Edgar Filing: GABELLI EQUITY TRUST INC

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ANNUAL REPORT
DECEMBER 31, 2001

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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 interdependent economic world.

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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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TO OUR SHAREHOLDERS,

A strong fourth quarter rally helped the leading market indices regain the
ground lost in September following the shocking terrorist attacks on America.
Despite the market's strong showing in the fourth quarter, the Standard & Poor's
("S&P") 500 Index closed the year with an 11.89% loss. The Dow Jones Industrial
Average posted a more modest 5.42% decline while the Nasdaq plunged 21.05%. Of
the most widely followed market barometers, only the small-cap Russell 2000
Index finished the year with a positive return. The Gabelli Equity Trust's
NAV return fell 3.68% in this challenging market.

INVESTMENT PERFORMANCE

For the fourth quarter ended December 31, 2001, The Gabelli Equity Trust's
(the "Trust") net asset value ("NAV") total return rose 11.84% after adjusting
for the reinvestment of the $0.27 per share distribution paid on December 24,
2001. The Standard & Poor's ("S&P") 500 Index, Nasdaq Composite Index, and Dow
Jones Industrial Average rose 10.68%, 30.13%, and 13.81%, respectively, over the
same period. Each index is an unmanaged indicator of stock market performance.
The Trust fell 3.68% during 2001 after adjusting for the reinvestment of the
$1.08 per share in distributions and an adjustment of $0.56 per share
attributable to the rights offering. The S&P 500 Index, Nasdaq Composite Index,
and Dow Jones Industrial Average declined 11.89%, 21.05%, and 5.42%,
respectively, over the same twelve-month period.

For the three-year period ended December 31, 2001, the Trust's total
return averaged 6.04% annually, including reinvestments of $3.57 per share in
distributions, an adjustment of $0.56 per share attributable to the rights
offering, and an adjustment of $0.75 per share attributable to the spin-off of
the Gabelli Utility Trust. The S&P 500 Index and Nasdaq Composite Index had
average annual declines of 1.03% and 3.83%, respectively, while the Dow Jones
Industrial Average had an average annual total return of 4.69%, over the same
three-year period. For the five-year period ended December 31, 2001, the Trust's
total return averaged 11.25% annually, including reinvestments of $5.77 per
share in distributions, an adjustment of $0.56 per share attributable to the
rights offering, and an adjustment of $0.75 per share attributable to the
spin-off of the Gabelli Utility Trust, versus average annual total returns of
10.70%, 8.60%, and 11.11% for the S&P 500, Nasdaq Composite Index, and Dow Jones
Industrial Average, respectively.

For the ten-year period ended December 31, 2001, the Trust's total return
averaged 12.14% annually, including reinvestments of $11.02 per share in
distributions, adjustments of $1.79 per share attributable to rights offerings,
and adjustments of $1.50 per share attributable to the spin-off of the Gabelli
Utility Trust and the Gabelli Global Multimedia Trust, versus average annual
total returns of 12.93%, 12.77%, and 14.71% for the S&P 500 Index, Nasdaq
Composite Index, and Dow Jones Industrial Average, respectively. Since inception
on August 21, 1986 through December 31, 2001, the Trust had a cumulative total
return of 509.60%, including adjustments of $20.24 per share for distributions,
rights offerings, spin-offs and taxes paid on undistributed long term capital
gains, which equates to an average annual total return of 12.48%.

The Trust's common shares ended the fourth quarter at $10.79 per share on
the New York Stock Exchange, a premium to the net asset value of 20.29% and a
total return of 11.72% for the fourth quarter. The Trust's common shares rose
10.32% over the trailing twelve-month period after adjusting for all
distributions and the rights offering.

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INVESTMENT RESULTS (a)

Quarter
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1st 2nd 3rd 4th Year
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2001: Net Asset Value $9.64 $9.90 $8.23 $8.97 $8.97
Total Return (4.3)% 5.2% (14.5)% 11.8% (3.7)%
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2000: Net Asset Value $12.68 $12.07 $11.71 $10.89 $10.89
Total Return 1.7% (2.7)% (0.7)% (2.7)% (4.4)%
------------------------------------------------------------------------------------------------
1999: Net Asset Value $11.64 $12.58 $11.11 $12.75 $12.75
Total Return 3.7% 10.5% (4.3)% 18.0% 29.5%
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1998: Net Asset Value $12.60 $12.35 $10.29 $11.47 $11.47
Total Return 11.2% 0.2% (14.6)% 15.1% 9.5%
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1997: Net Asset Value $9.68 $10.73 $11.49 $11.56 $11.56
Total Return 1.7% 13.6% 9.5% 3.1% 30.5%
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1996: Net Asset Value $10.14 $10.10 $9.72 $9.77 $9.77
Total Return 4.6% 2.2% (1.2)% 3.2% 9.0%
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1995: Net Asset Value $9.71 $9.92 $10.65 $9.95 $9.95
Total Return 5.3% 4.7% 7.4% 1.9% 20.6%
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1994: Net Asset Value $10.66 $10.42 $10.80 $9.46 $9.46
Total Return (2.9)% 0.1% 6.1% (2.5)% 0.5%
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1993: Net Asset Value $11.02 $11.33 $11.39 $11.23 $11.23
Total Return 6.5% 5.1% 7.5% 1.7% 22.4%
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1992: Net Asset Value $10.84 $10.47 $10.42 $10.58 $10.58
Total Return 4.5% (1.1)% 5.5% 4.6% 14.2%
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1991: Net Asset Value $11.29 $10.91 $10.90 $10.61 $10.61
Total Return 10.0% (1.2)% 2.2% 4.7% 16.2%
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1990: Net Asset Value $11.96 $11.96 $10.07 $10.49 $10.49
Total Return (8.5)% 2.1% (13.8)% 8.4% (12.7)%
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1989: Net Asset Value $12.80 $13.94 $14.37 $13.34 $13.34
Total Return 16.6% 10.9% 4.9% (1.8)% 33.2%
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1988: Net Asset Value $10.56 $11.27 $11.15 $11.22 $11.22
Total Return 7.5% 6.7% 1.5% 4.4% 21.5%
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1987: Net Asset Value $10.80 $11.62 $11.58 $9.82 $9.82
Total Return 16.5% 7.6% 4.7% (10.7)% 17.1%
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1986: Net Asset Value -- -- $9.37 $9.40 $9.40
Total Return -- -- 0.3% (c) 0.3% 0.6% (c)
------------------------------------------------------------------------------------------------

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Average Annual Returns - December 31, 2001
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Average Annual Average Annual
NAV Return (a) Investment Return (b)
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1 Year (3.68)% 10.32%
5 Year 11.25% 16.40%
10 Year 12.14% 14.77%
Life of Fund (c) 12.48% 13.33%
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(a) Life of Fund return based on initial net asset value of $9.34. Total returns
and average annual returns reflect changes in net asset value, reinvestment of
distributions, adjustments for rights offerings, spin-offs and taxes paid on
undistributed long term capital gains, and are net of expenses. Of course, the
returns noted represent past performance and do not guarantee future results.
Investment returns and the principal value of an investment will fluctuate. When
shares are sold they may be worth more or less than their original cost.

(b) Life of Fund return based on initial offering price of $10.00. Total returns
and average annual returns reflect changes in closing market values on the New
York Stock Exchange, reinvestment of distributions, adjustments for rights
offerings, spin-offs and taxes paid on undistributed long-term capital gains.

COMMENTARY

Mario Gabelli, our Chief Investment Officer, has appeared in the
prestigious BARRON'S Roundtable discussion annually since 1980. Many of our
readers have enjoyed the inclusion of selected and edited comments from BARRON'S
Roundtable in previous reports to shareholders. As is our custom, we are
including selected comments of Mario Gabelli from BARRON'S 2002 Roundtable.

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BARRON'S
ROUNDTABLE

MARIO GABELLI

CHAIRMAN AND CHIEF
INVESTMENT OFFICER
GABELLI ASSET MANAGEMENT INC.

(THE FOLLOWING HAS BEEN EXCERPTED:)

PAST AND PRESENTS

Somewhere between these quasi-extremes lies the stuff of which markets are made
-- the soaring hopes and quotidian ticks that separate legendary from forgotten
investors. That's the stuff we explored for hours upon hours two weeks ago, with
11 of the planet's legendary investment pros and pundits, members all of this
year's Barron's Roundtable.
Mario Gabelli of Gabelli Asset Management, rounds out this week's list of
luminaries, although his generous musings and snappy asides enliven every
Roundtable issue. This year Mario left his loony props home (anyway, tulips are
sooooo 20th century). But his unparalleled knowledge of media moguls and their
temperamental shares is on full and amusing display.

Throughout, you'll hear from the rest of the Roundtable crew, all listed nearby.
It's rich stuff so read on.
-- LAUREN R. RUBLIN

BARRON'S: Mario, you're up.

GABELLI: Let me point out some qualitative elements. You'll have very good unit
volume in 2002. GDP will be up 3%-4%. Productivity gives you a big bounce, given
the absence of inventory reduction. For example, GM's actions caused one million
cars to be cleaned out of industry inventories. So even with much lower retail
sales, production can go up. Secondly, consumers get all the benefits I talked
about. They're going to feel good when they get that weekly pay check, where the
2001 tax cuts will finally show up. Just like I feel good when I go out to buy
gas. I filled up yesterday for $1.09.

SCHAFER: The whole car?

GABELLI: Then there's what I call the kitchen sink. Corporations not only write
off things -- everything including the kitchen sink -- but deliberately do
things like reduce production schedules. That is going to reverse itself in
2002. FASB 142 [a new accounting rule that allows companies to quickly write off
goodwill] is going to add about 15% to reported earnings. A whole bunch of
things will accelerate reported earnings in 2002.

It's nice to know whether S&P operating earnings will be $53 or $58 or $43 or
$55 this year. But what about the growth rate beyond 2002, when you normalize
the recovery? I look at GDP on a global basis, and my map says 6%-8% profit
growth.

GABELLI: To recap, corporate profits will be up very sharply in 2002. Companies
everywhere keep cutting costs. Interest rates will go up toward the end of the
year, so overall the market will make very little progress. You will also see a
lot of deals, particularly in smaller companies, as large companies try to
accelerate top-line growth. Without the amortization of goodwill, the propensity
to do deals will increase. That's our roadmap -- a lot of little dots that will
help specific industries and companies.

Q: WHAT ABOUT IDEAS!

Before I go into stock specifics, though, here's a look at my Hall of Shame. I
want to keep Carter Wallace in it, for the hideous way they've treated
shareholders. I'd like to add WILLAMETTE INDUSTRIES [Timber rival WEYERHAEUSER
has made a hostile bid for the company.]

WITMER: You don't think they're just playing hard to get for a higher price?

GABELLI: Yes, of course they are. But it would have been a lot easier if they
didn't have these poison pills. Generically they should be eliminated.

WITMER: They want a couple more dollars.

GABELLI: Absolutely, and they will get it. Meanwhile the stock is back to 46 or
45.

WITMER: So it is a buy, right?

GABELLI: Yes, but I am not recommending it here. That's a different subject.
We've seen a round of consolidation in the gas and electric areas over the past
several years. Last year there were problems in the California energy market.
The independent power producers had problems toward the end of the year. With
ENRON

and all, things got very confused. In 2002 we think you'll see a reactivation of
transactions. I am recommending two companies in this area. One is CH ENERGY
GROUP, which operates in New York State. It is the hole in the donut. CH Energy
has approximately 16.3 million shares. If you look at a map of New York you will
see CON EDISON moving north, through Orange and Rockland counties. CH, or
Central Hudson is right next door. Last year the merger of ROCHESTER GAS and
ENERGY EAST was approved. NIAGARA MOHAWK is going to be bought by NATIONAL GRID.
This is the last independent in a state with consolidation. The company has
approximately $300 million in debt and about $300 million in cash, which it got
from selling off some of its businesses. It's got a GAAP [generally accepted
accounting principles] book value of around $500 million, and statutory book for
rate-base purposes of around $250 million. They will earn about $1.75 a share on
their rate base and add another dollar to earnings from their oil-delivery
business. We think this company is sold at 50% over its current price. Meanwhile
you're getting a 5% dividend yield.

WITMER: What is the current price?

GABELLI: It's $44 a share. The operating area is between New York City and
Albany. My second company is SOUTHWEST GAS, which I recommended in the past. It
operates in Phoenix and Las Vegas. The stock is around 21, and there are about
33 million shares. We think Southwest will get taken out at a price in the
mid-30s. Meanwhile on an 82-cent dividend you've got a decent return of about
4%. That provides some kind of ballast.

There were also a lot of transactions last year in cable networks. DISNEY bought
FAMILY CHANNEL, and VIACOM bought BLACK ENTERTAINMENT. I want to talk about
RAINBOW MEDIA. There is a pot of gold at the end of this Rainbow. The stock
trades on the New York Stock Exchange for around 25. There are 131 million
shares. This was spun off as a tracking stock from CABLEVISION, and includes the
American Movie Classics channel, Bravo and Women's Entertainment, which was
formerly the Romance Channel. AT&T had owned 24.5 million shares, and dumped the
stock about two months ago as part of its liquidity needs. That stock was sold
around 22-23, and has been floating up. The Dolan family owns 21 million of the
B shares, which have 10 votes. GE, which is NBC, owns 44 million shares and the
rest of us cable shareholders own the balance. Rainbow Media is worth somewhere
around 39 today, based on the metrics of comparable companies. We think that
grows over the next 3-4 years. Cash flow goes from about $250 million to a
billion dollars. There is very little debt. They may have to buy out MGM. The
question is, how is Cablevision going to monetize this asset? Meanwhile it is
going to grow nicely over the next several years. So Rainbow has a pot of gold
at the end of it, and we are buying.

Q: WELL, WHO DO YOU THINK IS GOING TO BUY IT?

GABELLI: Everybody wants it.

MACALLASTER: Maybe [Chairman Charles] Dolan wants it.

GABELLI: I think he will spin off. According to my script he will spin it off
with Madison Square Garden and James Dolan [Charles Dolan's son] will run that.
That includes the Knicks, the Rangers, the Rockettes, and so on. My second
company in the same area is E.W. SCRIPPS. I'm going to talk about three
companies in Cincinnati. So those portfolio managers who like to take day trips,
Cincinnati is in Ohio.

NEFF: Are you being thematic?

GABELLI: No, just coincidental. Not to keep you in suspense, the others are
BROADWING, which has been depressed to 10 from 40, and CHEMED.

MACALLASTER: How about CINCINNATI FINANCIAL?

GABELLI: You had your chance! Scripps' symbol is SSP, and it trades on the New
York Stock Exchange. There are 81 million shares. The company is in three
terrific areas -- newspapers, television and cable networks. The part that I
like is cable networks. The cable networks, for you unwashed, are Home & Garden
and the Food Network, and the company is starting up two new ones. We think
Scripps is worth over $100 a share.

Q: WHERE IS THE STOCK SELLING NOW?

GABELLI: Around 65-66. The catalyst is a change in the rules by which television
and newspapers are regulated. Right now, in theory, as a newspaper you can't
have a TV in the same market. We think that rule will change. There will be
consolidation in a market and consolidation among TV and newspaper operators.

Q: THIS COMPANY HAS ALREADY MADE ACQUISITIONS.

GABELLI: They have a temporary waiver. Tribune had an exemption when it bought
Times Mirror in southern California. You cannot have newspaper/television cross-
ownership in the same market under today's rules, though some companies have
been grandfathered in. Scripps becomes a yummy because it has wonderful
newspapers in markets in which companies want to own properties. Cash flow is
terrific. Cash flow is extraordinarily positive today, and becomes even more
positive. Cash builds up significantly over the next five years.

Q: APPARENTLY YOU'RE LOOKING FOR A QUICK UPTICK IN ADVERTISING.

GABELLI: I'm in the camp that says you have a consumer-led economic recovery.
There is a historic correlation between companies like P&G, earnings, consumer
expenditures and advertising. The advertising pricing structure has been damaged
in this cycle, but it will recover. And it will do quite well over the next two
or three years. Comps [ad-revenue comparisons] will be very easy year to year.

Something exceptional happened: Internet advertising swallowed an awful lot of
ad space, but now it's nonexistent.

GABELLI: The last dot.commer disappeared with Super Bowl 2000 and Pets.com. That
engine is gone. But you don't need the engine. In 1971 tobacco advertising was
taken off the air. Broadcasters lost 6% of ad revenues. Internet advertising
also created a blip. The problem, however, is that there were other blips that
came at the same time, and the sag was substantial. The advertising media pie,
which is around $450 billion, will grow again on a secular basis by 5%, 6%, 7%.
That recovery will become very visible starting in the next couple of quarters.

BLACK: I used to own Scripps. We sold it at around 63.

GABELLI: You sold it to me. Sell me more.

BLACK: Mario it's about 13 times enterprise value, which is the most expensive
of all the combination newspapers/broadcasters.

GABELLI: My third media recommendation is Liberty Media. The stock is 14, there
are 2.6 billion shares outstanding, and a $35 billion market cap. This is a
preferred way to participate in all of distribution. They are interconnected
with everyone. This is preferred programming basket, like the Asia Fund run by
Morgan Stanley or the Africa Fund. You are buying at a discount a collection of
assets that is very valuable. [Liberty Chairman John] Malone can energize them
and trade pieces, and he does it tax-efficiently.

Returning to Cablevision, I bought a lot more when AT&T sold it. There are 175
million shares, and the Dolan family owns 42 million shares. I couldn't think of
a better partner, because they come to work every day and make sure that they
grow

the franchise and protect it. And one way to protect it is to get the money they
need. They are going to have to raise about a billion dollars to fund the
conversion to digital cable. Hopefully they will do something creative with
their Wiz unit, maybe merge it into Circuit City. They'll keep the theaters.
From an EBITDA standpoint, my estimate for 2002 is $1.2 billion, and that will
grow to about $2 billion by 2005. So cash flow becomes very positive three years
out. They have skinnied the company down to one area -- New York. I was
concerned that when [AOL TIME WARNER CEO] Jerry Levin retires and Dick Parsons
becomes CEO, he will not be as passionate about owning Cablevision. But with
COMCAST buying AT&T's cable properties, when the dust settles either CHARTER or
COX COMMUNICATIONS or AOL will step up.

MACALLASTER: Would the government let Time Warner buy Cablevision?

GABELLI: The issue is, will they allow a cable/television cross-ownership
situation? If so, Time Warner would go after a big television distribution
company, which it doesn't have.

In the broadcasting area there will be another round of consolidation. Meryl
recommended Media General last year and I echo it. It's $50 a share, with 23
million shares or a $1.2 billion of market value, and about $800 million of
debt. It's not exceptionally well-managed. However, the company has a
TV/newspaper combination in Tampa, Florida, that is very attractive. They have
some other properties. Over the next 3-4 years earnings will explode to about $4
a share. Maybe we'll get lucky, and get $130 a share for this one.

Q: ANY OTHER MEDIA STORIES?

GABELLI: I was visiting with PAXSON COMMUNICATIONS the other day. Paxson has TV
stations which cover about 80% of the U.S. population in terms of TV coverage.
The stock is 10. NBC owns a call and warrants, and preferred stock, that gives
them 50% of the company. In the fall NBC announced they were buying Telemundo.
That could cause some major problems with Paxson because of the FCC's duopoly
rules. Clearly, Paxson is for sale. The question is, at what price. They've
refinanced debt, and cash flow is about breakeven.

Q: HOW LONG DO YOU HAVE TO WAIT?

GABELLI: You've got about 18 months. I think the FCC changes the rules and
allows cross-ownership and duopoly. Paxson is going to come to grips with the
fact that NBC bought Telemundo. The ideal thing for Paxson would be for NBC to
sell back its position, unwind it.

GABELLI'S PICKS

COMPANY SYMBOL PRICE (1/7)
--------------------------------------------
CH ENERGY GROUP CHG $44.72
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SOUTHWEST GAS SWX 22.60
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RAINBOW MEDIA RMG 26.00
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E.W. SCRIPPS SSP 68.55
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LIBERTY MEDIA L 14.86
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CABLEVISION CVC 46.93
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MEDIA GENERAL MEG 49.82
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PAXSON COMMUN PAX 10.40
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LIBERTY LC 41.51
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BROADWING BRW 10.55
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CHEMED CHE 34.06
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GAYLORD ENTMT GET 24.49
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GRUPO TELEVISA TV 42.51
--------------------------------------------

SOURCE: BLOOMBERG

One last media pick is LIBERTY CORP. LC sells for 41. It's located in South
Carolina and is worth about 60. It's got a bunch of TV stations, no debt.
However, I have to point out that I am in litigation with the company.

Q: WHAT ARE YOU SUING THEM FOR, OR IS IT THE OTHER WAY AROUND?

GABELLI: They sold an insurance company to ROYAL CANADA. We thought we would
vote for the deal only on the premise that they would do a large share buyback,
and we asked for dissenters' rights. Now, this is Mario Gabelli, Gabelli Asset
Management, in South Carolina courts asking for the dissenters' rights.

Let me give you the Broadwing story. About 3-4 years ago this was known as
Cincinnati Bell. It operates the telephone company in Cincinnati, and Ameritech
surrounded the territory much like Rochester Telephone was surrounded in upstate
New York, or Southern New England Telephone in Connecticut. The company spun off
CONVERGYS. Then it bought a company called IXC. Broadwing went to 40 on the
hype. Now it has dropped to $10. With 218 million shares, symbol is BRW on the
New York Stock Exchange, you are paying $2.2 billion. Debt is a couple of
billion dollars. The telephone business, which ALLTEL wants, is still vibrant,
and we think it's worth the entire market cap of the company. So you get the
balance of the business for free. We think they will sell their yellow-page
business, and maybe their wireless business. We hope the board wakes up and
says, `Hey, you had a shot and the strategy didn't work. Let's sell to Alltel or
Southwest Bell.' In which case we think the company is worth around $17-$18
today, and that that value will grow. Capital expenditures are coming down
sharply, and EBITDA in the telephone business gives you a cushion. This is a
beat-up stock and there will be another round of consolidation.

