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                                   GABELLI EQUITY TRUST INC.

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               SEMI-ANNUAL REPORT
               JUNE 30, 2001



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        Our cover icon represents the  underpinnings of Gabelli.
        The Teton mountains in Wyoming  represent what we believe in
        in America -- that creativity,  ingenuity, hard work and a global
        uniqueness  provide enduring values.  They also stand out in
        an increasingly complex, interconnected and interdependent
        economic world.

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 ALABAMA    ALASKA     ARIZONA   ARKANSAS    CALIFORNIA   COLORADO   CONNECTICUT
 DELAWARE     FLORIDA    GEORGIA

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  HAWAII      IDAHO    ILLINOIS     INDIANA     IOWA      KANSAS     KENTUCKY
  LOUISIANA    MAINE      MARYLAND

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MASSACHUSETTS MICHIGAN   MINNESOTA MISSISSIPPI   MISSOURI     MONTANA   NEBRASKA
NEVADA   NEW HAMPSHIRE NEW JERSEY

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  NEW MEXICO  NEW YORK  N. CAROLINA  N. DAKOTA    OHIO      OKLAHOMA    OREGON
  PENNSYLVANIA  RHODE ISLAND S. CAROLINA

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 S. DAKOTA   TENNESSEE    TEXAS      UTAH      VERMONT   VIRGINIA  WEST VIRGINIA
 WASHINGTON WISCONSIN   WYOMING

INVESTMENT OBJECTIVE:

The Gabelli Equity Trust Inc. is a closed-end, non-diversified management
investment company whose primary objective is long-term growth of
capital, with income as a secondary objective.

                    THIS REPORT IS PRINTED ON RECYCLED PAPER.




[PHOTO OF MARIO J. GABELLI OMITTED]
          MARIO J. GABELLI

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                  THE GABELLI
                  EQUITY TRUST INC.

TO OUR SHAREHOLDERS,

      After rallying in April and early May,  stocks  reversed course in June as
corporate America began  pre-announcing  second quarter earnings  shortfalls and
warning that third quarter earnings may also disappoint. Despite the June swoon,
the leading market indices closed the second quarter with respectable gains.

INVESTMENT PERFORMANCE

      For the second  quarter ended June 30, 2001,  The Gabelli  Equity  Trust's
(the "Trust") net asset value  ("NAV")  total return rose 5.23% after  adjusting
for the reinvestment of the $0.27 per share  distribution paid on June 25, 2001.
The Standard & Poor's ("S&P") 500 Index,  Nasdaq  Composite Index, and Dow Jones
Industrial Average rose 5.85%,  17.43%, and 6.75%,  respectively,  over the same
period. Each index is an unmanaged  indicator of stock market  performance.  The
Trust fell 2.42% over the trailing  twelve-month  period after adjusting for the
reinvestment of the $1.31 per share in distributions  and an adjustment of $0.56
per share  attributable  to the  rights  offering.  The S&P 500 Index and Nasdaq
Composite  Index declined 14.82% and 45.51%,  respectively,  while the Dow Jones
Industrial Average rose 2.21%, over the same twelve-month period.

      For the  two-year  period ended June 30,  2001,  the Trust's  total return
averaged  4.29%  annually,   including  reinvestments  of  $2.48  per  share  in
distributions,  an  adjustment  of $0.56 per share  attributable  to the  rights
offering,  and an adjustment of $0.75 per share  attributable to the spin-off of
The Gabelli Utility Trust.  The S&P 500 Index,  Nasdaq  Composite Index, and Dow
Jones  Industrial  Average had average  annual  declines of 4.42%,  10.31%,  and
0.57%,  respectively,  over the same two-year  period.  For the five-year period
ended  June 30,  2001,  the  Trust's  total  return  averaged  12.70%  annually,
including  reinvestments of $5.73 per share in  distributions,  an adjustment of
$0.56 per share attributable to the rights offering,  and an adjustment of $0.75
per share  attributable  to the spin-off of The Gabelli  Utility  Trust,  versus
average  annual  total  returns of 14.48%,  12.77%,  and 15.19% for the S&P 500,
Nasdaq Composite Index, and Dow Jones Industrial Average, respectively.

      For the  ten-year  period ended June 30,  2001,  the Trust's  total return
averaged  13.41%  annually,  including  reinvestments  of  $11.07  per  share in
distributions,  adjustments of $2.21 per share attributable to rights offerings,
and  adjustments of $1.50 per share  attributable to the spin-off of The Gabelli
Utility Trust and The Gabelli  Global  Multimedia  Trust,  versus average annual
total returns of 15.09%,  16.34%,  and 16.32% for the S&P 500, Nasdaq  Composite
Index, and Dow Jones Industrial Average, respectively. Since inception on August
21, 1986  through  June 30,  2001,  the Trust had a  cumulative  total return of
537.48%,  including  adjustments of $19.70 per share for  distributions,  rights
offerings,  spin-offs and taxes paid on  undistributed  long term capital gains,
which equates to an average annual total return of 13.26%.

      The Trust's  common shares ended the second quarter at $11.48 per share on
the New York Stock  Exchange,  a premium to the net asset  value of 15.96% and a
total return of 10.04% for the second  quarter.  The Trust's  common shares rose
11.78%  over  the  trailing   twelve-month   period  after   adjusting  for  all
distributions and the rights offering.



INVESTMENT RESULTS (a)
--------------------------------------------------------------------------------
                     AVERAGE ANNUAL RETURNS - JUNE 30, 2001
                     --------------------------------------
                               NAV AVERAGE               AVERAGE ANNUAL
                           ANNUAL RETURN (A)          INVESTMENT RETURN (C)
                           -----------------          ---------------------
  1 Year ...................    (2.67)%                     11.78%
  5 Year ...................    12.70%                      17.21%
  10 Year ..................    13.41%                      15.14%
  Life of Fund (b) .........    13.26%                      13.87%

(a) Life of Fund return based on initial net asset value of $9.34. Total returns
and average annual returns reflect  changes in net asset value,  reinvestment of
distributions,  adjustments  for rights  offerings,  spin-offs and taxes paid on
undistributed  long term capital gains, and are net of expenses.  Of course, the
returns noted represent past  performance  and do not guarantee  future results.
Investment returns and the principal value of an investment will fluctuate. When
shares are sold they may be worth more or less than their original cost.

(b) From commencement of investment operations on August 21, 1986.

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

7.20% TAX ADVANTAGED SERIES B CUMULATIVE PREFERRED STOCK

     On June 20, 2001,  the Trust  successfully  completed its offering of 7.20%
Tax Advantaged Series B Cumulative  Preferred Stock  ("Preferred  Shares") which
was rated 'Aaa' by Moody's Investors Service, Inc. Shareholder response has been
positive and we  appreciate  the efforts of Salomon  Smith Barney Inc.,  Merrill
Lynch & Co. and Gabelli & Company, Inc. the underwriters,  and wish to thank and
welcome all those investors who participated.

      The Trust  issued  6,600,000  Preferred  Shares at $25.00 per share  ($165
million)  with an  annual  dividend  rate of $1.80 per  share  paying  quarterly
starting in September  2001.  The  Preferred  Shares are trading on the New York
Stock  Exchange  under the symbol "GAB PrB".  Consistent  with our  conservative
approach,  the Trust issued the Preferred  Shares in a cost effective  manner at
less than an estimated $0.044 per share.

      How would the Preferred Shares benefit Common Shareholders?  The Trust has
earned a 13.26%  average  annual total return from  inception on August 21, 1986
through June 30, 2001. The Preferred  Shares were issued with a dividend rate of
7.20%.  Any return earned in excess of the stated  dividend rate would  directly
benefit Common  Shareholders;  however, any shortfall from the stated rate would
impact the Common  Shareholder  in the opposite  fashion.  Therefore,  by taking
advantage of the current  relatively low interest rate environment and achieving
our long-term investment objectives, the Preferred Share issuance offers what we
believe is a method of  potentially  adding wealth for our Common  Shareholders.
With the  completion of the preferred  offerings,  the Adviser will not earn the
management fee on the incremental  assets during any year in which the net asset
value total return on the Trust does not exceed the stated  dividend rate on the
Preferred Shares.

     Furthermore, Common Shareholders stand to receive certain tax benefits as a
result of the Preferred Stock offering. As taxable income is allocated to the

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TEXT AS FOLLOWS:
EPS
PMV
MANAGEMENT
CASHFLOW
RESEARCH

                                        2


Preferred  Shareholders  before Common  Shareholders,  taxable  distributions to
Common  Shareholders  would not be  required  to the extent they would be if the
Preferred  Shares  were not  outstanding.  Long-term  capital  gains are  passed
through  to  shareholders.   In  2000,   85.06%  of  the  common  and  preferred
distributions  was classified as long-term  capital gains,  taxable at a maximum
rate of 20%. As a result,  the ordinary income equivalent yield on the preferred
stock, for a shareholder in the 39% tax bracket, was 9.12%.

COMMENTARY

      Mario  Gabelli,   our  Chief  Investment  Officer,  has  appeared  in  the
prestigious  BARRON'S  Roundtable  discussion  annually since 1980.  Many of our
readers have enjoyed the inclusion of selected and edited comments from BARRON'S
Roundtable  in  previous  reports  to  shareholders.  As is our  custom,  we are
including  selected  comments  of  Mario  Gabelli  from  BARRON'S  2001  Midyear
Roundtable.


--------------------------------------------------------------------------------
June 25, 2001          BARRON'S  [BULLET]  Midyear Roundtable 2001
--------------------------------------------------------------------------------

                                    BARRON'S
                               MIDYEAR ROUNDTABLE
================================================================================
                                  MARIO GABELLI
             Chairman, Gabelli Asset Management Inc., Rye, New York

 ...My conclusion is we will have a consumer-led  economic  recovery  starting in
October,  November,  December.  That assumes we don't have  accidents in the oil
pipeline,  the  dollar  and  places  like  Argentina.  By the middle of July the
overall stock market will have absorbed the very ugly results in  second-quarter
earnings.  You'll start thinking  about better  comparisons in the first half of
2002.

Q: IS YOUR BOTTOM LINE SUNNY SKIES IN 2002?

A: In the short term we're  setting up for a fairly  large speed bump.  Earnings
are uglier than we thought.  Interest  rates went up instead of down at the long
end. But once you get past the short term you'll see a nice old-fashioned  rally
in non-Nasdaq-type  stocks and particularly consumer cyclicals.  For the rest of
2001 the overall  market is not going to do very much,  but  consumer  cyclicals
will do well.  You will  have a lot of  opportunity  to make  money in  specific
stocks because the environment for transactions is as good as I have ever seen.

Q: DEALS, DEALS, DEALS.

A: With this  Administration  you're  seeing a less hostile  environment  at the
Department  of  Justice,  at the  Federal  Trade  Commission  and clearly at the
Federal  Communications  Commission.  The FCC, as I've noted before, will change
the rules of the road on a whole bunch of issues.  Large  corporations will want
to  grow  the  top  line  and  diversify  through  deals.  So  even  though  the
Honeywell-GE deal blew up, on balance the background is very right for all sorts
of  transactions.  To sum up, our model for the next 12 months is that  economic
policy works,  monetary  policy works,  tax cuts work.  Also, the elimination of
goodwill creates a powerful propensity for deal activity. The consumer will lead
the recovery and there will be the absence of incremental  drag from  inventory,
starting in the third  quarter.  We see very little headway for the stock market
indexes for the next six to nine months,  but it is a good  environment in which
to own companies that will be the subject of financial engineering.
--------------------------------------------------------------------------------

THE LONG AND THE SHORT OF IT

      As evidenced by a record number of  pre-announced  earnings  shortfalls in
the second quarter,  six Federal  Reserve Board ("Fed")  interest rate cuts this
year  totaling  275 basis  points  (2.75%)  have yet to revive the sagging  U.S.
economy.  This should not come as a surprise. It takes time for Fed rate cuts to
work their magic, but the rabbit eventually  emerges from the hat. The $300-$600
federal income tax rebate many Americans will be receiving in

                                        3


August/September should provide a modest boost for the economy.  Granted, higher
utilities bills and expensive gasoline will soak up some of this cash.  However,
the tax rebate  should put  consumers  in a better mood and provide  part of the
underpinning  for a  consumer  led  economic  recovery  beginning  in the fourth
quarter. We also believe inventory in all but telecommunications/technology will
have largely worked through the system at that point.  Energy prices have abated
providing further relief.

      When will the stock market begin anticipating an economic  recovery?  In a
sense, it already has. The  April/early-May  rally  demonstrated  that investors
were  at  least  temporarily  willing  to look  past  poor  short-term  earnings
prospects and forward to better times in 2002.  Unfortunately,  when  confronted
with second quarter  earnings  "confessions"  and warnings that profits were not
likely to improve in the third quarter,  investors abandoned the "long view" and
once again focused on the short-term earnings negatives. We may see this pattern
hold for the  balance  of the  year,  as  market  rallies  are cut  short by bad
earnings news. So, we think it will be difficult for the broad market indices to
make much progress this year.

      In the  interim,  we think our  portfolio  will  continue to benefit  from
companies  buying  each  other.  The folks now in  charge of the  Department  of
Justice, Federal Trade Commission,  and Federal Communications Committee ("FCC")
are more  "deal  friendly"  and once the  accounting  profession  irons  out the
details that will free  acquiring  companies  from writing off  "goodwill"  (the
price they pay for a company in excess of book value) against  future  earnings,
we should see merger and acquisition activity accelerate.

DEAL ACTIVITY

      A component  of our  investment  methodology  is to identify  industry and
sector  trends  and themes  ahead of the curve and  position  ourselves  to take
advantage of these  developments.  Consolidation in a particular industry is one
such  dynamic.  As we have shared with you in previous  quarterly  letters,  the
continued  high  level of  activity  in  mergers  and  acquisitions  contributed
significantly  to the solid  performance of the Trust.  The  accompanying  table
illustrates how deal activity  surfaced value in a small sample of the portfolio
holdings.
--------------------------------------------------------------------------------
                                                  2001 COMPLETED DEALS



                                              NUMBER    AVERAGE COST    CLOSING
   TRUST HOLDING                           OF SHARES(a) PER SHARE(b)    PRICE(c) CLOSING DATE   % RETURN(d)
   -------------                           ------------ -------------  --------- ------------   ------------
                                                                                      
   FIRST QUARTER 2001 ANNOUNCED DEALS
   ----------------------------------
   Time Warner Inc.                          285,000       $30.67        $71.19      01/12/01        132.12%
   Telefonos de Mexico SA, Cl. L, ADR         36,000        10.82         32.66      02/08/01        201.85%

   FIRST QUARTER 2001 FINANCIAL ENGINEERING
   ----------------------------------------
   Cablevision Systems Corp., Cl. A          420,000        11.28         83.36      03/30/01        639.01%

   SECOND QUARTER 2001 ANNOUNCED DEALS
   -----------------------------------
   Litton Industries Inc.                    100,000        78.92         80.33      04/02/01          1.79%
   MCN Energy Group Inc.                      30,000        24.24         27.22      05/30/01         12.29%

------------------------------------------------------------------------------------------------------------
   (a) Number of shares held by the Trust on the final day of trading for the
       issuer.
   (b) Average purchase price of issuer's shares held by the Trust on the final
       day of trading for the issuer.
   (c) Closing price on the final day of trading for the issuer or the tender
       price on the closing date of the tender offer.
   (d) Represents average estimated return based on average cost per share and
       closing price per share.

