First Quarter Report
[Logo]
THE GABELLI
EQUITY TRUST INC.
March 31, 1996
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[Logo]
THE GABELLI
EQUITY TRUST INC.
Our cover icon represents the underpinnings of Gabelli.
The Teton mountains in Wyoming represent what we
believe in in America -- that creativity, ingenuity,
hard work and a global uniqueness provide enduring
values. They also stand out in an increasingly complex,
interconnected and inter-dependent economic world.
Investment Objective:
The Gabelli Equity Trust Inc. is a closed-
end, non-diversified management investment
company whose primary objective is long-
term growth of capital, with income as a
secondary objective.
This report is printed on recycled paper.
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[Photo of Mario J. Gabelli]
[Logo]
THE GABELLI
EQUITY TRUST INC.
To our Shareholders,
In the first quarter of 1996, the stock market shrugged off an economy
mired in snow, the GM strike, the ongoing budget stalemate in Washington and
rising long-term interest rates to post a solid advance. Flow of funds into
mutual funds and continued merger activity at record levels provided the fuel
for an ebullient U.S. stock market. Markets around the world marched in step.
During the first quarter ended March 31, 1996, The Gabelli Equity Trust
Inc.'s ("Equity Trust") net asset value per share, after adjusting for the $0.25
distribution paid on March 25, 1996, increased 4.6% to $10.14. This compares to
the 5.4% return in the unmanaged Standard & Poor's 500 Composite Stock Price
Index ("S&P 500") for the quarter. For the twelve months ended March 31, 1996,
the Equity Trust's net asset value increased 19.8%, after adjusting for all
distributions. The S&P 500 was up 32.1% for the same period.
Since inception on August 21, 1986, the Equity Trust's net asset value has
achieved a 243.1% total return, which equates to a 13.7% average annual return.
The three- and five-year average annual returns were both 13.3%.
The Equity Trust's common shares ended the quarter at $9.75 per share on
the New York Stock Exchange, an increase of 6.7% for the first quarter and up
13.2% for the trailing twelve months, after adjusting for all distributions and
the rights offering.
[Promotional Graphic]
What We Do
We do what is described as bottom up research: we read annual reports; we
visit the competition; we talk to customers; we go belly to belly with
management. We structure our portfolio by picking stocks.
In past reports, we have tried to articulate our investment philosophy and
methodology. The following graphic further illustrates the interplay among the
four components of our valuation approach.
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
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surfacevalue. 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.
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
The Economy and the Stock Market
In our year-end 1995 letter, we opined that modest economic growth, decent
corporate profits, low inflation, and higher long-term interest rates would add
up to a "decent, but much less inspiring stock market". With the exception of
the more than decent gains in equities in the first quarter, our scenario
appears to be on track. February's strong job report, while offset by weaker
than expected retail sales, still pointed to an economy that is moving forward
at a sustainable pace. Corporate profits are good, if not great, and overall
inflation remains subdued despite an anticipated (by us) increase in food and
fuel prices.
Is this backdrop likely to continue? In the second half of 1996, the
effects of an election year will provide positive psychological underpinnings to
the consumer as candidates for both political parties paint a rosy picture for
the future of the U.S. But we believe the kindling inflationary pressure on the
economy will become more evident. Higher prices for agricultural commodities,
notably food crops and feed grains, along with the spike in fuel prices added to
spot shortages in other industrial commodities point to inflation in the 3.5%
range. Long-term interest rates are adjusting to this, ultimately putting
pressure on equities multiples. As October 1987 taught us, stocks can only
advance so far into a headwind of rising long-term interest rates.
Finally, A Telecommunications Bill
The long awaited, comprehensive telecommunications bill is finally a
reality. While it is not quite the detailed architectural drawing investors
might have preferred, it is a reasonably good blueprint of the
telecommunications/media industry of tomorrow. While Wall Street is still
sorting out all of the ramifications of the bill, industry participants have
been quick to respond. US WEST Media Group's (UMG - $20.625 - NYSE) ten billion
dollar acquisition of closely held Continental Cablevision underscores the
viability of extending telephone franchises via cable telephony. That's probably
good news for other cable television operators like Comcast Corporation (CMCSA -
$17.375 - NASDAQ), Cablevision Systems Corporation (CVC - $57.50 - ASE), and
Time Warner Inc. (TWX - $40.875 - NYSE). AT&T Corp.'s (T - $61.25 -NYSE) second
break-up foreshadows head-to-head competition with Regional Bell Operating
Companies (RBOCs) in the local loop. It also gives investors the opportunity to
take advantage of a great fundamental bargain in the form of Lucent
Technologies, AT&T's telecommunications equipment business being spun-off to
shareholders. We believe a combination of RBOCs, NYNEX Corporation (NYN -
$49.875 - NYSE) and Bell Atlantic Corp. (BEL - $62.125 - NYSE) being the most
likely, will be a "back door" entry into long distance. With television
broadcast company "footprints" being
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enlarged from 25% to 35% as part of the Telecommunications Bill, we expect
merger and acquisition activity to accelerate. Indeed, we benefited from the
takeover of Citicasters Inc. (CITI - $29.25 - NASDAQ) by Jacor Communications
Inc. (JCOR - $19.50 - NASDAQ). We like both the prospective buyers (Walt Disney
Company (DIS - $63.875 - NYSE) and Westinghouse Electric Corp. (WX - $19.25 -
NYSE)) and sellers (Liberty Corporation (LC - $33.00 - NYSE), Osborne
Communications (OSBN - $11.125 - NYSE) and LIN Television Corporation (LNTV -
$35.25 - NASDAQ)) in that industry.
See the World
The rejuvenation of American industry, spawned by declining cost of capital
and enormous productivity gains, and the victory of global capitalism,
symbolized best by the crumbling of the Berlin Wall, are the catalysts that
positioned us to conquer new international economic frontiers. With free market
economies evolving in China and Eastern Europe, and rapidly expanding middle
classes in developing nations in Latin America and the Pacific Rim, there will
be 2.5 to 3 billion new consumers by the turn of the century. How are these new
consumers going to spend their money? If the past is a prologue to the future --
and we can learn something by looking back at the economic evolution of the
great American middle-class -- they will: upgrade or, perhaps more accurately,
diversify their diets; buy communications services, if made available; spend
money on entertainment; and travel. American companies will be instrumental in
satisfying the needs and wants of this emerging international middle-class.
Let's start in agriculturally state-of-the-art Iowa. The American grain
farmer is the most productive in the world. If chicken and pork consumption in
China were to increase by one ounce per capita, and Iowa were to provide all the
grain used to fatten these Chinese chickens and hogs, on a gross national
product basis, it would rank among the richest countries in the world. This
hypothetical statistical analogy calls attention to the tremendous upside
potential for the American grain farmer and vendors to the farmer. Agricultural
equipment manufacturers like Deere & Company (DE - $41.75 - NYSE), and grain
transporters and processors like Archer-Daniels-Midland Co. (ADM - $18.375 -
NYSE) should profit handsomely as the American farmer helps put more meat on
tables across the globe.