MACALLASTER: Does Broadwing pay a dividend?

GABELLI: I don't know. Unlike Ralph Nader I don't think dividends are important.
I think he is barking up the wrong tree. It would sap the intellectual energy of
Microsoft to pay a dividend.

SAMBERG: They are better off putting the money into Gabelli & Co.

GABELLI: I agree with that. My third company in Cincinnati is Chemed. It has 10
million shares and the stock is 33. You know this company as Roto-Rooter.

COHEN: Let's all sing the song.

CHORUS: Away goes trouble down the drain!

Q: WE TAKE IT YOU KNOW THE PRODUCT.

GABELLI: Roto-Rooter is a wonderful business. Chemed has two or three other
businesses. I think they are going to continue to sell off these businesses,
which should generate $50 million-$70 million. Earnings are about $1.70, but
there is another part of the story that's intriguing to me. Chemed has about a
$37 million investment in a company called VITAS HEALTHCARE, a hospice company.
I was reading the Odyssey Health Care prospectus and they listed Vitas as their
main competitor. I can't get a lot of information, but I'm under the impression
that Vitas may be going public, that Chemed will monetize this investment. So
pro forma, when the dust settles, they sell off healthcare, they monetize their
Vitas position, and you wind up with a company with $100 million of cash, $10 a
share, no debt. Roto-Rooter is a good cash generator.

Next, GAYLORD ENTERTAINMENT. It's in Nashville. It has two businesses today, and
33 million shares at $25 each. Gaylord operates Opryland Hotel, and next month
opens a new convention-oriented hotel in Orlando, Florida. They have a hotel in
Dallas, too. They also own a country music company, which is very attractive.
Former management did everything wrong. Now there's a new team. We think the
company is worth 45 to 50.

Q: IS THAT ALL?

GABELLI: I've got one more. The census that came out in August of 2000 revealed
a major bulge in the Spanish-speaking population in the United States. It's the
fastest-growing population which was a surprise to the bureaucrats in
Washington. There are 39 million Hispanics, up from 23.7 in 1990. I'm
recommending GRUPO TELEVISA. It's based in Mexico City and dominates the Mexican
television market. Think ABC, CBS and NBC all in one. It has 151 million shares,
trading at $41, and a $6.3 billion market cap. It's got about a billion dollars
of hidden assets net of debt, primarily UNIVISION stock. There's about $700
million of EBITDA that's growing at a double-digit rate. It is a software and
programming juggernaut for the Spanish market.

Q: THERE MUST BE A SPANISH WORD FOR JUGGERNAUT.

GABELLI: It is called telenovelas [Spanish-language TV soap operas]. Univision
gets the bulk of its programming from telenovelas. It is growing substantially,
and for every dollar of advertising revenue it gets, 11% goes to Televisa
because they supply the programming. In addition, Mexico doesn't have the same
economic advantages as India, or China. But it has very close access to U.S.
markets. If you have a hundred million people there, and a population that is
going to grow better than the U.S. average over the next 10 years, and [Mexican
President] Vicente Fox hopefully surviving and making structural changes in the
country, companies like Televisa can do extraordinarily well.

SAMBERG: (Holds aloft a hand-held device.) So, Mario, how much do you think AOL
took as a charge-off? [The news about AOL Time Warner's huge fourth-quarter
charge had just crossed the wires.]

GABELLI: Well, not as much as JDS UNIPHASE.

SAMBERG: You are wrong. $40-to-$60 billion. This could be bigger than JDSU.
[Last summer JDS Uniphase wrote off roughly $51 billion.]

GABELLI: So, do you want to have a high-low bet?

SAMBERG: When somebody says 40 to 60 it is usually 60.

Q: AT A MINIMUM.

GABELLI: They have a market cap of $140 billion.

FABER: Used to have.

GABELLI: Anyway, I'm done. I picked 13 stocks.

THANK YOU, MARIO.

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TO
BASICS

[GRAPHIC OF BOOK ENTITLED "SECURITY ANALYSIS" OMITTED.]
1934
BENJAMIN GRAHAM DAVID L. DODD

[GRAPHIC OF BOOK ENTITLED "THE INTELLIGENT INVESTOR" OMITTED.]
1949
BENJAMIN GRAHAM

[GRAPHIC OF BERKSHIRE HATHAWAY ANNUAL REPORT OMITTED.]
1951
WARREN E. BUFFETT

[GRAPHIC OF BOOK ENTITLED "SECURITY ANALYSIS" OMITTED.]
1988
ROGER F. MURRAY

[GRAPHIC OF BOOK ENTITLED "VALUE INVESTING" OMITTED.]
2001
BRUCE C. N. GREENWALD

EARNINGS, INTEREST RATES, INVESTOR PSYCHOLOGY AND THE STOCK MARKET
PREPARED FOR CIGAR AFICIONADO, BY MARIO J. GABELLI

The stock market, as represented by popular indices such as the Dow Jones
Industrials or Standard & Poor's 500, can be viewed both as a snapshot and as a
motion picture. A recent snapshot has captured equities at their worst. However,
"Stock Market, the Movie" has been a long running hit, delivering annualized
returns from 1926 through the first ten months of 2001 approximating 11%. So,
put your digital camera down, pick up your camcorder, and let's start
videotaping the interplay of earnings, interest rates and investor psychology on
the post September 11 stock market. But first, let's frame equity investing in
the proper perspective.

MR. MARKET

In my opinion, the single best description of prudent equities investing is
contained in two short paragraphs from Benjamin Graham's classic, The
Intelligent Investor, published in 1949. I quote:

"Let us close this section with something in the nature of a parable.
Imagine that you own a small share of a private company that cost you $1,000.
One of your partners, named Mr. Market, is very obliging indeed. Every day he
tells you what he thinks your interest is worth and furthermore offers either to
buy you out or to sell you an additional interest on that basis. Sometimes his
idea of value appears plausible and justified by business developments and
prospects as you know them. Often, on the other hand, Mr. Market lets his
enthusiasm or his fears run away with him, and the value he proposes seems to
you a little short of silly."

"If you are a prudent investor or a sensible businessman, will you let Mr.
Market's daily communication determine your view of the value of $1,000 interest
in the enterprise? Only in case you agree with him, or in case you want to trade
with him. You may be happy to sell out to him when he quotes you a ridiculously
high price, and equally happy to buy from him when his price is low. But the
rest of the time you will be wiser to form your own ideas of the value of your
holdings, based on full reports from the company about its operations and
financial position."

It is our, and every prudent investor's job to try to determine the
intrinsic value of an individual company or the market as a whole. At any given
point in time, intrinsic value is largely a function of earnings and interest
rates. Whether stocks trade at, above, or below intrinsic value is a function of
investor psychology. Mr. Market is the code name the traditional value investor
uses to personify investor psychology.

EARNINGS POWER

The aforementioned Benjamin Graham and his colleague David Dodd, who
co-authored Security Analysis, viewed stocks as pieces of businesses to be owned
long term, rather than pieces of paper to trade. Consequently, they saw little
merit in assessing intrinsic value based on short-term earnings. Instead, they
focused on what they termed "earnings power". Earnings power is determined by
reviewing a company's earnings history, evaluating the health of its business
and its competitive position within its industry, and then projecting a growth
rate for future earnings. Were they alive today, Graham and Dodd would be asking
the following questions regarding the earnings power of corporate America in a
post 9/11 economic environment:

o How bad is bad?

o How long will the difficulties last?

o Are the financial resources available to overcome the challenges?

o How good is good--what happens to earnings growth rates once we emerge from
this period of uncertainty?

Let's examine the current environment and try to answer the first three of
these questions. The economy is in recession and corporate earnings are anemic.
However, dealing from positions of strength--subdued inflation and budget
surpluses--the Federal Reserve and federal government are pulling out all the
stops to reinvigorate the economy. The Fed has injected massive liquidity into
the system and as I write, has cut short-term interest rates 10 times this year,
for a total of 4.5% (6.5% to 2%). Perhaps more importantly, the Treasury has
announced it will no longer be issuing 30-year bonds. This has brought long-term
interest rates down, further fueling the home mortgage refinancing boom that is
putting a lot of money in consumer's pockets. Lower long-term interest rates
also bring down the financial costs for corporations. This will have a favorable
impact on future operating earnings, and eventually encourage business
investment. Although there is currently some squabbling between Democrats and
Republicans, Congress will pass a substantial economic stimulus package. Our
conclusion is that we will experience a relatively modest, short-lived
recession, with the economy and corporate earnings starting to recover in the
second half of 2002.

How good is good? Corporate America has cut a lot of fat from overhead,
creating earnings leverage once demand recovers. Consequently, I think earnings
will climb sharply in mid 2002. Over the long-term, I believe earnings growth
will approximate 6% - 8%. If earnings recover as I anticipate, lower interest
rates will have a beneficial impact on the present value of equity assets.
8

INTEREST RATES 101

Let's spend a few moments looking at what happens when interest rates decline:

o Reduced Financial Costs. This helps highly leveraged companies by reducing
interest outlays.

o Improved Demand. Lower rates help stimulate demand for traditional, interest
sensitive economic sectors - residential housing being one key and visible
component.

o Focus on Dividends. Clearly, higher-yielding stocks with reasonable growth
prospects benefit from investors seeking higher yields than they are getting
from savings accounts.

o Higher Asset Values. Lower rates bolster the value of assets.

--------------------------------------------------------------------------------
ASSET VALUE SCENARIOS

CASE
----
A B C
Rates
$10 $10 + $1/YR $10 growing at 8%
-------------------------------------------------------------
10.0% $3.86 $7.71 $ 8.32
8.0% $4.63 $9.26 $10.00

Case A: What is the present value of $10 ten years from now
if interest rates (the discount factor) are ten
percent; eight percent?

Case B: What is the present value of $10, ten years from now
if it grows by $1 per year?

Case C: What is the present value of $10, ten years from now,
growing at 8% per year?
--------------------------------------------------------------------------------

INTEREST RATES AND STOCK PRICES

The dividend discount model, shown below, is a popular quantitative method for
valuing stocks. Here, the key variable is the growth rate in dividends.

P/E = b
----------
multiple k-g Where P/E: price to earnings
b: dividend payout rate
k: required rate of return by an investor
g: expected growth rate

Briefly, the model values stocks based on the relationship between two crucial
inputs: dividend growth and an investor's required rate of return.

Interest rates have declined to levels we have not seen in a long time.
Short-term interest rates have not been this low since 1962. The story is
similar for long-term interest rates except for a brief period during the LTCM
crisis in 1998. The 30-year Treasury bond was first issued in 1978 and it
carried a coupon of 8.00%. These were known as the "8s of 08." Today, with a
weak economy and the recent decision by the Treasury to halt the sale of 30-year
bonds, we are looking at sub 5% yields on long dated Treasury debt. In 1981, the
30-year bond, referred to by some as the "long guy", carried a 15% coupon and
5-year Treasury notes were sold with a coupon of 16.125%. Rising productivity,
low inflation, and better fiscal and monetary discipline on the part of the
Congress and Federal Reserve System all contributed to the truly incredible
slide in interest rates.

Nominal interest rates, comprised of "real" and "inflation" components reflect
the time value of money. There is a set schedule regarding the timing and amount
of cash flows from a straight bond. You get coupon payments with the highest
degree of certainty-at least with U.S. Treasuries-on prescribed dates and your
principal paid back at maturity. When you invest in stocks there is uncertainty
with respect to the timing and level of the company's cash flow. Uncertainty
means risk. Consequently, as a stock investor your expected return (which
unfortunately is not always realized) exceeds that which is available from a
high quality bond. This incremental return is called the "equity risk premium"
and is one reason why interest rates are a very important influence on the
general level of stock prices. To value a business, you must make an attempt to
calculate the present value of a company's future cash flows.

INFLATION AND P/E'S BY DECADE

Average Yearly Price
Average CPI Average P/E Change S&P
-------------------------------------------------------

1990s 2.9% 20.4 18.2%
1980s 5.1% 12.0 17.5%
1970s 7.4% 10.9 5.9%
1960s 2.5% 17.6 7.8%

Generally, low interest rates and low inflation support higher price to earnings
(P/E) multiples and thus higher stock prices. The converse is also true. This
historical relationship is shown on the chart to the right.

Consequently, rising rates are usually a negative for stocks and declining rates
are usually, but not always, a positive. Declining rates may not prevent stock
prices from falling if corporate profits are in free fall, a situation we have
experienced this year. Similarly, rising rates are not always bad, particularly
in the early stages of an economic recovery when sharply rising earnings
accompany them. But there is little doubt regarding the connection between the
level and direction of interest rates and stock prices. The bull market in
stocks that began in August of 1982 and continued for most of the next 17 years,
was driven by the combination of falling interest rates and rising profits,
albeit the connection was not always in lock-step. It was almost too good to be
true as the Dow Jones Industrial Average bolted from about 800 to over 11,000.

The discount rate used to calculate the present value of a company's cash flow
stream can be just as important as the earnings themselves. A simple example is
to calculate the present value of $10,000, 10 years from now, with interest
rates at both 15% and 5%. In a high rate environment, using a 15% discount rate,
the $10,000 of earnings a company generates 10 years out, has a present value of
$2,472. In contrast, using a 5% discount rate gives the earnings a present value
of $6,139. In other words, a promise to receive $10,000 in ten years has a
higher value in current dollars when interest rates are low.

Thanks to the mathematics of compounding, lower rates are particularly positive
for high growth stocks because the present value of a rapidly rising earnings
stream will be higher than the present value of a slower growing earnings
stream, everything else being equal.

So the moral of the story is that declining interest rates are good for stocks
but even better for "growth" stocks. The current bond yield environment is
potentially rocket fuel for quality growth stocks. It is also strong tonic for
stocks with reasonably good dividend yields, assuming such dividends are secured
by earnings that cover the dividend payments with a healthy margin of safety.

Many years ago most stocks provided dividend yields that exceeded bond yields,
making stocks attractive for income generation. Investors were not as
comfortable with stocks then and demanded robust dividend payments to induce
them to buy stocks. With money market and savings account yields hovering at or
even below 2%, many investors can easily increase their income generation by
reallocating assets to stocks with current dividend yields in excess of 2%. As
dividends grow over time, the investors' income stream will grow in tandem. If
income is an investment priority, it's time to think about adding some stocks to
the mix.

INVESTOR PSYCHOLOGY

Of course, intrinsic value and equities pricing are horses of two very different
colors. Remember the emotional Mr. Market often values stocks materially above
and substantially below intrinsic value. So, investor psychology will have a
major impact on market trends in the year ahead.

Are they ready? I think so. Investors are going to have to deal with another
quarter or two of ugly earnings and ongoing concern over terrorism--the fear
factor that ultimately resulted in a classic "flight to quality" in the third
quarter. However, when the political and economic dust settles, fear will likely
give way to greed that will not be satisfied by today's anemic returns from
bonds and money market funds.

In closing, investors today are faced with an easy choice--fretting over the
short-term prospects for the economy and the market, or taking the longer view
that recessions and bear markets present excellent long-term investment
opportunities. It always takes courage to invest in depressed markets, but if
you focus on fundamentally sound businesses trading at bargain prices, your
courage is generally rewarded.

PREMIUM/DISCOUNT SINCE INCEPTION

[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

0
09/30/86 0.0067
10/31/86 0.0046
11/30/86 -0.039
12/31/86 -0.0661
01/31/87 -0.1363
02/28/87 -0.1323
03/31/87 -0.1555
04/30/87 -0.1393
05/31/87 -0.1788
06/30/87 -0.2028
07/31/87 -0.2
08/31/87 -0.2052
09/30/87 -0.2128
10/31/87 -0.2074
11/30/87 -0.2154
12/31/87 -0.2061
01/31/88 -0.2235
02/29/88 -0.1145
03/31/88 -0.1523
04/30/88 -0.1477
05/31/88 -0.1906
06/30/88 -0.0819
07/31/88 -0.0984
08/31/88 -0.0942
09/30/88 -0.1097
10/31/88 -0.1256
11/30/88 -0.1104
12/31/88 -0.1113
01/31/89 -0.1214
02/28/89 -0.1108
03/31/89 -0.1006
04/30/89 -0.0925
05/31/89 -0.0699
06/30/89 -0.0468
07/31/89 -0.0854
08/31/89 -0.0243
09/30/89 -0.0385
10/31/89 -0.0257
11/30/89 -0.0217
12/31/89 0.0076
01/31/90 0.0534
02/28/90 -0.0156
03/31/90 0.0242
04/30/90 0.0033
05/31/90 -0.0056
06/30/90 -0.0049
07/31/90 -0.0176
08/31/90 -0.018
09/30/90 -0.0348
10/31/90 -0.1187
11/30/90 -0.0327
12/31/90 0.029
01/31/91 -0.0091
02/28/91 0.0269
03/31/91 0.015
04/30/91 -0.0257
05/31/91 -0.01
06/30/91 0.0138
07/31/91 -0.0032
08/31/91 -0.0009
09/30/91 -0.0298
10/31/91 -0.0083
11/30/91 -0.1014
12/31/91 -0.0366
01/31/92 -0.0077
02/29/92 0.0141
03/31/92 0.0045
04/30/92 0.0069
05/31/92 0.0092
06/30/92 0.0032
07/31/92 0.0165
08/31/92 0.0309
09/30/92 0.0427
10/31/92 -0.0068
11/30/92 -0.0461
12/31/92 -0.0257
01/31/93 -0.0312
02/28/93 -0.0046
03/31/93 0.0265
04/30/93 0.0436
05/31/93 0.012
06/30/93 -0.0207
07/31/93 -0.0093
08/31/93 -0.0358
09/30/93 0.0088
10/31/93 0.0601
11/30/93 0.0659
12/31/93 0.0573
01/31/94 0.0797
02/28/94 0.0673
03/31/94 0.0733
04/30/94 -0.027
05/31/94 0.0524
06/30/94 0.0542
07/31/94 0.0233
08/31/94 0.0597
09/30/94 0.0185
10/31/94 0.0375
11/30/94 0.0622
12/31/94 0.0121
01/31/95 0.0047
02/28/95 0.03
03/31/95 0.017
04/30/95 -0.0122
05/31/95 -0.024
06/30/95 -0.0081
07/31/95 -0.044
08/31/95 -0.0697
09/30/95 -0.0845
10/31/95 -0.1206
11/30/95 -0.075
12/31/95 -0.0578
01/31/96 -0.0625
02/29/96 -0.0821
03/31/96 -0.0385
04/30/96 -0.0732
05/31/96 -0.0916
06/30/96 -0.047
07/31/96 -0.0576
08/31/96 -0.0708
09/30/96 -0.0474
10/31/96 -0.0405
11/30/96 -0.0644
12/31/96 -0.0394
01/31/97 -0.0741
02/28/97 -0.0644
03/31/97 -0.0424
04/30/97 -0.0077
05/31/97 -0.0688
06/30/97 -0.0613
07/31/97 -0.0693
08/31/97 -0.0676
09/30/97 -0.0397
10/31/97 -0.0636
11/30/97 -0.0175
12/31/97 0.0316
01/31/98 0.0119
02/28/98 -0.0088
03/31/98 -0.022
04/30/98 -0.0788
05/31/98 -0.0885
06/30/98 -0.04
07/31/98 -0.042
08/31/98 -0.0814
09/30/98 -0.0091
10/31/98 0.0025
11/30/98 0.0216
12/31/98 0.0026
01/31/99 0.0103
02/28/99 0.0264
03/31/99 0.0202
04/30/99 -0.0068
05/31/99 -0.006
06/30/99 -0.0163
07/31/99 0.007
08/31/99 0.0159
09/30/99 0.0126
10/31/99 -0.0045
11/30/99 -0.0178
12/31/99 -0.0147
01/31/00 -0.0331
02/29/00 -0.0835
03/31/00 -0.0438
04/30/00 -0.078
05/31/00 -0.046
06/30/00 0.0097
07/31/00 -0.0093
08/31/00 0.0073
09/30/00 -0.0179
10/31/00 -0.0298
11/30/00 0.0332
12/31/00 0.0493
01/31/01 -0.045
02/28/01 -0.0067
03/31/01 0.1048
04/30/01 0.0937
05/31/01 0.1453
06/30/01 0.1596
07/31/01 0.1107
08/31/01 0.1614
09/30/01 0.2041
10/31/01 0.2241
11/30/01 0.2314
12/31/01 0.2029

PREMIUM / DISCOUNT DISCUSSION

As a refresher to our shareholders, the price of a closed-end mutual fund
is determined in the open market by willing buyers and sellers. Shares of the
Trust trade on the New York Stock Exchange and may trade at a premium to (higher
than) net asset value ("NAV") (the market value of the Trust's underlying
portfolio) or a discount to (lower than) net asset value. Of the 470 closed-end
funds in the U.S., approximately 30% currently trade at premiums to NAV versus
24% five years ago and 18% ten years ago. For general equity funds such as the
Trust, approximately 21% currently trade at premiums to NAV versus 17% both five
and ten years ago.

