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SEMI-ANNUAL REPORT
JUNE 30, 2002


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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,

      Ongoing uncertainty over the strength of the economic and corporate profit
recovery,  turmoil  in the  Middle  East,  renewed  fear of  terrorism  at home,
accounting scandals,  and revelations about conflicts of interest on Wall Street
combined  to  undermine  equities  in the  second  quarter.  At the close of the
quarter,  the Standard and Poor's ("S&P") 500 Index and Nasdaq  Composite  Index
were  re-testing  their  post-9/11   intra-day  lows  of  944.75  and  1,387.06,
respectively.

      In general, the Gabelli Equity Trust's (the "Trust's") industrial holdings
held up  relatively  well in this  uncompromising  market.  However,  the dismal
performance  of our media and  telecommunications  investments,  which  comprise
about 26% of our Trust, penalized overall returns.

COMPARATIVE RESULTS
                AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 2002 (A)


                                                            SINCE                                           YEAR TO
                                                QUARTER  INCEPTION (B)  10 YEAR  5 YEAR   3 YEAR   1 YEAR     DATE
                                                -------  -------------  -------  ------   ------    ------    ------
                                                                                         
 Gabelli Equity Trust NAV Return (c) ...........(12.67)%     11.31%      10.78%   6.22%   (1.58)%  (12.82)%  (9.70)%
 Gabelli Equity Trust Investment Return (d) .... (6.31)%     12.79%      13.67%  13.30%     7.86%   (2.12)%  (1.33)%
 Dow Jones Industrial Average ..................(10.74)%     10.56%      13.20%   5.59%   (3.94)%  (10.34)%  (6.91)%
 S&P 500 Index .................................(13.39)%      9.07%      11.42%   3.67%   (9.17)%  (17.98)% (13.15)%
 Nasdaq Composite Index ........................(20.71)%      8.85%      10.01%   0.29%  (18.33)%  (32.30)% (24.98)%

(a) Returns  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.  The Dow Jones  Industrial  Average is an unmanaged  index of 30 large
    industrial  stocks.  The  S&P  500  and the  Nasdaq  Composite  Indices  are
    unmanaged  indicators of stock market performance.  Dividends are considered
    reinvested (except for the Nasdaq Composite Index).  Performance for periods
    less than one year are not annualized.
(b) From commencement of investment operations on August 21, 1986.
(c) Total returns and average annual returns  reflect changes in net asset value
    ("NAV"),  reinvestment of  distributions,  adjustments for rights offerings,
    spin-offs and taxes paid on undistributed  long-term  capital gains, and are
    net of expenses.  Since Inception return based on initial net asset value of
    $9.34.
(d) 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. Since Inception return based on an initial offering
    price of $10.00.

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  502
publicly-traded  closed-end funds in the U.S., approximately 37% currently trade
at premiums to NAV versus 26% five years ago and 61% ten years ago.  For general
equity funds such as the Trust, approximately 31% currently trade at premiums to
NAV versus 33% five years and 14% 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 38% premium in June 2002 to a 27%
discount in December  1987.  The average  variance  from NAV for the Trust since
inception is a 0.3% discount to


NAV. Beginning in early 2001, the market price of the Trust exceeded the NAV and
this premium has gradually  increased  since.  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 11% 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.

                        PREMIUM/DISCOUNT SINCE INCEPTION
                               [GRAPHIC OMITTED]

     JUNE 30, 2002

 Net Asset Value  $ 7.59
 Market Price     $10.03
 Premium          32.15%

8/21/86       0
9/30/86       0.0067
10/31/86      0.0046
11/30/86     -0.039
12/31/86     -0.0661
1/31/87      -0.1363
2/28/87      -0.1323
3/31/87      -0.1555
4/30/87      -0.1393
5/31/87      -0.1788
6/30/87      -0.2028
7/31/87      -0.2
8/31/87      -0.2052
9/30/87      -0.2128
10/31/87     -0.2074
11/30/87     -0.2154
12/31/87     -0.2061
1/31/88      -0.2235
2/29/88      -0.1145
3/31/88      -0.1523
4/30/88      -0.1477
5/31/88      -0.1906
6/30/88      -0.0819
7/31/88      -0.0984
8/31/88      -0.0942
9/30/88      -0.1097
10/31/88     -0.1256
11/30/88     -0.1104
12/31/88     -0.1113
1/31/89      -0.1214
2/28/89      -0.1108
3/31/89      -0.1006
4/30/89      -0.0925
5/31/89      -0.0699
6/30/89      -0.0468
7/31/89      -0.0854
8/31/89      -0.0243
9/30/89      -0.0385
10/31/89     -0.0257
11/30/89     -0.0217
12/31/89      0.0076
1/31/90       0.0534
2/28/90      -0.0156
3/31/90       0.0242
4/30/90       0.0033
5/31/90      -0.0056
6/30/90      -0.0049
7/31/90      -0.0176
8/31/90      -0.018
9/30/90      -0.0348
10/31/90     -0.1187
11/30/90     -0.0327
12/31/90      0.029
1/31/91      -0.0091
2/28/91       0.0269
3/31/91       0.015
4/30/91      -0.0257
5/31/91      -0.01
6/30/91       0.0138
7/31/91      -0.0032
8/31/91      -0.0009
9/30/91      -0.0298
10/31/91     -0.0083
11/30/91     -0.1014
12/31/91     -0.0366
1/31/92      -0.0077
2/29/92       0.0141
3/31/92       0.0045
4/30/92       0.0069
5/31/92       0.0092
6/30/92       0.0032
7/31/92       0.0165
8/31/92       0.0309
9/30/92       0.0427
10/31/92     -0.0068
11/30/92     -0.0461
12/31/92     -0.0257
1/31/93      -0.0312
2/28/93      -0.0046
3/31/93       0.0265
4/30/93       0.0436
5/31/93       0.012
6/30/93      -0.0207
7/31/93      -0.0093
8/31/93      -0.0358
9/30/93       0.0088
10/31/93      0.0601
11/30/93      0.0659
12/31/93      0.0573
1/31/94       0.0797
2/28/94       0.0673
3/31/94       0.0733
4/30/94      -0.027
5/31/94       0.0524
6/30/94       0.0542
7/31/94       0.0233
8/31/94       0.0597
9/30/94       0.0185
10/31/94      0.0375
11/30/94      0.0622
12/31/94      0.0121
1/31/95       0.0047
2/28/95       0.03
3/31/95       0.017
4/30/95      -0.0122
5/31/95      -0.024
6/30/95      -0.0081
7/31/95      -0.044
8/31/95      -0.0697
9/30/95      -0.0845
10/31/95     -0.1206
11/30/95     -0.075
12/31/95     -0.0578
1/31/96      -0.0625
2/29/96      -0.0821
3/31/96      -0.0385
4/30/96      -0.0732
5/31/96      -0.0916
6/30/96      -0.047
7/31/96      -0.0576
8/31/96      -0.0708
9/30/96      -0.0474
10/31/96     -0.0405
11/30/96     -0.0644
12/31/96     -0.0394
1/31/97      -0.0741
2/28/97      -0.0644
3/31/97      -0.0424
4/30/97      -0.0077
5/31/97      -0.0688
6/30/97      -0.0613
7/31/97      -0.0693
8/31/97      -0.0676
9/30/97      -0.0397
10/31/97     -0.0636
11/30/97     -0.0175
12/31/97      0.0316
1/31/98       0.0119
2/28/98      -0.0088
3/31/98      -0.022
4/30/98      -0.0788
5/31/98      -0.0885
6/30/98      -0.04
7/31/98      -0.042
8/31/98      -0.0814
9/30/98      -0.0091
10/31/98      0.0025
11/30/98      0.0216
12/31/98      0.0026
1/31/99       0.0103
2/28/99       0.0264
3/31/99       0.0202
4/30/99      -0.0068
5/31/99      -0.006
6/30/99      -0.0163
7/31/99       0.007
8/31/99       0.0159
9/30/99       0.0126
10/31/99     -0.0045
11/30/99     -0.0178
12/31/99     -0.0147
1/31/00      -0.0331
2/29/00      -0.0835
3/31/00      -0.0438
4/30/00      -0.078
5/31/00      -0.046
6/30/00       0.0097
7/31/00      -0.0093
8/31/00       0.0073
9/30/00      -0.0179
10/31/00     -0.0298
11/30/00      0.0332
12/31/00      0.0493
1/31/01      -0.045
2/28/01      -0.0067
3/31/01       0.1048
4/30/01       0.0937
5/31/01       0.1453
6/30/01       0.1596
7/31/01       0.1107
8/31/01       0.1614
9/30/01       0.2041
10/31/01      0.2241
11/30/01      0.2314
12/31/01      0.2029
1/31/02       0.2497
2/28/02       0.2463
3/31/02       0.2311
4/30/02       0.248
5/30/02       0.2955
6/30/02       0.3215

SERIES C AUCTION RATE CUMULATIVE PREFERRED STOCK

      On June 27, 2002, the Trust successfully  completed its offering of Series
C Auction Rate Cumulative  Preferred Stock ("Preferred  Shares") which was rated
'Aaa' by Moody's Investors  Service,  Inc. and 'AAA' by Standard & Poor's Rating
Services.  Shareholder  response has been positive and we appreciate the efforts
of Salomon Smith Barney Inc. and Gabelli & Company, Inc., the underwriters,  and
wish to thank and welcome all those investors who participated.

      The Trust  issued  5,200  Preferred  Shares  at  $25,000  per share  ($130
million)  with an initial  annualized  dividend rate of 1.85% payable on July 3,
2002.  Dividend rates for the Preferred Shares are cumulative at a rate that may
be reset  every seven days based on the  results of an  auction.  The  Preferred
Shares are redeemable at the option of the Trust, in whole or in part, following
any dividend payment date with not less than 15 days and not more than 40 days

                                        2


notice at $25,000  per share plus any  accumulated  or unpaid  dividends.  These
Preferred  Shares do not trade on an exchange.  Consistent with our conservative
approach,  the Trust issued the Preferred Shares in a  cost-effective  manner at
less than an estimated $0.013 per share.

      How do the additional  Preferred Shares benefit Common  Shareholders?  The
Trust has earned an 11.31%  average annual total return from inception on August
21, 1986 through June 30, 2002. The Preferred Shares were issued with an initial
annualized  dividend  rate of  1.85%.  Going  forward,  the  dividend  rate will
fluctuate weekly based on market conditions. Additionally, the Trust was able to
leverage the current low interest  rate  environment  and protect the Trust from
increases in such interest rates by entering into a five-year interest rate swap
agreement with Citibank at a rate of 4.494%.  Any return earned in excess of the
stated  4.494%  swap  rate  would  benefit  Common  Shareholders;  however,  any
shortfall  from the stated swap rate would have an adverse  effect on the Common
Shareholder.  Therefore,  by taking  advantage of the  historically low interest
rate  environment  and  achieving  our  long-term  investment  objectives,   the
Preferred  Share  issuance  offers  what we believe  is a method of  potentially
adding  wealth for our Common  Shareholders.  Similar  to the  Trust's  previous
preferred  offerings,  the  Adviser  will  not earn  any  management  fee on the
incremental  assets during any year in which the net asset value total return on
the  Trust  does not  exceed  the  stated  five-year  swap rate  related  to the
Preferred Shares.  Following the expiration of the swap agreement,  the variable
dividend  rate on the  Preferred  Shares  will serve as the hurdle  rate for the
Adviser to earn any management fee on the incremental  assets,  unless the Trust
enters into a new swap agreement.  Coupled with the Trust's  existing  Preferred
Stock outstanding,  the effective dividend rate for the Trust's three classes of
Preferred Stock is 6.40%.

      Realized  long-term  capital gains of the Trust are passed  through to all
shareholders.  In 2001,  87.89% of the common and  preferred  distributions  was
classified  as  long-term  capital  gains,  taxable  at a  maximum  rate of 20%.
Accordingly,  the ordinary income equivalent yield on the preferred stock at the
initial  dividend  rate of 1.85%,  for a  shareholder  in the 38.6% tax bracket,
would be 2.35%.

COMMENTARY

THE ECONOMY: THE RECOVERY IS FOR REAL

      Although  consumer  confidence  readings and retail sales softened in May,
most  other  economic  data  has been  encouraging.  Industrial  production  and
productivity  continued to trend higher,  new housing starts  approached  record
levels,  and there was a modest  up-tick in  business  investment.  Importantly,
inflation  remained  dormant,  most likely  postponing any Federal Reserve Board
("Fed")  interest rate hikes.  We believe full year 2002 Gross Domestic  Product
("GDP")  growth will be above the 3% to 3.5% range we expected at the  beginning
of the year and that  capital  spending  plus a recovery  in Europe and Japan in
2003 will help sustain economic growth in the year ahead.

      Presently,  investors appear to be questioning  whether corporate earnings
will meet  expectations  in the coming  quarters.  We believe profits will be up
sharply this year as a result of the economic expansion, increased productivity,
cost  cutting,  financial  re-engineering,  and big  decline in the  "everything
including  the kitchen  sink"  write-offs  taken in 2001.  Financial  Accounting
Standards Board ("FASB") Rule 142, which does not require  companies to amortize
goodwill,  will also help earnings for many  companies.  In addition,  a gradual
weakening   of  the  dollar  will  boost   profits  for  the  large   U.S.-based
multinationals  in the S&P 500  Index.  Although  stocks  are still not cheap by
historical standards,  rising earnings will make equity valuations  considerably
more reasonable.

                                        3

THE MARKET: A CRISIS IN CONFIDENCE

      Unfortunately,  over the short term,  a recovering  economy,  a rebound in
corporate  profits,  and more  reasonable  equity  valuations may not do much to
improve investor  psychology,  which has been battered by geopolitical  tensions
and a crisis in  confidence  in the  integrity  of  corporate  America  and Wall
Street.

      It has  become  apparent  that  our  quick  victory  over the  Taliban  in
Afghanistan  has not eliminated  the threat of terrorism at home or abroad.  The
seemingly never-ending cycle of violence in the Middle East has further unnerved
investors.  For a few  tense  weeks,  investors  also  worried  about a  nuclear
confrontation between Pakistan and India over Kashmir. Clearly, it's a dangerous
world out there.

      Investors  have come to believe the stock  market is a dangerous  place as
well.  Not only  have  they lost a pile of money  over the last two  years,  but
"Enronitis,"  "Tycosis,"  "Marthritis"  (the insider  trading  investigation  of
Martha Stewart), and most recently "WorldCon" have many investors wondering what
malady will strike their  portfolios  next.  Following the revelations (to some)
that Wall  Street  research  is not what it's  cracked up to be,  investors  are
reluctant to go to their broker for a portfolio  check-up,  fearing the cure may
be worse than the disease.

REALITY CHECK

      At this  stage,  some  perspective  on the recent  scandals  in  corporate
America  and Wall  Street  is in order.  I've  spent  nearly  40 years  grilling
corporate managers about their businesses.  Most have been honest, albeit with a
tendency to "accentuate the positives and de-centuate the negatives."  Some have
been  disingenuous,  doing their best to sweep the bad news under the rug. While
I've seen many incompetent  managements run good companies into the ground, I've
only encountered a few who have been outright crooks.

      Unfortunately,  corporate  skullduggery  was on the  rise,  in part due to
"momentum" investing,  which focuses on short-term earnings dynamics, as well as
the  widespread  use of stock options -- the cocaine of the  corporate  elite --
that reward  managements  on the basis of their  companies'  stock prices rather
than improving business fundamentals.  It is little wonder that some managements
are  willing  to cook the books to  enhance  and/or  protect  the value of these
enormous options packages.

