines.
Q: THERE MUST BE AN INVESTMENT IDEA IN HERE SOMEWHERE?
GABELLI: Boeing has an advantage, from a currency point of view, and
because of its technology position. Also, because an aging fleet needs
to be replaced. And from the point of view that the growth in these
emerging markets is consumer-driven. So Boeing - and vendors to
Boeing - are going to be quite attractive over the next two or three
years. I like a bunch of companies in the Boeing-vendor category. One
might argue that I should just buy Boeing at $64 or buy Honeywell,
which makes some advanced avionics for it, at $42 - and I'm kind of
orienting my thinking in that fashion. But the ones that I'm
particularly fond of - and I have ridden them up and down - are the
nuts and bolts makers.
Q: CAN YOU BE A TAD MORE SPECIFIC?
GABELLI: There's a company called SPS Technologies, with 5.5 million
shares outstanding and a new management. The stock is at $37.
Earnings this year should be $2.35 - $2.50, and they are going to march
right up to $5 by 1998. Management will make some acquisitions on top
of that, so you're talking about $7 - $8 of earnings. The stock is
going to sell at a materially higher price. Hi-Shear is a company that
sells at $7 and has six million shares outstanding. It's a small cap,
but it's breaking even at the bottom of its cycle and - as soon as
Boeing starts shipping more - they're going to get better orders.
Then, you have some bigger companies like Crane, which has 30 million
shares on the New York Stock Exchange and trades at $36. They earned
$1.85 in '94; they're going to do $2.40 this year. Earnings are going
to march right up to $3.50 - $5.00 by the year 2000. In the Boeing
category, they make things like anti-skid brakes, so the planes stop
when you want them to. They make pumps. And they've bought a couple
of other small suppliers to Boeing, so they have a package there. We
are also very fond of another company, called Ametek, on the New York
Stock Exchange. It has about 34 million shares outstanding. The stock
is at $17. They are going to do $1.35 this year, which marches
steadily up to about three bucks in the year 2000. We're a major
shareholder. They've been buying back the stock. They're very
shareholder-sensitive, they're cash-generators. And the only part of
Ametek's business that's been limping is this aerospace part, where
they do precision instruments, fluid gauges and so on.
Then we like a company called Curtiss-Wright. I've liked it for a long
time.
Q: NO KIDDING!
GABELLI: I know, I've been on it for 10 years. Eventually, like a
stopped clock, I'll be right. They've got
4
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close to $100 million, or $20 a share, in cash. And they make things
like wing-flap actuators and they are getting orders on the new
Boeings. Right now there is an air pocket in earnings. But the stock
has drifted up with the market.
Another is Kollmorgen, which makes certain types of motors. It's a $7
stock, 10 million shares. This year, they'll have earnings of about 50
cents a share, with its price marching up to close to $32 by the year
2000. At $7, I figure this is what my good buddy, Peter, would call a
"four-bagger." They're starting to get their act together.
Q: KOLLMORGEN ISN'T EXACTLY A PURE PLAY ON BOEING?
GABELLI: No, whereas SPS and Hi-Shear are. With Ametek, it's
cyclically depressed; roughly one-third of their business. But Boeing
and its vendors are such an obvious play in terms of the airline stocks
doing better, which obviously improves their ability to finance new
planes. And it's not only U.S.-oriented - Boeing is very much in the
global market. My last name in that sector is Sequa. They make
jet-engine parts and their Chromalloy division makes parts that have to
go into airplanes every time they're periodically overhauled. The
stock is at $31 and they can do about $3.50 a share, looking out to
'97-'98. They've made a series of blunders that cost the shareholders a
bundle. But, hopefully, they'll just wait for the cycle to catch up now.
Q: WHAT ELSE ARE YOU DOING?
GABELLI: Another area is telephones. In Kuwait, the phone service was
fabulous. In Jerusalem, it was terrific. Every day, around the world,
long distance rates are coming down and demand is growing double-digits,
both for voice and data. So I like the long-distance companies. I like
AT&T and I like Sprint.
Q: NOW YOU LIKE SPRINT?
GABELLI: Sprint I like, not because the management has great vision,
and not because they are doing a joint venture with Deutsche Telekom
and France Telecom. But I like what they're doing with the cable
companies - using the cable structure, both marketing and distribution,
to gain access to customers. They are positioning themselves to be a
global brand-name factor in local telephony. So at $34 I like Sprint,
even though I have had some difficulties with management's vision in
the past - or lack thereof.
Q: IS THAT IT, MARIO?
GABELLI: Are you kidding? In the global game, you have things like
music, that travel well. I'm sure Batman Forever will do quite well in
the global interactive-couch potato game. So I'm still recommending
stocks like Time Warner and Viacom. Entertainment is terrific. When I
was driving from the airport in Kuwait, every house had a dish on it.
In India they've gone from 500,000 to 16 million satellite dishes. In
Iran, they have them - and they're not supposed to. In Indonesia they
are growing. Other things that travel well are CNN, Turner Broadcasting
and News Corp. And Disney cartoons - everybody I talked to wants a
cartoon channel.
Q: THAT SAYS SOMETHING.
GABELLI: I also like other companies in the global media area. I
talked about Seagram in January.
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Essentially, they sold plastics, contrary to the advice in The Graduate
and got into filmed entertainment. Seagram is probably going to figure
out a way to get a network distributor; they'll buy a CBS at some
point, even though the price is a little rich here.
Another we're participating in is American Brands which I also mentioned
at the Roundtable. They are in the golf business. There are 14,500 golf
courses that are growing at 5%. More people are playing. People want to
travel but they'd all travel to places where there's a golf course. This
company has the Foot-Joy and Titleist brands. Unfortunately, they'll make
the mistake of trying to buy Callaway Golf. They are better off
aggressively buying back their own stock. But on the other side, they'll
probably follow the path of ITT. They'll split the company up into three:
their consumer brands, their global tobacco business in the U.K. and their
liquids business, which is primarily alcohol.
Q: WHAT IS IT WORTH?
GABELLI: The company is worth about $65, if they do nothing but
continue to buy back their stock and not do silly things like buy
Callaway, even though it's synergistic. But even if they do, the stock
has a value of $100 by the year 2000 - and it's selling at $38 with a
fat dividend. Now, they have a high propensity to do something dumb,
but if they do, they'll become the target of a hostile takeover. And
investors like me are going to support that. The management has been
told they should really be aggressively doing smart things like buying
back the stock or restructuring, not making investment bankers rich by
doing deals they bring to them.
Q: TOO BAD YOU NEVER SPEAK YOUR MIND.
GABELLI: Another idea that's right in front of my nose is that cigars
are back. Premium cigars are back in particular, and there is only one
publicly-held cigar company in the U.S., Culbro. Culbro imports
cigars. Pre-Castros are in, Castros are in and post-Castros are going
to be in. So the stock is selling around $28. The stock spiked five or
ten points because they announced a deal with a Spanish tobacco
company. But my point is that, even if the deal breaks, demand for
premium cigars is one of the great little growth industries. Everybody
is smoking. I'm just trying to figure out where.
Q: ON THE TRUMAN BALCONY! BUT GO ON.
GABELLI: In the restructuring camp, I also like an old favorite, which
I own a lot of, Hilton. They put the company up for auction. They got
a lot of bidders, but not for the whole company. That may also have
been the case with Multimedia, which I recommended in January and still
like. They are going to split Hilton in two. And when somebody sits
down and calculates the present value of the parts, it'll be interesting.
So I like Hilton at $67. The spin-offs, in hotels and in gaming, are
going to find their own respective suitors. Finally, going back to
another old idea, regulatory change coming out of the Telecommunications
Deregulation Act of 1995 or 1996 will allow broadcasters to be basically
non-controlled. Cable will be able to get into telephone; telephones will
be able to get into cable. We're going see a lot of mergers and
acquisitions. On my list of transaction-driven companies are all the
small ones: Media General, Multimedia, Outlet Communications, Citicasters
and a bunch of radio operators.
BARRON'S: THANKS, MARIO.
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LET'S TALK STOCKS
The following are stock specifics on selected holdings of the Equity Trust's
investments. 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 - $35.125 - 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 card.
Less well recognized are its other important operations, such as
Minneapolis-based American Express Financial Advisors, Inc. (formerly IDS
Financial Services), which sells financial products ranging from mutual funds
to annuities. In 1994 Harvey Golub, Chairman and CEO, continued his program of
refocusing AXP on its core charge card and travel services businesses by
spinning off Lehman Brothers Holdings Inc. We look for earnings growth at
double digit rates over the balance of this decade.