Ideally, the Trust's market price will generally track the NAV. The Trust's
premium or discount to NAV fluctuates over time. Over our Trust's 15-year
history, the range fluctuated from a 23% premium in November 2001 to a 27%
discount in December 1987. The average variance from NAV for the Trust since
inception is a 1% discount to NAV. Beginning in early 2001, the market price of
the Trust exceeded the NAV and this premium has increased throughout the year.
The previous extended period in which a premium existed occurred during a
20-month period from August 1993 to March 1995.

"Mr. Market" often provides opportunities to invest at a discount. The
Trust has undertaken various initiatives to narrow the discount when appropriate
through distribution policies, rights offerings, share repurchase programs and
use of leverage.

The Trust's long-term investment goal is to generate a real rate of return
of 10%. We believe that our stock selection process adds to the investment
equation. We have a successful history of investment providing shareholders
average annual returns of 13% since inception. However, it is important to
remember that "Mr. Market" is a pendulum that swings both ways. As the market
moves away from momentum investing and back to basics, we believe that an
excessive premium for the Trust is not likely to be sustainable.

AMERICAN HEROES

In the months following September 11, we have been celebrating American
heroes. New York City firefighters, policemen, and emergency service workers
have been honored for their bravery and sacrifice. Political leaders such as New
York City Mayor Rudy Guiliani, President Bush, Secretary of State Colin Powell,
and Secretary of Defense Donald Rumsfeld have been applauded for their adept
handling of this crisis. We praise American servicemen who have been risking
their lives in Afghanistan to hunt down and capture the terrorists responsible
for the tragedy.

To this list of heroes, we would add the American consumer, who through
their collective courage and confidence in the American system, have helped
avert what might have become an economic catastrophe. So, let's hear it for
everyone who despite all the political and economic uncertainty resulting from
horrifying terrorist attacks, went out and bought a new home,

or a car, or took their families on vacation, or simply treated their loved ones
to a good holiday season. These courageous folks are the reason the American
economy has held up so well during these trying times and the people who will
lead our economy out of recession in the year ahead.

AND THEIR ALLIES

The American consumer has had two important allies. The Federal Reserve
Board responded promptly and effectively to the terrorist crisis by injecting a
massive dose of liquidity into the financial system and lowering short-term
interest rates to levels we haven't seen in forty years. The U.S. Treasury
Department announced it would cease issuing 30-year bonds, in the process,
bringing longer-term interest rates down and accelerating the home re-financing
boom that has provided much of the money consumers have been spending. We also
acknowledge the leadership of General Motors, which initiated a brilliant and
timely 0% APR financing to "Keep America Rolling." As we prepare this letter, we
have to give a demerit to the U.S Congress, which is letting partisan politics
get in the way of a second fiscal booster shot, particularly one aimed at
bolstering confidence among business leaders.

A NEW BULL MARKET?

Despite the economy's surprising resilience and the stock market's strong
fourth quarter, many investors remain wary as evidenced by the record $2.3
trillion parked in money market funds yielding about 2%. What will it take to
bring more investors off the sidelines? An official end to the recession and
better corporate earnings. We believe both are right around the corner.

Economic data released on December 31 revealed widespread improvement in
consumer confidence and housing, and even a modest increase in business
investment. Growth in unemployment insurance claims also slowed. These are all
valid indications the economy is beginning to regain its footing. At issue is
just how strong the economic recovery will be. Although inventories have been
reduced significantly and there has been a modest up-tick in sales, there is
still a great deal of excess capacity in the manufacturing sector. This will
likely restrain growth in business investment, forcing the American consumer to
continue to shoulder much of the economic load. We believe Gross Domestic
Product ("GDP") will be up 3% to 4% in 2002, well above the longer-term growth
of 2.5% to 3% we envision. The cut in taxes along with lower oil and fuel prices
will help consumer spending overcome the drag from the stock market's wealth
effect and rising unemployment.

Fortunately, we will not need an especially strong recovery to see
significantly better corporate earnings in 2002. Companies in virtually every
industry have been aggressively cutting costs. With the exception of pockets in
the technology and telecommunications equipment industries, the inventory
correction has largely run its course. Corporate interest expense has declined,
as have raw materials and energy prices. Corporate America wrote off everything
it could get away with in 2001 (we call this the "kitchen sink" effect), and due
to Federal Accounting Standard Board (FASB) Rule 142, the "amortization of
goodwill" will no longer penalize earnings. Consequently, a modest economic
recovery in the year ahead should be magnified in sharply higher reported
earnings. Very "easy" earnings comparisons in the first and second quarters of
2002 should help stabilize the market until investors gain confidence that
earnings will improve in the second half. In addition, the crisis in confidence
arising from "Enron" will result in auditing firms and CFO's cleaning up their
numbers (we observe that aggressive accounting will be back - but not in 2002).

THINGS THAT GO BUMP IN THE NIGHT

Our reasonably upbeat outlook for the economy and the stock market is
tempered by our usual laundry list of things to worry about. First and foremost
is the potential for another catastrophic terrorist episode (in the U.S. or
abroad) that could severely damage consumer and investor psychology.

Second on our list of concerns are oil and natural gas prices. Declining
energy prices have translated into lower gasoline, home heating, and utilities
costs for the consumer who we are counting on to lead us out of recession. The
Organization of Petroleum Exporting Countries ("OPEC") is currently cutting
production and urging other energy producing nations to follow suit. Whether
OPEC will succeed in convincing cash strapped producers such as Russia to turn
down the tap is debatable. However, the potential for further political upheaval
in the Middle East leading to the disruption of oil flow to the developed world
is certainly a risk. We hope we get our long needed energy policy.

Another issue we worry about is the economic health of the rest of the
world. The economies of our Latin American trade partners are imperiled by
declining commodity prices and in some cases, fiscal and monetary mismanagement.
Japan has fallen back into recession and European economic growth has slowed
substantially. This is a truly global economy, in which the economic health of
any one nation, including the mighty U.S. of A, is to a significant degree
dependent on the economic health of the rest of the world. Along these lines, we
remain puzzled by the enormous appetites of countries, companies and citizens
around the world to hold on to the U.S. dollar despite our history of huge trade
deficits.

INTERNATIONAL OUTLOOK

A portion of the Trust's portfolio continues to be managed by Caesar Bryan.
Caesar is the portfolio manager of the Gabelli International Growth Fund and the
co-portfolio manager of The Gabelli Global Opportunity Fund and The Gabelli
Global Growth Fund. Caesar's thoughts on international markets and global
economies are provided below:

With the exception of Japan, international markets tended to follow in the
footsteps of Wall Street during the quarter. In the U.S., the S&P 500 Index rose
10.7%. This rally came from very overvalued levels but was definitely assisted
by the aggressive easing undertaken by the Federal Reserve Board (the "Fed") and
the unexpected success of the U.S. military action in Afghanistan.

By the end of the year, U.S. short-term interest rates stood at 1.75%. The
Fed has lowered rates an unprecedented eleven times in a twelve-month period.
This was a signal to the markets that the monetary authorities remain committed
to providing sufficient liquidity to help foster an economic recovery. And the
markets reacted positively. Thus far the economic down turn has been fairly
shallow. Looking ahead, the expected recovery may therefore be somewhat muted.
Inventories have been pared substantially helped by robust auto sales due to the
zero percent financing. So it is reasonable to expect a decent inventory swing.

However, there are some headwinds that may prevent a strong recovery.
First, the consumer has continued to spend with little respite and consumer debt
levels are still quite high by historic standards. Second, business fixed
investment, although depressed, is unlikely to bounce back sharply. Overcapacity
in many sectors remains a concern, and although we expect an improvement in
corporate profitability it probably won't be sufficient to spur a major snap
back in corporate investments, which tend to be closely correlated to corporate
profits. Third, the dollar remains strong. This makes U.S. exports less
competitive and foreign manufacturers have been able to gain market share in the
U.S. market.

Europe, on the contrary, has benefited from a weak Euro and this has helped
to cushion the effects of the recent downturn. January 1, 2002 saw the
introduction of the Euro in its physical form. Clearly this was a major event
and its introduction was a technical success. During the next few months the
legacy currencies will slowly be phased out. The introduction of the new
currency actually resulted in a rounding up of prices, so the consumer price
index did move up a little early in the New Year. We expect this to be temporary
and inflation is likely to trend down in the coming months. This should provide
scope for the European Central Bank, if economic conditions further deteriorate,
to lower interest rates from their current level of 3.25%. The European Central
Bank has not been nearly as aggressive as the Federal Reserve. Their more
conservative approach probably reflects lingering concerns over inflation and
the need to build credibility in the market place.

The New Year also saw the abolition of corporate capital gains tax in
Germany. The rate had been fifty percent on capital gains. This reform will
enable German companies to sell long held stakes in other companies, many of
which are non-strategic. We believe European markets offer good value with the
potential for an increase in corporate transactions when confidence improves. We
expect an improvement in corporate profits as demand picks up and companies
benefit from cost cutting and lower input prices, including energy.

Japan remains a major disappointment. Their newly elected prime minister,
Mr. Koizumi, has been unable or unwilling to introduce any meaningful reforms,
despite huge personal popularity. In the meanwhile, the economy continues to
deflate. Falling prices punish those in debt. The already weak banking system
continues to receive body blows on a regular basis in the form of huge corporate
bankruptcies. Mycal, a food retailer, recently went bankrupt and its debts were
considered performing by its banks up to the day they declared bankruptcy. One
solution would be to nationalize the banks, but that would weaken the life
insurance industry, since companies in that sector own large equity stakes in
many banks.

We continue to focus our attention on leading companies in developed
countries outside the United States. Our investments are concentrated in
companies with a solid market position, a strong financial position and
motivated management.

We believe that over the long term investing in excellent companies at a
reasonable price is likely to result in superior investment returns. Investor
confidence remains fragile in the aftermath of Argentina's default and the Enron
collapse, but history tells us that the best opportunities are usually available
when confidence is low.

ALL TOO QUIET ON THE DEAL FRONT

As is usually the case during recessions and bear markets, merger and
acquisition activity slowed considerably in 2001. Fewer deals get done when it
is difficult to accurately assess a target company's intermediate-term revenue
and profit prospects and/or confidently project the future value of an acquiring
company's stock as deal currency. We experienced the same kind of lull in deal
activity in the months following the mini-crash of October 1987 and again during
the 1990-1991 recession and market correction. However, recessions and declining
stock markets usually set the stage for accelerating merger and acquisition
activity. The reason is simple--there are more bargains available. Once the
economic and market dust settles, these bargains tend to get snapped up in a
hurry.

FINANCIAL ENGINEERING - ONE OF OUR CATALYSTS

A component of our investment methodology is to identify industry and
sector trends and themes ahead of the curve and position ourselves to take
advantage of these developments. Consolidation in a particular industry is one
such dynamic. As we have shared with you in previous quarterly letters, the
activity in mergers and acquisitions, albeit slow, contributed significantly to
the performance of our Trust. The accompanying table illustrates how deal
activity surfaced value in a small sample of the portfolio holdings.

--------------------------------------------------------------------------------
2001 COMPLETED DEALS

NUMBER AVERAGE COST CLOSING
TRUST HOLDING OF SHARES (a) PER SHARE (b) PRICE (c) CLOSING DATE % RETURN (d)
------------- ------------- ------------- --------- --------------------------

FIRST QUARTER 2001 DEALS
------------------------
Time Warner Inc. 285,000 $30.67 $71.19 01/12/01 132.12%
Telefonos de Mexico SA, Cl. L, ADR 36,000 10.82 32.66 02/08/01 201.85%
FIRST QUARTER 2001 FINANCIAL ENGINEERING
----------------------------------------
Cablevision Systems Corp., Cl. A 420,000 11.28 83.36 03/30/01 639.01%
SECOND QUARTER 2001 DEALS
-------------------------
Litton Industries Inc. 100,000 78.92 80.33 04/02/01 1.79%
MCN Energy Group Inc. 30,000 24.24 27.22 05/30/01 12.29%
THIRD QUARTER 2001 DEALS
------------------------
Harcourt General Inc. 150,000 44.56 58.93 07/11/01 32.25%
Chris-Craft Industries Inc. 336,192 12.75 68.60 07/30/01 438.04%
Chris-Craft Industries Inc., Cl. B 592,895 14.90 68.60 07/30/01 360.40%
United Television Inc. 245,009 100.54 122.80 07/30/01 22.14%
Quaker Oats Co. 100,000 56.80 102.20 08/03/01 79.93%
THIRD QUARTER 2001 FINANCIAL ENGINEERING
----------------------------------------
Liberty Media Group, Cl. A 1,550,000 3.54 15.76 08/10/01 345.20%
FOURTH QUARTER 2001 DEALS
-------------------------
Carter-Wallace Inc. 526,300 14.13 20.43 10/01/01 44.59%
Unitrin Inc. 50,000 16.36 41.95 11/07/01 156.42%
Ralston Purina Group 1,100,000 20.88 33.48 12/13/01 60.34%
FOURTH QUARTER 2001 FINANCIAL ENGINEERING
-----------------------------------------
Deutsche Bank AG, ADR 160,000 43.23 52.10 10/02/01 20.52%

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

(a) Number of shares held by the Trust on the final day of trading for the
issuer.

(b) Average purchase price of issuer's shares held by the Trust on the final
day of trading for the issuer.

(c) Closing price on the final day of trading for the issuer or the tender
price on the closing date of the tender offer.

(d) Represents average estimated return based on average cost per share and
closing price per share.

Note: See the Portfolio of Investments for a complete listing of holdings.

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

In recent quarterly reports, we have discussed at length how and why the
deregulation of the media industry (encompassing broadcasting, cable television,
CATV and network programming assets, and publishing) should lead to another
round of consolidation. We saw only two major media deals in 2001--Vivendi's
purchase of USA Networks' USA and Sci-Fi cable channels, and Comcast's pending
acquisition of AT&T's cable television assets. But, we see more big deals coming
in the year ahead. AOL dropped out of the bidding for AT&T's cable properties,
probably due to the belief that a merger of these two cable giants wouldn't
survive anti-trust scrutiny. However, we believe AOL is committed to expanding
its cable footprint and that Cablevision, one of our largest holdings, could be
a target.

We have also detailed how deregulation combined with rapidly changing
economics should lead to increased deal activity in the utilities sector. Due to
the California utilities mess and more recently, the collapse of energy trading
giant Enron, there has been little deal activity in the utilities sector. We
believe this will change in the year ahead as the wholesale energy market
stabilizes. Our primary utilities investments are in smaller companies we
believe will be targeted by larger competitors.

We also expect to see accelerating merger and acquisition activity in the
currently depressed telecommunications and aerospace industries. The "new kids
on the telecom block" are in dire financial circumstances. Valuable telecom
assets will be bought for a song by more established players. While we usually
count on enhancing portfolio returns through investing in takeover targets, in
the wireline telecom arena, we expect to be rewarded by owning the strong that
will get stronger as they acquire valuable assets cheap. In the wireless
communications sector, we expect some of our holdings to be acquired as this
still fragmented industry consolidates. The troubled aerospace industry will
experience a classic "shakeout" as companies merge to realize the economies of
scale that will allow them to survive in an industry that has been hit
particularly hard by the terrorist attacks.

INVESTMENT SCORECARD

Due to the surprising strength of the auto industry, auto parts stocks such
as Standard Motor Products, Johnson Controls, and GenCorp performed
exceptionally well in 2001. Although the media sector slumped badly through most
of the year before recovering in the fourth quarter, we had big winners in Fox
Entertainment and USA Networks. Corporate turnarounds including services
conglomerate Cendant Corp. and truck manufacturer Navistar also contributed to
performance.

Financial services investments such as Stilwell Financial and American
Express disappointed. With the airline industry the biggest casualty of the
terrorist attacks, aerospace investments including SPS Technologies and Boeing
were hit hard. Telecommunications and telecom equipment holdings such as France
Telecom, Britain's Cable&Wireless, Qwest and Lucent Technologies also penalized
performance. Among our larger positions, cable operator Cablevision retreated
substantially.

LET'S TALK STOCKS

The following are stock specifics on selected holdings of our Trust.
Favorable earnings prospects do not necessarily translate into higher stock
prices, but they do express a positive trend that we believe will develop over
time.

AMERICAN EXPRESS CO. (AXP - $35.69 - NYSE), one of the most widely recognized
brands around the world, is focused on increasingly cross-selling financial
products and services to its customers. The company consists of three segments:
its Travel Related Services business, which contributes 78% of revenues,
provides charge cards, credit cards, travelers cheques, and travel services to
corporations and consumers; American Express Financial Advisors, which
contributes 19% of revenues, provides investment advisory services and financial
products such as mutual funds, insurance, and annuities; finally, American
Express Bank, which accounts for 3% of revenues, offers banking services to
other financial institutions, wholesale banking for corporations, and private
banking for high net worth individuals. The company's long-term goal is to
deliver revenue growth of at least 8% and earnings per share ("EPS") growth
between 12% and 15%.

AT&T CORP. (T - $18.14 - NYSE) provides voice, data and video communications
services to large and small businesses, as well as consumers and government
entities. AT&T and its subsidiaries furnish domestic and international long
distance, regional, local, cable television and Internet services. Recently, the
company announced that it would split into four separate companies. As part of
the restructuring, AT&T has converted AT&T Wireless from a tracking stock to an
asset-based stock and spun it off to AT&T shareholders. AT&T Broadband, which
includes cable, is in the process of being acquired by Comcast Corp. (CCZ -
$52.26 - NYSE) in a $70 billion transaction that will form the largest cable
operator in the country with about 22 million subscribers. The deal is expected
to close by the end of 2002. As the result of the Comcast merger, AT&T will be
left with a

significantly de-leveraged balance sheet and two businesses: business services
catering to large corporations and consumer operations providing long distance
services to about 60 million households. As part of restructuring, the AT&T
Consumer business is expected to be distributed to AT&T shareholders as a
tracking stock before year-end.

BERKSHIRE HATHAWAY INC. (BRK'A - $75,600 - NYSE) is Warren Buffett. The company
has interests in insurance (notably GEICO and General Re), publishing, aviation,
retailing, and manufacturing. Its investment portfolio includes over $37 billion
of marketable equity securities. Berkshire has grown rapidly through
acquisitions over the past 15 years, including Kirby vacuum cleaners; World Book
encyclopedias; H. H. Brown, Dexter and Justin footwear; Executive Jet aviation;
Dairy Queen restaurants and snack treats; Johns Manville building products;
Benjamin Moore paints; Shaw Industries carpets; GEICO insurance; and General Re
reinsurance. GEICO, the sixth largest auto insurer in the U.S., contributes 19%
of revenues while General Re, the fourth largest reinsurer globally, contributes
30% of revenues.

CLARCOR INC. (CLC - $27.15 - NYSE), founded in 1904, is a U.S.- based
manufacturer and marketer of engine-mobile filtration products,
industrial/environmental filtration products and consumer packaging products.
CLARCOR markets a full line of oil, air, fuel, coolant and hydraulic fluid
filters that are used in a wide variety of applications, including engines and
industrial equipment. The company markets commercial and industrial air filters
and systems, electrostatic contamination control equipment, and electrostatic
high precision spraying equipment. The air filters and systems remove
contaminants from recirculated indoor air and from processed air that is
exhausted outdoors. Containers and plastic closures manufactured by the company
are used in packaging a wide variety of dry and paste form products, such as
food specialties, beverages and juices, cosmetics and toiletries, drugs and
pharmaceuticals, and film.

LIBERTY MEDIA CORP. (L - $14.00 - NYSE), run by savvy media investor John
Malone, is engaged in businesses that provide programming services (including
production, acquisition and distribution through all media formats) as well as
businesses engaged in electronic retailing, direct marketing and other services.
Liberty Media holds interests in globally branded entertainment networks such as
Discovery Channel, USA Network, QVC, Encore and STARZ!. Liberty's investment
portfolio also includes interests in international video distribution
businesses, international telephony and domestic wireless companies, plant and
equipment manufacturers, and other businesses related to broadband services.

NAVISTAR INTERNATIONAL CORP. (NAV - $39.50 - NYSE), with world headquarters
outside of Chicago, is a leading North American manufacturer and marketer of
medium and heavy trucks and school buses, and a worldwide leader in the
manufacture of mid-range diesel engines, produced in a range of 160 to 300
horsepower for the International[R] brand. The company is also a private label
designer and manufacturer of diesel engines for the full-size pickup truck and
van markets. The company's products, parts and services are sold through a
network of 1,000 International[R] brand dealer outlets in the United States,
Canada, Brazil and Mexico, and through more than 90 separate dealers in 75
countries. Navistar provides financing for its customers and distributors
principally through its wholly-owned subsidiary, Navistar Financial Corporation.

PEPSICO INC. (PEP - $48.69 - NYSE) is a $25 billion food and beverage company
after the acquisition of Quaker Oats was completed on August 2, 2001. PepsiCo
added several products to its existing portfolio of the Pepsi-Cola and Frito Lay
brands, such as Gatorade and the Quaker Oat snack and food businesses. The
company is focused on the faster growing convenience category, improving their
distribution systems and extracting the synergies expected from the merger.
PepsiCo is also benefiting from the introduction of new products such as
Mountain Dew Code Red, Pepsi with Lemon, Bistro chips and the continued robust
growth of Aquafina.

SPS TECHNOLOGIES INC. (ST - $34.92 - NYSE) is a leading manufacturer of
fasteners, superalloys and magnetic materials for the aerospace, automotive and
industrial markets. The Precision Fasteners and Components group produces high
strength fasteners for the aerospace, automotive and machinery markets. The
Specialty Materials and Alloys group makes superalloys for the aerospace and
industrial gas turbine markets and the Magnetic Products group produces magnetic
materials used in automotive, electronics and other specialty applications.
Under the leadership of CEO Charlie Grigg, SPS has made 18 acquisitions since
1996 and has positioned the nearly $1 billion company to be a strategic global
supplier in the fastener and component industry. We believe the company will
continue to use its strong cash flow to augment internal revenue and earnings
growth with acquisitions.