      We are a little more cynical  regarding  Wall Street's  improprieties.  We
have always been wary of Wall Street  research,  primarily  because we feel most
sell-side  analysts do not do as  thorough a job as we do.  Also,  although  the
conflict of interest  between  investment  banking  and equity  research  may be
front-page  news  to  the  investor   public,   it  is  old  hat  to  investment
professionals.  Writing a negative  research  report on the stock of one of your
firm's investment  banking clients has always been a sure-fire way for sell-side
analysts to end up on the unemployment line.

      Although  corporate  accounting has never been transparent -- we have been
fighting  our way through  pages of footnotes  attached to  corporate  financial
statements  for years -- we would welcome reform in this area as well. We expect
a certain  amount of accounting  gimmickry  will always be the norm, as the bean
counters  figure out how to skirt whatever new rules are put in place.  However,
separation of auditors from  management  consultants  would be the first step in
resolving potential conflicts of interest.

      Hopefully,  we will make some progress on all these fronts.  In the coming
quarters,  we may continue to see negative  headlines  further denting  investor
confidence.  However,  we believe  that as the  economic  recovery  unfolds  and
corporate earnings meet or beat consensus  expectations,  investors will refocus
on an expanding number of excellent opportunities in the stock market.

                                        4

BACK TO BASICS

      In an economic  dynamic and stock  market  turmoil like this we want to go
back to  basics.  The  stock  market  is a  function  of  several  inter-related
elements:

      o Earnings/Economy

      o Inflation/Interest Rates

      o Mr. Market/Psychology

DOUBLE-DIGIT RETURNS - ARE THEY ACHIEVABLE?

      Many corporate  sponsors  (public  companies tied to liabilities with plan
assets) have made certain  assumptions  about  inflation.  In the 1990s,  stocks
returned 18.2% and in the 1980s, 17.5%. Those lofty returns were not sustainable
and the past couple years have proved that premise.  Expectations for returns in
the future should be more in line with the historical numbers. 9% to 9.5% is the
number  that  most  have  migrated  to over  the  past  several  years.  Is this
sustainable?  What  portfolio mix is necessary to achieve these results if rates
on fixed income  instruments  are under 6%? To help guide us on a  going-forward
basis,  below is a road map of returns over the last seventy-five years prepared
by Ibbotson  Associates,  a data services firm that provides historical research
information.

      Chart I compares the returns by decade of three separate asset classes and
the rate of inflation.  The "Stocks"  category consists of the S&P 500 Composite
Index with dividends  reinvested.  The "Bonds"  consist of Long Term  Government
Bonds with a maturity of 20 years.  The "Bills"  represent  the total  return of
30-day  Treasury  bills.  "Inflation"  reflects the Consumer  Price Index of all
Urban consumers and is not seasonally adjusted.

                         CHART I: A CENTURY OF INVESTING
                        COMPOUNDED ANNUAL RATES OF RETURN

                 STOCKS           BONDS          BILLS       INFLATION
----------------------------------------------------------------------
 02 (YTD)          -13.2%           3.6%           0.9%          1.8%
 01                -11.9            3.6            4.1           2.0
 00                 -9.1           21.5            5.9           3.4

 90's               18.2            8.8            4.9           2.9
 80's               17.5           12.6            8.9           5.1
 70's                5.9            5.5            6.3           7.4
 60's                7.8            1.4            3.9           2.5
 50's               19.4           -0.1            1.9           2.2
 40's                9.2            3.2            0.4           5.4
 30's                0.0            4.9            0.6          -2.0
 ---------------------------------------------------------------------
 1926-2002          10.6%           5.9%           3.8%          3.0%

 SOURCE: IBBOTSON ASSOCIATES AS OF 6/30/2002

                                        5

      Chart II details returns on the S&P 500 Index. Note the number of
declines.

                                   S&P 500 TOTAL RETURNS

ONLY TWICE HAS THE S&P 500 HAD TOTAL RETURN DOWN THREE OR MORE YEARS. IT LOOKS
LIKE WE'RE POISED FOR THE THIRD, BUT NOTE THE MARKET GAINS IN THE YEARS
FOLLOWING CONSECUTIVE DECLINES.

[GRAPHIC OMITTED]
[GRAPHIC OF ARROWS OMITTED]

          YEAR          TOTAL RETURNS
          2001              -11.9%
          2000               -9.1
          1999               21.0
          1998               28.6
          1997               33.4
          1996               23.1
          1995               37.4
          1994                1.3
          1993               10.0
          1992                7.7
          1991               30.6
          1990               -3.2
          1989               31.5
          1988               16.8
          1987                5.2
          1986               18.5
          1985               32.2
          1984                6.3
          1983               22.5
          1982               21.4
          1981               -4.9
          1980               32.4
          1979               18.4
          1978                6.6
          1977               -7.2
          1976               23.8
          1975               37.2
          1974              -26.5
          1973              -14.7
          1972               19.0
          1971               14.3
          1970                4.0
          1969               -8.5
          1968               11.1
          1967               24.0
          1966              -10.1
          1965               12.5
          1964               16.5

        YEAR          TOTAL RETURNS
        1963               22.8%
        1962               -8.7
        1961               26.9
        1960                0.1
        1959               12.0
        1958               43.3
        1957              -10.8
        1956                6.6
        1955               31.6
        1954               52.6
        1953               -1.0
        1952               18.4
        1951               24.0
        1950               31.7
        1949               18.8
        1948                5.5
        1947                5.7
        1946               -8.1
        1945               36.4
        1944               19.8
        1943               25.9
        1942               20.3
        1941              -11.6
        1940               -9.8
        1939               -0.4
        1938               31.1
        1937              -35.0
        1936               33.9
        1935               47.7
        1934               -1.4
        1933               54.0
        1932               -8.2
        1931              -43.3
        1930              -24.9
        1929               -8.4
        1928               43.6
        1927               37.5
        1926               11.6

SOURCE: ISI GROUP

      As we have said in our previous  shareholder  reports, we believe that the
economy in the decade of the aughts  will grow at 3% to 3.5% and that  inflation
will be about 3% (don't get concerned  with our  country's  ability to deal with
guns and Guccis).  As a result,  the overall  markets  should return 6% to 8% to
investors.  We  believe  that our Trust  will be able to  continue  to  generate
double-digit returns.

                                        6

CORPORATE GOVERNANCE

      It has  become  fashionable  for  institutional  investors  to talk  about
corporate  governance.  Some are focusing on compensation,  some are focusing on
stock options.  We want to share with you the following table labeled "The Magna
Carta of  Shareholder  Rights,"  which we published in 1988. In it, we indicated
what we believe as ombudsman for our  shareholders  -- we are not for management
or against management, we are for shareholders. This is our long-standing tenet.

655 Third Ave.                                           Gabelli & Company, Inc.
New York, N.Y. 10017                                                May 16, 1988

                                   MAGNA CARTA
                                       OF
                               SHAREHOLDER RIGHTS

There has been a great deal of dialogue  among fund sponsors,  especially  among
corporate  sponsors,  about the voting of proxies.  The U.S. Department of Labor
has focused on this as well.  We thought it timely to share with you our thought
process on the voting of proxies.

THE MAGNA CARTA (A) OF SHAREHOLDER RIGHTS

As we have stated in the past, we are neither for nor against management. We are
for shareholders.

As  security  analysts  we are best  informed  (sic!) to make the  decisions  on
matters that will affect the economic value of  investments.  We believe a Magna
Carta of Shareholder  Rights should exist.  What do you as a professional in the
investment business think?

We feel there are issues that affect  corporate  governance.  The following list
outlines our position on these issues:

                  WE ARE IN FAVOR OF:           WE WILL VOTE AGAINST:
                  -------------------           ---------------------
                  o Cumulative Voting           o Greenmail
                  o Golden Parachutes           o Poison Pills
                  o One Share: One Vote         o Supermajority Voting
                  o Cash Incentives             o Blank Check Preferreds
                  o Pre-emptive Rights          o Super-Dilutive Stock Options

This is our policy. We will make exceptions when we encounter management that
demonstrates superior sensitivity to the needs of shareholders. What are you
doing?

---------------
(a) The MAGNA CARTA (L.  great charter) was signed in June 1215 at  Runnymede on
the  Thames.  It was  the  decisive  step  forward  in   the  establishment   of
constitutional government in England.

Mario J. Gabelli, C.F.A.                       [COPYRIGHT] GAMCO Investors, Inc.

                                       7


      Where art thou now,  White  Knight?  Today our focus is to suggest that we
need to eliminate the poison pill. Why? We believe in an old maxim,  that "power
corrupts and absolute power corrupts absolutely."

      The  introduction of the poison pill weakened a discipline to management's
errant  activities  -- a takeover by someone who could  marshal and energize the
assets  better.  The  second  part was that  with  all of us  desiring  to align
management's  interests  with  shareholders,  we want to reframe  that with this
premise:  Management's  responsibility  is to grow  the  intrinsic  value of the
enterprise  as well as to make sure that the public price tracks that  intrinsic
value.  Another  basic  premise of the free market system is that capital has to
move to its  highest  returns.  Lazy  assets  and  lazy  managements  have to be
energized.  A takeover  that  attempts  to narrow the spread  acts as a powerful
cleansing tool and a powerful catalyst to stimulate management.

      Poison pills are major deterrents that have to be eliminated.  Our adviser
and its affiliate,  Gabelli Asset Management Company,  are initiating actions to
have companies remove their poison pills.

      We will again  refocus our  energies,  as we have  identified in our Magna
Carta,  on stock options.  If companies want to issue them in lieu of cash, then
account for them as an expense!  We will also echo  comments of other  observers
that the accounting  for these options has to be reexamined,  namely they should
flow through the P&L (profit and loss  statement) as opposed to just the balance
sheet. Obviously, the issues with stock options will be resolved.

THE BEAUTY AND THE BEAST

      Many of the shares in our portfolio, which we view as princely, turned out
to be beasts because they weren't capable of making love (i.e. nobody would make
love to them).

      In other words, the  consolidation we thought would occur in broadcasting,
cable,  wireless and telecom did not unfold.  The culprit:  constraints were not
lifted as readily as we  anticipated  at the Federal  Communications  Commission
("FCC").

                                        8

FEDERAL COMMUNICATIONS COMMISSION                         DEEP SIXING THE BIG 6?

On September  17th,  2001, we published a report  entitled  REGULATORY  CHANGE =
CATALYST. In it, we laid out our bullish case for a sweeping near-term media and
telecommunications  regulatory overhaul, led by FCC Chairman Michael Powell (See
Exhibit 1 below and our September report).

EXHIBIT 1: SEPTEMBER 2001 BULL CASE


---------------------------------------------------------------------------------------------------------------------------
REGULATION                       CURRENT STATUS                               "BULL CASE"
---------------------------------------------------------------------------------------------------------------------------
                                                                        
- Cable Ownership Cap            30% of pay TV subscribers                    Above 50% or no cap

- Affiliated Programming Cap     Affiliated content < 40% of first 75         No cap
                                 channels

- Cable/Broadcast Cross-         No cable and broadcast TV in same            Removal of ban
  ownership                      Designated Market Area (DMA)

- Cable Dual Must Carry          Must carry analog broadcast signal           Not forced to carry both broadcast
                                                                              digital and analog

- Cable Open Access              Notice of Inquiry                            No forced open access

- Satellite Must Carry           Must carry all local analog broadcasts       DBS Co. chooses which broadcast
                                 if carry one                                 stations to carry

- Broadcast/Newspaper Cross-     No newspaper and broadcast station in        Removal of ban
  ownership                      same DMA

- National TV Ownership Cap      35% of television audience                   Above 50% or no cap

- TV Duopolies                   Can own two stations in one market if        Eliminate rating and voice tests
                                 only one is in top four and eight
                                 independent voices exist

- Wireless Spectrum Cap          45 MHz in urban and 55 MHz in rural          No cap
                                 markets

- Wireline - Section 271         Regional Bell Operating Companies (RBOCs)    RBOCs can offer in-region LD
                                 cannot offer in-region Long Distance (LD)


While the deregulation  roadmap we laid out for the media and telecom industries
in our report (see the "Bull  Case"  above) is still  valid,  progress is taking
longer than we had originally  expected.  Whether this delay is political or due
to a cautious FCC is a subject of debate.  Considerable  friction has  developed
between Michael Powell and vocal  Democratic  Senator Fritz Hollings.  The facts
are that on June 17th,  2002,  the FCC announced  that it was combining the rule
making proceedings of six key media rules that were moving along separate tracks
into one. According to the FCC, the new universal rule should be ready by Spring
2003.

THE "BIG 6"

The six  rules  to be  reviewed  together  are as  follows  (The  first  four we
addressed in September - see Exhibit 1.):

     o 35% National TV Ownership Cap
     o TV Duopoly Rule
     o Newspaper/Broadcast Cross-Ownership Rule
     o Cable/Broadcast Cross Ownership
     o Radio Concentration Rule (limited to eight stations within the largest
       markets)
     o Dual Network Rule (No company can own two of the top four national
       broadcast networks.)

                                        9

KEY POINTS

- THE  OPTIMIST:  STRONGER  THEORETICAL  UNDERPINNINGS.  There  will  now be one
  coherent, well thought out rule that should stand the test of intense judicial
  scrutiny.  A series of rulings by the United  States  Court of Appeals for the
  District of Columbia Circuit have brought into focus the  underpinnings of the
  FCC  rules.  We  specifically  refer  to the  Court's  comments  on the 35% TV
  Ownership  Cap,  Cable/Broadcast  Cross-Ownership  and the Local TV  Ownership
  Rules  (Duopoly).  In  general,  the court felt the rules were  arbitrary.  We
  believe the new merger  rule will  require a rational  market  analysis of the
  broad  competitive  landscape in each specific  media market,  similar to what
  takes place today in an FTC anti-trust  review.  There will be one fabric,  as
  opposed to six rules.

- THE  PESSIMIST:  DEEP SIX?  Again,  it remains  open for debate  what is being
  driven by politics and what is being driven by the theoretical  underpinnings.
  The cynical side in us tells us that Powell is pushing off the tough decisions
  until after the 2002 election.  If the Republicans take control of the Senate,
  he may be able to  push  through  the  rules  without  having  to  joust  with
  Hollings.

- OVERALL MOMENTUM REMAINS POSITIVE.  Regardless of what the real driver may be,
  we believe change is still coming and that remains evident.  Given the Court's
  recent decisions  severely  criticizing the FCC's rules, we continue to expect
  more than ever  that the  industry  will be  deregulated.  (See our  Broadcast
  Deregulation reports dated 3/11/02 and 4/5/02.)

- CONCLUSION OF ENTIRE REVIEW  POSSIBLY  MOVED  FORWARD.  Though new  regulatory
  rules were expected to be promulgated in 2002, most industry  watchers did not
  expect all six of the above issues to be addressed this year. Thus, instead of
  several  relatively smaller catalysts hitting the market over the next several
  years, we believe the unified rule will provide one powerful catalyst in 2003.

- UNCERTAINTY.  There still exists a level of  uncertainty  in the media mergers
  and acquisitions marketplace.

CONCLUSION

Since a notice of  proposed  rule  making  (NPRM)  was  initiated  by the FCC in
September 2001 for the Newspaper/Broadcast  Cross-Ownership rule and the comment
periods have ended,  we believe that this rule was the furthest along in the FCC
review  process and therefore  slowed down the most by this event.  However,  we
think that this new  process  will  speed up the time frame for a  wider-ranging
review of media  rules.  We note that the rule  making  process on the 30% cable
ownership cap is unaffected here.

More importantly, we believe that this decision by the FCC may have little to no
effect on companies'  long-term  acquisition  strategies.  The powerful need for
consolidation to achieve economies of scale for the global  marketplace  remains
the driver behind the propensity to merge. Several companies have indicated that
when  faced with an  attractive  acquisition  opportunity  they may very well go
ahead with it and  challenge the rules instead of waiting for the FCC. The FCC's
rule changes will provide more fuel to drive natural consolidation. Deals should
surface  asset  value and should  therefore  drive  higher  valuations  for many
companies in the media space.