Chris-Craft Industries, Inc. (CCN - $35.00 - NYSE) is primarily engaged in
television broadcasting through its roughly 70% ownership of BHC
Communications, Inc. (BHC - $80.375 - ASE). BHC owns and operates independent
TV stations in Los Angeles (KCOP) and Portland, Oregon (KPTV). BHC also
controls 50% of United Television, Inc. (UTVI - $71.00 - NASDAQ), an operator
of an NBC-affiliated TV station, an ABC affiliate and three independent
outlets. BHC has entered into a partnership agreement with Paramount
Communications, Inc. to form and launch a new, fifth television network called
United Paramount Television Network (UPN). With about $1.5 billion in
marketable securities and cash, derived from the 1993 disposition of Time
Warner securities, CCN is strongly positioned to expand its operations. CCN
is the eighth-largest TV station group owner in the U.S., covering almost 20%
of TV households.
General Motors Corporation (GM - $46.875 - NYSE) is positioned to benefit from
a recovery in North American auto sales. Last year, its North American
operations were profitable for the first time in four years and international
profits continue to grow. With Jack Smith at the helm, GM is improving the
style and quality of its cars, rationalizing its production processes and
greatly reducing its costs. With peak earnings power exceeding $10 per share,
GM is a core holding.
GTE Corporation (GTE - $34.125 - NYSE) is the fourth-largest publicly-owned
telecommunications company in the world and is the largest domestic local
telephone company, serving 22 million access lines in 30 states. GTE is the
nation's second largest provider of cellular service, with a controlling
interest in metropolitan and rural service areas having over 50 million POPS.
Media General, Inc. (MEG'A - $30.50 - ASE) is a Richmond, VA - based company
publishing daily newspapers in Richmond, VA, Tampa, FL and Winston-Salem, NC.
Media General owns three network TV stations in Tampa, Charleston, SC, and
Jacksonville, FL, and a cable television franchise in Fairfax County, VA. With
a recovery in the operations and values of media properties, the successful
defense of the Richmond franchise from encroachment by the Washington Post, and
a pickup in transactions in the cable arena, this company is poised for a
significant rebound.
Pittway Corporation (PRY'A - $45.75 - ASE; PRY - $45.75 - ASE) has
undergone significant changes over the past few years, selling or
spinning off businesses representing half its sales volume and over 60%
of its income. The company has two remaining core businesses,
manufacturing and distributing professional burglar and fire alarm
equipment and publishing trade magazines and directories. The Ademco
Security Group, approximately 75% of revenues, is having banner years.
Penton Publishing appears to be emerging from three years of difficult
operating conditions as operating margins are now showing improvement.
Pittway is also involved in real estate and other promising ventures,
including a 45% interest in a leading manufacturer of encryption
equipment and a 5% equity interest in a satellite broadcast company.
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Sprint Corporation (FON - $33.625 - NYSE) remains very attractive in light of
its very low valuation and prospects for earnings acceleration. It trades at
59% of our $67 estimate of private market value. We expect the telephone and
cellular operations to be the main contributors to operations due to the
continuation of strong customer growth. We point out subscriber growth of 67%
in cellular last year. The long distance operations should maintain less
spectacular call volume growth at the industry average of approximately 8%.
Sprint's high cost structure also provides an opportunity for earnings
acceleration through further cost restructuring. An alliance with a
multinational communications partner also appears imminent and will provide
Sprint with the critical mass necessary to position itself strategically as a
dominant player in the multinational telecommunications market.
Time Warner Inc. (TWX - $41.125- NYSE) is one of the largest diversified media
and publishing companies in the world, with a market capitalization of over $15
billion. Warner Brothers Studios, the company's filmed entertainment
subsidiary, was ranked number one at the box office for the third consecutive
year. Its most recent summer blockbuster, Batman Forever, grossed $150 million
in its first few weeks in theaters. Time Warner is restructuring its business
into copyright and creativity (notably publishing, music and filmed
entertainment) on one side and distribution (mostly cable) on the other. Under
the aegis of Gerald M. Levin, investors can expect significant returns.
Viacom Inc. (VIA - $46.50 - ASE; VIA'B - $46.375 - ASE) has evolved into one
of the world's dominant media companies. Following its recent acquisitions of
Paramount Communications and Blockbuster Entertainment, the company is now
selling non-core assets and focusing on the global expansion of its media
franchises.
10% DISTRIBUTION POLICY
Pursuant to the Equity Trust's 10% Distribution Policy, the Equity Trust will
distribute $0.25 per share at the end of each of the first three calendar
quarters. The final distribution in December is an adjusting distribution in
order to meet the Fund's 10% payout goal as well as Internal Revenue Code
requirements.
The Fund recently distributed its second quarter distribution of $0.25 per
share on June 27, 1995. The next distribution is scheduled for payment in
September of 1995.
IN CONCLUSION
The first half of 1995 has been terrific for equity investors. We believe the
market will prove to be a sterner test in the second half, with stock selection
more critical to success. As always, we have reservations regarding the broad
market. At current levels, investors have made a big bet that the economy will
slow down without stalling and that inflation and interest rates will remain
low. If reality does not conform with expectation, stocks could hit an air
pocket.
Regardless of what Mr. Market has in store for us over the balance of the year,
we believe our portfolio offers excellent fundamental long-term value. We
remain confident that if we buy good businesses at opportunistic prices, we
will enhance the value of the assets you have entrusted to us.
Sincerely,
Mario J. Gabelli, CFA
President and Chief Investment Officer
July 17, 1995
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THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES
QUARTER ENDED JUNE 30, 1995
(UNAUDITED)
<CAPTION>
OWNERSHIP AT
JUNE 30,
SHARES 1995
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<S> <C> <C>
NET PURCHASES
COMMON STOCKS
American Brands, Inc. ......................................................................... 45,000 220,000
Atlantic Richfield Company..................................................................... 3,000 33,000
BC TELECOM Inc. ............................................................................... 20,000 90,000
BCE Mobile Communications Inc. ................................................................ 1,500 15,000
Brau und Brunnen (a)........................................................................... 4,040 12,540
CANAL +, Sponsored ADR......................................................................... 4,000 22,000
Carter-Wallace, Inc. .......................................................................... 39,800 160,000
Chevron Corporation............................................................................ 1,000 5,000
Church & Dwight Co., Inc. ..................................................................... 20,000 70,000
COMSAT Corporation............................................................................. 10,000 100,000
Culbro Corporation............................................................................. 7,000 23,000
Darden Restaurants Inc. (b).................................................................... 5,000 5,000
Deutsche Bank AG, Sponsored ADR (c)............................................................ 139,500 155,000
Dole Food Company, Inc. ....................................................................... 5,000 70,000
Earl Scheib, Inc. ............................................................................. 10,000 60,000
E.I. du Pont de Nemours and Company............................................................ 39,000 39,000
Ferro Corporation.............................................................................. 4,500 60,000
Gaylord Entertainment Company, Class A (d)..................................................... 14,425 29,425
Gillette Company (e)........................................................................... 12,000 24,000
Greif Bros. Corporation, Class A (e)........................................................... 120,000 240,000
Greif Bros. Corporation, Class B (e)........................................................... 1,700 3,400
Grupo Televisa S.A., GDR....................................................................... 34,500 50,000
Handy & Harman................................................................................. 40,500 120,500
Hilton Hotels Corporation...................................................................... 21,000 80,000
Independent Newspapers plc ORD................................................................. 15,000 50,000
Keystone International, Inc. .................................................................. 3,000 23,000
Lawter International, Inc. .................................................................... 4,000 30,000
Liberty Corporation............................................................................ 8,000 40,000
LIN Broadcasting Corporation................................................................... 66,000 100,000
