Edgar Filing: GABELLI EQUITY TRUST INC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-04700
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The Gabelli Equity Trust Inc.
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(Exact name of registrant as specified in charter)

One Corporate Center
Rye, New York 10580-1422
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(Address of principal executive offices) (Zip code)

Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
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(Name and address of agent for service)

registrant's telephone number, including area code: 1-800-422-3554
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2006
------------------

Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.

ITEM 1. REPORTS TO STOCKHOLDERS.

The Report to Shareholders is attached herewith.

[LOGO OMITTED]
THE GABELLI
EQUITY TRUST INC.

THE GABELLI EQUITY TRUST INC.

Annual Report
December 31, 2006

TO OUR SHAREHOLDERS,

The Sarbanes-Oxley Act requires a fund's principal executive and financial
officers to certify the entire contents of the semi-annual and annual
shareholder reports in a filing with the Securities and Exchange Commission on
Form N-CSR. This certification would cover the portfolio manager's commentary
and subjective opinions if they are attached to or a part of the financial
statements. Many of these comments and opinions would be difficult or impossible
to certify.

Because we do not want our portfolio managers to eliminate their opinions
and/or restrict their commentary to historical facts, we have separated their
commentary from the financial statements and investment portfolio and have sent
it to you separately. Both the commentary and the financial statements,
including the portfolio of investments, will be available on our website at
www.gabelli.com.

Enclosed are the audited financial statements and the investment portfolio
as of December 31, 2006.

COMPARATIVE RESULTS

-----------------------------------------------------------------------------------------------------------------------------
~AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2006 (A)
Since
Inception
Quarter 1 Year 3 Year 5 Year 10 Year 15 Year 20 Year (08/21/86)
-----------------------------------------------------------------------------------------------------------------------------

GABELLI EQUITY TRUST
NAV TOTAL RETURN (B).................. 11.52% 28.24% 17.55% 12.79% 12.20% 12.42% 12.69% 12.48%
INVESTMENT TOTAL RETURN (C)........... 10.86 29.42 17.35 8.24 12.28 12.54 13.12 12.05
S&P 500 Index........................... 6.69 15.78 10.43 6.18 8.42 10.63 11.79 11.20(d)
Dow Jones Industrial Average............ 7.31 18.98 8.49 6.83 8.95 12.02 12.74 12.35(d)
Nasdaq Composite Index.................. 6.95 9.52 6.43 4.37 6.46 9.90 10.16 9.49

(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. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA
PRESENTED. VISIT WWW.GABELLI.COM FOR PERFORMANCE INFORMATION AS OF THE MOST
RECENT MONTH END. PERFORMANCE RETURNS FOR LESS THAN ONE YEAR ARE NOT
ANNUALIZED. INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT OBJECTIVES,
RISKS, CHARGES, AND EXPENSES OF THE FUND BEFORE INVESTING. THE DOW JONES
INDUSTRIAL AVERAGE IS AN UNMANAGED INDEX OF 30 LARGE CAPITALIZATION 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. YOU CANNOT INVEST DIRECTLY IN AN INDEX.
(b) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN NET ASSET VALUE
PER SHARE ("NAV"), REINVESTMENT OF DISTRIBUTIONS AT NAV ON THE EX-DIVIDEND
DATE, AND ADJUSTMENTS FOR RIGHTS OFFERINGS, SPIN-OFFS, AND TAXES PAID ON
UNDISTRIBUTED LONG-TERM CAPITAL GAINS, AND ARE NET OF EXPENSES. SINCE
INCEPTION RETURN IS BASED ON AN INITIAL NAV OF $9.34.
(c) TOTAL RETURNS AND AVERAGE ANNUAL RETURNS REFLECT CHANGES IN CLOSING MARKET
VALUES ON THE NEW YORK STOCK EXCHANGE, REINVESTMENT OF DISTRIBUTIONS, AND
ADJUSTMENTS FOR RIGHTS OFFERINGS, SPIN-OFFS, AND TAXES PAID ON
UNDISTRIBUTED LONG-TERM CAPITAL GAINS. SINCE INCEPTION RETURN IS BASED ON
AN INITIAL OFFERING PRICE OF $10.00.
(d) FROM AUGUST 31, 1986, THE DATE CLOSEST TO THE FUND'S INCEPTION DATE FOR
WHICH DATA IS AVAILABLE.
--------------------------------------------------------------------------------

Sincerely yours,

Bruce N. Alpert
President
January 24, 2007

THE GABELLI EQUITY TRUST INC.
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)

The following table presents portfolio holdings as a percent of total
investments as of December 31, 2006:

Repurchase Agreements ............................... 10.5%
Food and Beverage ................................... 9.3%
Financial Services .................................. 9.1%
Energy and Utilities ................................ 7.6%
Telecommunications .................................. 5.5%
Health Care ......................................... 4.9%
Diversified Industrial .............................. 4.9%
Consumer Products ................................... 4.9%
Publishing .......................................... 4.5%
Entertainment ....................................... 4.1%
Cable and Satellite ................................. 4.0%
Hotels and Gaming ................................... 3.0%
Equipment and Supplies .............................. 2.7%
Automotive: Parts and Accessories ................... 2.4%
Aviation: Parts and Services ........................ 2.1%
Consumer Services ................................... 1.6%
Electronics ......................................... 1.6%
Broadcasting ........................................ 1.6%
Communications Equipment ............................ 1.5%
Specialty Chemicals ................................. 1.4%
Aerospace ........................................... 1.4%
U.S. Government Obligations ......................... 1.3%
Business Services ................................... 1.2%
Machinery ........................................... 1.1%
Agriculture ......................................... 1.0%
Metals and Mining ................................... 0.9%
Environmental Services .............................. 0.9%
Wireless Communications ............................. 0.9%
Real Estate ......................................... 0.8%
Automotive .......................................... 0.8%
Retail .............................................. 0.7%
Computer Software and Services ...................... 0.5%
Transportation ...................................... 0.4%
Closed-End Funds .................................... 0.4%
Paper and Forest Products ........................... 0.2%
Real Estate Investment Trusts ....................... 0.2%
Manufactured Housing and Recreational Vehicles ...... 0.1%
------
100.0%
======

THE GABELLI EQUITY TRUST INC. (THE "FUND") FILES A COMPLETE SCHEDULE OF
PORTFOLIO HOLDINGS WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") FOR
THE FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q, THE LAST OF WHICH
WAS FILED FOR THE QUARTER ENDED SEPTEMBER 30, 2006. SHAREHOLDERS MAY OBTAIN THIS
INFORMATION AT WWW.GABELLI.COM OR BY CALLING THE FUND AT 800-GABELLI
(800-422-3554). THE FUND'S FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV AND MAY ALSO BE REVIEWED AND COPIED AT THE SEC'S PUBLIC REFERENCE
ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE PUBLIC REFERENCE
ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330.

PROXY VOTING

The Fund files Form N-PX with its complete proxy voting record for the 12
months ended June 30th, no later than August 31st of each year. A description of
the Fund's proxy voting policies, procedures, and how the Fund voted proxies
relating to portfolio securities is available without charge, upon request, by
(i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One
Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC's website at
www.sec.gov.

THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES
QUARTER ENDED DECEMBER 31, 2006
(UNAUDITED)

OWNERSHIP AT
DECEMBER 31,
SHARES 2006
------ ------------
NET PURCHASES
COMMON STOCKS
Advanced Medical Optics Inc. ........ 22,000 22,000
Alcoa Inc. .......................... 10,000 20,000
American International Group Inc. ... 40,000 50,000
AMETEK Inc. (a)...................... 80,000 265,000
Aruze Corp. ......................... 13,000 13,000
Assa Abloy AB, Cl. B ................ 8,000 50,000
Aztar Corp. ......................... 94,600 132,600
Banta Corp. ......................... 70,000 70,000
Barclays plc......................... 15,000 70,000
Brown-Forman Corp., Cl. A ........... 10,100 10,100
Cadbury Schweppes plc, ADR .......... 40,000 100,000
Capitalia SpA........................ 15,000 45,000
Clear Channel Communications Inc..... 99,000 100,000
Clear Channel Outdoor Holdings Inc.,
Cl. A ............................. 4,200 100,000
Columbia Equity Trust Inc. .......... 100,100 100,100
Corus Entertainment Inc., Cl. B,
New York .......................... 13,333 13,333
Davide Campari-Milano SpA............ 20,000 20,000
Delta & Pine Land Co. ............... 20,000 70,000
Dow Jones & Co. Inc. ................ 5,000 55,000
Earl Scheib Inc. .................... 2,000 82,500
Enodis plc........................... 400,000 400,000
Fastweb.............................. 15,000 15,000
Fleetwood Enterprises Inc. .......... 15,000 50,000
FMC Corp. ........................... 1,000 2,000
Fortune Brands Inc. ................. 10,000 60,000
GATX Corp. .......................... 10,000 120,000
General Electric Co. ................ 120,000 120,000
Giant Industries Inc. ............... 6,000 16,000
Greif Inc., Cl. B ................... 3,000 8,000
Griffin Land & Nurseries Inc. ....... 500 55,500
Halliburton Co. ..................... 50,000 210,000
Hanesbrands Inc. .................... 35,000 60,000
Harrah's Entertainment Inc. ......... 39,000 45,000
Heineken NV.......................... 5,000 10,000
Hennes & Mauritz AB, Cl. B .......... 4,000 21,500
Hospira Inc. ........................ 5,000 30,000
ICOS Corp. .......................... 868,800 868,800
Idearc Inc. (b)...................... 9,000 9,000
Intel Corp. ......................... 20,000 80,000
InterContinental Hotels Group Inc. .. 45,000 45,000
International Flavors &
Fragrances Inc. ................... 50,000 50,000
ITO EN Ltd........................... 150,000 150,000
Jacuzzi Brands Inc. ................. 250,000 250,000
John H. Harland Co. ................. 12,000 12,000
Kinder Morgan Inc. .................. 200,000 350,000
Legg Mason Inc. ..................... 21,000 23,000
Lenox Group Inc. .................... 2,000 42,000
Mandarin Oriental International Ltd.. 600,000 600,000
Marsh & McLennan Companies Inc....... 30,000 30,000
Midas Inc. .......................... 14,000 130,000
Monsanto Co. ........................ 22,000 30,000
Niko Resources Ltd., New York........ 2,000 2,000
Nissin Food Products Co. Ltd......... 36,000 36,000
Nortel Networks Corp.(c)............. 15,000 200,000
Oil-Dri Corp. of America............. 10,000 10,000
Orient-Express Hotels Ltd., Cl. A ... 12,000 12,000
PAN Fish ASA......................... 650,000 650,000
PepsiAmericas Inc. .................. 35,000 500,000
Pfizer Inc. ......................... 30,000 430,000
Redback Networks Inc. ............... 200,000 200,000
Remy Cointreau SA.................... 18,000 18,000
Rio Tinto plc........................ 18,000 18,000

OWNERSHIP AT
DECEMBER 31,
SHARES 2006
------ ------------
Rogers Communications Inc., Cl B,
Toronto (d) ....................... 9,655 19,310
Rolls-Royce Group plc................ 200,000 1,200,000
Rolls-Royce Group plc, Cl. B (e)....36,700,000 36,700,000
Sally Beauty Holdings Inc. .......... 50,000 50,000
Sara Lee Corp. ...................... 200,000 300,000
Serono SA............................ 5,000 5,000
Swedish Match AB..................... 110,000 1,000,000
Symbol Technologies Inc. ............ 901,900 1,401,900
Syngenta AG, ADR .................... 5,000 15,000
TD Banknorth Inc. ................... 166,800 166,800
TELUS Corp. ......................... 15,000 15,000
The Coca-Cola Co. ................... 10,000 200,000
The Fairchild Corp., Cl. A .......... 4,900 205,000
The Mosaic Co. ...................... 20,000 30,000
The Reader's Digest Association Inc.. 295,000 470,000
Thomas & Betts Corp. ................ 15,000 305,000
Triple Crown Media Inc. ............. 450 20,200
UnitedHealth Group Inc. ............. 20,000 40,000
Univision Communications Inc., Cl. A 40,000 50,000
Westpac Banking Corp. ............... 5,000 58,000
Woolworths Ltd....................... 10,000 73,000
Xstrata plc.......................... 16,666 66,666
Yahoo! Inc. ......................... 10,000 150,000
YAKULT HONSHA Co. Ltd................ 475,000 475,000

NET SALES
COMMON STOCKS
Acuity Brands Inc. .................. (105,000) 40,000
Advanced Micro Devices Inc. ......... (5,000) 5,000
Agere Systems Inc. .................. (3,000) 45,000
AGL Resources Inc. .................. (4,000) 6,000
Allegheny Energy Inc. ............... (50,000) 70,000
America Movil SAB de CV, Cl. L, ADR. (80,000) 110,000
Ameriprise Financial Inc. ........... (35,000) 65,000
Ampco-Pittsburgh Corp. .............. (31,000) 164,000
ANC Rental Corp. .................... (60,000) -
Archer-Daniels-Midland Co. .......... (60,000) 490,000
Arkema............................... (815) -
Ashland Inc. ........................ (240,000) 60,000
AT&T Inc. ........................... (450,000) -
AutoNation Inc. ..................... (1,252) 168,000
Avis Budget Group Inc. .............. (10,000) 30,000
Avon Products Inc. .................. (5,000) 85,000
Bell Aliant Regional Communications
Income Fund....................... (1,762) 16,000
Berkshire Hathaway Inc., Cl. A ...... (12) 248
Biogen Idec Inc. .................... (1,000) 26,000
BorgWarner Inc. ..................... (5,000) 43,000
CA Inc. ............................. (146) -
Camden Property Trust................ (2,500) 2,500
Campbell Soup Co. ................... (8,000) 72,000
CBS Corp., Cl. A .................... (7,500) 415,000
CH Energy Group Inc. ................ (10,000) 105,000
Christian Dior SA.................... (1,000) 42,000
Cincinnati Bell Inc. ................ (20,000) 800,000
Citizens Communications Co. ......... (55,000) 5,000
CLARCOR Inc. ........................ (12,300) 185,000
Clorox Co. .......................... (1,000) 32,000
CMS Energy Corp. .................... (10,000) 70,000
Coldwater Creek Inc. ................ (8,000) 27,000
Comcast Corp., Cl. A ................ (105,000) 55,000
Commerzbank AG, ADR ................. (30,000) 155,000
Commonwealth Telephone
Enterprises Inc. .................. (40,000) 130,000
ConocoPhillips....................... (2,739) 320,000

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
PORTFOLIO CHANGES (CONTINUED)
QUARTER ENDED DECEMBER 31, 2006
(UNAUDITED)

OWNERSHIP AT
DECEMBER 31,
SHARES 2006
------ ------------
NET SALES (CONTINUED)
COMMON STOCKS (CONTINUED)
Cooper Industries Ltd., Cl. A ....... (49,000) 136,000
Corn Products International Inc. .... (33,000) 60,000
Corus Entertainment Inc.,
Cl. B, Toronto .................... (13,333) 3,333
Curtiss-Wright Corp. ................ (22,000) 374,000
Dana Corp. .......................... (50,000) 380,000
Deere & Co. ......................... (15,000) 220,000
Deutsche Bank AG..................... (1,000) 149,000
Deutsche Telekom AG, ADR ............ (2,000) 168,000
Duke Energy Corp. ................... (30,000) 250,000
Duquesne Light Holdings Inc. ........ (16,000) 84,000
El Paso Electric Co. ................ (55,000) 285,000
Embarq Corp. ........................ (26,619) -
Embratel Participacoes SA, ADR ...... (15,000) -
Energizer Holdings Inc. ............. (1,000) 114,000
Eni SpA.............................. (80,000) -
Equity Residential................... (1,500) -
Fedders Corp. ....................... (5,000) 65,000
Flowers Foods Inc. .................. (5,000) 70,000
Fomento Economico Mexicano
SAB de CV, ADR ................... (3,000) 33,000
Franklin Elec Co., Inc. ............. (1,000) 23,000
Gallaher Group plc, ADR ............. (42,000) 190,000
Gemstar-TV Guide International Inc... (30,000) 600,000
Gerber Scientific Inc. .............. (10,000) 90,000
GlaxoSmithKline plc.................. (20,000) 45,036
Gold Kist Inc. (f)................... (50,000) -
Greif Inc., Cl. A ................... (113,000) 115,000
Grupo Televisa SA, ADR .............. (25,000) 650,000
Harley-Davidson Inc. ................ (4,000) 32,000
Hercules Inc. ....................... (20,000) 170,000
Hilton Hotels Corp. ................. (20,000) 530,000
Host Hotels & Resorts Inc. .......... (15,000) -
IAC/InterActiveCorp.................. (30,000) 200,000
Inco Ltd............................. (200,000) -
Irish Life & Permanent plc........... (65,000) -
ITT Corp. ........................... (5,000) 255,000
Janus Capital Group Inc. ............ (39,000) 145,000
Johnson & Johnson.................... (15,000) -
Johnson Controls Inc. ............... (36,000) 76,000
JP Morgan Chase & Co. ............... (3,000) 52,000
Kellogg Co. ......................... (25,000) 105,000
Landesbank Berlin Holding AG......... (15,000) 260,000
Leucadia National Corp. ............. (2,000) 133,000
Liberty Media Holding Corp. -
Capital, Cl. A .................... (43,000) 77,000
Liberty Media Holding Corp. -
Interactive, Cl. A ............... (120,000) 430,000
Lin TV Corp., Cl. A ................. (5,000) 80,000
Lucent Technologies Inc. (g)......... (180,000) -
Lufkin Industries Inc. .............. (2,000) 103,000
Mellon Financial Corp. .............. (20,000) 80,000
Merck & Co. Inc. .................... (5,000) 95,000
Metro International SA, SDR, Cl. A... (21,000) -
Metro International SA, SDR, Cl. B... (42,000) -
MGM Mirage........................... (8,000) 110,000
Motorola Inc. ....................... (10,000) 90,000
National Presto Industries Inc. ..... (2,500) 22,500
Navistar International Corp. ........ (35,000) 325,000
New York Times Co., Cl. A ........... (30,000) 50,000
News Corp., Cl. A ................... (84,800) 1,660,000
Niko Resources Ltd., Toronto......... (2,000) 1,000
Northeast Utilities.................. (60,000) 240,000

OWNERSHIP AT
DECEMBER 31,
SHARES 2006
------ ------------
Northrop Grumman Corp. .............. (15,000) 80,000
Omnova Solutions Inc. ............... (2,300) 230,000
Oriental Land Co. Ltd................ (17,500) -
Pactiv Corp. ........................ (1,000) 114,000
Precision Castparts Corp. ........... (65,000) 115,000
Qwest Communications
International Inc. ................ (230,000) 570,000
Realogy Corp. (h).................... (20,000) -
Rogers Communications Inc.,
Cl. B, New York ................... (70,000) 295,345
Rollins Inc. ........................ (15,000) 795,000
Sensient Technologies Corp. ......... (20,000) 280,000
Sequa Corp., Cl. A .................. (15,230) 73,000
SJW Corp. ........................... (55,000) 5,000
Southern Energy Homes Inc. (i)....... (4,600) -
Starwood Hotel & Resorts
Worldwide Inc. .................... (4,000) 34,000
Sulzer AG............................ (2,000) 2,000
SUPERVALU Inc. ...................... (30,960) 20,000
Takeda Pharmaceutical Co. Ltd........ (4,000) 19,000
Telecom Italia SpA................... (18,075) 1,470,000
Telefonica SA, ADR .................. (18,000) 230,000
Telephone & Data Systems Inc. ....... (50,000) 260,000
TELUS Corp., ADR .................... (25,000) -
The AES Corp. ....................... (5,000) 65,000
The Bank of New York Co. Inc. ....... (10,000) 70,000
The Central Europe and
Russia Fund Inc. ................. (2,785) 105,000
The DIRECTV Group Inc. .............. (143,444) 10,000
The McGraw-Hill Companies Inc. ...... (17,000) 183,000
The Phoenix Companies Inc. .......... (5,000) 135,000
The Reynolds and Reynolds Co. (j).... (120,000) -
The St. Joe. Co. .................... (4,000) 150,000
The Walt Disney Co. ................. (175,000) 85,000
Transocean Inc. ..................... (12,000) -
TXU Corp. ........................... (54,000) 30,000
Verizon Communications Inc. ......... (10,000) 180,000
Viacom Inc., Cl. A .................. (85,000) 375,000
Vivendi.............................. (20,000) 333,900
Waste Management Inc. ............... (20,000) 450,000
Watts Water Technologies Inc., Cl. A. (35,000) 195,000
Westar Energy Inc. .................. (20,000) 270,000
Wyndham Worldwide Corp. ............. (16,000) -
Young Broadcasting Inc., Cl. A ...... (10,000) 115,000

CONVERTIBLE PREFERRED STOCKS
Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B ........... (1,000) 25,000