Evan Carpenter                                             Andrew Rittenberry
(914) 921-6595                                             (914) 921-6592

[COPYRIGHT]Gabelli & Company, Inc. 2002

ONE CORPORATE CENTER  RYE, NY 10580   GABELLI & COMPANY, INC.

                                           TEL (914) 921-3700 FAX (914) 921-5098
--------------------------------------------------------------------------------

This  report has been  prepared  as a matter of general  information.  It is not
intended to be a complete  description of any security or company  mentioned and
is not an offer to buy or sell  any  security.  Unless  otherwise  noted,  stock
prices for 2002 reflect the closing price  through the business day  immediately
prior to the date of this  report.  All facts and  statistics  are from  sources
believed  reliable,  but are not  guaranteed  as to  accuracy.  The firm and its
affiliates, employees, and clients may have recently established or disposed of,
or may be  establishing  or disposing of,  positions in securities  mentioned in
this report.  Since portfolio managers make individual  investment  decisions in
the  accounts  under their  supervision,  transactions  in such  accounts may be
inconsistent with research reports.  Additional  information on these securities
and companies is available upon request. [COPYRIGHT]Gabelli & Company, Inc. 2002

                                       10


      On top of that, the Beast got particularly  ugly as Adelphia and WorldCom,
not  to  mention  the  Winstars,   Teligents,   Global   Crossings  and  Qwests,
over-impacted on the market. Indeed, instead of positive developments out of the
FCC we had negative ones -- for example Senator Feingold from Wisconsin recently
introduced legislation to curtail the ability of radio companies to expand their
ownership.

INVESTMENT SCORECARD

      Defense   contractors   (Curtiss-Wright,   Lockheed  Martin  and  Northrup
Grumman), food and beverage stocks (Coca-Cola Enterprises, Kellogg Co. and Kerry
Group),  manufacturers  (Nortek and Watts  Industries) and industrial  companies
(Acuity Brands,  Nashua and ITT Industries)  finished this quarter at the top of
our performance list.

      Media and  telecommunications  stocks  dominated our  laggard's  list with
portfolio  holdings  such  as  Cablevision  Systems,  UnitedGlobalCom,   Vivendi
Universal, AT&T, Sprint and Broadwing giving substantial ground.

THE MEDIA STOCK MASSACRE

      Media stocks, with the exception of newspaper  publishers,  were clobbered
in the second  quarter,  with some of our favorite  companies near the bottom of
the  Trust's   performance  list.  Several  factors  --  investor  concern  over
relatively  high  debt  levels  in  the  media  industry  (especially  in  cable
television),  heavy  institutional  ownership  and an absence  of deals  despite
regulatory changes that should promote further  consolidation in the industry --
were responsible for the media stock massacre.

      We believe  these three  factors will work in media  stocks'  favor in the
year ahead. Ad spending  should improve as the economic  recovery and "political
spending" unfolds. In fact,  "up-front"  advertising sales for broadcasters have
already firmed  considerably.  The implication is that  corporations  believe ad
prices will rise in the spot  market in the coming  quarters.  As media  company
cash flows improve, investor concern over debt will diminish.  Finally, we think
it is simply a matter of time before we see more deals  resulting from new rules
that permit ownership of broadcast and cable  television  properties in the same
markets and that allow  broadcasters to increase their national  "footprint." As
regulatory  barriers  continue  to  come  down  --  we  expect  rules  currently
preventing  companies from owning television stations and newspapers in the same
market to be modified or eliminated  this year -- deal activity  should  resume,
helping to surface values in the beaten down media sector.

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 - $36.32 - 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  80% of  revenues,
provides charge cards, credit cards,  travelers cheques,  and travel services to
corporations  and  consumers;   American  Express  Financial   Advisors,   which
contributes 17% 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

                                       11

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 - $10.70 - 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 and local telecommunications,  cable television and Internet
services.  The company is in the process of splitting  itself into four separate
entities. As part of the restructuring,  AT&T has converted AT&T Wireless (AWE -
$5.85 - NYSE) 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.  (CMCSK - $23.84 - Nasdaq)  in a $70  billion
transaction  that will form the largest cable operator in the country with about
22 million subscribers.  The deal has recently received shareholder approval and
pending  regulatory  approvals  is  expected  to close by the end of 2002.  As a
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 50 million households.

BERKSHIRE HATHAWAY INC. (BRK'A - $66,800 - 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 $28 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;  MiTek steel connectors;  XTRA
transportation leasing; GEICO insurance; and General Re reinsurance.  GEICO, the
sixth  largest  auto  insurer in the U.S.,  contributes  17% of  revenues  while
General Re, the fourth largest reinsurer globally, contributes 23% of revenues.

GENUINE PARTS CO. (GPC - $34.87 - NYSE), a Georgia  corporation  incorporated in
1928,  is  the  premier   service   organization   engaged  in  the  traditional
distribution of automotive and industrial replacement parts, office products and
electrical/electronic   materials.   The   company's   NAPA   automotive   parts
distribution  centers  distribute  replacement parts (other than body parts) for
substantially  all motor  vehicle  makes and  models in  service  in the  United
States, including imported vehicles,  trucks, buses,  motorcycles,  recreational
vehicles  and farm  vehicles.  The  Industrial  Parts Group  distributes  a wide
variety of products to its customers, primarily industrial concerns, to maintain
and operate  plants,  machinery and equipment.  The Office Products Group (S. P.
Richards Company),  is engaged in the wholesale  distribution of a broad line of
office and other  products that are used in the daily  operation of  businesses,
schools,    offices    and    institutions.    The    financially    troublesome
Electrical/Electronic  Materials  Group  ("EIS")  distributes  materials for the
manufacture and repair of electrical and electronic apparatus.

LIBERTY  MEDIA  CORP.  (L - $10.00 - NYSE),  run by savvy  deal  maker and 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 the Discovery Channel, USA Interactive, 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.

                                       12


PEPSICO INC.  (PEP - $48.20 - 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 Twist,  Pepsi Blue,  Starbucks  Doubleshot,  Bistro
chips and the continued robust growth of Aquafina.

SCRIPPS (E.W.) CO. (SSP - $77.00 - NYSE), headquartered in Cincinnati,  Ohio, is
a  diversified  media  company  with  operations  throughout  the United  States
combining  traditional and new media. The company is the tenth largest newspaper
publisher in the U.S. with 21 daily  newspapers.  Scripps also has 10 television
stations,  reaching  one in every ten homes in  America.  Additionally,  Scripps
Networks includes four national cable networks:  Home & Garden Television,  Food
Network,  Do It  Yourself  and Fine  Living.  Lastly,  the  company has a global
licensing and syndication  business which  syndicates more than 150 comic strips
and editorial  features,  including  PEANUTS and DILBERT.  Scripps is focused on
growing and strengthening its cable television business.

SPS  TECHNOLOGIES  INC.  (ST -  $38.17  - 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. 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.

TELEPHONE & DATA SYSTEMS INC.  (TDS - $60.55 - AMEX)  provides  mobile and local
phone services to 3.6 million customers in 35 states.  TDS conducts its cellular
operations  through  81%-owned  United States Cellular (USM - $25.45 - AMEX) and
its   wireline    telephone    operations   through   its   wholly   owned   TDS
Telecommunications  ("TDS Telecom")  subsidiary,  a full-service  local exchange
carrier.  Having  completed  a merger of its  82%-owned  PCS  subsidiary  Aerial
Communications with VoiceStream Wireless, which was acquired by Deutsche Telekom
(DT - $9.31 - NYSE),  a former  German phone  monopoly,  TDS owns 131.6  million
shares of Deutsche Telekom,  representing 2.25 shares of DT per share of TDS. As
part of the VoiceStream/Deutsche Telekom deal, TDS also received $570 million in
cash.

VIACOM INC. (VIA - $44.46 - 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). The company focuses on high growth businesses and aims to deliver
cash flow growth that is above the industry average.

                                       13

SHAREHOLDER MEETING - MAY 20, 2002 - FINAL RESULTS

      The Annual Meeting of  Shareholders  was held on May 20, 2002 at the Bruce
Museum in Greenwich,  Connecticut.  At that  meeting,  common  shareholders  and
preferred  shareholders  voting as a single class elected  Frank J.  Fahrenkopf,
Jr., Arthur V. Ferrara and Salvatore J. Zizza as Directors of the Trust. A total
of 120,975,558 votes, 121,385,966 votes and 121,266,291 votes were cast in favor
of each Director and  1,106,598  votes,  1,026,191  votes and 805,865 votes were
withheld for each Director,  respectively.  Preferred  shareholders  voting as a
separate  class elected  Anthony J. Colavita as a Director of the Trust. A total
of  11,564,422  votes were cast in favor of this  Director and 72,412 votes were
withheld for this Director.

      Mario J.  Gabelli,  Thomas E. Bratter,  James P. Conn,  Karl Otto Pohl and
Anthony R. Pustorino  continue to serve in their  capacities as Directors of the
Trust.

      We thank you for you participation and appreciate your continued support.

COMMON STOCK 10% DISTRIBUTION POLICY

      The Trust  continues to maintain its 10%  Distribution  Policy whereby the
Trust pays to common stock shareholders 10% of its average net assets each year.
Pursuant to this policy, the Trust distributed $0.27 per share on June 24, 2002.

      Under the policy,  distributions are made at the annual rate of 10% of the
average of the calendar  quarter-end  net assets of the Trust's  common stock at
December  2001  and  March,   June,  and  September  2002.  The  Trust  normally
distributes  $0.27 per share to common stock  shareholders  in March,  June, and
September.  The fourth quarter distribution is a variable adjusting distribution
in December.  The adjusting distribution is the greater of the remaining portion
of 10% of the  average  net assets to be  distributed  (10% of the  average  net
assets less the  cumulative  amount paid in March,  June,  and September) or the
minimum distribution required by IRS regulations.

      Using June quarter-end net asset figures in place of September quarter-end
net asset figures for discussion purposes, 10% of the Trust's average net assets
equates to $0.81 per share.  Under the existing  policy, a distribution of $0.27
per share in September would bring the total  distribution for 2002 to $0.81 per
share  ($0.27 per share per quarter x 3 quarters = $0.81 per share),  satisfying
the Trust's 10% Distribution Policy projected required amount.

      Each quarter,  the Board of Directors  reviews the amount of any potential
distribution based on the income, capital gains or capital available. As of June
30, 2002, the Trust has  approximately  $366 million ($2.78 per common share) of
gross  unrealized  appreciation on portfolio  securities which could be realized
through the sale of portfolio securities and distributed to shareholders. In any
event,  the Trust will continue to make every effort to provide our common stock
shareholders with consistent  distributions  throughout the year pursuant to our
policy.

7.25% TAX ADVANTAGED CUMULATIVE PREFERRED STOCK - DIVIDENDS

      The Trust's 7.25% Tax Advantaged  Cumulative  Preferred  Stock paid a cash
distribution  on June 26, 2002 of  $0.453125  per share.  For the twelve  months
ended  June  30,  2002,  Preferred  Stock  shareholders  received  distributions
totaling  $1.8125,  the annual dividend rate per share of Preferred  Stock.  The
next distribution is scheduled for September 2002.

                                       14

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 June 26, 2002 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 next
distribution is scheduled for September 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:



                      AUGUST                         SEPTEMBER                       OCTOBER
                      ------                         ---------                       -------
                                                                            
     1st Wednesday    Susan Byrne                    Caesar Bryan                    Walter Walsh & Laura Linehan
     2nd Wednesday    Lynda Calkin                   Hart Woodson                    Caesar Bryan
     3rd Wednesday    Walter Walsh & Laura Linehan   Charles Minter & Martin Weiner  Henry Van der Eb
     4th Wednesday    Barbara Marcin                 Barbara Marcin                  Lynda Calkin
     5th Wednesday                                                                   Barbara Marcin

      All chat sessions start at 4:15 PM (Eastern Time). Please arrive early, as
participation is limited.

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

                                       15

IN CONCLUSION

      As the old saying goes, "the darkest hour is just before dawn." We are not
suggesting  the  stock  market  is  about to take  off in the  coming  quarters.
However,  the fundamental  picture -- an expanding economy,  low interest rates,
rising earnings and more reasonable  equity valuations -- raises the floor under
equities.


                             Sincerely,

                             /S/ Mario J. Gabelli

                             MARIO J. GABELLI, CFA
                             Portfolio Manager and Chief Investment Officer

August 1, 2002

--------------------------------------------------------------------------------
                                SELECTED HOLDINGS
                                  JUNE 30, 2002

American Express Co.                            PepsiCo Inc.
AT&T Corp.                                      Scripps (E.W.) Co.
Berkshire Hathaway Inc.                         SPS Technologies Inc.
Genuine Parts Co.                               Telephone & Data Systems Inc.
Liberty Media Corp.                             Viacom 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.

                                       16

                          THE GABELLI EQUITY TRUST INC.
                                PORTFOLIO CHANGES
                           QUARTER ENDED JUNE 30, 2002
                                   (UNAUDITED)

                                                      OWNERSHIP AT
                                                        JUNE 30,
                                            SHARES        2002
                                            ------    ------------
NET PURCHASES
COMMON STOCKS
Abbott Laboratories ....................    20,000        20,000
Adelphia Communications Corp., Cl. A ...   120,000       120,000
AES Corp. ..............................    52,000        52,000
Agere Systems Inc., Cl. B (a) ..........   134,393       134,393
Allegiance Telecom Inc. ................     1,500         9,000
AOL Time Warner Inc. ...................    45,000       620,000
AT&T Wireless Services Inc. ............    50,000       550,170
Bank Of Ireland, Ireland ...............    11,000       110,000
Boots Co. pl ...........................    60,000        60,000
Bristol-Meyers Squibb Co. ..............   110,000       110,000
Broadwing Inc. .........................    40,000       850,000
BT Group plc, ADR ......................     5,000        34,000
Cablevision Systems Corp., Cl. A .......    20,000       535,000
Campbell Soup Co. ......................     5,000        70,000
Charter Communications Inc., Cl. A .....    30,000        30,000
Cheung Kong (Holdings) Ltd. - Rts. (b) .     3,000         3,000
Clear Channel Communications Inc. (c ) .    15,015        15,015
Coca-Cola Hellenic Bottling Co. SA .....    20,000        20,000
Cooper Industries Ltd., Cl. A ..........   120,000       120,000
Corning Inc. ...........................    50,000       510,000
Curtiss-Wright Corp. Cl. B .............     3,000       101,320
DQE Inc. ...............................    50,000       100,000
Dreyer's Grand Ice Cream Inc. ..........    20,000        20,000
El Paso Corp ...........................    80,000        80,000
Ferro Corp. ............................    25,000       340,000
Ford Motor Co. .........................     5,000        20,000
Gas Natural SDG SA .....................    25,000        25,000
Gemstar-TV Guide International Inc. ....   110,000       140,432
Genuity Inc. (d) .......................    30,000        30,000
GrafTech International Ltd. ............    75,000        75,000
Greek Organization Of Football
   Prognostics .........................    30,000        30,000
Grupo Bimbo SA de CV, Ser. A ...........    89,000       440,000
Grupo TMM SA de CV, Cl. A, ADR .........    20,000        20,000
GTECH Holdings Corp. (e) ...............     4,000         8,000
HBOS plc ...............................    10,000        66,000
Heinz (H.J.) Co. .......................    29,000       114,000
Hilton Group plc .......................   810,000     2,460,000
IVAX Corp. .............................    15,000        15,000
Knight-Ridder Inc. .....................    15,900        15,900
Leap Wireless International Inc. .......    20,000       160,000
Liberty Media Corp., Cl. A .............    40,000     1,840,000
Liberty Satellite & Technology
   Inc., Cl. A (f) .....................    34,000        34,000
Lin TV Corp., Cl. A ....................     5,000         5,000
Mellon Financial Corp. .................     1,900        85,000
Merck & Co. Inc. .......................     5,000        40,000
Mirant Corp. ...........................    30,000        90,000
mm02 plc ADR ...........................    10,800       140,800
Muenchener Rueckversicherungs-
   Gesellschaft AG .....................     5,000         5,000