What else will these new consumers spring for? Telephone calls to friends
and family. To compete on the global economic stage and to attract foreign
capital, developing countries need modern telecommunications systems. Who will
build and service them? AT&T and Northern Telecom Limited (NT - $47.75 - NYSE)
will play a big role in wiring the world. AirTouch Communications Inc. (ATI -
$31.125 - NYSE), which has done a terrific job winning joint venture cellular
telephone franchises on technical merit throughout Europe, will expand into the
Pacific Rim and Latin America. Motorola, Inc. (MOT - $53.00 - NYSE) will build
millions of handsets for new international wireless customers. Cable & Wireless
plc (CWP - $24.125 - NYSE) (51% owners of Hong Kong Telephone) will be a gateway
to China.
There is simply no place you can go in the world without American filmed
entertainment being a theatrical, cable television and broadcast staple. The
same goes for American music. As distribution channels for entertainment
software products expand both here (via the convergence of the computer,
telephone, and cable television industries) and overseas (the number of
satellite dishes in India has gone from 400,000 to 15 million in the last five
years), the value of entertainment software will continue to increase. Who wins?
Time Warner, Viacom Inc. (VIA - $41.00 - ASE, VIA'B - $42.125 - ASE), Seagram
Company Ltd. (VO - $32.375 -NYSE) (the new owner of MCA), and
Tele-Communications, Inc./Liberty Media Group (LBTYA - $26.375 - NASDAQ)
(Tele-Communications, Inc.'s (TCOMA - $18.5625 - NASDAQ) collection of
entertainment software and cable network investments).
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Finally, the new international middle-class will be taking to the friendly
skies. Over the next five years, you might profit by investing in international
airline stocks. However, it will be less complicated and perhaps just as
lucrative investing in Boeing Co. (BA - $86.625 - NYSE), which will build the
foreign fleets to accommodate increasing air travel. Industry studies indicate
that in the next ten years, 7,000 new aircraft will be built. Boeing will get
the lion's share of these orders. Vendors to Boeing like Precision Castparts
Corp. (PCP - $40.00 - NYSE), SPS Technologies, Inc. (ST - $55.625 - NYSE),
AMETEK, Inc. (AME - $17.625 - NYSE) and Curtiss-Wright Corporation (CW - $52.00
- - NYSE) will also do quite well.
Let's Talk Stocks
The following are stock specifics on selected holdings of our Fund'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 - $49.375 - NYSE), founded in 1850, is a
diversified travel and financial services company operating in 160 countries
around the world. The company is best known for its American Express charge card
and travel-related services. Another important operation is Minneapolis-based
American Express Financial Advisors, Inc. (formerly IDS Financial Services)
which sells financial products ranging from mutual funds to annuities. Harvey
Golub, Chairman and CEO, has refocused AXP on its core "green" charge card and
investment management businesses. The company has significantly expanded the
range of merchants who welcome its cards. Management's objective is virtual
parity with bankcard networks. An electronic interactive service was introduced
last year that enables cardmembers to make travel arrangements, check the status
of their accounts, pay their bills and purchase catalogue merchandise. We
believe the company has been repositioned to enjoy double-digit earnings growth
over the balance of this decade.
Chris-Craft Industries, Inc. (CCN - $41.75 - NYSE), through its 74% ownership of
BHC Communications, Inc. is primarily a television broadcaster. BHC owns and
operates independent TV stations in Los Angeles (KCOP) and Portland (KPTV). BHC
also controls over 50% of United Television, Inc., which operates an NBC
affiliate, an ABC affiliate and three independent stations. BHC has entered into
a partnership agreement with Paramount Communications, Inc. to launch a new
fifth television network called United Paramount Television Network (UPN). CCN,
with over $1.5 billion in cash and marketable securities, is strongly positioned
to expand its operations. CCN is the eighth-largest TV station group owner in
the U.S. and covers almost 20% of TV households.
----------------------
Chris-Craft Industries
----------------------
74% |
----------------------
BHC Communications
----------------------
56% |
----------------------
United Television
----------------------
General Motors Corporation (GM - $53.25 - NYSE), the world's largest auto
manufacturer, is materially undervalued. Its North American operations have been
profitable for two years. 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. The
company is poised to source more of its parts, realizing lower labor costs and
better quality components. Peak earnings power is likely to exceed $12 per
share. A reorganization of GM along the lines of ITT and AT&T becomes an
intriguing possibility assuming the shares continue to trade at current low
levels.
GTE Corporation (GTE - $43.875 - NYSE) is the fourth-largest publicly-owned
telecommunications company in the world. The company owns the largest non-Bell
telecommunications system, serving 19 million access lines in 30
4
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states. GTE is the nation's second largest provider of cellular services, with a
controlling interest in metropolitan and rural service areas covering more than
50 million people. Roughly 25% of earnings are derived from non-telephone
businesses growing at more than 20% per year. Chuck Lee has prepared the company
for accelerated growth.
Pittway Corporation (PRY - $50.00 - 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. Its Ademco Security
Group, approximately 75% of revenues, is growing rapidly. 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 37% interest in Cylink (Pittway
owns 8.9 million shares), a leading manufacturer of encryption equipment, and a
4.5% equity interest in U.S. Satellite Broadcasting (Pittway owns 4.2 million
shares), a direct-to-the-home (DTH) satellite broadcast company.
Sprint Corporation (FON - $38.00 - NYSE) is the third largest long-distance
carrier and the second largest independent local telephone company in the U.S.
The company completed the spin-off of its cellular unit, 360(degree)
Communications Company, in March. Sprint has positioned itself on a global basis
through a joint venture with France Telecom/Deutsche Telekom which purchased a
20% stake in Sprint (excluding the cellular unit) in January for $3.5 billion.
Our interest in Sprint stems from its promising national cable/telephony and
PCS/wireless joint venture with three major cable operators:
Tele-Communications, Inc., Comcast Corporation and Cox Communications, Inc. We
consider FON an interesting value with the risks associated with the prospective
new entrants in the long distance business offset by the cable/telephony venture
and its own pursuit of the $100 billion local telephone market.
Tele-Communications, Inc. (TCOMA - $18.5625 - NASDAQ), the largest cable TV
operator in the U.S., serving about 14 million subscribers, is guided by Dr.
John C. Malone - one of the most shareholder sensitive managers we have found.
Given that regulation has historically played a major role in the valuation of
cable properties, we believe that the recent passage of the Telecommunications
Act of 1996, combined with the current deregulatory climate in Congress, could
prove to be a significant catalyst for cable stocks. Strategically, TCOMA is a
well-positioned industry leader, from its telephony joint-venture with Sprint to
its innovative Internet access business, dubbed @ Home, to its 80% ownership of
Tele-Communications International.
United Television, Inc. (UTVI - $88.75 - NASDAQ) is a television broadcasting
company which owns and operates five television stations: one ABC, one NBC and
three UPN affiliates. Its stations cover approximately 6% of the U.S.
population. UTVI is a 56%-owned subsidiary of BHC Communications. Strong
advertising demand, prospects for favorable regulatory changes in the industry
and corporate cost controls will magnify EBITDA growth going forward. Our 1996
PMV is estimated at $114 per share, $25 of which is cash. UTVI's PMV is expected
to approach $200 by the year 2000.