PRINCIPAL
AMOUNT
---------
U.S. TREASURY NOTE
U.S. Treasury Note,
3.500%, 11/15/06 .............$(300,000) -

-------------
(a) 3 for 2 stock split
(b) Spin-off - 1 share Idearc Inc. for every 20 shares of Verizon
Communications Inc.
(c) Reverse Stock Split - 1:10
(d) 2 for 1 stock split
(e) Spin-off - 36.7 shares of Rolls-Royce Group plc, Cl. B for every 1 share
of Rolls-Royce Group plc
(f) Tender Offer - $21.00 for every 1 share
(g) Merger - 0.1952 share of Alcatel-Lucent for every 1 share of Lucent
Technologies Inc.
(h) Tender Offer - $23.00 for every 0.992274884 share
(i) Cash Merger - $8.50 for every 1 share
(j) Cash Merger - $40.00 for every 1 share

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006

MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS -- 87.9%
FOOD AND BEVERAGE -- 9.3%
85,000 Ajinomoto Co. Inc. .............$ 998,444 $ 1,123,524
40,000 Anheuser-Busch
Companies Inc. .............. 1,816,269 1,968,000
36,000 ARIAKE JAPAN Co. Ltd. .......... 857,851 703,332
10,100 Brown-Forman Corp., Cl. A ...... 684,855 681,043
110,000 Cadbury Schweppes plc .......... 1,136,502 1,177,041
100,000 Cadbury Schweppes plc, ADR ..... 3,559,110 4,293,000
72,000 Campbell Soup Co. .............. 1,915,927 2,800,080
20,000 Coca-Cola Enterprises Inc. ..... 376,514 408,400
40,000 Coca-Cola Hellenic
Bottling Co. SA ............. 519,295 1,562,933
60,000 Corn Products
International Inc. .......... 811,122 2,072,400
20,000 Davide Campari-Milano SpA ...... 196,011 198,271
60,000 Del Monte Foods Co. ............ 564,374 661,800
10,108 Denny's Corp.+ ................. 14,357 47,609
80,000 Diageo plc ..................... 1,174,064 1,570,301
224,000 Diageo plc, ADR ................ 9,660,541 17,765,440
70,000 Flowers Foods Inc. ............. 771,725 1,889,300
33,000 Fomento Economico Mexicano
SAB de CV, ADR .............. 1,356,892 3,820,080
180,000 General Mills Inc. ............. 8,693,258 10,368,000
200,000 Groupe Danone .................. 19,701,934 30,308,230
1,000,000 Grupo Bimbo SA de CV, Cl. A .... 2,705,279 4,998,611
110,000 H.J. Heinz Co. ................. 3,901,343 4,951,100
20,000 Hain Celestial Group Inc.+ ..... 267,663 624,200
10,000 Heineken NV .................... 471,537 475,612
150,000 ITO EN Ltd. .................... 4,531,517 4,588,042
105,000 Kellogg Co. .................... 3,784,191 5,256,300
75,000 Kerry Group plc, Cl. A ......... 860,877 1,861,263
12,100 LVMH Moet Hennessy
Louis Vuitton SA ............ 419,052 1,277,005
2,500 Nestle SA ...................... 513,610 888,387
36,000 Nissin Food
Products Co. Ltd. ........... 1,270,527 1,334,062
650,000 PAN Fish ASA+ .................. 550,715 594,207
500,000 PepsiAmericas Inc. ............. 9,040,864 10,490,000
355,000 PepsiCo Inc. ................... 17,975,927 22,205,250
6,750 Pernod-Ricard SA ............... 1,457,288 1,550,393
68,200 Ralcorp Holdings Inc.+ ......... 1,308,415 3,470,698
18,000 Remy Cointreau SA .............. 1,153,170 1,164,280
300,000 Sara Lee Corp. ................. 4,862,162 5,109,000
200,000 The Coca-Cola Co. .............. 8,929,955 9,650,000
45,000 The Hershey Co. ................ 1,915,127 2,241,000
2,000 The J.M. Smucker Co. ........... 52,993 96,940
115,360 Tootsie Roll
Industries Inc. ............. 1,562,923 3,772,272
170,000 Wm. Wrigley Jr. Co. ............ 8,244,515 8,792,400
42,500 Wm. Wrigley Jr. Co., Cl. B ..... 2,191,580 2,184,500
475,000 YAKULT HONSHA Co. Ltd. ......... 13,356,561 13,650,687
-------------- --------------
146,136,836 194,644,993
-------------- --------------
FINANCIAL SERVICES -- 9.1%
7,000 Allianz SE ..................... 1,053,147 1,430,031
575,000 American Express Co. ........... 27,278,920 34,885,250
50,000 American International
Group Inc. .................. 3,327,703 3,583,000
65,000 Ameriprise Financial Inc. ...... 1,630,926 3,542,500
30,000 Argonaut Group Inc.+ ........... 752,879 1,045,800
95,000 Aviva plc ...................... 1,163,351 1,528,988
90,000 Banco Santander Central
Hispano SA, ADR ............. 322,130 1,679,400
100,000 Bank of Ireland ................ 584,533 2,310,079
70,000 Barclays plc ................... 916,885 1,000,529

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

248 Berkshire Hathaway Inc.,
Cl. A+ ......................$ 785,026 $ 27,277,520
7,500 Calamos Asset
Management Inc., Cl. A ...... 135,000 201,225
45,000 Capitalia SpA .................. 395,314 425,912
250,000 Citigroup Inc. ................. 12,033,563 13,925,000
155,000 Commerzbank AG, ADR ............ 3,145,338 5,876,251
149,000 Deutsche Bank AG ............... 13,066,887 19,852,760
20,000 H&R Block Inc. ................. 329,930 460,800
145,000 Janus Capital Group Inc. ....... 2,432,086 3,130,550
52,000 JPMorgan Chase & Co. ........... 1,327,407 2,511,600
260,000 Landesbank Berlin
Holding AG+ ................. 5,263,037 2,745,693
23,000 Legg Mason Inc. ................ 2,046,053 2,186,150
133,000 Leucadia National Corp. ........ 1,662,878 3,750,600
30,000 Marsh & McLennan
Companies Inc. .............. 922,962 919,800
45,000 Mediobanca SpA ................. 932,143 1,062,702
80,000 Mellon Financial Corp. ......... 2,519,801 3,372,000
65,000 Moody's Corp. .................. 3,285,357 4,488,900
108,750 Nikko Cordial Corp. ............ 1,351,625 1,247,374
2,500 Prudential Financial Inc. ...... 68,750 214,650
50,000 Standard Chartered plc ......... 954,007 1,460,655
80,000 State Street Corp. ............. 4,001,480 5,395,200
20,000 SunTrust Banks Inc. ............ 419,333 1,689,000
150,000 T. Rowe Price Group Inc. ....... 4,610,820 6,565,500
166,800 TD Banknorth Inc. .............. 5,373,585 5,384,304
5,000 The Allstate Corp. ............. 209,064 325,550
70,000 The Bank of New
York Co. Inc. ............... 2,490,562 2,755,900
45,000 The Charles Schwab Corp. ....... 657,563 870,300
18,000 The Dun & Bradstreet Corp.+ .... 395,898 1,490,220
189,000 The Midland Co. ................ 1,386,764 7,928,550
135,000 The Phoenix Companies Inc. ..... 1,924,073 2,145,150
80,000 The Shizuoka Bank Ltd. ......... 791,848 793,916
3,000 The St. Paul Travelers
Companies Inc. .............. 113,277 161,070
40,000 UBS AG ......................... 1,875,967 2,430,858
120,000 UniCredito Italiano SpA ........ 885,016 1,051,812
100,000 Waddell & Reed Financial Inc.,
Cl. A ....................... 2,058,579 2,736,000
58,000 Westpac Banking Corp. .......... 927,920 1,109,759
-------------- --------------
117,809,387 188,948,808
-------------- --------------
ENERGY AND UTILITIES -- 7.6%
6,000 AGL Resources Inc. ............. 106,104 233,460
70,000 Allegheny Energy Inc.+ ......... 1,099,843 3,213,700
70,000 Apache Corp. ................... 2,728,670 4,655,700
10,000 Aquila Inc.+ ................... 44,350 47,000
247,000 BP plc, ADR .................... 15,155,797 16,573,700
105,000 CH Energy Group Inc. ........... 4,342,243 5,544,000
70,000 CMS Energy Corp.+ .............. 448,516 1,169,000
320,000 ConocoPhillips ................. 19,595,465 23,024,000
8,000 Constellation Energy Group ..... 449,608 550,960
60,000 DPL Inc. ....................... 1,411,620 1,666,800
14,000 DTE Energy Co. ................. 619,460 677,740
250,000 Duke Energy Corp. .............. 7,728,249 8,302,500
84,000 Duquesne Light Holdings Inc. ... 1,310,794 1,667,400
270,000 El Paso Corp. .................. 3,253,601 4,125,600
285,000 El Paso Electric Co.+ .......... 4,563,231 6,945,450
50,000 Energy East Corp. .............. 1,065,733 1,240,000
80,000 Exxon Mobil Corp. .............. 2,750,108 6,130,400
20,000 FPL Group Inc. ................. 556,256 1,088,400
16,000 Giant Industries Inc.+ ......... 1,273,995 1,199,200
210,000 Halliburton Co. ................ 3,809,429 6,520,500

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2006

MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES (CONTINUED)
27,000 Imperial Oil Ltd. ..............$ 1,010,138 $ 993,963
350,000 Kinder Morgan Inc. ............. 36,650,631 37,012,500
10,000 Marathon Oil Corp. ............. 242,414 925,000
10,000 Mirant Corp.+ .................. 192,014 315,700
140,000 Mirant Corp. Escrow+ (a) ....... 0 0
2,000 Niko Resources Ltd.,
New York ..................... 110,842 166,700
1,000 Niko Resources Ltd., Toronto ... 55,421 71,474
10,000 NiSource Inc. .................. 215,500 241,000
240,000 Northeast Utilities ............ 4,631,542 6,758,400
20,000 Oceaneering International Inc.+ 538,223 794,000
2,000 PetroChina Co. Ltd., ADR ....... 137,965 281,560
16,000 Petroleo Brasileiro SA, ADR .... 1,125,213 1,647,840
100,000 Progress Energy Inc., CVO+ ..... 52,000 32,500
60,000 Saipem SpA ..................... 1,126,995 1,563,461
13,000 Sasol Ltd. ..................... 500,463 479,702
5,000 SJW Corp. ...................... 68,704 193,800
20,000 Southwest Gas Corp. ............ 451,132 767,400
65,000 The AES Corp.+ ................. 369,961 1,432,600
32,628 Total SA ....................... 1,986,057 2,353,799
30,000 TXU Corp. ...................... 740,349 1,626,300
270,000 Westar Energy Inc. ............. 4,728,664 7,009,200
-------------- --------------
127,247,300 159,242,409
-------------- --------------
TELECOMMUNICATIONS -- 5.4%
5,000 Alltel Corp. ................... 91,103 302,400
220,000 BCE Inc. ....................... 5,679,932 5,940,000
30,000 Brasil Telecom Participacoes
SA, ADR ..................... 1,743,257 1,280,700
1,700,000 BT Group plc ................... 7,029,679 10,035,637
4,440,836 Cable & Wireless
Jamaica Ltd.+ ............... 101,639 66,919
800,000 Cincinnati Bell Inc.+ .......... 5,663,624 3,656,000
5,000 Citizens Communications Co. .... 69,940 71,850
130,000 Commonwealth Telephone
Enterprises Inc. ............ 5,053,722 5,441,800
110,000 Compania de
Telecomunicaciones de
Chile SA, ADR ............... 1,634,847 883,300
168,000 Deutsche Telekom AG, ADR ....... 2,793,519 3,057,600
15,000 Fastweb ........................ 778,948 857,765
5,000 France Telecom SA, ADR ......... 146,305 138,500
100,000 Koninklijke KPN NV ............. 232,728 1,421,688
570,000 Qwest Communications
International Inc.+ ......... 1,958,336 4,770,900
550,000 Sprint Nextel Corp. ............ 15,436,707 10,389,500
186,554 Tele Norte Leste
Participacoes SA, ADR ....... 2,477,755 2,783,386
48,000 Telecom Argentina SA,
Cl. B, ADR+ ................. 369,540 960,480
1,470,000 Telecom Italia SpA ............. 6,015,464 4,443,667
230,000 Telefonica SA, ADR ............. 11,566,157 14,662,500
62,000 Telefonos de Mexico SAB de
CV, Cl. L, ADR .............. 469,422 1,752,120
260,000 Telephone & Data
Systems Inc. ................ 12,077,996 14,125,800
370,000 Telephone & Data
Systems Inc., Special ....... 16,257,412 18,352,000
15,000 TELUS Corp. .................... 280,203 688,419
180,000 Verizon Communications Inc. .... 6,606,128 6,703,200
5,169 Windstream Corp. ............... 19,996 73,503
-------------- --------------
104,554,359 112,859,634
-------------- --------------
HEALTH CARE -- 4.9%
10,000 Abbott Laboratories ............ 398,848 487,100
22,000 Advanced Medical
Optics Inc.+ ................ 846,104 774,400

MARKET
SHARES COST VALUE
------ ---- -------
7,023 Allergan Inc. ..................$ 655,380 $ 840,934
52,000 Amgen Inc.+ .................... 3,039,863 3,552,120
19,146 AstraZeneca plc ................ 949,527 1,027,783
26,000 Biogen Idec Inc.+ .............. 157,406 1,278,940
135,000 Bristol-Myers Squibb Co. ....... 3,485,673 3,553,200
7,000 Cochlear Ltd. .................. 287,028 320,475
45,036 GlaxoSmithKline plc ............ 1,292,245 1,185,135
4,000 GlaxoSmithKline plc, ADR ....... 216,096 211,040
30,000 Henry Schein Inc.+ ............. 764,324 1,469,400
38,300 Hisamitsu
Pharmaceutical Co. Inc. ..... 935,511 1,213,319
30,000 Hospira Inc.+ .................. 1,049,087 1,007,400
868,800 ICOS Corp.+ .................... 27,383,160 29,356,752
40,000 Invitrogen Corp.+ .............. 2,065,234 2,263,600
95,000 Merck & Co. Inc. ............... 3,625,481 4,142,000
2,000 Nobel Biocare Holding AG ....... 286,712 591,301
39,000 Novartis AG .................... 2,076,654 2,248,461
105,000 Novartis AG, ADR ............... 4,622,998 6,031,200
430,000 Pfizer Inc. .................... 11,887,587 11,137,000
16,400 Roche Holding AG ............... 2,587,332 2,940,829
15,108 Sanofi-Aventis ................. 1,354,266 1,395,029
100,000 Schering-Plough Corp. .......... 1,917,839 2,364,000
5,000 Serono SA ...................... 4,513,312 4,489,126
80,000 Smith & Nephew plc ............. 752,722 834,883
5,250 Straumann Holding AG ........... 1,087,318 1,271,030
10,000 Synthes Inc. ................... 1,190,727 1,192,450
19,000 Takeda Pharmaceutical
Co. Ltd. .................... 909,016 1,304,399
40,000 UnitedHealth Group Inc. ........ 1,873,359 2,149,200
82,000 William Demant Holding A/S+ .... 3,730,842 6,648,492
100,000 Wyeth .......................... 4,105,470 5,092,000
3,500 Zimmer Holdings Inc.+ .......... 217,154 274,330
-------------- --------------
90,264,275 102,647,328
-------------- --------------
DIVERSIFIED INDUSTRIAL -- 4.9%
40,000 Acuity Brands Inc. ............. 1,214,400 2,081,600
55,000 Amano Corp. .................... 956,301 690,475
164,000 Ampco-Pittsburgh Corp. ......... 2,155,086 5,490,720
26,000 Bayer AG ....................... 1,093,829 1,395,499
25,000 Bouygues SA .................... 1,244,323 1,604,844
136,000 Cooper Industries Ltd., Cl. A .. 7,429,909 12,298,480
260,000 Crane Co. ...................... 5,942,015 9,526,400
77,500 CRH plc ........................ 1,027,655 3,226,652
400,000 Enodis plc ..................... 1,399,733 1,560,512
120,000 General Electric Co. ........... 4,360,104 4,465,200
115,000 Greif Inc., Cl. A .............. 2,679,427 13,616,000
8,000 Greif Inc., Cl. B .............. 453,774 860,000
455,500 Honeywell International Inc. ... 15,523,651 20,606,820
255,000 ITT Corp. ...................... 6,693,277 14,489,100
101,000 Park-Ohio Holdings Corp.+ ...... 1,073,670 1,624,080
2,000 Sulzer AG ...................... 425,026 2,276,569
30,000 Technip SA ..................... 2,101,417 2,059,270
74,000 The Lamson & Sessions Co.+ ..... 435,944 1,795,240
75,000 Trinity Industries Inc. ........ 945,000 2,640,000
-------------- --------------
57,154,541 102,307,461
-------------- --------------
CONSUMER PRODUCTS -- 4.9%
24,000 Altadis SA ..................... 1,010,055 1,256,155
85,000 Avon Products Inc. ............. 2,457,708 2,808,400
42,000 Christian Dior SA .............. 3,082,702 4,476,932
15,000 Church & Dwight Co. Inc. ....... 99,536 639,750
32,000 Clorox Co. ..................... 1,776,613 2,052,800
10,000 Colgate-Palmolive Co. .......... 513,338 652,400
69,000 Compagnie Financiere
Richemont AG, Cl. A ......... 2,879,288 4,020,517
114,000 Energizer Holdings Inc.+ ....... 4,929,546 8,092,860

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2006

MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS (CONTINUED)
60,000 Fortune Brands Inc. ............$ 4,147,453 $ 5,123,400
60,000 Gallaher Group plc ............. 938,308 1,346,896
190,000 Gallaher Group plc, ADR ........ 13,470,232 17,090,500
2,000 Givaudan SA .................... 550,742 1,851,456
60,000 Hanesbrands Inc.+ .............. 1,376,148 1,417,200
32,000 Harley-Davidson Inc. ........... 1,486,605 2,255,040
250,000 Jacuzzi Brands Inc.+ ........... 3,063,335 3,107,500
42,000 Lenox Group Inc.+ .............. 383,261 268,800
15,000 Matsushita Electric
Industrial Co. Ltd., ADR .... 178,325 301,350
15,000 Mattel Inc. .................... 270,000 339,900
22,500 National Presto
Industries Inc. ............. 767,432 1,347,075
10,000 Oil-Dri Corp. of America ....... 171,255 168,800
300,000 Procter & Gamble Co. ........... 15,983,165 19,281,000
60,000 Reckitt Benckiser plc .......... 1,849,650 2,741,958
7,500 Swatch Group AG ................ 1,587,958 1,657,263
1,000,000 Swedish Match AB ............... 11,131,012 18,697,186
-------------- --------------
74,103,667 100,995,138
-------------- --------------
PUBLISHING -- 4.5%
70,000 Banta Corp. .................... 2,865,557 2,548,000
55,000 Dow Jones & Co. Inc. ........... 2,230,693 2,090,000
9,000 Idearc Inc.+ ................... 275,255 257,850
348,266 Independent News &
Media plc ................... 663,968 1,383,777
14,212 McClatchy Co., Cl. A ........... 730,795 615,380
320,000 Media General Inc., Cl. A ...... 19,151,873 11,894,400
122,000 Meredith Corp. ................. 5,066,964 6,874,700
50,000 New York Times Co., Cl. A ...... 1,945,184 1,218,000
1,660,000 News Corp., Cl. A .............. 21,945,920 35,656,800
20,000 News Corp., Cl. B .............. 186,274 445,200
200,000 Penton Media Inc.+ ............. 439,128 154,000
382,000 PRIMEDIA Inc.+ ................. 1,665,474 645,580
261,319 SCMP Group Ltd. ................ 191,790 99,108
66,585 Seat Pagine Gialle SpA ......... 177,139 39,685
150,000 The E.W. Scripps Co., Cl. A .... 5,032,324 7,491,000
183,000 The McGraw-Hill
Companies Inc. .............. 7,152,812 12,447,660
470,000 The Reader's Digest
Association Inc. ............ 8,075,814 7,849,000
45,000 Tribune Co. .................... 1,425,927 1,385,100
-------------- --------------
79,222,891 93,095,240
-------------- --------------
ENTERTAINMENT -- 4.1%
13,000 Aruze Corp. .................... 378,492 373,598
32,000 Canal+ Groupe .................. 34,011 315,121
2,002 Chestnut Hill Ventures+ (a) .... 54,500 42,990
220,000 Discovery Holding Co., Cl. A+ .. 3,185,692 3,539,800
3,000 DreamWorks Animation
SKG Inc., Cl. A+ ............ 68,959 88,470
110,000 EMI Group plc .................. 292,543 570,752
79,500 EMI Group plc, ADR ............. 941,481 824,638
600,000 Gemstar-TV Guide
International Inc.+ ......... 2,825,471 2,406,000
650,000 Grupo Televisa SA, ADR ......... 6,226,362 17,556,500
125 Live Nation Inc.+ .............. 1,296 2,800
160,000 Publishing &
Broadcasting Ltd. ........... 2,612,735 2,696,409
1,629,500 Rank Group plc ................. 7,987,535 7,457,868
12,000 Regal Entertainment Group,
Cl. A ....................... 165,788 255,840
75,000 Six Flags Inc.+ ................ 360,725 393,000
85,000 The Walt Disney Co. ............ 1,792,093 2,912,950
810,000 Time Warner Inc. ............... 17,932,501 17,641,800