                                                      OWNERSHIP AT
                                                        JUNE 30,
                                            SHARES        2002
                                            ------    ------------
NTT DoCoMo Inc. ........................       800         1,000
PACCAR Inc. (g) ........................    10,000        30,000
Parmalat Finanziaria SpA ...............   150,000       150,000
Pennzoil-Quaker State Co. ..............   144,800       358,200
Pernod-Ricard SA .......................     7,000         7,000
PRIMEDIA Inc. ..........................    50,000       350,000
Qwest Communications
   International Inc. ..................   180,000       200,000
Rainbow Media Group, Cl. A .............    10,000       560,000
Regal Entertainment Group, Cl. A .......    15,000        15,000
SBC Communications Inc. ................    90,000       205,000
Sequa Corp., Cl. B .....................     3,000        78,000
Smucker (J.M.) Co. (h) .................     2,000         2,000
Texas Instruments Inc. .................    70,000       110,000
Tod's SpA ..............................     7,750         7,750
TotalFinaElf SA ........................     1,000         7,907
Tsakos Energy Navigation Ltd. ..........    29,273        29,273
Tyco International Ltd. ................    35,000        35,000
Unitrin Inc. ...........................     8,500        58,500
Verizon Communications Inc. ............    45,000       340,000
Vivendi Universal SA ...................     5,000        35,900
Vivendi Universal SA, ADR ..............    20,000       230,000
Westar Energy Inc. .....................   260,000       260,000
Worldcom Inc. - MCI Group ..............    20,000       120,000
PREFERRED STOCKS
Gray Communications Systems Inc.,
   8.000% Cv. Pfd., Ser. C .............        90            90
Hercules Trust I, 9.420% Pfd. ..........    21,700        21,700

                                          PRINCIPAL
CORPORATE BONDS                            AMOUNT
                                          ---------
Agere Systems Inc.,
   Sub. Dev. Cv., 6.500%, 12/15/09 .....$3,500,000    $3,500,000
Charter Communications Inc.,
   Cv., 4.750%, 06/01/06 ...............   400,000       900,000

NET SALES                                   SHARES
COMMON STOCKS                               ------
Ackerley Group Inc. (c ) ...............   (42,900)           --
Aegon NV ...............................   (26,000)           --
Allianz AG .............................    (4,100)           --
AT&T Canada Inc., Cl. B ................   (50,000)           --
BAE Systems plc ........................   (50,000)      100,000
Bank of Ireland, London ................   (11,000)           --
Bank One Corp. .........................   (20,000)       85,000
Compass Group plc ......................  (150,940)           --
Cooper Industries Inc. .................  (120,000)           --
Dominion Resources Inc. ................    (2,500)        2,500
Donaldson Co. Inc. .....................    (3,000)      216,000

                 See accompanying notes to financial statements.

                                       17

                          THE GABELLI EQUITY TRUST INC.
                          PORTFOLIO CHANGES (CONTINUED)
                           QUARTER ENDED JUNE 30, 2002
                                   (UNAUDITED)

                                                      OWNERSHIP AT
                                                        JUNE 30,
                                            SHARES        2002
                                            ------    ------------
NET SALES (CONTINUED)
COMMON STOCKS (CONTINUED)
Embratel Participacoes SA, ADR ..........  (15,000)      200,000
EMC Corp. ...............................  (10,000)      160,000
Energizer Holdings Inc. .................   (5,000)      345,001
Flowserve Corp. .........................  (15,000)      135,000
Genuity Inc. (d) ........................ (180,000)           --
Gerber Scientific Inc. ..................   (5,000)      100,000
Halliburton Co. .........................  (20,000)      280,000
Hilton Hotels Corp. .....................  (10,000)      650,000
IDEX Corp. ..............................  (38,700)      211,300
Independent News & Media plc, Dublin .... (215,000)      196,000
ITT Industries Inc. .....................   (5,000)      120,000
Japan Telecom Co. Ltd. ..................      (35)          230
Liberty Satellite & Technology
   Inc., Cl. A (f) ...................... (340,000)           --
MGM Mirage ..............................  (30,000)       60,000
Midland Co. .............................     (300)       99,700
National Service Industries Inc. ........     (500)       34,500
Neiman Marcus Group Inc., Cl. B .........  (14,500)       90,000
Northrop Grumman Corp. ..................   (6,978)       91,000
NTL Inc. ................................  (20,000)       20,000
NTT DoCoMo Inc.-W/I .....................     (800)           --
Obic Co. Ltd. ...........................   (1,500)           --
PepsiCo Inc. ............................  (25,000)      500,000
RCN Corp. ...............................  (20,000)      110,000
Reader's Digest Association
   Inc., Cl. B ..........................  (45,000)      140,000
Reuters Group plc, ADR ..................  (10,833)           --
Rohm and Haas Co. .......................  (80,000)       20,000
Rohm Co. Ltd. ...........................   (1,400)        6,000
Sprint Corp. - PCS Group ................  (20,000)      230,000
Superior Industries International Inc. ..  (35,000)       25,000
Swiss Re ................................   (6,000)        4,200
Telefonica SA, ADR ......................  (13,884)      265,140
THK Co. Ltd. ............................  (11,000)       33,000
Tokyo Electron Ltd ......................   (1,000)        8,400
Tsakos Energy Navigation Ltd.              (31,273)           --
Tyson Foods Inc., Cl. A .................  (90,000)           --

                                                      OWNERSHIP AT
                                                        JUNE 30,
                                            SHARES        2002
                                            ------    ------------
UCAR International Inc. .................  (75,000)           --
USA Interactive .........................   (5,000)      490,000
Vodafone Group plc ...................... (100,000)      453,888
Western Resources Inc. .................. (250,000)           --
Winn-Dixie Stores Inc. ..................  (10,000)       40,000

------------------
(a) Spinoff - 0.2646 shares of Agere  Systems  Inc.,  Cl. B for every 1 share of
    Lucent Technologies Inc.
(b) Spinoff - 0.0400  shares of Cheung  Kong  (Holdings)  Ltd. - Rts for every 1
    share of Cheung Kong (Holdings) Ltd.
(c) Merger - 0.3500  shares of Clear  Channel  Communications  Inc.  for every 1
    share of Ackerley Group Inc
(d) 1 for 20 stock split
(e) 2 for 1 stock split
(f) 1 for 10 stock split
(g) 3 for 2 stock split
(h) Spinoff - 0.0200 shares of Smucker (J.M.) Co. for every 1 share of Procter &
    Gamble Co.

                 See accompanying notes to financial statements.

                                       18

                          THE GABELLI EQUITY TRUST INC.
                            PORTFOLIO OF INVESTMENTS
                            JUNE 30, 2002 (UNAUDITED)

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
              COMMON STOCKS -- 82.6%
              FINANCIAL SERVICES -- 7.6%
      90,000  Allstate Corp. .......... $ 2,376,366   $ 3,328,200
     550,000  American Express Co. ....  19,230,623    19,976,000
      36,400  Argonaut Group Inc. .....     977,772       779,688
      90,000  Banco Santander Central
                Hispano SA, ADR .......     322,130       701,100
     110,000  Bank of Ireland .........     635,101     1,366,676
      80,000  Bank of New York Co. Inc.   2,960,687     2,700,000
      85,000  Bank One Corp. ..........   2,606,390     3,270,800
     282,000  Bankgesellschaft
                Berlin AG+ ............   5,606,801       523,599
         260  Berkshire Hathaway
                Inc., Cl. A+ ..........     824,299    17,368,000
       5,000  Block (H&R) Inc. ........      97,625       230,750
     190,000  Commerzbank AG, ADR .....   3,839,967     2,880,400
     160,000  Deutsche Bank AG, ADR ...   6,917,270    11,121,600
      20,000  Dun and Bradstreet Corp.+     333,130       661,000
      66,000  HBOS plc ................     472,591       714,296
      25,000  Hibernia Corp., Cl. A ...     198,750       494,750
      20,000  Invik & Co. AB, Cl. B ...     936,800       587,584
     100,000  Irish Life & Permanent
                plc, Dublin ...........     781,432     1,446,871
      60,000  John Hancock Financial
                Services Inc. .........   2,322,590     2,112,000
      50,000  JP Morgan Chase & Co. ...   1,334,283     1,696,000
      64,000  Leucadia National Corp. .   2,040,082     2,026,240
      85,000  Mellon Financial Corp. ..   2,750,640     2,671,550
      99,700  Midland Co. .............   1,114,894     5,031,859
      30,000  Moody's Corp. ...........     666,995     1,492,500
       5,000  Muenchener
                Rueckversicherungs-
                Gesellschaft AG .......   1,219,733     1,185,150
     186,500  Nikko Cordial Corp. .....   1,436,073       941,400
     185,000  Phoenix Companies Inc. ..   2,981,430     3,394,750
       2,500  Prudential Financial Inc.+     68,750        83,400
      50,000  Prudential plc ..........     754,035       457,296
      60,000  RAS SpA .................     660,245       805,309
      60,000  Riggs National Corp. ....     552,538       894,600
      50,000  Schwab (Charles) Corp. ..     730,625       560,000
      80,000  State Street Corp. ......   1,417,370     3,576,000
      30,000  Stilwell Financial Inc. .     470,955       546,000
      20,000  SunTrust Banks Inc. .....     419,333     1,354,400
       4,200  Swiss Re ................     434,171       410,644
     100,000  T. Rowe Price Group Inc.    3,379,425     3,288,000
       7,000  Travelers Property
                Casualty Corp., Cl. A+      129,500       123,900
      58,500  Unitrin Inc. ............   1,073,500     2,092,545
     130,000  Wachovia Corp. ..........   4,051,382     4,963,400

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
      55,100  Waddell & Reed Financial
                Inc., Cl. A ........... $ 1,150,377   $ 1,262,892
                                       ------------ -------------
                                         80,276,660   109,121,149
                                       ------------ -------------
              TELECOMMUNICATIONS -- 7.4%
       8,132  Aliant Inc. .............      72,479       149,499
       9,000  Allegiance Telecom Inc.+       75,638        16,470
      30,000  ALLTEL Corp. ............     617,209     1,410,000
   1,500,000  AT&T Corp. ..............  25,512,207    16,050,000
       3,333  Avaya Inc.+ .............      26,540        16,498
     320,000  BCE Inc. ................   8,524,049     5,574,400
      33,400  Brasil Telecom
                Participacoes SA, ADR .   1,940,826       945,554
     850,000  Broadwing Inc.+ .........   8,374,257     2,210,000
   1,775,000  BT Group plc+ ...........   7,339,812     6,818,284
      34,000  BT Group plc, ADR+ ......   1,326,152     1,296,080
   3,338,192  Cable & Wireless Jamaica
                Ltd. ..................     101,642       113,500
     173,000  Cable & Wireless plc, ADR   4,035,260     1,344,210
     130,000  CenturyTel Inc. .........   2,760,538     3,835,000
     100,000  Citizens Communications
                Co.+ ..................   1,226,788       836,000
     255,466  Commonwealth Telephone
                Enterprises Inc.+ .....   4,424,217    10,279,952
      20,000  Commonwealth Telephone
                Enterprises Inc., Cl. B+    128,902       820,000
      45,000  Compania de
                Telecomunicaciones de
                Chile SA, ADR .........     721,724       551,250
   1,577,000  CoreComm Ltd.+ ..........     238,320        63,080
     240,278  Deutsche Telekom AG,
                ADR ...................   4,091,422     2,236,988
     200,000  Embratel Participacoes SA,
                ADR ...................   3,112,869        80,000
      27,000  France Telecom SA, ADR ..   1,024,124       253,260
         230  Japan Telecom Co. Ltd. ..     801,311       658,206
     100,000  KPN NV+ .................     232,728       468,134
     200,000  Qwest Communications
                International Inc.+ ...   1,048,965       560,000
     110,000  RCN Corp.+ ..............     780,983       150,700
       9,655  Rogers Communications
                Inc., Cl. B+ ..........     137,424        86,336
     110,345  Rogers Communications
                Inc., Cl. B, ADR+ .....   1,537,198     1,008,553
     205,000  SBC Communications Inc. .   6,853,475     6,252,500
     350,000  Sprint Corp. - FON Group    8,833,016     3,713,500
     186,554  Tele Norte Leste
                Participacoes SA, ADR .   2,554,387     1,856,212

                 See accompanying notes to financial statements.

                                       19

                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                            JUNE 30, 2002 (UNAUDITED)

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
              COMMON STOCKS (CONTINUED)
              TELECOMMUNICATIONS (CONTINUED)
      40,000  Telecom Argentina Stet
                France Telecom SA,
                ADR+ .................. $   349,211   $    26,000
     400,040  Telecom Italia SpA ......     839,903     3,133,060
     123,000  Telecom Italia SpA, ADR .   2,585,208     9,606,300
     135,000  Telecom Italia SpA, RNC .     517,495       715,979
     265,140  Telefonica SA, ADR+ .....   9,182,548     6,588,729
      16,912  Telefonica SA, BDR+ .....     206,521       140,023
      36,000  Telefonos de Mexico SA,
                Cl. L, ADR ............     389,422     1,154,880
      12,750  TELUS Corp. .............     222,542        90,623
      52,500  TELUS Corp., ADR ........     950,397       373,153
       4,250  TELUS Corp., Non-Voting .      74,181        28,280
      27,500  TELUS Corp., Non-Voting,
                ADR ...................     557,547       182,985
     340,000  Verizon Communications
                Inc. ..................  12,761,426    13,651,000
     120,000  WorldCom Inc. - MCI
                Group .................   1,339,033       108,000
                                       ------------ -------------
                                        128,429,896   105,453,178
                                       ------------ -------------
              FOOD AND BEVERAGE -- 6.9%
      10,108  Advantica Restaurant
                Group Inc.+ ...........      14,357         9,400
      10,800  Cadbury Schweppes plc,
                ADR ...................     271,368       325,944
      70,000  Campbell Soup Co. .......   2,012,307     1,936,200
      30,000  Coca-Cola Co. ...........   1,389,563     1,680,000
      50,000  Coca-Cola Enterprises Inc.    773,534     1,104,000
      20,000  Coca-Cola Hellenic
                Bottling Co. SA .......     320,189       338,558
     100,000  Corn Products
                International Inc. ....   2,916,387     3,112,000
     100,000  Diageo plc ..............   1,037,393     1,298,721
     224,000  Diageo plc, ADR .........   8,642,745    11,569,600
      20,000  Dreyer's Grand Ice
                Cream Inc. ............   1,345,682     1,372,000
      41,600  Flowers Foods Inc.+ .....   1,055,628     1,075,360
      90,000  General Mills Inc. ......   3,178,115     3,967,200
     440,000  Grupo Bimbo SA de CV,
                Ser. A ................     949,109       983,118
      20,000  Hain Celestial Group Inc.+    267,663       370,000
     114,000  Heinz (H.J.) Co. ........   4,571,694     4,685,400
      30,000  Interbrew SA ............     845,071       861,308
     350,000  Kellogg Co. .............   9,771,694    12,551,000
      75,000  Kerry Group plc, Cl. A ..     860,877     1,120,375
      60,500  LVMH Moet Hennessy
                Louis Vuitton, ADR ....     416,625       610,445