Viacom Inc. (VIA - $41.00 - ASE; VIA'B - $42.125 - ASE), long a major provider
of entertainment "content", 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 to reduce
debt and is focusing on the global expansion of its media franchises. Viacom is
well-positioned in music (notably MTV) and cable networks such as Nickelodeon,
USA (50% interest) and the Sci-Fi Channel.
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SHAREHOLDER QUESTIONS AND COMMENTS - TO WHOM DO I WRITE?
The following are common questions and/or situations that you may have
about the Equity Trust. Shareholders who hold their shares in "Street Name" with
a brokerage firm should contact their broker regarding account specific
questions.
[Photo of Marc Diagonale]
When do I write to the Equity Trust?
You may write directly to the Equity Trust at One Corporate Center, Rye, NY
10580-1434. You may also call us directly at (914) 921-5070 or e-mail us at
[email protected]. Marc Diagonale, Vice President, Investor Relations, has worked
with the Equity Trust since May 1994. Prior to that he was a client services
representative for Gabelli & Company, Inc. Marc holds an MBA from New York
University and a B.A. from Georgetown University. Marc is available to assist
you with any questions you may have about the Equity Trust, including the
following:
1. How may I buy more shares?
2. What has the Equity Trust paid out in dividends?
3. I have a question about the portfolio/investment style.
4. How has the Equity Trust performed? What have the returns been?
5. I have a question about rights offerings.
6. I have a question about my account value.
7. I would like a printout of the history of my account.
8. I have a question about taxes.
9. I would like my dividend check mailed directly to my bank.
10. How do I reinvest my dividends?
10% Distribution Policy
The Equity Trust continues to maintain its 10% distribution policy whereby
the Equity Trust pays out 10% of its average net assets each year. Pursuant to
this policy, the Equity Trust distributed $0.25 per share on March 25, 1996. The
next distribution is scheduled for payment in June 1996.
Internet
You can now visit us on the Internet. Our home page at
http://www.gabelli.com contains information about Gabelli Funds, Inc., the
Gabelli Mutual Funds, quarterly reports, closing prices, IRAs, 401(k)s and other
current news. You can also send us e-mail at [email protected].
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In Conclusion
As investors entrusted with preserving and enhancing the value of your
assets, we react with mixed emotions to rapidly rising equities markets. While
we enjoy the tailwind provided by investor euphoria, we worry about what will
happen when the party winds down. Sooner or later, however, this historic bull
market will loose steam, either with a real correction/bear market, or more
likely and preferably, an extended period of returns in line with earnings
gains. In a more historical market environment, our conservative value oriented
approach to equities investing should demonstrate its virtues on an absolute and
relative basis.
We believe the Equity Trust's portfolio is a diversified collection of
solid businesses trading at material discounts to their "real world" economic
values. In an environment in which individual stock fundamentals are likely to
be more important than market momentum in earnings returns, we are confident the
Equity Trust will reward its shareholders.
We thank you for your confidence in our investing abilities and wish you a
productive and financially rewarding 1996.
Sincerely,
/s/ Mario J. Gabelli
Mario J. Gabelli
President and Chief Investment Officer
April 19, 1996
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Top Ten Holdings
March 31, 1996
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Chris-Craft Industries, Inc. Time Warner Inc.
United Television, Inc. Viacom Inc.
American Express Company GTE Corporation
Pittway Corporation Sprint Corporation
General Motors Corporation Media General, Inc.
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NOTE: The views expressed in this report reflect those of the portfolio manager,
only through the end of the period of this report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
7
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THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES
Quarter Ended March 31, 1996
(Unaudited)
Ownership at
March 31,
Shares 1996
------ ------------
NET PURCHASES
Common Stocks
Ackerley Communications, Inc. .................... 8,300 8,300
AMETEK, Inc. ..................................... 37,500 220,000
Archer-Daniels-Midland Co. ....................... 60,000 130,000
BBN Corporation .................................. 22,000 80,000
Cable & Wireless plc,
Sponsored ADR .................................. 10,000 70,000
Cablevision Systems
Corporation, Class A ........................... 17,100 110,000
CANAL +, Sponsored ADR ........................... 5,000 40,000
Carter-Wallace, Inc. ............................. 300,500 490,500
Catellus Development
Corporation .................................... 20,000 20,000
Centennial Cellular Corp.,
Class A ........................................ 20,000 20,000
Central European Equity
Fund Inc. (a) .................................. 1,263 60,263
Chris-Craft Industries, Inc. (a) ................. 9,489 325,802
Chris-Craft Industries, Inc.,
Class B (a) .................................... 15,343 526,791
Church & Dwight Co., Inc. ........................ 7,000 75,000
Coltec Industries Inc. ........................... 185,500 185,500
Cooper Industries, Inc. .......................... 10,000 10,000
Culbro Corporation ............................... 3,600 27,100
Echlin Inc. ...................................... 35,000 85,000
Ferro Corporation ................................ 37,000 107,000
First Brands Corporation (b) ..................... 30,000 60,000
Franklin Electric Company ........................ 5,000 5,000
Fred Meyer Inc. .................................. 1,000 1,000
Gaylord Entertainment
Company, Class A ............................... 30,000 150,000
GenCorp Inc. ..................................... 103,000 103,000
General Host Corporation (a) ..................... 20,980 90,980
General Instrument
Corporation .................................... 30,000 30,000
General Motors Corporation,
Class E (c) .................................... 105,585 105,585
Giant Food Inc., Class A ......................... 17,000 17,000
Goulds Pumps Incorporated ........................ 47,000 47,000
Grupo Televisa S.A., GDR ......................... 50,000 300,000
H&R Block Inc. ................................... 15,000 40,000
Hong Kong Telecommunica-
tions Ltd., Sponsored ADR ...................... 20,000 40,000
International Family
Entertainment, Inc., Class B (d) ............... 50,759 253,795
Shares/ Ownership at
Principal March 31,
Amount 1996
------ ------------