MARKET
SHARES COST VALUE
------ ---- -------
20,200 Triple Crown Media Inc.+ .......$ 217,899 $ 156,348
375,000 Viacom Inc., Cl. A+ ............ 18,170,566 15,378,750
333,900 Vivendi ........................ 9,061,536 13,050,992
-------------- --------------
72,310,185 85,664,626
-------------- --------------
CABLE AND SATELLITE -- 4.0%
1,590,000 Cablevision Systems Corp.,
Cl. A+ ...................... 33,560,398 45,283,200
55,000 Comcast Corp., Cl. A+ .......... 1,751,889 2,328,150
85,000 Comcast Corp., Cl. A, Special+ . 756,584 3,559,800
55,000 EchoStar Communications
Corp., Cl. A+ ............... 1,722,522 2,091,650
156,770 Liberty Global Inc., Cl. A+ .... 2,194,421 4,569,846
139,001 Liberty Global Inc., Cl. C+ .... 2,941,276 3,892,028
295,345 Rogers Communications Inc.,
Cl. B, New York ............. 4,345,478 17,602,562
19,310 Rogers Communications Inc.,
Cl. B, Toronto .............. 137,424 574,589
80,000 Shaw Communications Inc.,
Cl. B, New York ............. 329,198 2,536,800
20,000 Shaw Communications Inc.,
Cl. B, Toronto .............. 52,983 633,023
10,000 The DIRECTV Group Inc.+ ........ 250,200 249,400
-------------- --------------
48,042,373 83,321,048
-------------- --------------
HOTELS AND GAMING -- 3.0%
132,600 Aztar Corp.+ ................... 6,731,424 7,216,092
190,000 Gaylord Entertainment Co.+ ..... 5,061,983 9,676,700
28,000 Greek Organization of
Football Prognostics SA ..... 370,769 1,082,226
45,000 Harrah's Entertainment Inc. .... 3,378,976 3,722,400
530,000 Hilton Hotels Corp. ............ 8,778,237 18,497,000
45,000 InterContinental Hotels
Group plc ................... 912,562 1,111,938
1,344,116 Ladbrokes plc .................. 14,291,853 11,007,315
6,000 Las Vegas Sands Corp.+ ......... 221,279 536,880
600,000 Mandarin Oriental
International Ltd. .......... 1,028,889 1,002,000
110,000 MGM Mirage+ .................... 3,730,098 6,308,500
12,000 Orient-Express Hotels Ltd.,
Cl. A ....................... 518,369 567,840
34,000 Starwood Hotels & Resorts
Worldwide Inc. .............. 520,597 2,125,000
-------------- --------------
45,545,036 62,853,891
-------------- --------------
EQUIPMENT AND SUPPLIES -- 2.7%
265,000 AMETEK Inc. .................... 4,455,847 8,437,600
2,000 Amphenol Corp., Cl. A .......... 14,775 124,160
50,000 Assa Abloy AB, Cl. B ........... 948,665 1,088,235
94,000 CIRCOR International Inc. ...... 974,241 3,458,260
200,000 Donaldson Co. Inc. ............. 2,943,696 6,942,000
65,000 Fedders Corp.+ ................. 285,346 65,000
110,000 Flowserve Corp.+ ............... 2,075,580 5,551,700
23,000 Franklin Electric Co. Inc. ..... 250,434 1,181,970
90,000 Gerber Scientific Inc.+ ........ 988,544 1,130,400
75,000 GrafTech International Ltd.+ ... 785,966 519,000
210,000 IDEX Corp. ..................... 7,537,793 9,956,100
40,000 Ingersoll-Rand Co. Ltd.,
Cl. A ....................... 855,378 1,565,200
103,000 Lufkin Industries Inc. ......... 1,000,348 5,982,240
11,000 Mueller Industries Inc. ........ 485,034 348,700
1,000 Sealed Air Corp. ............... 17,404 64,920
2,000 The Manitowoc Co. Inc. ......... 25,450 118,860
100,000 The Weir Group plc ............. 420,789 1,045,562
195,000 Watts Water Technologies Inc.,
Cl. A ....................... 3,012,603 8,016,450
-------------- --------------
27,077,893 55,596,357
-------------- --------------

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2006

MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS (CONTINUED)
AUTOMOTIVE: PARTS AND ACCESSORIES -- 2.3%
43,000 BorgWarner Inc. ................$ 1,126,424 $ 2,537,860
185,000 CLARCOR Inc. ................... 1,506,877 6,254,850
380,000 Dana Corp.+ .................... 3,511,898 528,200
82,500 Earl Scheib Inc.+ .............. 644,854 292,050
350,000 Genuine Parts Co. .............. 12,868,192 16,600,500
76,000 Johnson Controls Inc. .......... 4,515,029 6,529,920
130,000 Midas Inc.+ .................... 1,805,604 2,990,000
317,500 Modine Manufacturing Co. ....... 8,027,340 7,947,025
180,000 Proliance International Inc.+ .. 1,288,913 828,000
160,000 Standard Motor Products Inc. ... 1,743,588 2,396,800
35,000 Superior Industries
International Inc. .......... 822,800 674,450
27,000 TI Automotive Ltd.,
Cl. A+ (a) .................. 0 0
-------------- --------------
37,861,519 47,579,655
-------------- --------------
AVIATION: PARTS AND SERVICES -- 2.1%
374,000 Curtiss-Wright Corp. ........... 5,410,846 13,867,920
200,000 GenCorp Inc.+ .................. 2,572,011 2,804,000
115,000 Precision Castparts Corp. ...... 5,913,307 9,002,200
73,000 Sequa Corp., Cl. A+ ............ 2,963,867 8,399,380
74,600 Sequa Corp., Cl. B+ ............ 3,852,672 8,573,032
205,000 The Fairchild Corp., Cl. A+ .... 1,196,473 448,950
-------------- --------------
21,909,176 43,095,482
-------------- --------------
CONSUMER SERVICES -- 1.6%
200,000 IAC/InterActiveCorp+ ........... 5,436,750 7,432,000
430,000 Liberty Media Corp. -
Interactive, Cl. A+ ......... 9,042,363 9,275,100
795,000 Rollins Inc. ................... 12,221,245 17,577,450
-------------- --------------
26,700,358 34,284,550
-------------- --------------
ELECTRONICS -- 1.6%
5,000 Advanced Micro
Devices Inc.+ ............... 52,100 101,750
5,000 Hitachi Ltd., ADR .............. 347,376 311,800
80,000 Intel Corp. .................... 1,488,952 1,620,000
4,920 Keyence Corp. .................. 941,170 1,219,199
20,000 Molex Inc., Cl. A .............. 519,697 554,000
7,500 NEC Corp., ADR ................. 43,625 36,000
38,000 Royal Philips Electronics
NV, ADR ..................... 52,354 1,428,040
1,401,900 Symbol Technologies Inc. ....... 20,788,893 20,944,386
265,000 Texas Instruments Inc. ......... 6,407,535 7,632,000
-------------- --------------
30,641,702 33,847,175
-------------- --------------
BROADCASTING -- 1.6%
415,000 CBS Corp., Cl. A ............... 13,320,613 12,956,300
100,000 Clear Channel
Communications Inc. ......... 3,546,281 3,554,000
2,000 Cogeco Inc. .................... 39,014 50,182
13,333 Corus Entertainment Inc.,
Cl. B, New York ............. 49,629 479,455
3,333 Corus Entertainment Inc.,
Cl. B, Toronto .............. 12,406 118,612
120,000 Gray Television Inc. ........... 1,060,168 879,600
27,000 Gray Television Inc., Cl. A .... 317,211 221,940
200,000 ION Media Networks Inc.+ ....... 333,063 100,000
77,000 Liberty Media Corp. - Capital,
Cl. A+ ...................... 6,188,638 7,544,460
80,000 Lin TV Corp., Cl. A+ ........... 1,131,059 796,000
120,000 Mediaset SpA ................... 1,288,354 1,424,065

MARKET
SHARES COST VALUE
------ ---- -------
30,000 Modern Times Group AB,
Cl. B+ ......................$ 1,832,335 $ 1,971,969
100,000 Television Broadcasts Ltd. ..... 396,239 610,673
50,000 Univision Communications
Inc., Cl. A+ ................ 1,758,776 1,771,000
115,000 Young Broadcasting Inc.,
Cl. A+ ...................... 1,045,804 324,300
-------------- --------------
32,319,590 32,802,556
-------------- --------------
COMMUNICATIONS EQUIPMENT -- 1.5%
45,000 Agere Systems Inc.+ ............ 664,168 862,650
10,000 Andrew Corp.+ .................. 109,277 102,300
480,000 Corning Inc.+ .................. 4,124,295 8,980,800
90,000 Motorola Inc. .................. 1,024,871 1,850,400
200,000 Nortel Networks Corp.+ ......... 5,602,878 5,346,000
305,000 Thomas & Betts Corp.+ .......... 9,229,463 14,420,400
-------------- --------------
20,754,952 31,562,550
-------------- --------------
SPECIALTY CHEMICALS -- 1.4%
60,000 Ashland Inc. ................... 3,784,810 4,150,800
5,400 Ciba Specialty Chemicals
AG, ADR ..................... 4,285 179,874
20,000 E.I. du Pont de
Nemours and Co. ............. 802,600 974,200
325,000 Ferro Corp. .................... 6,822,762 6,724,250
2,000 FMC Corp. ...................... 136,430 153,100
50,000 H.B. Fuller Co. ................ 668,859 1,291,000
170,000 Hercules Inc.+ ................. 1,979,821 3,282,700
50,000 International Flavors &
Fragrances Inc. ............. 2,289,946 2,458,000
230,000 Omnova Solutions Inc.+ ......... 1,861,571 1,053,400
280,000 Sensient Technologies Corp. .... 5,133,933 6,888,000
15,000 Syngenta AG, ADR ............... 189,981 557,100
165,000 Tokai Carbon Co. Ltd. .......... 677,815 1,172,976
4,032 Tronox Inc., Cl. B ............. 44,467 63,665
-------------- --------------
24,397,280 28,949,065
-------------- --------------
AEROSPACE -- 1.3%
105,000 Boeing Co. ..................... 6,475,976 9,328,200
10,000 Lockheed Martin Corp. .......... 585,900 920,700
80,000 Northrop Grumman Corp. ......... 4,444,416 5,416,000
1,200,000 Rolls-Royce Group plc+ ......... 9,166,092 10,520,237
36,700,000 Rolls-Royce Group plc,
Cl. B ....................... 37,618 72,936
-------------- --------------
20,710,002 26,258,073
-------------- --------------
BUSINESS SERVICES -- 1.2%
7,050 ACCO Brands Corp.+ ............. 126,069 186,614
30,000 Avis Budget Group Inc. ......... 568,356 650,700
22,500 Canon Inc. ..................... 865,859 1,266,753
1,000 CheckFree Corp.+ ............... 9,040 40,160
100,000 Clear Channel Outdoor .
Holdings Inc., Cl. A+ ....... 2,029,434 2,791,000
186,554 Contax Participacoes SA, ADR ... 76,632 171,257
200,000 Group 4 Securicor plc .......... 0 736,201
94,000 Landauer Inc. .................. 2,511,653 4,932,180
119,000 MasterCard Inc., Cl. A ......... 4,776,000 11,720,310
72,500 Nashua Corp.+ .................. 656,627 606,825
25,000 Secom Co. Ltd. ................. 1,095,891 1,296,164
-------------- --------------
12,715,561 24,398,164
-------------- --------------
MACHINERY -- 1.1%
20,000 Caterpillar Inc. ............... 136,559 1,226,600
220,000 Deere & Co. .................... 12,905,974 20,915,400
-------------- --------------
13,042,533 22,142,000
-------------- --------------

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2006

MARKET
SHARES COST VALUE
------ ---- -------
COMMON STOCKS (CONTINUED)
AGRICULTURE -- 1.0%
490,000 Archer-Daniels-Midland Co. .....$ 10,962,208 $ 15,660,400
70,000 Delta & Pine Land Co. .......... 2,712,884 2,831,500
30,000 Monsanto Co. ................... 1,342,682 1,575,900
30,000 The Mosaic Co.+ ................ 491,686 640,800
-------------- --------------
15,509,460 20,708,600
-------------- --------------
METALS AND MINING -- 0.9%
20,000 Alcoa Inc. ..................... 602,426 600,200
33,000 Anglo American plc ............. 1,250,229 1,609,520
89,148 Barrick Gold Corp. ............. 2,610,253 2,736,844
72,500 Harmony Gold Mining
Co. Ltd.+ ................... 347,738 1,149,538
35,000 Harmony Gold Mining
Co. Ltd., ADR+ .............. 460,007 551,250
75,000 Ivanhoe Mines Ltd.+ ............ 560,208 737,250
105,000 Newmont Mining Corp. ........... 2,525,310 4,740,750
110,000 Novelis Inc. ................... 2,381,034 3,063,500
18,000 Rio Tinto plc .................. 937,265 957,923
66,666 Xstrata plc .................... 1,347,948 3,328,536
-------------- --------------
13,022,418 19,475,311
-------------- --------------
ENVIRONMENTAL SERVICES -- 0.9%
65,000 Republic Services Inc. ......... 875,761 2,643,550
450,000 Waste Management Inc. .......... 11,177,729 16,546,500
-------------- --------------
12,053,490 19,190,050
-------------- --------------
WIRELESS COMMUNICATIONS -- 0.9%
110,000 America Movil SAB de CV,
Cl. L, ADR .................. 1,466,186 4,974,200
1,500 NTT DoCoMo Inc. ................ 3,553,937 2,369,648
3,340 Tele Norte Celular
Participacoes SA, ADR ....... 51,601 30,060
8,350 Telemig Celular
Participacoes SA, ADR ....... 241,320 319,388
32,165 Tim Participacoes SA, ADR ...... 390,212 1,113,552
100,000 United States Cellular Corp.+ .. 4,333,517 6,959,000
270 Vivo Participacoes SA+ ......... 941 1,858
174,122 Vivo Participacoes SA, ADR ..... 2,370,462 713,900
5,845 Vivo Participacoes SA, Pfd.+ ... 89,788 23,911
70,000 Vodafone Group plc, ADR ........ 1,902,872 1,944,600
-------------- --------------
14,400,836 18,450,117
-------------- --------------
REAL ESTATE -- 0.8%
70,000 Cheung Kong (Holdings) Ltd. .... 815,521 861,692
98,000 Florida East Coast
Industries Inc. ............. 2,113,491 5,840,800
55,500 Griffin Land & Nurseries Inc.+ . 529,369 1,800,975
150,000 The St. Joe Co. ................ 8,609,636 8,035,500
-------------- --------------
12,068,017 16,538,967
-------------- --------------
AUTOMOTIVE -- 0.8%
35,000 General Motors Corp. ........... 958,291 1,075,200
325,000 Navistar International Corp.+ .. 11,502,531 10,864,750
64,500 PACCAR Inc. .................... 431,444 4,186,050
-------------- --------------
12,892,266 16,126,000
-------------- --------------
RETAIL -- 0.7%
168,000 AutoNation Inc.+ ............... 2,264,270 3,581,760
4,000 AutoZone Inc.+ ................. 351,780 462,240
27,000 Coldwater Creek Inc.+ .......... 54,462 662,040
40,000 Costco Wholesale Corp. ......... 1,868,913 2,114,800
21,500 Hennes & Mauritz AB, Cl. B ..... 919,237 1,086,628
50,000 Matsumotokiyoshi Co. Ltd. ...... 1,372,603 1,111,298

MARKET
SHARES COST VALUE
------ ---- -------
30,000 Next plc .......................$ 811,183 $ 1,057,310
50,000 Sally Beauty Holdings Inc.+ .... 416,928 390,000
39,800 Seven & I Holdings Co. Ltd. .... 1,114,381 1,237,427
20,000 SUPERVALU Inc. ................. 595,000 715,000
10,000 The Home Depot Inc. ............ 342,745 401,600
73,000 Woolworths Ltd. ................ 1,058,044 1,377,174
-------------- --------------
11,169,546 14,197,277
-------------- --------------
COMPUTER SOFTWARE AND SERVICES -- 0.5%
10,000 Check Point Software
Technologies Ltd.+ .......... 169,874 219,200
12,000 John H. Harland Co. ............ 604,895 602,400
830 NIWS Co. HQ Ltd. ............... 1,012,369 498,676
200,000 Redback Networks Inc.+ ......... 5,002,545 4,988,000
24,100 Square Enix Co. Ltd. ........... 648,849 631,839
25,256 Telecom Italia Media SpA ....... 26,868 12,019
150,000 Yahoo! Inc.+ ................... 4,869,908 3,831,000
-------------- --------------
12,335,308 10,783,134
-------------- --------------
TRANSPORTATION -- 0.4%
100,000 AMR Corp.+ ..................... 1,924,248 3,023,000
120,000 GATX Corp. ..................... 2,497,512 5,199,600
15,000 Grupo TMM SA, Cl. A, ADR+ ...... 80,459 37,800
-------------- --------------
4,502,219 8,260,400
-------------- --------------
SHARES/
UNITS
------
CLOSED-END FUNDS -- 0.4%
16,000 Bell Aliant Regional
Communications
Income Fund+ (b) ............ 510,684 369,920
31,500 Royce Value Trust Inc. ......... 388,297 699,300
105,000 The Central Europe and
Russia Fund Inc. ............ 2,403,781 5,650,050
70,000 The New Germany Fund Inc. ...... 754,518 1,012,900
-------------- --------------
4,057,280 7,732,170
-------------- --------------
PAPER AND FOREST PRODUCTS -- 0.2%
114,000 Pactiv Corp.+ .................. 1,196,847 4,068,660
10,000 Svenska Cellulosa AB, Cl. B .... 423,932 522,207
-------------- --------------
1,620,779 4,590,867
-------------- --------------
REAL ESTATE INVESTMENT TRUSTS -- 0.2%
2,500 Camden Property Trust .......... 46,862 184,625
100,100 Columbia Equity Trust Inc. ..... 1,885,912 1,912,911
2,187 Prosperity REIT ................ 616 475
24,984 Rayonier Inc. .................. 798,811 1,025,593
-------------- --------------
2,732,201 3,123,604
-------------- --------------
MANUFACTURED HOUSING AND RECREATIONAL VEHICLES -- 0.1%
70,000 Champion Enterprises Inc.+ ..... 659,503 655,200
50,000 Fleetwood Enterprises Inc.+ .... 535,046 395,500
31,000 Huttig Building Products Inc.+ . 78,168 163,990
7,000 Martin Marietta Materials Inc. . 144,225 727,370
10,000 Nobility Homes Inc. ............ 195,123 265,900
22,000 Skyline Corp. .................. 883,239 884,840
-------------- --------------
2,495,304 3,092,800
-------------- --------------
TOTAL
COMMON STOCKS ................ 1,349,380,540 1,829,365,500
-------------- --------------

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2006

MARKET
SHARES COST VALUE
------ ---- -------
CONVERTIBLE PREFERRED STOCKS -- 0.2%
AEROSPACE -- 0.1%
13,500 Northrop Grumman Corp.,
7.000% Cv. Pfd., Ser. B .....$ 1,573,020 $ 1,795,500
-------------- --------------
TELECOMMUNICATIONS -- 0.1%
25,000 Cincinnati Bell Inc.,
6.750% Cv. Pfd., Ser. B ..... 787,113 1,150,000
-------------- --------------
BROADCASTING -- 0.0%
90 Gray Television Inc.,
8.000% Cv. Pfd.,
Ser. C (a)(b)(c) ............ 900,000 900,000
-------------- --------------
TOTAL CONVERTIBLE
PREFERRED STOCKS ............. 3,260,133 3,845,500
-------------- --------------
PRINCIPAL
AMOUNT
------

CONVERTIBLE CORPORATE BONDS -- 0.1%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.1%
$ 1,000,000 Standard Motor Products Inc.,
Sub. Deb. Cv.,
6.750%, 07/15/09 ............ 968,763 950,000
500,000 The Pep Boys -
Manny, Moe & Jack, Cv.,
4.250%, 06/01/07 ............ 496,690 497,500
-------------- --------------
1,465,453 1,447,500
-------------- --------------
AEROSPACE -- 0.0%
669,000 Kaman Corp., Sub. Deb. Cv.,
6.000%, 03/15/12 ............ 645,242 687,398
-------------- --------------
CONSUMER PRODUCTS -- 0.0%
1,000,100 Pillowtex Corp., Sub. Deb. Cv.,
9.000%, 12/15/07 (a)(d) ..... 0 0
-------------- --------------
TOTAL CONVERTIBLE
CORPORATE BONDS .............. 2,110,695 2,134,898
-------------- --------------