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
      41,300  Mondavi (Robert) Corp.,
                Cl. A+ ................ $ 1,286,495   $ 1,413,699
     150,000  Parmalat Finanziaria SpA      442,418       463,690
     600,595  PepsiAmericas Inc. ......   8,073,962     8,972,889
     500,000  PepsiCo Inc. ............  14,253,072    24,100,000
       7,000  Pernod-Ricard SA ........     606,722       685,807
      60,000  Ralcorp Holdings Inc.+ ..     940,903     1,875,000
      20,000  Sara Lee Corp. ..........     398,414       412,800
       2,000  Smucker (J.M.) Co. ......      52,993        68,260
     103,854  Tootsie Roll
                Industries Inc. .......   1,580,957     4,004,610
     150,000  Wrigley (Wm.) Jr. Co. ...   3,610,220     8,302,500
                                       ------------ -------------
                                         71,886,157    99,269,884
                                       ------------ -------------
              ENTERTAINMENT -- 6.0%
     620,000  AOL Time Warner Inc.+ ...  14,622,091     9,120,200
     160,000  Canal Plus, ADR .........      34,010       114,400
     220,000  Disney (Walt) Co. .......   4,846,732     4,158,000
     100,000  EMI Group plc, ADR ......   1,189,467       762,150
     120,000  Fox Entertainment Group
                Inc., Cl. A+ ..........   2,783,871     2,610,000
      50,000  GC Companies Inc.+ ......      54,500        12,500
     140,432  Gemstar-TV Guide
                International Inc.+ ...   2,061,073       756,928
      24,000  Liberty Livewire Corp.,
                Cl. A+ ................      93,109        70,560
   1,840,000  Liberty Media Corp.,
                Cl. A+ ................   9,279,598    18,400,000
     300,000  Metro-Goldwyn-Mayer
                Inc.+ .................   4,962,381     3,510,000
     160,000  Publishing &
                Broadcasting Ltd. .....     893,720       812,871
      15,000  Regal Entertainment
                Group, Cl. A+ .........     285,000       349,800
     100,000  Six Flags Inc.+ .........   1,387,850     1,445,000
     850,000  Viacom Inc., Cl. A+ .....   9,373,638    37,791,000
      35,900  Vivendi Universal SA ....   2,294,754       775,772
     230,000  Vivendi Universal SA,
                ADR ...................   8,896,712     4,945,000
                                       ------------ -------------
                                         63,058,506    85,634,181
                                       ------------ -------------
              DIVERSIFIED INDUSTRIAL -- 5.2%
     220,000  Acuity Brands Inc. ......   3,801,308     4,004,000
     195,000  Ampco-Pittsburgh Corp. ..   2,627,873     2,340,000
     120,000  Cooper Industries Ltd.,
                Cl. A .................   5,953,705     4,716,000
     270,000  Crane Co. ...............   5,062,737     6,852,600
     110,000  GATX Corp. ..............   1,748,853     3,311,000
     200,000  GenTek Inc. .............   1,587,121        44,000
     260,000  Greif Bros. Corp., Cl. A    4,845,131     8,673,860

                 See accompanying notes to financial statements.

                                       20

                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                            JUNE 30, 2002 (UNAUDITED)

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
              COMMON STOCKS (CONTINUED)
              DIVERSIFIED INDUSTRIAL (CONTINUED)
       3,400  Greif Bros. Corp., Cl. B   $   69,825  $    112,200
     380,000  Honeywell International
                Inc. ..................  13,367,461    13,387,400
     120,000  ITT Industries Inc. .....   3,650,453     8,472,000
     400,600  Lamson & Sessions Co.+ ..   2,458,185     1,562,340
      34,500  National Service Industries
                Inc. ..................     457,454       310,500
      83,715  Park-Ohio Holdings Corp.+   1,009,737       376,718
     213,800  Sensient Technologies
                Corp. .................   3,865,929     4,866,088
      10,000  Smiths Group plc ........     171,257       129,872
       6,000  Sulzer AG+ ..............   1,275,079     1,274,065
     100,000  Thomas Industries Inc. ..   1,388,525     2,880,000
      50,000  Trinity Industries Inc. .     945,000     1,036,000
     170,000  TRW Inc. ................   8,590,646     9,686,600
      35,000  Tyco International Ltd. .     599,534       472,850
                                       ------------ -------------
                                         63,475,813    74,508,093
                                       ------------ -------------
              EQUIPMENT AND SUPPLIES -- 5.2%
     120,000  AMETEK Inc. .............   1,873,494     4,470,000
       2,000  Amphenol Corp., Cl. A+ ..      29,550        72,000
      10,000  Caterpillar Inc. ........     136,559       489,500
      95,000  CIRCOR International Inc.     981,440     1,629,250
     320,000  Deere & Co. .............   3,134,721    15,328,000
     216,000  Donaldson Co. Inc. ......   1,449,454     7,568,640
     135,000  Flowserve Corp.+ ........   2,468,412     4,023,000
      13,000  Franklin Electric Co. Inc.    210,022       611,910
     100,000  Gerber Scientific Inc.+ .   1,060,701       351,000
      75,000  GrafTech International
                Ltd.+ .................   1,008,428       922,500
     211,300  IDEX Corp. ..............   1,377,232     7,078,550
      20,000  Ingersoll-Rand Co., Cl. A     844,600       913,200
      60,000  Lufkin Industries Inc. ..   1,105,223     1,732,200
       1,000  Manitowoc Co. Inc. ......      25,450        35,490
     425,000  Navistar International
                Corp.+ ................   6,419,191    13,600,000
      28,000  Olympus Optical Co. Ltd.      418,424       391,069
      30,000  PACCAR Inc. .............     450,000     1,331,700
     170,000  SPS Technologies Inc.+ ..   2,963,443     6,488,900
      60,000  Sybron Dental Specialties
                Inc.+ .................   1,140,669     1,110,000
      33,000  THK Co. Ltd. ............     790,476       634,636
     250,000  Watts Industries Inc.,
                Cl. A .................   3,331,739     4,962,500
     100,000  Weir Group plc ..........     420,789       432,907
                                       ------------ -------------
                                         31,640,017    74,176,952
                                       ------------ -------------

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
              ENERGY AND UTILITIES -- 5.2%
      52,000  AES Corp.+ .............. $   283,977   $   281,840
      70,000  AGL Resources Inc. ......   1,259,271     1,624,000
      37,400  Apache Corp. ............     844,013     2,149,752
     120,000  BP plc ..................     725,215     1,007,880
     248,800  BP plc, ADR .............   5,313,984    12,561,912
     150,000  Burlington Resources Inc.   6,384,591     5,700,000
     115,000  CH Energy Group Inc. ....   4,749,282     5,663,750
      20,000  Cinergy Corp. ...........     609,845       719,800
     210,000  Conoco Inc. .............   5,050,835     5,838,000
      10,000  Constellation Energy
                Group Inc. ............     237,177       293,400
       2,500  Dominion Resources Inc. .     152,000       165,500
      15,000  DPL Inc. ................     355,513       396,750
     100,000  DQE Inc. ................   1,744,412     1,400,000
      30,366  DTE Energy Co. ..........   1,344,098     1,355,538
      80,000  El Paso Corp. ...........   1,980,239     1,648,800
     400,000  El Paso Electric Co.+ ...   3,236,625     5,540,000
      20,000  Energy East Corp. .......     429,788       452,000
       9,400  FPL Group Inc. ..........     507,682       563,906
      25,000  Gas Natural SDG SA ......     460,652       481,467
     280,000  Halliburton Co. .........   4,123,915     4,463,200
      38,632  Kerr-McGee Corp. ........   2,281,548     2,068,744
      90,000  Mirant Corp.+ ...........   1,000,720       657,000
     100,000  NiSource Inc.+ ..........     200,000       208,000
     250,000  Northeast Utilities .....   4,834,797     4,702,500
     358,200  Pennzoil-Quaker State Co.   6,836,957     7,712,046
     100,000  Progress Energy Inc.+ ...      52,000        30,000
      10,400  SJW Corp. ...............     931,126       842,400
      14,000  Southwest Gas Corp. .....     289,625       346,500
       7,907  Total Fina Elf SA .......   1,114,624     1,283,825
     260,000  Westar Energy Inc. ......   4,407,757     3,991,000
                                       ------------ -------------
                                         61,742,268    74,149,510
                                       ------------ -------------
              PUBLISHING -- 4.8%
      20,000  Dow Jones & Co. Inc. ....   1,030,036       969,000
     196,000  Independent News &
                Media plc, Dublin .....     316,913       387,149
      15,900  Knight-Ridder Inc. ......   1,066,095     1,000,905
       5,000  McClatchy Co., Cl. A ....     240,250       321,250
     105,000  McGraw-Hill Companies
                Inc. ..................   2,621,025     6,268,500
     400,000  Media General Inc., Cl. A   9,832,031    24,000,000
     125,000  Meredith Corp. ..........   2,091,314     4,793,750
     115,000  New York Times Co., Cl. A     790,115     5,922,500
     120,000  News Corp. Ltd. .........     696,029       652,093

                 See accompanying notes to financial statements.

                                       21

                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                            JUNE 30, 2002 (UNAUDITED)

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
              COMMON STOCKS (CONTINUED)
              PUBLISHING (CONTINUED)
      11,016  News Corp. Ltd., ADR .... $   195,892   $   252,597
     400,000  Penton Media Inc.+ ......   4,849,118       860,000
     350,000  PRIMEDIA Inc.+ ..........   1,806,479       427,000
      33,000  Pulitzer Inc. ...........   1,483,667     1,712,700
     140,000  Reader's Digest
                Association Inc., Cl. B   3,371,358     3,220,000
     400,000  SCMP Group Ltd. .........     273,726       232,060
      70,000  Scripps (E.W.) Co., Cl. A   4,559,387     5,390,000
      91,842  Seat-Pagine Gialle SpA+ .     204,007        67,304
      75,000  Thomas Nelson Inc. ......     908,325       792,000
     250,000  Tribune Co. .............   8,604,264    10,875,000
                                       ------------ -------------
                                         44,940,031    68,143,808
                                       ------------ -------------
              CONSUMER PRODUCTS -- 4.4%
      70,000  Altadis SA ..............   1,030,995     1,444,896
      43,000  Christian Dior SA .......   1,514,055     1,656,247
      10,000  Church & Dwight Co. Inc.       99,536       313,300
     110,000  Compagnie Financiere
                Richemont AG, Cl. A ...   1,550,184     2,502,100
      50,000  Department 56 Inc.+ .....     524,317       814,000
     345,001  Energizer Holdings Inc.+    5,324,935     9,459,927
      90,000  Fortune Brands Inc. .....   2,401,342     5,040,000
     250,000  Gallaher Group plc, ADR .   4,342,521     9,337,500
     300,000  Gillette Co. ............   9,680,864    10,161,000
       2,000  Givaudan SA .............     550,742       806,370
      60,000  Harley-Davidson Inc. ....     151,125     3,076,200
      15,000  Matsushita Electric Industrial
                Co. Ltd., ADR .........     178,325       207,450
     100,000  Mattel Inc. .............   1,549,565     2,108,000
      30,000  Maytag Corp. ............     913,036     1,279,500
      50,000  National Presto Industries
                Inc. ..................   1,768,883     1,600,000
       9,500  Nintendo Co. Ltd. .......     784,763     1,398,970
      20,000  Philip Morris Companies
                Inc. ..................     600,935       873,600
     100,000  Procter & Gamble Co. ....   6,919,810     8,930,000
      32,000  Shimano Inc. ............     521,107       434,121
      15,000  Swatch Group AG, Cl. B ..     868,351     1,335,551
      10,425  Syratech Corp.+ (a) .....     333,704         4,691
                                       ------------ -------------
                                         41,609,095    62,783,423
                                       ------------ -------------
              WIRELESS COMMUNICATIONS -- 3.4%
      95,000  America Movil SA de CV,
                Cl. L, ADR ............   1,235,397     1,273,000
     550,170  AT&T Wireless Services
                Inc.+ .................   7,186,094     3,218,494
     160,000  Leap Wireless International
                Inc.+ .................   3,115,240       172,800
   1,775,000  mm02 plc+ ...............   1,980,584     1,136,381

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
     140,800  mm02 plc, ADR+ .......... $ 1,649,378   $   887,040
     240,000  Nextel Communications
                Inc., Cl. A+ ..........   3,841,367       770,400
       1,000  NTT DoCoMo Inc. .........   2,437,994     2,461,286
     250,000  Rogers Wireless
                Communications Inc.,
                Cl. B+ ................   3,494,025     1,927,500
     230,000  Sprint Corp. - PCS
                Group+ ................     533,587     1,028,100
      16,700  Tele Celular Sul
                Participacoes SA, ADR .     266,992       184,034
      55,666  Tele Centro Oeste Celular
                Participacoes SA, ADR .     166,868       246,600
       3,340  Tele Leste Celular
                Participacoes SA, ADR+       89,340        35,070
       8,350  Tele Nordeste Celular
                Participacoes SA, ADR .     123,227       160,320
       3,340  Tele Norte Celular
                Participacoes SA, ADR+       51,601        17,535
   1,400,000  Telecom Italia Mobile
                SpA ...................   2,244,688     5,738,102
       8,350  Telemig Celular
                Participacoes SA, ADR .     241,320       172,845
     450,000  Telephone & Data
                Systems Inc. ..........  37,059,011    27,247,500
      66,800  Telesp Celular
                Participacoes SA, ADR+    2,135,936       264,528
     453,888  Vodafone Group plc ......     817,567       622,683
     100,000  Vodafone Group plc, ADR .     927,768     1,365,000
                                       ------------ -------------
                                         69,597,984    48,929,218
                                       ------------ -------------
              AUTOMOTIVE: PARTS AND ACCESSORIES -- 3.4%
      20,000  ArvinMeritor Inc. .......     387,543       480,000
      36,802  BorgWarner Inc. .........   1,669,649     2,125,684
     100,000  CLARCOR Inc. ............   1,266,455     3,165,000
     320,061  Dana Corp. ..............   5,237,799     5,930,730
      65,000  Delphi Corp. ............     766,915       858,000
     260,000  GenCorp Inc. ............   2,470,673     3,718,000
     210,000  Genuine Parts Co. .......   5,500,492     7,322,700
     114,000  Johnson Controls Inc. ...   1,890,245     9,303,540
     110,000  Midas Inc.+ .............   1,575,679     1,364,000
     335,000  Modine Manufacturing Co.    4,388,179     8,234,300
      20,000  O'Reilly Automotive Inc.+     579,199       551,200
      70,800  Scheib (Earl) Inc.+ .....     608,339       212,400
     163,000  Standard Motor Products
                Inc. ..................   1,748,388     2,762,850
      25,000  Superior Industries
                International Inc. ....     626,663     1,156,250
     105,000  TransPro Inc.+ ..........     936,808       656,250
                                       ------------ -------------
                                         29,653,026    47,840,904
                                       ------------ -------------

                 See accompanying notes to financial statements.