   NOTE: SEE THE PORTFOLIO OF INVESTMENTS FOR A COMPLETE LISTING OF HOLDINGS.



                                        4


THE WILD CARDS

      What could  happen to disrupt  this  scenario?  California,  here we come.
Despite the demise of the dotcoms and massive layoffs in other  California based
technology companies,  the California economy has managed to keep its head above
water.  Whether  it will  continue  to do so with high  electricity  prices  and
rolling  blackouts  is subject to debate.  With the  Federal  Energy  Regulatory
Commission  ("FERC")  instituting  price caps for wholesale  electricity sold in
California,  the worst of the crisis  may have  passed.  However,  if the lights
continue  to go out and  California  (the  sixth  largest  economy in the world)
slides into recession, national economic progress may be restrained.

      High  energy  prices  are a  problem  for the  rest of the  U.S.  as well.
Eventually, free market forces--increased production to take advantage of higher
prices and  conservation to save  money--will work their magic and energy prices
will come down. In the interim,  high electric bills and prices at the pump will
pinch consumers.  Over the longer term, we should benefit from a national energy
policy focused on increasing domestic production, conservation, and perhaps most
importantly,  building more  efficient  energy  distribution  systems.  The U.S.
dollar has been too strong.  This has created an imbalance in certain countries,
notably Argentina.

NOBODY LIKES WHAT BRUSSELS SPROUTS

      As we prepare this letter,  the  Brussels,  Belgium-based  European  Union
Commission ("EUC") has just blocked the proposed merger between General Electric
and Honeywell  International.  In our opinion, this is a major step in the wrong
direction.  The EUC's hard line on the deal (both U.S. and  Canadian  regulators
blessed the marriage and GE made  significant  concessions in attempting to gain
EUC  approval)  does not appear to be based on antitrust  issues,  but rather on
potential  advantages  GE/Honeywell  might have over  European  competitors.  In
short,   the  EUC  is  throwing  its   considerable   weight   behind   economic
protectionism.

      While it is easy to paint the EUC or other nations'  trade  authorities as
villains, the U.S. is not guilt free on the protectionist front. Currently,  the
U.S. has trade disputes with Canada over steel,  lumber,  wheat,  pork, beef and
chicken;  with the European Union ("EU") over textiles,  steel,  bananas,  wine,
cheese,  batteries,  and paper; and with Asia over steel,  apples,  video games,
autos,  and technology  transfer.  No one seems willing to back down and let the
free market forces work their magic.

      Economic   protectionism  simply  doesn't  work.  The  U.S.'s  ill-advised
Smoot-Hawley tariffs,  which helped cause and then prolong the Great Depression,
are a classic  example.  Competition  created  through  free trade  periodically
causes  painful  economic  dislocation.   However,  it  also  promotes  economic
efficiency and growth.  Competition  from Japan forced the U.S. auto industry to
build better  cars,  and the Motor City is now running on all  cylinders.  Lower
labor  costs  in  emerging  market  nations  provided  great  incentive  for the
development of productivity enhancing industrial technology in the U.S., and the
Rust Belt has once again  become a  thriving  manufacturing  region.  Europe has
knocked down its internal economic boundaries, promoting a free flow of capital,
goods, and services across the continent. Even Japan now appears willing to open
some of its markets to foreign goods.  Economic  Darwinism has short-term social
and political costs. Longer term,  however,  survival of the fittest will result
in a stronger  global economy.  It is our hope that today's trade  skirmishes do
not escalate  into trade wars that will undo all the progress made in creating a
truly global economy.

INTERNATIONAL OUTLOOK

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

                                        5


      We are in the middle of a global economic slowdown. A few months ago there
was some doubt as to  whether  the U.S.  slowdown  would  spread to Europe.  The
European Central Bank ("ECB") took the position that as trade between Europe and
the U.S. was small relative to the size of the European  economy the impact of a
U.S. slowdown on Europe's economy would be limited.  Instead they argue that the
greater  threat to economic  stability in Europe is inflation.  As a consequence
they have not,  apart from a nominal 25 basis point  reduction in May,  made any
meaningful interest rate reductions.

     Recent  evidence  suggests  that the ECB has been  overconfident.  The U.S.
slowdown  appears to have traveled  across the Atlantic.  The ease at which this
happened can probably be laid at the doorstep of multinational companies. During
the past decade there has been an unprecedented amount of investment in the U.S.
made by European  companies.  Of course,  the European  activities of major U.S.
companies are well known. Ford, Microsoft, Intel, and IBM are household names in
Europe.  As the  slowdown  unfolded  in the U.S.,  both  American  and  European
multinationals have cut spending in Europe.

      The current  slowdown seems to be different from previous  periods of slow
growth. Typically,  since the Second World War, periods of slow growth have been
caused by the central banks raising interest rates to slow demand as prices have
risen  beyond  acceptable  levels.  This time  companies  have  sharply  reduced
spending in response to overcapacity  in many sectors of the economy.  Inflation
does not appear to be a problem. Indeed, Mr. Greenspan, chairman of the Fed, has
said that inflation does not pose any threat at the current time. In response to
sharp reductions in capital  expenditures and lower corporate  profits,  the Fed
has aggressively reduced interest rates.

      The U.S.  consumer,  so often the hero of the global  economy,  refuses to
capitulate.  Obviously  lower  interest  rates and the tax rebate  will  support
consumer  spending,  but it is unlikely  that the U.S.  consumer can continue to
carry the economy on his heavily  indebted back.  Help is needed from Europe and
Japan.  As the  inflation  threat  wanes in Europe over the next few months,  we
believe  that  the ECB  will  follow  the Fed and  reduce  interest  rates  more
aggressively. This should act to spur demand in Europe.

      The Japanese  economy is the slowest  growing of the three major  economic
entities.  Their new Prime Minister, Mr. Koizumi, has a wonderful opportunity to
implement  significant  policy reform.  This opportunity is based in his popular
appeal among  voters,  which allows him to bypass the Liberal  Democratic  Party
("LDP") old guard.  His challenge is to push through both economic and political
reforms.  One without the other is probably not sufficient.  Will he succeed? We
will not know  for some  time,  but if we  observe  compromise  with the  senior
figures  within the LDP then the chances of success will be greatly  diminished.
He must seize the opportunity.

      The current investment  environment is challenging.  In the plus column we
have accommodative  central bank policy,  low and falling inflation,  and in the
case of Europe and Japan the prospects for significant  reform.  Valuations have
now corrected to much more attractive levels.

      We believe that one of the keys to the current  environment is to identify
companies that have pricing power and therefore some control over profitability.
Most of our  international  holdings  are in  companies  that have a product  or
service that is hard to duplicate and where there is a high barrier to entry. We
have not abandoned quality  businesses which are economically  sensitive such as
entertainment  and  broadcasting.  To do so  would  mean  taking  a  stand  that
economies  will not  recover  in the medium  term,  and that is not a bet we are
willing to take at the current time.

A MEDIA STOCK TRIFECTA

      In last quarter's shareholder letter, we detailed a landmark federal court
decision  striking down FCC regulations  preventing  companies from serving more
than 30% of the nation's total cable television or satellite television markets.

                                        6


The court also  struck  down  rules  barring  cable  television  companies  from
controlling  more than 40% of the channels and programming  assets they offer to
the public.  We observed that the court's  decision might be the death knell for
other  restrictive FCC regulations  such as rules preventing  broadcasters  from
owning TV stations  reaching more than 35% of the total  population  and barring
companies  from owning  television  stations and  newspapers in the same market.
Finally,  we opined  that the  appointment  of free market  oriented  Republican
Michael Powell as the head of the FCC would  foreshadow more relaxed  regulatory
policy.  Our conclusion was that we would see increased  merger and  acquisition
activity in media industries.  In the year ahead, favorable earnings comparisons
for advertising-supported  media companies should result in a trifecta for media
stocks.

      The 2002 Winter Olympics are being held in Salt Lake City,  enabling prime
time "live  action"  broadcasts  of popular  events like figure  skating and ice
hockey. This virtually guarantees a much larger domestic television audience and
higher  advertising  rates for broadcasters and cable television  operators than
when Olympic Games are staged  halfway  around the globe.  This profit  windfall
will show up in first  quarter 2002  earnings.  Political  fund  raising  reform
notwithstanding,  with  control of the House and the Senate up for grabs at next
year's  mid-term  elections,  massive  political  advertising  spending  will be
another  bonanza for  broadcasters,  cable  television  operators  and newspaper
companies. This should make for some very attractive earnings comparisons in the
third and fourth  quarters  of 2002.  If, as we  anticipate,  there will be more
mergers and  acquisitions  in the year ahead,  better  operating  results should
boost stock prices and takeover premiums.

INVESTMENT SCORECARD

      Small group  broadcasters  Gray  Communications,  Young  Broadcasting  and
Paxson  Communications  made the first  page of our leader  board this  quarter.
Multimedia giants AOL Time Warner and Viacom also posted excellent returns.  The
balance  of our top  performers  came from a wide range of  industry  groups and
featured many beaten down stocks that began attracting bargain hunters.

      Telecommunications  stocks  (particularly our European  telecommunications
holdings)  and  telecommunications  equipment  manufacturers  continued  to  get
pounded in the market. We believe these depressed sectors will gradually recover
as  strong  demand   eventually   soaks  up  excess   capacity  and  prices  for
telecommunications services begin to firm.

LET'S TALK STOCKS

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

BERKSHIRE HATHAWAY INC. (BRK'A - $69,400 - NYSE) is Warren Buffett.  The company
has interests in insurance (notably GEICO and General Re), publishing, aviation,
retailing, and manufacturing. Its investment portfolio includes over $37 billion
of  marketable   equity   securities.   Berkshire  has  grown  rapidly   through
acquisitions over the past 15 years, including Kirby vacuum cleaners; World Book
encyclopedias;  H. H. Brown, Dexter and Justin footwear; Executive Jet aviation;
Dairy Queen  restaurants  and snack treats;  Johns Manville  building  products;
Benjamin Moore paints; Shaw Industries carpets; GEICO insurance;  and General Re
reinsurance.  GEICO, the sixth largest auto insurer in the U.S., contributes 19%
of revenues while General Re, the fourth largest reinsurer globally, contributes
30% of revenues.

BP PLC (BP - $49.85 - NYSE) is Britain's  largest company and one of the world's
top  three  oil  companies  on the basis of  market  capitalization  and  proved
reserves. The company's main businesses are Exploration and Production, Refining
and  Marketing,   and  Chemicals,   whose  activities   include   petrochemicals
manufacturing  and marketing.  The company  provides high quality  technological
support for all its businesses through its research and engineering activities.

                                        7



CABLEVISION  SYSTEMS CORP. (CVC - $58.50 - NYSE) is one of the nation's  leading
communications and entertainment companies,  with a portfolio of operations that
spans  state-of-the-art  cable television  services,  championship  professional
sports teams and national cable television networks.  Headquartered in Bethpage,
N.Y.,  Cablevision serves nearly 3 million cable customers in the most important
cable TV market -- New York.  Cablevision also owns and operates New York City's
famed Madison Square Garden (MSG),  which  includes the arena complex,  the N.Y.
Knicks,  the  N.Y.  Rangers  and  the  MSG  network.  MSG  operates  Radio  City
Entertainment and holds a long-term lease for Radio City Music Hall, home of the
world-famous  Rockettes. On March 30, 2001, shares that track the performance of
the firm's  national cable  programming  subsidiary,  Rainbow Media Group (RMG -
$25.80 - NYSE),  began  trading on the NYSE.  Rainbow  manages  growing  content
offerings  such as  American  Movie  Classics,  Bravo and The  Independent  Film
Channel.

CHRIS-CRAFT  INDUSTRIES INC. (CCN - $71.40 - NYSE), through its 80% ownership of
BHC Communications (BHC -$138.99 - AMEX), is primarily a television broadcaster.
BHC owns and operates UPN  affiliated  stations in New York (WWOR),  Los Angeles
(KCOP) and Portland,  Oregon (KPTV). BHC also owns 58% of United Television Inc.
(UTVI - $126.00 - Nasdaq), which operates an NBC affiliate, an ABC affiliate and
five UPN affiliates.  Chris-Craft's  television  stations  constitute one of the
nation's largest television station groups,  reaching  approximately 22% of U.S.
households. Chris-Craft is a major beneficiary of the recent FCC ruling allowing
television  duopoly,  or  ownership  of two  stations  in a single  market.  The
Chris-Craft  complex  is debt  free,  with  roughly  $1.5  billion  in cash  and
marketable  securities.  On July  31,  2001,  News  Corp.  (NWS - $37.15 - NYSE)
announced that it had completed its  acquisition of Chris-Craft  (along with BHC
and United Television). According to the terms of the deal, CCN shareholders can
elect to receive a package  of cash,  shares of News Corp.  Preferred  ADSs,  or
both.

CRANE CO. (CR - $31.00 - NYSE) is a diversified  industrial company that focuses
on proprietary  engineered  products in aerospace,  fiberboard  panels,  vending
machines,  pumps and valves and industrial  controls.  In April 2001,  Eric Fast
became  CEO of Crane.  He  previously  served as  Co-Head  of Global  Investment
Banking  at  Salomon  Smith  Barney  and  brings  to Crane  important  skills in
deal-making,  finance and public markets.  We believe his appointment is timely,
as the company plans to use its free cash flow to augment  internal  revenue and
earnings  growth with  acquisitions.  The combination of higher top line growth,
strong  balance sheet with a 26% net  debt-to-capital  ratio,  an estimated $700
million ($12 per share) of free cash flow over the next five years and an active
stock  repurchase and debt reduction  program  underscore our enthusiasm for the
stock.

GAYLORD  ENTERTAINMENT CO. (GET - $28.80 - NYSE) is a diversified  entertainment
company  operating  principally  in two  segments:  hospitality  and media.  The
company's  hospitality  group  consists of an  interrelated  group of businesses
including the Opryland Hotel Nashville, the Inn at Opryland, the General Jackson
(an  entertainment  showboat),  and other  related  businesses.  The media group
consists  primarily of the Grand Ole Opry, the Ryman  Auditorium,  the Wildhorse
Saloon, Acuff-Rose Music Publishing,  Word Entertainment,  three Nashville radio
stations,  and other related businesses.  Gaylord has a new management team that
is focusing on unlocking shareholder value.