SHARES
------

WARRANTS -- 0.0%
ENERGY AND UTILITIES -- 0.0%
12,183 Mirant Corp., Ser. A,
expire 01/03/11+ ............ 36,353 159,597
-------------- --------------
PRINCIPAL
AMOUNT
------

SHORT-TERM OBLIGATIONS -- 11.8%
REPURCHASE AGREEMENTS -- 10.5%
$94,449,000 Barclays Capital Inc., 4.800%,
dated 12/29/06, due 01/03/07,
proceeds at maturity,
$94,511,966 (e) ............. 94,449,000 94,449,000
125,000,000 Daiwa Securities America Inc.,
4.820%, dated 12/29/06,
due 01/03/07, proceeds at
maturity, $125,083,681 (f) .. 125,000,000 125,000,000
-------------- --------------
219,449,000 219,449,000
-------------- --------------
U.S. TREASURY BILLS -- 1.3%
27,645,000 U.S. Treasury Bills,
5.006% to 5.100%++,
03/08/07 to 05/03/07 (g) .... 27,188,439 27,200,512
-------------- --------------
TOTAL SHORT-TERM
OBLIGATIONS .................. 246,637,439 246,649,512
-------------- --------------

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

TOTAL INVESTMENTS -- 100.0% ................$1,601,425,160 $2,082,155,007
==============
FUTURES CONTRACTS
(Unrealized depreciation) ................................ (87,420)

OTHER ASSETS AND LIABILITIES (NET) ......................... 32,331,192
PREFERRED STOCK
(13,906,900 preferred shares outstanding) ................ (527,492,500)
--------------

NET ASSETS -- COMMON STOCK
(168,756,272 common shares outstanding) .................$1,586,906,279
==============

NET ASSET VALUE PER COMMON SHARE
($1,586,906,279 / 168,756,272 shares outstanding) ........ $9.40
=====
NUMBER OF UNREALIZED
CONTRACTS EXPIRATION DATE DEPRECIATION
--------- --------------- --------------

FUTURES CONTRACTS -- SHORT POSITION
31 S & P 500 Index Futures ......... 03/15/07 $ (87,420)
==============

-------------
(a) Security fair valued under procedures established by the Board of
Directors. The procedures may include reviewing available financial
information about the company and reviewing valuation of comparable
securities and other factors on a regular basis. At December 31, 2006, the
market value of fair valued securities amounted to $942,990 or 0.05% of
total investments.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At December
31, 2006, the market value of the Rule 144A securities amounted to
$1,269,920 or 0.06% of total investments.
(c) At December 31, 2006, the Fund held an investment in a restricted and
illiquid security amounting to $900,000 or 0.04% of total investments,
which was valued under methods approved by the Board as follows:

12/31/2006
ACQUISITION ACQUISITION ACQUISITION CARRYING VALUE
SHARES ISSUER DATE COST PER UNIT
------ ------ ----------- ----------- --------------
90 Gray Television Inc.,
8.000% Cv. Pfd., Ser. C .. 04/23/02 $900,000 $10,000

(d) Bond in default.
(e) Collateralized by $67,430,000 and $1,465,000 U.S. Treasury Bonds, 8.875%
and 6.375%, due 02/15/19 and 08/15/27, market value $94,556,040 and
$1,781,940, respectively.
(f) Collateralized by $127,091,000 U.S. Treasury Bill and $2,193,000 U.S.
Treasury Note, 5.987% and 4.000%, due 03/29/07 and 06/15/09, market value
$125,343,499 and $2,157,364, respectively.
(g) At December 31, 2006, $600,000 of the principal amount was pledged as
collateral for futures contracts.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR American Depository Receipt
CVO Contingent Value Obligation

% OF
MARKET MARKET
VALUE VALUE
------- ------------
GEOGRAPHIC DIVERSIFICATION
North America......................... 79.4% $1,652,579,749
Europe................................ 15.5 323,393,342
Latin America......................... 2.8 58,100,649
Japan................................. 1.8 38,476,335
Asia/Pacific.......................... 0.4 7,424,442
South Africa.......................... 0.1 2,180,490
----- --------------
Total Investments..................... 100.0% $2,082,155,007
===== ==============

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2006

ASSETS:
Investments, at value (cost $1,381,976,160) ............... $ 1,862,706,007
Repurchase agreements, at value
(cost $219,449,000) ..................................... 219,449,000
Foreign currency, at value (cost $18,383) ................ 18,334
Deposit at broker ......................................... 47,243
Cash ...................................................... 17,583
Receivable for investments sold ........................... 53,414,291
Dividends and interest receivable ......................... 2,070,035
Unrealized appreciation on swap contracts ................. 625,830
Variation margin .......................................... 42,160
Prepaid expense ........................................... 69,720
---------------
TOTAL ASSETS .............................................. 2,138,460,203
---------------
LIABILITIES:
Payable for investments purchased ......................... 17,151,507
Payable for investment advisory fees ...................... 5,332,140
Distributions payable ..................................... 493,030
Payable for offering expenses ............................. 307,531
Payable for payroll expenses .............................. 33,115
Payable for accounting fees ............................... 7,481
Payable for Directors' fees ............................... 1,500
Other accrued expenses .................................... 735,120
---------------
TOTAL LIABILITIES ......................................... 24,061,424
---------------
PREFERRED STOCK:
Series B Cumulative Preferred Stock (7.20%, $25
liquidation value, $0.001 par value, 6,600,000
shares authorized with 4,950,000 shares issued
and outstanding) ........................................ 123,750,000
Series C Cumulative Preferred Stock (Auction Rate,
$25,000 liquidation value, $0.001 par value, 5,200
shares authorized with 5,200 shares issued and
outstanding) ............................................ 130,000,000
Series D Cumulative Preferred Stock (5.875%, $25
liquidation value, $0.001 par value, 3,000,000
shares authorized with 2,949,700 shares issued
and outstanding) ........................................ 73,742,500
Series E Cumulative Preferred Stock (Auction Rate,
$25,000 liquidation value, $0.001 par value, 2,000
shares authorized with 2,000 shares issued and
outstanding) ............................................ 50,000,000
Series F Cumulative Preferred Stock (6.20%, $25
liquidation value, $0.001 par value, 6,000,000
shares authorized with 6,000,000 shares issued
and outstanding) ........................................ 150,000,000
---------------
TOTAL PREFERRED STOCK ..................................... 527,492,500
---------------
NET ASSETS ATTRIBUTABLE TO COMMON SHARES................... $ 1,586,906,279
===============
NET ASSETS ATTRIBUTABLE TO COMMON SHARES
CONSIST OF:
Paid-in capital, at $0.001 par value ...................... $ 1,110,082,186
Accumulated net investment income ......................... 693,273
Accumulated distributions in excess of net realized
gain on investments, options, futures contracts,
swap contracts, and foreign currency transactions ....... (5,141,866)
Net unrealized appreciation on investments ................ 480,729,847
Net unrealized appreciation on swap contracts ............. 625,830
Net unrealized depreciation on futures .................... (87,420)
Net unrealized appreciation on foreign
currency translations ................................... 4,429
---------------
NET ASSETS ................................................ $ 1,586,906,279
===============
NET ASSET VALUE PER COMMON SHARE
($1,586,906,279 / 168,756,272 shares outstanding;
246,000,000 shares authorized)............................. $9.40
=====

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006

INVESTMENT INCOME:
Dividends (net of foreign taxes of $646,110) .............. $ 41,180,391
Interest .................................................. 10,581,496
-------------
TOTAL INVESTMENT INCOME ................................... 51,761,887
-------------
EXPENSES:
Investment advisory fees .................................. 18,761,514
Auction agent fees ........................................ 449,260
Shareholder communications expenses ....................... 395,336
Custodian fees ............................................ 255,855
Payroll expenses .......................................... 188,995
Shareholder services fees ................................. 171,830
Directors' fees ........................................... 139,938
Legal and audit fees ...................................... 118,004
Accounting fees ........................................... 45,000
Interest expense .......................................... 75
Miscellaneous expenses .................................... 352,303
-------------
TOTAL EXPENSES ............................................ 20,878,110
Less: Custodian fee credits ............................... (52,316)
-------------
NET EXPENSES .............................................. 20,825,794
-------------
NET INVESTMENT INCOME ..................................... 30,936,093
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, OPTIONS WRITTEN, FUTURES CONTRACTS,
SWAP CONTRACTS, AND FOREIGN CURRENCY:
Net realized gain on investments .......................... 141,539,769
Net realized gain on options written ...................... 21,999
Net realized gain on futures contracts .................... 1,626,836
Net realized gain on swap contracts ....................... 615,003
Net realized loss on foreign currency transactions ........ (182,582)
-------------
Net realized gain on investments, options written,
futures contracts, swap contracts,
and foreign currency transactions ....................... 143,621,025
-------------
Net change in unrealized appreciation/(depreciation):
on investments .......................................... 219,834,170
on future contracts ..................................... (87,420)
on swap contracts ....................................... 210,805
on foreign currency translations ........................ 12,066
-------------
Net change in unrealized appreciation/(depreciation)
on investments, future contracts, swap contracts,
and foreign currency translations ....................... 219,969,621
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, OPTIONS WRITTEN, FUTURES
CONTRACTS, SWAP CONTRACTS, AND
FOREIGN CURRENCY ........................................ 363,590,646
-------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ......................................... 394,526,739
-------------
Total Distributions to Preferred Stock Shareholders ....... (24,947,491)
-------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO
COMMON SHARES RESULTING FROM OPERATIONS ................. $ 369,579,248
=============

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO COMMON SHARES

YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
----------------- -----------------

OPERATIONS:
Net investment income ........................................................... $ 30,936,093 $ 15,621,752
Net realized gain on investments, written options,
futures contracts, swap contracts,
and foreign currency transactions ............................................. 143,621,025 132,556,780
Net change in unrealized appreciation/(depreciation) on investments, futures
contracts, swap contracts, and foreign currency translations .................. 219,969,621 (60,827,456)
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................ 394,526,739 87,351,076
--------------- ---------------
DISTRIBUTIONS TO PREFERRED SHARES:
Net investment income ........................................................... (4,468,454) (2,181,294)
Net realized short-term gains on investments, written options,
futures contracts, swap contracts,
and foreign currency transactions ............................................. (1,813,678) (182,478)
Net realized long-term gains on investments, written options,
futures contracts, swap contracts,
and foreign currency transactions ............................................. (18,665,359) (19,817,252)
--------------- ---------------
TOTAL DISTRIBUTIONS TO PREFERRED SHARES ......................................... (24,947,491) (22,181,024)
--------------- ---------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON
SHARES RESULTING FROM OPERATIONS .............................................. 369,579,248 65,170,052
--------------- ---------------
DISTRIBUTIONS TO COMMON SHARES:
Net investment income ........................................................... (26,337,625) (12,530,700)
Net realized short-term gains on investments, written options,
futures contracts, swap contracts,
and foreign currency transactions ............................................. (10,620,934) (1,048,266)
Net realized long-term gains on investments, written options,
futures contracts, swap contracts,
and foreign currency transactions ............................................. (109,810,607) (113,842,518)
--------------- ---------------
TOTAL DISTRIBUTIONS TO COMMON SHARES ............................................ (146,769,166) (127,421,484)
--------------- ---------------
FUND SHARE TRANSACTIONS:
Net increase in net assets from common shares issued upon reorganization and
reinvestment of dividends and distributions ................................... 23,591,621 45,583,893
Net increase in net assets from common shares issued upon rights offering ....... -- 143,681,307
Offering costs for preferred shares charged to paid-in capital .................. (5,235,000) (5,050)
Offering costs for issuance of common shares in rights charged to paid-in capital (151,821) (600,000)
--------------- ---------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS ......................... 18,204,800 188,660,150
--------------- ---------------
NET INCREASE IN NET ASSETS ATTRIBUTABLE TO COMMON SHARES ........................ 241,014,882 126,408,718

NET ASSETS ATTRIBUTABLE TO COMMON SHARES:
Beginning of period ............................................................. 1,345,891,397 1,219,482,679
--------------- ---------------
End of period (including undistributed net investment income
of $693,273 and $561,527, respectively) ...................................... $ 1,586,906,279 $ 1,345,891,397
=============== ===============

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION. The Gabelli Equity Trust Inc. (the "Fund") is a non-diversified
closed-end 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.
Investment operations commenced on August 21, 1986.

The Fund will invest at least 80% of its assets in equity securities under
normal market conditions (the "80% Policy"). The 80% Policy may be changed
without shareholder approval. The Fund will provide shareholders with notice at
least 60 days prior to the implementation of any change in the 80% Policy.

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

SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange 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 or a market's official closing price 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 (the "Board") so determines, by such other method as the
Board 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 on a foreign market are generally
valued at the preceding closing values of such securities on the relevant
market, but may be fair valued pursuant to procedures established by the Board
if market conditions change significantly after the close of the foreign market
but prior to the close of business on the day the securities are being valued.
Debt instruments with remaining maturities of 60 days or less that are not
credit impaired are valued at amortized cost, unless the Board determines such
amount does not reflect the securities' fair value, in which case these
securities will be fair valued as determined by the Board. Debt instruments
having a maturity greater than 60 days for which market quotations are readily
available are valued at the average of the latest bid and asked prices. If there
were no asked prices quoted on such day, the security is valued using the
closing bid price. Futures contracts are valued at the closing settlement price
of the exchange or board of trade on which the applicable contract is traded.

Securities and assets for which market quotations are not readily available
are fair valued as determined by the Board. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available
financial and non-financial information about the company; comparisons to the
valuation and changes in valuation of similar securities, including a comparison
of foreign securities to the equivalent U.S. dollar value ADR securities at the
close of the U.S. exchange; and evaluation of any other information that could
be indicative of the value of the security.

In September 2006, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards ("SFAS") 157, Fair Value
Measurements, which clarifies the definition of fair value and requires
companies to expand their disclosure about the use of fair value to measure
assets and liabilities in interim and annual periods subsequent to initial
recognition. Adoption of SFAS 157 requires the use of the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. At this time,
management is in the process of reviewing the requirements of SFAS 157 against
its current valuation policies to determine future applicability.

REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
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. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
The Fund will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 102% of the dollar
amount invested by the Fund in each agreement. The Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the adequacy of the collateral.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At December
31, 2006, the Fund had investments of $219,449,000 in repurchase agreements.

INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Fund may invest, from time
to time, in shares of other investment companies (or entities that would be
considered investment companies but are excluded from the definition pursuant to
certain exceptions under the 1940 Act) (the "Acquired Funds") in accordance with
the 1940 Act and related rules.

As a shareholder in the Fund, you would bear the pro rata portion of the
periodic expenses of the Acquired Funds in addition to the Fund's expenses.

For the fiscal year ended December 31, 2006, the Fund's pro rata portion of
the periodic expenses charged by the Acquired Funds was less than one basis
point.

OPTIONS. The Fund may purchase or write call or put options on securities
or indices. As a writer of put options, the Fund receives a premium at the
outset and then bears the risk of unfavorable changes in the price of the
financial instrument underlying

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

the option. The Fund would incur a loss if the price of the underlying financial
instrument decreases between the date the option is written and the date on
which the option is terminated. The Fund would realize a gain, to the extent of
the premium, if the price of the financial instrument increases between those
dates.

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

In the case of call options, these exercise prices are referred to as
"in-the-money", "at-the-money", and "out-of-the-money", respectively. The Fund
may write (a) in-the-money call options when the Adviser expects that the price
of the underlying security will remain stable or decline moderately during the
option period, (b) covered at-the-money call options when the Adviser expects
that the price of the underlying security will remain stable or advance
moderately during the option period, and (c) out-of-the-money call options when
the Adviser expects that the premiums received from writing the call option will
be greater than the appreciation in the price of the underlying security above
the exercise price. By writing a call option, the Fund limits its opportunity to
profit from any increase in the market value of the underlying security above
the exercise price of the option. Out-of-the-money, at-the-money, and
in-the-money put options (the reverse of call options as to the relation of
exercise price to market price) may be utilized in the same market environments
that such call options are used in equivalent transactions.

SWAP AGREEMENTS. The Fund may enter into interest rate swap or cap
transactions. The use of swaps and caps is a highly specialized activity that
involves investment techniques and risks different from those associated with
ordinary portfolio transactions. Swap agreements may involve, to varying
degrees, elements of market and counterparty risk, and exposure to loss in
excess of the related amounts reflected in the Statement of Assets and
Liabilities. In an interest rate swap, the Fund 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 Fund periodically a variable rate payment that is intended to
approximate the Fund's variable rate payment obligation on Series C Preferred
Stock. In an interest rate cap, the Fund would pay a premium to the counterparty
and, to the extent that a specified variable rate index exceeds a predetermined
fixed rate, would receive from that counterparty payments of the difference
based on the notional amount of such cap. Interest rate swap and cap
transactions introduce additional risk because the Fund would remain obligated
to pay preferred stock dividends when due in accordance with the Articles
Supplementary even if the counterparty defaulted. If there is a default by the
counterparty to a swap contract, the Fund will be limited to contractual
remedies pursuant to the agreements related to the transaction. There is no
assurance that the swap contract counterparties will be able to meet their
obligations pursuant to a swap contract or that, in the event of default, the
Fund will succeed in pursuing contractual remedies. The Fund thus assumes the
risk that it may be delayed in or prevented from obtaining payments owed to it
pursuant to a swap contract. The creditworthiness of the swap contract
counterparties is closely monitored in order to minimize this risk. Depending on
the general state of short-term interest rates and the returns on the Fund's
portfolio securities at that point in time, such a default could negatively
affect the Fund's ability to make dividend payments for Series C Preferred
Stock. In addition, at the time an interest rate swap or cap transaction reaches
its scheduled termination date, there is a risk that the Fund 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 Fund's ability to make dividend payments on Series
C Preferred Stock.

Unrealized gains related to swaps are reported as an asset and unrealized
losses are reported as a liability in the Statement of Assets and Liabilities.
The change in value of swaps, including the accrual of periodic amounts of
interest to be paid or received on swaps is reported as unrealized gains or
losses in the Statement of Operations. A realized gain or loss is recorded upon
payment or receipt of a periodic payment or termination of swap agreements.

The Fund has entered into an interest rate swap agreement with Citibank
N.A. Under the agreement, the Fund receives a floating rate of interest and pays
a respective fixed rate of interest on the nominal value of the swap. Details of
the swap at December 31, 2006 are as follows:

NOTIONAL FLOATING RATE* TERMINATION UNREALIZED
AMOUNT FIXED RATE (RATE RESET MONTHLY) DATE APPRECIATION
------------ ---------- ------------------ ----------- ------------
$130,000,000 4.494% 5.34938% July 2, 2007 $625,830

--------------
* Based on Libor (London Interbank Offered Rate).

FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose
of hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit 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 Fund each day, depending on the daily fluctuations in the
value of the contract, which are included in unrealized
appreciation/(depreciation) on investments and futures contracts. The Fund
recognizes a realized gain or loss when the contract is closed.

There are several risks in connection with the use of futures contracts as
a hedging instrument. The change in value of futures contracts primarily
corresponds with the value of their underlying instruments, which may not
correlate with the change in value of the hedged investments. In addition, there
is the risk that the Fund may not be able to enter into a closing transaction
because of an illiquid secondary market. Open futures contracts at December 31,
2006 are reflected within the Schedule of Investments.

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

FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund 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 translations. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.

The use of forward foreign exchange contracts does not eliminate
fluctuations in the underlying prices of the Fund'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 that might
result should the value of the currency increase. In addition, the Fund could be
exposed to risks if the counterparties to the contracts are unable to meet the
terms of their contracts. At December 31, 2006, there were no open forward
foreign exchange contracts.

FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are
maintained in U.S. dollars. Foreign currencies, investments, and other assets
and liabilities are translated into U.S. dollars at the current exchange rates.
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 that 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
translations. 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 Fund 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.

FOREIGN SECURITIES. The Fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies, and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.

FOREIGN TAXES. The Fund may be subject to foreign taxes on income, gains on
investments, or currency repatriation, a portion of which may be recoverable.
The Fund will accrue such taxes and recoveries as applicable, based upon its
current interpretation of tax rules and regulations that exist in the markets in
which it invests.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 10% of its
net assets in securities for which the markets are illiquid. Illiquid securities
include securities the disposition of which is subject to substantial legal or
contractual restrictions. The sale of illiquid securities often requires more
time and results in higher brokerage charges or dealer discounts and other
selling expenses than does the sale of securities eligible for trading on
national securities exchanges or in the over-the-counter markets. Restricted
securities may sell at a price lower than similar securities that are not
subject to restrictions on resale. Securities freely saleable among qualified
institutional investors under special rules adopted by the SEC may be treated as
liquid if they satisfy liquidity standards established by the Board. The
continued liquidity of such securities is not as well assured as that of
publicly traded securities, and accordingly the Board will monitor their
liquidity.

SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on 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 on the accrual
basis. Premiums and discounts on debt securities are amortized using the
effective yield to maturity method. Dividend income is recorded on the
ex-dividend date except for certain dividends which are recorded as soon as the
Fund is informed of the dividend.

CUSTODIAN FEE CREDITS AND INTEREST EXPENSE. When cash balances are
maintained in the custody account, the Fund receives credits which are used to
offset custodian fees. The gross expenses paid under the custody arrangement are
included in custodian fees in the Statement of Operations with the corresponding
expense offset, if any, shown as "custodian fee credits". When cash balances are
overdrawn, the Fund is charged an overdraft fee equal to 110% of the 90 day
Treasury Bill rate on outstanding balances. This amount, if any, would be shown
as "interest expense" in the Statement of Operations.

DISTRIBUTIONS TO SHAREHOLDERS. Distributions to common shareholders are
recorded on the ex-dividend date. Distributions to shareholders are based on
income and capital gains as determined in accordance with Federal income tax
regulations, which may differ from income and capital gains as determined under
U.S. generally accepted accounting principles. These differences are primarily
due to differing treatments of income and gains on various investment securities
and foreign currency transactions held by the Fund, timing differences, and
differing characterizations of distributions made by the Fund. Distributions
from net investment income include net realized gains on foreign currency
transactions. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, adjustments are made to
the appropriate capital accounts in the period when the differences arise. These
reclassifications have no impact on NAV of the Fund. For the fiscal year ended
December 31, 2006, reclassifications were made to increase accumulated net
investment income by $1,732 and increase accumulated distributions in excess of
net realized gain on investments, options, futures contracts, swap contracts,
and foreign currency transactions by $51,952, with an offsetting adjustment to
paid-in capital.

Distributions to shareholders of the Fund's 7.20% Series B Cumulative
Preferred Stock, Series C Auction Rate Cumulative Preferred Stock, 5.875% Series
D Cumulative Preferred Stock, Series E Auction Rate Cumulative Preferred Stock,
and 6.20% Series F Cumulative Preferred Stock ("Cumulative Preferred Stock") are
recorded on a daily basis and are determined as described in Note 5.

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

The tax character of distributions paid during the fiscal years ended
December 31, 2006 and December 31, 2005 was as follows:

YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
----------------------------- -----------------------------
COMMON PREFERRED COMMON PREFERRED
----------- ----------- ----------- -----------

DISTRIBUTIONS PAID FROM:
Ordinary income
(Inclusive of short-term
capital gains) ..................... $ 36,958,559 $ 6,282,132 $ 13,578,966 $ 2,363,772
Net long-term capital gains .......... 109,810,607 18,665,359 113,842,518 19,817,252
------------ ----------- ------------ -----------
Total distributions paid ............. $146,769,166 $24,947,491 $127,421,484 $22,181,024
============ =========== ============ ===========

PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). It is the policy of the Fund to comply with the
requirements of the Code applicable to regulated investment companies and to
distribute substantially all of its net investment company taxable income and
net capital gains. Therefore, no provision for Federal income taxes is required.

As of December 31, 2006, the components of accumulated earnings/(losses) on
a tax basis were as follows:

Net unrealized appreciation on investments $475,036,839
Net unrealized appreciation on foreign currency
and swap contracts...................... 537,593
Undistributed ordinary income (inclusive of
short-term capital gains)............... 777,037
Undistributed long-term capital gains..... 472,624
------------
Total..................................... $476,824,093
============

The following summarizes the tax cost of investments, swap contracts, and
the related unrealized appreciation/(depreciation) at December 31, 2006:

GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
COST APPRECIATION DEPRECIATION (DEPRECIATION)
---- ------------ ------------ ------------

Investments ..............$1,607,118,168 $528,271,411 $(53,234,572) $475,036,839
Swap contracts............ 533,164 -- 533,164
------------ ------------ ------------
$528,804,575 $(53,234,572) $475,570,003
============ ============ ============

In July 2006, the FASB issued Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109" ("the
Interpretation"). The Interpretation establishes for all entities, including
pass through entities such as the Fund, a minimum threshold for financial
statement recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction), and
requires certain expanded tax disclosures. The Interpretation is required to be
implemented for the Fund no later than June 29, 2007, and is to be applied to
all open tax years as of the date of effectiveness. Management has begun to
evaluate the application of the Interpretation to the Fund, and is not in a
position at this time to estimate the significance of its impact, if any, on the
Fund's financial statements.

3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES. The Fund has entered into an
investment advisory agreement (the "Advisory Agreement") with the Adviser which
provides that the Fund will pay the Adviser a fee, computed weekly and paid
monthly, equal on an annual basis to 1.00% of the value of the Fund's average
weekly net assets including the liquidation value of preferred stock. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio and oversees the administration of
all aspects of the Fund'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 NAV of the common shares of the Fund,
including distributions and advisory fee subject to reduction, does not exceed
the stated dividend rate or corresponding swap rate of each particular series of
the Cumulative Preferred Stock for the fiscal year.

The Fund's total return on the NAV of the common shares is monitored on a
monthly basis to assess whether the total return on the NAV of the common shares
exceeds the stated dividend rate or corresponding swap rate of each particular
series of Cumulative Preferred Stock for the period. For the fiscal year ended
December 31, 2006, the Fund's total return on the NAV of the common shares
exceeded the stated dividend rate or corresponding swap rate of all outstanding
Preferred Stock. Thus, management fees were accrued on these assets.

During the fiscal year ended December 31, 2006, the Fund paid brokerage
commissions of $483,095 to Gabelli & Company, Inc. ("Gabelli & Company"), an
affiliate of the Adviser.

The cost of calculating the Fund's NAV per share is a Fund expense pursuant
to the Advisory Agreement between the Fund and the Adviser. During the fiscal
year ended December 31, 2006, the Fund paid or accrued $45,000 to the Adviser in
connection with the cost of computing the Fund's NAV.

The Fund is assuming its portion of the allocated cost of the Gabelli
Funds' Chief Compliance Officer in the amount of $30,061 for the fiscal year
ended December 31, 2006, which is included in payroll expenses in the Statement
of Operations.

The Fund pays each Director that is not considered to be an affiliated
person an annual retainer of $12,000 plus $1,500 for each Board meeting attended
and they are reimbursed for any out of pocket expenses incurred in attending
meetings. All Board committee members receive $1,000 per meeting attended. In
addition, the Audit Committee Chairman receives an annual fee of $3,000, the
Proxy Voting Committee Chairman receives an annual fee of $1,500, and the
Nominating Committee Chairman receives an annual fee of $2,000. Directors who
are directors or employees of the Adviser or an affiliated company receive no
compensation or expense reimbursement from the Fund.

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

4. PORTFOLIO SECURITIES. Purchases and proceeds from the sales of securities for
the year ended December 31, 2006, other than short-term securities, aggregated
$555,514,591 and $495,441,658, respectively.

Options activity for the Fund for the period ended December 31, 2006 was as
follows:

NUMBER OF
CONTRACTS PREMIUMS
----------- -----------

Options outstanding at December 31, 2005... -- --
Options written............................ 500 $ 21,999
Options expired............................ (500) (21,999)
---- --------
Options outstanding at December 31, 2006... -- $ --
==== ========

5. CAPITAL. The charter permits the Fund to issue 246,000,000 shares of common
stock (par value $0.001) and authorizes the Board to increase its authorized
shares from time to time. The Board has authorized the repurchase of its shares
on the open market when the shares are trading on the New York Stock Exchange
("NYSE") at a discount of 10% or more (or such other percentage as the Board may
determine from time to time) from the NAV of the shares. During the fiscal year
ended December 31, 2006, the Fund did not repurchase any shares of its common
stock in the open market.

Transactions in common stock were as follows:

YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
------------------------ ------------------------
Shares Amount Shares Amount
--------- ----------- ---------- ------------

Shares issued upon reinvestment of
dividends and distributions........... 2,677,002 $23,591,621 3,242,215 $ 27,277,033
Shares issued in rights offering........ -- -- 20,525,901 143,081,307
Shares issued in connection
with reorganization of
Sterling Capital Corporation.......... -- -- 1,978,190 18,306,860
--------- ----------- ---------- ------------
Net increase............................ 2,677,002 $23,591,621 25,746,306 $188,665,200
========= =========== ========== ============

The Fund's Articles of Incorporation, as amended, authorizes the issuance
of up to 18,000,000 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 Fund is required by the 1940 Act
and by the Articles Supplementary to meet certain asset coverage tests with
respect to the Cumulative Preferred Stock. If the Fund fails to meet these
requirements and does not correct such failure, the Fund may be required to
redeem, in part or in full, the 7.20% Series B, Series C Auction Rate, 5.875%
Series D, Series E Auction Rate, and 6.20% Series F Cumulative Preferred Stock
at redemption prices of $25, $25,000, $25, $25,000, and $25, 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 coverage requirements could restrict the
Fund's ability to pay dividends to common shareholders and could lead to sales
of portfolio securities at inopportune times. The income received on the Fund'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.

On September 21, 2005, the Fund distributed one transferable right for each
of the 143,681,301 shares of common stock outstanding to shareholders of record
on that date. Seven rights were required to purchase one additional common share
at the subscription price of $7.00 per share. Shareholders who exercised their
full primary subscription rights were eligible for an over-subscription
privilege entitling them to subscribe, subject to certain limitations and a
pro-rata allotment, for any additional shares not purchased pursuant to the
primary subscription plus such additional amounts as authorized by the Board in
accordance with the registration statement. The subscription period expired on
October 26, 2005. The rights offering was fully subscribed, having received
over-subscription requests in excess of the shares available for primary
subscription resulting in the issuance of 20,525,901 shares of common stock and
proceeds of $143,681,307 to the Fund, prior to the deduction of estimated
expenses of $600,000. Additional expenses of $151,821 were recorded in the year
ended December 31, 2006. The NAV of the Fund's common shares was reduced by
approximately $0.15 per share as a result of the issuance of shares below NAV.

On June 20, 2001, the Fund received net proceeds of $159,329,175 (after
underwriting discounts of $5,197,500 and 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 Fund, at its option, may
redeem the 7.20% Series B Cumulative Preferred Stock in whole or in part at the
redemption price at any time. On June 26, 2006, the Fund, as authorized by the
Board, redeemed 25% (1,650,000 shares) of its outstanding 7.20% Series B
Cumulative Preferred Stock at the redemption price of $25.00 per share (the
liquidation value). The Series B Preferred Shares were callable at any time at
the liquidation value plus accrued dividends following the expiration of the
five year call protection on June 20, 2006. At December 31, 2006, 4,950,000
shares of 7.20% Series B Cumulative Preferred Stock were outstanding and accrued
dividends amounted to $148,500.

On June 27, 2002, the Fund received net proceeds of $128,246,557 (after
underwriting discounts of $1,300,000 and offering expenses of $453,443) 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 seven days, is expected to vary with short-term interest rates. The
dividend rates of Series C Auction Rate Cumulative Preferred Stock ranged from
4.21% to 5.27% for the year ended December 31, 2006. 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 Fund, 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 fiscal year ended December 31, 2006, the Fund did not
redeem any shares of Series C Auction Rate Cumulative Preferred Stock. At
December 31, 2006, 5,200 shares of Series C Auction Rate Cumulative Preferred
Stock were outstanding with an annualized dividend rate of 5.26% and accrued
dividends amounted to $95,241.

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

On October 7, 2003, the Fund received net proceeds of $72,375,842 (after
underwriting discounts of $2,362,500 and offering expenses of $261,658) from the
public offering of 3,000,000 shares of 5.875% Series D Cumulative Preferred
Stock. Commencing October 7, 2008 and thereafter, the Fund, at its option, may
redeem the 5.875% Series D Cumulative Preferred Stock in whole or in part at the
redemption price at any time. During the fiscal year ended December 31, 2006,
the Fund did not repurchase any shares of 5.875% Series D Cumulative Preferred
Stock. At December 31, 2006, 2,949,700 shares of 5.875% Series D Cumulative
Preferred Stock were outstanding and accrued dividends amounted to $72,206.

On October 7, 2003, the Fund received net proceeds of $49,350,009 (after
underwriting discounts of $500,000 and offering expenses of $149,991) from the
public offering of 2,000 shares of Series E Auction Rate Cumulative Preferred
Stock. The dividend rate, as set by the auction process, which is generally held
every seven days, is expected to vary with short-term interest rates. The
dividend rates of Series E Auction Rate Cumulative Preferred Stock ranged from
4.10% to 5.30% for the fiscal year ended December 31, 2006. Existing
shareholders may submit an order to hold, bid, or sell such shares on each
auction date. Series E Auction Rate Cumulative Preferred Stock shareholders may
also trade shares in the secondary market. The Fund, at its option, may redeem
the Series E Auction Rate Cumulative Preferred Stock in whole or in part at the
redemption price at any time. During the fiscal year ended December 31, 2006,
the Fund did not redeem any shares of Series E Auction Rate Cumulative Preferred
Stock. At December 31, 2006, 2,000 shares of Series E Auction Rate Cumulative
Preferred Stock were outstanding with an annualized dividend rate of 5.30% and
accrued dividends amounted to $22,083.

On November 10, 2006, the Fund received net proceeds of $144,765,000 (after
underwriting discounts of $4,725,000 and estimated offering expenses of
$510,000) from the public offering of 6,000,000 shares of 6.20% Series F
Cumulative Preferred Stock. Commencing November 10, 2011 and thereafter, the
Fund, at its option, may redeem the 6.20% Series F Cumulative Preferred Stock in
whole or in part at the redemption price at any time. During the fiscal year
ended December 31, 2006, the Fund did not repurchase any shares of 6.20% Series
F Cumulative Preferred Stock. At December 31, 2006, 6,000,000 shares of 6.20%
Series F Cumulative Preferred Stock were outstanding and accrued dividends
amounted to $155,000.

The holders of Cumulative Preferred Stock generally are entitled to one
vote per share held on each matter submitted to a vote of shareholders of the
Fund and will vote together with holders of common stock as a single class. The
holders of Cumulative Preferred Stock voting together as a single class also
have the right currently to elect two Directors and under certain circumstances
are entitled to elect a majority of the Board of Directors. In addition, the
affirmative vote of a majority of the votes entitled to be cast by holders of
all outstanding shares of the preferred stock, voting as a single class, will be
required to approve any plan of reorganization adversely affecting the preferred
stock, and the approval of two-thirds of each class, voting separately, of the
Fund's outstanding voting stock must approve the conversion of the Fund from a
closed-end to an open-end investment company. The approval of a majority (as
defined in the 1940 Act) of the outstanding preferred stock and a majority (as
defined in the 1940 Act) of the Fund's outstanding voting securities are
required to approve certain other actions, including changes in the Fund's
investment objectives or fundamental investment policies.

6. INDEMNIFICATIONS. The Fund enters into contracts that contain a variety of
indemnifications. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.

7. REORGANIZATION. On September 13, 2005, the Fund acquired substantially all of
the net assets of the Sterling Capital Corp. pursuant to a Plan of
Reorganization approved by Sterling Capital Corp. on September 12, 2005. The
acquisition was accomplished by a tax free exchange of 1,978,190 common shares
of the Fund valued at $18,306,860 for the net assets of the Sterling Capital
Corp. on September 12, 2005. Sterling Capital Corp.'s net assets of $18,306,860,
including $2,191,264 of unrealized appreciation, were combined with those of the
Fund on September 13, 2005. The net assets attributable to common shares of the
Fund immediately before the acquisition were $1,273,163,812.

8. SUBSEQUENT EVENTS. On January 8, 2007, the Fund, as authorized by the Board,
redeemed 100% (4,950,000 shares) of its outstanding 7.20% Series B Cumulative
Preferred Stock at the redemption price of $25.00 per share (the liquidation
value), plus accumulated and unpaid dividends through the redemption date of
$0.06 per share. The Preferred Shares were callable at any time at the
liquidation value plus accrued dividends following the expiration of the five
year call protection on June 20, 2006.

9. OTHER MATTERS. The Adviser and/or affiliates received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund share trading practices involving certain funds managed by the
Adviser. GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company,
responded to these requests for documents and testimony. In June 2006, GAMCO
began discussions with the SEC regarding a possible resolution of their inquiry.
In February 2007, the Adviser made an offer of settlement to the staff of the
SEC for communication to the Commission for its consideration to resolve this
matter. This offer of settlement is subject to agreement regarding the specific
language of the SEC's administrative order and other settlement documents. On a
separate matter, in September 2005, the Adviser was informed by the staff of the
SEC that the staff may recommend to the Commission that an administrative remedy
and a monetary penalty be sought from the Adviser in connection with the actions
of two of seven closed-end funds managed by the Adviser relating to Section
19(a) and Rule 19a-1 of the 1940 Act. These provisions require registered
investment companies to provide written statements to shareholders when a
dividend is made from a source other than net investment income. While the two
closed-end funds sent annual statements and provided other materials containing
this information, the funds did not send written statements to shareholders with
each distribution in 2002 and 2003. The Adviser believes that all of the funds
are now in compliance. The Adviser believes that these matters would have no
effect on the Fund or any material adverse effect on the Adviser or its ability
to manage the Fund. The staff's notice to the Adviser did not relate to the
Fund.

THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS

SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD:

YEAR ENDED DECEMBER 31,
------------------------------------------------------------
2006 2005 2004 2003 2002
---------- ---------- ---------- ---------- ----------

OPERATING PERFORMANCE:
Net asset value, beginning of period....................... $ 8.10 $ 8.69 $ 7.98 $ 6.28 $ 8.97
---------- ---------- ---------- ---------- ----------
Net investment income...................................... 0.18 0.09 0.02 0.04 0.07
Net realized and unrealized gain (loss) on investments .... 2.18 0.47 1.63 2.50 (1.65)
---------- ---------- ---------- ---------- ----------
Total from investment operations........................... 2.36 0.56 1.65 2.54 (1.58)
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:(A)
Net investment income...................................... (0.03) (0.01) (0.00)(e) (0.00)(e) (0.01)
Net realized gain on investments........................... (0.12) (0.14) (0.14) (0.14) (0.16)
---------- ---------- ---------- ---------- ----------
Total distributions to preferred shareholders ............. (0.15) (0.15) (0.14) (0.14) (0.17)
---------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO COMMON SHAREHOLDERS
RESULTING FROM OPERATIONS.................................. 2.21 0.41 1.51 2.40 (1.75)
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Net investment income...................................... (0.16) (0.08) (0.01) (0.01) (0.05)
Net realized gain on investments........................... (0.72) (0.77) (0.79) (0.68) (0.90)
Return of capital.......................................... -- -- -- (0.00)(e) (0.00)(e)
---------- ---------- ---------- ---------- ----------
Total distributions to common shareholders ................ (0.88) (0.85) (0.80) (0.69) (0.95)
---------- ---------- ---------- ---------- ----------
FUND SHARE TRANSACTIONS:
Increase (decrease) in net asset value
from common stock
share transactions ...................................... -- (0.00)(e) 0.00(e) 0.01 0.02
Decrease in net asset value from
shares issued in rights offering ........................ -- (0.15) -- -- --
Increase in net asset value from
repurchase of preferred shares .......................... -- -- 0.00(e) -- --
Offering costs for preferred shares
charged to paid-in capital .............................. (0.03) (0.00)(e) 0.00(e) (0.02) (0.01)
Offering costs for issuance of rights
charged to paid-in capital .............................. (0.00)(e) (0.00)(e) -- -- --
---------- ---------- ---------- ---------- ----------
Total fund share transactions.............................. (0.03) (0.15) 0.00(e) (0.01) 0.01
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE ATTRIBUTABLE TO
COMMON SHAREHOLDERS,
END OF PERIOD............................................ $ 9.40 $ 8.10 $ 8.69 $ 7.98 $ 6.28
========== ========== ========== ========== ==========
NAV Total Return + ........................................ 28.17% 5.50% 19.81% 39.90% (21.00)%
========== ========== ========== ========== ==========
Market Value, End of Period................................ $ 9.41 $ 8.03 $ 9.02 $ 8.00 $ 6.85
========== ========== ========== ========== ==========
Investment Total Return ++................................. 29.42% 0.66% 24.04% 28.58% (28.36)%
========== ========== ========== ========== ==========

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
FINANCIAL HIGHLIGHTS (CONTINUED)

SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD:

YEAR ENDED DECEMBER 31,
------------------------------------------------------------
2006 2005 2004 2003 2002
---------- ---------- ---------- ---------- ----------