                                       22

                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                            JUNE 30, 2002 (UNAUDITED)

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
              COMMON STOCKS (CONTINUED)
              HOTELS AND GAMING -- 2.4%
     110,000  Aztar Corp.+ ............ $   772,707   $ 2,288,000
      90,000  Boca Resorts Inc., Cl. A+     787,000     1,192,500
     240,000  Gaylord Entertainment
                Co.+ ..................   6,198,540     5,292,000
      30,000  Greek Organization of
                Football Prognostics ..     288,232       275,547
       8,000  GTECH Holdings Corp.+ ...      69,219       204,320
   2,460,000  Hilton Group plc ........   8,307,399     8,558,981
     650,000  Hilton Hotels Corp. .....   6,542,136     9,035,000
      60,000  MGM Mirage+ .............   1,588,260     2,025,000
     430,000  Park Place Entertainment
                Corp.+ ................   2,424,893     4,407,500
      50,000  Starwood Hotels & Resorts
                Worldwide Inc. ........   1,075,717     1,644,500
                                       ------------ -------------
                                         28,054,103    34,923,348
                                       ------------ -------------
              HEALTH CARE -- 2.4%
      20,000  Abbott Laboratories .....     743,000       753,000
      60,000  Amgen Inc.+ .............     256,894     2,512,800
      40,000  Apogent Technologies Inc.+    803,368       822,800
      10,000  AstraZeneca plc, London .     385,298       414,005
      35,146  AstraZeneca plc,
                Stockholm .............   1,255,532     1,460,882
      12,000  Aventis SA ..............     899,375       850,345
      26,000  Biogen Inc.+ ............     181,025     1,077,180
     110,000  Bristol-Myers Squibb Co.    2,938,465     2,827,000
      23,000  Centerpulse AG+ .........   1,394,669     3,836,811
      75,036  GlaxoSmithKline plc .....   1,817,378     1,621,893
       4,000  GlaxoSmithKline plc,
                ADR ...................     216,096       172,560
      56,011  Invitrogen Corp.+ .......   2,678,982     1,792,912
      40,000  Merck & Co. Inc. ........   2,380,606     2,025,600
      46,000  Novartis AG .............   1,431,247     2,023,116
     108,000  Novartis AG, Registered .     948,510     4,733,640
      65,000  Pfizer Inc. .............   1,077,000     2,275,000
      17,900  Roche Holding AG ........   1,644,702     1,353,190
      20,000  Sanofi-Synthelabo SA ....     967,750     1,216,754
      10,000  Schering-Plough Corp. ...     354,700       246,000
      14,000  Takeda Chemical
                Industries Ltd. .......     782,347       614,404
      38,000  Wyeth ...................   1,819,180     1,945,600
                                       ------------ -------------
                                         24,976,124    34,575,492
                                       ------------ -------------
              RETAIL -- 2.1%
     200,000  Albertson's Inc. ........   5,669,538     6,092,000
     300,000  AutoNation Inc.+ ........   3,354,597     4,350,000
      60,000  Boots Co. plc ...........     617,609       594,942
      10,000  Coldwater Creek Inc.+ ...     181,517       244,000

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
      16,000  Delhaize Le Lion SA,
                ADR ................... $   908,672   $   745,280
      33,000  Gucci Group NV, ADR .....   2,709,049     3,122,130
     100,000  Lillian Vernon Corp. ....   1,362,258       712,500
      90,000  Neiman Marcus Group Inc.,
                Cl. A+ ................   2,800,847     3,123,000
     320,000  Neiman Marcus Group Inc.,
                Cl. B+ ................   7,741,769    10,329,600
       7,750  Tod's SpA ...............     387,822       336,780
      40,000  Winn-Dixie Stores Inc. ..     482,476       623,600
                                       ------------ -------------
                                         26,216,154    30,273,832
                                       ------------ -------------
              AEROSPACE -- 1.7%
     100,000  BAE Systems plc .........     560,593       510,647
     115,000  Boeing Co. ..............   3,847,934     5,175,000
     100,000  Lockheed Martin Corp. ...   2,641,248     6,950,000
      91,000  Northrop Grumman Corp. ..   6,452,792    11,375,000
                                       ------------ -------------
                                         13,502,567    24,010,647
                                       ------------ -------------
              CONSUMER SERVICES -- 1.5%
      40,000  Loewen Group Inc.+ ......      48,700         1,200
     505,000  Rollins Inc. ............   5,690,722    10,271,700
     490,000  USA Interactive Inc.+ ...   5,149,626    11,490,500
                                       ------------ -------------
                                         10,889,048    21,763,400
                                       ------------ -------------
              BROADCASTING -- 1.5%
      15,015  Clear Channel
                Communications Inc.+ ..     481,784       480,780
      16,666  Corus Entertainment Inc.,
                Cl. B+ ................      62,036       294,772
      28,000  Gray Communications
                Systems Inc. ..........     376,900       506,800
      25,000  Gray Communications
                Systems Inc., Cl. B ...     355,780       332,500
     195,000  Grupo Televisa SA, ADR+ .   5,116,358     7,289,100
     200,000  Liberty Corp. ...........   8,528,905     7,970,000
       5,000  Lin TV Corp., Cl. A+ ....     110,000       135,200
       4,000  Nippon Broadcasting
                System Inc. ...........     161,709       146,843
      40,375  NRJ Group ...............     384,806       732,112
     131,000  Paxson Communications
                Corp.+ ................   1,311,348       720,500
      14,700  RTL Group (Brussels) ....     649,036       580,723
       3,000  RTL Group (New York) ....     126,100       118,515
     100,000  Television Broadcasts Ltd.    396,239       425,657
     110,000  Young Broadcasting Inc.,
                Cl. A+ ................   2,713,685     1,955,800
                                       ------------ -------------
                                         20,774,686    21,689,302
                                       ------------ -------------

                 See accompanying notes to financial statements.

                                       23

                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                            JUNE 30, 2002 (UNAUDITED)

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
              COMMON STOCKS (CONTINUED)
              REAL ESTATE -- 1.5%
     450,000  Catellus Development
                Corp.+ ................ $ 6,751,839   $ 9,189,000
      75,000  Cheung Kong (Holdings)
                Ltd. ..................     871,487       625,023
      44,000  Florida East Coast
                Industries Inc., Cl. A      523,108     1,113,200
      58,451  Florida East Coast
                Industries Inc., Cl. B      964,977     1,391,134
      55,000  Griffin Land & Nurseries
                Inc.+ .................     513,143       760,375
       4,753  HomeFed Corp.+ ..........         851         4,325
     253,000  St. Joe Co. .............   1,873,208     7,595,060
                                       ------------ -------------
                                         11,498,613    20,678,117
                                       ------------ -------------
              AVIATION: PARTS AND SERVICES -- 1.4%
     101,320  Curtiss-Wright Corp.,
                Cl. B .................   5,582,889     7,659,792
      90,000  Fairchild Corp., Cl. A+ .   1,111,343       283,500
      60,000  Precision Castparts Corp.   1,113,468     1,980,000
      84,500  Sequa Corp., Cl. A+ .....   3,371,578     5,525,455
      78,000  Sequa Corp., Cl. B+ .....   4,068,661     5,109,000
                                       ------------ -------------
                                         15,247,939    20,557,747
                                       ------------ -------------
              SPECIALTY CHEMICALS -- 1.1%
       5,400  Ciba Specialty Chemicals,
                ADR (b) ...............      21,140       216,324
      10,000  du Pont de Nemours
                (E.I.) and Co. ........     327,500       444,000
     340,000  Ferro Corp. .............   7,268,003    10,251,000
      40,000  Fuller (H.B.) Co. .......     968,437     1,171,600
     120,000  Hercules Inc.+ ..........   1,543,119     1,392,000
      15,000  IVAX Corp.+ .............     170,441       162,000
     210,000  Omnova Solutions Inc.+ ..   1,767,940     1,764,000
      20,000  Rohm and Haas Co. .......     618,875       809,800
      11,697  Syngenta AG, ADR ........      22,129       142,236
                                       ------------ -------------
                                         12,707,584    16,352,960
                                       ------------ -------------
              CABLE -- 1.1%
     120,000  Adelphia Communications
                Corp., Cl. A+ .........     890,183        19,200
     535,000  Cablevision Systems
                Corp., Cl. A+ .........   8,190,256     5,061,100
      30,000  Charter Communications
                Inc., Cl. A+ ..........     138,876       122,400
      40,000  Comcast Corp., Cl. A+ ...     341,837       968,000
      85,000  Comcast Corp., Cl. A,
                Special+ ..............     756,584     2,026,400
      20,000  NTL Inc.+ ...............      80,402           640

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
     560,000  Rainbow Media Group,
                Cl. A+ ................ $ 8,588,016   $ 4,900,000
      20,000  Shaw Communications
                Inc., Cl. B ...........      52,983       220,266
      80,000  Shaw Communications Inc.,
                Cl. B, Non-Voting .....     329,197       896,000
     370,000  UnitedGlobalCom Inc.,
                Cl. A+ ................   2,499,253     1,017,500
                                       ------------ -------------
                                         21,867,587    15,231,506
                                       ------------ -------------
              AGRICULTURE -- 0.9%
   1,050,000  Archer-Daniels-
                Midland Co. ...........  13,728,377    13,429,500
       5,000  Delta & Pine Land Co. ...      84,396       100,500
                                       ------------ -------------
                                         13,812,773    13,530,000
                                       ------------ -------------
              ELECTRONICS -- 0.9%
     134,393  Agere Systems Inc.,
                Cl. B+ ................     499,373       201,589
       3,000  Hitachi Ltd., ADR .......     218,796       192,510
      16,000  Molex Inc., Cl. A .......     504,206       438,880
       7,500  NEC Corp., ADR ..........      43,625        52,125
      38,800  Philips Electronics
                NV, ADR ...............      53,456     1,070,880
       6,000  Rohm Co. Ltd. ...........     994,112       895,574
      47,000  Sony Corp., ADR .........   1,554,214     2,495,700
     110,000  Texas Instruments Inc. ..   3,370,837     2,607,000
     250,000  Thomas & Betts Corp.+ ...   4,581,748     4,650,000
       8,400  Tokyo Electron Ltd. .....     483,190       547,357
                                       ------------ -------------
                                         12,303,557    13,151,615
                                       ------------ -------------
              AUTOMOTIVE -- 0.7%
      20,000  Ford Motor Co. ..........     490,840       320,000
     167,942  General Motors Corp. ....   5,307,581     8,976,500
                                       ------------ -------------
                                          5,798,421     9,296,500
                                       ------------ -------------
              BUILDING AND CONSTRUCTION -- 0.6%
     112,500  CRH plc .................   1,363,025     1,883,278
      32,222  Huttig Building Products
                Inc.+ .................      81,163       173,032
      15,000  Martin Marietta Materials
                Inc. ..................     322,687       585,000
     140,000  Nortek Inc.+ ............   1,892,737     6,314,000
       5,000  Nortek Inc., Special
                Common+ (a) ...........      72,155       225,500
                                       ------------ -------------
                                          3,731,767     9,180,810
                                       ------------ -------------
              ENVIRONMENTAL SERVICES -- 0.6%
      65,000  Republic Services Inc.+ .     875,761     1,239,550
     300,000  Waste Management Inc. ...   5,314,129     7,815,000
                                       ------------ -------------
                                          6,189,890     9,054,550
                                       ------------ -------------

                 See accompanying notes to financial statements.

                                       24

                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                            JUNE 30, 2002 (UNAUDITED)

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
              COMMON STOCKS (CONTINUED)
              BUSINESS SERVICES -- 0.6%
      60,000  ANC Rental Corp.+ ....... $   578,273   $    10,800
     180,000  Cendant Corp.+ ..........   2,573,002     2,858,400
       1,000  CheckFree Corp.+ ........       9,040        15,640
      98,000  Landauer Inc. ...........     634,307     3,805,340
      70,000  Nashua Corp.+ ...........     634,027       497,000
       7,000  Secom Co. Ltd. ..........     481,862       343,412
     250,000  Securicor plc ...........           0       452,532
       3,500  SYNAVANT Inc.+ ..........      27,506         4,935
                                       ------------ -------------
                                          4,938,017     7,988,059
                                       ------------ -------------
              PAPER AND FOREST PRODUCTS -- 0.6%
     100,000  MeadWestvaco Corp. ......   2,806,203     3,356,000
     170,000  Pactiv Corp.+ ...........   1,775,756     4,046,000
      10,000  Rayonier Inc. ...........     465,432       491,300
                                       ------------ -------------
                                          5,047,391     7,893,300
                                       ------------ -------------
              COMMUNICATIONS EQUIPMENT -- 0.4%
      68,000  Acterna Corp.+ ..........     245,121        27,948
     290,000  Allen Telecom Inc.+ .....   2,191,165     1,247,000
     510,000  Corning Inc.+ ...........   5,161,032     1,810,500
     130,000  Lucent Technologies Inc.+     952,294       215,800
     110,000  Motorola Inc. ...........   1,553,319     1,586,200
     100,000  Nortel Networks Corp.+ ..     725,285       145,000
      44,000  Scientific-Atlanta Inc. .     355,750       723,800
                                       ------------ -------------
                                         11,183,966     5,756,248
                                       ------------ -------------
              METALS AND MINING -- 0.4%
      72,500  Harmony Gold Mining
                Co. Ltd. ..............     347,738       998,579
      15,000  Harmony Gold Mining
                Co. Ltd., ADR .........      79,800       202,950
     125,000  Newmont Mining Corp.
                Holding Co. ...........   2,501,633     3,291,250
      50,000  Placer Dome Inc. ........     487,169       560,500
                                       ------------ -------------
                                          3,416,340     5,053,279
                                       ------------ -------------
              CLOSED END FUNDS -- 0.2%
      59,000  Central European Equity
                Fund Inc. .............     740,735       814,200
      18,592  France Growth Fund Inc.+      184,694       129,214
      54,150  Italy Fund Inc. .........     450,250       370,928
      68,000  New Germany Fund Inc.+ ..     750,658       343,400
      70,000  Pimco RCM Europe
                Fund Inc. .............     512,662       495,600
      40,000  Royce Value Trust Inc. ..     466,533       662,000
                                       ------------ -------------
                                          3,105,532     2,815,342
                                       ------------ -------------

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
              TRANSPORTATION -- 0.2%
     100,000  AMR Corp.+ .............. $ 1,924,248   $ 1,686,000
      20,000  Grupo TMM SA de CV,
                Cl. A, ADR+ ...........     203,300       138,000
       7,500  Kansas City Southern+ ...      13,986       127,500
      29,273  Tsakos Energy
                Navigation Ltd.+            421,218       409,822
                                       ------------ -------------
                                          2,562,752     2,361,322
                                       ------------ -------------
              SATELLITE -- 0.2%
     180,323  General Motors Corp.,
                Cl. H+ ................   2,584,089     1,875,359
      34,000  Liberty Satellite &
                Technology Inc., Cl. A+     900,012        76,500
     190,000  Loral Space &
                Communications Ltd.+ ..     614,954       188,100
                                       ------------ -------------
                                          4,099,055     2,139,959
                                       ------------ -------------
              COMPUTER SOFTWARE AND SERVICES -- 0.1%
      20,000  Capcom Co. Ltd. .........     684,260       517,287
      10,000  Computer Associates
                International Inc. ....     254,407       158,900
     160,000  EMC Corp.+ ..............   2,749,056     1,208,000
      30,000  Genuity Inc., Cl. A+ ....     617,929       114,000
                                       ------------ -------------
                                          4,305,652     1,998,187
                                       ------------ -------------
              COMPUTER HARDWARE -- 0.0%
      26,000  Hewlett-Packard Co. .....     839,290       397,280
      10,000  Xerox Corp.+ ............     108,625        69,700
                                       ------------ -------------
                                            947,915       466,980
                                       ------------ -------------
              TOTAL COMMON
                STOCKS ................ 953,486,886 1,180,752,802
                                       ------------ -------------
              PREFERRED STOCKS -- 1.6%
              PUBLISHING -- 1.1%
     770,499  News Corp. Ltd., Pfd.,
                ADR ...................  20,918,811    15,217,352
                                       ------------ -------------
              TELECOMMUNICATIONS -- 0.3%
      60,000  Allen Telecom Inc.,
                7.750% Cv. Pfd., Ser. D   3,000,000     2,139,000
      31,000  Broadwing Inc.,
                6.750% Cv. Pfd., Ser. B     986,633       523,900
      20,000  Citizens Communications Co.,
                5.000% Cv. Pfd. .......     986,648       808,000
         500  Lucent Technologies
                Capital Trust I,
                7.750% Cv. Pfd. (b) ...     500,000       240,114
                                       ------------ -------------
                                          5,473,281     3,711,014
                                       ------------ -------------

                 See accompanying notes to financial statements.