ITT Industries Inc. .............................. 27,500 150,000
Lillian Vernon Corporation ....................... 5,000 40,000
LIN Television Corporation ....................... 4,000 7,000
Loral Corporation ................................ 70,000 70,000
LVHM Moet Hennessy Louis
Vuitton, Sponsored ADR ......................... 1,000 11,000
Martin Marietta Materials, Inc. .................. 5,000 15,000
Meredith Corporation ............................. 10,000 80,000
Midland Company .................................. 2,300 36,300
Minnesota Mining and
Manufacturing Company .......................... 5,000 110,000
Moog, Inc., Class A .............................. 2,500 2,500
Neiman Marcus Group, Inc. ........................ 5,000 420,000
New Germany Fund (a) ............................. 2,229 72,229
Paxson Communications
Corporation, Class A ........................... 25,000 25,000
PepsiCo, Inc. .................................... 10,000 100,000
Pittway Corporation (e) .......................... 22,500 67,500
Pittway Corporation, Class A (e) ................. 148,750 463,750
Precision Castparts Corp. ........................ 22,700 25,000
Quaker Oats Company .............................. 5,000 145,000
Ralston Purina Group ............................. 5,000 135,000
Revlon Inc., Class A ............................. 2,000 2,000
Rohr Inc. ........................................ 14,000 14,000
Scientific-Atlanta, Inc. ......................... 10,000 20,000
Sequa Corporation, Class A ....................... 1,000 41,000
Smith's Food & Drug Centers Inc.,
Class B ........................................ 63,000 63,000
Tele-Communications
International, Inc., Class A ................. 20,000 25,000
360o Communications
Company (f) .................................... 160,000 160,000
Time Warner Inc. ................................. 5,000 290,000
Tootsie Roll Industries, Inc. (a) ................ 2,560 22,660
Trinity Industries, Inc. ......................... 10,000 100,000
Walt Disney Company (g) .......................... 73,452 73,452
Westinghouse Electric Corp. ...................... 29,900 80,000
Wrigley (Wm.) Jr. Company ........................ 5,000 100,000
Wynn's International, Inc. (e) ................... 15,000 45,000
Corporate Bond
General Host Corporation,
Class D, Conv. Sub. Note,
8.000% due 02/15/2002 .......................... $ 50,000 $ 50,000
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THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES (Continued)
Quarter Ended March 31, 1996
(Unaudited)
Ownership at
March 31,
Shares 1996
------ ------------
NET SALES
Common Stocks
Allen Group Inc. .............................. 5,000 100,000
American Express Company ...................... 10,000 550,000
Amgen Inc. .................................... 2,000 18,000
AptarGroup, Inc. .............................. 10,000 40,000
AT&T Corp. .................................... 30,000 65,000
Brau und Brunnen .............................. 1,500 11,540
Brunswick Corporation ......................... 40,000 --
Burlington Resources Inc. ..................... 2,000 113,000
Capital Cities/ABC, Inc. (g) .................. 70,000 --
Castle & Cooke Inc. ........................... 16,667 --
CBI Industries Inc. (h) ....................... 20,000 --
Cincinnati Bell Inc. .......................... 5,000 35,000
Coca-Cola Enterprises Inc. .................... 15,000 50,000
C-TEC Corporation ............................. 10,500 130,500
Deere & Company ............................... 2,000 370,000
Dole Food Company, Inc. ....................... 10,000 40,000
Donaldson Company, Inc. ....................... 2,300 227,700
Fund American Enterprises
Holdings Inc. ............................... 5,000 --
GEICO Corporation (i) ......................... 201,100 --
GTE Corporation ............................... 5,900 429,100
Hungarian Telephone &
Cable Corp. ................................. 1,000 --
IDEX Corporation .............................. 1,000 334,000
ITT Hartford Group Inc. ....................... 96,000 --
Johnson Controls, Inc. ........................ 5,000 105,000
Kaneb Services, Inc. .......................... 105,000 150,000
Lehman Brothers
Holdings Inc. ............................... 10,000 140,000
Magma Copper Company (j) ...................... 380,800 --
Media General, Inc., Class A .................. 5,000 470,000
NYNEX Corporation ............................. 5,000 45,000
Outlet Communications, Inc.,
Class A (k) ................................. 161,800 --
Shares/ Ownership at
Principal March 31,
Amount 1996
------ ------------
Pearson plc ORD ............................... 2,024 --
Pep Boys -- Manny, Moe
& Jack ...................................... 26,000 --
Philips Electronics N.V.,
New York .................................... 45,000 50,000
Pratt & Lambert, Inc., New (l) ................ 36,000 --
Revco D.S. Inc., New .......................... 20,000 80,000
Royce Value Trust, Inc. ....................... 1 43,600
SBC Communications Inc. ....................... 10,000 175,000
Sierra On-Line, Inc. .......................... 5,000 15,000
Sprint Corporation ............................ 15,000 480,000
STET-Societa Finanziaria
Telefonica SpA,
Sponsored ADR ............................... 11,100 285,000
Unitrin, Inc. ................................. 5,000 45,000
Varity Corporation, New ....................... 25,000 180,000
Viacom Inc., Class B .......................... 5,000 110,000
Preferred Stocks
General Motors Corporation,
Depositary Shares,
$3.25, Pfd. (c) ............................. 75,000 --
Magma Copper Company,
Series D, 5.625%,
Conv. Pfd. (m) .............................. 30,000 --
Magma Copper Company,
Series E, 6.000%,
Conv. Pfd. (n) .............................. 97,500 --
Sprint Corporation,
8.250%, Conv. Pfd. .......................... 3,000 15,000
Corporate Bonds
Nortek, Inc., Sr. Sub. Note,
9.875% due 03/01/2004 ....................... $ 600,000 $2,700,000
Time Warner Inc., Conv
Sub. Deb., 8.750%
due 01/10/2015 (o) .......................... $24,190,850 --
- ----------
(a) Stock dividend.
(b) 2 for 1 stock split.
(c) Conversion - 1.4078 shares of General Motors Corporation, Class E for each
share of General Motors Corporation, Depositary Shares, $3.25,
Pfd.
(d) 5 for 4 stock split.
(e) 3 for 2 stock split.
(f) Spinoff - 0.333333 shares of 360o Communications Company for each share of
Sprint Corporation.
(g) Merger - $61.942110 for each share of Capital Cities/ABC, Inc. 1.04932080
shares of Walt Disney Company for each share of Capital
Cities/ABC, Inc.
(h) Tendered all shares @ $33.00 per share.
(i) Cash Merger - @ $70.00 per share.
(j) Tendered all shares @ $28.00 per share.
(k) Cash Merger - @ $47.25 per share.
(l) Cash Merger - @ $35.00 per share.
(m) Tendered all shares @ $96.544 per share.
(n) Tendered all shares @ $100.646 per share.
(o) Tendered all debentures @ $1,035.00 per debenture.