RATIOS AND SUPPLEMENTAL DATA:
Net assets including liquidation
value of preferred shares,
end of period (in 000's) ................................ $2,114,399 $1,764,634 $1,638,225 $1,514,525 $1,271,600
Net assets attributable to common shares,
end of period (in 000's) ................................ $1,586,906 $1,345,891 $1,219,483 $1,094,525 $ 842,403
Ratio of net investment income to
average net assets
attributable to common shares
before preferred distributions .......................... 2.12% 1.27% 0.64% 0.67% 0.99%
Ratio of operating expenses to average net
assets attributable to common
shares net of advisory fee reduction, if any (b)......... 1.43% 1.39% 1.57% 1.62% 1.19%
Ratio of operating expenses to average
net assets including liquidation value of
preferred shares net of advisory fee reduction,
if any (b)............................................... 1.11% 1.04% 1.14% 1.14% 0.87%
Portfolio turnover rate ................................... 29.5% 22.4% 28.6% 19.2% 27.1%
PREFERRED STOCK:
7.25% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ............... -- -- -- -- $ 134,198
Total shares outstanding (in 000's) ....................... -- -- -- -- 5,368
Liquidation preference per share........................... -- -- -- -- $ 25.00
Average market value (c) .................................. -- -- -- -- $ 25.75
Asset coverage per share................................... -- -- -- -- $ 74.07
7.20% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ............... $ 123,750 $ 165,000 $ 165,000 $ 165,000 $ 165,000
Total shares outstanding (in 000's) ....................... 4,950 6,600 6,600 6,600 6,600
Liquidation preference per share........................... $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00
Average market value (c) .................................. $ 25.27 $ 25.92 $ 26.57 $ 27.06 $ 26.40
Asset coverage per share................................... $ 100.21 $ 105.35 $ 97.81 $ 90.15 $ 74.07
AUCTION RATE SERIES C CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ............... $ 130,000 $ 130,000 $ 130,000 $ 130,000 $ 130,000
Total shares outstanding (in 000's) ....................... 5 5 5 5 5
Liquidation preference per share........................... $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Average market value (c) .................................. $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Asset coverage per share................................... $ 100,211 $ 105,353 $ 97,806 $ 90,150 $ 74,068
5.875% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ............... $ 73,743 $ 73,743 $ 73,743 $ 75,000 --
Total shares outstanding (in 000's) ....................... 2,950 2,950 2,950 3,000 --
Liquidation preference per share........................... $ 25.00 $ 25.00 $ 25.00 $ 25.00 --
Average market value (c) .................................. $ 23.98 $ 24.82 $ 24.81 $ 25.10 --
Asset coverage per share................................... $ 100.21 $ 105.35 $ 97.81 $ 90.15 --
AUCTION RATE SERIES E CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ............... $ 50,000 $ 50,000 $ 50,000 $ 50,000 --
Total shares outstanding (in 000's) ....................... 2 2 2 2 --
Liquidation preference per share........................... $ 25,000 $ 25,000 $ 25,000 $ 25,000 --
Average market value (c) .................................. $ 25,000 $ 25,000 $ 25,000 $ 25,000 --
Asset coverage per share................................... $ 100,211 $ 105,353 $ 97,806 $ 90,150
6.20% CUMULATIVE PREFERRED STOCK
Liquidation value, end of period (in 000's) ............... $ 150,000 -- -- -- --
Total shares outstanding (in 000's) ....................... 6,000 -- -- -- --
Liquidation preference per share........................... $ 25.00 -- -- -- --
Average market value (c) .................................. $ 25.12 -- -- -- --
Asset coverage per share................................... $ 100.21 -- -- -- --
ASSET COVERAGE (D) ........................................ 401% 421% 391% 361% 296%
---------------

+ Based on net asset value per share, adjusted for reinvestment of
distributions at prices obtained under the Fund's dividend reinvestment
plan, including the effect of shares issued pursuant to 2005 rights
offering, assuming full subscription by shareholder.
++ Based on market value per share, adjusted for reinvestment of distributions
at prices obtained under the Fund's dividend reinvestment plan, including
the effect of shares issued pursuant to 2005 rights offering, assuming full
subscription by shareholder.
(a) Calculated based upon average common shares outstanding on the record dates
throughout the periods.
(b) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. For the fiscal years ended
December 31, 2006, 2005, 2004, 2003, and 2002 the effect of the custodian
fee credits was minimal.
(c) Based on weekly prices.
(d) Asset coverage is calculated by combining all series of preferred stock.
(e) Amount represents less than $0.005 per share.

See accompanying notes to financial statements.

THE GABELLI EQUITY TRUST INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Equity Trust Inc.
(hereafter referred to as the "Fund") at December 31, 2006, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the periods presented, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 2006 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
February 28, 2007

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

The business and affairs of the Fund are managed under the direction of
the Fund's Board of Directors. Information pertaining to the Directors and
officers of the Fund is set forth below. The Fund's Statement of Additional
Information includes additional information about the Fund's Directors and
officers and is available, without charge, upon request, by calling 800-GABELLI
(800-422-3554) or by writing to The Gabelli Equity Trust Inc. at One Corporate
Center, Rye, NY 10580-1422.

TERM OF NUMBER OF
OFFICE AND FUNDS IN FUND
NAME, POSITION(S) LENGTH OF COMPLEX
ADDRESS 1 TIME OVERSEEN BY PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE SERVED 2 DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR5
---------------- -------- --------- ---------------------- ------------------

INTERESTED DIRECTORS 3:
----------------------
MARIO J. GABELLI Since 1986** 24 Chairman of the Board and Chief Executive Director of Morgan Group
Director and Officer of GAMCO Investors, Inc. and Holdings, Inc.
Chief Investment Officer Chief Investment Officer - Value Portfolios of (transportation
Age: 64 Gabelli Funds, LLC and GAMCO Asset services); Chairman
Management Inc.; Director/Trustee or Chief of the Board of Lynch
Investment Officer of other registered Interactive Corporation
investment companies in the Gabelli Funds (multimedia and
complex; Chairman and Chief Executive communication services
Officer of GGCP, Inc. company)

INDEPENDENT DIRECTORS 6:
-----------------------
THOMAS E. BRATTER Since 1986** 3 Director, President and Founder of The John --
Director Dewey Academy (residential college
Age: 67 preparatory therapeutic high school)

ANTHONY J. COLAVITA4 Since 1999*** 34 Partner in the law firm of --
Director Anthony J. Colavita, P.C.
Age: 71

JAMES P. CONN4 Since 1989* 15 Former Managing Director and Chief Investment Director of First
Director Officer of Financial Security Assurance Republic Bank (banking)
Age: 68 Holdings Ltd. (insurance holding company)
(1992-1998)

FRANK J. FAHRENKOPF JR. Since 1998*** 5 President and Chief Executive Officer of the Director of First
Director American Gaming Association; Co-Chairman Republic Bank (banking)
Age: 67 of the Commission on Presidential Debates;
Former Chairman of the Republican National
Committee (1983-1989)

ARTHUR V. FERRARA Since 2001** 7 Former Chairman of the Board and Chief Director of The
Director Executive Officer of The Guardian Life Guardian sponsored
Age: 76 Insurance Company of America mutual funds
(1993-1995)

ANTHONY R. PUSTORINO Since 1986* 14 Certified Public Accountant; Professor Director of The LGL
Director Emeritus, Pace University Group, Inc. (diversified
Age: 81 manufacturing)

SALVATORE J. ZIZZA Since 1986*** 25 Chairman of Hallmark Electrical Supplies Corp. Director of Hollis-Eden
Director (distribution of electrical supplies) Pharmaceuticals
Age: 61 (biotechnology) and
Earl Scheib, Inc.
(automotive services)

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

TERM OF
OFFICE AND
NAME, POSITION(S) LENGTH OF
ADDRESS 1 TIME PRINCIPAL OCCUPATION(S)
AND AGE SERVED 2 DURING PAST FIVE YEARS
---------------- -------- ---------------------
OFFICERS:
--------

BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating Officer of Gabelli Funds,
President LLC and an officer of all of the registered investment companies in the
Age: 55 Gabelli Funds complex. Director and President of Gabelli Advisers, Inc.
since 1998

CARTER W. AUSTIN Since 2000 Vice President of the Fund since 2000. Vice President of The Gabelli Dividend
Vice President & Income Trust since 2003; The Gabelli Global Gold, Natural Resources &
Age: 40 Income Trust since 2005; and The Gabelli Global Deal Fund since 2006; Vice
President of Gabelli Funds, LLC since 1996

LOAN P. NGUYEN Since 2006 Vice President of The Gabelli Global Multimedia Trust Inc. since 2004;
Vice President and Ombudsman Assistant Vice President of GAMCO Investors, Inc. since 2006; Portfolio
Age: 24 Administrator for Gabelli Funds, LLC during 2004; Student at Boston College
prior to 2004

JAMES E. MCKEE Since 1995 Vice President, General Counsel and Secretary of GAMCO Investors, Inc.
Secretary since 1999; GAMCO Asset Management Inc. since 1993; Secretary of all of
Age: 43 the registered investment companies in the Gabelli Funds complex

AGNES MULLADY Since 2006 Treasurer of all of the registered investment companies in the Gabelli Funds complex;
Treasurer Senior Vice President of U.S. Trust Company, N.A. and Treasurer and Chief Financial
Age: 48 Officer of Excelsior Funds from 2004 through 2005; Chief Financial Officer of AMIC
Distribution Partners from 2002 through 2004; Controller of Reserve Management
Corporation and Reserve Partners, Inc. and Treasurer of Reserve Funds from 2000
through 2002

PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs at GAMCO Investors, Inc. since 2004; Chief Compliance
Chief Compliance Officer Officer of all of the registered investment companies in the Gabelli Funds complex;
Age: 53 Vice President of Goldman Sachs Asset Management from 2000 through 2004

---------------------
1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
2 The Fund's Board of Directors is divided into three classes, each class
having a term of three years. Each year the term of office of one class
expires and the successor or successors elected to such class serve for a
three year term. The three year term for each class expires as follows:
* - Term expires at the Fund's 2009 Annual Meeting of Shareholders or until
their successors are duly elected and qualified.
** - Term expires at the Fund's 2007 Annual Meeting of Shareholders or until
their successors are duly elected and qualified.
*** - Term expires at the Fund's 2008 Annual Meeting of Shareholders or until
their successors are duly elected and qualified.
Each officer will hold office for an indefinite term until the date he or she
resigns or retires or until his or her successor is elected and qualified.
3 "Interested person" of the Fund as defined in the 1940 Act. Mr. Gabelli is
considered an "interested person" of the Fund because of his affiliation with
Gabelli Funds, LLC which acts as the Fund's investment adviser.
4 Represents holders of the Fund's Preferred Stock.
5 This column includes only directorships of companies required to report to
the SEC under the Securities Exchange Act of 1934, as amended (i.e. public
companies) or other investment companies registered under the 1940 Act.
6 Directors who are not interested persons are considered "Independent"
Directors.

CERTIFICATIONS

The Fund's Chief Executive Officer has certified to the New York Stock
Exchange ("NYSE") that, as of June 12, 2006, he was not aware of any violation
by the Fund of applicable NYSE corporate governance listing standards. The Fund
reports to the SEC on Form N-CSR which contains certifications by the Fund's
principal executive officer and principal financial officer that relate to the
Fund's disclosure in such reports and that are required by Rule 30a-2(a) under
the 1940 Act.

THE GABELLI EQUITY TRUST INC.
INCOME TAX INFORMATION (UNAUDITED)
DECEMBER 31, 2006

CASH DIVIDENDS AND DISTRIBUTIONS

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

COMMON SHARES
03/27/06 03/17/06 $0.19000 $0.05020 $0.13980 $8.55750
06/26/06 06/16/06 0.19000 0.04700 0.14300 8.21400
09/25/06 09/15/06 0.20000 0.04950 0.15050 8.62000
12/18/06 12/13/06 0.30000 0.07420 0.22580 9.36000
-------- -------- --------
$0.88000 $0.22090 $0.65910
7.20% PREFERRED SHARES
03/27/06 03/20/06 $0.45000 $0.11710 $0.33290
06/26/06 06/19/06 0.45000 0.11130 0.33870
09/26/06 09/19/06 0.45000 0.11130 0.33870
12/26/06 12/18/06 0.45000 0.11130 0.33870
-------- -------- --------
$1.80000 $0.45100 $1.34900
5.875% PREFERRED SHARES
03/27/06 03/20/06 $0.36719 $0.09624 $0.27095
06/26/06 06/19/06 0.36719 0.09086 0.27633
09/26/06 09/19/06 0.36719 0.09086 0.27633
12/26/06 12/18/06 0.36718 0.09085 0.27633
-------- -------- --------
$1.46875 $0.36881 $1.09994
6.20% PREFERRED SHARES
12/26/06 12/18/06 $0.20236 $0.05007 $0.15229
-------- -------- --------
$0.20236 $0.05007 $0.15229

SERIES C AND E AUCTION RATE PREFERRED SHARES

Auction Rate Preferred Shares pay dividends weekly based on a rate set at
auction, usually held every seven days. The percentage of 2006 distributions
derived from long-term capital gains for the Series C and Series E Auction Rate
Preferred Shares was 74.89%.

A Form 1099-DIV has been mailed to all shareholders of record which sets
forth specific amounts to be included in the 2006 tax returns. Ordinary income
distributions include net investment income and realized net short-term capital
gains. Ordinary income is reported in box 1a of Form 1099-DIV. Capital gain
distributions are reported in box 2a of Form 1099-DIV. The long-term gain
distributions for the fiscal year ended December 31, 2006 were $128,475,966, or
the maximum allowable.

CORPORATE DIVIDENDS RECEIVED DEDUCTION, QUALIFIED DIVIDEND INCOME AND U.S.
GOVERNMENT SECURITIES INCOME

In 2006, the Fund paid to common, 7.20% Series B, 5.875% Series D, and 6.20%
Series F preferred shareholders ordinary income totaling $0.22090, $0.45100,
$0.36881, and $0.05007 per share, respectively. The Fund paid weekly
distributions to Series C and Series E preferred shareholders at varying rates
throughout the year, including an ordinary income dividend totaling $309.66231
and $307.25932 per share, respectively, in 2006. For the fiscal year ended
December 31, 2006, 100% of the ordinary income dividend qualified for the
dividend received deduction available to corporations, and 92.41% of the
ordinary income distribution was deemed qualified dividend income and is
reported in box 1b on Form 1099-DIV. The percentage of the ordinary income
dividends paid by the Fund during 2006 derived from U.S. Government Securities
was 0.51%. Such income is exempt from state and local tax in all states.
However, many states, including New York and California, allow a tax exemption
for a portion of the income earned only if a mutual fund has invested at least
50% of its assets at the end of each quarter of the Fund's fiscal year in U.S.
Government Securities. The Fund did not meet this strict requirement in 2006.
The percentage of U.S. Government Securities held as of December 31, 2006 was
1.29%.

THE GABELLI EQUITY TRUST INC.
INCOME TAX INFORMATION (CONTINUED) (UNAUDITED)
DECEMBER 31, 2006

HISTORICAL DISTRIBUTION SUMMARY

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

COMMON STOCK
2006........... $0.15690 $0.06400 $0.65910 -- -- -- $0.88000 --
2005 (d)....... 0.08756 0.00672 0.75572 -- -- -- 0.85000 --
2004........... 0.01930 0.04990 0.73080 -- -- -- 0.80000 --
2003........... 0.01140 0.04480 0.63380 -- -- -- 0.69000 --
2002........... 0.05180 0.01550 0.88270 -- -- -- 0.95000 --
2001 (e)....... 0.06700 0.06400 0.94900 -- -- -- 1.08000 --
2000........... 0.04070 0.15500 1.11430 -- -- -- 1.31000 --
1999 (f)....... 0.03010 0.21378 0.99561 $0.91176 -- -- 2.15125 $0.91176 -
1998........... 0.06420 -- 1.10080 -- -- -- 1.16500 --
1997........... 0.07610 0.00210 0.93670 0.02510 -- -- 1.04000 0.02500 -
1996........... 0.10480 -- 0.78120 0.11400 -- -- 1.00000 0.11400 -
1995 (g)....... 0.12890 -- 0.49310 0.37800 -- -- 1.00000 0.37800 -
1994 (h)....... 0.13536 0.06527 0.30300 1.38262 -- -- 1.88625 1.38262 -
1993 (i)....... 0.13050 0.02030 0.72930 0.22990 -- -- 1.11000 0.22990 -
1992 (j)....... 0.20530 0.04050 0.29660 0.51760 -- -- 1.06000 0.51760 -
1991 (k)....... 0.22590 0.03990 0.14420 0.68000 -- -- 1.09000 0.68000 -
1990........... 0.50470 -- 0.22950 0.44580 -- -- 1.18000 0.44580 -
1989........... 0.29100 0.35650 0.66250 -- $0.62880 $0.21380 1.31000 0.41500 +
1988........... 0.14500 0.20900 0.19600 -- 0.25130 0.08540 0.55000 0.16590 +
1987........... 0.25600 0.49100 0.33500 -- -- -- 1.08200 --
7.20% PREFERRED STOCK
2006........... $0.32000 $0.13100 $1.34900 -- -- -- $1.80000 --
2005........... 0.17650 0.01430 1.60920 -- -- -- 1.80000 --
2004........... 0.04340 0.11224 1.64436 -- -- -- 1.80000 --
2003........... 0.03000 0.11640 1.65360 -- -- -- 1.80000 --
2002........... 0.09800 0.02960 1.67240 -- -- -- 1.80000 --
2001........... 0.05870 0.05440 0.81690 -- -- -- 0.93000 --
5.875% PREFERRED STOCK
2006........... $0.26193 $0.10688 $1.09994 -- -- -- $1.46875 --
2005........... 0.14405 0.01170 1.31300 -- -- -- 1.46875 --
2004........... 0.03542 0.09159 1.34174 -- -- -- 1.46875 --
2003........... 0.00535 0.02086 0.29610 -- -- -- 0.32231 --
6.20% PREFERRED STOCK
2006........... $0.03527 $0.01480 $0.15229 -- -- -- $0.20236 --
AUCTION RATE PREFERRED C STOCK
2006........... $219.92983 $89.73249 $923.57769 -- -- -- $1233.24000 --
2005........... 83.01020 6.73650 756.60330 -- -- -- 846.35000 --
2004........... 9.15570 23.67550 346.83810 -- -- -- 379.66930 --
2003........... 5.42000 21.05000 298.41000 -- -- -- 324.88000 --
2002........... 12.28350 3.71450 209.89200 -- -- -- 225.89000 --
AUCTION RATE PREFERRED E STOCK
2006........... $218.22316 $89.03616 $916.41068 -- -- -- $1223.67000 --
2005........... 82.44330 6.69050 751.43620 -- -- -- 840.57000 --
2004........... 9.30280 24.05620 352.41090 -- -- -- 385.76000 --
2003........... 1.07000 4.18000 59.32000 -- -- -- 64.57000 --

--------------------------
(a) Total amounts may differ due to rounding.
(b) Taxable as ordinary income.
(c) Net Asset Value was reduced by this amount on the last business day of the
year.
(d) On September 21, 2005, the Fund also distributed Rights equivalent to $0.21
per share based upon full subscription of all issued shares.
(e) On January 10, 2001, the Fund also distributed Rights equivalent to $0.56
per share based upon full subscription of all issued shares.
(f) On July 9, 1999, the Fund also distributed shares of The Gabelli Utility
Trust valued at $9.8125 per share.
(g) On October 19, 1995, the Fund also distributed Rights equivalent to $0.37
per share based upon full subscription of all issued shares.
(h) On November 15, 1994, the Fund also distributed shares of The Gabelli Global
Multimedia Trust Inc. valued at $8.0625 per share.
(i) On July 14, 1993, the Fund also distributed Rights equivalent to $0.50 per
share based upon full subscription of all issued shares.
(j) On September 28, 1992, the Fund also distributed Rights equivalent to $0.36
per share based upon full subscription of all issued shares.
(k) On October 21, 1991, the Fund also distributed Rights equivalent to $0.42
per share based upon full subscription of all issued shares.
- Decrease in cost basis.
+ Increase in cost basis.

AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLAN
ENROLLMENT IN THE PLAN
It is the policy of The Gabelli Equity Trust Inc. (the "Fund") to
automatically reinvest dividends payable to common shareholders. As a
"registered" shareholder you automatically become a participant in the Fund's
Automatic Dividend Reinvestment Plan (the "Plan"). The Plan authorizes the Fund
to issue shares of common stock 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 Fund. Plan participants may
send their stock certificates to Computershare Trust Company, N.A.
("Computershare") 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 Computershare
P.O. Box 43010
Providence, RI 02940-3010

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 or requesting a copy of the terms of the
Plan may contact Computershare at (800) 336-6983.