                                       25

                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                            JUNE 30, 2002 (UNAUDITED)

                                                         MARKET
      SHARES                               COST           VALUE
      ------                               ----          -------
              COMMON STOCKS (CONTINUED)
              AEROSPACE -- 0.1%
      14,021  Northrop Grumman Corp.,
                7.000% Cv. Pfd.,
                Ser. B ................ $ 1,633,727  $  2,033,045
                                       ------------ -------------
              BROADCASTING -- 0.1%
          90  Gray Communications
                Systems Inc.,
                8.000% Cv. Pfd.,
                Ser. C (b) ............     900,000       900,000
     100,000  ProSieben Sat.1 Media
                AG, Pfd. ..............   1,043,352     1,014,291
                                       ------------ -------------
                                          1,943,352     1,914,291
                                       ------------ -------------
              SPECIALTY CHEMICALS -- 0.0%
      21,700  Hercules Trust I,
                9.420% Pfd. ...........     502,980       507,780
                                       ------------ -------------
              AVIATION: PARTS AND SERVICES -- 0.0%
       3,000  Sequa Corp.,
                $5.00 Cv. Pfd. ........     239,700       282,000
                                       ------------ -------------
              WIRELESS COMMUNICATIONS -- 0.0%
  10,760,547  Telesp Celular
                Participacoes SA, Pfd.+      82,623        16,875
                                       ------------ -------------
              TOTAL PREFERRED
                STOCKS ................  30,794,474    23,682,357
                                       ------------ -------------
   PRINCIPAL
    AMOUNT
   --------
              CORPORATE BONDS -- 0.5%
              ELECTRONICS -- 0.2%
 $3,500,000   Agere Sysyems Inc.,
                Sub. Deb. Cv.,
                6.500%, 12/15/09 ......   3,500,000     2,681,875
                                       ------------ -------------
              AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.1%
  1,500,000   Standard Motor Products Inc.,
                Sub. Deb. Cv.,
                6.750%, 07/15/09 ......   1,433,621     1,218,750
                                       ------------ -------------
              AVIATION: PARTS AND SERVICES -- 0.1%
    933,000   Kaman Corp.,
                Sub. Deb. Cv.,
                6.000%, 03/15/12 ......     881,491       910,841
                                       ------------ -------------
              ENERGY AND UTILITIES -- 0.1%
  1,000,000   Mirant Corp.,
                Sub. Deb. Cv.,
                2.500%, 06/15/21 ......     754,164       731,250
                                       ------------ -------------

   PRINCIPAL                                             MARKET
    AMOUNT                                 COST           VALUE
   ---------                               ----          -------
              CABLE -- 0.0%
  $ 900,000   Charter Communications Inc., Cv.,
                4.750%, 06/01/06 ...... $   640,718   $   410,625
                                       ------------ -------------
              HOTELS AND GAMING -- 0.0%
    400,000   Hilton Hotels Corp.,
                Sub. Deb. Cv.,
                5.000%, 05/15/06 ......     354,000       377,500
                                       ------------ -------------
              WIRELESS COMMUNICATIONS -- 0.0%
    500,000   Nextel Communications Inc.,
                9.500%, 02/01/11 ......     347,402       247,500
                                       ------------ -------------
              CONSUMER PRODUCTS -- 0.0%
  1,000,000   Pillowtex Corp.,
                Sub. Deb. Cv.,
                6.000%, 03/15/12+ (e) .     406,180             0
                                       ------------ -------------
              TOTAL CORPORATE
                BONDS .................   8,317,576     6,578,341
                                       ------------ -------------

      SHARES
      ------
              RIGHTS -- 0.0%
              REAL ESTATE -- 0.0%
       3,000  Cheung Kong Life Science
                International Inc.
                Rights+ ...............           0             0
                                       ------------ -------------
              WARRANTS -- 0.0%
              FOOD AND BEVERAGE -- 0.0%
      62,463  Advantica Restaurant Group
                Inc., expires
                01/07/05+ .............     105,603           187
                                       ------------ -------------
              METALS AND MINING -- 0.0%
       5,000  Harmony Gold Mining Co.
                Ltd., ADR,
                expires 06/29/03+ .....           0        44,850
                                       ------------ -------------
              TOTAL WARRANTS ..........     105,603        45,037
                                       ------------ -------------
   PRINCIPAL
    AMOUNT
   ---------
              U.S. GOVERNMENT OBLIGATIONS -- 3.5%
$50,000,000   U.S. Treasury Bill,
                1.770%++, 07/11/02 ....  49,970,500    49,970,500
                                       ------------ -------------

                 See accompanying notes to financial statements.

                                       26

                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                            JUNE 30, 2002 (UNAUDITED)

   PRINCIPAL                                             MARKET
    AMOUNT                                 COST           VALUE
   ---------                               ----          -------
              REPURCHASE AGREEMENTS -- 12.1%
$ 32,458,000  Agreement with State
                Street Bank & Trust Co.,
                1.870%, dated 06/28/02,
                due 07/01/02,
                proceeds at maturity
                $32,463,058 (c) ......  $32,458,000   $   32,458,000
140,000,000   Agreement with Warburg
                Dillon Reed, 1.920%,
                dated 06/28/02,
                due 07/01/02,
                proceeds at maturity
                $140,022,400 (c) .....  140,000,000      140,000,000
                                     --------------   --------------
              TOTAL REPURCHASE
                AGREEMENTS ..........   172,458,000      172,458,000
                                     --------------   --------------
TOTAL INVESTMENTS -- 100.3% .........$1,215,133,039    1,433,487,037
                                     ==============
OTHER ASSETS, LIABILITIES
  AND LIQUIDATION VALUE OF
  CUMULATIVE PREFERRED STOCK -- (30.3)% .............   (433,327,225)
                                                      --------------
NET ASSETS -- COMMON STOCK -- 70.0%
  (131,771,904 common shares outstanding) ...........  1,000,159,812
                                                      --------------
NET ASSETS -- PREFERRED STOCK -- 30.0%
  (11,973,100 preferred shares outstanding) .........    429,197,500
                                                      --------------
TOTAL NET ASSETS -- 100.0% .......................... $1,429,357,312
                                                      ==============
NET ASSET VALUE PER COMMON SHARE
  ($1,000,159,812 / 131,771,904
  shares outstanding) ...............................        $  7.59
                                                             =======
----------------
              For Federal tax purposes:
              Aggregate cost ........................ $1,215,133,039
                                                      ==============
              Gross unrealized appreciation ......... $  366,171,067
              Gross unrealized depreciation .........   (147,817,069)
                                                      --------------
              Net unrealized appreciation ........... $  218,353,998
                                                      --------------

   PRINCIPAL                         SETTLEMENT           NET UNREALIZED
    AMOUNT                              DATE               DEPRECIATION
   ---------                         ----------           --------------
               FORWARD FOREIGN EXCHANGE CONTRACTS -- 0.0%
$ 4,992,000(d) Deliver Hong Kong Dollars in
                 exchange for
                 USD 639,820 ........ 08/01/02                 $(204)
                                                               =====
  NOTIONAL
   AMOUNT
    --------
               INTEREST RATE SWAP AGREEMENT -- 0.0%
130,000,000    Receive floating rate from Citibank, NA
                 based on the 1-month LIBOR and pay
                 a fixed rate equal to 4.494%
                 Terminates 07/01/07 ...................... $(69,000)
                                                            ========
------------------------------
(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 June 30,
      2002, the market value of Rule 144A  securities  amounted to $1,356,438 or
      0.1% of total net assets.
(c)   Collateralized  by U.S.  Treasury  Notes,  5.50% to 8.00%, due 02/28/02 to
      11/15/21, market value $173,112,736.
(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.
W/I - When Issued.

                                       % OF
                                      MARKET      MARKET
                                       VALUE       VALUE
                                      ------    -----------
       GEOGRAPHIC DIVERSIFICATION
       United States .................  84.6%  $1,212,360,665
       Europe ........................  11.1      159,910,293
       Asia/Pacific Rim ..............   2.3       32,494,212
       Latin America .................   1.1       15,981,271
       Canada ........................   0.8       11,539,066
       South Africa ..................   0.1        1,201,530
                                       -----   --------------
       Total Investments ............. 100.0%  $1,433,487,037
                                       =====   ==============

                 See accompanying notes to financial statements.

                                       27

                          THE GABELLI EQUITY TRUST INC.

                       STATEMENT OF ASSETS AND LIABILITIES
                            JUNE 30, 2002 (UNAUDITED)

ASSETS:
   Investments, at value (cost $1,215,133,039) .....     $ 1,433,487,037
   Cash and foreign currency, at value (cost $1,490)               2,063
   Dividends and interest receivable ...............           1,591,769
                                                         ---------------
   TOTAL ASSETS ....................................       1,435,080,869
                                                         ---------------
LIABILITIES:
   Payable for investments purchased ...............           3,938,549
   Dividends payable ...............................             193,438
   Unrealized depreciation on swap contract ........              69,000
   Unrealized depreciation on forward foreign
      exchange contracts ...........................                 204
   Payable for investment advisory fees ............             794,434
   Payable to custodian ............................              28,402
   Other accrued expenses and liabilities ..........             699,530
                                                         ---------------
   TOTAL LIABILITIES ...............................           5,723,557
                                                         ---------------
PREFERRED STOCK:
   Series A Cumulative Preferred Stock (7.25%,
      $25 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 liquidation value, $0.001 par value,
      8,000,000 shares authorized with
      6,600,000 shares issued and outstanding) .....         165,000,000
   Series C Cumulative Preferred Stock (Auction
      Rate, $25,000 liquidation value,
      $0.001 par value, 6,000 shares authorized
      with 5,200 shares issued and
      outstanding) .................................         130,000,000
                                                         ---------------
   TOTAL PREFERRED STOCK ...........................         429,197,500
                                                         ---------------
   NET ASSETS ATTRIBUTABLE TO COMMON STOCK
      SHAREHOLDERS .................................     $ 1,000,159,812
                                                         ===============
NET ASSETS ATTRIBUTABLE TO COMMON STOCK
   SHAREHOLDERS CONSIST OF:
   Capital stock, at par value .....................     $       131,772
   Additional paid-in capital ......................         783,748,484
   Accumulated distributions in excess of net
      investment income ............................             (47,836)
   Accumulated distributions in excess of net
      realized gain on investments, futures
      contracts and foreign currency transactions ..          (1,972,803)
   Net unrealized appreciation on investments and
      foreign currency transactions ................         218,300,195
                                                         ---------------
   TOTAL NET ASSETS ................................     $ 1,000,159,812
                                                         ===============
   NET ASSET VALUE PER COMMON SHARE
      ($1,000,159,812 / 131,771,904 shares
      outstanding; 184,000,000 shares
      authorized of $0.001 par value) ..............               $7.59
                                                                   =====

                             STATEMENT OF OPERATIONS
               FOR THE SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED)

INVESTMENT INCOME:
   Dividends (net of foreign taxes of $418,277) .........     $   9,059,362
   Interest .............................................         1,769,640
                                                              -------------
   TOTAL INVESTMENT INCOME ..............................        10,829,002
                                                              -------------
EXPENSES:
   Investment advisory fees .............................         5,512,313
   Shareholder communications expenses ..................           181,508
   Payroll ..............................................           148,204
   Shareholder services fees ............................           118,025
   Custodian fees .......................................            75,830
   Directors' fees ......................................            71,482
   Legal and audit fees .................................            55,612
   Miscellaneous expenses ...............................            79,994
                                                              -------------
   TOTAL EXPENSES .......................................         6,242,968
                                                              -------------
   LESS: CUSTODIAN FEE CREDIT ...........................            (4,814)
                                                              -------------
   NET EXPENSES .........................................         6,238,154
                                                              -------------
   NET INVESTMENT INCOME ................................         4,590,848
                                                              -------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
   INVESTMENTS, FUTURES CONTRACTS AND FOREIGN
   CURRENCY TRANSACTIONS:
   Net realized gain on investments .....................        13,307,995
   Net realized gain on foreign currency transactions ...            17,470
   Net realized gain on futures contracts ...............           555,625
                                                              -------------
   Net realized gain on investments, futures
      contracts and foreign currency transactions .......        13,881,090
                                                              -------------
   Net change in net unrealized appreciation/depreciation
      on investments and foreign currency transactions ..      (118,600,995)
                                                              -------------
   NET REALIZED AND UNREALIZED LOSS
      ON INVESTMENTS, FUTURES CONTRACTS
      AND FOREIGN CURRENCY TRANSACTIONS .................      (104,719,905)
                                                              -------------
   NET DECREASE IN NET ASSETS RESULTING
      FROM OPERATIONS ...................................      (100,129,057)
                                                              -------------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
   Net investment income ................................       (10,998,098)
                                                              -------------
   TOTAL DISTRIBUTIONS TO PREFERRED STOCK
      SHAREHOLDERS ......................................       (10,998,098)
                                                              -------------
   NET DECREASE IN NET ASSETS ATTRIBUTABLE TO
      COMMON STOCK SHAREHOLDERS RESULTING
      FROM OPERATIONS ...................................     $(111,127,155)
                                                              =============

                 See accompanying notes to financial statements.

                                       28

                         THE GABELLI EQUITY TRUST INC.

     STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS


                                                                             SIX MONTHS ENDED
                                                                               JUNE 30, 2002          YEAR ENDED
                                                                                (UNAUDITED)        DECEMBER 31, 2001
                                                                              ---------------      -----------------

                                                                                             
OPERATIONS:
   Net investment income ................................................     $     4,590,848      $     9,816,147
   Net realized gain on investments, options, futures contracts
      and foreign currency transactions .................................          13,881,090          144,016,946
   Net change in unrealized appreciation/depreciation on investments
      and foreign currency transactions .................................        (118,600,995)        (171,507,313)
                                                                              ---------------      ---------------
   NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS .................        (100,129,057)         (17,674,220)
                                                                              ---------------      ---------------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
   Net investment income ................................................          (2,733,027)          (1,001,064)
   Net realized gain on investments, options,
      futures contracts and foreign currency transactions ...............          (8,265,071)         (14,867,161)
                                                                              ---------------      ---------------
   TOTAL DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS ..................         (10,998,098)         (15,868,225)
                                                                              ---------------      ---------------
   NET DECREASE IN NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS
   RESULTING FROM OPERATIONS ............................................        (111,127,155)         (33,542,445)
                                                                              ---------------      ---------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
   Net investment income ................................................          (1,857,821)          (8,582,562)
   Net realized gain on investments, options,
      futures contracts and foreign currency transactions ...............          (5,616,019)        (129,877,560)
   Paid-in capital ......................................................         (62,605,925)                  --
                                                                              ---------------      ---------------
   TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS .....................         (70,079,765)        (138,460,122)
                                                                              ---------------      ---------------
FUND SHARE TRANSACTIONS:
   Net increase in net assets from common shares issued upon reinvestment
      of dividends and distributions and rights offering ................          16,995,721          160,303,359
   Underwriting discount for preferred shares charged to paid-in capital           (1,300,000)          (5,670,695)
   Offering costs for preferred shares charged to paid-in capital .......            (500,000)            (500,000)
                                                                              ---------------      ---------------
   NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS ..............          15,195,721          154,132,664
                                                                              ---------------      ---------------
   NET DECREASE IN NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS .        (166,011,199)         (17,869,903)
NET ASSETS ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS:
   Beginning of period ..................................................       1,166,171,011        1,184,040,914
                                                                              ---------------      ---------------
   End of period ........................................................     $ 1,000,159,812      $ 1,166,171,011
                                                                              ===============      ===============


                 See accompanying notes to financial statements.