Lotus Development Corporation.................................................................. 125,500 125,500
Lufkin Industries, Inc. ....................................................................... 25,000 50,000
LVHM Moet Hennessy Louis Vuitton, Sponsored ADR................................................ 3,000 3,000
Marion Merrell Dow Inc. ....................................................................... 3,000 103,000
Mark IV Industries, Inc. (d)................................................................... 8,479 178,068
Meredith Corporation........................................................................... 6,000 26,000
Minnesota Mining and Manufacturing Company..................................................... 35,000 110,000
Multimedia, Inc., New.......................................................................... 25,000 175,000
National Presto Industries, Inc. .............................................................. 400 6,400
Navistar International Corporation............................................................. 30,000 400,000
Oriental Press Group ORD....................................................................... 100,000 249,000
PACCAR Inc. ................................................................................... 5,000 10,000
Ralston Purina Group (f)....................................................................... 4,075 134,075
Reader's Digest Association, Inc., Class B..................................................... 6,500 46,000
Santa Fe Energy Resources, Inc. ............................................................... 20,000 50,000
SBC Communications Inc. (g).................................................................... 190,000 190,000
Seagram Company Ltd. .......................................................................... 50,000 100,000
Sequa Corporation, Class A..................................................................... 3,000 32,000
Sequa Corporation, Class B..................................................................... 4,000 44,000
South China Morning Post Holdings ORD.......................................................... 80,000 100,000
SPS Technologies, Inc. ........................................................................ 1,500 84,000
Telecom Corporation of New Zealand Limited, Sponsored ADR...................................... 500 1,000
Television Broadcasting Ltd. ORD............................................................... 50,000 100,000
Time Warner Inc. .............................................................................. 25,000 260,000
Tootsie Roll Industries, Inc. ................................................................. 9,000 9,000
Wrigley (Wm.) Jr. Company...................................................................... 16,000 66,000
NET SALES
COMMON STOCKS
ALLTEL Corporation............................................................................. 10,000 --
Ameritech Corporation.......................................................................... 3,000 --
AMR Corporation................................................................................ 5,000 82,000
AptarGroup, Inc. .............................................................................. 1,000 349,000
Belize Holdings Inc. .......................................................................... 1,000 11
BellSouth Corporation.......................................................................... 500 --
Berliner Bank Aktiengesellschaft............................................................... 1,200 30,000
Black & Decker Corporation..................................................................... 20,000 20,000
Bruncor, Inc. ................................................................................. 1,000 --
Brunswick Corporation.......................................................................... 10,000 50,000
Century Telephone Enterprises, Inc. ........................................................... 4,500 175,000
Churchhill Downs Inc. ......................................................................... 1,500 --
Clemente Global Growth Fund Inc. .............................................................. 1,000 --
Coca-Cola Enterprises Inc. .................................................................... 35,000 230,000
Contel Cellular Inc. (h)....................................................................... 10,000 --
Daimler-Benz Aktiengesellschaft, ADR........................................................... 4,400 --
Detroit Diesel Corporation..................................................................... 3,500 --
Donaldson Company, Inc. ....................................................................... 6,500 230,000
Duracell International Inc. ................................................................... 2,500 10,000
Ecolab, Inc. (i)............................................................................... 216,000 --
Fibreboard Corporation, New.................................................................... 3,000 --
First Brands Corporation....................................................................... 3,000 30,000
Flextech plc ORD............................................................................... 10,000 --
Ford Motor Company............................................................................. 36,000 --
Foster's Brewing Group Limited, ADR............................................................ 10,000 --
Frontier Corporation........................................................................... 45,000 5,000
General Host Corporation....................................................................... 3,500 70,000
General Motors Corporation..................................................................... 5,000 300,000
Harcourt General, Inc. (j)..................................................................... 382,000 --
ITT Corporation................................................................................ 1,300 105,000
Johnson & Johnson.............................................................................. 18,000 167,000
Johnson Controls, Inc. ........................................................................ 3,000 110,000
LIN Television Corporation..................................................................... 2,000 15,000
MCI Communications Corporation................................................................. 2,500 --
MFS Communications Company, Inc. .............................................................. 3,000 --
Minerals Technologies Inc. .................................................................... 5,500 --
Morgan Grenfell SMALLCap Fund Inc. ............................................................ 10,356 7,000
NewTel Enterprises Limited..................................................................... 3,000 --
NEXTEL Communications, Inc., Class A........................................................... 10,400 19,600
</TABLE>
9
<PAGE>
<TABLE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES -- (CONTINUED)
QUARTER ENDED JUNE 30, 1995
(UNAUDITED)
<CAPTION>
OWNERSHIP AT
JUNE 30,
SHARES 1995
---------- -------------
<S> <C> <C>
NET SALES--(CONTINUED)
COMMON STOCKS--(CONTINUED)
Philippine Long Distance Telephone Company....................................................... 2,300 --
Philips Electronics N.V., New York............................................................... 20,000 120,000
Pittway Corporation, Class A..................................................................... 3,000 392,000
Plum Creek Timber Company, L.P................................................................... 12,500 --
PS Group, Inc. .................................................................................. 4,000 --
Puritan Bennett Corporation...................................................................... 12,000 --
Quebec-Telephone................................................................................. 3,000 --
Ralcorp Holdings, Inc. .......................................................................... 1,666 40,000
Ralston-Continental Baking Group (f)............................................................. 45,000 --
Rayonier Inc. ................................................................................... 35,000 --
Royal PTT Nederland NV, Sponsored ADR, 144A...................................................... 23,000 25,000
Salomon Inc. .................................................................................... 2,000 20,000
Sotheby's Holdings, Inc., Class A................................................................ 5,000 5,000
Southern New England Telecommunications Corporation.............................................. 20,000 --
Southwestern Bell Corporation (g)................................................................ 190,000 --
Sprint Corporation............................................................................... 2,000 665,500
SPX Corporation.................................................................................. 10,000 40,000
Tenneco Inc. .................................................................................... 2,204 100,000
Value Line, Inc. ................................................................................ 8,000 --
Varity Corporation, New.......................................................................... 10,000 240,000
Westvaco Corporation............................................................................. 25,000 --
Vodafone Group, Sponsored ADR.................................................................... 7,500 --
Volkswagen AG, Sponsored ADR..................................................................... 7,500 --
PREFERRED STOCKS
News Corporation Ltd., Sponsored ADR, Pfd........................................................ 2,500 --