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 Fund'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 Fund's common stock. The valuation date is the dividend or
distribution payment date or, if that date is not a New York Stock Exchange
("NYSE") trading day, the next trading day. If the net asset value of the common
stock at the time of valuation exceeds the market price of the common stock,
participants will receive shares from the Fund valued at market price. If the
Fund should declare a dividend or capital gains distribution payable only in
cash, Computershare will buy common stock in the open market, or on the NYSE or
elsewhere, for the participants' accounts, except that Computershare will
endeavor to terminate purchases in the open market and cause the Fund 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.

VOLUNTARY CASH PURCHASE PLAN

The Voluntary Cash Purchase Plan is yet another vehicle for our shareholders
to increase their investment in the Fund. 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 Computershare for investments in the Fund's shares
at the then current market price. Shareholders may send an amount from $250 to
$10,000. Computershare will use these funds to purchase shares in the open
market on or about the 1st and 15th of each month. Computershare 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 Computershare, P.O. Box 43010, Providence, RI
02940-3010 such that Computershare receives such payments approximately 10 days
before the 1st and 15th of the month. Funds not received at least five days
before the investment date shall be held for investment until the next purchase
date. A payment may be withdrawn without charge if notice is received by
Computershare at least 48 hours before such payment is to be invested.

SHAREHOLDERS WISHING TO LIQUIDATE SHARES HELD AT COMPUTERSHARE 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.

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 Fund.

The Fund 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 Computershare on at least 90 days' written notice to
participants in the Plan.

--------------------------------------------------------------------------------
The Annual Meeting of The Gabelli Equity Trust's shareholders will be held at
9:00 A.M. on Monday, May 14, 2007 at the Greenwich Library in Greenwich,
Connecticut.
--------------------------------------------------------------------------------

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

DIRECTORS OFFICERS
Mario J. Gabelli, CFA
CHAIRMAN & CHIEF EXECUTIVE OFFICER, Bruce N. Alpert
GAMCO INVESTORS, INC. PRESIDENT

Dr. Thomas E. Bratter Carter W. Austin
PRESIDENT, JOHN DEWEY ACADEMY VICE PRESIDENT

Anthony J. Colavita Peter D. Goldstein
ATTORNEY-AT-LAW, CHIEF COMPLIANCE OFFICER
ANTHONY J. COLAVITA, P.C.
James E. McKee
James P. Conn SECRETARY
FORMER CHIEF INVESTMENT OFFICER,
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD. Agnes Mullady
TREASURER
Frank J. Fahrenkopf, Jr.
PRESIDENT & CHIEF EXECUTIVE OFFICER, LoAn P. Nguyen
AMERICAN GAMING ASSOCIATION VICE PRESIDENT & OMBUDSMAN

Arthur V. Ferrara INVESTMENT ADVISER
FORMER CHAIRMAN & CHIEF EXECUTIVE OFFICER, Gabelli Funds, LLC
GUARDIAN LIFE INSURANCE COMPANY OF AMERICA One Corporate Center
Rye, New York 10580-1422
Anthony R. Pustorino
CERTIFIED PUBLIC ACCOUNTANT, CUSTODIAN
PROFESSOR EMERITUS, PACE UNIVERSITY Mellon Trust of New England, N.A.

Salvatore J. Zizza COUNSEL
CHAIRMAN, HALLMARK ELECTRICAL SUPPLIES CORP. Willkie Farr & Gallagher LLP

TRANSFER AGENT AND REGISTRAR
Computershare Trust Company, N.A.

STOCK EXCHANGE LISTING
7.20% 5.875% 6.20%
Common Preferred Preferred Preferred
------ --------- --------- ---------
NYSE-Symbol: GAB GAB PrB GAB PrD GAB PrF
Shares Outstanding: 168,756,272 4,950,000 2,949,700 6,000,000

The Net Asset Value per share appears in the
Publicly Traded Funds column, under the heading
"General Equity Funds," 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 per share may be obtained each
day by calling (914) 921-5070.

-------------------------------------------------------------------------------
For general information about the Gabelli Funds, call 800-GABELLI
(800-422-3554), fax us at 914-921-5118, visit Gabelli Funds' Internet homepage
at: 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 Fund may, from time to time, purchase
shares of its common stock in the open market when the Fund's shares are trading
at a discount of 10% or more from the net asset value of the shares. The Fund
may also, from time to time, purchase shares of its Series B, Series D, and
Series F Cumulative Preferred Stock in the open market when the shares are
trading at a discount to the Liquidation Value of $25.00.
--------------------------------------------------------------------------------

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

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

GAB Q4/2006

ITEM 2. CODE OF ETHICS.

(a) The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.

(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, and that relates to any
element of the code of ethics description.

(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

As of the end of the period covered by the report, the registrant's Board of
Directors has determined that Anthony R. Pustorino is qualified to serve as an
audit committee financial expert serving on its audit committee and that he is
"independent," as defined by Item 3 of Form N-CSR.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

AUDIT FEES

(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$88,558 for 2005 and $53,500 for 2006.

AUDIT-RELATED FEES

(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $20,600 for 2005 and $20,600 for 2006. Audit-related fees
represent services provided in the preparation of Preferred Shares
Reports.

TAX FEES

(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $2,880 for 2005 and
$3,100 for 2006. Tax fees represent tax compliance services provided
in connection with the review of the Registrant's tax returns.

ALL OTHER FEES

(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
for 2005 and $48,000 for 2006. Other fees include fees for issuance of
consents, comfort letters in connection with the preferred share
offerings.

(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.

Pre-Approval Policies and Procedures. The Audit Committee ("Committee")
of the registrant is responsible for pre-approving (i) all audit and
permissible non-audit services to be provided by the independent
registered public accounting firm to the registrant and (ii) all
permissible non-audit services to be provided by the independent
registered public accounting firm to the Adviser, Gabelli Funds, LLC,
and any affiliate of Gabelli Funds, LLC ("Gabelli") that provides
services to the registrant (a "Covered Services Provider") if the
independent registered public accounting firm's engagement related
directly to the operations and financial reporting of the registrant.
The Committee may delegate its responsibility to pre-approve any such
audit and permissible non-audit services to the Chairperson of the
Committee, and the Chairperson must report to the Committee, at its
next regularly scheduled meeting after the Chairperson's pre-approval
of such services, his or her decision(s). The Committee may also
establish detailed pre-approval policies and procedures for
pre-approval of such services in accordance with applicable laws,
including the delegation of some or all of the Committee's pre-approval
responsibilities to the other persons (other than Gabelli or the
registrant's officers). Pre-approval by the Committee of any
permissible non-audit services is not required so long as: (i) the
permissible non-audit services were not recognized by the registrant at
the time of the engagement to be non-audit services; and (ii) such
services are promptly brought to the attention of the Committee and
approved by the Committee or Chairperson prior to the completion of the
audit.

(e)(2) The percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:

(b) 100%

(d) 100%

(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was 0%.

(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $0 for 2005 and $0 for 2006.

(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

The registrant has a separately designated audit committee consisting of the
following members: Anthony J. Colavita, Anthony R Pustorino and Salvatore J.
Zizza.

ITEM 6. SCHEDULE OF INVESTMENTS.

Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

The Proxy Voting Policies are attached herewith.

THE VOTING OF PROXIES ON BEHALF OF CLIENTS

Rules 204(4)-2 and 204-2 under the Investment Advisers Act of 1940 and
Rule 30b1-4 under the Investment Company Act of 1940 require investment advisers
to adopt written policies and procedures governing the voting of proxies on
behalf of their clients.

These procedures will be used by GAMCO Asset Management Inc., Gabelli
Funds, LLC, Gabelli Securities, Inc., and Gabelli Advisers, Inc. (collectively,
the "Advisers") to determine how to vote proxies relating to portfolio
securities held by their clients, including the procedures that the Advisers use
when a vote presents a conflict between the interests of the shareholders of an
investment company managed by one of the Advisers, on the one hand, and those of
the Advisers; the principal underwriter; or any affiliated person of the
investment company, the Advisers, or the principal underwriter. These procedures
will not apply where the Advisers do not have voting discretion or where the
Advisers have agreed to with a client to vote the client's proxies in accordance
with specific guidelines or procedures supplied by the client (to the extent
permitted by ERISA).

I. PROXY VOTING COMMITTEE

The Proxy Voting Committee was originally formed in April 1989 for the purpose
of formulating guidelines and reviewing proxy statements within the parameters
set by the substantive proxy voting guidelines originally published by GAMCO
Investors, Inc. in 1988 and updated periodically, a copy of which are appended
as Exhibit A. The Committee will include representatives of Research,
Administration, Legal, and the Advisers. Additional or replacement members of
the Committee will be nominated by the Chairman and voted upon by the entire
Committee.

Meetings are held as needed basis to form views on the manner in which
the Advisers should vote proxies on behalf of their clients.

In general, the Director of Proxy Voting Services, using the Proxy
Guidelines, recommendations of Institutional Shareholder Corporate Governance
Service ("ISS"), other third-party services and the analysts of Gabelli &
Company, Inc., will determine how to vote on each issue. For non-controversial
matters, the Director of Proxy Voting Services may vote the proxy if the vote is
(1) consistent with the recommendations of the issuer's Board of Directors and
not contrary to the Proxy Guidelines; (2) consistent with the recommendations of
the issuer's Board of Directors and is a non-controversial issue not covered by
the Proxy Guidelines; or (3) the vote is contrary to the recommendations of the
Board of Directors but is consistent with the Proxy Guidelines. In those
instances, the Director of Proxy Voting Services or the Chairman of the
Committee may sign and date the proxy statement indicating how each issue will
be voted.

All matters identified by the Chairman of the Committee, the Director
of Proxy Voting Services or the Legal Department as controversial, taking into
account the recommendations of ISS or other third party services and the
analysts of Gabelli & Company, Inc., will be presented to the Proxy Voting
Committee. If the Chairman of the Committee, the Director of Proxy Voting
Services or the Legal Department has identified the matter as one that (1) is
controversial; (2) would benefit from deliberation by the Proxy Voting
Committee; or (3) may give rise to a conflict of interest between the Advisers
and their clients, the Chairman of the Committee will initially determine what
vote to recommend that the Advisers should cast and the matter will go before
the Committee.

A. CONFLICTS OF INTEREST.

THE ADVISERS HAVE IMPLEMENTED THESE PROXY VOTING PROCEDURES IN
ORDER TO PREVENT CONFLICTS OF INTEREST FROM INFLUENCING THEIR
PROXY VOTING DECISIONS. BY FOLLOWING THE PROXY GUIDELINES, AS
WELL AS THE RECOMMENDATIONS OF ISS, OTHER THIRD-PARTY SERVICES
AND THE ANALYSTS OF GABELLI & COMPANY, THE ADVISERS ARE ABLE TO
AVOID, WHEREVER POSSIBLE, THE INFLUENCE OF POTENTIAL CONFLICTS OF
INTEREST. NEVERTHELESS, CIRCUMSTANCES MAY ARISE IN WHICH ONE OR
MORE OF THE ADVISERS ARE FACED WITH A CONFLICT OF INTEREST OR THE
APPEARANCE OF A CONFLICT OF INTEREST IN CONNECTION WITH ITS VOTE.
IN GENERAL, A CONFLICT OF INTEREST MAY ARISE WHEN AN ADVISER
KNOWINGLY DOES BUSINESS WITH AN ISSUER, AND MAY APPEAR TO HAVE A
MATERIAL CONFLICT BETWEEN ITS OWN INTERESTS AND THE INTERESTS OF
THE SHAREHOLDERS OF AN INVESTMENT COMPANY MANAGED BY ONE OF THE
ADVISERS REGARDING HOW THE PROXY IS TO BE VOTED. A CONFLICT ALSO
MAY EXIST WHEN AN ADVISER HAS ACTUAL KNOWLEDGE OF A MATERIAL
BUSINESS ARRANGEMENT BETWEEN AN ISSUER AND AN AFFILIATE OF THE
ADVISER.

IN PRACTICAL TERMS, A CONFLICT OF INTEREST MAY ARISE, FOR
EXAMPLE, WHEN A PROXY IS VOTED FOR A COMPANY THAT IS A CLIENT OF
ONE OF THE ADVISERS, SUCH AS GAMCO ASSET MANAGEMENT INC. A
CONFLICT ALSO MAY ARISE WHEN A CLIENT OF ONE OF THE ADVISERS HAS
MADE A SHAREHOLDER PROPOSAL IN A PROXY TO BE VOTED UPON BY ONE OR
MORE OF THE ADVISERS. THE DIRECTOR OF PROXY VOTING SERVICES,
TOGETHER WITH THE LEGAL DEPARTMENT, WILL SCRUTINIZE ALL PROXIES
FOR THESE OR OTHER SITUATIONS THAT MAY GIVE RISE TO A CONFLICT OF
INTEREST WITH RESPECT TO THE VOTING OF PROXIES.

A. OPERATION OF PROXY VOTING COMMITTEE.

For matters submitted to the Committee, each member of the
Committee will receive, prior to the meeting, a copy of the proxy
statement, any relevant third party research, a summary of any
views provided by the Chief Investment Officer and any
recommendations by Gabelli & Company, Inc. analysts. The Chief
Investment Officer or the Gabelli & Company, Inc. analysts may be
invited to present their viewpoints. IF THE DIRECTOR OF PROXY
VOTING SERVICES or the Legal Department believe that the matter
before the committee is one with respect to which a conflict of
interest may exist between the Advisers and their clients,
counsel will provide an opinion to the Committee concerning the
conflict. If the matter is one in which the interests of the
clients of one or more of Advisers may diverge, counsel will so
advise and the Committee may make different recommendations as to
different clients. For any matters where the recommendation may
trigger appraisal rights, counsel will provide an opinion
concerning the likely risks and merits of such an appraisal
action.

Each matter submitted to the Committee will be determined by the vote
of a majority of the members present at the meeting. Should the vote concerning
one or more recommendations be tied in a vote of the Committee, the Chairman of
the Committee will cast the deciding vote. The Committee will notify the proxy
department of its decisions and the proxies will be voted accordingly.

Although the Proxy Guidelines express the normal preferences for the
voting of any shares not covered by a contrary investment guideline provided by
the client, the Committee is not bound by the preferences set forth in the Proxy
Guidelines and will review each matter on its own merits. Written minutes of all
Proxy Voting Committee meetings will be maintained. The Advisers subscribe to
ISS, which supplies current information on companies, matters being voted on,
regulations, trends in proxy voting and information on corporate governance
issues.

If the vote cast either by the analyst or as a result of the
deliberations of the Proxy Voting Committee runs contrary to the recommendation
of the Board of Directors of the issuer, the matter will be referred to legal
counsel to determine whether an amendment to the most recently filed Schedule
13D is appropriate.

II. SOCIAL ISSUES AND OTHER CLIENT GUIDELINES

If a client has provided special instructions relating to the voting of
proxies, they should be noted in the client's account file and forwarded to the
proxy department. This is the responsibility of the investment professional or
sales assistant for the client. In accordance with Department of Labor
guidelines, the Advisers' policy is to vote on behalf of ERISA accounts in the
best interest of the plan participants with regard to social issues that carry
an economic impact. Where an account is not governed by ERISA, the Advisers will
vote shares held on behalf of the client in a manner consistent with any
individual investment/voting guidelines provided by the client. Otherwise the
Advisers will abstain with respect to those shares.

III. CLIENT RETENTION OF VOTING RIGHTS

If a client chooses to retain the right to vote proxies or if there is
any change in voting authority, the following should be notified by the
investment professional or sales assistant for the client.

- Operations
- Legal Department
- Proxy Department
- Investment professional assigned to the account

In the event that the Board of Directors (or a Committee thereof) of
one or more of the investment companies managed by one of the Advisers has
retained direct voting control over any security, the Proxy Voting Department
will provide each Board Member (or Committee member) with a copy of the proxy
statement together with any other relevant information including recommendations
of ISS or other third-party services.

IV. VOTING RECORDS

The Proxy Voting Department will retain a record of matters voted upon
by the Advisers for their clients. The Advisers' staff may request proxy-voting
records for use in presentations to current or prospective clients. Requests for
proxy voting records should be made at least ten days prior to client meetings.

If a client wishes to receive a proxy voting record on a quarterly,
semi-annual or annual basis, please notify the Proxy Voting Department. The
reports will be available for mailing approximately ten days after the quarter
end of the period. First quarter reports may be delayed since the end of the
quarter falls during the height of the proxy season.

A letter is sent to the custodians for all clients for which the
Advisers have voting responsibility instructing them to forward all proxy
materials to:

[Adviser name]
Attn: Proxy Voting Department
One Corporate Center
Rye, New York 10580-1433

The sales assistant sends the letters to the custodians along with the
trading/DTC instructions. Proxy voting records will be retained in compliance
with Rule 204-2 under the Investment Advisers Act.

V. VOTING PROCEDURES

1. Custodian banks, outside brokerage firms and Wexford Clearing Services
Corporation are responsible for forwarding proxies directly to GAMCO.

Proxies are received in one of two forms:

o Shareholder Vote Authorization Forms (VAFs) - Issued by ADP. VAFs must be
voted through the issuing institution causing a time lag. ADP is an outside
service contracted by the various institutions to issue proxy materials.

o Proxy cards which may be voted directly.

2. Upon receipt of the proxy, the number of shares each form represents is
logged into the proxy system according to security.

3. In the case of a discrepancy such as an incorrect number of shares, an
improperly signed or dated card, wrong class of security, etc., the issuing
custodian is notified by phone. A corrected proxy is requested. Any arrangements
are made to insure that a proper proxy is received in time to be voted
(overnight delivery, fax, etc.). When securities are out on loan on record date,
the custodian is requested to supply written verification.

4. Upon receipt of instructions from the proxy committee (see Administrative),
the votes are cast and recorded for each account on an individual basis.

Since January 1, 1992, records have been maintained on the Proxy Edge system.
The system is backed up regularly. From 1990 through 1991, records were
maintained on the PROXY VOTER system and in hardcopy format. Prior to 1990,
records were maintained on diskette and in hardcopy format.

PROXY EDGE records include:
Security Name and Cusip Number
Date and Type of Meeting (Annual, Special, Contest)
Client Name
Adviser or Fund Account Number
Directors' Recommendation
How GAMCO voted for the client on each issue
The rationale for the vote when it appropriate

Records prior to the institution of the PROXY EDGE system include:
Security name
Type of Meeting (Annual, Special, Contest)
Date of Meeting
Name of Custodian
Name of Client
Custodian Account Number
Adviser or Fund Account Number
Directors' recommendation
How the Adviser voted for the client on each issue
Date the proxy statement was received and by whom
Name of person posting the vote
Date and method by which the vote was cast

o From these records individual client proxy voting records are compiled. It
is our policy to provide institutional clients with a proxy voting record
during client reviews. In addition, we will supply a proxy voting record at
the request of the client on a quarterly, semi-annual or annual basis.

5. VAFs are kept alphabetically by security. Records for the current proxy
season are located in the Proxy Voting Department office. In preparation for the
upcoming season, files are transferred to an offsite storage facility during
January/February.

6. Shareholder Vote Authorization Forms issued by ADP are always sent directly
to a specific individual at ADP.

7. If a proxy card or VAF is received too late to be voted in the conventional
matter, every attempt is made to vote on one of the following manners:

o VAFs can be faxed to ADP up until the time of the meeting. This is followed
up by mailing the original form.

o When a solicitor has been retained, the solicitor is called. At the
solicitor's direction, the proxy is faxed.

8. In the case of a proxy contest, records are maintained for each opposing
entity.

9. Voting in Person

a) At times it may be necessary to vote the shares in person. In this case, a
"legal proxy" is obtained in the following manner:

o Banks and brokerage firms using the services at ADP:

The back of the VAF is stamped indicating that we wish to vote in person.
The forms are then sent overnight to ADP. ADP issues individual legal proxies
and sends them back via overnight (or the Adviser can pay messenger charges). A
lead-time of at least two weeks prior to the meeting is needed to do this.
Alternatively, the procedures detailed below for banks not using ADP may be
implemented.

o Banks and brokerage firms issuing proxies directly:

The bank is called and/or faxed and a legal proxy is requested.

All legal proxies should appoint:

"REPRESENTATIVE OF [ADVISER NAME] WITH FULL POWER OF SUBSTITUTION."

b) The legal proxies are given to the person attending the meeting along with
the following supplemental material:

o A limited Power of Attorney appointing the attendee an Adviser
representative.
o A list of all shares being voted by custodian only. Client names and
account numbers are not included. This list must be presented, along with
the proxies, to the Inspectors of Elections and/or tabulator at least
one-half hour prior to the scheduled start of the meeting. The tabulator
must "qualify" the votes (i.e. determine if the vote have previously been
cast, if the votes have been rescinded, etc. vote have previously been
cast, etc.).
o A sample ERISA and Individual contract.
o A sample of the annual authorization to vote proxies form.
o A copy of our most recent Schedule 13D filing (if applicable).