GENUINE PARTS CO. (GPC - $31.50 - NYSE), a Georgia  corporation  incorporated in
1928,  is a service  organization  engaged  in the  distribution  of  automotive
replacement   parts,   industrial   replacement   parts,   office  products  and
electrical/electronic   materials.   The   Company's   NAPA   automotive   parts
distribution  centers  distribute  replacement parts (other than body parts) for
substantially  all motor  vehicle  makes and  models in  service  in the  United
States, including imported vehicles,  trucks, buses,  motorcycles,  recreational
vehicles  and farm  vehicles.  The  Industrial  Parts Group  distributes  a wide
variety of products to its customers, primarily industrial concerns, to maintain
and operate plants, machinery and equipment. The Office Products Group, operated
through S. P. Richards  Company,  is engaged in the wholesale  distribution of a
broad line of office and other products that are used in the daily operation of

                                        8



businesses,   schools,  offices  and  institutions.   The  Electrical/Electronic
Materials Group ("EIS") distributes  materials for the manufacture and repair of
electrical  and  electronic  apparatus.  With  branch  locations  in  38  cities
nationwide and in Mexico,  this Group stocks over 100,000 items, from insulating
and conductive materials to assembly tools and test equipment.

LIBERTY  MEDIA GROUP (LMG'A - $17.49 - NYSE),  run by savvy media  investor John
Malone, is engaged in businesses that provide  programming  services  (including
production,  acquisition and distribution  through all media formats) as well as
businesses engaged in electronic retailing, direct marketing and other services.
LMG holds interests in globally-branded entertainment networks such as Discovery
Channel, USA Network, QVC, Encore and STARZ! Liberty's investment portfolio also
includes interests in international video distribution businesses, international
telephony and domestic wireless  companies,  plant and equipment  manufacturers,
and other businesses related to broadband services.  Liberty Media Group Class A
and Class B common stock are tracking stocks of AT&T,  though they are scheduled
to be spun off to the tracking stock shareholders in August 2001.

MEDIA  GENERAL  INC.  (MEG'A  - $46.00  - AMEX)  is a  Richmond,  Virginia-based
communications company that is primarily focused on the Southeast. Its newspaper
publishing  operations  include the RICHMOND  TIMES-DISPATCH,  the WINSTON-SALEM
JOURNAL, THE TAMPA TRIBUNE, and 22 other daily newspapers. This includes 5 daily
newspapers,  clustered in Alabama and South  Carolina,  which the company bought
from Thomson Corp.  for $237 million in August 2000.  The company also owns a 20
percent  interest in the DENVER POST.  Media  General also  operates  twenty-six
television stations primarily located in Southeastern  markets,  including eight
purchased from Spartan  Communications  on March 27, 2000 for $605 million.  The
company sold its Garden State Paper Co. to Enron Corp. (ENE - $49.10 - NYSE) for
$72 million in August 2000, but still owns 33% of SP Newsprint Company.

NEWPORT NEWS  SHIPBUILDING  INC.  (NNS - $61.25 - NYSE) agreed to be acquired by
General   Dynamics  Corp.  (GD  -  $77.81  -  NYSE),  the  U.S.  Navy's  largest
shipbuilder,  for $2.6 billion in cash, betting the Pentagon will reverse a 1999
decision to reject the combination. Northrop Grumman Corp. (NOC - $80.10 - NYSE)
matched General  Dynamics' $2.6 billion offer for NNS, seeking to keep its rival
from dominating sales of nuclear-powered  ships to the U.S Navy.  Northrop would
pay $67.50 per share for the defense contractor,  with 75% of the bid being paid
in stock and 25% in cash. General Dynamics countered  Northrop's bid by agreeing
to pay all cash. The  acquisition  proposals from General  Dynamics and Northrop
are under regulatory review.

RALSTON PURINA CO. (RAL - $30.02 - NYSE),  based in St. Louis, MO, completed the
tax-free spin-off of Energizer  Holdings,  Inc. on April 1, 2000. Ralston Purina
now operates in a single  business  segment,  pet  products,  and is the world's
largest manufacturer of dry pet food. The company is also a leading manufacturer
of cat litter products in North America.  Ralston's brands include DOG CHOW, CAT
CHOW, MEOW MIX, PRO PLAN, and TIDY CATS. In January 2001, Nestle S.A.  announced
a definitive  merger agreement with Ralston to acquire all shares for $33.50 per
share  in  cash.

SPS  TECHNOLOGIES  INC.  (ST -  $47.40  - NYSE)  is a  leading  manufacturer  of
fasteners,  superalloys and magnetic materials for the aerospace, automotive and
industrial  markets.  The Precision Fasteners and Components group produces high
strength  fasteners for the  aerospace,  automotive and machinery  markets.  The
Specialty  Materials  and Alloys group makes  superalloys  for the aerospace and
industrial gas turbine markets and the Magnetic Products group produces magnetic
materials  used in automotive,  electronics  and other  specialty  applications.
Under the leadership of CEO Charlie Grigg,  SPS has made 18  acquisitions  since
1996 and has positioned the nearly $1 billion  company to be a strategic  global
supplier in the fastener  and  component  industry.  We believe the company will
continue to use its strong cash flow to augment  internal  revenue and  earnings
growth with acquisitions.

                                        9



STANDARD MOTOR PRODUCTS INC. (SMP - $13.30 - NYSE), headquartered in Long Island
City, New York, supplies functional replacement parts for the engine management,
electrical and climate  control systems of cars,  trucks and buses.  The company
services all makes and models, both new and old cars, imported and domestic. SMP
has  two  primary  divisions--engine  management  and  temperature  control--and
believes it is the number one supplier to the North American aftermarket in each
of these lines.

TELEPHONE & DATA SYSTEMS INC. (TDS - $108.75 - AMEX)  provides  mobile and local
phone services to 3.6 million customers in 35 states.  TDS conducts its cellular
operations through an 81% owned United States Cellular (USM - $57.65 - AMEX) and
its   wireline    telephone    operations   through   its   wholly   owned   TDS
Telecommunications  Corp.  ("TDS  Telecom")  subsidiary,  a  full-service  local
exchange  carrier.  Having  completed a merger of its 82%-owned  PCS  subsidiary
Aerial  Communications  with  VoiceStream  Wireless,  which  has  recently  been
acquired  by  Deutsche  Telecom  (DT -  $22.45 - NYSE),  a former  German  phone
monopoly,  TDS now owns 131.6 million shares of Deutsche  Telecom valued at over
$2.7  billion.  As part  of the  VoiceStream/Deutsche  Telecom  deal,  TDS  also
received $570 million in cash.

VIACOM INC. (VIA - $53.04 - NYSE) is a diversified media company with businesses
across many media  platforms.  The firm operates cable networks  (including VH1,
MTV, Showtime and Nickelodeon),  television networks and stations (including the
CBS and UPN  Television  networks and numerous  affiliated  TV stations in major
markets),  major market radio stations and outdoor advertising (through Infinity
Broadcasting),  a movie  studio  (Paramount),  a  publishing  house  (Simon  and
Schuster),  amusement  parks  (Paramount  Parks)  and  video  rental  operations
(Blockbuster  Inc).  The company  focuses on high growth  businesses and aims to
deliver cash flow growth that is above the industry average.

VIVENDI  UNIVERSAL  SA (V - $58.00 - NYSE)  recently  completed  its merger with
Canal  Plus,  of  France,  and  Seagram,  of  Canada,  thus  creating  a  global
communications  and  entertainment  powerhouse.  Vivendi now owns  wireless  and
wireline  communications  companies,  European cable and satellite assets, Havas
Publishing,  Seagram's former Universal Film, Music, and Entertainment divisions
and a varied assortment of internet investments.  Moreover,  the firm owns large
stakes in USA Networks and British Sky Broadcasting. Vivendi has announced plans
to eventually spin-off Vivendi Environment,  its utility subsidiary, in the next
few  years.  At that time,  Vivendi  will have  completed  its  transition  from
France's  largest  environmental  services  company  to a global  communications
company.

WASTE  MANAGEMENT  INC. (WMI - $30.82 - NYSE) merged with USA Waste in 1998, and
is now the largest solid waste company in North America.  The company provides a
number of services,  including  collection,  transfer,  landfill,  and recycling
services  for a diverse  customer  base,  notably  the  municipal,  residential,
commercial,  and industrial markets. Services are provided throughout the United
States as well as in Canada,  Mexico,  and  Puerto  Rico.  Internationally,  the
company operates in Europe, the Pacific Rim, and in South America.  In addition,
Waste Management is a leading developer,  operator, and owner of waste-to-energy
facilities in the U.S.

SHAREHOLDER MEETING - MAY 14, 2001 - FINAL RESULTS

      The  Annual  Meeting  of  Shareholders  was  held on May  14,  2001 at the
Greenwich  Library  in  Greenwich,  Connecticut.  At that  meeting,  common  and
preferred  shareholders  voting as a single class  elected  Mario J. Gabelli and
Thomas E. Bratter as Directors of the Trust.  A total of  119,609,233  votes and
119,550,865  votes were cast in favor of each  Director  and  880,558  votes and
938,927  votes  were  withheld  for  each  Director,   respectively.   Preferred
shareholders  voting  as a  separate  class  elected  Felix J.  Christiana  as a
Director  of the Trust.  A total of  4,914,531  votes were cast in favor of this
Director and 40,448 votes were withheld for this Director, respectively.

                                       10



      Anthony J. Colavita,  James P. Conn, Frank J.  Fahrenkopf,  Jr., Karl Otto
Pohl,  Anthony R.  Pustorino and  Salvatore J. Zizza  continue to serve in their
capacities as Directors of the Equity Trust.

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

SPECIAL NOTE

      It is with deep sorrow that we report the passing of our valued friend and
Director,  Felix J. Christiana.  The Board of Directors  acknowledges with great
appreciation the passionate contributions,  guidance and friendship given by Mr.
Christiana  during his long association with The Gabelli Equity Trust. The Board
of Directors and Officers of the Trust will greatly miss Mr. Christiana.

COMMON STOCK 10% DISTRIBUTION POLICY

      The Equity Trust continues to maintain its 10% Distribution Policy whereby
The Equity  Trust pays out to common stock  shareholders  10% of its average net
assets each year.  Pursuant to this policy,  The Equity Trust  distributed $0.27
per share on June 25, 2001.  The next  distribution  is scheduled  for September
2001.

7.25% TAX ADVANTAGED CUMULATIVE PREFERRED STOCK - DIVIDENDS

      The Trust's 7.25% Tax Advantaged  Cumulative  Preferred  Stock paid a cash
distribution  on June 25, 2001 of  $0.453125  per share.  For the  twelve-months
ended  June  30,  2001,  Preferred  Stock  shareholders  received  distributions
totaling  $1.8125,  the annual dividend rate per share of Preferred  Stock.  The
next distribution is scheduled for September 2001.

WWW.GABELLI.COM

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

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



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


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



                                    AUGUST                    SEPTEMBER                 OCTOBER
                                    ------                    ---------                 -------
                                                                               
      1st Wednesday                 Caesar Bryan              Walter Walsh              Ivan Arteaga
      2nd Wednesday                 Ivan Arteaga              Caesar Bryan              Tim O'Brien
      3rd Wednesday                 Linda Caulkin             Hart Woodson              Susan Byrne
      4th Wednesday                 Tim O'Brien               Barbara Marcin            Caesar Bryan
      5th Wednesday                 Barbara Marcin                                      Barbara Marcin


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

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

                                       11


IN CONCLUSION
      The  second  quarter  of  2001  got  off to a good  start  with  investors
recognizing  that Federal  Reserve easing and tax reform should help the economy
begin  recovering  in early 2002.  But, yet another  round of earnings  warnings
shortened investors' focus and stocks gave back much of their gains. The economy
should bounce back in early 2002 and relatively easy earnings comparisons should
help the  market  trend  higher.  In the  interim,  we remain  focused  on those
industry groups and individual companies representing excellent long-term value.

                                Sincerely,
                                /S/MARIO J. GABELLI
                                MARIO J. GABELLI, CFA
                                Portfolio Manager and Chief Investment Officer
August 8, 2001

                                SELECTED HOLDINGS
                                  JUNE 30, 2001
                                  -------------
Berkshire Hathaway Inc.
Cablevision Systems Corp.
Chris-Craft Industries Inc.
Crane Co.
Genuine Parts Co.


Liberty Media Group
Media General Inc.
Ralston Purina Co.
Telephone & Data Systems Inc.
Viacom Inc.

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

                                       12



                          THE GABELLI EQUITY TRUST INC.
                                PORTFOLIO CHANGES
                           QUARTER ENDED JUNE 30, 2001
                                   (UNAUDITED)

                                                                    OWNERSHIP AT
                                                                      JUNE 30,
                                                         SHARES         2001
                                                         ------     ------------
NET PURCHASES
COMMON STOCKS
America Movil, SA de CV, Cl. L, ADR ...........          10,000           55,000
American Express Co. ..........................          85,000          270,000
Apogent Technologies Inc. .....................           6,000           40,000
AT&T Canada Inc., Cl. B .......................          10,000           20,000
AT&T Corp. ....................................          10,000          650,000
AT&T Wireless Group ...........................           5,000           65,000
AutoNation Inc. ...............................          34,000          320,000
Burlington Resources Inc. .....................           5,000          135,000
Cable & Wireless plc, ADR .....................           5,000          150,000
Carter-Wallace Inc. ...........................           5,000          520,000
Citizens Communications Co. ...................          25,000           50,000
Corning Inc. ..................................          30,000           60,000
Dana Corp. ....................................          50,000           84,161
Delhaize Le Lion SA, ADR (a) ..................          16,000           16,000
Deutsche Telekom AG, ADR (b) (c) ..............          24,278           24,278
Diageo plc, ADR ...............................          20,000          140,000
Dow Jones & Co. Inc. ..........................           1,000           12,000
DQE Inc. ......................................          20,000           20,000
DTE Energy Co. (d) ............................          10,366           10,366
Dun and Bradstreet Corp. ......................           5,000           20,000
EMC Corp. .....................................          20,000           30,000
Fujitsu Ltd. ..................................           3,000           41,000
General Chemical Group Inc. ...................         200,200          330,200
Gillette Co. ..................................          25,000          275,000
Givaudan SA ...................................           2,000            2,000
Gray Communications
   Systems Inc., Cl. B ........................           3,000           10,000
Gulf Canada Resources Ltd.,
   New York ...................................         100,000          100,000
Gulf Canada Resources Ltd.,
   Toronto ....................................         100,000          100,000
Harmony Gold Mining Co. Ltd., ADR .............           2,500           15,000
Hercules Inc. .................................          30,000          100,000
Honeywell Inc. ................................         225,000          225,000
HS Resources Inc. .............................          50,000           50,000
IBP Inc. ......................................          52,500           52,500
Jafco Co. Ltd. ................................           6,000            6,000
Japan Telecom Co. Ltd. ........................              14               46
Kerry Group plc, Cl. A ........................          75,000           75,000
National Service Industries Inc. ..............           5,000          130,000
NEC Corp., ADR (e) ............................           6,000            7,500
Neiman Marcus Group Inc., Cl. A ...............          50,000           50,000
Newport News Shipbuilding Inc. ................         108,000          108,000
Nikko Securities Co. Ltd. .....................          25,000          141,500
Northeast Utilities ...........................          10,000           75,000
Novartis AG (f) ...............................          44,850           46,000
NTL Inc. ......................................          10,000           52,625
Olympus Optical Co. Ltd. ......................          25,000           25,000
PepsiAmericas Inc. ............................          99,000          590,595
Phoenix Companies Inc. ........................          80,000           80,000
PRIMEDIA Inc. .................................          50,000          100,000
Procter & Gamble Co. ..........................           2,000          112,000
Publishing & Broadcasting Ltd. ................          20,000          165,000