Sprint Corporation, 8.250%, Conv. Pfd............................................................ 3,000 27,000
COMMON STOCK WARRANTS AND RIGHTS
Viacom Inc., Contingent Value Rights, expires 07/07/1995......................................... 5,000 45,000
<FN>
---------------
(a) Rights subscription.
(b) Spinoff-1 share of Darden Restaurants Inc. for each share of General Mills, Inc.
(c) 10 for 1 stock split.
(d) Stock dividend.
(e) 2 for 1 stock split.
(f) Distribution-0.0886 shares of Ralston Purina Group for each share of Ralston-Continental Baking Group.
(g) Name change from Southwestern Bell Corporation to SBC Communications Inc.
(h) Cash Merger-$25.50 for each share of Contel Cellular Inc.
(i) Tendered all shares @ $25.00.
(j) Tendered all shares @ $40.50 in a Dutch Auction.
</TABLE>
10
<PAGE>
<TABLE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS
JUNE 30, 1995 (UNAUDITED)
<CAPTION>
MARKET
SHARES COST VALUE
--------------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS--85.9%
INDUSTRIAL EQUIPMENT AND SUPPLIES--13.6%
170,000 AMETEK, Inc. ........................................... $ 2,373,643 $ 3,060,000
180,000 Ampco-Pittsburgh Corporation............................ 2,386,035 1,642,500
349,000 AptarGroup, Inc. ....................................... 5,713,579 11,211,625
7,000 Caterpillar Inc. ....................................... 191,305 449,750
66,000 CLARCOR Inc. ........................................... 1,202,150 1,509,750
71,925 Crane Co................................................ 1,852,074 2,607,281
125,000 CTS Corporation......................................... 2,855,102 3,812,500
124,000 Deere & Company......................................... 3,591,078 10,617,500
230,000 Donaldson Company, Inc. ................................ 2,654,323 6,008,750
19,125 Duriron Company, Inc. .................................. 109,331 430,313
60,000 Gerber Scientific, Inc. ................................ 460,407 1,005,000
240,000 Greif Bros. Corporation, Class A........................ 4,285,781 5,610,000
3,400 Greif Bros. Corporation, Class B (a).................... 69,824 79,475
40,000 Guardsman Products, Inc. ............................... 450,400 515,000
400,000 IDEX Corporation........................................ 3,940,517 13,400,000
23,000 Keystone International, Inc. ........................... 465,275 451,375
35,000 Lafarge Corporation..................................... 595,375 656,250
50,000 Lufkin Industries, Inc. ................................ 908,349 937,500
12,000 M/A-Com, Inc.+.......................................... 57,975 141,000
40,000 Manitowoc Company, Inc. ................................ 870,450 1,155,000
178,068 Mark IV Industries, Inc. ............................... 2,001,932 3,828,462
12,500 Martin Marietta Materials, Inc. ........................ 278,437 250,000
400,000 Navistar International Corporation+..................... 8,051,983 6,050,000
130,000 Nortek, Inc.+........................................... 808,129 1,121,250
5,000 Nortek, Inc., Special Common+ (a)....................... 72,155 43,125
10,000 PACCAR Inc. ............................................ 516,001 467,500
45,000 Pittway Corporation..................................... 985,804 2,058,750
392,000 Pittway Corporation, Class A............................ 6,107,004 17,934,000
2,000 Scientific-Atlanta, Inc. ............................... 29,175 44,000
32,000 Sequa Corporation, Class A+............................. 1,283,329 936,000
44,000 Sequa Corporation, Class B+............................. 2,141,060 1,474,000
84,000 SPS Technologies, Inc.+................................. 2,830,863 3,160,500
100,000 St. Joe Paper Company................................... 3,333,516 6,350,000
240,000 Varity Corporation, New+................................ 4,648,970 10,560,000
20,000 Watts Industries, Inc., Class A......................... 415,830 501,250
----------- -----------
68,537,161 120,079,406
----------- -----------
TELECOMMUNICATIONS--11.5%
168,000 AT&T Corp. ............................................. 6,301,308 8,925,000
90,000 BC TELECOM Inc. ........................................ 1,611,422 1,546,176
80,000 BCE Inc. ............................................... 2,681,717 2,570,000
11 Belize Holdings Inc. ................................... 176 176
7,000 British Telecommunications plc, Sponsored ADR........... 450,422 439,250
50,000 Cable & Wireless plc, Sponsored ADR..................... 1,037,173 1,025,000
35,000 Cincinnati Bell Inc. ................................... 650,375 883,750
1,600 Compania Telefonos de Chile SA, Sponsored ADR........... 105,319 130,200
141,000 C-TEC Corporation+...................................... 2,782,272 3,542,625
30,000 C-TEC Corporation, Class B+............................. 463,817 738,750
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
<TABLE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<CAPTION>
MARKET
SHARES COST VALUE
--------------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS (CONTINUED)
5,000 Frontier Corporation.................................... $ 83,875 $ 120,000
440,000 GTE Corporation......................................... 8,821,086 15,015,000
15,000 Hong Kong Telecommunications Ltd., Sponsored ADR........ 214,925 298,125
1,000 Hungarian Telephone & Cable Corp.+...................... 12,000 13,625
1,020,000 Jamaica Telephone Ltd. ORD+............................. 101,641 100,429
40,000 Lincoln Telecommunications Company...................... 593,225 630,000
10,000 Maritime Telegraph and Telephone Company, Limited....... 162,919 140,603
20,000 Motorola, Inc. ......................................... 377,000 1,342,500
50,000 NYNEX Corporation....................................... 2,038,358 2,012,500
30,000 Pacific Telesis Group Inc. ............................. 977,865 802,500
25,000 Royal PTT Nederland NV, Sponsored ADR, 144A (c)......... 668,718 890,625
190,000 SBC Communications Inc. ................................ 3,375,539 9,048,750
10,000 Singapore Telecommunications Limited ORD................ 23,114 19,535
665,500 Sprint Corporation...................................... 9,092,518 22,377,437
3,000,000 STET-Societa Finanziaria Telefonica p.a. ORD............ 5,770,661 8,300,217
4,000 Telecom Argentina Stet-France Telecom S.A.,
Sponsored ADR......................................... 189,158 180,500
1,000 Telecom Corporation of New Zealand Limited,
Sponsored ADR......................................... 48,126 60,625
3,200,000 Telecom Italia SpA, ORD................................. 6,460,061 8,677,471
260,000 Telecomunicacoes Brasileiras SA (Telebras), Sponsored
ADR................................................... 4,632,854 8,515,000
5,927 Telecomunicacoes Brasileiras SA (Telebras),
Sponsored ADR, 144A (c)+.............................. 333,613 194,109
7,500 Telefonica de Argentina S.A., ADR, Class B.............. 202,670 185,625
55,000 Telefonica de Espana, Sponsored ADR..................... 1,880,319 2,131,250
13,000 Telefonos De Mexico SA, Sponsored ADR................... 515,642 385,125
----------- -----------
62,659,888 101,242,478
----------- -----------
BROADCASTING--9.5%
135,000 BHC Communications, Inc., Class A+...................... 7,118,598 10,850,625
70,000 Capital Cities/ABC, Inc. ............................... 3,120,473 7,560,000
316,313 Chris-Craft Industries, Inc. ........................... 4,690,339 11,070,955
511,448 Chris-Craft Industries, Inc., Class B (a)............... 8,836,324 17,900,680
50,000 Grupo Televisa S.A., GDR................................ 897,963 1,018,750
128,000 Havas, Sponsored ADR.................................... 2,466,155 2,480,000
40,000 Liberty Corporation..................................... 1,132,137 1,090,000
15,000 LIN Television Corporation+............................. 63,060 504,375
160,000 Outlet Communications, Inc., Class A+................... 1,734,690 6,000,000
100,000 Television Broadcasting Ltd. ORD+....................... 396,239 351,521
360,000 United Television, Inc. ................................ 10,317,070 25,560,000
----------- -----------
40,773,048 84,386,906
----------- -----------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
--------------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES--6.0%
570,000 American Express Company................................ $ 10,418,500 $ 20,021,250
24,000 Banco Santander SA, ADR................................. 1,024,016 945,000
260 Berkshire Hathaway Inc.+................................ 824,299 6,097,000
30,000 Berliner Bank Aktiengesellschaft........................ 6,004,015 7,940,124
18,000 Commerzbank AG, Sponsored ADR........................... 715,857 859,500
155,000 Deutsche Bank AG, Sponsored ADR......................... 6,422,445 7,517,500
15,000 Financial Security Assurance Holdings Ltd. ............. 318,312 375,000
25,000 Hibernia Corporation.................................... 198,750 221,875
100,000 Lehman Brothers Holdings Inc. .......................... 2,284,759 2,187,500
33,000 Midland Company......................................... 977,318 1,443,750
12,000 Morgan (J.P.) & Co. Incorporated........................ 752,350 841,500
60,000 Riggs National Corporation+............................. 552,538 592,500
20,000 Salomon Inc. ........................................... 969,805 802,500
10,000 SunTrust Banks, Inc. ................................... 419,333 582,500
50,000 Unitrin, Inc. .......................................... 1,724,643 2,375,000
2,000 U.S. Trust Corporation.................................. 105,790 144,000
----------- -----------
33,712,730 52,946,499
----------- -----------
WIRELESS COMMUNICATIONS--5.2%
250,000 AirTouch Communications Inc.+........................... 5,710,602 7,125,000