APPENDIX A
PROXY GUIDELINES

PROXY VOTING GUIDELINES

GENERAL POLICY STATEMENT

It is the policy of GAMCO INVESTORS, INC. to vote in the best economic interests
of our clients. As we state in our Magna Carta of Shareholders Rights,
established in May 1988, we are neither FOR nor AGAINST management. We are for
shareholders.

At our first proxy committee meeting in 1989, it was decided that each proxy
statement should be evaluated on its own merits within the framework first
established by our Magna Carta of Shareholders Rights. The attached guidelines
serve to enhance that broad framework.

We do not consider any issue routine. We take into consideration all of our
research on the company, its directors, and their short and long-term goals for
the company. In cases where issues that we generally do not approve of are
combined with other issues, the negative aspects of the issues will be factored
into the evaluation of the overall proposals but will not necessitate a vote in
opposition to the overall proposals.

BOARD OF DIRECTORS

The advisers do not consider the election of the Board of Directors a routine
issue. Each slate of directors is evaluated on a case-by-case basis.

Factors taken into consideration include:

o Historical responsiveness to shareholders
This may include such areas as:
-Paying greenmail
-Failure to adopt shareholder resolutions receiving a majority of
shareholder votes
o Qualifications
o Nominating committee in place
o Number of outside directors on the board
o Attendance at meetings
o Overall performance

SELECTION OF AUDITORS

In general, we support the Board of Directors' recommendation for audit.

BLANK CHECK PREFERRED STOCK

We oppose the issuance of blank check preferred stock.

Blank check preferred stock allows the company to issue stock and establish
dividends, voting rights, etc. without further shareholder approval.

CLASSIFIED BOARD

A classified board is one where the directors are divided into classes with
overlapping terms. A different class is elected at each annual meeting.

While a classified board promotes continuity of directors facilitating long
range planning, we feel directors should be accountable to shareholders on an
annual basis. We will look at this proposal on a case-by-case basis taking into
consideration the board's historical responsiveness to the rights of
shareholders.

Where a classified board is in place we will generally not support attempts to
change to an annually elected board.

When an annually elected board is in place, we generally will not support
attempts to classify the board.

INCREASE AUTHORIZED COMMON STOCK

The request to increase the amount of outstanding shares is considered on a
case-by-case basis.

Factors taken into consideration include:

o Future use of additional shares
-Stock split
-Stock option or other executive compensation plan
-Finance growth of company/strengthen balance sheet
-Aid in restructuring
-Improve credit rating
-Implement a poison pill or other takeover defense
o Amount of stock currently authorized but not yet issued or reserved for
stock option plans
o Amount of additional stock to be authorized and its dilutive effect

We will support this proposal if a detailed and verifiable plan for the use of
the additional shares is contained in the proxy statement.

CONFIDENTIAL BALLOT

We support the idea that a shareholder's identity and vote should be treated
with confidentiality.

However, we look at this issue on a case-by-case basis.

In order to promote confidentiality in the voting process, we endorse the use of
independent Inspectors of Election.

CUMULATIVE VOTING

In general, we support cumulative voting.

Cumulative voting is a process by which a shareholder may multiply the number of
directors being elected by the number of shares held on record date and cast the
total number for one candidate or allocate the voting among two or more
candidates.

Where cumulative voting is in place, we will vote against any proposal to
rescind this shareholder right.

Cumulative voting may result in a minority block of stock gaining representation
on the board. When a proposal is made to institute cumulative voting, the
proposal will be reviewed on a case-by-case basis. While we feel that each board
member should represent all shareholders, cumulative voting provides minority
shareholders an opportunity to have their views represented.

DIRECTOR LIABILITY AND INDEMNIFICATION

We support efforts to attract the best possible directors by limiting the
liability and increasing the indemnification of directors, except in the case of
insider dealing.

EQUAL ACCESS TO THE PROXY

The SEC's rules provide for shareholder resolutions. However, the resolutions
are limited in scope and there is a 500 word limit on proponents' written
arguments. Management has no such limitations. While we support equal access to
the proxy, we would look at such variables as length of time required to
respond, percentage of ownership, etc.

FAIR PRICE PROVISIONS

Charter provisions requiring a bidder to pay all shareholders a fair price are
intended to prevent two-tier tender offers that may be abusive. Typically, these
provisions do not apply to board-approved transactions.

We support fair price provisions because we feel all shareholders should be
entitled to receive the same benefits.

Reviewed on a case-by-case basis.

GOLDEN PARACHUTES

Golden parachutes are severance payments to top executives who are terminated or
demoted after a takeover.

We support any proposal that would assure management of its own welfare so that
they may continue to make decisions in the best interest of the company and
shareholders even if the decision results in them losing their job. We do not,
however, support excessive golden parachutes. Therefore, each proposal will be
decided on a case-by- case basis.

NOTE: CONGRESS HAS IMPOSED A TAX ON ANY PARACHUTE THAT IS MORE THAN THREE TIMES
THE EXECUTIVE'S AVERAGE ANNUAL COMPENSATION.

ANTI-GREENMAIL PROPOSALS

We do not support greenmail. An offer extended to one shareholder should be
extended to all shareholders equally across the board.

LIMIT SHAREHOLDERS' RIGHTS TO CALL SPECIAL MEETINGS

We support the right of shareholders to call a special meeting.

CONSIDERATION OF NONFINANCIAL EFFECTS OF A MERGER

This proposal releases the directors from only looking at the financial effects
of a merger and allows them the opportunity to consider the merger's effects on
employees, the community, and consumers.

As a fiduciary, we are obligated to vote in the best economic interests of our
clients. In general, this proposal does not allow us to do that. Therefore, we
generally cannot support this proposal.

Reviewed on a case-by-case basis.

MERGERS, BUYOUTS, SPIN-OFFS, RESTRUCTURINGS

Each of the above is considered on a case-by-case basis. According to the
Department of Labor, we are not required to vote for a proposal simply because
the offering price is at a premium to the current market price. We may take into
consideration the long term interests of the shareholders.

MILITARY ISSUES

Shareholder proposals regarding military production must be evaluated on a
purely economic set of criteria for our ERISA clients. As such, decisions will
be made on a case-by-case basis.

In voting on this proposal for our non-ERISA clients, we will vote according to
the client's direction when applicable. Where no direction has been given, we
will vote in the best economic interests of our clients. It is not our duty to
impose our social judgment on others.

NORTHERN IRELAND

Shareholder proposals requesting the signing of the MacBride principles for the
purpose of countering the discrimination of Catholics in hiring practices must
be evaluated on a purely economic set of criteria for our ERISA clients. As
such, decisions will be made on a case-by-case basis.

In voting on this proposal for our non-ERISA clients, we will vote according to
client direction when applicable. Where no direction has been given, we will
vote in the best economic interests of our clients. It is not our duty to impose
our social judgment on others.

OPT OUT OF STATE ANTI-TAKEOVER LAW

This shareholder proposal requests that a company opt out of the coverage of the
state's takeover statutes. Example: Delaware law requires that a buyer must
acquire at least 85% of the company's stock before the buyer can exercise
control unless the board approves.

We consider this on a case-by-case basis. Our decision will be based on the
following:

o State of Incorporation

o Management history of responsiveness to shareholders
o Other mitigating factors

POISON PILL

In general, we do not endorse poison pills.

In certain cases where management has a history of being responsive to the needs
of shareholders and the stock is very liquid, we will reconsider this position.

REINCORPORATION

Generally, we support reincorporation for well-defined business reasons. We
oppose reincorporation if proposed solely for the purpose of reincorporating in
a state with more stringent anti-takeover statutes that may negatively impact
the value of the stock.

STOCK OPTION PLANS

Stock option plans are an excellent way to attract, hold and motivate directors
and employees. However, each stock option plan must be evaluated on its own
merits, taking into consideration the following:

o Dilution of voting power or earnings per share by more than 10%
o Kind of stock to be awarded, to whom, when and how much
o Method of payment
o Amount of stock already authorized but not yet issued under existing stock
option plans

SUPERMAJORITY VOTE REQUIREMENTS

Supermajority vote requirements in a company's charter or bylaws require a level
of voting approval in excess of a simple majority of the outstanding shares. In
general, we oppose supermajority-voting requirements. Supermajority requirements
often exceed the average level of shareholder participation. We support
proposals' approvals by a simple majority of the shares voting.

LIMIT SHAREHOLDERS RIGHT TO ACT BY WRITTEN CONSENT

Written consent allows shareholders to initiate and carry on a shareholder
action without having to wait until the next annual meeting or to call a special
meeting. It permits action to be taken by the written consent of the same
percentage of the shares that would be required to effect proposed action at a
shareholder meeting.

Reviewed on a case-by-case basis.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

PORTFOLIO MANAGER
-----------------

Mr. Mario J. Gabelli, CFA, is primarily responsible for the day-to-day
management of The Gabelli Equity Trust Inc., (the Trust). Mr. Gabelli has served
as Chairman, Chief Executive Officer, and Chief Investment Officer -Value
Portfolios of GAMCO Investors, Inc. and its affiliates since their organization.

Additionally, Mr. Caesar M. P. Bryan manages a portion of the Trust's assets.
Mr. Bryan is a Senior Vice President and Portfolio Manager with GAMCO Asset
Management Inc. (a wholly owned subsidiary of GAMCO Investors, Inc.) since 1994.

MANAGEMENT OF OTHER ACCOUNTS
----------------------------

The table below shows the number of other accounts managed by the Portfolio
Managers and the total assets in each of the following categories: registered
investment companies, other paid investment vehicles and other accounts. For
each category, the table also shows the number of accounts and the total assets
in the accounts with respect to which the advisory fee is based on account
performance.

------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Total Assets
No. of Accounts in Accounts
Name of Portfolio Total where Advisory where Advisory
Manager or Type of No. of Accounts Total Fee is Based on Fee is Based
Team Member Accounts Managed Assets Performance on Performance
----------- --------- ------- ------- ----------- --------------
------------------------- ------------------- ------------------- -------------- ----------------- ----------------

1. Mario J. Gabelli Registered 21 $11.8B 5 $3.2B
Investment
Companies:
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Other Pooled 17 $714.9M 16 $624.3M
Investment
Vehicles:
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Other Accounts: 1818 $11.0B 6 $1.5B
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
2. Caesar M.P. Bryan Registered 5 $1.5B 0 $0
Investment
Companies:
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Other Pooled 1 $4.0M 1 $4.0M
Investment
Vehicles:
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------
Other Accounts: 5 $50.5M 0 $0
--------------------------- ------------------- ------------------- -------------- ----------------- ----------------

POTENTIAL CONFLICTS OF INTEREST
-------------------------------

As reflected above, the Portfolio Managers manage accounts in addition to the
Trust. Actual or apparent conflicts of interest may arise when a Portfolio
Manager also has day-to-day management responsibilities with respect to one or
more other accounts. These potential conflicts include:

ALLOCATION OF LIMITED TIME AND ATTENTION. As indicated above, the Portfolio
Managers manage multiple accounts. As a result, they will not be able to devote
all of their time to management of the Trust. The Portfolio Manager, therefore,
may not be able to formulate as complete a strategy or identify equally
attractive investment opportunities for each of those accounts as might be the
case if he were to devote all of his attention to the management of only the
Trust.

ALLOCATION OF LIMITED INVESTMENT OPPORTUNITIES. As indicated above, the
Portfolio Managers manage managed accounts with investment strategies and/or
policies that are similar to the Trust. In these cases, if he identifies an
investment opportunity that may be suitable for multiple accounts, a Fund may
not be able to take full advantage of that opportunity because the opportunity
may be allocated among all or many of these accounts or other accounts managed
primarily by other Portfolio Managers of the Adviser, and their affiliates. In
addition, in the event the Portfolio Manager determines to purchase a security
for more than one account in an aggregate amount that may influence the market
price of the security, accounts that purchased or sold the security first may
receive a more favorable price than accounts that made subsequent transactions.

SELECTION OF BROKER/DEALERS. Because of Mr. Gabelli's position with the
Distributor and his indirect majority ownership interest in the Distributor, he
may have an incentive to use the Distributor to execute portfolio transactions
for a Fund.

PURSUIT OF DIFFERING STRATEGIES. At times, the Portfolio Manager may determine
that an investment opportunity may be appropriate for only some of the accounts
for which he exercises investment responsibility, or may decide that certain of
the funds or accounts should take differing positions with respect to a
particular security. In these cases, he may execute differing or opposite
transactions for one or more accounts which may affect the market price of the
security or the execution of the transaction, or both, to the detriment of one
or more other accounts.

VARIATION IN COMPENSATION. A conflict of interest may arise where the financial
or other benefits available to the Portfolio Managers differ among the accounts
that they manage. If the structure of the Adviser's management fee or the
Portfolio Manager's compensation differs among accounts (such as where certain
accounts pay higher management fees or performance-based management fees), the
Portfolio Manager may be motivated to favor certain accounts over others. The
Portfolio Manager also may be motivated to favor accounts in which he has an
investment interest, or in which the Adviser, or their affiliates have
investment interests. Similarly, the desire to maintain assets under management
or to enhance a Portfolio Manager's performance record or to derive other
rewards, financial or otherwise, could influence the Portfolio Manager in
affording preferential treatment to those accounts that could most significantly
benefit the Portfolio Manager. For example, as reflected above, if the Portfolio
Manager manages accounts which have performance fee arrangements, certain
portions of his compensation will depend on the achievement of performance
milestones on those accounts. The Portfolio Manager could be incented to afford
preferential treatment to those accounts and thereby by subject to a potential
conflict of interest.

The Adviser, and the Funds have adopted compliance policies and procedures that
are designed to address the various conflicts of interest that may arise for the
Adviser and their staff members. However, there is no guarantee that such
policies and procedures will be able to detect and prevent every situation in
which an actual or potential conflict may arise.

COMPENSATION STRUCTURE FOR MARIO J. GABELLI
-------------------------------------------

Mr. Gabelli receives incentive-based variable compensation based on a percentage
of net revenues received by the Adviser for managing the Trust. Net revenues are
determined by deducting from gross investment management fees the firm's
expenses (other than Mr. Gabelli's compensation) allocable to this Trust. Five
closed-end registered investment companies (including this Trust) managed by Mr.
Gabelli have arrangements whereby the Adviser will only receive its investment
advisory fee attributable to the liquidation value of outstanding preferred
stock (and Mr. Gabelli would only receive his percentage of such advisory fee)
if certain performance levels are met. Additionally, he receives similar
incentive based variable compensation for managing other accounts within the
firm and its affiliates. This method of compensation is based on the premise
that superior long-term performance in managing a portfolio should be rewarded
with higher compensation as a result of growth of assets through appreciation
and net investment activity. The level of compensation is not determined with
specific reference to the performance of any account against any specific
benchmark. One of the other registered investment companies managed by Mr.
Gabelli has a performance (fulcrum) fee arrangement for which his compensation
is adjusted up or down based on the performance of the investment company
relative to an index. Mr. Gabelli manages other accounts with performance fees.
Compensation for managing these accounts has two components. One component is
based on a percentage of net revenues to the investment adviser for managing the
account. The second component is based on absolute performance of the account,
with respect to which a percentage of such performance fee is paid to Mr.
Gabelli. As an executive officer of the Adviser's parent company, GBL, Mr.
Gabelli also receives ten percent of the net operating profits of the parent
company. He receives no base salary, no annual bonus, and no stock options.

COMPENSATION STRUCTURE FOR CAESAR M. P. BRYAN
---------------------------------------------

The compensation of Mr. Bryan for the Trust is structured to enable the Adviser
to attract and retain highly qualified professionals in a competitive
environment. The Portfolio Manager receives a compensation package that includes
a minimum draw or base salary, equity-based incentive compensation via awards of
stock options, and incentive based variable compensation based on a percentage
of net revenue received by the Adviser for managing the Trust to the extent that
the amount exceeds a minimum level of compensation. Net revenues are determined
by deducting from gross investment management fees certain of the firm's
expenses (other than the Portfolio Managers' compensation) allocable to the
Trust (the incentive-based variable compensation for managing other accounts is
also based on a percentage of net revenues to the investment adviser for
managing the account). This method of compensation is based on the premise that
superior long-term performance in managing a portfolio should be rewarded with
higher compensation as a result of growth of assets through appreciation and net
investment activity. The level of equity-based incentive and incentive-based
variable compensation is based on an evaluation by the Adviser's parent, GBL, of
quantitative and qualitative performance evaluation criteria. This evaluation
takes into account, in a broad sense, the performance of the accounts managed by
the Portfolio Manager, but the level of compensation is not determined with
specific reference to the performance of any account against any specific
benchmark. Generally, greater consideration is given to the performance of
larger accounts and to longer term performance over smaller accounts and
short-term performance.

OWNERSHIP OF SHARES IN THE FUND
-------------------------------

Mario Gabelli and Caesar M. P. Bryan owned over $1,000,000 and $0, respectively,
of shares of the Trust as of December 31, 2006.

(B) Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES

=============================================================================================================================
(C) TOTAL NUMBER OF (D) MAXIMUM NUMBER (OR
SHARES (OR UNITS) APPROXIMATE DOLLAR VALUE) OF
(A) TOTAL NUMBER OF PURCHASED AS PART OF SHARES (OR UNITS) THAT MAY YET
SHARES (OR UNITS) (B) AVERAGE PRICE PAID PUBLICLY ANNOUNCED PLANS BE PURCHASED UNDER THE PLANS
PERIOD PURCHASED PER SHARE (OR UNIT) OR PROGRAMS OR PROGRAMS
=============================================================================================================================

Month #1 Common - N/A Common - N/A Common - N/A Common - 166,832,166
07/01/06 Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - 4,950,000
through
07/31/06 Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
=============================================================================================================================
Month #2 Common - N/A Common - N/A Common - N/A Common - 166,832,166
08/01/06 Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - 4,950,000
through
08/31/06 Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
=============================================================================================================================
Month #3 Common - N/A Common - N/A Common - N/A Common - 167,642,009
09/01/06 Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - 4,950,000
through
09/30/06 Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
=============================================================================================================================
Month #4 Common - N/A Common - N/A Common - N/A Common - 167,642,009
10/01/06 Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - 4,950,000
through
10/31/06 Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
=============================================================================================================================
Month #5 Common - N/A Common - N/A Common - N/A Common - 167,642,009
11/01/06 Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - 4,950,000
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
11/30/06 Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - 6,000,000
=============================================================================================================================
Month #6 Common - N/A Common - N/A Common - N/A Common - 168,756,272
12/01/06 Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - 4,950,000
through Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - 2,949,700
12/31/06 Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - 6,000,000
=============================================================================================================================
Total Common - N/A Common - N/A Common - N/A N/A
Preferred Series B - N/A Preferred Series B - N/A Preferred Series B - N/A
Preferred Series D - N/A Preferred Series D - N/A Preferred Series D - N/A
Preferred Series F - N/A Preferred Series F - N/A Preferred Series F - N/A
=============================================================================================================================

Footnote columns (c) and (d) of the table, by disclosing the following
information in the aggregate for all plans or programs publicly announced:

a. The date each plan or program was announced - The notice of the potential
repurchase of common and preferred shares occurs quarterly in the Fund's
quarterly report in accordance with Section 23(c) of the Investment Company
Act of 1940, as amended.
b. The dollar amount (or share or unit amount) approved - Any or all common
shares outstanding may be repurchased when the Fund's common shares are
trading at a discount of 10% or more from the net asset value of the
shares. Any or all preferred shares outstanding may be repurchased when the
Fund's preferred shares are trading at a discount to the liquidation value
of $25.00.
c. The expiration date (if any) of each plan or program - The Fund's
repurchase plans are ongoing.
d. Each plan or program that has expired during the period covered by the
table - The Fund's repurchase plans are ongoing.
e. Each plan or program the registrant has determined to terminate prior to
expiration, or under which the registrant does not intend to make further
purchases. - The Fund's repurchase plans are ongoing.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's Board of Directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.

ITEM 11. CONTROLS AND PROCEDURES.

(a) The registrant's principal executive and principal financial officers, or
persons performing similar functions, have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR
270.30a-3(c))) are effective, as of a date within 90 days of the filing
date of the report that includes the disclosure required by this paragraph,
based on their evaluation of these controls and procedures required by Rule
30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or
15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR
240.13a-15(b) or 240.15d-15(b)).

(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR
270.30a-3(d)) that occurred during the registrant's second fiscal quarter
of the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control
over financial reporting.

ITEM 12. EXHIBITS.

(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.

(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

(a)(3) Not applicable.

(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

(registrant) The Gabelli Equity Trust Inc.
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By (Signature and Title)* /s/ Bruce N. Alpert
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Bruce N. Alpert, Principal Executive Officer

Date 03/01/2007
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

By (Signature and Title)* /s/ Bruce N. Alpert
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer

Date 03/01/2007
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By (Signature and Title)* /s/ Agnes Mullady
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Agnes Mullady, Principal Financial Officer and
Treasurer

Date 03/01/2007
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* Print the name and title of each signing officer under his or her signature.