                                                                    OWNERSHIP AT
                                                                      JUNE 30,
                                                         SHARES         2001
                                                         ------     ------------
Rainbow Media Group (g) .......................         210,000          210,000
Roche Holding AG (h) ..........................          17,760           17,900
Rogers Wireless Communications Inc.,
   Cl. B ......................................           7,000           80,000
Sara Lee Corp. ................................          10,000           10,000
Schering-Plough Corp. .........................          10,000           10,000
Sensient Technologies Corp. ...................         100,000          100,000
Shimano Inc. ..................................          12,000           32,000
SJW Corp. .....................................           1,000            4,000
Sprint FON Group ..............................          20,000          350,000
State Street Corp. (i) ........................          40,000           80,000
Sulzer AG .....................................           3,000            6,000
UnitedGlobalCom Inc., Cl. A ...................          30,000          160,000
Westvaco Corp. ................................           3,000          105,000
Willamette Industries Inc. ....................          80,000          260,000
WorldCom Inc.--MCI Group ......................          10,000           10,000
Young Broadcasting Inc., Cl. A ................          50,000           50,000

PREFERRED STOCKS
Northrop Grumman Corp.,
   7.00% Cv. Pfd., Ser. B (j) .................          14,021           14,021

                                                      PRINCIPAL
                                                       AMOUNT
                                                      ---------
CORPORATE BONDS
Waste Management Inc. .........................
   Sub. Deb. Cv. 4.00%, 02/01/02 ..............     $ 2,000,000      $ 2,000,000

                                                        SHARES
                                                        ------
WARRANTS
Harmony Gold Mining Co. Ltd.,
   ADR, expire 06/29/03 .......................           5,000            5,000

NET SALES
COMMON STOCKS
Albertson's Inc. ..............................         (15,000)         140,000
Allstate Corp. ................................         (10,000)          90,000
Amphenol Corp., Cl. A .........................         (45,000)          80,000
AOL Time Warner Inc. ..........................         (15,000)         365,000
Block (H&R) Inc. ..............................         (15,000)          10,000
Cablevision Systems Corp., Cl. A ..............          (5,000)         415,000
Cendant Corp. .................................         (45,000)         155,000
Chris-Craft Industries Inc., Cl. B ............              (2)         592,895
Church & Dwight Co. Inc. ......................         (20,000)          25,000
Delhaize America Inc., Cl. A ..................         (45,000)              --
Disney (Walt) Co. .............................         (10,000)         140,000
First Union Corp. .............................         (13,000)         112,000
GC Companies Inc. .............................         (50,000)              --
General Mills Inc. ............................         (15,000)         120,000
ITT Industries Inc. ...........................          (2,500)         140,000
Johnson Controls Inc. .........................          (3,000)         114,000
Litton Industries Inc. ........................        (100,000)              --
Loral Space & Communications Ltd. .............         (10,000)         150,000
Lucent Technologies Inc. ......................         (10,000)          60,000

                 See accompanying notes to financial statements.

                                       13



                          THE GABELLI EQUITY TRUST INC.
                          PORTFOLIO CHANGES (CONTINUED)
                           QUARTER ENDED JUNE 30, 2001
                                   (UNAUDITED)


                                                                    OWNERSHIP AT
                                                                      JUNE 30,
                                                         SHARES         2001
                                                         ------     ------------
NET SALES (CONTINUED)
COMMON STOCKS (CONTINUED)
MCN Energy Group Inc. (d) ...........................   (30,000)             --
Midland Co. .........................................   (10,000)        100,000
Newmont Mining Corp. ................................    (5,000)        100,000
Nintendo Co. Ltd. ...................................    (1,000)          9,500
Pacific Century CyberWorks Ltd., ADR ................    (5,000)          5,000
Parmalat Finanziaria SpA (k) ........................  (481,000)        169,000
PepsiCo Inc. ........................................   (15,000)        265,000
Powertel Inc. (c) ...................................    (5,038)             --
Rohm & Haas Co. .....................................    (5,000)        195,000
Sodexho Marriott Services Inc. ......................    (1,000)             --
Stanley Electric Co. Ltd. ...........................   (72,000)             --
Tyler Technologies Inc. .............................   (15,000)         20,000
USA Networks Inc. ...................................    (5,000)        570,000
UtiliCorp United Inc. ...............................    (5,000)             --
Viacom Inc., Cl. A ..................................   (35,000)        865,000
VoiceStream Wireless Corp. (b) ......................    (4,992)             --
Wrigley (Wm.) Jr. Co. ...............................    (2,000)        150,000
XO Communications Inc., Cl. A .......................    (5,000)         10,000

RIGHTS
Rogers Wireless Communications Inc. (l) ............    (73,000)             --


------------------------------
(a) Merger--0.4 shares of Delhaize Le Lion SA, ADR for every
    1 share of Delhaize America Inc., Cl. A
(b) Merger--3.6683  shares  of  Deutsche  Telekom  AG,  ADR for every 1 share of
    VoiceStream Wireless Corp.
(c) Merger--2.6353  shares  of  Deutsche  Telekom  AG,  ADR for every 1 share of
    Powertel Inc.
(d) Merger--0.3455 shares of DTE Energy Co. for every 1 share of MCN Energy
    Group Inc.
(e) 5 for 1 stock split
(f) 40 for 1 stock split
(g) Spinoff--1 share of Rainbow Media Group for every 2 shares of Cablevision
    Systems Corp., Cl. A
(h) 100 for 1 stock split
(i) 2 for 1 stock split
(j) Merger--0.14021 shares of Northrop Grumman Corp., 7.00% Cv. Pfd., Ser. B
    for every 1 share of Litton Industries Inc.
(k) 13 for 25 stock split
(l) Rights expired 04/18/01

                 See accompanying notes to financial statements.

                                       14



                          THE GABELLI EQUITY TRUST INC.
                            PORTFOLIO OF INVESTMENTS
                            JUNE 30, 2001 (UNAUDITED)



                                                                      MARKET
     SHARES                                              COST          VALUE
     ------                                              ----         ------
               COMMON STOCKS -- 81.0%
               ENTERTAINMENT -- 7.8%
     365,000   AOL Time Warner Inc.+ .............   $  7,636,356   $ 19,345,000
     160,000   Canal Plus, ADR+ ..................         34,010         95,632
     140,000   Disney (Walt) Co. .................      2,670,882      4,044,600
     100,000   EMI Group plc, ADR ................      1,189,467      1,125,820
      25,000   Fox Entertainment
                 Group Inc., Cl. A+ ..............        556,125        697,500
      18,432   Gemstar-TV Guide
                 International Inc.+ .............        754,976        785,203
     150,940   Granada Compass plc+ ..............        477,001        316,833
     138,000   Grupo Televisa SA, GDR+ ...........      3,048,195      5,521,380
      24,000   Liberty Livewire Corp.,
                 Cl. A+ ..........................         93,109        210,000
   1,550,000   Liberty Media Group,
                 Cl. A+ ..........................      5,490,808     27,109,500
     165,000   Publishing &
                 Broadcasting Ltd. ...............        915,408        761,250
      10,000   Six Flags Inc. ....................        140,273        210,400
     570,000   USA Networks Inc.+ ................      5,581,655     15,960,000
     865,000   Viacom Inc., Cl. A+ ...............      9,459,276     45,879,600
                                                     ------------   ------------
                                                       38,047,541    122,062,718
                                                     ------------   ------------
               BROADCASTING -- 7.2%
      50,000   Ackerley Group Inc. ...............        544,975        560,500
     336,192   Chris-Craft Industries Inc.+ ......      4,285,059     24,004,109
     592,895   Chris-Craft Industries Inc.,
                 Cl. B+ (a) ......................      8,836,175     42,332,703
      16,666   Corus Entertainment Inc.,
                 Cl. B+ ..........................         62,036        381,079
      33,000   Gray Communications
                 Systems Inc. ....................        438,347        628,320
      10,000   Gray Communications
                 Systems Inc., Cl. B .............        168,265        151,000
     200,000   Liberty Corp. .....................      8,528,905      8,000,000
       4,000   Nippon Broadcasting
                 System Inc. .....................        161,709        141,121
      50,375   NRJ Groupe+ .......................        483,579        759,096
     120,700   Paxson Communications
                 Corp., Cl. A+ ...................      1,213,574      1,629,450
      17,700   RTL Group (New York) ..............        775,136      1,076,619
     100,000   Television Broadcasting Ltd. ......        396,239        420,533
     245,009   United Television Inc. ............     24,632,336     30,871,134
      50,000   Young Broadcasting Inc.,
                 Cl. A+ ..........................      1,766,245      1,679,000
                                                     ------------   ------------
                                                       52,292,580    112,634,664
                                                     ------------   ------------
               TELECOMMUNICATIONS -- 6.9%
       8,132   Aliant Inc. .......................         72,479        184,068
       7,500   Allegiance Telecom Inc.+ ..........         74,063        112,425



                                                                      MARKET
     SHARES                                              COST          VALUE
     ------                                              ----         ------
      30,000   ALLTEL Corp. ......................   $    617,209   $  1,837,800
      20,000   AT&T Canada Inc., Cl. B+ ..........        612,750        602,600
     650,000   AT&T Corp. ........................     13,153,550     14,300,000
       3,333   Avaya Inc.+ .......................         26,540         45,662
     230,000   BCE Inc. ..........................      6,590,343      6,049,000
      33,400   Brasil Telecom
                 Participacoes SA, ADR ...........      1,940,826      1,403,134
      25,000   BroadWing Inc.+ ...................        548,915        611,250
   2,893,090   Cable & Wireless
                 Jamaica Ltd. ....................        101,642        150,462
      95,000   Cable & Wireless plc ..............      1,170,181        558,819
     150,000   Cable & Wireless plc, ADR .........      4,070,895      2,700,000
      60,000   CenturyTel Inc. ...................        430,644      1,818,000
      50,000   Citizens Communications Co. .......        679,358        601,500
     255,466   Commonwealth Telephone
                 Enterprises Inc.+ ...............      4,424,217     10,793,439
      20,000   Commonwealth Telephone
                 Enterprises Inc., Cl. B+ ........        128,902        880,000
      35,000   Compania de
                 Telecomunicaciones de
                 Chile SA, ADR ...................        592,324        492,800
      24,278   Deutsche Telekom AG, ADR ..........        507,923        545,041
      21,600   Elisa Communications
                 Oyj, Cl. A ......................      1,175,397        353,100
     167,000   Embratel Participacoes
                 SA, ADR+ ........................      3,517,106      1,249,160
          46   Japan Telecom Co. Ltd. ............        797,468        955,294
       5,000   Pacific Century CyberWorks
                 Ltd., ADR+ ......................        126,772         14,350
     155,000   RCN Corp.+ ........................      1,100,476        850,950
       9,655   Rogers Communications
                 Inc., Cl. B+ ....................        137,424        144,167
     110,345   Rogers Communications
                 Inc., Cl. B, ADR+ ...............      1,537,198      1,671,727
     115,000   SBC Communications Inc. ...........      4,106,783      4,606,900
     350,000   Sprint FON Group ..................      8,833,016      7,476,000
     186,554   Tele Norte Leste
                 Participacoes SA, ADR ...........      2,554,387      2,846,814
       8,000   Telecom Argentina Stet
                 France Telecom SA, ADR ..........        164,771        123,600
     400,040   Telecom Italia SpA ................        839,903      3,589,807
     123,000   Telecom Italia SpA, ADR ...........      2,585,208     10,824,000
     265,249   Telefonica SA, ADR ................      9,757,403      9,877,873
      16,256   Telefonica SA, BDR+ ...............        206,528        201,314
      36,000   Telefonos de Mexico
                 SA, Cl. L, ADR ..................        389,422      1,263,240
      12,750   TELUS Corp. .......................        222,542        287,336
      52,500   TELUS Corp., ADR ..................        950,397      1,183,906
       4,250   TELUS Corp., Non-Voting ...........         74,181         92,306
      27,500   TELUS Corp.,
                 Non-Voting, ADR .................        557,547        597,657

                 See accompanying notes to financial statements.

                                       15



                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                            JUNE 30, 2001 (UNAUDITED)