9
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS
March 31, 1996 (Unaudited)
Market
Shares Value
------ -----
COMMON STOCKS -- 79.5%
Industrial Equipment And Supplies -- 11.8%
220,000 AMETEK, Inc. ..................................... $ 3,877,500
180,000 Ampco-Pittsburgh Corporation ..................... 2,340,000
40,000 AptarGroup, Inc. ................................. 1,660,000
7,000 Caterpillar Inc. ................................. 476,000
66,000 CLARCOR Inc. ..................................... 1,435,500
10,000 Cooper Industries, Inc. .......................... 390,000
71,925 Crane Co. ........................................ 2,903,972
75,00 CTS Corporation .................................. 2,878,125
370,000 Deere & Company .................................. 15,447,500
227,700 Donaldson Company, Inc. .......................... 6,261,750
19,125 Duriron Company, Inc. ............................ 525,937
5,000 Franklin Electric Company ........................ 180,000
60,000 Gerber Scientific, Inc. .......................... 900,000
47,000 Goulds Pumps, Incorporated+ ...................... 1,028,125
240,000 Greif Bros. Corporation, Class A ................. 7,020,000
3,400 Greif Bros. Corporation, Class B+(a) ............. 99,450
40,000 Guardsman Products, Inc. ......................... 915,000
334,000 IDEX Corporation ................................. 12,984,250
35,000 Keystone International, Inc. ..................... 787,500
50,000 Lufkin Industries, Inc. .......................... 912,500
40,000 Manitowoc Company, Inc. .......................... 1,260,000
170,000 Mark IV Industries, Inc. ......................... 3,740,000
15,000 Martin Marietta Materials, Inc. .................. 341,250
400,000 Navistar International Corporation+ .............. 4,150,000
130,000 Nortek, Inc.+ .................................... 1,576,250
5,000 Nortek, Inc., Special Common+ (a) ................ 55,000
10,000 PACCAR Inc. ...................................... 487,500
67,500 Pittway Corporation .............................. 3,375,000
463,750 Pittway Corporation, Class A ..................... 22,955,625
20,000 Scientific-Atlanta, Inc. ......................... 355,000
41,000 Sequa Corporation, Class A+ ...................... 1,399,125
48,000 Sequa Corporation, Class B+ ...................... 1,968,000
84,000 SPS Technologies, Inc.+ .......................... 4,672,500
95,000 St. Joe Paper Company ............................ 5,486,250
111,250 TransPro Inc. .................................... 903,906
180,000 Varity Corporation, New+ ......................... 7,785,000
20,000 Watts Industries, Inc., Class A .................. 397,500
-----------
123,931,015
-----------
Telecommunications -- 9.5%
65,000 AT&T Corp. ....................................... 3,981,250
100,000 BC TELECOM Inc. .................................. 1,861,634
80,000 BCE Inc. ......................................... 2,830,000
11 BHI Corporation+ ................................. 166
7,000 British Telecommunications plc,
Sponsored ADR .................................. 395,500
70,000 Cable & Wireless plc, Sponsored ADR .............. 1,688,750
35,000 Cincinnati Bell Inc. ............................. 1,820,000
10,000 Compania de Telecomunicaciones
de Chile SA, Sponsored ADR ..................... 847,500
130,500 C-TEC Corporation+ ............................... 4,861,125
30,000 C-TEC Corporation, Class B+ ...................... 1,102,500
429,100 GTE Corporation .................................. 18,826,762
40,000 Hong Kong Telecommunications Ltd.,
Sponsored ADR .................................. 800,000
1,020,000 Jamaica Telephone Ltd. ORD ....................... 74,766
40,000 Lincoln Telecommunications Company ............... 770,000
10,000 Maritime Telegraph and Telephone
Company, Limited ............................... 141,228
12,000 Motorola, Inc. ................................... 636,000
45,000 NYNEX Corporation ................................ 2,244,375
50,000 Pacific Telesis Group Inc. ....................... 1,381,250
175,000 SBC Communications Inc. .......................... 9,209,375
10,000 Singapore Telecommunications
Limited ORD .................................... 24,579
480,000 Sprint Corporation ............................... 18,240,000
285,000 STET-Societa Finanziaria Telefonica
SpA, Sponsored ADR ............................. 7,944,375
4,000 Telecom Argentina Stet-France Telecom
S.A., Sponsored ADR ............................ 166,000
2,500,000 Telecom Italia SpA, ORD .......................... 3,962,319
249,073 Telecomunicacoes Brasileiras SA
(Telebras), Sponsored ADR ...................... 12,391,382
5,927 Telecomunicacoes Brasileiras SA
(Telebras), Sponsored ADR, 144A (c) ............ 294,868
10,000 Telefonica de Argentina S.A., ADR,
Class B ........................................ 256,250
55,000 Telefonica de Espana, Sponsored ADR .............. 2,612,500
20,000 Telefonos De Mexico SA, Sponsored ADR ............ 657,500
-----------
100,021,954
-----------
Broadcasting -- 8.1%
8,300 Ackerley Communications, Inc. .................... 164,962
55,000 BHC Communications, Inc., Class A ................ 5,142,500
325,802 Chris-Craft Industries, Inc. ..................... 13,602,250
526,791 Chris-Craft Industries, Inc., Class B (a) ........ 21,993,543
300,000 Grupo Televisa S.A., GDR+ ........................ 7,462,500
125,000 Havas, Sponsored ADR ............................. 2,625,000
50,000 Liberty Corporation .............................. 1,650,000
7,000 LIN Television Corporation+ ...................... 246,750
25,000 Paxson Communications Corporation,
Class A+ ....................................... 400,000
100,000 Television Broadcasting Ltd. ORD ................. 367,856
340,000 United Television, Inc. .......................... 30,175,000
80,000 Westinghouse Electric Corp. ...................... 1,540,000
-----------
85,370,361
-----------
10
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
March 31, 1996 (Unaudited)
Market
Shares Value
------ -----
COMMON STOCKS (Continued)
Financial Services -- 6.1%
550,000 American Express Company .......................... $27,156,250
24,000 Banco Santander SA, ADR ........................... 1,134,000
260 Berkshire Hathaway Inc.+ .......................... 8,801,000
30,000 Berliner Bank Aktiengesellschaft .................. 6,930,425
18,000 Commerzbank AG, Sponsored ADR ..................... 832,500
150,000 Deutsche Bank AG, Sponsored ADR+ .................. 7,650,000
13,432 Financial Security Assurance Holdings Ltd. ........ 340,837
25,000 Hibernia Corporation .............................. 265,625
40,000 H&R Block Inc. .................................... 1,445,000
140,000 Lehman Brothers Holdings Inc. ..................... 3,745,000
36,300 Midland Company ................................... 1,783,238
12,000 Morgan (J.P.) & Co. Incorporated .................. 996,000
60,000 Riggs National Corporation+ ....................... 742,500
10,000 SunTrust Banks, Inc. .............................. 700,000
45,000 Unitrin, Inc. ..................................... 2,070,000
-----------
64,592,375
-----------
Wireless Communications -- 4.6%
245,000 AirTouch Communications Inc.+ ..................... 7,625,625
100,000 Allen Group Inc. .................................. 1,937,500
67,500 Associated Group, Inc., Class A+ .................. 1,299,375
67,500 Associated Group, Inc., Class B+ .................. 1,290,938
15,000 BCE Mobile Communications Inc.+ ................... 649,859
20,000 Centennial Cellular Corp., Class A+ ............... 305,000
175,000 Century Telephone Enterprises, Inc. ............... 5,556,250
110,000 COMSAT Corporation, Series 1 ...................... 2,571,250