VIACOM INC. (VIA - $44.25 - NYSE) is a diversified media company with businesses
across many media platforms. The firm operates cable networks (including VH1,
MTV, Showtime and Nickelodeon), television networks and stations (including the
CBS and UPN Television networks and numerous affiliated TV stations in major
markets), major market radio stations and outdoor advertising (through Infinity
Broadcasting), a movie studio (Paramount), a publishing house (Simon and
Schuster), amusement parks (Paramount Parks) and video rental operations
(Blockbuster Inc.). The company focuses on high growth businesses and aims to
deliver cash flow growth that is above the industry average.

WILLAMETTE INDUSTRIES INC. (WLL - $52.12 - NYSE) has taken several turns in its
defense against Weyerhaeuser Industries' (WY - $54.08 - NYSE) hostile offer for
the company. After Weyerhaeuser raised its offer to $55 per share in early
December, the Willamette board continued to reject the proposal as inadequate.
Willamette threatened to use the "scorched earth" takeover defense by entering
into talks to buy the building products division of Georgia Pacific (GP - $27.61
- NYSE). However, after weeks of negotiations with Georgia Pacific, on January
21, Willamette announced that it had ended talks with Georgia Pacific and had
agreed in principle to a deal in which Weyerhaeuser would pay $55.50 per share
for all outstanding shares of Willamette. The transaction is subject to the
negotiation of a definitive merger agreement and approval by the Weyerhaeuser
and Willamette boards of directors. This new agreement should bring an end to
the one of the most controversial takeover fights in recent memory.

COMMON STOCK 10% DISTRIBUTION POLICY

The Trust continues to maintain its 10% Distribution Policy whereby the
Trust pays out to common stock shareholders 10% of its average net assets each
year. Pursuant to this policy, the Trust distributed $0.27 per share on December
24, 2001. The next distribution is scheduled for March 2002.

7.25% TAX ADVANTAGED CUMULATIVE PREFERRED STOCK - DIVIDENDS

The Trust's 7.25% Tax Advantaged Cumulative Preferred Stock paid a cash
distribution on December 26, 2001 of $0.453125 per share. For the year ended
December 31, 2001, Preferred Stock shareholders received distributions totaling
$1.8125, the annual dividend rate per share of Preferred Stock. The percentage
of this distribution treated as a long-term capital gain was 88%, which results
in a tax-equivalent stated yield (based on a $25.00 liquidation value and a
Federal Income Tax Bracket of 39.1%) of 9.25%. The next distribution is
scheduled for March 2002.

7.20% TAX ADVANTAGED SERIES B CUMULATIVE PREFERRED STOCK - DIVIDENDS

The Trust's 7.20% Tax Advantaged Series B Cumulative Preferred Stock paid a
cash distribution on December 26, 2001 of $0.45 per share. The Series B
Preferred Shares were issued on June 20, 2001 at $25.00 per share and will pay
distributions quarterly at an annual dividend rate of $1.80 per share. The
percentage of the distribution treated as a long-term capital gain was 88%,
which results in a tax-equivalent stated yield (based on a $25.00 liquidation
value) of 9.18%. The next distribution is scheduled for March 2002.

WWW.GABELLI.COM

Please visit us on the Internet. Our homepage at http://www.gabelli.com
contains information about Gabelli Asset Management Inc., the Gabelli Mutual
Funds, IRAs, 401(k)s, quarterly reports, closing prices and other current news.
You can send us e-mail at closedend@gabelli.com.

In our efforts to bring our shareholders more timely portfolio information,
Gabelli Fund's portfolio managers regularly participate in chat sessions at
www.gabelli.com as reflected below.

WHO WHEN
Special Chats: Mario J. Gabelli First Monday of each month
Howard Ward First Tuesday of each month

In addition, every Wednesday will feature a different portfolio manager.
The upcoming Wednesday chat schedule is as follows:

FEBRUARY MARCH APRIL

1st Wednesday Charles Minter & Martin Weiner Henry van der Eb Susan Bryne
2nd Wednesday Ivan Arteaga Walter Walsh & Laura Linehan Lynda Calkin
3rd Wednesday Tim O'Brien Tim O'Brien Caesar Bryan
4th Wednesday Barbara Marcin Barbara Marcin Barbara Marcin

All chat sessions start at 4:15 ET. Please arrive early, as participation
is limited.

You may sign up for our HIGHLIGHTS e-mail newsletter at www.gabelli.com and
receive early notice of chat sessions, closing mutual fund prices, news events
and media sightings.

IN CONCLUSION

2001 has been a year most would like to forget. For the first time since
Pearl Harbor, America has been attacked and suffered substantial casualties. We
have been forced into what will be a long and costly war against terrorism. Many
Americans lost their jobs as the overheated economy came to an abrupt
standstill. Yet, we have survived and both the resilient economy and rebounding
stock market are pointing to a better year ahead. We wish all our shareholders a
Happy New Year, with growing confidence that 2002 will be just that.

Sincerely,

/S/ MARIO J. GABELLI, CFA
Portfolio Manger and Chief Investment Officer

February 14, 2002

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

SELECTED HOLDINGS
DECEMBER 31, 2001

American Express Co. Navistar International Corp.
AT&T Corp. PepsiCo Inc.
Berkshire Hathaway Inc. SPS Technologies Inc.
CLARCOR Inc. Viacom Inc.
Liberty Media Corp. Willamette Industries Inc.

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

NOTE: The views expressed in this report reflect those of the portfolio managers
only through the end of the period stated in this report. The managers' views
are subject to change at any time based on market and other conditions.

THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES
QUARTER ENDED DECEMBER 31, 2001
(UNAUDITED)

OWNERSHIP AT
DECEMBER 31,
SHARES 2001
-------- -------------

NET PURCHASES
COMMON STOCKS
Acuity Brands Inc. (a) ................ 220,000 220,000
Aetna Inc. ............................ 50,000 50,000
America Movil, SA de CV, Cl. L, ADR ... 15,000 95,000
American Express Co. .................. 60,000 480,000
AOL Time Warner Inc. .................. 100,000 465,000
Apache Corp. (b) ...................... 3,400 37,400
Argonaut Group Inc. ................... 6,400 36,400
AT&T Canada Inc., Cl. B ............... 30,000 50,000
AT&T Corp. ............................ 650,000 1,500,000
AT&T Wireless Services Inc. ........... 90,000 370,170
Bank of New York Co. Inc. ............. 5,000 85,000
Bank One Corp. ........................ 5,000 110,000
BCE Inc. .............................. 45,000 275,000
BorgWarner Inc. ....................... 11,000 36,802
Broadwing Inc. ........................ 595,000 680,000
BT Group plc .......................... 1,775,000 1,775,000
BT Group plc, ADR ..................... 19,000 29,000
Cable & Wireless Jamaica Ltd. (c) ..... 445,102 3,338,192
Cablevision Systems Corp., Cl. A ...... 95,000 515,000
Cadbury Schweppes plc, ADR ............ 800 10,800
Campbell Soup Co. ..................... 20,000 20,000
Cendant Corp. ......................... 25,000 180,000
CH Energy Group Inc. .................. 120,000 120,000
Compania de Telecomunicaciones
de Chile SA, ADR ................... 10,000 45,000
Cinergy Corp. ......................... 20,000 20,000
Commerzbank AG, ADR ................... 90,000 190,000
Compagnie Financiere
Richemont AG, Cl. A (d) ............ 108,900 110,000
Conoco Inc. ........................... 50,000 210,000
Constellation Energy Group Inc. ....... 10,000 10,000
Cooper Industries Inc. ................ 5,000 115,000
CoreComm Ltd. ......................... 800,000 1,000,000
Corn Products International Inc. ...... 10,000 100,000
Corning Inc. .......................... 280,000 400,000
Curtiss-Wright Corp., Cl. B (e) ....... 6,320 6,320
Dana Corp. ............................ 135,000 250,161
Department 56 Inc. .................... 15,000 50,000
Deutsche Telekom AG, ADR .............. 186,000 240,278
Diageo plc, ADR ....................... 49,000 224,000
Dominion Resources Inc. (f) ........... 8,000 8,000
Dow Jones & Co. Inc. .................. 8,000 20,000
DPL Inc. .............................. 15,000 15,000
DQE Inc. .............................. 25,000 50,000
Embratel Participacoes SA, ADR ........ 60,000 210,000
EMC Corp. ............................. 70,000 170,000
France Telecom SA, ADR ................ 25,000 25,000
Fuller (H.B.) Co. (g) ................. 12,000 24,000
GATX Corp. ............................ 8,000 110,000
Gaylord Entertainment Co. ............. 5,500 240,000
Gemstar-TV Guide International Inc. ... 8,000 30,432
GenTek Inc. ........................... 50,000 200,000
Genuine Parts Co. ..................... 15,000 210,000
Gillette Co. .......................... 25,000 300,000
Gray Communications Systems Inc., Cl. B 10,000 25,000
Grupo Bimbo, SA de CV, Ser A .......... 166,700 166,700
Grupo Televisa SA, ADR ................ 5,000 195,000
Gucci Group NV, ADR ................... 23,000 30,000
Halliburton Co. ....................... 145,000 200,000
Heinz (H.J.) Co. ...................... 45,000 80,000
Hercules Inc. ......................... 20,000 120,000
Hilton Hotels Corp. ................... 100,000 700,000
Honeywell Inc. ........................ 45,000 375,000
Italy Fund Inc. ....................... 13,900 54,150
Jafco Co. Ltd. ........................ 4,000 10,000
John Hancock Financial Services Inc. .. 40,000 40,000
Kellogg Co. ........................... 80,000 350,000
Kerr-McGee Corp. ...................... 25,000 38,632
Lamson & Sessions Co. ................. 10,600 400,600

OWNERSHIP AT
DECEMBER 31,
SHARES 2001
-------- -------------
Leap Wireless International Inc. ...... 10,000 130,000
Liberty Media Corp., Cl. A ............ 150,000 1,700,000
Loral Space & Communications Ltd. ..... 130,000 200,000
Lucent Technologies Inc. .............. 30,000 130,000
Mattel Inc. ........................... 35,000 100,000
Maytag Corp. .......................... 5,000 30,000
McClatchy Co., Cl. A .................. 5,000 5,000
McGraw-Hill Companies Inc. ............ 8,000 105,000
Mellon Financial Corp. ................ 8,100 83,100
Metro-Goldwyn-Mayer Inc. .............. 10,000 10,000
Midas Inc. ............................ 20,000 110,000
mm02 plc (h) .......................... 1,775,000 1,775,000
mm02 plc, ADR (i) ..................... 115,500 115,500
Modine Manufacturing Co. .............. 5,000 335,000
Molex Inc., Cl. A ..................... 7,000 16,000
National Presto Industries Inc. ....... 6,000 50,000
Neiman Marcus Group Inc., Cl. A ....... 34,500 104,500
News Corp. Ltd. ....................... 5,000 120,000
Nextel Communications Inc., Cl. A ..... 20,000 250,000
Nortel Networks Corp. ................. 100,000 100,000
Northeast Utilities ................... 70,000 195,000
Northrop Grumman Corp. (j) ............ 22,979 97,979
NTT DoCoMo Inc. ....................... 44 100
Olympus Optical Co. Ltd. .............. 3,000 28,000
O'Reilly Automotive Inc. .............. 20,000 20,000
Park-Ohio Holdings Corp. .............. 5,000 83,715
Pennzoil-Quaker State Co. ............. 88,400 163,400
PepsiAmericas Inc. .................... 10,000 600,595
Pfizer Inc. ........................... 20,000 65,000
Phoenix Companies Inc. ................ 20,000 185,000
Precision Castparts Corp. ............. 10,000 60,000
Prudential Financial Inc. ............. 2,500 2,500
Pulitzer Inc. ......................... 3,000 33,000
Rainbow Media Group ................... 290,000 500,000
Rayonier Inc. ......................... 10,000 10,000
Reader's Digest Association Inc., Cl. B 10,000 185,000
Republic Services Inc. ................ 10,000 65,000
Mondavi (Robert) Corp., Cl. A ......... 41,300 41,300
Rogers Wireless Communications Inc.,
Cl. B .............................. 100,000 250,000
Rohm Co. Ltd. ......................... 1,000 7,400
Sammy Corp. ........................... 3,300 3,300
Scripps (E.W.) Co., Cl. A ............. 46,000 71,000
Sensient Technologies Corp. ........... 100,000 200,000
Six Flags Inc. ........................ 71,000 100,000
SJW Corp. ............................. 200 10,200
Sony Corp., ADR ....................... 2,000 47,000
Sybron Dental Specialties Inc. ........ 50,000 60,000
T. Rowe Price Group Inc. .............. 30,000 100,000
Telecom Argentina Stet France
Telecom SA, ADR .................... 12,000 20,000
Thomas & Betts Corp. .................. 7,400 250,000
Thomas Industries Inc. ................ 2,000 77,000
Tokyo Electron Ltd. ................... 12,400 12,400
Tribune Co. ........................... 50,000 250,000
Tyson Foods Inc., Cl. A (k) ........... 200,000 200,000
UCAR International Inc. ............... 5,000 75,000
UnitedGlobalCom Inc., Cl. A ........... 105,000 370,000
Wachovia Corp. ........................ 18,000 130,000
Waddell & Reed Financial Inc., Cl. A .. 20,100 55,100
Western Resources Inc. ................ 225,800 250,000
Willamette Industries Inc. ............ 82,000 322,000
Winn-Dixie Stores Inc. ................ 10,000 60,000
WorldCom Inc. - MCI Group ............. 60,000 100,000
Young Broadcasting Inc., Cl. A ........ 20,000 110,000

PREFERRED STOCKS
Broadwing Inc., 6.750% Cv. Pfd., Ser B 31,000 31,000
Citizens Communications Co.,
5.00% Cv. Pfd. ..................... 5,000 20,000
Sequa Corp., $5.00 Cv. Pfd. ........... 2,500 3,000

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES (CONTINUED)
QUARTER ENDED DECEMBER 31, 2001
(UNAUDITED)

OWNERSHIP AT
PRINCIPAL DECEMBER 31,
AMOUNT 2001
-------- -------------

NET PURCHASES (CONTINUED)
CORPORATE BONDS
Charter Communications Inc., Cv.,
4.750%, 06/01/06 $ 400,000 $ 400,000
Mirant Corp., Sub. Deb. Cv.,
2.500%, 06/15/21 1,000,000 1,000,000

SHARES
--------
NET SALES
COMMON STOCKS
Amphenol Corp., Cl. A (75,000) 5,000
Cable & Wireless plc, ADR (5,000) 170,000
Carter-Wallace Inc. (l) (526,300) 0
Coca-Cola Enterprises Inc. (50,000) 70,000
Coldwater Creek Inc. (4,000) 10,000
Comcast Corp., Cl. A, Special (5,000) 85,000
Donaldson Co. Inc. (30,000) 225,000
Fairchild Corp., Cl. A (20,000) 90,000
Ferro Corp. (10,000) 315,000
Fujitsu Ltd. (41,000) 0
General Mills Inc. (15,000) 95,000
Gerber Scientific Inc. (5,000) 105,000
Gray Communications Systems Inc. (5,000) 28,000
Harley Davidson Inc. (30,000) 70,000
Heller Financial Inc., Cl. A (m) (868,300) 0
Hewlett-Packard Co (9,000) 26,000
Elisa Communications Oyj, Cl. A (21,600) 0
IBP Inc. (k) (28,581) 0
ITT Industries Inc. (8,000) 130,000
Landauer Inc. (2,000) 98,000
Louis Dreyfus Natural Gas Corp. (f) (25,000) 0
Newport News Shipbuilding Inc. (j) (110,000) 0
NTL Inc. (12,625) 60,000
Parmalat Finanziaria SpA (154,000) 0
Philips Electronics NV (25,440) 0

OWNERSHIP AT
DECEMBER 31,
SHARES 2001
-------- -------------
PRIMEDIA Inc. (12,800) 213,000
Procter & Gamble Co. (2,000) 110,000
Publishing & Broadcasting Ltd. (15,000) 160,000
Ralston Purina Co. (n) (945,000) 0
RCN Corp. (5,000) 150,000
Rohm and Haas Co. (22,000) 173,000
Ryder System Inc. (25,000) 0
Secom Co. Ltd. (3,000) 10,000
Sulzer AG (6,000) 6,000
Sulzer Medica AG (9,000) 23,000
Takeda Chemical Industries Ltd. (4,000) 14,000
Tyler Technologies Inc. (10,000) 0
USA Networks Inc. (70,000) 495,000
Viacom Inc., Cl. A (5,000) 850,000
Waste Management Inc. (10,000) 310,000
Xerox Corp. (2,000) 12,000
------------------------------------
(a) Spinoff--1 share of Acuity Brands Inc. for every 1 share of National Service
Industries Inc.
(b) 10.00% stock dividend
(c) 15.39% stock dividend
(d) 100 for 1 stock split
(e) Spinoff--0.0649 shares of Curtiss-Wright Corp., Cl. B for every 1 share of
Unitrin Inc.
(f) Merger--0.3226 shares of Dominion Resources Inc. for every 1 share of Louis
Dreyfus Natural Gas Corp.
(g) 2 for 1 stock split
(h) Spinoff--1 share of mm02 plc for every 1 share of BT Group plc
(i) Spinoff--1 share of mm02 plc, ADR for every 1 share of BT Group plc, ADR
(j) Merger--0.2542 shares of Northrop Grumman Corp. for every 1 share of Newport
News Shipbuilding Inc.
(k) Merger--2.3810 shares of Tyson Foods Inc. for every 1 share of IBP Inc.
(l) Cash merger at $20.44 a share
(m) Cash merger at $53.75 a share
(n) Cash merger at $33.50 a share

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2001

MARKET
SHARES COST VALUE
------ -------- -------

COMMON STOCKS -- 85.8%
TELECOMMUNICATIONS -- 9.7%
8,132 Aliant Inc. ................ $ 72,479 $ 152,730
7,500 Allegiance Telecom Inc.+ ... 74,063 62,175
30,000 ALLTEL Corp. ............... 617,209 1,851,900
50,000 AT&T Canada Inc.,+ ......... 1,502,250 1,509,500
1,500,000 AT&T Corp. ................. 25,512,207 27,210,000
3,333 Avaya Inc.+ ................ 26,540 40,496
275,000 BCE Inc. ................... 7,620,167 6,270,000
33,400 Brasil Telecom
Participacoes SA, ADR .... 1,940,826 1,385,432
680,000 Broadwing Inc.+ ............ 7,434,722 6,460,000
1,775,000 BT Group plc+ .............. 7,339,812 6,535,896
29,000 BT Group plc, ADR+ ......... 1,129,761 1,065,750
3,338,192 Cable & Wireless
Jamaica Ltd. ............. 101,642 114,204
95,000 Cable & Wireless plc ....... 1,170,181 456,963
170,000 Cable & Wireless plc, ADR .. 4,005,710 2,517,700
130,000 CenturyTel Inc. ............ 2,760,538 4,264,000
100,000 Citizens Communications Co.+ 1,226,788 1,066,000
255,466 Commonwealth Telephone
Enterprises Inc.+ ........ 4,424,217 11,623,703
20,000 Commonwealth Telephone
Enterprises Inc., Cl. B+ . 128,902 879,000
45,000 Compania de
Telecomunicaciones de
Chile SA, ADR ............ 721,724 605,700
1,000,000 CoreComm Ltd.+ ............. 146,000 159,900
240,278 Deutsche Telekom AG, ADR ... 4,091,422 4,060,698
210,000 Embratel Participacoes
SA, ADR+ ................. 3,412,277 873,600
25,000 France Telecom SA, ADR ..... 965,924 999,750
265 Japan Telecom Co. Ltd. ..... 910,316 794,636
100,000 KPN NV ..................... 232,728 508,405
150,000 RCN Corp.+ ................. 1,064,977 439,500
9,655 Rogers Communications
Inc., Cl. B+ ............. 137,424 164,036
110,345 Rogers Communications
Inc., Cl. B, ADR+ ........ 1,537,198 1,853,796
115,000 SBC Communications Inc. .... 4,106,783 4,504,550
350,000 Sprint Corp. - FON Group ... 8,833,016 7,028,000
186,554 Tele Norte Leste
Participacoes SA, ADR .... 2,554,387 2,915,839
20,000 Telecom Argentina Stet
France Telecom SA, ADR ... 247,321 130,400
400,040 Telecom Italia SpA ......... 839,903 3,419,389
123,000 Telecom Italia SpA, ADR .... 2,585,208 10,516,500
135,000 Telecom Italia SpA, RNC .... 517,495 721,205
265,249 Telefonica SA, ADR+ ........ 9,757,403 10,631,180
16,256 Telefonica SA, BDR+ ........ 206,528 235,697
36,000 Telefonos de Mexico
SA, Cl. L, ADR ........... 389,422 1,260,720
12,750 TELUS Corp. ................ 222,542 193,695
52,500 TELUS Corp., ADR ........... 950,397 797,567
4,250 TELUS Corp., Non-Voting .... 74,181 61,903
27,500 TELUS Corp.,
Non-Voting, ADR .......... 557,547 400,546
295,000 Verizon Communications ..... 10,947,457 14,000,700
100,000 WorldCom Inc. - MCI Group .. 1,293,071 1,270,000
------------ -------------
124,390,665 142,013,361
------------ -------------
ENTERTAINMENT -- 8.4%
465,000 AOL Time Warner Inc.+ ...... 10,947,796 14,926,500
160,000 Canal Plus, ADR ............ 34,010 102,000
220,000 Disney (Walt) Co. .......... 4,846,732 4,558,400
100,000 EMI Group plc, ADR ......... 1,189,467 1,043,520