                                                                  MARKET
     SHARES                                          COST          VALUE
     ------                                          ----         ------
               COMMON STOCKS (CONTINUED)
               TELECOMMUNICATIONS (CONTINUED)
     295,000   Verizon Communications .......    $10,947,457   $ 15,782,500
      10,000   WorldCom Inc. - MCI Group ....        163,100        161,000
      10,000   XO Communications Inc.,
                 Cl. A+ .....................         91,700         19,200
                                                 -----------   ------------
                                                  86,578,947    107,858,201
                                                 -----------   ------------
               FINANCIAL SERVICES -- 6.0%
      26,000   Aegon NV .....................        931,905        731,858
       4,100   Allianz AG ...................      1,413,422      1,203,371
      90,000   Allstate Corp. ...............      2,406,026      3,959,100
     270,000   American Express Co. .........     10,472,948     10,476,000
      30,000   Argonaut Group Inc. ..........        855,370        603,000
     175,000   Banca Intesa SpA .............        702,532        617,783
      90,000   Banco Santander Central
                 Hispano SA, ADR ............        322,130        827,100
      84,000   Bank of Ireland, Dublin ......        427,242        832,007
      15,000   Bank of Ireland, London ......         98,369        148,573
      56,000   Bank of Scotland .............        350,184        632,434
     105,000   Bank One Corp. ...............      3,677,074      3,759,000
     282,000   Bankgesellschaft Berlin AG ...      5,606,801      2,267,956
         260   Berkshire Hathaway Inc.,
                 Cl. A+ .....................        824,299     18,044,000
      10,000   Block (H&R) Inc. .............        390,250        645,500
      50,000   Commerzbank AG, ADR ..........      1,189,067      1,263,505
     150,000   Deutsche Bank AG, ADR ........      6,224,445     10,717,545
      20,000   Dun and Bradstreet Corp.+ ....        333,130        564,000
     112,000   First Union Corp. ............      3,505,201      3,913,280
      25,000   Hibernia Corp., Cl. A ........        198,750        445,000
      20,000   Invik & Co. AB, Cl. B ........        936,800      1,433,162
     100,000   Irish Life &
                 Permanent plc, .............        781,432      1,168,264
      48,100   J.P. Morgan Chase & Co. ......      1,257,712      2,145,260
       6,000   Jafco Co. Ltd. ...............        694,322        572,984
      64,000   Leucadia National Corp. ......      2,040,082      2,076,800
      60,000   Mellon Financial Corp. .......      1,898,845      2,760,000
     100,000   Midland Co. ..................      1,117,752      4,450,000
      30,000   Moody's Corp. ................        666,995      1,005,000
     141,500   Nikko Securities Co. Ltd. ....      1,157,257      1,133,447
      80,000   Phoenix Companies Inc.+ ......      1,383,200      1,488,000
      50,000   Prudential plc ...............        754,035        605,459
      50,000   RAS SpA ......................        534,750        614,608
      60,000   Riggs National Corp. .........        552,538      1,019,400
      80,000   State Street Corp. ...........      1,417,370      3,959,200
      30,000   Stilwell Financial Inc.+ .....        470,955      1,006,800
      20,000   SunTrust Banks Inc. ..........        419,333      1,295,600
         510   Swiss Re .....................        977,697      1,019,234
      38,000   T. Rowe Price Group Inc. .....      1,273,500      1,420,820
      50,000   Unitrin Inc. .................        817,863      1,920,000
      30,000   Waddell & Reed
                 Financial Inc., Cl. A ......    $   426,563   $    952,500
                                                 -----------   ------------
                                                  59,508,146     93,697,550
                                                 -----------   ------------
               EQUIPMENT AND SUPPLIES -- 5.5%
     100,000   AMETEK Inc. ..................      1,394,214      3,055,000
      80,000   Amphenol Corp., Cl. A+ .......      1,040,625      3,204,000
      10,000   Caterpillar Inc. .............        136,559        500,500
      95,000   CIRCOR International Inc.+ ...        981,440      1,714,750
     107,000   CLARCOR Inc. .................      1,347,205      2,872,950
     320,000   Deere & Co. ..................      3,134,721     12,112,000
     255,000   Donaldson Co. Inc. ...........      1,676,029      7,943,250
     130,000   Flowserve Corp.+ .............      2,065,746      3,997,500
       6,500   Franklin Electric Co. ........        210,022        493,350
     110,000   Gerber Scientific Inc. .......      1,200,356      1,204,500
     298,000   IDEX Corp. ...................      1,935,965     10,132,000
      20,000   Ingersoll-Rand Co. ...........        713,378        824,000
      60,000   Lufkin Industries Inc. .......      1,105,223      1,656,000
       1,000   Manitowoc Co. Inc. ...........         25,450         29,500
     430,000   Navistar International Corp.+       6,528,284     12,095,900
      25,000   Olympus Optical Co. Ltd. .....        375,255        400,511
      20,000   PACCAR Inc. ..................        450,000      1,028,400
      84,500   Sequa Corp., Cl. A+ ..........      3,371,578      3,844,750
      75,000   Sequa Corp., Cl. B+ ..........      3,888,160      4,443,750
     170,000   SPS Technologies Inc.+ .......      2,963,443      8,058,000
      10,000   Sybron Dental
                 Specialties Inc ............        179,033        204,900
      35,000   THK Co. Ltd. .................        919,565        658,097
      70,000   UCAR International Inc.+ .....        971,360        836,500
     250,000   Watts Industries Inc., Cl. A .      3,331,739      4,237,500
     100,000   Weir Group plc ...............        420,789        391,685
                                                 -----------   ------------
                                                  40,366,139     85,939,293
                                                 -----------   ------------
               CONSUMER PRODUCTS -- 5.5%
      70,000   Altadis SA ...................      1,030,995        997,934
     520,000   Carter-Wallace Inc. ..........      7,309,269     10,062,000
      43,000   Christian Dior SA ............      1,514,055      1,547,103
      25,000   Church & Dwight Co. Inc. .....        253,220        636,250
       1,100   Compagnie Financiere
                 Richemont AG, C1. A ........      1,550,184      2,815,256
      35,000   Department 56 Inc.+ ..........        394,267        267,750
     285,601   Energizer Holdings Inc.+ .....      4,325,114      6,554,543
      90,000   Fortune Brands Inc. ..........      2,401,342      3,452,400
     250,000   Gallaher Group plc, ADR ......      4,342,521      6,225,000
     275,000   Gillette Co. .................      8,887,126      7,972,250
       2,000   Givaudan SA+ .................        550,742        554,706
     100,000   Harley Davidson Inc. .........        251,225      4,708,000
      15,000   Matsushita Electric Industrial
                 Co. Ltd., ADR ..............        178,325        237,000
      65,000   Mattel Inc. ..................        919,565      1,229,800
      25,000   Maytag Corp. .................        768,336        731,500

                 See accompanying notes to financial statements.

                                       16



                                               THE GABELLI EQUITY TRUST INC.
                                           PORTFOLIO OF INVESTMENTS (CONTINUED)
                                                 JUNE 30, 2001 (UNAUDITED)


                                                                     MARKET
     SHARES                                                COST       VALUE
     ------                                                ----      ------
              COMMON STOCKS (CONTINUED)
              CONSUMER PRODUCTS (CONTINUED)
     42,000   National Presto Industries Inc. ......   $ 1,543,512   $ 1,247,400
      9,500   Nintendo Co. Ltd. ....................       784,763     1,729,134
     20,000   Philip Morris Companies Inc. .........       600,935     1,015,000
    112,000   Procter & Gamble Co. .................     7,809,242     7,145,600
    800,000   Ralston Purina Co. ...................    13,189,221    24,016,000
     32,000   Shimano Inc. .........................       521,107       471,601
      1,500   Swatch Group AG ......................       892,765     1,502,212
     10,425   Syratech Corp.+ ......................       333,704        74,278
                                                       -----------   -----------
                                                        60,351,535    85,192,717
                                                       -----------   -----------
              WIRELESS COMMUNICATIONS -- 4.6%
     55,000   America Movil,
                SA de CV, Cl. L, ADR+ ..............       607,553     1,147,300
     65,000   AT&T Wireless Group+ .................     1,473,068     1,062,750
     12,500   Leap Wireless
                International Inc.+ ................       364,116       378,750
    100,000   Nextel Communications
                Inc., Cl. A+ .......................     1,763,612     1,750,000
     80,000   Rogers Wireless
                Communications Inc.,
                Cl. B+ .............................     1,619,676     1,381,600
    220,000   Sprint PCS Group+ ....................       287,077     5,313,000
     16,700   Tele Celular Sul
                Participacoes SA, ADR ..............       266,992       337,340
     55,666   Tele Centro Oeste Celular
                Participacoes SA, ADR ..............       166,868       481,511
      3,340   Tele Leste Celular
                Participacoes SA, ADR ..............        89,340       134,268
      8,350   Tele Nordeste Celular
                Participacoes SA, ADR ..............       123,227       272,210
      3,340   Tele Norte Celular
                Participacoes SA, ADR ..............        51,601        90,180
  1,200,000   Telecom Italia Mobile SpA ............     1,113,354     6,115,607
      8,350   Telemig Celular
                Participacoes SA, ADR ..............       241,320       344,855
    450,000   Telephone & Data
                Systems Inc. .......................    11,087,191    48,937,500
     66,800   Telesp Celular
                Participacoes SA, ADR ..............     2,135,936     1,012,020
    553,888   Vodafone Group plc ...................       915,040     1,226,915
    100,000   Vodafone Group plc, ADR ..............       927,768     2,235,000
                                                       -----------   -----------
                                                        23,233,739    72,220,806
                                                       -----------   -----------
              FOOD AND BEVERAGE -- 4.4%
     10,108   Advantica Restaurant
                Group Inc.+ ........................        14,358         6,570
      1,000   Cadbury Schweppes plc, ADR ...........        28,008        27,200
     15,000   Coca-Cola Co. ........................       682,313       675,000
     50,000   Coca-Cola Enterprises Inc. ...........       816,250       817,500



                                                                       MARKET
     SHARES                                                COST         VALUE
     ------                                                ----        ------
    150,940   Compass Group plc+ ...................   $ 1,090,534   $ 1,207,893
     90,000   Corn Products
                International Inc. .................     2,608,387     2,880,000
    140,000   Diageo plc, ADR ......................     5,174,844     6,153,000
    120,000   General Mills Inc. ...................     3,501,155     5,253,600
     20,000   Hain Celestial Group Inc.+ ...........       267,663       440,000
     22,000   Heinz (H.J.) Co. .....................       861,241       899,580
     52,500   IBP Inc. .............................     1,317,519     1,325,625
     25,000   Interbrew SA+ ........................       719,153       668,789
    270,000   Kellogg Co. ..........................     7,515,822     7,830,000
     75,000   Kerry Group plc, Cl. A ...............       860,877       864,942
     60,500   LVMH Moet Hennessy
                Louis Vuitton, ADR .................       416,625       620,125
    169,000   Parmalat Finanziaria SpA .............       373,278       450,670
    590,595   PepsiAmericas Inc. ...................     7,935,964     7,854,914
    265,000   PepsiCo Inc. .........................     8,132,461    11,713,000
     70,000   Quaker Oats Co. ......................     3,044,803     6,387,500
     60,000   Ralcorp Holdings Inc.+ ...............       940,903     1,124,400
     10,000   Sara Lee Corp. .......................       188,640       189,400
    100,830   Tootsie Roll Industries Inc. .........     1,580,969     3,885,988
    150,000   Wrigley (Wm.) Jr. Co. ................     3,610,220     7,027,500
                                                       -----------   -----------
                                                        51,681,987    68,303,196
                                                       -----------   -----------
              PUBLISHING -- 4.4%
     12,000   Dow Jones & Co. Inc. .................       600,392       716,520
    150,000   Harcourt General Inc. ................     6,684,706     8,728,500
    646,000   Independent News & Media
                plc, Dublin ........................     1,428,821     1,285,175
     97,000   McGraw-Hill Companies Inc. ...........     2,192,694     6,416,550
    400,000   Media General Inc., Cl. A ............     9,832,031    18,400,000
    125,000   Meredith Corp. .......................     2,091,314     4,476,250
    115,000   New York Times Co., Cl. A ............       790,115     4,830,000
    145,000   News Corp. Ltd. ......................       796,385     1,327,567
      5,000   News Corp. Ltd., ADR .................        54,120       185,750
     57,727   Pearson plc ..........................       809,395       951,521
    400,000   Penton Media Inc. ....................     4,849,118     7,000,000
    100,000   PRIMEDIA Inc.+ .......................       988,793       679,000
     27,000   Pulitzer Inc. ........................     1,189,663     1,425,600
    160,000   Reader's Digest Association
                Inc., Cl. B ........................     4,110,972     4,160,000
     91,842   Seat-Pagine Gialle SpA ...............       204,007        94,467
    400,000   South China Morning
                Post Holdings ......................       273,726       264,115
     75,000   Thomas Nelson Inc. ...................       908,325       527,250
    160,000   Tribune Co. ..........................     5,390,834     6,401,600
                                                       -----------   -----------
                                                        43,195,411    67,869,865
                                                       -----------   -----------
              ENERGY AND UTILITIES -- 3.1%
     73,400   AGL Resources Inc. ...................     1,322,958     1,743,250
     34,000   Apache Corp. .........................       844,013     1,725,500

                 See accompanying notes to financial statements.

                                       17



                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                            JUNE 30, 2001 (UNAUDITED)


                                                                       MARKET
     SHARES                                                COST         VALUE
     ------                                                ----        ------
               COMMON STOCKS (CONTINUED)
               ENERGY AND UTILITIES (CONTINUED)
    120,000    BP plc ............................    $   725,215    $   986,456
    248,800    BP plc, ADR .......................      5,313,984     12,402,680
    135,000    Burlington Resources Inc. .........      5,842,869      5,393,250
    155,000    Conoco Inc., Cl. A ................      3,544,449      4,371,000
     20,000    DQE Inc. ..........................        424,076        450,000
     10,366    DTE Energy Co. ....................        462,525        481,397
    400,000    El Paso Electric Co.+ .............      3,236,625      6,396,000
     20,000    Energy East Corp. .................        429,788        418,200
    100,000    Gulf Canada Resources
                 Ltd., Toronto ...................        792,060        809,194
    100,000    Gulf Canada Resources
                 Ltd., New York+ .................        791,000        810,000
     55,000    Halliburton Co. ...................      1,201,188      1,958,000
     50,000    HS Resources Inc.+ ................      3,234,912      3,240,000
    210,000    Niagara Mohawk
                 Holdings Inc.+ ..................      3,101,421      3,714,900
    100,000    NiSource Inc.+ ....................        200,000        237,000
     75,000    Northeast Utilities ...............      1,479,575      1,556,250
     75,000    Pennzoil-Quaker State Co.+ ........      1,373,582        840,000
    100,000    Progress Energy Inc. ..............         52,000         50,500
      4,000    SJW Corp. .........................        400,061        342,000
     14,000    Southwest Gas Corp. ...............        289,625        331,520
      4,907    Total Fina Elf SA .................        655,890        687,090
                                                      -----------    -----------
                                                       35,717,816     48,944,187
                                                      -----------    -----------
               DIVERSIFIED INDUSTRIAL -- 2.9%
    195,000    Ampco-Pittsburgh Corp. ............      2,627,873      2,203,500
     50,000    Cooper Industries Inc. ............      1,799,362      1,979,500
    270,000    Crane Co. .........................      5,062,737      8,370,000
    102,000    GATX Corp. ........................      1,533,375      4,090,200
    150,000    GenTek Inc. .......................      1,491,896        795,000
    225,000    Honeywell Inc. ....................      8,871,100      7,872,750
    140,000    ITT Industries Inc.+ ..............      4,301,122      6,195,000
    390,000    Lamson & Sessions Co.+ ............      2,415,785      2,613,000
    130,000    National Service
                 Industries Inc. .................      2,957,029      2,934,100
     78,715    Park-Ohio Holdings Corp.+ .........        993,487        377,832
    100,000    Sensient Technologies Corp. .......      1,835,688      2,052,000
     12,420    Smith Industries plc ..............        223,040        144,108
      6,000    Sulzer AG .........................      3,258,451      1,909,478
     82,000    Swire Pacific Ltd., Cl. A .........        553,597        424,738
     75,000    Thomas Industries Inc. ............        769,882      2,212,500
     50,000    Trinity Industries Inc. ...........        945,000      1,025,000
                                                      -----------    -----------
                                                       39,639,424     45,198,706
                                                      -----------    -----------
               CABLE -- 2.5%
    415,000    Cablevision Systems Corp.,
                 Cl. A+ ..........................      3,990,027     24,277,500
     40,000    Comcast Corp., Cl. A ..............        341,837      1,718,000



                                                                       MARKET
     SHARES                                                COST         VALUE
     ------                                                ----        ------
     90,000    Comcast Corp., Cl. A,
                 Special .........................    $   797,342    $ 3,906,000
     52,625    NTL Inc.+ .........................      1,571,545        634,131
    210,000    Rainbow Media Group+ ..............        713,251      5,418,000
     20,000    Shaw Communications Inc.,
                 Cl. B ...........................         52,983        472,601
     80,000    Shaw Communications Inc.,
                 Cl. B, Non-Voting+ ..............        329,198      1,899,200
    160,000    UnitedGlobalCom Inc.,
                 Cl. A+ ..........................      3,293,088      1,384,000
                                                      -----------    -----------
                                                       11,089,271     39,709,432
                                                      -----------    -----------
               AUTOMOTIVE: PARTS AND ACCESSORIES -- 2.4%
     20,000    ArvinMeritor Inc. .................        387,543        334,800
     25,802    Borg-Warner Automotive
                 Inc. ............................      1,143,687      1,280,295
     84,161    Dana Corp. ........................      1,838,975      1,964,318
     70,000    Delphi Automotive
                 Systems Corp.+ ..................        801,192      1,115,100
    260,000    GenCorp Inc. ......................      2,470,673      3,328,000
    195,000    Genuine Parts Co. .................      4,985,542      6,142,500
    114,000    Johnson Controls Inc. .............      1,890,245      8,261,580
     90,000    Midas Inc. ........................      1,372,349      1,134,000
    330,000    Modine Manufacturing Co. ..........      4,284,009      9,101,400
     80,000    Scheib (Earl) Inc.+ ...............        749,281        216,800
    163,000    Standard Motor Products Inc. ......      1,748,388      2,167,900
     70,000    Superior Industries
                 International Inc. ..............      1,819,682      2,681,000
    105,000    TransPro Inc. .....................        936,808        399,000
                                                      -----------    -----------
                                                       24,428,374     38,126,693
                                                      -----------    -----------
               PAPER AND FOREST PRODUCTS -- 2.1%
    260,000    Greif Bros. Corp., Cl. A ..........      4,845,131      7,891,000
      3,400    Greif Bros. Corp., Cl. B ..........         69,825         95,200
    180,000    Pactiv Corp.+ .....................      1,875,631      2,412,000
      5,000    Sealed Air Corp.+ .................        147,125        186,250
    253,000    St. Joe Co. .......................      1,873,208      6,803,170
    105,000    Westvaco Corp. ....................      2,856,244      2,550,450
    260,000    Willamette Industries Inc. ........     12,279,247     12,870,000
                                                      -----------    -----------
                                                       23,946,411     32,808,070
                                                      ...........    ...........
               HEALTH CARE -- 1.8%
     40,000    American Home
                 Products Corp. ..................      1,929,781      2,337,600
     60,000    Amgen Inc.+ .......................        256,894      3,640,800
     40,000    Apogent Technologies Inc.+ ........        803,368        984,000
     10,000    AstraZeneca plc, London ...........        385,298        465,944
     35,146    AstraZeneca plc,
                 Stockholm .......................      1,255,532      1,624,107
     10,000    Aventis SA ........................        748,895        798,314

                 See accompanying notes to financial statements.