110,000 Allen Group Inc. ....................................... 1,343,490 3,258,750
67,500 Associated Group, Inc., Class A+........................ 354,616 1,164,375
67,500 Associated Group, Inc., Class B+........................ 354,616 1,248,750
15,000 BCE Mobile Communications Inc.+......................... 435,205 499,208
175,000 Century Telephone Enterprises, Inc. .................... 947,557 4,965,625
100,000 COMSAT Corporation...................................... 1,955,600 1,962,500
100,000 LIN Broadcasting Corporation............................ 8,961,861 12,650,000
19,600 NEXTEL Communications, Inc., Class A+................... 220,544 276,850
41,000 Securicor Group plc, ORD................................ 611,606 1,051,878
4,000 Securicor Group plc, Class A ORD........................ 45,881 61,586
5,500 Teleglobe Inc. ......................................... 83,078 78,082
322,000 Telephone and Data Systems, Inc. ....................... 3,135,658 11,712,750
----------- -----------
24,160,314 46,055,354
----------- -----------
ENTERTAINMENT--4.8%
29,000 Bay Meadows Operating Company........................... 498,410 464,000
29,425 Gaylord Entertainment Company, Class A.................. 671,773 742,981
50,000 GC Companies, Inc.+..................................... 952,487 1,637,500
10,000 GTECH Holdings Corporation+............................. 170,269 292,500
12,000 PolyGram NV............................................. 315,663 709,500
13,650 Sony Music Entertainment ORD............................ 589,405 578,178
120,000 THORN EMI plc, Sponsored ADR............................ 1,752,187 2,505,000
260,000 Time Warner Inc. ....................................... 6,673,963 10,692,500
61,072 Todd-AO Corporation, Class A............................ 183,216 351,164
290,000 Viacom Inc., Class A+................................... 3,264,108 13,485,000
245,000 Viacom Inc., Class B+................................... 3,962,443 11,361,875
----------- -----------
19,033,924 42,820,198
----------- -----------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
--------------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
CABLE--4.2%
22,000 CANAL+, Sponsored ADR................................... $ 778,125 $ 602,250
65,000 Comcast Corporation, Class A............................ 1,009,207 1,182,188
68,125 Comcast Corporation, Class A Special.................... 655,333 1,264,570
81,036 International Family Entertainment, Inc., Class B+...... 1,022,652 1,276,317
475,000 Media General, Inc., Class A............................ 9,204,364 14,487,500
175,000 Multimedia, Inc., New+.................................. 3,639,044 6,781,250
5,000 Shaw Cable Systems, Ltd Class B, Conv. ................. 32,748 30,032
40,000 Shaw Communications Inc., Class B, Conv. ............... 382,635 240,253
462,125 Tele-Communications, Inc., Class A+..................... 9,233,442 10,831,055
----------- -----------
25,957,550 36,695,415
----------- -----------
DIVERSIFIED INDUSTRIAL--4.0%
23,000 Culbro Corporation+..................................... 575,450 759,000
40,000 GATX Corporation........................................ 673,434 1,885,000
105,000 ITT Corporation......................................... 6,898,371 12,337,500
375,000 Lamson & Sessions Co.+.................................. 2,325,669 2,156,250
30,000 Lawter International, Inc. ............................. 265,306 360,000
110,000 Minnesota Mining and Manufacturing Company.............. 6,013,481 6,297,500
115,000 National Service Industries, Inc. ...................... 2,561,115 3,320,625
100,000 Tenneco Inc. ........................................... 4,600,898 4,600,000
43,000 Thomas Industries Inc. ................................. 617,782 704,125
90,000 Trinity Industries, Inc. ............................... 1,543,169 2,992,500
100,000 Tyler Corporation+...................................... 354,618 312,500
----------- -----------
26,429,293 35,725,000
----------- -----------
CONSUMER PRODUCTS--4.0%
220,000 American Brands, Inc. .................................. 8,364,269 8,745,000
20,000 Black & Decker Corporation.............................. 363,703 617,500
50,000 Brunswick Corporation................................... 671,001 850,000
160,000 Carter-Wallace, Inc. ................................... 2,483,844 1,820,000
70,000 Church & Dwight Co., Inc. .............................. 1,510,107 1,452,500
10,000 Duracell International Inc. ............................ 271,927 432,500
30,000 First Brands Corporation................................ 775,625 1,286,250
24,000 Gillette Company........................................ 691,975 1,071,000
6,400 National Presto Industries, Inc. ....................... 214,785 290,400
30,000 Outboard Marine Corp. .................................. 579,550 588,750
26,715 Park-Ohio Industries, Inc.+............................. 310,560 320,580
20,000 Philip Morris Companies Inc. ........................... 1,017,750 1,487,500
60,000 Procter & Gamble Company................................ 3,176,254 4,312,500
134,075 Ralston Purina Group.................................... 4,239,040 6,837,825
50,000 Scotts Company, Class A+................................ 833,295 1,093,750
55,000 Tambrands Inc. ......................................... 2,241,277 2,351,250
100,000 Whitman Corporation..................................... 1,082,376 1,937,500
----------- -----------
28,827,338 35,494,805
----------- -----------
FOOD AND BEVERAGE--3.9%
12,540 Brau und Brunnen........................................ 2,495,778 2,385,855
30,000 Campbell Soup Company................................... 870,925 1,470,000
230,000 Coca-Cola Enterprises Inc. ............................. 3,285,304 5,031,250
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
--------------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
FOOD AND BEVERAGE (CONTINUED)
5,000 Darden Restaurants Inc. ................................ $ 23,535 $ 54,375
70,000 Dole Food Company, Inc. ................................ 2,208,494 2,038,750
30,000 Eskimo Pie Corporation.................................. 498,750 495,000
150,000 Fomento Economico Mexicano SA, ADR...................... 474,875 352,500
34,000 General Mills, Inc. .................................... 729,062 1,746,750
20,000 Guinness plc, Sponsored ADR............................. 729,362 740,200
45,000 Kellogg Company......................................... 2,393,384 3,211,875
3,000 LVHM Moet Hennessy Louis Vuitton, Sponsored ADR......... 111,250 108,750
150,000 PepsiCo, Inc. .......................................... 4,918,783 6,843,750
60,000 Quaker Oats Company..................................... 1,643,900 1,972,500
40,000 Ralcorp Holdings, Inc.+................................. 1,737,776 915,000
100,000 Seagram Company Ltd. ................................... 2,713,688 3,462,500
9,000 Tootsie Roll Industries, Inc. .......................... 599,790 623,250
66,000 Wrigley (Wm.) Jr. Company............................... 2,773,001 3,060,750
----------- -----------
28,207,657 34,513,055
----------- -----------
AUTOMOTIVE: PARTS AND ACCESSORIES--3.8%
34,000 APS Holding Corporation, Class A+....................... 527,000 896,750
72,500 Echlin Inc. ............................................ 1,145,362 2,519,375
150,000 Genuine Parts Company................................... 5,327,630 5,681,250
120,500 Handy & Harman.......................................... 1,653,850 1,867,750
110,000 Johnson Controls, Inc. ................................. 3,093,027 6,215,000
315,000 Modine Manufacturing Company............................ 3,287,827 11,576,250
30,000 Pep Boys - Manny, Moe & Jack............................ 531,000 802,500
10,100 Quaker State Corporation................................ 141,905 151,500
27,500 Republic Automotive Parts, Inc.+........................ 204,233 409,062
40,000 SPX Corporation......................................... 866,938 455,000
128,000 Standard Motor Products, Inc. .......................... 870,900 2,592,000
30,000 Wynn's International, Inc. ............................. 420,462 697,500
----------- -----------
18,070,134 33,863,937
----------- -----------
BUSINESS SERVICES--2.5%
125,000 International Business Machines Corporation............. 6,188,440 12,000,000
125,000 Landauer, Inc. ......................................... 809,065 2,359,375
125,500 Lotus Development Corporation+.......................... 8,002,507 8,000,625
----------- -----------
15,000,012 22,360,000
----------- -----------
HEALTH CARE--2.1%
10,000 Amgen Inc.+............................................. 366,444 804,375
6,500 Biogen, Inc.+........................................... 181,025 289,250
167,000 Johnson & Johnson....................................... 7,493,359 11,293,375
24,000 Mallinckrodt Group, Inc. ............................... 710,919 852,000
103,000 Marion Merrell Dow Inc. ................................ 3,341,290 2,626,500
10,000 Pfizer Inc. ............................................ 639,063 923,750
56,000 Sandoz Ltd., Sponsored ADR.............................. 1,009,438 1,918,000
----------- -----------
13,741,538 18,707,250
----------- -----------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
--------------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
AUTOMOTIVE--1.7%
300,000 General Motors Corporation.............................. $ 9,568,077 $ 14,062,500
30,000 Harley Davidson, Inc. .................................. 298,350 731,250
----------- -----------
9,866,427 14,793,750
----------- -----------
ENERGY--1.7%
34,000 Apache Corporation...................................... 844,013 930,750
33,000 Atlantic Richfield Company.............................. 3,562,478 3,621,750
52,500 British Petroleum Company plc, ADR...................... 2,431,318 4,495,313
115,000 Burlington Resources Inc. .............................. 5,340,447 4,240,625