30,000 NEXTEL Communications, Inc., Class A+ ............. 566,250
41,000 Securicor Group plc ORD ........................... 1,339,176
4,000 Securicor Group plc, Class A ORD .................. 73,110
3,500,000 Telecom Italia Mobile SpA+ ........................ 6,362,033
322,000 Telephone and Data Systems, Inc. .................. 14,892,500
160,000 360o Communications Company+ ...................... 3,820,000
-----------
48,288,866
-----------
Entertainment -- 4.3%
25,000 Ascent Entertainment Group Inc.+ . ................ 375,000
29,000 Bay Meadows Operating Company ..................... 427,750
150,000 Gaylord Entertainment Company, Class A ............ 4,050,000
50,000 GC Companies, Inc.+ ............................... 1,900,000
10,000 GTECH Holdings Corporation+ ....................... 310,000
12,000 PolyGram NV ....................................... 723,000
120,000 THORN EMI plc, Sponsored ADR ...................... 3,064,800
290,000 Time Warner Inc. .................................. 11,853,750
67,179 Todd-AO Corporation, Class A ...................... 923,711
310,000 Viacom Inc., Class A+ ............................. 12,710,000
110,000 Viacom Inc., Class B+ ............................. 4,633,750
73,452 Walt Disney Company ............................... 4,691,747
-----------
45,663,508
-----------
Consumer Products -- 4.1%
250,000 American Brands, Inc. ............................. 10,593,750
490,500 Carter-Wallace, Inc. .............................. 8,031,937
75,000 Church & Dwight Co., Inc. ......................... 1,565,625
27,100 Culbro Corporation+ ............................... 1,663,262
10,000 Duracell International Inc. ....................... 496,250
30,000 Eastman Kodak Company ............................. 2,130,000
60,000 First Brands Corporation .......................... 1,680,000
24,000 Gillette Company .................................. 1,242,000
9,000 National Presto Industries, Inc. .................. 360,000
26,715 Park-Ohio Industries, Inc.+ ....................... 440,798
135,000 Ralston Purina Group .............................. 9,028,125
2,000 Revlon Inc., Class A+ ............................. 55,000
50,000 Scotts Company, Class A+ .......................... 887,500
50,000 Tambrands Inc. .................................... 2,337,500
100,000 Whitman Corporation ............................... 2,425,000
-----------
42,936,747
-----------
Cable -- 3.4%
110,000 Cablevision Systems Corporation,
Class A+ ........................................ 6,325,000
40,000 CANAL +, Sponsored ADR ............................ 1,840,000
65,000 Comcast Corporation, Class A ...................... 1,129,375
68,125 Comcast Corporation, Class A Special .............. 1,204,961
30,000 General Instrument Corporation+ ................... 821,250
253,795 International Family Entertainment, Inc.,
Class B+ ........................................ 4,282,791
10,000 Shaw Cable Systems Ltd., Class B, Conv ............ 68,780
40,000 Shaw Communications Inc., Class B,
Conv. ........................................... 275,118
462,125 Tele-Communications, Inc., Class A+ ............... 8,578,195
350,000 Tele-Communications, Inc./Liberty
Media Group, Class A+ ........................... 9,231,250
25,000 Tele-Communications International, Inc.,
Class A+ ........................................ 534,375
85,000 US WEST Media Group+ .............................. 1,753,125
-----------
36,044,220
-----------
Food And Beverage -- 3.4%
11,540 Brau und Brunnen .................................. 1,364,223
30,000 Campbell Soup Company ............................. 1,826,250
50,000 Coca-Cola Enterprises Inc. ........................ 1,543,750
40,000 Dole Food Company, Inc. ........................... 1,540,000
200,000 Fomento Economico Mexicano SA, ADR ................ 562,000
34,000 General Mills, Inc. ............................... 1,984,750
20,000 Guinness plc, Sponsored ADR........................ 711,200
45,000 Kellogg Company ................................... 3,408,750
11,000 LVHM Moet Hennessy Louis Vuitton,
Sponsored ADR ................................... 552,750
11
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
March 31, 1996 (Unaudited)
Market
Shares Value
------ -----
COMMON STOCKS (Continued)
Food And Beverage (Continued)
100,000 PepsiCo, Inc. ..................................... $ 6,325,000
145,000 Quaker Oats Company ............................... 4,839,375
40,000 Ralcorp Holdings, Inc.+ ........................... 1,025,000
100,000 Seagram Company Ltd. .............................. 3,237,500
22,660 Tootsie Roll Industries, Inc. ..................... 827,090
100,000 Wrigley (Wm.) Jr. Company ......................... 5,862,500
-----------
35,610,138
-----------
Automotive Parts And Accessories -- 3.2%
34,000 APS Holding Corporation, Class A+ ................. 586,500
85,000 Echlin Inc. ....................................... 3,081,250
103,000 GenCorp Inc. ...................................... 1,287,500
110,000 Genuine Parts Company ............................. 4,950,000
225,000 Handy & Harman .................................... 3,684,375
105,000 Johnson Controls, Inc. ............................ 7,835,625
320,000 Modine Manufacturing Company ...................... 8,480,000
12,000 Quaker State Corporation .......................... 168,000
25,000 Republic Automotive Parts, Inc.+ . ................ 381,250
40,000 SPX Corporation ................................... 720,000
120,000 Standard Motor Products, Inc. ..................... 1,920,000
45,000 Wynn's International, Inc. ........................ 1,057,500
-----------
34,152,000
-----------
Publishing -- 3.1%
50,000 Independent Newspapers plc ORD .................... 396,838
12,000 McGraw-Hill Companies, Inc. ....................... 1,041,000
470,000 Media General, Inc., Class A ...................... 18,212,500
80,000 Meredith Corporation .............................. 3,300,000
180,002 New York Times Company, Class A ................... 5,220,058
5,000 News Corporation Limited, ADS ..................... 115,000
299,000 Oriental Press Group ORD+ ......................... 135,312
46,000 Reader's Digest Association, Inc., Class B ........ 1,983,750
200,000 South China Morning Post Holdings ORD ............. 130,592
230,000 Western Publishing Group, Inc.+ ................... 2,271,250
-----------
32,806,300
-----------
Diversified Industrial-- 3.0%
40,000 GATX Corporation .................................. 1,840,000
150,000 ITT Industries Inc. ............................... 3,825,000
400,000 Lamson & Sessions Co.+ ............................ 3,700,000
60,000 Lawter International, Inc. ........................ 652,500
110,000 Minnesota Mining and Manufacturing
Company ......................................... 7,136,250
105,000 National Service Industries, Inc. ................. 3,806,250
100,000 Tenneco Inc. ...................................... 5,587,500
43,000 Thomas Industries Inc. ............................ 903,000
100,000 Trinity Industries, Inc. .......................... 3,487,500
100,000 Tyler Corporation+ ................................ 237,500
-----------
31,175,500
-----------
Business Services -- 2.4%
80,000 BBN Corporation+ .................................. 2,030,000
105,585 General Motors Corporation, Class E ............... 6,018,345
20,000 Honeywell, Inc. ................................... 1,105,000
125,000 International Business Machines
Corporation ..................................... 13,890,625
125,000 Landauer, Inc. .................................... 2,578,125
-----------
25,622,095
-----------
Energy -- 1.7%
34,000 Apache Corporation ................................ 913,750