                                       18



                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                            JUNE 30, 2001 (UNAUDITED)


                                                                       MARKET
     SHARES                                                COST         VALUE
     ------                                                ----        ------
               COMMON STOCKS (CONTINUED)
               HEALTH CARE (CONTINUED)
     26,000    Biogen Inc.+ ......................    $   181,025    $ 1,413,360
     75,036    GlaxoSmithKline plc+ ..............      1,817,378      2,110,628
      4,000    GlaxoSmithKline plc, ADR ..........        216,096        224,800
     56,011    Invitrogen Corp.+ .................      2,678,982      4,021,590
     46,000    Novartis AG .......................      1,431,247      1,664,840
    108,000    Novartis AG, Registered ...........        948,510      3,904,200
     45,000    Pfizer Inc. .......................        240,750      1,802,250
     17,900    Roche Holding AG ..................      1,644,702      1,289,704
     20,000    Sanofi-Synthelabo SA ..............        967,750      1,312,180
     10,000    Schering-Plough Corp. .............        354,700        362,400
     18,000    Takeda Chemical
                 Industries Ltd. .................      1,013,551        837,105
                                                      -----------    -----------
                                                       16,874,459     28,793,822
                                                      -----------    -----------
               HOTELS AND GAMING -- 1.6%
    120,000    Aztar Corp.+ ......................        843,207      1,452,000
     90,000    Boca Resorts Inc., Cl. A+ .........        787,000      1,325,700
    234,500    Gaylord Entertainment Co. .........      6,082,795      6,753,600
      5,000    GTECH Holdings Corp.+ .............         86,269        177,550
  1,045,000    Hilton Group plc ..................      3,273,996      3,512,579
    550,000    Hilton Hotels Corp. ...............      6,002,739      6,380,000
     20,000    MGM Mirage Inc.+ ..................        516,903        599,200
    430,000    Park Place
                 Entertainment Corp.+ ............      2,424,893      5,203,000
                                                      -----------    -----------
                                                       20,017,802     25,403,629
                                                      -----------    -----------
               BUSINESS SERVICES -- 1.4%
     60,000    ANC Rental Corp.+ .................        578,273        180,000
    155,000    Cendant Corp.+ ....................      2,382,422      3,022,500
      1,000    CheckFree Corp.+ ..................          9,040         35,070
    100,000    Landauer Inc. .....................        647,252      3,000,000
     58,500    Nashua Corp.+ .....................        548,437        406,575
     10,833    Reuters Group plc, ADR ............        815,788        842,266
     13,000    Secom Co. Ltd. ....................        813,097        725,491
    250,000    Securicor Group plc ...............              0        574,870
      3,500    SYNAVANT Inc.+ ....................         27,506         24,885
     30,900    Vivendi Universal SA ..............      2,117,043      1,801,044
    205,000    Vivendi Universal SA, ADR .........      8,281,893     11,890,000
                                                      -----------    -----------
                                                       16,220,751     22,502,701
                                                      -----------    -----------
               RETAIL -- 1.3%
    140,000    Albertson's Inc. ..................      3,704,724      4,198,600
    320,000    AutoNation Inc.+ ..................      3,605,501      3,712,000
     14,000    Coldwater Creek Inc.+ .............        259,128        364,000
     16,000    Delhaize Le Lion SA, ADR ..........        908,672        938,400
    100,000    Lillian Vernon Corp. ..............      1,362,258        706,000
     50,000    Neiman Marcus Group Inc.,
                 Cl. A+ ..........................      1,647,739      1,550,000



                                                                       MARKET
     SHARES                                                COST         VALUE
     ------                                                ----        ------
    320,000    Neiman Marcus Group Inc.,
                 Cl. B+ ..........................    $ 7,741,769    $ 9,440,000
                                                      -----------    -----------
                                                       19,229,791     20,909,000
                                                      -----------    -----------
               SPECIALTY CHEMICALS -- 1.1%
      5,400    Ciba Specialty Chemicals,
                 ADR+ (b) ........................         21,140        159,560
     10,000    du Pont de Nemours
                 (E.I.) & Co. ....................        327,500        482,400
    315,000    Ferro Corp. .......................      5,692,776      6,870,150
     12,000    Fuller (H.B.) Co. .................        457,469        598,800
    330,200    General Chemical
                 Group Inc. ......................        491,993        138,684
    100,000    Hercules Inc.+ ....................      1,371,047      1,130,000
    210,000    Omnova Solutions Inc. .............      1,767,940      1,528,800
    195,000    Rohm & Haas Co. ...................      6,060,568      6,415,500
     11,697    Syngenta AG, ADR+ .................         22,129        126,328
                                                      -----------    -----------
                                                       16,212,562     17,450,222
                                                      -----------    -----------
               BUILDING AND CONSTRUCTION -- 0.9%
    112,500    CRH plc ...........................      1,363,025      1,885,730
     32,222    Huttig Building
                 Products Inc.+ ..................         81,163        163,366
     15,000    Martin Marietta
                 Materials Inc. ..................        322,687        742,350
    108,000    Newport News
                 Shipbuilding Inc. ...............      7,016,903      6,615,000
    144,000    Nortek Inc.+ ......................      1,930,643      4,495,680
      5,000    Nortek Inc.,
                 Special Common+ (a) .............         72,155        156,100
                                                      -----------    -----------
                                                       10,786,576     14,058,226
                                                      -----------    -----------
               REAL ESTATE -- 0.9%
    450,000    Catellus Development Corp.+ .......      6,751,839      7,852,500
     75,000    Cheung Kong (Holdings) Ltd. .......        871,487        817,346
     44,000    Florida East Coast
                 Industries Inc., Cl. A ..........        523,108      1,557,600
     58,451    Florida East Coast
                 Industries Inc., Cl. B ..........        964,977      2,063,320
     55,000    Griffin Land &
                 Nurseries Inc.+ .................        513,143        914,100
      4,753    HomeFed Corp.+ ....................            851          4,515
                                                      -----------    -----------
                                                        9,625,405     13,209,381
                                                      -----------    -----------
               AGRICULTURE -- 0.8%
  1,000,000    Archer-Daniels-Midland Co. ........     13,728,377     13,000,000
      5,000    Delta & Pine Land Co. .............         84,396         98,250
                                                      -----------    -----------
                                                       13,812,773     13,098,250
                                                      -----------    -----------

                 See accompanying notes to financial statements.

                                       19



                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                            JUNE 30, 2001 (UNAUDITED)


                                                                       MARKET
     SHARES                                                COST         VALUE
     ------                                                ----        ------
               COMMON STOCKS (CONTINUED)
               ENVIRONMENTAL SERVICES -- 0.8%
     60,000    Republic Services Inc.+ ...........    $   783,447    $ 1,191,000
    350,000    Waste Management Inc. .............      6,492,192     10,787,000
                                                      -----------    -----------
                                                        7,275,639     11,978,000
                                                      -----------    -----------
               ELECTRONICS -- 0.7%
     41,000    Fujitsu Ltd. ......................      1,199,088        430,660
      3,000    Hitachi Ltd., ADR .................        218,796        296,970
      9,000    Molex Inc., Cl. A .................        315,766        268,380
      7,500    NEC Corp., ADR ....................         43,625        102,825
     26,640    Philips Electronics NV ............      1,041,219        706,121
     38,800    Philips Electronics NV, ADR .......         53,456      1,025,484
      5,100    Rohm Co. Ltd. .....................      1,151,127        792,507
     11,000    Sony Corp. ........................        898,956        723,246
     34,000    Sony Corp., ADR ...................        973,924      2,237,200
    200,000    Thomas & Betts Corp. ..............      3,514,300      4,414,000
                                                      -----------    -----------
                                                        9,410,257     10,997,393
                                                      -----------    -----------
               AUTOMOTIVE -- 0.7%
     10,000    Ford Motor Co. ....................        309,640        245,500
    157,942    General Motors Corp. ..............      4,799,093     10,163,568
                                                      -----------    -----------
                                                        5,108,733     10,409,068
                                                      -----------    -----------
               AEROSPACE -- 0.7%
    125,000    BAE Systems plc ...................        754,039        598,603
    100,000    Lockheed Martin Corp. .............      2,641,248      3,705,000
     75,000    Northrop Grumman Corp. ............      4,812,089      6,007,500
                                                      -----------    -----------
                                                        8,207,376     10,311,103
                                                      -----------    -----------
               CONSUMER SERVICES -- 0.7%
     40,000    Loewen Group Inc. .................         48,700          5,200
    510,000    Rollins Inc. ......................      5,737,037     10,154,100
                                                      -----------    -----------
                                                        5,785,737     10,159,300
                                                      -----------    -----------
               COMMUNICATIONS EQUIPMENT -- 0.6%
     68,000    Acterna Corp.+ ....................        245,121        748,000
    290,000    Allen Telecom Inc.+ ...............      2,191,166      4,350,000
     60,000    Corning Inc. ......................      1,305,700      1,002,600
     60,000    Lucent Technologies Inc. ..........        691,358        372,000
     50,000    Motorola Inc. .....................        662,503        828,000
     27,000    Nokia Corp., Cl. A, ADR ...........        755,119        595,080
     44,000    Scientific-Atlanta Inc. ...........        355,750      1,786,400
                                                      -----------    -----------
                                                        6,206,717      9,682,080
                                                      -----------    -----------
               AVIATION: PARTS AND SERVICES -- 0.5%
     98,000    Curtiss-Wright Corp. ..............      2,425,885      5,262,600
    110,000    Fairchild Corp., Cl. A+ ...........      1,442,877        771,100
     44,000    Precision Castparts Corp. .........        729,212      1,646,480
                                                      -----------    -----------
                                                        4,597,974      7,680,180
                                                      -----------    -----------



                                                                       MARKET
     SHARES                                                COST         VALUE
     ------                                                ----        ------
               SATELLITE -- 0.3%
    180,323    General Motors Corp.,
                 Cl. H+ ..........................    $ 2,584,089    $ 3,651,541
    340,000    Liberty Satellite &
                 Technology Inc., Cl. A+ .........        900,012        867,000
    150,000    Loral Space &
                 Communications Ltd.+ ............      1,538,188        420,000
                                                      -----------    -----------
                                                        5,022,289      4,938,541
                                                      -----------    -----------
               TRANSPORTATION -- 0.2%
     72,000    AMR Corp.+ ........................      1,400,590      2,601,360
      7,500    Kansas City Southern
                 Industries Inc. .................         13,986        118,500
     31,273    MIF Ltd.+ .........................        449,997        390,262
     30,000    Ryder System Inc. .................        641,175        588,000
                                                      -----------    -----------
                                                        2,505,748      3,698,122
                                                      -----------    -----------
               COMPUTER SOFTWARE AND SERVICES -- 0.2%
     20,000    Capcom Co. Ltd. ...................        684,260        692,776
     15,000    Computer Associates
                 International Inc. ..............        401,031        540,000
     30,000    EMC Corp.+ ........................        816,684        871,500
    150,000    Genuity Inc.+ .....................        790,729        468,000
      2,500    Obic Co. Ltd. .....................        401,284        563,081
     20,000    Tyler Technologies Inc. ...........         93,975         48,000
                                                      -----------    -----------
                                                        3,187,963      3,183,357
                                                      -----------    -----------
               CLOSED END FUNDS -- 0.2%
     59,000    Central European Equity
                 Fund Inc. .......................        740,735        677,320
     70,000    Dresdner RCM
                 Europe Fund Inc. ................        512,662        641,200
     18,592    France Growth Fund Inc. ...........        184,695        153,756
     40,250    Italy Fund Inc. ...................        360,845        322,000
     68,000    New Germany Fund Inc. .............        750,658        478,720
     45,942    Royce Value Trust Inc. ............        519,501        743,801
                                                      -----------    -----------
                                                        3,069,096      3,016,797
                                                      -----------    -----------
               METALS AND MINING -- 0.2%
     72,500    Harmony Gold Mining Co. ...........
                 Ltd. ............................        347,738        421,808
     15,000    Harmony Gold Mining Co. ...........
                 Ltd., ADR .......................         79,800         85,350
    100,000    Newmont Mining Corp. ..............      1,911,924      1,861,000
     50,000    Placer Dome Inc. ..................        487,169        490,000
                                                      -----------    -----------
                                                        2,826,631      2,858,158
                                                      -----------    -----------

                 See accompanying notes to financial statements.