5,000 Chevron Corporation..................................... 186,025 233,125
300,000 Kaneb Services, Inc.+................................... 1,545,137 637,500
50,000 Santa Fe Energy Resources, Inc.+........................ 478,875 475,000
----------- -----------
14,388,293 14,634,063
----------- -----------
CONSUMER SERVICES--1.3%
450,000 Rollins, Inc. .......................................... 4,479,713 10,800,000
20,000 Sierra On-Line, Inc.+................................... 158,303 500,000
----------- -----------
4,638,016 11,300,000
----------- -----------
PUBLISHING--1.3%
50,000 Independent Newspapers plc ORD.......................... 243,202 274,370
12,000 McGraw-Hill Companies, Inc. ............................ 707,700 910,500
26,000 Meredith Corporation.................................... 559,588 659,750
190,002 New York Times Company, Class A......................... 2,610,818 4,465,047
5,000 News Corporation Limited, ADS........................... 54,120 113,125
249,000 Oriental Press Group ORD................................ 140,871 100,562
2,024 Pearson plc ORD......................................... 20,058 19,155
46,000 Reader's Digest Association, Inc., Class B.............. 1,806,980 1,880,250
100,000 South China Morning Post Holdings ORD................... 59,335 60,095
230,000 Western Publishing Group, Inc.+......................... 3,633,014 2,587,500
----------- -----------
9,835,686 11,070,354
----------- -----------
RETAIL--0.9%
25,000 Crown Books Corporation+................................ 284,112 281,250
60,000 Earl Scheib, Inc.+...................................... 600,706 330,000
70,000 General Host Corporation................................ 477,775 428,750
30,000 Lillian Vernon Corporation.............................. 364,849 551,250
433,000 Neiman Marcus Group, Inc. .............................. 6,164,008 6,170,250
22,000 Strawbridge & Clothier, Series A........................ 580,752 440,000
----------- -----------
8,472,202 8,201,500
----------- -----------
HOTELS/CASINOS--0.8%
80,000 Hilton Hotels Corporation............................... 4,224,736 5,620,000
50,000 Mirage Resorts, Incorporated+........................... 532,231 1,531,250
----------- -----------
4,756,967 7,151,250
----------- -----------
AIRLINES--0.7%
82,000 AMR Corporation+........................................ 5,409,579 6,119,250
----------- -----------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
--------------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
ELECTRONICS--0.6%
1,000 Hitachi, Ltd., ADR...................................... $ 60,300 $ 100,250
1,000 Matsushita Electric Industrial Co. Ltd., ADR............ 92,800 155,000
1,500 NEC Corp., ADR.......................................... 43,625 82,500
120,000 Philips Electronics N.V., New York...................... 1,576,516 5,130,000
2,000 Sony Corporation........................................ 63,850 97,000
----------- -----------
1,837,091 5,564,750
----------- -----------
SPECIALTY CHEMICAL--0.6%
39,000 E.I. du Pont de Nemours and Company..................... 2,554,500 2,681,250
60,000 Ferro Corporation....................................... 959,687 1,590,000
36,000 Pratt & Lambert, Inc. .................................. 523,025 841,500
----------- -----------
4,037,212 5,112,750
----------- -----------
AVIATION: PARTS AND SERVICES--0.4%
50,000 Curtiss-Wright Corporation.............................. 2,491,103 2,231,250
145,000 Hi-Shear Industries Inc.+............................... 2,317,757 1,069,375
----------- -----------
4,808,860 3,300,625
----------- -----------
COUNTRY/CLOSED-END FUNDS--0.4%
70,000 Emerging Germany Fund Inc. ............................. 512,662 507,500
25,000 France Growth Fund, Inc. ............................... 246,844 256,250
61,123 Future Germany Fund..................................... 762,926 939,766
34,250 Italy Fund, Inc. ....................................... 300,170 265,438
7,000 Morgan Grenfell SMALLCap Fund Inc. ..................... 62,558 71,750
71,326 New Germany Fund........................................ 781,786 864,828
32,769 Royce Value Trust, Inc. ................................ 348,547 393,228
----------- -----------
3,015,493 3,298,760
----------- -----------
METALS AND MINING--0.3%
15,000 Barrick Gold Corporation................................ 403,375 378,750
13,500 Homestake Mining Company................................ 206,675 222,750
20,000 Newmont Gold Company.................................... 800,047 805,000
55,000 Pegasus Gold Inc.+...................................... 934,232 556,875
10,000 Placer Dome Inc. ....................................... 175,163 261,250
----------- -----------
2,519,492 2,224,625
----------- -----------
TRANSPORTATION--0.1%
11,000 Florida East Coast Industries, Inc. .................... 523,108 811,250
----------- -----------
OTHER--0.0%
5,000 Sotheby's Holdings, Inc., Class A....................... 59,938 68,125
----------- -----------
TOTAL COMMON STOCKS...................................................... 479,278,951 758,541,355
----------- -----------
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
--------------- ------------ ------------
<C> <S> <C> <C>
PREFERRED STOCKS--0.9%
AUTOMOTIVE--0.5%
75,000 General Motors Corporation, Depositary Shares, Pfd.,
$3.25................................................. $ 3,750,000 $ 4,725,000
----------- -----------
CONSUMER PRODUCTS--0.2%
34,000 Fieldcrest Cannon, Inc., 6.000%, Series A, Conv. Pfd.,
144A (c).............................................. 1,877,500 1,564,000
----------- -----------
TELECOMMUNICATIONS--0.1%
27,000 Sprint Corporation, 8.250%, Conv. Pfd. ................. 860,625 938,250
2,130,723 Telecomunicacoes de Sao Paulo SA (Telesp),
Pfd., Registered...................................... 261,253 263,881
----------- -----------
1,121,878 1,202,131
----------- -----------
CABLE--0.1%
8,000 Tele-Communications, Inc., Jr. Pfd., Class B, Ex.,
6.000%................................................ 408,017 516,000
----------- -----------
DIVERSIFIED INDUSTRIAL--0.0%
3,500 GATX Corporation, 3.875%, Conv. Pfd. ................... 185,600 196,000
----------- -----------
TOTAL PREFERRED STOCKS................................................... 7,342,995 8,203,131
----------- -----------
COMMON STOCK WARRANTS AND RIGHTS--0.0%
ENTERTAINMENT--0.0%
45,000 Viacom Inc., Contingent Value Rights, expires
07/07/1995+........................................... 230,850 64,687
----------- -----------
<CAPTION>
PRINCIPAL
AMOUNT
---------------
<C> <S> <C> <C>
CORPORATE BONDS--7.0%
ENTERTAINMENT--6.6%
$ 20,500,000 Time Warner Inc., Reset Note, Zero Coupon through
08/15/1995 due 08/15/2002............................. 20,309,893 20,166,875
35,000,000 Time Warner Inc., Conv. Sub. Deb., 8.750% due
01/10/2015............................................ 36,794,083 36,531,250
1,575,000 Viacom Inc., Ex. Sub. Deb., 8.000% due 07/07/2006....... 1,017,844 1,531,688
----------- -----------
58,121,820 58,229,813
----------- -----------
INDUSTRIAL EQUIPMENT AND SUPPLIES--0.3%
3,300,000 Nortek, Inc., Sr. Sub. Note, 9.875% due 03/01/2004...... 3,256,920 2,937,000
----------- -----------
AUTOMOTIVE: PARTS AND ACCESSORIES--0.1%
500,000 GenCorp Inc., Conv. Sub. Deb., 8.000% due 08/01/2002.... 490,000 483,125
----------- -----------
PUBLISHING--0.0%
200,000 News American Holdings Incorporated, Gtd. Ex. Sub. Note,
Zero Coupon due 03/31/2002............................ 119,913 195,500
----------- -----------
BROADCASTING--0.0%
FRF 125,000 Havas, Conv. Bonds, Payment-in-kind,
3.000% due 12/31/1997................................. 26,357 29,745
----------- -----------
TOTAL CORPORATE BONDS.................................................... 62,015,010 61,875,183
----------- -----------
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT COST VALUE
--------------- ------------ ------------
<C> <S> <C> <C>
U.S. TREASURY BILLS--4.0%
$36,000,000 5.320% to 6.800%++ due 08/24/1995 - 02/08/1996 (d)...... $ 35,260,404 $ 35,260,404
------------ ------------
REPURCHASE AGREEMENT--0.6%
4,918,000 Agreement with UBS Securities Inc., 6.020% dated
06/30/1995, to be repurchased at $4,920,467 on
07/03/1995, collateralized by $4,630,000 U.S. Treasury
Bonds, 8.625% due 08/15/1997 (value $5,017,994)....... 4,918,000 4,918,000
------------ ------------
TOTAL INVESTMENTS................................................ 98.4% $589,046,210(b) 868,862,760
=============
OTHER ASSETS AND LIABILITIES (NET)............................... 1.6 14,025,064
----- ------------
NET ASSETS....................................................... 100.0% $882,887,824
===== =============
<FN>
---------------
(a) Security fair valued under procedures established by the Board of
Directors.
(b) Aggregate cost for Federal tax purposes was $588,521,820. Net unrealized
appreciation for Federal tax purposes was $280,340,940 (gross unrealized
appreciation was $295,237,636 and gross unrealized depreciation was
$14,896,696).
(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.
(d) Securities pledged as collateral for futures contracts.
+ 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
</TABLE>
<TABLE>
FUTURES CONTRACTS--SHORT POSITION
<CAPTION>
NUMBER OF UNREALIZED
CONTRACTS DEPRECIATION
--------- ------------
<C> <S> <C>
320 S&P 500 Index Futures, September 1995..................................... $3,376,147
=============
</TABLE>
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
JUNE 30, 1995
----------------
<S> <C>
Time Warner Inc. American Express Company
Chris-Craft Industries, Inc. Pittway Corporation
Viacom Inc. General Motors Corporation
United Television, Inc. GTE Corporation
Sprint Corporation Media General, Inc.
</TABLE>
-----------------------------------------------------------------------------
See Notes to Financial Statements.