MARKET
SHARES COST VALUE
------ -------- -------
110,000 Fox Entertainment
Group Inc., Cl. A+ .......$ 2,572,691 $ 2,918,300
50,000 GC Companies Inc.+ ......... 54,500 11,500
30,432 Gemstar-TV Guide
International Inc.+ ...... 1,032,536 842,966
195,000 Grupo Televisa SA, ADR+ .... 5,116,358 8,420,100
24,000 Liberty Livewire Corp.,
Cl. A+ ................... 93,109 166,730
1,700,000 Liberty Media Corp.,
Cl. A+ ................... 7,429,178 23,800,000
10,000 Metro-Goldwyn-Mayer Inc.+ .. 177,381 219,000
160,000 Publishing &
Broadcasting Ltd. ........ 893,720 802,640
3,300 Sammy Corp. ................ 92,875 76,042
100,000 Six Flags Inc. ............. 1,387,850 1,538,000
495,000 USA Networks Inc.+ ......... 5,181,820 13,518,450
850,000 Viacom Inc., Cl. A+ ........ 9,373,638 37,612,500
30,900 Vivendi Universal SA+ ...... 2,117,043 1,692,028
210,000 Vivendi Universal SA, ADR .. 8,492,515 11,295,900
------------ -------------
61,033,219 123,544,576
------------ -------------
FINANCIAL SERVICES -- 7.6%

26,000 Aegon NV ................... 931,905 703,754
4,100 Allianz AG ................. 1,413,422 971,045
95,000 Allstate Corp. ............. 2,571,116 3,201,500
480,000 American Express Co. ....... 16,820,362 17,131,200
36,400 Argonaut Group Inc. ........ 977,772 712,348
90,000 Banco Santander Central
Hispano SA, ADR .......... 322,130 747,000
99,000 Bank of Ireland ............ 525,611 937,006
85,000 Bank of New York Co. Inc. .. 3,171,750 3,468,000
110,000 Bank One Corp. ............. 3,825,625 4,295,500
282,000 Bankgesellschaft Berlin AG . 5,606,801 642,781
260 Berkshire Hathaway Inc.
Cl. A+ ................... 824,299 19,656,000
5,000 Block (H&R) Inc. ........... 97,625 223,500
190,000 Commerzbank AG, ADR ........ 3,839,967 2,935,101
160,000 Deutsche Bank AG, ADR+ ..... 6,917,270 11,224,000
20,000 Dun and Bradstreet Corp.+ .. 333,130 706,000
126,000 Friends Provident plc+ ..... 398,689 366,764
56,000 HBOS plc ................... 350,184 648,765
25,000 Hibernia Corp., Cl. A ...... 198,750 444,750
20,000 Invik & Co. AB, Cl. B ...... 936,800 1,103,941
100,000 Irish Life &
Permanent plc, Dublin .... 781,432 1,015,030
10,000 Jafco Co. Ltd. ............. 991,754 600,489
40,000 John Hancock Financial
Services Inc. ............ 1,551,590 1,652,000
50,000 JP Morgan Chase & Co. ...... 1,334,283 1,817,500
64,000 Leucadia National Corp. .... 2,040,082 1,847,680
83,100 Mellon Financial Corp. ..... 2,686,078 3,126,222
100,000 Midland Co. ................ 1,117,752 4,380,000
30,000 Moody's Corp. .............. 666,995 1,195,800
171,500 Nikko Cordial Corp. ........ 1,366,981 765,508
185,000 Phoenix Companies Inc.+ .... 2,981,430 3,422,500
2,500 Prudential Financial Inc.+ . 68,750 82,975
50,000 Prudential plc ............. 754,035 579,254
50,000 RAS SpA .................... 534,750 588,984
60,000 Riggs National Corp. ....... 552,538 838,200
80,000 State Street Corp. ......... 1,417,370 4,180,000
30,000 Stilwell Financial Inc. .... 470,956 816,600
20,000 SunTrust Banks Inc. ........ 419,333 1,254,000
10,200 Swiss Re ................... 975,235 1,025,965
100,000 T. Rowe Price Group Inc. ... 3,379,425 3,473,000
50,000 Unitrin Inc. ............... 761,022 1,976,000
130,000 Wachovia Corp. ............. 4,051,382 4,076,800

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2001

MARKET
SHARES COST VALUE
------ -------- -------

COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES (CONTINUED)
55,100 Waddell & Reed
Financial Inc., Cl. A ....$ 1,150,377 $ 1,774,220
------------ ------------
80,116,758 110,607,682
------------ ------------
FOOD AND BEVERAGE -- 6.3%
10,108 Advantica Restaurant
Group Inc.+ .............. 14,357 6,874
10,800 Cadbury Schweppes plc, ADR . 271,368 277,776
20,000 Campbell Soup Co. .......... 610,897 597,400
15,000 Coca-Cola Co. .............. 682,313 707,250
70,000 Coca-Cola Enterprises Inc. . 1,073,692 1,325,800
150,940 Compass Group plc .......... 1,075,654 1,131,352
100,000 Corn Products
International Inc. ....... 2,916,387 3,525,000
100,000 Diageo plc ................. 1,037,393 1,142,499
224,000 Diageo plc, ADR ............ 8,642,745 10,364,480
15,000 Flowers Foods Inc.+ ........ 576,491 598,800
95,000 General Mills Inc. ......... 3,231,955 4,940,950
166,700 Grupo Bimbo, SA de CV,
Ser. A ................... 335,855 336,362
20,000 Hain Celestial Group Inc.+ . 267,663 549,200
80,000 Heinz (H.J.) Co. ........... 3,240,544 3,289,600
30,000 Interbrew SA ............... 845,071 821,373
350,000 Kellogg Co. ................ 9,771,694 10,535,000
75,000 Kerry Group plc, Cl. A ..... 860,877 918,002
60,500 LVMH Moet Hennessy
Louis Vuitton, ADR ....... 416,625 498,520
41,300 Mondavi (Robert) Corp.,
Cl. A+ ................... 1,286,495 1,569,400
600,595 PepsiAmericas Inc. ......... 8,073,962 8,288,211
525,000 PepsiCo Inc. ............... 15,142,741 25,562,250
60,000 Ralcorp Holdings Inc.+ ..... 940,903 1,362,000
10,000 Sara Lee Corp. ............. 188,640 222,300
100,830 Tootsie Roll Industries Inc. 1,580,96 3,940,436
200,000 Tyson Foods Inc., Cl. A .... 1,982,700 2,310,000
150,000 Wrigley (Wm.) Jr. Co. ...... 3,610,220 7,705,500
------------ -------------
68,678,211 92,526,335
------------ -------------
EQUIPMENT AND SUPPLIES-- 6.1%
120,000 AMETEK Inc. ................ 1,873,494 3,826,800
5,000 Amphenol Corp., Cl. A+ ..... 68,437 240,250
10,000 Caterpillar Inc. ........... 136,559 522,500
95,000 CIRCOR International Inc. .. 981,440 1,752,750
107,000 CLARCOR Inc. ............... 1,347,205 2,905,050
320,000 Deere & Co. ................ 3,134,721 13,971,200
225,000 Donaldson Co. Inc. ......... 1,502,029 8,739,000
150,000 Flowserve Corp.+ ........... 2,554,162 3,991,500
6,500 Franklin Electric Co. ...... 210,023 533,000
105,000 Gerber Scientific Inc. ..... 1,163,763 976,500
297,000 IDEX Corp. ................. 1,929,521 10,246,500
20,000 Ingersoll-Rand Co. ......... 713,378 836,200
60,000 Lufkin Industries Inc. ..... 1,105,224 1,608,000
1,000 Manitowoc Co. Inc. ......... 25,450 31,100
430,000 Navistar International Corp.+ 6,528,284 16,985,000
28,000 Olympus Optical Co. Ltd. ... 418,424 402,716
20,000 PACCAR Inc. ................ 450,000 1,312,400
84,500 Sequa Corp., Cl. A+ ........ 3,371,578 4,015,440
75,000 Sequa Corp., Cl. B+ ........ 3,888,160 4,050,000
170,000 SPS Technologies Inc.+ ..... 2,963,443 5,936,400
60,000 Sybron Dental
Specialties Inc.+ ........ 1,140,669 1,294,800
48,000 THK Co. Ltd. ............... 1,129,619 700,260
75,000 UCAR International Inc.+ ... 1,008,428 802,500

MARKET
SHARES COST VALUE
------ -------- -------

250,000 Watts Industries Inc., Cl.A $ 3,331,739 $ 3,750,000
100,000 Weir Group plc ............. 420,789 351,482
------------ -------------
41,396,539 89,781,348
------------ -------------
WIRELESS COMMUNICATIONS -- 5.5%
95,000 America Movil,
SA de CV, Cl. L, ADR+ .... 1,235,397 1,850,600
370,170 AT&T Wireless
Services Inc.+ ........... 5,776,047 5,319,343
130,000 Leap Wireless
International Inc.+ ...... 2,998,412 2,726,100
1,775,000 mm02 plc+ .................. 1,980,584 2,234,605
115,500 mm02 plc, ADR+ ............. 1,433,317 1,455,300
250,000 Nextel Communications
Inc., Cl. A+ ............. 3,942,464 2,740,000
100 NTT DoCoMo Inc.+ ........... 1,387,730 1,175,035
250,000 Rogers Wireless
Communications
Inc., Cl. B+ ............. 3,494,025 3,637,500
220,000 Sprint Corp. - PCS Group+ .. 287,077 5,370,200
16,700 Tele Celular Sul
Participacoes SA, ADR .... 266,992 273,045
55,666 Tele Centro Oeste Celular
Participacoes SA, ADR .... 166,868 389,662
3,340 Tele Leste Celular
Participacoes SA, ADR+ ... 89,340 68,303
8,350 Tele Nordeste Celular
Participacoes SA, ADR .... 123,227 235,386
3,340 Tele Norte Celular
Participacoes SA, ADR .... 51,601 76,352
1,400,000 Telecom Italia Mobile SpA .. 2,244,688 7,815,728
8,350 Telemig Celular
Participacoes SA, ADR .... 241,320 314,127
450,000 Telephone & Data
Systems Inc. ............. 37,059,011 40,387,500
66,800 Telesp Celular
Participacoes SA, ADR .... 2,135,935 618,568
553,888 Vodafone Group plc ......... 915,040 1,449,029
100,000 Vodafone Group plc, ADR .... 927,768 2,568,000
------------ -------------
66,756,843 80,704,383
------------ -------------
PUBLISHING -- 4.4%
20,000 Dow Jones & Co. Inc. ....... 1,030,036 1,094,600
646,000 Independent News & Media
plc, Dublin .............. 1,428,821 1,207,885
5,000 McClatchy Co., Cl. A ....... 240,250 235,000
105,000 McGraw-Hill Companies Inc. . 2,621,025 6,402,900
400,000 Media General Inc., Cl. A .. 9,832,030 19,932,000
125,000 Meredith Corp. ............. 2,091,314 4,456,250
115,000 New York Times Co., Cl. A .. 790,115 4,973,750
120,000 News Corp. Ltd. ............ 696,029 959,606
5,000 News Corp. Ltd., ADR ....... 54,120 159,050
400,000 Penton Media Inc. .......... 4,849,118 2,504,000
213,000 PRIMEDIA Inc.+ ............. 1,376,009 926,550
33,000 Pulitzer Inc. .............. 1,483,667 1,683,000
185,000 Reader's Digest Association
Inc., Cl. B .............. 4,595,037 4,144,000
71,000 Scripps (E.W.) Co., Cl. A .. 4,626,214 4,686,000
91,842 Seat-Pagine Gialle SpA ..... 204,007 74,169
400,000 SCMP Group Ltd. ............ 273,726 251,351
75,000 Thomas Nelson Inc.+ ........ 908,325 832,500
250,000 Tribune Co. ................ 8,604,264 9,357,500
------------ -------------
45,704,107 63,880,111
------------ -------------

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2001

MARKET
SHARES COST VALUE
------ -------- -------

COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES -- 4.3%
73,400 AGL Resources Inc. .........$ 1,322,958 $ 1,689,668
37,400 Apache Corp. ............... 844,013 1,865,512
120,000 BP plc ..................... 725,215 932,629
248,800 BP plc, ADR ................ 5,313,984 11,571,688
135,000 Burlington Resources Inc. .. 5,842,869 5,067,900
120,000 CH Energy Group Inc. ....... 4,952,044 5,216,400
20,000 Cinergy Corp. .............. 609,846 668,600
210,000 Conoco Inc. ................ 5,050,835 5,943,000
10,000 Constellation Energy
Group Inc. ............... 237,177 265,500
8,000 Dominion Resources Inc. .... 486,400 480,800
15,000 DPL Inc. ................... 355,514 361,200
50,000 DQE Inc. ................... 1,003,350 946,500
12,366 DTE Energy Co. ............. 549,316 518,630
400,000 El Paso Electric Co.+ ...... 3,236,625 5,800,000
20,000 Energy East Corp. .......... 429,788 379,800
200,000 Halliburton Co. ............ 3,620,593 2,620,000
38,632 Kerr-McGee Corp. ........... 2,281,548 2,117,034
210,000 Niagara Mohawk
Holdings Inc.+ ........... 3,101,421 3,723,300
100,000 NiSource Inc.+ ............. 200,000 232,000
195,000 Northeast Utilities ........ 3,785,441 3,437,850
163,400 Pennzoil-Quaker State Co.+ . 2,616,442 2,361,130
100,000 Progress Energy Inc. ....... 52,000 44,000
10,200 SJW Corp. .................. 915,141 869,958
14,000 Southwest Gas Corp. ........ 289,625 312,900
4,907 Total Fina Elf SA .......... 655,890 700,800
250,000 Western Resources Inc. ..... 4,257,167 4,300,000
------------ -------------
52,735,202 62,426,799
------------ -------------
DIVERSIFIED INDUSTRIAL-- 4.0%
220,000 Acuity Brands Inc. ......... 3,801,308 2,662,000
195,000 Ampco-Pittsburgh Corp. ..... 2,627,873 2,096,250
115,000 Cooper Industries Inc. ..... 5,409,747 4,015,800
270,000 Crane Co. .................. 5,062,737 6,922,800
110,000 GATX Corp. ................. 1,748,853 3,577,200
200,000 GenTek Inc.+ ............... 1,587,121 342,000
260,000 Greif Bros. Corp., Cl. A ... 4,845,131 8,567,000
3,400 Greif Bros. Corp., Cl. B ... 69,825 107,780
375,000 Honeywell Inc. ............. 13,199,849 12,682,500
130,000 ITT Industries Inc. ........ 3,967,255 6,565,000
400,600 Lamson & Sessions Co.+ ..... 2,458,185 2,103,150
140,000 National Service
Industries Inc. .......... 464,391 282,800
83,715 Park-Ohio Holdings Corp.+ .. 1,009,737 266,214
200,000 Sensient Technologies Corp. 3,600,064 4,162,000
12,420 Smith Industries plc ....... 223,040 122,376
6,000 Sulzer AG .................. 1,275,079 921,526
77,000 Thomas Industries Inc. ..... 816,982 1,925,000
50,000 Trinity Industries Inc. .... 945,000 1,358,500
------------ -------------
53,112,177 58,679,896
------------ -------------
CONSUMER PRODUCTS -- 3.7%
70,000 Altadis SA ................. 1,030,995 1,190,434
43,000 Christian Dior SA .......... 1,514,055 1,319,725
10,000 Church & Dwight Co. Inc. ... 99,536 266,300
110,000 Compagnie Financiere
Richemont AG, Cl. A ...... 1,550,184 2,043,920
50,000 Department 56 Inc.+ ........ 524,317 430,000
350,001 Energizer Holdings Inc.+ ... 5,362,847 6,667,519
90,000 Fortune Brands Inc. ........ 2,401,342 3,563,100
250,000 Gallaher Group plc, ADR .... 4,342,521 6,737,500
300,000 Gillette Co. ............... 9,680,864 10,020,000
2,000 Givaudan SA ................ 550,742 609,532

MARKET
SHARES COST VALUE
------ -------- -------

70,000 Harley Davidson Inc. .......$ 176,313 $ 3,801,700
15,000 Matsushita Electric Industrial
Co. Ltd., ADR ............ 178,325 189,000
100,000 Mattel Inc. ................ 1,549,565 1,720,000
30,000 Maytag Corp. ............... 913,036 930,900
50,000 National Presto Industries
Inc. ..................... 1,768,883 1,387,500
9,500 Nintendo Co. Ltd. .......... 784,763 1,663,551
20,000 Philip Morris Companies Inc. 600,935 917,000
110,000 Procter & Gamble Co. ....... 7,668,453 8,704,300
32,000 Shimano Inc. ............... 521,107 363,803
15,000 Swatch Group AG, Cl. B+ .... 868,35 1,348,409
10,425 Syratech Corp.+ (a) ........ 333,704 7,037
------------ -------------
42,420,838 53,881,230
------------ -------------
CABLE-- 3.1%
515,000 Cablevision Systems Corp.,
Cl. A+ ................... 7,770,006 24,436,750
40,000 Comcast Corp., Cl. A ....... 341,837 1,440,000
85,000 Comcast Corp., Cl. A,
Special .................. 756,584 3,060,000
60,000 NTL Inc.+ .................. 298,014 56,400
500,000 Rainbow Media Group+ ....... 7,238,251 12,350,000
20,000 Shaw Communications Inc.,
Cl. B .................... 52,983 423,239
80,000 Shaw Communications Inc.,
Cl. B, Non-Voting ........ 329,197 1,696,000
370,000 UnitedGlobalCom Inc.,
Cl. A+ ................... 2,499,253 1,850,000
------------ -------------
19,286,125 45,312,389
------------ -------------

AUTOMOTIVE: PARTS AND ACCESSORIES-- 2.9%
20,000 ArvinMeritor Inc. .......... 387,543 392,800
36,802 BorgWarner Inc. ............ 1,669,649 1,922,904
250,161 Dana Corp. ................. 4,053,920 3,472,235
65,000 Delphi Automotive
Systems Corp. ............ 766,915 887,900
260,000 GenCorp Inc. ............... 2,470,673 3,668,600
210,000 Genuine Parts Co. .......... 5,500,492 7,707,000
114,000 Johnson Controls Inc. ...... 1,890,245 9,205,500
110,000 Midas Inc. ................. 1,575,679 1,265,000
335,000 Modine Manufacturing Co. ... 4,388,179 7,815,550
20,000 O'Reilly Automotive Inc.+ .. 579,199 729,400
75,000 Scheib (Earl) Inc.+ ........ 667,781 126,000
163,000 Standard Motor Products Inc. 1,748,388 2,265,700
70,000 Superior Industries
International Inc. ....... 1,819,682 2,817,500
105,000 TransPro Inc. .............. 936,807 325,500
------------ -------------
28,455,152 42,601,589
------------ -------------

HEALTH CARE -- 2.1%
50,000 Aetna Inc. 1,488,635 1,649,500
40,000 American Home
Products Corp. 1,929,780 2,454,400
60,000 Amgen Inc.+ 256,894 3,386,400
40,000 Apogent Technologies Inc.+ 803,368 1,032,000
10,000 AstraZeneca plc, London 385,298 450,887
35,146 AstraZeneca plc,
Stockholm 1,255,532 1,611,604
12,000 Aventis SA 899,375 852,091
26,000 Biogen Inc.+ 181,025 1,491,100
75,036 GlaxoSmithKline plc 1,817,378 1,881,660
4,000 GlaxoSmithKline plc, ADR 216,096 199,280
56,011 Invitrogen Corp.+ 2,678,982 3,468,761
46,000 Novartis AG 1,431,247 1,662,360
108,000 Novartis AG, Registered 948,510 3,942,000

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2001

MARKET
SHARES COST VALUE
------ -------- -------

COMMON STOCKS (CONTINUED)
HEALTH CARE (CONTINUED)
65,000 Pfizer Inc. ................$ 1,077,000 $ 2,590,250
17,900 Roche Holding AG ........... 1,644,702 1,277,578
20,000 Sanofi-Synthelabo SA ....... 967,750 1,492,272
10,000 Schering-Plough Corp. ...... 354,700 358,100
23,000 Sulzer Medica AG ........... 1,394,669 969,710
14,000 Takeda Chemical
Industries Ltd. .......... 782,347 633,450
------------ -------------
20,513,288 31,403,403
------------ -------------

HOTELS AND GAMING -- 2.1%
120,000 Aztar Corp.+ ............... 843,207 2,196,000
90,000 Boca Resorts Inc., Cl. A+ .. 787,000 1,179,000
240,000 Gaylord Entertainment Co.+ . 6,198,541 5,904,000
5,000 GTECH Holdings Corp.+ ...... 86,269 226,450
1,450,000 Hilton Group plc ........... 4,607,137 4,452,836
700,000 Hilton Hotels Corp. ........ 7,194,239 7,644,000
115,000 MGM Mirage Inc.+ ........... 3,120,233 3,320,050
430,000 Park Place
Entertainment Corp.+ ..... 2,424,893 3,943,100
60,000 Starwood Hotels &
Resorts Worldwide Inc. ... 1,300,682 1,791,000
------------ -------------
26,562,201 30,656,436
------------ -------------