40,000 Atlantic Richfield Company ........................ 4,760,000
52,500 British Petroleum Company plc, ADR ................ 5,578,125
113,000 Burlington Resources Inc. ......................... 4,195,125
10,000 Chevron Corporation ............................... 561,250
25,000 Halliburton Company ............................... 1,421,875
150,000 Kaneb Services, Inc.+ ............................. 375,000
50,000 Santa Fe Energy Resources, Inc.+ .................. 525,000
-----------
18,330,125
-----------
Hotels/Casinos -- 1.7%
100,000 Hilton Hotels Corporation ......................... 9,400,000
100,000 ITT Corporation, New+ ............................. 6,000,000
50,000 Mirage Resorts, Incorporated+ ..................... 2,193,750
-----------
17,593,750
-----------
Automotive -- 1.6%
290,000 General Motors Corporation ........................ 15,442,500
30,000 Harley Davidson, Inc. ............................. 1,166,250
-----------
16,608,750
-----------
Health Care -- 1.3%
18,000 Amgen Inc.+ ....................................... 1,046,250
6,500 Biogen, Inc.+ ..................................... 386,750
70,000 Johnson & Johnson ................................. 6,457,500
24,000 Mallinckrodt Group, Inc. .......................... 903,000
20,000 Pfizer Inc. ....................................... 1,340,000
54,000 Sandoz Ltd., Sponsored ADR+ ....................... 3,172,500
----------
13,306,000
----------
Consumer Services -- 1.0%
450,000 Rollins, Inc. ..................................... 10,518,750
15,000 Sierra On-Line, Inc.+ ............................. 504,375
----------
11,023,125
----------
Retail -- 1.0%
25,000 Crown Books Corporation+ .......................... 225,000
65,000 Earl Scheib, Inc.+ ................................ 491,562
1,000 Fred Meyer Inc.+ .................................. 28,000
12
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
March 31, 1996 (Unaudited)
Market
Shares Value
------ -----
COMMON STOCKS (Continued)
Retail (Continued)
90,980 General Host Corporation ......................... $ 341,175
40,000 Lillian Vernon Corporation ....................... 545,000
420,000 Neiman Marcus Group, Inc.+ ....................... 9,345,000
------------
10,975,737
------------
Aviation Parts And Services -- 0.9%
25,000 Boeing Co. ....................................... 2,165,625
185,500 Coltec Industries Inc.+ .......................... 2,249,188
50,000 Curtiss-Wright Corporation ....................... 2,600,000
145,000 Hi-Shear Industries Inc.+ ........................ 924,375
2,500 Moog, Inc., Class A+ ............................. 45,000
25,000 Precision Castparts Corp. ........................ 1,000,000
14,000 Rohr Inc.+ ....................................... 252,000
------------
9,236,188
------------
Airlines -- 0.7%
82,000 AMR Corporation+ ................................. 7,339,000
------------
Electronics -- 0.7%
2,000 Hitachi, Ltd., ADR ............................... 195,250
70,000 Loral Corporation ................................ 3,430,000
1,500 Matsushita Electric Industrial Co. Ltd.,
ADR ............................................ 247,500
1,500 NEC Corp., ADR ................................... 87,375
50,000 Philips Electronics N.V., New York ............... 1,818,750
20,000 Sony Corporation ................................. 1,215,000
------------
6,993,875
------------
Specialty Chemical -- 0.6%
39,000 E.I. du Pont de Nemours and Company .............. 3,237,000
107,000 Ferro Corporation ................................ 3,036,125
------------
6,273,125
------------
Retail: Food And Drug -- 0.4%
17,000 Giant Food Inc., Class A ......................... 561,000
80,000 Revco D.S. Inc., New+ ............................ 2,200,000
63,000 Smith's Food & Drug Centers Inc., Class B ........ 1,512,000
------------
4,273,000
------------
Country/Closed-End Funds -- 0.3%
60,263 Central European Equity Fund Inc. ................ 1,069,668
70,000 Emerging Germany Fund Inc.+ ...................... 525,000
25,000 France Growth Fund, Inc. ......................... 253,125
34,250 Italy Fund, Inc. ................................. 278,281
72,229 New Germany Fund ................................. 884,805
43,600 Royce Value Trust, Inc. .......................... 534,100
------------
3,544,979
------------
Metals And Mining -- 0.3%
15,000 Barrick Gold Corporation ......................... 455,625
20,000 Newmont Gold Company ............................. 1,122,500
70,000 Pegasus Gold Inc.+ ............................... 1,023,750
10,000 Placer Dome Inc. ................................. 288,750
------------
2,890,625
------------
Agriculture -- 0.2%
130,000 Archer-Daniels-Midland Co. ....................... 2,388,750
------------
Transportation -- 0.1%
11,000 Florida East Coast Industries, Inc. .............. 961,125
------------
Real Estate -- 0.0%
20,000 Catellus Development Corporation+ ................ 155,000
------------
TOTAL COMMON STOCKS ............................................ 838,108,233
------------
PREFERRED STOCKS -- 0.3%
Consumer Products -- 0.2%
34,000 Fieldcrest Cannon, Inc., Series A, 6.000%,
Conv. Pfd., 144A (c) ........................... 1,564,000
------------
Telecommunications -- 0.1%
15,000 Sprint Corporation, 8.250%, Conv. Pfd. ........... 581,250
2,130,723 Telecomunicacoes de Sao Paulo SA ,
(Telesp) Pfd., Registered ...................... 362,364
------------
943,614
------------
Cable -- 0.0%
8,000 Tele-Communications, Inc., Class B,
6.000%, Ex. Jr. Pfd. ............................. 526,000
------------
Diversified Industrial -- 0.0%
3,500 GATX Corporation, 3.875%, Conv. Pfd. ............. 197,313
------------
TOTAL PREFERRED STOCKS ......................................... 3,230,927
------------
Principal
Amount
------
CORPORATE BONDS -- 1.3%
Entertainment -- 0.9%
$2,400,000 Time Warner Inc., Deb., 8.110%
due 08/15/2006 ................................. 2,475,000
2,400,000 Time Warner Inc., Deb., 8.180%
due 08/15/2007 ................................. 2,481,000
13
<PAGE>
THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
March 31, 1996 (Unaudited)
Principal Market
Amount Value
------- -----
CORPORATE BONDS (Continued)
Entertainment (Continued)
$2,000,000 Time Warner Inc., Floating Rate Note,
6.210% due 08/15/2000 .......................... $ 2,010,000
1,200,000 Time Warner Inc., Note,
7.975% due 08/15/2004 .......................... 1,231,500
1,575,000 Viacom Inc., Ex. Sub. Deb.,
8.000% due 07/07/2006 .......................... 1,511,016
------------
9,708,516
------------
Industrial Equipment And Supplies -- 0.3%
2,700,000 Nortek, Inc., Sr. Sub. Note,
9.875% due 03/01/2004 .......................... 2,544,750
------------
Publishing -- 0.1%
200,000 News American Holdings Incorporated,
Gtd. Ex. Sub. Note, Zero Coupon
due 03/31/2002 ................................. 202,500
1,000,000 Thomas Nelson Inc., Conv. Sub. Note,
5.750% due 11/30/1999 .......................... 1,030,000
------------
1,232,500
------------
Automotive: Parts And Accessories -- 0.0%
500,000 GenCorp Inc., Conv. Sub. Deb.,
8.000% due 08/01/2002 .......................... 495,000
------------
Retail -- 0.0%
50,000 General Host Corporation, Class D,
Conv. Sub. Note, 8.000% due 02/15/2002 ......... 40,938
------------
Broadcasting -- 0.0%
FRF 125,000 Havas, Conv. Bonds, Payment-in-kind,
3.000% due 12/31/1997 .......................... 30,630
------------
TOTAL CORPORATE BONDS .......................................... 14,052,334
------------
U.S. TREASURY BILLS -- 18.5%
195,500,000 5.060% to 5.240%++ due
04/04/1996 - 05/30/1996 (d) .................... 194,730,431
------------
REPURCHASE AGREEMENT -- 0.6%
5,990,000 Agreement with Morgan (J.P.) & Co.