19
<PAGE>
<TABLE>
THE GABELLI EQUITY TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995 (UNAUDITED)
<S> <C>
ASSETS:
Investments, at value (Cost $589,046,210)
See accompanying portfolio:
Investment securities............................................................................ $828,684,356
U.S. Government obligations...................................................................... 35,260,404
Repurchase agreement............................................................................. 4,918,000
------------
868,862,760
Cash............................................................................................. 470,259
Receivable for investment securities sold........................................................ 3,768,671
Dividends receivable............................................................................. 1,785,911
Interest receivable.............................................................................. 954,775
Variation Margin................................................................................. 208,000
Other receivables................................................................................ 8,348,807
------------
Total Assets................................................................................. 884,399,183
------------
LIABILITIES:
Payable for investment advisory fee.............................................................. 716,665
Payable for investment securities purchased...................................................... 414,777
Accrued Directors' Fees.......................................................................... 30,000
Accrued expenses and other payables.............................................................. 349,917
------------
Total Liabilities............................................................................ 1,511,359
------------
NET ASSETS for 88,988,240 shares outstanding......................................................... $882,887,824
============
NET ASSETS CONSIST OF:
Common stock at par value........................................................................ $ 88,988
Additional paid-in capital....................................................................... 628,683,162
Accumulated net realized gain on investments sold................................................ 15,287,130
Distributions in excess of net investment income earned to date.................................. (37,661,201)
Net unrealized appreciation of investments....................................................... 276,489,745
------------
Total Net Assets............................................................................. $882,887,824
============
NET ASSET VALUE ($882,887,824 / 88,988,240 shares outstanding;
200,000,000 shares authorized of $0.001 par value)............................................... $9.92
=====
</TABLE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS
ENDED YEAR
06/30/95 ENDED
(UNAUDITED) 12/31/94
------------ ------------
<S> <C> <C>
Net investment income................................................................. $ 6,181,528 $ 11,585,624
Net realized gain on investments during the period.................................... 13,384,560 32,781,619
Net change in unrealized appreciation/depreciation of investments during the period... 64,670,970 (39,475,647)
------------ -------------
Net increase in net assets resulting from operations.................................. 84,237,058 4,891,596
Distributions to shareholders from:*
Net investment income............................................................. (6,181,528) (11,514,882)
Distributions in excess of net investment income earned to date................... (37,661,201) --
Net realized gain on investments.................................................. -- (31,614,199)
Paid-in capital................................................................... -- (112,954,633)
Net increase in net assets from Equity Trust share transactions....................... 17,300,896 38,611,705
------------ -------------
Net increase/(decrease) in net assets................................................. 57,695,225 (112,580,413)
NET ASSETS:
Beginning of period................................................................... 825,192,599 937,773,012
------------ -------------
End of period......................................................................... $882,887,824 $825,192,599
============ =============
<FN>
---------------
* Distributions for The Gabelli Global Multimedia Trust Inc. spin-off for the
year ended December 31, 1994 from net investment income, realized short-term
gains and paid-in capital were $5,507,685, $2,660,988 and $56,314,066,
respectively.
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
<TABLE>
THE GABELLI EQUITY TRUST INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $253,738).................................. $ 6,749,691
Interest.................................................................................. 4,737,844
------------
Total Investment Income............................................................... 11,487,535
------------
EXPENSES:
Investment advisory fee................................................................... $4,246,700
Shareholder communications expense........................................................ 375,147
Transfer agent fees....................................................................... 274,855
Custodian fees............................................................................ 122,272
Directors' fees........................................................................... 63,546
Payroll................................................................................... 58,854
Legal and audit fees...................................................................... 40,945
Other..................................................................................... 123,688
----------
Total Expenses........................................................................ 5,306,007
------------
NET INVESTMENT INCOME......................................................................... 6,181,528
------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS:
Net realized gain/(loss) on:
Securities transactions............................................................... 25,010,821
Futures transactions.................................................................. (11,627,088)
Foreign currency transactions......................................................... 827
------------
Net realized gain on investments during the period........................................ 13,384,560
------------
Net change in unrealized appreciation/depreciation of:
Securities............................................................................ 66,664,182
Futures transactions.................................................................. (1,997,967)
Foreign currency and other assets and liabilities..................................... 4,755
------------
Net change in unrealized appreciation/depreciation of
investments during the period........................................................... 64,670,970
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS............................................... 78,055,530
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................................... $ 84,237,058
============
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
<TABLE>
THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS
PER SHARE AMOUNTS FOR AN EQUITY TRUST SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
SIX MONTHS
DECEMBER 31, ENDED
------------------------------------------------------------------------------------------------- 06/30/95
1986* 1987 1988 1989 1990 1991 1992 1993(A) 1994(A) (UNAUDITED)
-------- -------- -------- -------- -------- -------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating
performance:
Net asset value,
beginning
of period..... $ 9.35 $ 9.40 $ 9.82 $ 11.22 $ 13.34 $ 10.49 $ 10.61 $ 10.58 $ 11.23 $ 9.46
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net investment
income........ 0.10 0.16 0.14 0.38 0.44 0.27 0.19 0.14 0.14 0.07
Net realized and
unrealized
gain/(loss) on
investments... (0.04 ) 0.89 2.32+ 3.26+ (2.11 ) 1.37 1.21 2.13 (0.08) 0.89
Provision for
income
taxes......... -- -- (0.09) (0.21) -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from
investment
operations.... 0.06 1.05 2.37 3.43 (1.67) 1.64 1.40 2.27 0.06 0.96
Increase/(decrease)
in
net asset
value from
Equity Trust
share
transactions... -- 0.01 0.02 -- -- (0.42) (0.36) (0.50) -- --
Offering
expenses
charged
to capital
surplus....... (0.01 ) -- -- -- -- (0.01) (0.01) (0.01) -- --
Distributions to
shareholders
from:
Net
investment
income.... -- (0.19) (0.21) (0.29) (0.53) (0.27) (0.19) (0.11) (0.14)(b) (0.07)
Distributions
in excess
of net
investment
income.... -- -- -- -- -- -- -- -- -- (0.43)
Net realized
gains..... -- (0.45) (0.78) (1.02) (0.23) (0.14) (0.38) (0.77) (0.37) --
Distributions
in excess
of net
realized
gains..... -- -- -- -- -- -- -- (0.02) -- --
Paid-in
capital... -- -- -- -- (0.42) (0.68) (0.49) (0.21) (1.32)(b) --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total
distributions... -- (0.64) (0.99) (1.31) (1.18) (1.09) (1.06) (1.11) (1.83) (0.50)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of
period........ $ 9.40 $ 9.82 $ 11.22 $ 13.34 $ 10.49 $ 10.61 $ 10.58 $ 11.23 $ 9.46 $ 9.92
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Market value,
end of
period........ $ 8.625 $ 7.625 $ 9.875 $14.000 $10.500 $10.125 $10.250 $ 12.125 $ 9.625 $ 10.000
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total Investment
Return**+..... (13.8)% (0.9)% 37.8% 59.0% (16.7)% 10.9% 15.9% 36.5% (5.1)% 9.3%
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Net Asset Value
Total
Return***..... 0.5% 17.1% 21.5% 33.2% (12.7)% 16.2% 14.2% 22.4% 0.5% 10.3%
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Ratios to average net assets/supplemental data:
Net assets, end
of period
(in 000's).... $413,760 $429,490 $484,792 $589,990 $479,863 $595,151 $725,263 $ 937,773 $825,193 $ 882,888
Net
investment
income.... 2.89%++ 1.50% 1.36% 2.82% 3.84% 2.34% 1.88% 1.25% 1.29% 1.46%++
Operating
expenses... 1.24%++ 1.24% 1.25% 1.18% 1.18% 1.24% 1.22% 1.20% 1.19% 1.25%++
Portfolio
turnover
rate.......... 58.8% 96.5% 51.5% 28.1% 15.5% 11.2% 12.5% 24.4% 22.2% 8.3%
<FN>
---------------
* The Equity Trust commenced operations on August 21, 1986.
** Based on market value per share, adjusted for reinvestment of distributions
and taxes, including distribution of Rights, assuming full subscription by
shareholder.
*** Based on net asset value per share, adjusted for reinvestment of
distributions and taxes, including distribution of Rights, assuming full
subscription by shareholder.
+ Before provision for income taxes.
++ 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.
</TABLE>
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"). 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 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 business 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 most recent bid prices as obtained
from one or more dealers that make markets in the securities. Portfolio
securities which are traded both in the over-the-counter market and on a stock
exchange 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 immediately prior to the close of the New York Stock
Exchange of such securities on their respective exchanges or markets. 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 on that security. 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. Debt
instruments having a greater maturity are valued at the highest bid price
obtained from a dealer maintaining an active market in those securities or on
the basis of prices obtained from a pricing service approved as reliable by the
Board of Directors.
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 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
23
<PAGE>
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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.
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 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 discount) is recorded as earned.
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
24
<PAGE>
THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
net assets. In accordance with the Advisory Agreement, the Adviser manages the
Equity Trust's portfolio, makes investment decisions for the Equity Trust,
places adds to purchases 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, 1995, Gabelli & Company, Inc.
("Gabelli & Company") and its affiliates received $24,940 in brokerage
commissions as a result of executing agency transactions in portfolio securities
on behalf of the Equity Trust.
Having received the Board of Directors and shareholders approval, on
November 15, 1994 the Equity Trust contributed $64,482,739 in cash in exchange
for shares of a newly formed, wholly owned investment company subsidiary, The
Gabelli Global Multimedia Trust Inc., and on the same date distributed such
shares to holders of record on October 17, 1994 at the rate of one share of the
Multimedia Trust for every ten shares of the Equity Trust. The distribution was
equivalent to $0.75 per share of the Equity Trust, of which $0.064, $0.031 and
$0.655 was derived from undistributed net investment income, short term capital
gains and paid-in capital, respectively.