PAPER AND FOREST PRODUCTS-- 2.1%
180,000 Pactiv Corp.+ .............. 1,875,630 3,195,000
10,000 Rayonier Inc. .............. 465,432 504,700
253,000 St. Joe Co. ................ 1,873,208 7,020,750
105,000 Westvaco Corp. ............. 2,856,244 2,987,250
322,000 Willamette Industries Inc. . 15,152,490 16,782,640
------------ -------------
22,223,004 30,490,340
------------ -------------

RETAIL -- 1.9%
200,000 Albertson's Inc. ........... 5,669,538 6,298,000
320,000 AutoNation Inc.+ ........... 3,605,501 3,945,600
10,000 Coldwater Creek Inc.+ ...... 181,517 211,800
16,000 Delhaize Le Lion SA, ADR ... 908,672 816,000
30,000 Gucci Group NV, ADR ........ 2,431,099 2,547,000
100,000 Lillian Vernon Corp. ....... 1,362,258 665,000
104,500 Neiman Marcus Group Inc.,
Cl. A .................... 3,281,330 3,246,815
320,000 Neiman Marcus Group Inc.,
Cl. B+ ................... 7,741,769 9,504,000
60,000 Winn-Dixie Stores Inc. ..... 728,476 855,000
------------ -------------
25,910,160 28,089,215
------------ -------------

AEROSPACE -- 1.3%
125,000 BAE Systems plc ............ 754,039 563,063
118,000 Boeing Co. ................. 3,948,316 4,576,040
100,000 Lockheed Martin Corp. ...... 2,641,248 4,667,000
97,979 Northrop Grumman Corp. ..... 7,050,472 9,877,240
------------ -------------
14,394,075 19,683,343
------------ -------------

SPECIALTY CHEMICALS-- 1.2%
5,400 Ciba Specialty Chemicals,
ADR+(b) .................. 21,141 167,940
10,000 du Pont de Nemours
(E.I.) & Co. ............. 327,500 425,100
315,000 Ferro Corp. ................ 5,737,904 8,127,000
24,000 Fuller (H.B.) Co. .......... 457,469 690,480
120,000 Hercules Inc.+ ............. 1,543,119 1,200,000
210,000 Omnova Solutions Inc. ...... 1,767,940 1,428,000
173,000 Rohm and Haas Co. .......... 5,345,527 5,990,990
11,697 Syngenta AG, ADR+ .......... 22,129 123,988
------------ -------------
15,222,729 18,153,498
------------ -------------

MARKET
SHARES COST VALUE
------ -------- -------

BROADCASTING -- 1.1%
50,000 Ackerley Group Inc.+ .......$ 544,974 $ 875,000
16,666 Corus Entertainment Inc.,
Cl. B+ ................... 62,036 330,969
28,000 Gray Communications
Systems Inc. ............. 376,900 388,640
25,000 Gray Communications
Systems Inc., Cl. B ...... 355,780 259,750
200,000 Liberty Corp. .............. 8,528,905 8,230,000
4,000 Nippon Broadcasting
System Inc. .............. 161,709 106,821
50,375 NRJ Group .................. 483,579 939,216
131,000 Paxson Communications
Corp.+ ................... 1,311,348 1,368,950
14,700 RTL Group, Brussels ........ 649,036 576,550
3,000 RTL Group, New York ........ 126,100 117,797
100,000 Television Broadcasting Ltd. 396,239 433,453
110,000 Young Broadcasting Inc.,
Cl. A+ ................... 2,713,685 1,974,500
------------ -------------
15,710,291 15,601,646
------------ -------------

AGRICULTURE -- 1.0%
1,050,000 Archer-Daniels-Midland Co. . 13,728,377 15,067,500
5,000 Delta & Pine Land Co. ...... 84,396 113,150
------------ -------------
13,812,773 15,180,650
------------ -------------

REAL ESTATE -- 0.8%
450,000 Catellus Development Corp.+ 6,751,839 8,280,000
75,000 Cheung Kong (Holdings) Ltd. 871,487 779,061
44,000 Florida East Coast
Industries Inc., Cl. A ... 523,108 1,018,600
58,451 Florida East Coast
Industries Inc., Cl. B ... 964,977 1,221,626
55,000 Griffin Land &
Nurseries Inc.+ .......... 513,143 748,550
4,753 HomeFed Corp.+ ............. 851 4,515
------------ -------------
9,625,405 12,052,352
------------ -------------

ENVIRONMENTAL SERVICES -- 0.8%
65,000 Republic Services Inc.+ .... 875,761 1,298,050
310,000 Waste Management Inc. ...... 5,547,425 9,892,100
------------ -------------
6,423,186 11,190,150
------------ -------------

ELECTRONICS -- 0.7%
3,000 Hitachi Ltd., ADR .......... 218,796 219,570
16,000 Molex Inc., Cl. A .......... 504,206 432,800
7,500 NEC Corp., ADR ............. 43,625 77,775
38,800 Philips Electronics NV, ADR 53,456 1,129,468
7,400 Rohm Co. Ltd. .............. 1,438,657 960,430
47,000 Sony Corp., ADR ............ 1,554,214 2,119,700
250,000 Thomas & Betts Corp. ....... 4,581,748 5,287,500
12,400 Tokyo Electron Ltd. ........ 702,116 608,363
------------ -------------
9,096,818 10,835,606
------------ -------------

COMMUNICATIONS EQUIPMENT-- 0.7%
68,000 Acterna Corp.+ ............. 245,121 268,600
290,000 Allen Telecom Inc.+ ........ 2,191,165 2,465,000
400,000 Corning Inc. ............... 4,358,792 3,568,000
130,000 Lucent Technologies Inc.+ .. 1,154,016 817,700
100,000 Motorola Inc. .............. 1,415,823 1,502,000
100,000 Nortel Networks Corp. ...... 725,285 750,000
44,000 Scientific-Atlanta Inc. .... 355,750 1,053,360
------------ -------------
10,445,952 10,424,660
------------ -------------

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2001

MARKET
SHARES COST VALUE
------ -------- -------

COMMON STOCKS (CONTINUED)
CONSUMER SERVICES -- 0.7%
40,000 Loewen Group Inc. ..........$ 48,700 $ 1,440
510,000 Rollins Inc. ............... 5,737,037 10,200,000
------------ -------------
5,785,737 10,201,440
------------ -------------

BUSINESS SERVICES -- 0.6%
60,000 ANC Rental Corp.+ .......... 578,273 1,800
180,000 Cendant Corp.+ ............. 2,573,002 3,529,800
1,000 CheckFree Corp.+ ........... 9,040 18,000
98,000 Landauer Inc. .............. 634,307 3,317,300
70,000 Nashua Corp.+ .............. 634,028 407,400
10,833 Reuters Holdings plc, ADR .. 815,788 649,872
10,000 Secom Co. Ltd. ............. 647,479 502,060
250,000 Securicor Group plc ........ 0 427,528
3,500 SYNAVANT Inc.+ ............. 27,506 14,000
------------ -------------
5,919,423 8,867,760
------------ -------------

AUTOMOTIVE -- 0.5%
15,000 Ford Motor Co. ............. 409,640 235,800
157,942 General Motors Corp. ....... 4,799,093 7,675,981
------------ -------------
5,208,733 7,911,781
------------ -------------

BUILDING AND CONSTRUCTION-- 0.5%
112,500 CRH plc .................... 1,363,025 1,986,320
32,222 Huttig Building
Products Inc.+ ........... 81,163 196,554
15,000 Martin Marietta
Materials Inc. ........... 322,688 699,000
144,000 Nortek Inc.+ ............... 1,930,643 4,017,600
5,000 Nortek Inc.,
Special Common+(a) ....... 72,155 139,500
------------ -------------
3,769,674 7,038,974
------------ -------------

AVIATION: PARTS AND SERVICES-- 0.5%
98,000 Curtiss-Wright Corp. ....... 2,425,885 4,679,500
6,320 Curtiss-Wright Corp., Cl. B 195,120 293,880
90,000 Fairchild Corp., Cl. A+ .... 1,111,343 261,000
60,000 Precision Castparts Corp. .. 1,113,468 1,695,000
------------ -------------
4,845,816 6,929,380
------------ -------------

COMPUTER SOFTWARE AND SERVICES-- 0.3%
20,000 Capcom Co. Ltd. ............ 684,260 529,529
10,000 Computer Associates
International Inc. ....... 254,406 344,900
170,000 EMC Corp.+ ................. 3,017,532 2,284,800
160,000 Genuity Inc.+ .............. 807,729 252,800
2,500 Obic Co. Ltd. .............. 401,284 495,956
------------ -------------
5,165,211 3,907,985
------------ -------------

SATELLITE-- 0.3%
180,323 General Motors Corp.,
Cl. H+ ................... 2,584,089 2,785,990
340,000 Liberty Satellite &
Technology Inc., Cl. A+ .. 900,012 319,600
200,000 Loral Space &
Communications Ltd.+ ..... 706,704 598,000
------------ -------------
4,190,805 3,703,590
------------ -------------

METALS AND MINING-- 0.2%
72,500 Harmony Gold Mining Co.
Ltd. ..................... 347,738 474,469
15,000 Harmony Gold Mining Co.
Ltd., ADR ................ 79,800 97,650

MARKET
SHARES COST VALUE
------ -------- -------

100,000 Newmont Mining Corp. .......$ 1,911,923 $ 1,911,000
50,000 Placer Dome Inc. ........... 487,169 545,500
------------ -------------
2,826,630 3,028,619
------------ -------------

CLOSED END FUNDS -- 0.2%
59,000 Central European Equity
Fund Inc. ................ 740,735 682,040
70,000 Dresdner RCM
Europe Fund Inc. ......... 512,662 563,500
18,592 France Growth Fund Inc. .... 184,694 136,279
54,150 Italy Fund Inc. ............ 450,250 346,560
68,000 New Germany Fund Inc. ...... 750,658 399,160
44,000 Royce Value Trust Inc. ..... 503,064 691,680
------------ -------------
3,142,063 2,819,219
------------ -------------

TRANSPORTATION -- 0.2%
100,000 AMR Corp.+ ................. 1,924,248 2,217,000
7,500 Kansas City Southern
Industries Inc. .......... 13,986 105,975
31,273 Tsakos Energy
Navigation Ltd.+ ......... 449,997 400,968
------------ -------------
2,388,231 2,723,943
------------ -------------
COMPUTER HARDWARE -- 0.0%

26,000 Hewlett-Packard Co. ........ 839,290 534,040
12,000 Xerox Corp. ................ 138,600 125,040
------------ -------------
977,890 659,080
------------ -------------

EDUCATIONAL SERVICES -- 0.0%
14,000 Benesse Corp. .............. 1,157,011 363,193
------------ -------------
TOTAL COMMON
STOCKS .................... 919,402,942 1,257,875,962
------------ -------------

PREFERRED STOCKS -- 1.7%
PUBLISHING -- 1.4%
767,491 News Corp. Ltd., Pfd., ADR . 20,860,601 20,307,808
------------ -------------

TELECOMMUNICATIONS -- 0.2%
31,000 Broadwing Inc.,
6.750% Cv. Pfd., Ser. B .. 986,633 1,054,000
20,000 Citizens Communications Co.,
5.000% Cv. Pfd. .......... 986,648 890,000
------------ -------------
1,973,281 1,944,000
------------ -------------
AEROSPACE-- 0.1%
14,021 Northrop Grumman Corp.,
7.000% Cv. Pfd., Ser. B .. 1,633,727 1,738,604
------------ -------------

EQUIPMENT AND SUPPLIES -- 0.0%
3,000 Sequa Corp.,
$5.00 Cv. Pfd. ........... 239,700 240,300
------------ -------------

BROADCASTING -- 0.0%
43,000 ProSieben Sat.1 Media
AG, Pfd. ................. 611,067 220,146
------------ -------------

WIRELESS COMMUNICATIONS -- 0.0%
10,760,547 Telesp Celular
Participacoes SA, Pfd.,+ . 82,623 39,587
------------ -------------
TOTAL PREFERRED
STOCKS ..................... 25,400,999 24,490,445
------------ -------------

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2001

PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ------- ---------

CORPORATE BONDS -- 0.4%
ENVIRONMENTAL SERVICES -- 0.1%
$2,039,000 Waste Management Inc.,
Sub. Deb. Cv.
4.000%, 02/01/02 .........$ 2,035,292 $ 2,036,451
------------ -------------

AUTOMOTIVE: PARTS AND ACCESSORIES-- 0.1%
1,500,000 Standard Motor Products Inc.,
Sub. Deb. Cv.
6.750%, 07/15/09 ......... 1,430,874 1,117,500
------------ -------------

AVIATION: PARTS AND SERVICES -- 0.1%
1,000,000 Kaman Corp.,
Sub. Deb. Cv.
6.000%, 03/15/12 ......... 943,269 955,000
------------ -------------

ENERGY AND UTILITIES -- 0.1%
1,000,000 Mirant Corp.,
Sub. Deb. Cv.
2.500%, 06/15/21 ......... 750,113 755,000
------------ -------------

CABLE-- 0.0%
400,000 Charter Communications Inc.,
Cv.
4.750%, 06/01/06 ......... 331,683 367,000
------------ -------------
PUBLISHING-- 0.0%
200,000 News America Holdings Inc.,
Sub. Deb. Cv.
Zero Coupon, 03/31/02 .... 196,368 277,120
------------ -------------

HOTELS AND GAMING-- 0.0%
230,000 Hilton Hotels Corp.,
Sub. Deb. Cv.
5.000%, 05/15/06 ......... 190,702 204,700
------------ -------------

CONSUMER PRODUCTS-- 0.0%
1,000,000 Pillowtex Corp.,
Sub. Deb. Cv.
6.000%, 03/15/12+(e) ..... 406,180 0
------------ -------------

TOTAL CORPORATE
BONDS ...................... 6,284,481 5,712,771
------------ -------------

SHARES
-------

WARRANTS -- 0.0%
FOOD AND BEVERAGE -- 0.0%
62,463 Advantica Restaurant
Group Inc.,
expires 01/07/05+ ........ 105,603 62
------------ -------------

METALS AND MINING-- 0.0%
5,000 Harmony Gold Mining Co.
Ltd., ADR,
expires 06/29/03 ......... 0 15,200
------------ -------------
TOTAL WARRANTS ............. 105,603 15,262
------------ -------------

PRINCIPAL
AMOUNT
--------

U.S. GOVERNMENT OBLIGATIONS-- 7.0%
$102,712,000 U.S. Treasury Bills,
1.670% to 1.675%++,
02/14/02 to 03/28/02 ..... 102,404,340 102,410,955
------------ -------------

PRINCIPAL MARKET
AMOUNT COST VALUE
--------- ------- ---------

REPURCHASE AGREEMENT -- 5.7%

$84,006,000 Agreement with State Street
Bank & Trust Co.,
1.60%, dated 12/31/01,
due 01/02/02, proceeds at
maturity $84,013,467(c) ..$ 84,006,000 $ 84,006,000
------------ -------------

TOTAL INVESTMENTS-- 100.6% ........ $1,137,604,365 1,474,511,395
==============

OTHER ASSETS, LIABILITIES
AND LIQUIDATION VALUE OF
CUMULATIVE PREFERRED STOCK-- (21.0)% ............ (308,340,384)
--------------

NET ASSETS - COMMON STOCK -- 79.6%
(130,067,799 common shares outstanding) ......... 1,166,171,011
--------------

NET ASSETS - PREFERRED STOCK -- 20.4%
(11,967,900 preferred shares outstanding) ....... 299,197,500
--------------

TOTAL NET ASSETS-- 100.0% .........................$1,465,368,511
==============
NET ASSET VALUE PER COMMON SHARE
($1,166,171,011 / 130,067,799 shares outstanding) $8.97
=====

-------------
For Federal tax purposes:
Aggregate cost ............................. $1,139,577,168
==============
Gross unrealized appreciation .............. $ 392,983,147
Gross unrealized depreciation .............. (58,048,990)
--------------
Net unrealized appreciation on investments . $ 334,934,157
==============

-------------
PRINCIPAL SETTLEMENT NET UNREALIZED
AMOUNT DATE APPRECIATION
------ ------ ------------

FORWARD FOREIGN EXCHANGE CONTRACTS -- 0.0%
4,992,000(d) Deliver Hong Kong Dollars
in exchange for
USD 639,820 ......... 08/01/02 $ 208
==============

-------------
(a) Security fair valued under procedures established by the Board
of Directors.
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933, as amended. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
December 31, 2001, the market value of Rule 144A securities amounted to
$167,940 or 0.0% of total net assets.
(c) Collateralized by U.S. Treasury Notes, 4.25% to 6.50%, due 03/31/03 to
11/15/26, market value $85,688,628.
(d) Principal amount denoted in Hong Kong Dollars.
(e) Bond in default.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.

ADR - American Depositary Receipt
BDR - Brazilian Depositary Receipt
RNC - Non-Convertible Savings Shares
USD - U.S. Dollars

% OF
MARKET MARKET
VALUE VALUE
--------- --------
GEOGRAPHIC DIVERSIFICATION
United States .................... 83.4% $1,229,864,547
Europe ........................... 11.2 165,819,766
Asia/Pacific Rim ................. 2.7 39,558,555
Latin America .................... 1.4 19,907,987
Canada ........................... 1.3 18,788,421
South Africa ..................... 0.0 572,119
----- --------------
Total Investments ................ 100.0% $1,474,511,395
----- --------------

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2001

ASSETS:
Investments, at value (Cost $1,137,604,365) .............. $1,474,511,395
Cash and foreign currency, at value (Cost $96,377) ....... 96,358
Dividends and interest receivable ........................ 1,329,678
Receivable from investments sold ......................... 34,725,398
Unrealized appreciation on forward foreign
exchange contracts .................................... 208
Other assets ............................................. 20,503
--------------
TOTAL ASSETS 1,510,683,540
--------------
LIABILITIES:

Payable for investments purchased ........................ 43,558,731
Dividends payable ........................................ 360,155
Payable for investment advisory fees ..................... 962,772
Payable to custodian ..................................... 24,000
Other accrued expenses and liabilities ................... 409,371
--------------
TOTAL LIABILITIES ........................................ 45,315,029
--------------
NET ASSETS ............................................... $1,465,368,511
==============
NET ASSETS CONSIST OF:
Series A Cumulative Preferred Stock (7.25%, $25.00
liquidation value, $0.001 par value,
8,000,000 shares authorized with
5,367,900 shares issued and outstanding) .............. $ 134,197,500
Series B Cumulative Preferred Stock (7.20%, $25.00
liquidation value, $0.001 par value,
8,000,000 shares authorized with
6,600,000 shares issued and outstanding) .............. 165,000,000
Capital stock, at par value .............................. 130,068
Additional paid-in capital ............................... 831,160,392
Accumulated distributions in excess of
net investment income ................................. (47,836)
Accumulated distributions in excess of net realized
gain on investments, options, future contracts and
foreign currency transactions ......................... (1,972,803)
Net unrealized appreciation on investments
and foreign currency transactions ..................... 336,901,190
--------------
TOTAL NET ASSETS ......................................... $1,465,368,511
==============
NET ASSET VALUE PER COMMON SHARE
($1,166,171,011 / 130,067,799 shares
outstanding; 184,000,000 shares
authorized of $0.001 par value) ....................... $8.97
=====

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001

INVESTMENT INCOME:
Dividends (net of foreign taxes of $678,253) ............. $ 15,621,453
Interest ................................................. 7,756,568
--------------
TOTAL INVESTMENT INCOME .................................. 23,378,021
--------------
EXPENSES:
Investment advisory fees ................................. 12,063,874
Shareholder communications expenses ...................... 349,951
Shareholder services fees ................................ 255,020
Payroll .................................................. 155,000
Directors' fees .......................................... 147,765
Custodian fees ........................................... 168,256
Legal and audit fees ..................................... 178,364
Miscellaneous expenses ................................... 316,979
--------------
TOTAL EXPENSES ........................................... 13,635,209
--------------
LESS: CUSTODIAN FEE CREDIT ............................... (73,335)
--------------
NET EXPENSES ............................................. 13,561,874
--------------
NET INVESTMENT INCOME .................................... 9,816,147
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FUTURES CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain on investments and options ............. 122,752,573
Net realized loss on foreign currency transactions ....... (112,405)
Net realized gain on futures contracts ................... 21,376,778
--------------
Net realized gain on investments, options, futures
contracts and foreign currency transactions ........... 144,016,946
--------------
Net change in net unrealized appreciation/depreciation
on investments, futures contracts
and foreign currency transactions ..................... (171,507,313)
--------------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS, FUTURES CONTRACTS
AND FOREIGN CURRENCY TRANSACTIONS ..................... (27,490,367)
--------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ....................................... $ (17,674,220)
==============

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
STATEMENT OF CHANGES IN NET ASSETS

YEAR ENDED YEAR ENDED
DECEMBER 31, 2001 DECEMBER 31, 2000
----------------- -----------------
OPERATIONS:

Net investment income .................................................................. $ 9,816,147 $ 5,453,347
Net realized gain on investments, futures contracts
and foreign currency transactions ................................................... 144,016,946 139,784,787
Net change in unrealized appreciation/depreciation on investments,
futures contracts and foreign currency transactions ................................. (171,507,313) (193,936,839)
-------------- --------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................... (17,674,220) (48,698,705)
-------------- --------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income .................................................................. (8,582,562) (4,400,558)
Net realized short-term gain on investments, options,
futures contracts and foreign currency transactions ................................. (8,156,865) --
Net realized long-term gain on investments, options,
futures contracts and foreign currency transactions ................................. (121,720,695) (136,303,772)
-------------- --------------
TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS ....................................... (138,460,122) (140,704,330)
-------------- --------------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income .................................................................. (1,001,064) (304,788)
Net realized short-term gain on investments, options,
futures contracts and foreign currency transactions ................................. (929,028) --
Net realized long-term gain on investments, options,
futures contracts and foreign currency transactions ................................. (13,938,133) (9,440,571)
-------------- --------------
TOTAL DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS .................................... (15,868,225) (9,745,359)
-------------- --------------
TRUST SHARE TRANSACTIONS:
Net increase in net assets from common shares issued upon reinvestment of dividends and
distributions, and rights offering .................................................. 159,803,359 14,165,101
Net increase from issuance of preferred stock .......................................... 159,329,175 --
Net decrease from repurchase of preferred stock ........................................ (24,870) (394,388)
-------------- --------------
NET INCREASE IN NET ASSETS FROM TRUST SHARE TRANSACTIONS ............................... 319,107,664 13,770,713
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS .................................................. 147,105,097 (185,377,681)
NET ASSETS:
Beginning of period .................................................................... 1,318,263,414 1,503,641,095
-------------- --------------
End of period (including undistributed net investment loss
of $(47,836) and $0, respectively) .................................................. $1,465,368,511 $1,318,263,414
============== ==============

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION. The Gabelli Equity Trust Inc. (the "Equity Trust") is a
closed-end, non-diversified management investment company organized as a
Maryland corporation on May 20, 1986 and registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), whose primary objective is long-term
growth of capital. The Equity Trust had no operations until August 11, 1986,
when it sold 10,696 shares of common stock to Gabelli Funds, LLC (the "Adviser")
for $100,008. Investment operations commenced on August 21, 1986.