Incorporated, 5.375% dated 03/29/1996,
to be repurchased at $5,992,683 on
04/01/1996, collateralized by $4,436,000
U.S. Treasury Bonds, 11.625% due
11/15/2004 (value $6,110,590) ................... 5,990,000
------------
TOTAL INVESTMENTS
(Cost $710,210,679) (b)..................... 100.2% $1,056,111,925
OTHER ASSETS AND
LIABILITIES (Net)........................... (0.2) (2,131,405)
----- --------------
NET ASSETS .................................. 100.0% $1,053,980,520
===== ==============
NET ASSET VALUE ($1,053,980,520
/ 103,919,670 shares outstanding) .......... $10.14
======
- ----------
(a) Security fair valued under procedures established by the Board of
Directors.
(b) Aggregate cost for Federal tax purposes was $710,216,946. Net unrealized
appreciation for Federal tax purposes was $345,894,979 (gross unrealized
appreciation was $359,127,785 gross unrealized depreciation was
$13,232,806).
(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
FUTURES CONTRACTS - SHORT POSITION
Number of Unrealized
Contracts Appreciation
- --------- ------------
300 S&P 500 Index Futures, June 1996 .................... $ 373,019
=========
14
<PAGE>
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLAN
Enrollment in the Plan
It is the policy of The Gabelli Equity Trust Inc. ("Equity Trust") to
automatically reinvest dividends. As a "registered" shareholder you
automatically become a participant in the Equity Trust's Automatic Dividend
Reinvestment Plan (the "Plan"). The Plan authorizes the Equity Trust to issue
shares to participants upon an income dividend or a capital gains distribution
regardless of whether the shares are trading at a discount or a premium to net
asset value. All distributions to shareholders whose shares are registered in
their own names will be automatically reinvested pursuant to the Plan in
additional shares of the Equity Trust. Plan participants may send their stock
certificates to State Street Bank and Trust Company ("State Street") to be held
in their dividend reinvestment account. Registered shareholders wishing to
receive their distribution in cash must submit this request in writing to:
The Gabelli Equity Trust Inc.
c/o State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan may contact State Street at 1 (800)
336-6983.
Shareholders wishing to liquidate reinvested shares held at State Street
Bank must do so in writing or by telephone. Please submit your request to the
above mentioned address or telephone number. Include in your request your name,
address and account number. The cost to liquidate shares is $2.50 per
transaction as well as the brokerage commission incurred. Brokerage charges are
expected to be less than the usual brokerage charge for such transactions.
If your shares are held in the name of a broker, bank or nominee, you
should contact such institution. If such institution is not participating in the
Plan, your account will be credited with a cash dividend. In order to
participate in the Plan through such institution, it may be necessary for you to
have your shares taken out of "street name" and re-registered in your own name.
Once registered in your own name your dividends will be automatically
reinvested. Certain brokers participate in the Plan. Shareholders holding shares
in "street name" at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must
contact their broker to make this change.
The number of shares of Common Stock distributed to participants in the
Plan in lieu of cash dividends is determined in the following manner. Under the
Plan, whenever the market price of the Equity Trust's Common Stock is equal to
or exceeds net asset value at the time shares are valued for purposes of
determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued shares of Common Stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current
15
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market price of the Equity Trust's Common Stock. The valuation date is the
dividend or distribution payment date or, if that date is not a New York Stock
Exchange trading day, the next trading day. If the net asset value of the Common
Stock at the time of valuation exceeds the market price of the Common Stock,
participants will receive shares from the Equity Trust valued at market price.
If the Equity Trust should declare a dividend or capital gains distribution
payable only in cash, State Street will buy Common Stock in the open market, or
on the New York Stock Exchange or elsewhere, for the participants' accounts,
except that State Street will endeavor to terminate purchases in the open market
and cause the Equity Trust to issue shares at net asset value if, following the
commencement of such purchases, the market value of the Common Stock exceeds the
then current net asset value.
The automatic reinvestment of dividends and capital gains distributions
will not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for Federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.
The Equity Trust reserves the right to amend or terminate the Plan as
applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to written notice of the change sent to the members of the Plan
at least 90 days before the record date for such dividend or distribution. The
Plan also may be amended or terminated by State Street on at least 90 days'
written notice to participants in the Plan.
Voluntary Cash Purchase Plan
The Voluntary Cash Purchase Plan is yet another vehicle for our
shareholders to increase their investment in the Equity Trust. In order to
participate in the Voluntary Cash Purchase Plan, shareholders must have their
shares registered in their own name.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to State Street for investments in the Equity Trust's
shares at the then current market price. Shareholders may send an amount from
$250 to $10,000. State Street will use these funds to purchase shares in the
open market on or about the 15th of each month. State Street will charge each
shareholder who participates $0.75, plus a pro rata share of the brokerage
commissions. Brokerage charges for such purchases are expected to be less than
the usual brokerage charge for such transactions. It is suggested that any
voluntary cash payments be sent to State Street Bank and Trust Company, P.O. Box
8200, Boston, MA 02266-8200 such that State Street receives such payments
approximately 10 days before the 15th of the month. Funds not received at least
five days before the investment date shall be held for investment in the
following month. A payment may be withdrawn without charge if notice is received
by State Street at least 48 hours before such payment is to be invested.
For more information regarding the Dividend Reinvestment Plan and
Voluntary Cash Purchase Plan, brochures are available by calling (914) 921-5070
or by writing directly to the Equity Trust.
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The Annual Meeting of the Equity Trust's Stockholders will be
held at 9:30 A.M. on Monday, May 13, 1996, at the Cole
Auditorium, Greenwich Public Library in Greenwich, Connecticut.
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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
Investment Advisor
Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580-1434
Custodian
Boston Safe Deposit and Trust Company
Counsel
Willkie Farr & Gallagher
Transfer Agent and Registrar
State Street Bank and Trust Company
Stock Exchange Listing
NYSE-Symbol: GAB
Shares Outstanding 103,919,670
The Net Asset Value appears in the Publicly
Traded Funds column, under the heading
"General Equity Funds," in Saturday's The New
York Times and Mondays in The Wall Street
Journal. It is also listed in Barron's Mutual
Funds/Closed End Funds section under the
heading "General Equity Funds".
The Net Asset Value may be obtained each day
by calling (914) 921-5071.
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For general information about the Gabelli
Funds, call 1-800-GABELLI (1-800-422-3554),
fax us at 914-921-5118 or, visit Gabelli
Funds' Internet homepage at:
http://www.gabelli.com, or e-mail us at:
[email protected]
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Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Equity Trust may from time to time
purchase shares of its 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.
- --------------------------------------------------------------------------------
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THE GABELLI EQUITY TRUST INC. FIRST CLASS MAIL
One Corporate Center U.S. POSTAGE
Rye, NY 10580-1434 PAID
(914) 921-5070 RYE, NY
PERMIT No. 109
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First Quarter Report
March 31, 1996
03/96