                                       20



                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                            JUNE 30, 2001 (UNAUDITED)


                                                                       MARKET
   SHARES                                                COST           VALUE
   ------                                                ----          ------
                COMMON STOCKS (CONTINUED)
                COMPUTER HARDWARE -- 0.1%
    44,000      Hewlett-Packard Co. ............    $  1,792,291  $    1,258,400
    15,000      Xerox Corp. ....................         183,562         143,550
                                                    ------------  --------------
                                                       1,975,853       1,401,950
                                                    ------------  --------------
                EDUCATIONAL SERVICES -- 0.0%
    10,000      Benesse Corp. ..................       1,029,239         313,513
                                                    ------------  --------------
                TOTAL COMMON
                  STOCKS .......................     779,066,692   1,266,618,891
                                                    ------------  --------------
                PREFERRED STOCKS -- 0.2%
                AEROSPACE -- 0.2%
    14,021      Northrop Grumman Corp.,
                  7.00% Cv. Pfd., Ser. B .......       1,633,727       1,500,247
                                                    ------------  --------------
                TELECOMMUNICATIONS-- 0.0%
    15,000      Citizens Communications Co.,
                  5.00% Cv. Pfd. ...............         772,625         750,000
                                                    ------------  --------------
                BROADCASTING -- 0.0%
    40,000      ProSieben Sat.1 Media
                  AG, Pfd. .....................         568,909         568,894
                                                    ------------  --------------
                PUBLISHING -- 0.0%
    10,000      News Corp. Ltd., Pfd., ADR .....         157,103         324,000
                                                    ------------  --------------
                WIRELESS COMMUNICATIONS -- 0.0%
10,760,547      Telesp Celular
                  Participacoes SA, Pfd.+ ......          82,623          65,697
                                                    ------------  --------------
                TOTAL PREFERRED
                  STOCKS .......................       3,214,987       3,208,838
                                                    ------------  --------------
PRINCIPAL
  AMOUNT
---------
                CORPORATE BONDS -- 0.3%
                ENVIRONMENTAL SERVICES -- 0.1%
$2,000,000      Waste Management Inc.
                  Sub. Deb. Cv.
                  4.00%, 02/01/02 ..............       1,975,000       1,982,500
                                                    ------------  --------------
                AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.1%
 1,500,000      Standard Motor Products Inc.,
                  Sub. Deb. Cv.
                  6.75%, 07/15/09 ..............       1,428,251       1,055,625
                                                    ------------  --------------
                AVIATION: PARTS AND SERVICES -- 0.1%
 1,000,000      Kaman Corp.,
                  Sub. Deb. Cv.
                  6.00%, 03/15/12 ..............         941,337         955,000
                                                    ------------  --------------


PRINCIPAL
  AMOUNT
---------
                PUBLISHING-- 0.0%
 $ 200,000      News America Holdings Inc.,
                  Sub. Deb. Cv.
                  Zero Coupon, 03/31/02 ........    $    185,424  $      321,250
                                                    ------------  --------------
                HOTELS AND GAMING-- 0.0%
   230,000      Hilton Hotels Corp.,
                  Sub. Deb. Cv.
                  5.00%, 05/15/06 ..............         187,145         208,150
                                                    ------------  --------------
                CONSUMER PRODUCTS-- 0.0%
 1,000,000      Pillowtex Corp.,
                  Sub. Deb. Cv.
                  6.00%, 03/15/12+ .............         406,180             156
                                                    ------------  --------------
                TOTAL CORPORATE
                  BONDS ........................       5,123,337       4,522,681
                                                    ------------  --------------
  SHARES
  ------
                WARRANTS -- 0.0%
                METALS AND MINING -- 0.0%
     5,000      Harmony Gold Mining Co.
                  Ltd., ADR,
                  expire 06/29/03 ..............               0           9,450
                                                    ------------  --------------
                FOOD AND BEVERAGE -- 0.0%
    62,463      Advantica Restaurant
                  Group Inc.,
                  expire 01/07/05+ .............         105,603           1,874
                                                    ------------  --------------
                TOTAL WARRANTS .................         105,603          11,324
                                                    ------------  --------------
PRINCIPAL
  AMOUNT
---------
                U.S. GOVERNMENT OBLIGATIONS -- 17.3%
$273,000,000    U.S. Treasury Bills,
                  3.42% to 3.74%++,
                  due 07/12/01 to 12/13/01(c)        271,040,110     270,988,344
                                                    ------------  --------------
                REPURCHASE AGREEMENTS -- 2.0%
  30,513,000    Agreement with State State
                  Bank & Trust Co.,
                  3.96%, dated 06/29/01,
                  due 07/02/01, proceeds
                  at maturity $30,155,344 (d)         30,513,000      30,513,000
                                                    ------------  --------------

                 See accompanying notes to financial statements.

                                       21



                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                            JUNE 30, 2001 (UNAUDITED)



                                                                                     MARKET
                                                                   COST               VALUE
                                                              ---------------    ---------------
                                                                           
TOTAL INVESTMENTS -- 100.8% ...............................   $ 1,089,063,729    $ 1,575,863,078
                                                              ===============
OTHER ASSETS, LIABILITIES AND
  LIQUIDATION VALUE OF
  CUMULATIVE PREFERRED STOCK -- (19.9)% ...................                         (311,948,917)
                                                                                 ---------------
NET ASSETS - COMMON STOCK -- 80.9%
  (127,620,323 common shares outstanding) ................                         1,263,914,161
                                                                                 ---------------
NET ASSETS - PREFERRED STOCK -- 19.1%
  (11,967,900 preferred shares outstanding) ..............                           299,197,500
                                                                                 ---------------
TOTAL NET ASSETS -- 100.0% ................................                      $ 1,563,111,661
                                                                                 ===============
NET ASSET VALUE PER COMMON SHARE
  ($1,263,914,161 [DIVIDE] 127,620,323 shares outstanding)                                 $9.90
                                                                                           =====


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

  FORWARD FOREIGN EXCHANGE CONTRACTS
6,627,723(e)   Deliver Hong Kong Dollars
                 in exchange for
                 USD 849,804 .....................................   08/03/01    $         4,196
                                                                                 ===============

  NUMBER OF                                                                      NET UNREALIZED
  CONTRACTS                                                                       APPRECIATION
  ---------                                                                      --------------
FUTURES CONTRACTS -- SHORT POSITION
    150        S&P 500 Index Futures
                 09/20/01 ...................................................    $     1,931,250
                                                                                 ===============

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

               For Federal tax purposes:
               Aggregate cost ...............................................    $ 1,089,063,729
                                                                                 ===============
               Gross unrealized appreciation ................................    $   528,412,749
               Gross unrealized depreciation ................................        (41,613,400)
                                                                                 ===============
               Net unrealized appreciation ..................................    $   486,799,349
                                                                                 ===============


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

  (a)  Security fair valued under procedures established by the Board
       of Directors.
  (b)  Security exempt from registration under Rule 144A of the Securities Act
       of 1933, as amended.  These  securities may be resold in  transactions
       exempt from registration, normally to qualified institutional buyers. At
       June 30, 2001, the market value of Rule 144A  securities  amounted to
       $159,560 or 0.0% of total net assets.
  (c)  At June 30, 2001, $6,500,000  of the  principal  amount  was  pledged as
       collateral for futures contracts.
  (d)  Collateralized by U.S. Treasury Bond, 8.50%, due 02/15/20, market value
       $45,643,487.
  (e)  Principal amount denoted in Hong Kong Dollars.
    +  Non-income producing security.
   ++  Represents  annualized yield at date of purchase.
 ADR - American Depositary Receipt
 BDR - Brazilian Depositary Receipt
 USD - United States Dollars
 GDR - Global Depositary Receipt

                                        % of
                                       Market      Market
                                        Value       Value
                                       ------   --------------
       GEOGRAPHIC DIVERSIFICATION
       United States ...............    87.3%   $1,375,015,401
       Europe ......................     9.2       145,088,695
       Asia/Pacific Rim ............     1.3        21,254,213
       Canada ......................     1.1        17,061,640
       Latin America ...............     1.1        16,935,971
       South Africa ................     0.0           507,158
                                       ------   --------------
       Total Investments ...........   100.0%   $1,575,863,078
                                       ======   ==============

                 See accompanying notes to financial statements.

                                       22



                          THE GABELLI EQUITY TRUST INC.
                       STATEMENT OF ASSETS AND LIABILITIES
                            JUNE 30, 2001 (UNAUDITED)

ASSETS:
   Investments, at value (Cost $1,089,063,729) ..............    $1,575,863,078
   Cash and foreign currency, at value (Cost $23,990) .......            23,457
   Dividends and interest receivable ........................         1,561,855
   Receivable for investments sold ..........................            92,130
   Unrealized appreciation on forward foreign
      exchange contracts ....................................             4,196
   Other assets .............................................            41,038
                                                                 --------------
   TOTAL ASSETS .............................................     1,577,585,754
                                                                 --------------
LIABILITIES:
   Payable for investments purchased ........................         3,626,424
   Dividends payable ........................................         9,095,003
   Variation margin .........................................           176,250
   Payable for investment advisory fee ......................         1,038,616
   Other accrued expenses and liabilities ...................           537,800
                                                                 --------------
   TOTAL LIABILITIES ........................................        14,474,093
                                                                 --------------
   NET ASSETS ...............................................    $1,563,111,661
                                                                 ==============
NET ASSETS CONSIST OF:
   Cumulative Preferred Stock (7.25%, $25.00
      liquidation  value,  $0.001 par
      value, 8,000,000 shares authorized with
      5,367,900 shares issued and outstanding) ..............     $ 134,197,500
   Cumulative Preferred Stock (7.20%, $25.00
      liquidation value, $0.001 par value,
      8,000,000 shares authorized with
      6,600,000 shares issued and outstanding) ..............       165,000,000
   Capital stock, at par value ..............................           127,620
   Additional paid-in capital ...............................       806,359,006
   Distributions in excess of net realized gain on
      investments, futures contracts and foreign
      currency transactions .................................       (31,282,956)
   Net unrealized appreciation on investments, futures
      contracts and foreign currency transactions ...........       488,710,491
                                                                 --------------
   TOTAL NET ASSETS .........................................    $1,563,111,661
                                                                 ==============
   NET ASSET VALUE PER COMMON SHARE
      ($1,263,914,161 [DIVIDE] 127,620,323 shares
      outstanding; 184,000,000 shares
      authorized of $0.001 par value) .......................             $9.90
                                                                          =====

                             STATEMENT OF OPERATIONS
               FOR THE SIX MONTHS ENDED JUNE 30, 2001 (UNAUDITED)

INVESTMENT INCOME:
   Dividends (net of foreign taxes of $516,128) ..............     $  7,756,939
   Interest ..................................................        3,853,938
                                                                   ------------
   TOTAL INVESTMENT INCOME ...................................       11,610,877
                                                                   ------------
EXPENSES:
   Investment advisory fees ..................................        6,259,704
   Shareholder communications expenses .......................          208,749
   Shareholder services fees .................................          174,944
   Directors' fees ...........................................           70,956
   Custodian fees ............................................           70,945
   Legal and audit fees ......................................           70,568
   Payroll ...................................................           70,014
   Miscellaneous expenses ....................................           66,986
                                                                   ------------
   TOTAL EXPENSES ............................................        6,992,866
                                                                   ------------
   LESS: CUSTODIAL FEE CREDIT ................................          (28,552)
                                                                   ------------
   NET EXPENSES ..............................................        6,964,314
                                                                   ------------
   NET INVESTMENT INCOME .....................................        4,646,563
                                                                   ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
   INVESTMENTS, FUTURES CONTRACTS AND FOREIGN
   CURRENCY TRANSACTIONS:
   Net realized gain on investments ..........................       24,870,057
   Net realized loss on foreign currency transactions ........         (108,048)
   Net realized gain on futures contracts ....................       14,800,465
                                                                   ------------
   Net realized gain on investments, futures contracts
      and foreign currency transactions ......................       39,562,474
                                                                   ------------
   Net change in net unrealized appreciation/
      depreciation on investments, futures contracts
      and foreign currency transactions ......................      (19,698,012)
                                                                   ------------
   NET REALIZED AND UNREALIZED GAIN
      ON INVESTMENTS, FUTURES CONTRACTS
      AND FOREIGN CURRENCY TRANSACTIONS ......................       19,864,462
                                                                   ------------
   NET INCREASE IN NET ASSETS RESULTING
      FROM OPERATIONS ........................................     $ 24,511,025
                                                                   ============

                 See accompanying notes to financial statements.

                                       23



                          THE GABELLI EQUITY TRUST INC.

                       STATEMENT OF CHANGES IN NET ASSETS



                                                                            SIX MONTHS ENDED
                                                                              JUNE 30, 2001          YEAR ENDED
                                                                               (UNAUDITED)        DECEMBER 31, 2000
                                                                            ----------------      -----------------
                                                                                            
OPERATIONS:
   Net investment income ................................................. $    4,646,563         $    5,453,347
   Net realized gain on investments, futures contracts and foreign
      currency transactions ..............................................     39,562,474            139,784,787
   Net change in unrealized appreciation/depreciation on investments,
      futures contracts and foreign currency transactions ................    (19,698,012)          (193,936,839)
                                                                           --------------         --------------
   NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .......     24,511,025            (48,698,705)
                                                                           --------------         --------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
   Net investment income .................................................     (4,340,463)            (4,400,558)
   Net realized gain on investments, futures contracts and foreign
      currency transactions ..............................................    (35,003,008)          (133,922,564)
   In excess of net realized gains on investments, futures contracts
      and foreign currency transactions ..................................    (29,649,749)            (2,381,208)
                                                                           --------------         --------------
   TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS ......................    (68,993,220)          (140,704,330)
                                                                           --------------         --------------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
   Net investment income .................................................       (306,100)              (304,788)
   Net realized gain on investments, futures contracts and foreign
      currency transactions ..............................................     (4,559,466)            (9,440,571)
                                                                           --------------         --------------
   TOTAL DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS ...................     (4,865,566)            (9,745,359)
                                                                           --------------         --------------
TRUST SHARE TRANSACTIONS:
   Net increase in net assets from Equity Trust share transactions .......      8,588,558             14,165,101
   Shares issued in rights offering ......................................    126,303,145                     --
   Net increase from issuance of preferred stock .........................    159,329,175                     --
   Net decrease from repurchase of preferred stock .......................        (24,870)              (394,388)
                                                                           --------------         --------------
   NET INCREASE IN NET ASSETS FROM EQUITY TRUST SHARE TRANSACTIONS .......    294,196,008             13,770,713
                                                                           --------------         --------------
   NET INCREASE (DECREASE) IN NET ASSETS .................................    244,848,247           (185,377,681)
NET ASSETS:
   Beginning of period ...................................................  1,318,263,414          1,503,641,095
                                                                           --------------         --------------
   End of period ......................................................... $1,563,111,661         $1,318,263,414
                                                                           --------------         --------------


                 See accompanying notes to financial statements.

                                       24



                          THE GABELLI EQUITYTRUST INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)


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

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

      SECURITY VALUATION.  Portfolio securities listed or traded on a nationally
recognized securities exchange, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("Nasdaq") or traded on foreign exchanges are
valued at the last sale price on that  exchange  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,  except for open short  positions,  which are
valued at the last  asked  price).  All  other  portfolio  securities  for which
over-the-counter  market  quotations  are  readily  available  are valued at the
latest average of the bid and asked prices. If there were no asked prices quoted
on that day,  then the  security is valued at the  closing bid price.  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").  Securities and assets for which market
quotations  are not  readily  available  are  valued  at  their  fair  value  as
determined in good faith under  procedures  established by and under the general
supervision of the Board of Directors. Short term debt securities with remaining
maturities of 60 days or less are valued at amortized cost, unless the Directors
determine such does not reflect the securities'  fair value, in which case these
securities  will be valued at their fair value as determined  by the  Directors.
Debt  instruments  having a  maturity  greater  than 60 days are  valued  at the
highest bid price  obtained from a dealer  maintaining an active market in those
securities.  Options are valued at the last sale price on the  exchange on which
they are listed.  If no sales of such  options  have taken place that day,  they
will be valued at the mean between their closing bid and asked prices.