3. PORTFOLIO SECURITIES
Cost of purchases and proceeds from sales of securities, other than
short-term securities, aggregated $65,855,898 and $91,083,113, respectively, for
the six months ended June 30, 1995.
<TABLE>
4. CAPITAL
Common stock transactions were as follows:
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
06/30/95 12/31/94*
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares issued due to reinvestment of dividends and
distributions................................................. 1,764,509 $17,300,896 3,750,021 $38,611,705
--------- ----------- --------- -----------
Net increase.................................................... 1,764,509 $17,300,896 3,750,021 $38,611,705
========= =========== ========= ===========
<FN>
---------------
* Estimated stock issuance costs relating to the July 14, 1993 Rights Offering,
which totalled approximately $650,511, were charged directly against the
proceeds of the offering on July 14, 1993. During the year ended December 31,
1994, the estimated stock issuance costs exceeded the actual stock issuance
costs by $109,131. Therefore, additional paid-in capital has been increased by
this amount in 1994.
</TABLE>
5. MEETING OF SHAREHOLDERS
The annual meeting of shareholders was held on May 17, 1995 whereby
shareholders elected Mario J. Gabelli, Thomas E. Bratter and Felix A. Christiana
as Directors of the Equity Trust. 74,300,013, 74,249,696 and 74,215,303 votes
were cast for each Director and 869,066, 919,382 and 953,776 votes were withheld
for each Director, respectively.
In addition, the shareholders elected Price Waterhouse LLP as certified
public accountants for the Equity Trust for the year ending December 31, 1995.
73,822,279 votes were cast in favor of approval of the proposal, 516,195 votes
were cast against the proposal and 830,604 votes abstained.
25
<PAGE>
<TABLE>
THE GABELLI EQUITY TRUST INC.
QUARTERLY RESULTS OF INVESTMENT OPERATIONS (UNAUDITED)
Shown in thousand of dollars and per common share:
<CAPTION>
NET REALIZED AND NET
UNREALIZED INCREASE/
GAIN/(LOSS) (DECREASE)
TOTAL NET ON INVESTMENTS IN NET ASSETS
INVESTMENT INVESTMENT AND NET OTHER FROM
INCOME INCOME ASSETS OPERATIONS
---------------- ---------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995--QUARTER ENDED
06/30/95................................... $6,110 $0.07 $3,448 $0.04 37,620 $ 0.43 $ 41,068 $ 0.47
03/31/95................................... 5,378 0.06 2,733 0.03 40,436 0.46 43,169 0.49
1994--QUARTER ENDED
12/31/94................................... 5,395 0.06 2,801 0.03 (25,113) (0.29) (22,312) (0.26)
09/30/94................................... 5,936 0.07 3,190 0.04 50,303 0.59 53,493 0.63
06/30/94................................... 5,895 0.07 3,306 0.04 (2,277) (0.03) 1,029 0.01
03/31/94................................... 5,032 0.06 2,289 0.03 (29,607) (0.35) (27,318) (0.32)
1993--QUARTER ENDED
12/31/93................................... 5,474 0.07 2,690 0.03 14,193 0.17 16,883 0.20
09/30/93................................... 4,641 0.06 1,892 0.03 62,348 0.78 64,240 0.81
06/30/93................................... 5,020 0.07 2,831 0.04 36,374 0.53 39,205 0.57
03/31/93................................... 5,179 0.07 2,957 0.04 44,405 0.65 47,362 0.69
</TABLE>
<TABLE>
HISTORICAL DISTRIBUTION SUMMARY (UNAUDITED)
CALENDAR YEAR 1995
<CAPTION>
DIVIDEND
TOTAL AMOUNT REINVESTMENT
PAYABLE DATE RECORD DATE PAID PER SHARE PRICE
------------------- ----------- -------------- ------------
<S> <C> <C> <C>
06/27/95 06/13/95 $ 0.25 $ 9.92
03/28/95 03/14/95 0.25 9.70
</TABLE>
<TABLE>
<CAPTION>
TAXES PAID
SHORT- LONG- UNDISTRIBUTED ON
TERM TERM LONG-TERM UNDISTRIBUTED ADJUSTMENT
ANNUAL INVESTMENT CAPITAL CAPITAL RETURN OF CAPITAL CAPITAL TOTAL TO
SUMMARY INCOME GAINS GAINS CAPITAL(A) GAINS GAINS(B) DISTRIBUTIONS COST BASIS
--------------- ---------- -------- -------- ---------- ------------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994(c)........ $0.13536 $0.06527 $0.30300 $1.38262 -- -- $ 1.88625 $1.38262-
1993(d)........ 0.13050 0.02030 0.72930 0.22990 -- -- $ 1.11000 0.22990-
1992(e)........ 0.20530 0.04050 0.29660 0.51760 -- -- $ 1.06000 0.51760-
1991(f)........ 0.22590 0.03990 0.14420 0.68000 -- -- $ 1.09000 0.68000-
1990........... 0.50470 -- 0.22950 0.44580 -- -- $ 1.18000 0.44580-
1989........... 0.29100 0.35650 0.66250 -- $0.6288 $0.2138 $ 1.31000 0.41500+
1988........... 0.14500 0.20900 0.19600 -- 0.2513 0.0854 $ 0.55000 0.16590+
1987........... 0.25600 0.49100 0.33500 -- -- -- $ 1.08200 --
<FN>
---------------
(a) Non-taxable.
(b) Net Asset Value is reduced by this amount on the last business day of the
year.
(c) On November 15, 1994, the Company distributed shares of The Gabelli Global
Multimedia Trust Inc. valued at $8.0625 per share.
(d) On July 14, 1993, the Company distributed Rights equivalent to $0.50 per
share upon full subscription of all issued shares.
(e) On September 28, 1992, the Company distributed Rights equivalent to $0.36
per share upon full subscription of all issued shares.
(f) On October 21, 1991, the Company distributed Rights equivalent to $0.42 per
share upon full subscription of all issued shares.
- Decrease in cost basis.
+ Increase in cost basis.
</TABLE>
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 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 Bank and Trust
Company at 1 (800) 336-6983.
Shareholders wishing to liquidate reinvested shares held at State Street
Bank and Trust Company may 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 such institution 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 of capital
gains distribution, participants are issued shares of Common Stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current market price of the Equity Trust's Common Stock. The valuation
date is the dividend or distribution payment date or, if that date is not a New
York Stock Exchange trading day, the next trading day. If the net asset value of
the Common Stock at the time of valuation exceeds the market price of the Common
Stock, participants will receive shares from the Equity Trust valued at market
price. If the Equity Trust should declare a dividend or capital gains
distribution payable only in cash, State Street will buy Common Stock in the
open market, or on the New York Stock Exchange or elsewhere, for the
participants' accounts, except that State Street will endeavor to terminate
purchases in the open market and cause the Equity Trust to issue shares at net
27
<PAGE>
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 and participate in the Dividend Reinvestment
Plan.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to State Street Bank and Trust Company for investments
in the Equity Trust's shares at the then current market price. Shareholders may
send an amount from $250 to $3,000. State Street Bank and Trust Company will use
these funds to purchase shares in the open market on or about February 15 and
August 15 of each year. State Street Bank and Trust Company 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 payment
approximately 10 days before February 15 or August 15. A payment may be
withdrawn without charge if notice is received by State Street Bank and Trust
Company 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
Paul R. Ades
Attorney-at-Law
Partner, Murov & Ades
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
Brigid O. Bieber
Assistant Secretary
Richard W. Ingram
Assistant Treasurer
Investment Adviser
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: 88,988,280
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 Monday's
The Wall Street Journal. It is also listed in
Barron's Mutual Funds/Closed End Funds
section under the heading "General Equity Funds".
The Net Asset Value may be obtained each
day by calling (914) 921-5071.
-------------------------------------------------
For general information about
the Gabelli Funds, call 1-800-GABELLI
(1-800-422-3553), fax us at
914-921-5118 or, visit our Internet
homepage at:
http://www.gabelli.com/gabelli
-------------------------------------------------
-------------------------------------------------------------------------------
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>
<TABLE>
<S> <C>
THE GABELLI EQUITY TRUST INC. ----------------
ONE CORPORATE CENTER FIRST CLASS MAIL
RYE, NY 10580-1434 U.S. POSTAGE
(914) 921-5070 PAID
RYE, NY
PERMIT No. 109
----------------
SEMI-ANNUAL REPORT
JUNE 30, 1995
06/95
</TABLE>