2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Equity Trust in the preparation of its financial statements.

SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("Nasdaq") or traded in the U.S.
over-the-counter market for which market quotations are readily available are
valued at the last quoted sale price on that exchange or market as of the close
of business on the day the securities are being valued. If there were no sales
that day, the security is valued at the average of the closing bid and asked
prices or, if there were no asked prices quoted on that day, then the security
is valued at the closing bid price on that day. If no bid or asked prices are
quoted on such day, the security is valued at the most recently available price
or, if the Board of Directors so determines, by such other method as the Board
of Directors shall determine in good faith, to reflect its fair market value.
Portfolio securities traded on more than one national securities exchange or
market are valued according to the broadest and most representative market, as
determined by Gabelli Funds, LLC (the "Adviser"). Portfolio securities primarily
traded in foreign markets are generally valued at the preceding closing values
of such securities on their respective exchanges or markets. Securities and
assets for which market quotations are not readily available are valued at their
fair value as determined in good faith under procedures established by and under
the general supervision of the Board of Directors. Short term debt securities
with remaining maturities of 60 days or less are valued at amortized cost,
unless the Board of Directors determines such does not reflect the securities
fair value, in which case these securities will be valued at their fair value as
determined by the Board of Directors. Debt instruments having a maturity greater
than 60 days for which market quotations are readily available are valued at the
latest average of the bid and asked prices. If there were no asked prices quoted
on such day, the security is valued using the closing bid price on that day.
Options are valued at the last sale price on the exchange on which they are
listed. If no sales of such options have taken place that day, they will be
valued at the mean between their closing bid and asked prices.

REPURCHASE AGREEMENTS. The Equity Trust may enter into repurchase
agreements with primary government securities dealers recognized by the Federal
Reserve Bank of New York, with member banks of the Federal Reserve System or
with other brokers or dealers that meet credit guidelines established by the
Adviser and reviewed by the Board of Directors. Under the terms of a typical
repurchase agreement, the Equity Trust takes possession of an underlying debt
obligation subject to an obligation of the seller to repurchase, and the Equity
Trust to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Equity Trust's holding period. The Equity Trust
will always receive and maintain securities as collateral whose market value,
including accrued interest, will be at least equal to 100% of the dollar amount
invested by the Equity Trust in each agreement. The Equity Trust will make
payment for such securities only upon physical delivery or upon evidence of book
entry transfer of the collateral to the account of the custodian. To the extent
that any repurchase transaction exceeds one business day, the value of the
collateral is marked-to-market on a daily basis to maintain the adequacy of the
collateral. If the seller defaults and the value of the collateral declines or
if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Equity Trust may be delayed or
limited.

OPTIONS. The Equity Trust may purchase or write call or put options on
securities or indices. As a writer of call options, the Equity Trust receives a
premium at the outset and then bears the risk of unfavorable changes in the
price of the financial instrument underlying the option. The Equity Trust would
incur a loss if the price of the underlying financial instrument increases
between the date the option is written and the date on which the option is
terminated. The Equity Trust would realize a gain, to the extent of the premium,
if the price of the financial instrument decreases between those dates.

As a purchaser of put options, the Equity Trust pays a premium for the
right to sell to the seller of the put option the underlying security at a
specified price. The seller of the put has the obligation to purchase the
underlying security upon exercise at the exercise price. If the price of the
underlying security declines, the Equity Trust would realize a gain upon sale or
exercise. If the price of the underlying security increases, the Equity Trust
would realize a loss upon sale or at expiration date, but only to the extent of
the premium paid.

THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The option activity for the Equity Trust for the year ended December 31,
2001 was as follows:

NUMBER OF
CONTRACTS PREMIUMS
---------- --------
Call options outstanding at December 31, 2000 250 $ 417,375
Call options written during the period -- --
Call options expired during the period -- --
Call options closed during the period (250) (417,375)
--- ---------
Call options outstanding at December 31, 2001 -- $ --
=== =========

Futures Contracts. The Equity Trust may engage in futures contracts for the
purpose of hedging against changes in the value of its portfolio securities and
in the value of securities it intends to purchase. Such investments will only be
made if they are economically appropriate to the reduction of risks involved in
the management of the Equity Trust's investments. Upon entering into a futures
contract, the Equity Trust is required to deposit with the broker an amount of
cash or cash equivalents equal to a certain percentage of the contract amount.
This is known as the "initial margin." Subsequent payments ("variation margin")
are made or received by the Equity Trust each day, depending on the daily
fluctuation of the value of the contract. The daily changes in the contract are
included in unrealized appreciation/depreciation on investments and futures
contracts. The Equity Trust recognizes a realized gain or loss when the contract
is closed. There were no open futures contracts at December 31, 2001.

There are several risks in connection with the use of futures contracts as
a hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk the
Equity Trust may not be able to enter into a closing transaction because of an
illiquid secondary market.

FORWARD FOREIGN EXCHANGE CONTRACTS. The Equity Trust may engage in forward
foreign exchange contracts for hedging a specific transaction with respect to
either the currency in which the transaction is denominated or another currency
as deemed appropriate by the Adviser. Forward foreign exchange contracts are
valued at the forward rate and are marked-to-market daily. The change in market
value is included in unrealized appreciation/depreciation on investments and
foreign currency transactions. When the contract is closed, the Equity Trust
records a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.

The use of forward foreign exchange contracts does not eliminate
fluctuations in the underlying prices of the Equity Trust's portfolio
securities, but it does establish a rate of exchange that can be achieved in the
future. Although forward foreign exchange contracts limit the risk of loss due
to a decline in the value of the hedged currency, they also limit any potential
gain/(loss) that might result should the value of the currency increase. In
addition, the Equity Trust could be exposed to risks if the counterparties to
the contracts are unable to meet the terms of their contracts.

FOREIGN CURRENCY TRANSLATION. The books and records of the Equity Trust
are maintained in United States (U.S.) dollars. Foreign currencies, investments
and other assets and liabilities are translated into U.S. dollars at the
exchange rates prevailing at the end of the period, and purchases and sales of
investment securities, income and expenses are translated at the exchange rate
prevailing on the respective dates of such transactions. Unrealized gains and
losses, which result from changes in foreign exchange rates and/or changes in
market prices of securities, have been included in unrealized
appreciation/depreciation on investments and foreign currency transactions. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Equity Trust and the amounts actually received. The
portion of foreign currency gains and losses related to fluctuation in exchange
rates between the initial trade date and subsequent sale trade date is included
in realized gain/(loss) on investments.

SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for as of the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders
are recorded on the ex-dividend date. Distributions to shareholders of the
Equity Trust's 7.25% Tax Advantaged Series A Cumulative Preferred Stock and
7.20% Tax Advantaged Series B Cumulative Preferred Stock ("Cumulative Preferred
Stock") are accrued on a daily basis and are determined as described in Note 5.

THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Income distributions and capital gain distributions are determined in
accordance with Federal income tax regulations which may differ from accounting
principles generally accepted in the United States. These differences are
primarily due to differing treatments of income and gains on various investment
securities held by the Equity Trust, timing differences and differing
characterization of distributions made by the Equity Trust.

For the year ended December 31, 2001, reclassifications were made to
decrease accumulated distributions in excess of net investment income for
$280,357 and decrease accumulated distributions in excess of net realized gain
on investments, options, future contracts and foreign currency transactions for
$388,179 with an offsetting adjustment to additional paid-in capital.

For the fiscal year ended December 31, 2001, the tax character of
distributions paid does not materially differ from accounting principles
generally accepted in the United States.

PROVISION FOR INCOME TAXES. The Equity Trust intends to continue to qualify
as a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended. As a result, a Federal income tax provision is not
required.

As of December 31, 2001, the components of accumulated earnings/(losses) on
a tax basis were as follows:

Net unrealized appreciation $334,880,551
-----------
Total accumulated earnings $334,880,551
===========

Dividends and interest from non-U.S. sources received by the Equity Trust
are generally subject to non-U.S. withholding taxes at rates ranging up to 30%.
Such withholding taxes may be reduced or eliminated under the terms of
applicable U.S. income tax treaties, and the Equity Trust intends to undertake
any procedural steps required to claim the benefits of such treaties. If the
value of more than 50% of the Equity Trust's total net assets at the close of
any taxable year consists of stocks or securities of non-U.S. corporations, the
Equity Trust is permitted and may elect to treat any non-U.S. taxes paid by it
as paid by its shareholders.

3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. The Equity Trust has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Equity Trust will pay the Adviser a fee,
computed weekly and paid monthly, equal on an annual basis to 1.00% of the value
of the Equity Trust's average weekly net assets. In accordance with the Advisory
Agreement, the Adviser provides a continuous investment program for the Equity
Trust's portfolio and oversees the administration of all aspects of the Equity
Trust's business and affairs. The Adviser has agreed to reduce the management
fee on the incremental assets attributable to the Cumulative Preferred Stock if
the total return of the net asset value of the common shares of the Equity
Trust, including distributions and advisory fee subject to reduction, does not
exceed the stated dividend rate of the Cumulative Preferred Stock. For the year
ended December 31, 2001, the Equity Trust's total return on the net asset value
of the common shares did not exceed the stated dividend rate of the Cumulative
Preferred Stock. Thus, such management fees were not earned on the incremental
assets.

During the year ended December 31, 2001, Gabelli & Company, Inc. and its
affiliates received $664,606 in brokerage commissions as a result of executing
agency transactions in portfolio securities on behalf of the Equity Trust.

4. PORTFOLIO SECURITIES. Cost of purchases and proceeds from sales of
securities, other than short-term securities, for the year ended December 31,
2001 aggregated $523,886,380 and $297,177,920, respectively.

5. CAPITAL. The Articles of Incorporation, dated May 19, 1986, permit the Equity
Trust to issue 184,000,000 shares of common stock (par value $0.001). The Board
of Directors of the Equity Trust has authorized the repurchase of its shares on
the open market when the shares are trading at a discount of 10% or more (or
such other percentage as the Board of Directors may determine from time to time)
from the net asset value of the shares. During the year ended December 31, 2001,
the Equity Trust did not repurchase any shares of its common stock in the open
market.

On January 10, 2001, the Equity Trust distributed one transferable right
for each of the 108,688,408 common shares outstanding to shareholders of record
on that date. Six rights were required to purchase one additional common share
at the subscription price of $7.00 per share. The subscription period expired on
February 13, 2001. The rights offering was fully subscribed resulting in the
issuance of 18,114,735 common shares and proceeds of $126,803,145 to the Equity
Trust, prior to the deduction of estimated expenses of $500,000. The net asset
value per share of the Equity Trust common shareholders was reduced by
approximately $0.62 per share as a result of the issuance.

THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Transactions in common stock were as follows:

YEAR ENDED YEAR ENDED
DECEMBER 31, 2001 DECEMBER 31, 2000
------------------------- -------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------

Shares issued in rights offering 18,114,735 $126,303,145 -- --
Shares issued upon reinvestment
of dividends and distributions 3,264,654 33,500,214 1,311,793 $14,165,101
---------- ------------ ---------- -----------
Net increase 21,379,389 $159,803,359 1,311,793 $14,165,101
---------- ------------ ---------- -----------

The holders of Cumulative Preferred Stock have voting rights equivalent to
those of the holders of common stock (one vote per share) and will vote together
with holders of shares of common stock as a single class. In addition, the 1940
Act requires that along with approval of a majority of the holders of common
stock, approval of a majority of the holders of any outstanding shares of
Cumulative Preferred Stock, voting separately as a class, would be required to
(a) adopt any plan of reorganization that would adversely affect the Cumulative
Preferred Stock, and (b) take any action requiring a vote of security holders,
including, among other things, changes in the Trust's subclassification as a
closed-end investment company or changes in its fundamental investment
restrictions. The Equity Trust's Articles of Incorporation, as amended,
authorize the issuance of up to 16,000,000 shares of $0.001 par value Cumulative
Preferred Stock. The Cumulative Preferred Stock is senior to the common stock
and results in the financial leveraging of the common stock. Such leveraging
tends to magnify both the risks and opportunities to common shareholders.
Dividends on shares of the Cumulative Preferred Stock are cumulative. The Equity
Trust is required to meet certain asset coverage tests as required by the 1940
Act and by the Shares' Articles Supplementary with respect to the Cumulative
Preferred Stock. If the Equity Trust fails to meet these requirements and does
not correct such failure, the Equity Trust may be required to redeem, in part or
in full, the Cumulative Preferred Stock at a redemption price of $25.00 per
share plus an amount equal to the accumulated and unpaid dividends whether or
not declared on such shares in order to meet these requirements. Additionally,
failure to meet the foregoing asset requirements could restrict the Equity
Trust's ability to pay dividends to common shareholders and could lead to sales
of portfolio securities at inopportune times. The income received on the Equity
Trust's assets may vary in a manner unrelated to the fixed rate, which could
have either a beneficial or detrimental impact on net investment income and
gains available to common shareholders.

Commencing June 9, 2003 and thereafter, the Equity Trust, at its option,
may redeem the 7.25% Series A Cumulative Preferred Stock in whole or in part at
the redemption price. During the year ended December 31, 2001, the Equity Trust
repurchased 1,000 shares of 7.25% Series A Cumulative Preferred Stock at a cost
of $24,870 and at an average price of $24.87 per share. During the year ended
December 31, 2000, the Equity Trust repurchased 17,500 shares of 7.25% Series A
Cumulative Preferred Stock at a cost of $394,388 and at an average price of
$22.54 per share. At December 31, 2001, 5,367,900 shares of the 7.25% Series A
Cumulative Preferred Stock were outstanding at the fixed dividend rate of 7.25
percent per share and accrued dividends amounted to $162,155.

On June 20, 2001, the Equity Trust received net proceeds of $159,329,175
(after underwriting discounts of $5,197,500 and estimated offering expenses of
$473,325) from the public offering of 6,600,000 shares of 7.20% Series B
Cumulative Preferred Stock. Commencing June 20, 2006 and thereafter, the Equity
Trust, at its option, may redeem the 7.20% Series B Cumulative Preferred Stock
in whole or in part at the redemption price. During the year ended December 31,
2001, the Equity Trust did not repurchase any shares of 7.20% Series B
Cumulative Preferred Stock. At December 31, 2001, 6,600,000 shares of the 7.20%
Series B Cumulative Preferred Stock were outstanding at the fixed rate of 7.20
percent per share and accrued dividends amounted to $198,000.

THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS

SELECTED DATA FOR AN EQUITY TRUST COMMON SHARE OUTSTANDING THROUGHOUT EACH
PERIOD:

YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
OPERATING PERFORMANCE: 2001(A) 2000(A) 1999(A) 1998(A)
---------- ---------- ---------- ----------

Net asset value, beginning of period ............................... $ 10.89 $ 12.75 $ 11.47 $ 11.56
---------- ---------- ---------- ----------
Net investment income .............................................. 0.08 0.05 0.04 0.07

Net realized and unrealized gain (loss)
on investments ................................................... (0.16) (0.51) 3.25 1.09

---------- ---------- ---------- ----------
Total from investment operations ................................... (0.08) (0.46) 3.29 1.16
---------- ---------- ---------- ----------
CHANGE IN NET ASSET VALUE FROM CAPITAL STOCK TRANSACTIONS
Increase in net asset value from Trust share transactions .......... 0.03 -- -- --
Decrease in net asset value from shares issued in rights offering .. (0.62) -- -- --
Offering expenses charged to capital surplus ....................... (0.05) -- -- (0.04)
---------- ---------- ---------- ----------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income .............................................. (0.06) (0.04) (0.03)(b) (0.06)
Net realized gain on investments ................................... (1.02) (1.27) (1.21)(b) (1.10)
Paid-in capital .................................................... -- -- (0.68)(b) --
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income .............................................. (0.01) (0.00)(c) (0.00)(c) (0.00)(c)
Net realized gain on investments ................................... (0.11) (0.09) (0.09) (0.05)
---------- ---------- ---------- ----------
Total distributions ................................................ (1.20) (1.40) (2.01) (1.21)
---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD ..................................... $ 8.97 $ 10.89 $ 12.75 $ 11.47
========== ========== ========== ==========
Net asset value total return+ ...................................... (3.68)% (4.39)% 29.49% 9.55%
========== ========== ========== ==========
Market value, end of period ........................................ $ 10.79 $ 11.44 $ 12.56 $ 11.56
========== ========== ========== ==========
Total investment return++ .......................................... 10.32% 1.91% 26.57% 9.23%
========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS AVAILABLE TO COMMON
STOCK SHAREHOLDERS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............................... $1,465,369 $1,318,263 $1,503,641 $1,352,190
Net assets attributable to common shares,
end of period (in 000's) ......................................... $1,166,171 $1,184,041 $1,368,981 $1,217,190
Ratio of net investment income to average
net assets attributable to common stock .......................... 0.81% 0.42% 0.34% 0.60%
Ratio of operating expenses to average
net assets attributable to common stock (f) ...................... 1.12% 1.14% 1.27% 1.15%
Ratio of operating expenses to average
total net assets (e) (f) ......................................... 0.95% 1.03% 1.15% 1.09%
Portfolio turnover rate ............................................ 23.9% 32.1% 38.0% 39.8%

7.25% CUMULATIVE PREFERRED STOCK:
Liquidation value, end of period (in 000's) ........................ $ 134,198 $ 134,223 $ 134,660 $ 135,000
Total shares outstanding (in 000's) ................................ 5,368 5,369 5,386 5,400
Asset coverage (g) ................................................. 490% 982% 1,117% 1,001%
Asset coverage per share (g) ....................................... $ 122.44 $ 245.54 $ 279.16 $ 250.41
Liquidation preference per share ................................... $ 25.00 $ 25.00 $ 25.00 $ 25.00
Average market value (d) ........................................... $ 25.39 $ 22.62 $ 24.43 $ 25.63

7.20% CUMULATIVE PREFERRED STOCK:
Liquidation value, end of period (in 000's) ........................ $ 165,000 -- -- --
Total shares outstanding (in 000's) ................................ 6,600 -- -- --
Asset coverage (g) ................................................. 490% -- -- --
Asset coverage per share (g) ....................................... $ 122.44 -- -- --
Liquidation preference per share ................................... $ 25.00 -- -- --
Average market value (d) ........................................... $ 25.60 -- -- --

YEAR ENDED DECEMBER 31,
-----------
OPERATING PERFORMANCE: 1997(A)
----------

Net asset value, beginning of period .............................. $ 9.77
----------
Net investment income ............................................. 0.08

Net realized and unrealized gain (loss)
on investments .................................................. 2.75

----------
Total from investment operations .................................. 2.83
----------
CHANGE IN NET ASSET VALUE FROM CAPITAL STOCK TRANSACTIONS
Increase in net asset value from Trust share transactions ......... --
Decrease in net asset value from shares issued in rights offering . --
Offering expenses charged to capital surplus ...................... --
----------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
Net investment income ............................................. (0.08)
Net realized gain on investments .................................. (0.93)
Paid-in capital ................................................... (0.03)
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
Net investment income ............................................. --
Net realized gain on investments .................................. --
----------
Total distributions ............................................... (1.04)
----------
NET ASSET VALUE, END OF PERIOD .................................... $ 11.56
==========
Net asset value total return+ ..................................... 30.46%
==========
Market value, end of period ....................................... $ 11.69
==========
Total investment return++ ......................................... 37.46%
==========
RATIOS TO AVERAGE NET ASSETS AVAILABLE TO COMMON
STOCK SHAREHOLDERS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .............................. $1,210,570
Net assets attributable to common shares,
end of period (in 000's) ........................................ $1,210,570
Ratio of net investment income to average
net assets attributable to common stock ......................... 0.76%
Ratio of operating expenses to average
net assets attributable to common stock (f) ..................... 1.14%
Ratio of operating expenses to average
total net assets (e) (f) ........................................ 1.14%
Portfolio turnover rate ........................................... 39.2%

7.25% CUMULATIVE PREFERRED STOCK:
Liquidation value, end of period (in 000's) ....................... --
Total shares outstanding (in 000's) ............................... --
Asset coverage (g) ................................................ --
Asset coverage per share (g) ...................................... --
Liquidation preference per share .................................. --
Average market value (d) .......................................... --

7.20% CUMULATIVE PREFERRED STOCK:
Liquidation value, end of period (in 000's) ....................... --
Total shares outstanding (in 000's) ............................... --
Asset coverage (g) ................................................ --
Asset coverage per share (g) ...................................... --
Liquidation preference per share .................................. --
Average market value (d) .......................................... --

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

+ Based on net asset value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to rights
offering, assuming full subscription by shareholders.
++ Based on market value per share, adjusted for reinvestment of
distributions, including the effect of shares issued pursuant to rights
offering, assuming full subscription by shareholders.
(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 Utility Trust
spin-off from net investment income, realized short-term gains, realized
long-term gains, and paid-in-capital were $0.01029, $0.07453, $0.34218 and
$0.32300, respectively.
(c) Amount represents less than $0.005 per share.
(d) Based on weekly prices.
(e) Amounts are attributable to both common and preferred stock assets. Prior
to 1998, there was no preferred stock outstanding.
(f) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. Including such custodian
fee credits for the years ended December 31, 2001 and 2000, the expense
ratios of operating expenses to average net assets attributable to common
stock would be 1.11% and 1.14%, respectively and ratios of operating
expenses to average total net assets would be 0.94% and 1.03%,
respectively.
(g) Asset coverage is calculated by combining all series of preferred stock.
See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
The Gabelli Equity Trust Inc.