                                       29

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

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

                                       30

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

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.

      SWAP AGREEMENTS. The Equity Trust may enter into interest rate swap or cap
transactions.  The use of interest  rate swaps and caps is a highly  specialized
activity that involves  investment  techniques  and risks  different  from those
associated with ordinary  portfolio security  transactions.  In an interest rate
swap,  the Equity  Trust would  agree to pay to the other party to the  interest
rate  swap  (which is known as the  "counterparty")  periodically  a fixed  rate
payment in exchange  for the  counterparty  agreeing to pay to the Equity  Trust
periodically a variable rate payment that is intended to approximate  the Equity
Trust's  variable  rate  payment  obligation  on the Series C  Preferred.  In an
interest rate cap, the Equity Trust would pay a premium to the interest rate cap
to the  counterparty  and, to the extent that a  specified  variable  rate index
exceeds a predetermined fixed rate, would receive from the counterparty payments
of the difference  based on the notional amount of such cap.  Interest rate swap
and cap  transactions  introduce  additional risk because the Equity Trust would
remain  obligated to pay preferred  stock  dividends when due in accordance with
the Articles Supplementary even if the counterparty defaulted.  Depending on the
general state of short-term interest rates and the returns on the Equity Trust's
portfolio  securities  at that point in time,  such a default  could  negatively
affect the Equity  Trust's  ability to make  dividend  payments for the Series C
Preferred.  In addition,  at the time an interest  rate swap or cap  transaction
reaches its scheduled  termination  date,  there is a risk that the Equity Trust
will not be able to obtain a  replacement  transaction  or that the terms of the
replacement  will not be as favorable as on the  expiring  transaction.  If this
occurs,  it could have a negative  impact on the Equity Trust's  ability to make
dividend payments on the Series C Preferred.

      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 June 30, 2002.

      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.

                                       31

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

      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,  7.20%
Tax  Advantaged  Series B Cumulative  Preferred  Stock and Series C Auction Rate
Cumulative Preferred Stock ("Cumulative Preferred Stock") are accrued on a daily
basis and are determined as described in Note 5.

      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.

      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.

      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.

                                       32

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

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 or  corresponding  swap rate of the  Cumulative
Preferred  Stock.  For the six months  ended June 30, 2002,  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 six months ended June 30, 2002, Gabelli & Company, Inc. and its
affiliates  received $226,776 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 six months ended June 30,
2002 aggregated $139,275,810 and $93,129,622, 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 six months  ended June 30,
2002,  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.

      Transactions in common stock were as follows:


                                         SIX MONTHS ENDED
                                          JUNE 30, 2002              YEAR ENDED
                                            (UNAUDITED)           DECEMBER 31, 2001
                                     -----------------------   ----------------------
                                       Shares       Amount        Shares     Amount
                                     ---------   -----------   ---------- -----------
                                                              
Shares issued in rights offering ...        --   $        --   18,114,735 $126,303,145
Shares issued upon reinvestment
  of dividends and distributions ... 1,704,105    16,995,721    3,264,654   33,500,214
                                     ---------   -----------   ---------- ------------
Net increase ....................... 1,704,105   $16,995,721   21,379,389 $159,803,359
                                     =========   ===========   ========== ============


                                       33

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

      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 7.25% Series A, 7.20% Series B and Series C Auction Rate Cumulative
Preferred Stock at a redemption price of $25, $25 and $25,000, respectively, 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 and variable  rates,
which could have either a beneficial  or  detrimental  impact on net  investment
income and gains available to common shareholders.

      Under  Emerging  Issues  Task  Force  (EITF)   promulgating   Topic  D-98,
CLASSIFICATION  AND  MEASUREMENT OF REDEEMABLE  SECURITIES,  which was issued on
July 19, 2001, preferred securities that are redeemable for cash or other assets
are to be  classified  outside  of  permanent  equity  to the  extent  that  the
redemption is at a fixed or  determinable  price and at the option of the holder
or upon the  occurrence of an event that is not solely within the control of the
issuer.  Subject to the  guidance  of the EITF,  the Equity  Trust's  Cumulative
Preferred Stock,  which was previously  classified as a component of net assets,
has been  reclassified  outside of permanent equity (net assets  attributable to
common stock shareholders) in the accompanying financial statements.  Prior year
amounts  have also been  reclassified  to conform  with this  presentation.  The
impact of this reclassification creates no change to the net assets 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 six months ended June 30,  2002,  the Equity
Trust did not  repurchase  any  shares of 7.25%  Series A  Cumulative  Preferred
Stock.  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. At June 30, 2002,  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
$81,077.

                                       34

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

      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 six months ended June
30,  2002 and the year  ended  December  31,  2001,  the  Equity  Trust  did not
repurchase any shares of 7.20% Series B Cumulative  Preferred Stock. At June 30,
2002,  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 $99,000.

      On June 27, 2002, the Equity Trust  received net proceeds of  $128,200,000
(after  underwriting  discounts of $1,300,000 and estimated offering expenses of
$500,000)  from the public  offering  of 5,200  shares of Series C Auction  Rate
Cumulative  Preferred  Stock.  The dividend rate, as set by the auction process,
which is  generally  held  every 7 days,  is  expected  to vary with  short-term
interest rates.  Existing  shareholders may submit an order to hold, bid or sell
such shares on each auction  date.  Series C Auction Rate  Cumulative  Preferred
Stock  shareholders  may also trade shares in the secondary  market.  The Equity
Trust, at its option, may redeem the Series C Auction Rate Cumulative  Preferred
Stock in whole or in part at the  redemption  price at any time.  During the six
months ended June 30, 2002,  the Equity Trust did not  repurchase  any shares of
Series C Auction Rate Cumulative Preferred Stock. At June 30, 2002, 5,200 shares
of the Series C Auction Rate Cumulative  Preferred Stock were outstanding at the
annual rate of 1.85 percent per share and accrued dividends amounted to $13,361.

6.  SUBSEQUENT  EVENT.  Effective  August 1, 2002, the Equity Trust modified its
non-fundamental  investment policy to increase,  from 65% to 80%, the portion of
its  assets  that it will  invest,  under  normal  market  conditions  in equity
securities (the "80% Policy").

      The 80% Policy may be changed without shareholder  approval.  However, the
Equity Trust has adopted a policy to provide shareholders with at least 60 days'
notice of the implementation of any change in the 80% Policy.

                                       35

                          THE GABELLI EQUITY TRUST INC.
                              FINANCIAL HIGHLIGHTS


SELECTED DATA FOR AN EQUITY TRUST COMMON       SIX MONTHS ENDED                     YEAR ENDED DECEMBER 31,
SHARE OUTSTANDING THROUGHOUT EACH PERIOD:      JUNE 30, 2002(A) -----------------------------------------------------------------
OPERATING PERFORMANCE:                            (UNAUDITED)     2001(A)      2000(A)       1999(A)        1998(A)      1997(A)
                                                  ----------    ----------   ----------    ----------     ----------   ----------
                                                                                                     
   Net asset value, beginning of period ......... $     8.97    $    10.89   $    12.75    $    11.47     $    11.56   $     9.77
                                                  ----------    ----------   ----------    ----------     ----------   ----------
   Net investment income ........................       0.04          0.08         0.05          0.04           0.07         0.08
   Net realized and unrealized gain
     (loss) on investments ......................      (0.78)        (0.16)       (0.51)         3.25           1.09         2.75
                                                  ----------    ----------   ----------    ----------     ----------   ----------
   Total from investment operations .............      (0.74)        (0.08)       (0.46)         3.29           1.16         2.83
                                                  ----------    ----------   ----------    ----------     ----------   ----------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
   Net investment income ........................      (0.02)        (0.01)       (0.00)(c)     (0.00)(c)      (0.00)(c)       --
   Net realized gain on investments .............      (0.06)        (0.11)       (0.09)        (0.09)         (0.05)          --
                                                  ----------    ----------   ----------    ----------     ----------   ----------
   Total distributions to preferred
         stock shareholders .....................      (0.08)        (0.12)       (0.09)        (0.09)         (0.05)          --
                                                  ----------    ----------   ----------    ----------     ----------   ----------
NET INCREASE (DECREASE) IN NET
  ASSETS ATTRIBUTABLE TO
  COMMON STOCK SHAREHOLDERS
  RESULTING FROM OPERATIONS .....................      (0.82)        (0.20)       (0.55)         3.20           1.11         2.83
                                                  ----------    ----------   ----------    ----------     ----------   ----------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
   Net investment income ........................      (0.02)        (0.06)       (0.04)        (0.03)(b)      (0.06)       (0.08)
   Net realized gain on investments .............      (0.04)        (1.02)       (1.27)        (1.21)(b)      (1.10)       (0.93)
   Paid-in capital ..............................      (0.48)           --           --         (0.68)(b)         --        (0.03)
                                                  ----------    ----------   ----------    ----------     ----------   ----------
   Total distributions to common
      stock shareholders ........................      (0.54)        (1.08)       (1.31)        (1.92)         (1.16)       (1.04)
                                                  ----------    ----------   ----------    ----------     ----------   ----------
CAPITAL SHARE TRANSACTIONS:
   Increase (decrease) in net asset
     value from common stock share
     transactions and rights offering ...........      (0.01)         0.03           --            --             --           --
   Underwriting discount for preferred shares
     charged to paid-in capital .................      (0.01)        (0.62)          --            --             --           --
   Offering costs for preferred shares
     charged to paid-in capital .................         --         (0.05)          --            --          (0.04)          --
                                                  ----------    ----------   ----------    ----------     ----------   ----------
   Total capital share transactions .............      (0.02)        (0.64)          --            --          (0.04)          --
                                                  ----------    ----------   ----------    ----------     ----------   ----------
   NET ASSET VALUE ATTRIBUTABLE
     TO COMMON STOCK
     SHAREHOLDERS, END OF PERIOD ................ $     7.59    $     8.97   $    10.89    $    12.75     $    11.47   $    11.56
                                                  ==========    ==========   ==========    ==========     ==========   ==========
   Net asset value total return + ...............      (9.70)%       (3.68)%      (4.39)%       29.49%          9.55%       30.46%
                                                  ==========    ==========   ==========    ==========     ==========   ==========
   Market value, end of period .................. $    10.03    $    10.79   $    11.44    $    12.56     $    11.56   $    11.69
                                                  ==========    ==========   ==========    ==========     ==========   ==========
   Total investment return ++ ...................      (1.33)%       10.32%        1.91%        26.57%          9.23%       37.46%
                                                  ==========    ==========   ==========    ==========     ==========   ==========
RATIOS AND SUPPLEMENTAL DATA:
   Net assets including
     liquidation value of
     preferred shares, end of
     period (in 000's) .......................... $1,429,357    $1,465,369   $1,318,263    $1,503,641     $1,352,190    $1,210,570
   Net assets attributable to
     common shares,
     end of period (in 000's) ................... $1,000,160    $1,166,171   $1,184,041    $1,368,981     $1,217,190    $1,210,570
   Ratio of net investment income
     to average net assets
     attributable to common shares ..............       0.82%(g)      0.81%        0.42%         0.34%          0.60%         0.76%
   Ratio of operating expenses to
     average net assets
     attributable to common shares (e) ..........       1.11%(g)      1.12%        1.14%         1.27%          1.15%         1.14%
   Ratio of operating expenses to
     average total net assets
     including liquidation value
     of preferred shares (e) ....................       0.88%(g)      0.95%        1.03%         1.15%          1.09%         1.14%
   Portfolio turnover rate ......................        7.3%         23.9%        32.1%         38.0%          39.8%         39.2%

 --------------------------
+   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.  Total return for the
    period of less than one year is not annualized.
++  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.  Total return for the period of less than
    one year is not annualized.
(a) Per share  amounts have been  calculated  using the monthly  average  shares
    outstanding method.
(b) A distribution  equivalent to $0.75 per share for The Gabelli  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) 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 period ended June 30, 2002 and 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%,  1.11%  and  1.14%,
    respectively,  and the expense ratios of operating expenses to average total
    net assets including  liquidation  value of preferred shares would be 0.88%,
    0.94% and 1.03%, respectively.
(f) Asset coverage is calculated by combining all series of preferred stock.
(g) Annualized.

                 See accompanying notes to financial statements.

                                       36


                          THE GABELLI EQUITY TRUST INC.
                        FINANCIAL HIGHLIGHTS (CONTINUED)


                                           SIX MONTHS ENDED                  YEAR ENDED DECEMBER 31,
                                           JUNE 30, 2002(A)  -----------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA:                 (UNAUDITED)     2001(A)     2000(A)    1999(A)     1998(A)   1997(A)
                                              ----------     --------    --------   ---------   --------   -------
                                                                                         
PREFERRED STOCK:
   7.25% CUMULATIVE PREFERRED STOCK
   Liquidation value,
     end of period (in 000's) ............... $ 134,198   $ 134,198  $ 134,223   $ 134,660   $ 135,000        --
   Total shares outstanding (in 000's) ......     5,368       5,368      5,369       5,386       5,400        --
   Liquidation preference per share ......... $   25.00   $   25.00  $   25.00   $   25.00   $   25.00        --
   Average market value (d) ................. $   25.86   $   25.39  $   22.62   $   24.43   $   25.63        --
   7.20% CUMULATIVE PREFERRED STOCK
   Liquidation value,
     end of period (in 000's) ............... $ 165,000   $ 165,000         --          --          --        --
   Total shares outstanding (in 000's) ......     6,600       6,600         --          --          --        --
   Liquidation preference per share ......... $   25.00   $   25.00         --          --          --        --
   Average market value (d) ................. $   26.20   $   25.60         --          --          --        --
   AUCTION RATE CUMULATIVE PREFERRED STOCK
   Liquidation value, end of
     period (in 000's) ...................... $ 130,000          --         --          --          --        --
   Total shares outstanding (in 000's) ......         5          --         --          --          --        --
   Liquidation preference per share ......... $  25,000          --         --          --          --        --
   Average market value (d) ................. $  25,000          --         --          --          --        --
ASSET COVERAGE (f) ..........................       333%        490%       982%      1,117%       1,001%      --
ASSET COVERAGE PER SHARE (f) ................ $  119.38   $  122.44  $  245.54   $  279.16   $   250.41       --

 --------------------------
+   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 shareholder.  Total return for the
    period of less than one year is not annualized.
++  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 shareholder.  Total return for the period of less than
    one year is not annualized.
(a) Per share  amounts have been  calculated  using the monthly  average  shares
    outstanding method.
(b) A distribution  equivalent to $0.75 per share for The Gabelli  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) 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 period ended June 30, 2002 and 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%,  1.11%  and  1.14%,
    respectively,  and the expense ratios of operating expenses to average total
    net assets including  liquidation  value of preferred shares would be 0.88%,
    0.94% and 1.03%, respectively.
(f) Asset coverage is calculated by combining all series of preferred stock.
(g) Annualized.

                 See accompanying notes to financial statements.

                                       37

                         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

                                       38


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.

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,
RI02940-3011  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.

                                       39


                             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 ADVISER

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

                               7.25%        7.20%
                 COMMON       PREFERRED    PREFERRED
                 ------       ---------    ---------
NYSE-
Symbol:            GAB         GAB Pr       GAB PrB
Shares
Outstanding:   131,771,904    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
(914) 921-5070
HTTP://WWW.GABELLI.COM

SEMI-ANNUAL REPORT
JUNE 30, 2002

GBFCM 06/02