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Equity Trust Inc. (the
"Trust") at December 31, 2001, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2001 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.

/S/ PricewaterhouseCoopers LLP

1177 Avenue of the Americas
New York, NY 10036
February 15, 2002

THE GABELLI EQUITY TRUST INC.
ADDITIONAL FUND INFORMATION (UNAUDITED)

The business and affairs of the Trust are managed under the direction of
the Trust's Board of Directors. Information pertaining to the Directors and
officers of the Trust is set forth below. The Trust's Statement of Additional
Information includes additional information about The Gabelli Equity Trust Inc.
Directors and is available, without charge, upon request, by calling
1-800-GABELLI (1-800-422-3554) or by writing to The Gabelli Equity Trust Inc. at
One Corporate Center, Rye, NY 10580.

TERM OF NUMBER OF
OFFICE AND FUNDS IN FUND
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED2 DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR
----------------- -------- ----------- ----------------------- --------------------
INTERESTED DIRECTORS3:

MARIO J. GABELLI Since 1986*** 21 Chairman of the Board and Chief Executive Director of Morgan Group
Director, President and Officer of Gabelli Asset Management Inc. and Holdings, Inc. (transportation
Chief Investment Officer Chief Investment Officer of Gabelli Funds, services); Vice Chairman
Age: 59 LLC and GAMCO Investors, Inc.; of Lynch Corporation
Chairman and Chief Executive Officer of (diversified manufacturing)
Lynch Interactive Corporation (multimedia
and services)

KARL OTTO POHL Since 1992** 30 Member of the Shareholder Committee of Sal Director of Gabelli Asset
Director Oppenheim Jr. & Cie (private investment Management Inc. (investment
bank); Former President of the management); Chairman, Incentive
Deutsche Bundesbank and Chairman of its Capital and Incentive Asset
Central Bank Council (1980-1991) Management (Zurich); Director at
Sal Oppenheim Jr. & Cie, Zurich

NON-INTERESTED DIRECTORS:

THOMAS E. BRATTER Since 1986*** 3 Director, President and Founder, The John --
Director Dewey Academy (residential college
Age: 62 preparatory therapeutic high school)

ANTHONY J. COLAVITA4 Since 1999* 32 President and Attorney at Law in the law firm
Director of Anthony J. Colavita, P.C.
Age: 66

JAMES P. CONN4 Since 1989** 11 Former Managing Director and Chief Director of LaQuinta Corp.(hotels)
Director Investment Officer of Financial Security and First Republic Bank
Age: 64 Assurance Holdings Ltd. (1992-1998)

FRANK J. FAHRENKOPF JR. Since 1998* 3 President and Chief Executive Officer of the --
Director American Gaming Association since June
Age: 62 1995; Partner of Hogan & Hartson (law
firm); Chairman of International Trade
Practice Group; Co-Chairman of the
Commission on Presidential Debates;
Former Chairman of the Republican
National Committee

ARTHUR V. FERRARA Since 2001* 9 Formerly, Chairman of the Board and Chief Director of The Guardian Life
Director Executive Officer of The Guardian Life Insurance Company of America;
Age: 71 Insurance Company of America from January Director of The Guardian Insurance
1993 to December 1995; President, Chief & Annuity Company, Inc.,
Executive Officer and a Director prior Guardian Investor Services
thereto Corporation, and 5 mutual funds
within the Guardian Fund Complex

ANTHONY R. PUSTORINO Since 1986** 16 Certified Public Accountant; Professor --
Director Emeritus, Pace University
Age: 76

SALVATORE J. ZIZZA Since 1986* 8 Chairman, Hallmark Electrical Supplies Corp.; Board Member of Hollis Eden
Age: 56 Former Executive Vice President of FMG Pharmaceuticals,
Group (OTC), a healthcare provider; Former Bion Environmental
President and Chief Executive Officer of the Technologies Inc.
Lehigh Group Inc., (electrical supply and The Credit Store Inc.
wholesaler); an interior construction company,
through 1997

THE GABELLI EQUITY TRUST INC.
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)

TERM OF NUMBER OF
OFFICE AND FUNDS IN FUND
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S)
AND AGE SERVED2 DIRECTOR DURING PAST FIVE YEARS
----------------- -------- ----------- -----------------------
OFFICERS:

BRUCE N. ALPERT Since 1998 -- Executive Vice President and Chief Operating
Vice President and Officer of Gabelli Funds, LLC since 1988 and
Treasurer an officer of all mutual funds advised by
Age: 50 Gabelli Funds, LLC and its affiliates.
Director and President of the Gabelli Advisors,
Inc.

CARTER W. AUSTIN Since 2000 -- Vice President at the Trust since 2000.
Vice President Vice President of Gabelli Funds, LLC
Age: 34 since 1996.

JAMES E. MCKEE Since 1995 -- Vice President, General Counsel and Secretary
Secretary of Gabelli Asset Management Inc. since 1999
Age: 38 and GAMCO Investors, Inc. since 1993; Secretary
of all mutual funds advised by Gabelli Advisers,
Inc. and Gabelli Funds, LLC

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

1 Address:One Corporate Center, Rye, NY 10580, unless otherwise noted.
2 The Trust's Board of Directors is divided into three classes, each class
having a term of three years. Each year the term of office of one class
expires and the successor or successors elected to such class serve for a
three year term. The three year term for each class expires as follows:
* - Term expires at the Trust's 2002 Annual Meeting of Shareholders and until
their successors are duly elected and qualified.
** - Term expires at the Trust's 2003 Annual Meeting of Shareholders and until
their successors are duly elected and qualified.
*** - Term expires at the Trust's 2004 Annual Meeting of Shareholders and until
their successors are duly elected and qualified.
3 "Interested person" of the Trust as defined in the Investment Company Act
of 1940. Messrs. Gabelli and Pohl are each considered an "interested
person" because of their affiliation with Gabelli Funds, LLC which acts as
the Trust's investment adviser.
4 Represents holders of the Trust's 7.20% and 7.25% Cumulative Preferred
Stock.

--------------------------------------------------------------------------------
THE GABELLI EQUITY TRUST INC.
AND YOUR PERSONAL PRIVACY

WHO ARE WE?

The Gabelli Equity Trust (the "Trust") is a closed-end investment company
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940. We are managed by Gabelli Funds LLC, which is
affiliated with Gabelli Asset Management Inc. Gabelli Asset Management is a
publicly-held company that has subsidiaries that provide investment
advisory or brokerage services for a variety of clients.

WHAT KIND OF NON-PUBLIC INFORMATION DO WE COLLECT ABOUT YOU IF YOU BECOME A
GABELLI CUSTOMER?

When you purchase shares of the Trust on the New York Stock Exchange, you
have the option of registering directly with our transfer agent in order,
for example, to participate in our dividend reinvestment plan.

o Information you give us on your application form. This could include
your name, address, telephone number, social security number, bank
account number, and other information.

o INFORMATION ABOUT YOUR TRANSACTIONS WITH US. This would include
information about the shares that you buy or sell, it may also include
information about whether you sell or exercise rights that we have
issued from time to time. If we hire someone else to provide
services--like a transfer agent--we will also have information about
the transactions that you conduct through them.

WHAT INFORMATION DO WE DISCLOSE AND TO WHOM DO WE DISCLOSE IT?

We do not disclose any non-public personal information about our customers
or former customers to anyone, other than our affiliates, our service
providers who need to know such information and as otherwise permitted by
law. If you want to find out what the law permits, you can read the privacy
rules adopted by the Securities and Exchange Commission. They are in volume
17 of the Code of Federal Regulations, Part 248. The Commission often posts
information about its regulations on its web site, www.sec.gov.

WHAT DO WE DO TO PROTECT YOUR PERSONAL INFORMATION?

We restrict access to non-public personal information about you to the
people who need to know that information in order to perform their jobs or
provide services to you and to ensure that we are complying with the laws
governing the securities business. We maintain physical, electronic, and
procedural safeguards to keep your personal information confidential.

--------------------------------------------------------------------------------
37

THE GABELLI EQUITY TRUST INC.
INCOME TAX INFORMATION (UNAUDITED)
DECEMBER 31, 2001

CASH DIVIDENDS AND DISTRIBUTIONS

TOTAL AMOUNT ORDINARY LONG-TERM DIVIDEND
PAYABLE RECORD PAID INVESTMENT CAPITAL REINVESTMENT
DATE DATE PER SHARE (A) INCOME GAINS (A) PRICE
---------- ---------- -------------- ------------ ----------- --------------

COMMON SHARES
03/26/01 03/16/01 $0.2700 $0.0320 $0.2380 $10.5100
06/25/01 06/15/01 0.2700 0.0330 0.2370 10.9500
09/24/01 09/14/01 0.2700 0.0330 0.2370 9.4525
12/24/01 12/14/01 0.2700 0.0330 0.2370 10.3455
------- ------- -------
$1.0800 $0.1310 $0.9490
7.25% PREFERRED SHARES
03/26/01 03/19/01 $0.4531 $0.0551 $0.3980
06/25/01 06/18/01 0.4531 0.0551 0.3980
09/26/01 09/19/01 0.4531 0.0551 0.3980
12/26/01 12/18/01 0.4532 0.0552 0.3980
------- ------- -------
$1.8125 $0.2205 $1.5920
7.20% PREFERRED SHARES

09/26/01 09/19/01 $0.4800 $0.0584 $0.4216
12/26/01 12/18/01 0.4500 0.0547 0.3953
------- ------- -------
$0.9300 $0.1131 $0.8169

A Form 1099-DIV has been mailed to all shareholders of record for the
distributions mentioned above, setting forth specific amounts to be included in
the 2001 tax returns. Ordinary income distributions include net investment
income and realized net short-term capital gains. 100% of the long-term capital
gains paid by the Equity Trust in 2001 was classified as "20% Rate Gains"
subject to a maximum tax rate of 20% (or 10% depending on an individual's tax
bracket). Capital gain distributions are reported in box 2a of Form 1099-DIV.

NON-TAXABLE RETURN OF CAPITAL

The amount received as a non-taxable (return of capital) distribution
should be applied to reduce the tax cost of shares. There is no return of
capital in 2001.

CORPORATE DIVIDENDS RECEIVED DEDUCTION AND U.S. GOVERNMENT SECURITIES INCOME

The Equity Trust paid to common shareholders an ordinary income dividend
totalling $0.1310 per share in 2001. The Equity Trust paid to 7.25% Series A
preferred shareholders and 7.20% Series B preferred shareholders an ordinary
income dividend totalling $0.22046 per share and $0.1131 per share,
respectively, in 2001. The percentage of such dividends that qualifies for the
dividends received deduction available to corporations is 68.37% for all such
dividends paid in 2001. The percentage of the ordinary income dividends paid by
the Equity Trust during 2001 derived from U.S. Government Securities was 11.64%.
However, it should be noted that the Equity Trust did not hold more than 50% of
its assets in U.S. Government Securities at the end of each calendar quarter
during 2001.

HISTORICAL DISTRIBUTION SUMMARY - COMMON STOCK

SHORT- LONG- UNDISTRIBUTED TAXES PAID ON
TERM TERM NON-TAXABLE LONG-TERM UNDISTRIBUTED ADJUSTMENT
INVESTMENT CAPITAL CAPITAL RETURN OF CAPITAL CAPITAL TOTAL TO
INCOME GAINS (B) GAINS CAPITAL GAINS GAINS (C) DISTRIBUTIONS COST BASIS
---------- --------- ---------- ------------ ----------- -------------- ------------- -----------

2001 (d) ...... $0.06700 $0.06400 $0.94900 -- -- -- $1.08000 --
2000 .......... 0.04070 0.15500 1.11430 -- -- -- 1.31000 --
1999 (e) ...... 0.03010 0.21378 0.99561 $0.91176 -- -- 2.15125 $0.91176 -
1998 .......... 0.06420 -- 1.10080 -- -- -- 1.16500 --
1997 .......... 0.07610 0.00210 0.93670 0.02510 -- -- 1.04000 0.02500 -
1996 .......... 0.10480 -- 0.78120 0.11400 -- -- 1.00000 0.11400 -
1995 (f) ...... 0.12890 -- 0.49310 0.37800 -- -- 1.00000 0.37800 -
1994 (g) ...... 0.13536 0.06527 0.30300 1.38262 -- -- 1.88625 1.38262 -
1993 (h) ...... 0.13050 0.02030 0.72930 0.22990 -- -- 1.11000 0.22990 -
1992 (i) ...... 0.20530 0.04050 0.29660 0.51760 -- -- 1.06000 0.51760 -
1991 (j) ...... 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 --

HISTORICAL DISTRIBUTION SUMMARY - 7.25% PREFERRED STOCK
2001 .......... $0.11440 $0.10610 $1.59200 -- -- -- $1.81250 --
2000 .......... 0.05670 0.21430 1.54150 -- -- -- 1.81250 --
1999 .......... 0.04370 0.31640 1.45240 -- -- -- 1.81250 --
1998 .......... 0.05600 -- 0.96100 -- -- -- 1.01700 --

HISTORICAL DISTRIBUTION SUMMARY - 7.20% PREFERRED STOCK
2001 .......... $0.05870 $0.05440 $0.81690 -- -- -- $0.93000 --

--------------------------
(a) Total amounts differ due to rounding.
(b) Taxable as ordinary income.
(c) Net Asset Value is reduced by this amount on the last business day of the
year.
(d) On January 10, 2001, the Company distributed Rights equivalent to $0.56 per
share based upon full subscription of all issued shares.
(e) On July 9, 1999, the Company distributed shares of The Gabelli Utility
Trust valued at $9.8125 per share.
(f) On October 19, 1995, the Company distributed Rights equivalent to $0.37 per
share based upon full subscription of all issued shares.
(g) On November 15, 1994, the Company distributed shares of The Gabelli Global
Multimedia Trust Inc. valued at $8.0625 per share.
(h) On July 14, 1993, the Company distributed Rights equivalent to $0.50 per
share based upon full subscription of all issued shares.
(i) On September 28, 1992, the Company distributed Rights equivalent to $0.36
per share based upon full subscription of all issued shares.
(j) On October 21, 1991, the Company distributed Rights equivalent to $0.42 per
share based upon full subscription of all issued shares.

- Decrease in cost basis.
+ Increase in cost basis.

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 EquiServe Trust Company ("EquiServe") 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 EquiServe
P.O. Box 43011
Providence, RI 02940-3011

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 EquiServe at 1 (800)
336-6983.

SHAREHOLDERS WISHING TO LIQUIDATE REINVESTED SHARES held at EquiServe must do
so in writing or by telephone. Please submit your request to the above mentioned
address or telephone number. Include in your request your name, address and
account number. The cost to liquidate shares is $2.50 per transaction as well as
the brokerage commission incurred. Brokerage charges are expected to be less
than the usual brokerage charge for such transactions.

If your shares are held in the name of a broker, bank or nominee, you should
contact such institution. If such institution is not participating in the Plan,
your account will be credited with a cash dividend. In order to participate in
the Plan through such institution, it may be necessary for you to have your
shares taken out of "street name" and re-registered in your own name. Once
registered in your own name your dividends will be automatically reinvested.
Certain brokers participate in the Plan. Shareholders holding shares in "street
name" at participating institutions will have dividends automatically
reinvested. Shareholders wishing a cash dividend at such institution must
contact their broker to make this change.

The number of shares of Common Stock distributed to participants in the Plan
in lieu of cash dividends is determined in the following manner. Under the Plan,
whenever the market price of the Equity Trust's Common Stock is equal to or
exceeds net asset value at the time shares are valued for purposes of
determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued shares of Common Stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current market price of the Equity Trust's Common Stock. The valuation
date is the dividend or distribution payment date or, if that date is not a New
York Stock Exchange trading day, the next trading day. If the net asset value of
the Common Stock at the time of valuation exceeds the market price of the Common
Stock, participants will receive shares from the Equity Trust valued at market
price. If the Equity Trust should declare a dividend or capital gains
distribution payable only in cash, EquiServe will buy Common Stock in the open
market, or on the New York Stock Exchange or elsewhere, for the participants'
accounts, except that EquiServe 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 EquiServe on at least 90 days' written
notice to participants in the Plan.

AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLAN (CONTINUED)

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 EquiServe for investments in the Equity Trust's
shares at the then current market price. Shareholders may send an amount from
$250 to $10,000. EquiServe will use these funds to purchase shares in the open
market on or about the 1st and 15th of each month. EquiServe 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 EquiServe, P.O. Box 43011, Providence, RI
02940-3011 such that EquiServe receives such payments approximately 10 days
before the investment date. 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 EquiServe 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.

--------------------------------------------------------------------------------
The Annual Meeting of the Equity Trust's stockholders will be held at 9:00
A.M. on Monday, May 20, 2002, at The Bruce Museum, One Museum Drive in
Greenwich, Connecticut.
--------------------------------------------------------------------------------

DIRECTORS AND OFFICERS
THE GABELLI EQUITY TRUST INC.
ONE CORPORATE CENTER, RYE, NY 10580-1422

DIRECTORS

Mario J. Gabelli, CFA
CHAIRMAN & CHIEF INVESTMENT OFFICER,
GABELLI ASSET MANAGEMENT INC.

Dr. Thomas E. Bratter
PRESIDENT, JOHN DEWEY ACADEMY

Anthony J. Colavita
ATTORNEY-AT-LAW,
ANTHONY J. COLAVITA, P.C.

James P. Conn
FORMER MANAGING DIRECTOR AND CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.

Frank J. Fahrenkopf, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER,
AMERICAN GAMING ASSOCIATION

Arthur V. Ferrara
FORMER CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
GUARDIAN LIFE INSURANCE COMPANY OF AMERICA

Karl Otto Pohl
FORMER PRESIDENT, DEUTSCHE BUNDESBANK

Anthony R. Pustorino
CERTIFIED PUBLIC ACCOUNTANT
PROFESSOR EMERITUS, PACE UNIVERSITY

Salvatore J. Zizza
CHAIRMAN, HALLMARK ELECTRICAL SUPPLIES CORP.

OFFICERS

Mario J. Gabelli, CFA
PRESIDENT & CHIEF INVESTMENT OFFICER

Bruce N. Alpert
VICE PRESIDENT & TREASURER

Carter W. Austin
VICE PRESIDENT

James E. McKee
SECRETARY

INVESTMENT ADVISOR

Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422

CUSTODIAN

Boston Safe Deposit and Trust Company

COUNSEL

Willkie Farr & Gallagher

TRANSFER AGENT AND REGISTRAR

EquiServe Trust Company

STOCK EXCHANGE LISTING

Common 7.25% Preferred 7.20% Preferred
------ --------------- ---------------
NYSE-Symbol: GAB GAB Pr GAB PrB
Shares Outstanding: 130,067,799 5,367,900 6,600,000

The Net Asset Value appears in the Publicly Traded Funds column, under the
heading "General Equity Funds," in Sunday's The New York Times and in Monday's
The Wall Street Journal. It is also listed in Barron's Mutual Funds/Closed End
Funds section under the heading "General Equity Funds".

The Net Asset Value may be obtained each day by calling (914) 921-5071.

--------------------------------------------------------------------------------
For general information about the Gabelli Funds,
call 1-800-GABELLI (1-800-422-3554), fax us at
914-921-5118, visit Gabelli Funds' Internet
homepage at: HTTP://WWW.GABELLI.COM
or e-mail us at: closedend@gabelli.com
--------------------------------------------------------------------------------

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

Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Equity Trust may, from time to time,
purchase shares of its common stock in the open market when the Equity Trust
shares are trading at a discount of 10% or more from the net asset value of
the shares. The Equity Trust may also, from time to time, purchase shares of
its Cumulative Preferred Stock in the open market when the shares are trading
at a discount to the Liquidation Value of $25.00.
--------------------------------------------------------------------------------

THE GABELLI EQUITY TRUST INC.
ONE CORPORATE CENTER, RYE, NY 10580-1422

PHONE: 1-800-GABELLI (1-800-422-3554)
FAX: 1-914-921-5118 INTERNET: WWW.GABELLI.COM
E-MAIL: CLOSEDEND@GABELLI.COM

GBFCM-AR-12/01