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

                                       25



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


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

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

      The option  activity  for Equity  Trust for the six months  ended June 30,
2001 was as follows:

                                                     NUMBER OF
                                                      CONTRACTS       PREMIUMS
                                                     ----------       --------
Call options outstanding at December 31, 2000 ......     250          $417,375
Call options written during the period .............      --                --
Call options expired during the period .............      --                --
Call options closed during the period ..............    (250)         (417,375)
                                                        ----          --------
Call options outstanding at June 30, 2001 ..........      --          $    --
                                                        ====          =======

      FUTURES  CONTRACTS.  The Equity Trust may engage in futures  contracts for
the purpose of hedging against changes in the value of its portfolio  securities
and in the value of securities  it intends to purchase.  Such  investments  will
only be made if they are  economically  appropriate  to the  reduction  of risks
involved in the management of the Equity Trust's investments. Upon entering into
a futures  contract,  the Equity Trust is required to deposit with the broker an
amount of cash or cash equivalents equal to a certain percentage of the contract
amount. This is known as the "initial margin."  Subsequent payments  ("variation
margin")  are made or received by the Equity  Trust each day,  depending  on the
daily fluctuation of the value of the ___ contract. ___ The daily ___ changes in
the  contract  are  included  in  ___  unrealized  appreciation/depreciation  on
investments and futures  contracts.  The Equity Trust recognizes a realized gain
or loss when the contract is closed.

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

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

                                       26



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


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

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

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

      DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders
are recorded on the  ex-dividend  date.  Income  distributions  and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally  accepted  accounting  principles.  These  differences are
primarily due to differing  treatments of income and gains on various investment
securities  held  by  the  Equity  Trust,   timing   differences  and  differing
characterization  of  distributions  made by the Equity Trust.  Distributions to
shareholders  of the Equity  Trust's 7.25% Tax Advantaged  Cumulative  Preferred
Stock and 7.20% Tax Advantaged Series B Cumulative  Preferred Stock ("Cumulative
Preferred  Stock") are accrued on a daily basis and are  determined as described
in Note 5.

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

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

3. AGREEMENTS AND  TRANSACTIONS  WITH  AFFILIATES.  The Equity Trust has entered
into an  investment  advisory  agreement  (the  "Advisory  Agreement")  with the
Adviser  which  provides  that the  Equity  Trust  will pay the  Adviser  a fee,
computed weekly and paid monthly, equal on an annual basis to 1.00% of the value
of the Equity Trust's average weekly net assets.

                                       27



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


In accordance  with the Advisory  Agreement,  the Adviser  provides a continuous
investment   program  for  the  Equity   Trust's   portfolio  and  oversees  the
administration  of all aspects of the Equity Trust's  business and affairs.  The
Adviser  has  agreed to reduce  the  management  fee on the  incremental  assets
attributable  to the Cumulative  Preferred  Stock if the total return of the net
asset value of the common  shares of the Equity Trust,  including  distributions
and advisory fee subject to reduction,  does not exceed the stated dividend rate
of the Cumulative  Preferred  Stock. For the six months ended June 30, 2001, the
Equity  Trust's total return on the net asset value of the common shares did not
exceed the stated dividend rate of the Cumulative  Preferred  Stock.  Thus, such
management fees were not earned on the incremental assets.

      During the six months ended June 30, 2001, Gabelli & Company, Inc. and its
affiliates  received $205,981 in brokerage  commissions as a result of executing
agency transactions in portfolio securities on behalf of the Equity Trust.

4.  PORTFOLIO  SECURITIES.   Cost  of  purchases  and  proceeds  from  sales  of
securities,  other than short-term securities, for the six months ended June 30,
2001 aggregated $123,070,523 and $104,931,950, respectively.

5. CAPITAL. The Articles of Incorporation, dated May 19, 1986, permit the Equity
Trust to issue 184,000,000 shares of common stock (par value $0.001).  The Board
of Directors of the Equity Trust has  authorized the repurchase of its shares on
the open  market  when the shares are  trading at a discount  of 10% or more (or
such other percentage as the Board of Directors may determine from time to time)
from the net asset  value of the  shares.  During the six months  ended June 30,
2001,  the Equity Trust did not repurchase any shares of its common stock in the
open market.

      Transactions in capital stock were as follows:



                                                               SIX MONTHS ENDED
                                                                JUNE 30, 2001                        YEAR ENDED
                                                                 (UNAUDITED)                      DECEMBER 31, 2000
                                                          --------------------------         --------------------------
                                                             Shares        Amount              Shares        Amount
                                                          ----------    ------------         ---------     ------------
                                                                                               
Shares issued in rights offering .......................  18,114,735    $126,303,145                --               --
Shares issued upon reinvestment
  of dividends and distributions .......................     817,178       8,588,558         1,311,793     $ 14,165,101
                                                          ----------    ------------         ---------     ------------
Net increase ...........................................  18,931,913    $134,891,703         1,311,793     $ 14,165,101
                                                          ==========    ============         =========     ============


      The Equity Trust's Articles of  Incorporation,  as amended,  authorize the
issuance of up to  16,000,000  shares of $0.001 par value  Cumulative  Preferred
Stock.  On June 20, 2001, the Equity Trust received net proceeds of $159,329,175
(after  underwriting  discounts of $5,197,500 and estimated offering expenses of
$473,325)  from the public  offering  of  6,600,000  shares of 7.20%  Cumulative
Preferred  Stock.  The Cumulative  Preferred Stock is senior to the common stock
and results in the financial  leveraging of the common  stock.  Such  leveraging
tends to  magnify  both the risks  and  opportunities  to  Common  Shareholders.
Dividends on shares of the Cumulative Preferred Stock are cumulative. The Equity
Trust is required  to meet  certain  asset  coverage  tests with  respect to the
Cumulative Preferred Stock. If the Equity Trust fails to meet these requirements
and does not correct such  failure,  the Equity Trust may be required to redeem,
in part or in full,  the  Cumulative  Preferred  Stock at a redemption  price of
$25.00 per share plus an amount equal to the  accumulated  and unpaid  dividends
whether or not  declared  on such  shares in order to meet  these  requirements.
Additionally,  failure to meet the foregoing asset  requirements  could restrict
the Equity  Trust's  ability to pay dividends to Common  Shareholders  and could
lead to sales of portfolio  securities at inopportune times.  Commencing June 9,
2003 and  thereafter,  the Equity  Trust,  at its  option,  may redeem the 7.25%
Cumulative  Preferred Stock in whole or in part at the redemption price.  During
the six

                                       28



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


months ended June 30, 2001, the Equity Trust  repurchased  1,000 shares of 7.25%
Cumulative  Preferred  Stock at a cost of $24,870 and an average price of $24.87
per share. During the year ended December 31, 2000, the Equity Trust repurchased
17,500 shares of 7.25%  Cumulative  Preferred Stock at a cost of $394,388 and at
an average price of $22.54 per share. At June 30, 2001,  5,367,900 shares of the
7.25% Cumulative  Preferred Stock were outstanding at the fixed dividend rate of
7.25 percent per share and accrued  dividends  amounted to $135,129.  Commencing
June 20, 2006 and thereafter,  the Equity Trust,  at its option,  may redeem the
7.20%  Cumulative  Preferred Stock in whole or in part at the redemption  price.
During the six months ended June 30, 2001,  the Equity Trust did not  repurchase
any shares of 7.20%  Cumulative  Preferred  Stock.  At June 30, 2001,  6,600,000
shares of the 7.20%  Cumulative  Preferred  Stock were  outstanding at the fixed
rate of 7.20 percent per share and accrued dividends  amounted to $330,000.  The
income  received on the Equity Trust's assets may vary in a manner  unrelated to
the fixed rate,  which could have either a beneficial or  detrimental  impact on
net investment income and gains available to Common Shareholders.

      The holders of Cumulative Preferred Stock have voting rights equivalent to
those of the holders of common stock (one vote per share) and will vote together
with holders of shares of common stock as a single class. In addition,  the 1940
Act  requires  that along with  approval  of a majority of the holders of common
stock,  approval  of a  majority  of the  holders of any  outstanding  shares of
Cumulative  Preferred Stock,  voting separately as a class, would be required to
(a) adopt any plan of reorganization  that would adversely affect the Cumulative
Preferred Stock,  and (b) take any action requiring a vote of security  holders,
including,  among other things,  changes in the Trust's  subclassification  as a
closed-end   investment  company  or  changes  in  its  fundamental   investment
restrictions.

6. RIGHTS  OFFERING.  On January 10,  2001,  the Equity  Trust  distributed  one
transferable  right for each of the  108,688,408  common shares  outstanding  to
shareholders  of record on that date.  Six rights were  required to purchase one
additional  common  share at the  subscription  price of $7.00  per  share.  The
subscription  period expired on February 13, 2001. The rights offering was fully
subscribed resulting in the issuance of 18,114,735 common shares and proceeds of
$126,803,145 to the Equity Trust,  prior to the deduction of estimated  expenses
of  $500,000.  The  net  asset  value  per  share  of the  Equity  Trust  common
shareholders  was  reduced by  approximately  $0.56 per share as a result of the
issuance.

                                       29



                          THE GABELLI EQUITYTRUST INC.
                              FINANCIAL HIGHLIGHTS




SELECTED DATA FOR AN EQUITY TRUST COMMON   SIX MONTHS ENDED                  YEAR ENDED DECEMBER 31,
SHARE OUTSTANDING THROUGHOUT EACH PERIOD:  JUNE 30, 2001(A)  ------------------------------------------------------------------
OPERATING PERFORMANCE:                        (UNAUDITED)      2000(A)      1999(A)       1998(A)       1997(A)       1996(A)
                                               ----------    ----------    ----------    ----------    ----------    ----------
                                                                                                   
   Net asset value, beginning of period        $    10.89    $    12.75    $    11.47    $    11.56    $     9.77    $     9.95
                                               ----------    ----------    ----------    ----------    ----------    ----------
   Net investment income                             0.04          0.05          0.04          0.07          0.08          0.11
   Net realized and unrealized gain (loss)
     on investments                                  0.16         (0.51)         3.25          1.09          2.75          0.71
                                               ----------    ----------    ----------    ----------    ----------    ----------
   Total from investment operations                  0.20         (0.46)         3.29          1.16          2.83          0.82
                                               ----------    ----------    ----------    ----------    ----------    ----------
   Decrease in net asset value from
     EquityTrust share transactions                 (0.56)           --            --            --            --            --
   Offering expenses charged to capital surplus     (0.05)           --            --         (0.04)           --            --
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
   Net investment income                            (0.04)        (0.04)        (0.03)(b)     (0.06)        (0.08)        (0.11)
   In excess of net investment income                  --            --            --            --         (0.00)(c)        --
   Net realized gain on investments                 (0.27)        (1.25)        (1.21)(b)     (1.10)        (0.92)        (0.78)
   In excess of net realized gain on investments    (0.23)        (0.02)           --            --         (0.01)        (0.00)(c)
   Paid-in capital                                     --           --          (0.68)(b)        --         (0.03)        (0.11)
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
   Net investment income                            (0.00)(c)     (0.00)(c)     (0.00)(c)     (0.00)(c)        --            --
   Net realized gain on investments                 (0.04)        (0.09)        (0.09)        (0.05)           --            --
                                               ----------    ----------    ----------    ----------    ----------    ----------
   Total distributions                              (0.58)        (1.40)        (2.01)        (1.21)        (1.04)        (1.00)
                                               ----------    ----------    ----------    ----------    ----------    ----------
   NET ASSET VALUE, END OF PERIOD              $     9.90    $    10.89    $    12.75    $    11.47    $    11.56    $     9.77
                                               ==========    ==========    ==========    ==========    ==========    ==========
   Net asset value total return+                     0.73%        (4.39)%       29.49%         9.55%        30.46%         9.00%
                                               ==========    ==========    ==========    ==========    ==========    ==========
   Market value, end of period                 $    11.48    $    11.44    $    12.56    $    11.56    $    11.69    $     9.38
                                               ==========    ==========    ==========    ==========    ==========    ==========
   Total investment return++                        11.21%         1.91%        26.57%         9.23%        37.46%        11.00%
                                               ==========    ==========    ==========    ==========    ==========    ==========
RATIOS TO AVERAGE NET ASSETS AVAILABLE TO COMMON
   STOCK SHAREHOLDERS AND SUPPLEMENTAL DATA:
   Net assets, end of period (in 000's)        $1,563,112    $1,318,263    $1,503,641    $1,352,190    $1,210,570    $1,015,437
   Net assets attributable to common shares,
     end of period (in 000's)                  $1,263,914    $1,184,041    $1,368,981    $1,217,190    $1,210,570    $1,015,437
   Ratio of net investment income to average
     net assets attributable to common stock         0.73%(f)      0.42%         0.34%         0.60%         0.76%         1.07%
   Ratio of operating expenses to average
     net assets attributable to common stock         1.10%(f)      1.14%         1.27%         1.15%         1.14%         1.18%
   Ratio of operating expenses to average
     total net assets (e)                            0.99%(f)      1.03%         1.15%         1.09%         1.14%         1.18%
   Portfolio turnover rate                            8.3%         32.1%         38.0%         39.8%         39.2%         18.9%
7.25% CUMULATIVE PREFERRED STOCK:
   Liquidation value, end of period (in 000's) $  134,198    $  134,223    $  134,660    $  135,000            --            --
   Total shares outstanding (in 000's)              5,368         5,369         5,386         5,400            --            --
   Asset coverage                                     523%          972%        1,117%        1,001%           --            --
   Liquidation preference per share            $    25.00    $    25.00    $    25.00    $    25.00            --            --
   Average market value (d)                    $    25.23    $    22.62    $    24.43    $    25.63            --            --
7.20% CUMULATIVE PREFERRED STOCK:
   Liquidation value, end of period (in 000's) $  165,000            --            --            --            --            --
   Total shares outstanding (in 000's)              6,600            --            --            --            --            --
   Asset coverage                                     523%           --            --            --            --            --
   Liquidation preference per share            $    25.00            --            --            --            --            --
   Average market value (d)                    $    25.09            --            --            --            --            --


 --------------------------
  +  Based  on  net  asset  value  per  share, adjusted  for  reinvestment  of
     distributions, including the effect of shares issued  pursuant  to rights
     offering, assuming full subscription by shareholder. Total return for the
     period of less than one year is not annualized.
 ++  Based on market value per share, adjusted for reinvestment of
     distributions, including the effect of shares issued pursuant to rights
     offering, assuming full subscription by shareholder. Total return for the
     period of less than one year is not annualized.
(a)  Per share amounts have been calculated using the monthly average shares
     outstanding  method.
(b)  A distribution equivalent to $0.75 per share for The Gabelli Utility Trust
     spin-off from net investment income, realized short-term gains, realized
     long-term gains, and paid-in-capital were $0.01029, $0.07453, $0.34218 and
     $0.32300, respectively.
(c)  Amount represents less than $0.005 per share.
(d)  Based on weekly prices.
(e)  Amounts are attributable to both common and preferred stock assets.
     Prior to 1998, there was no preferred stock outstanding.
(f)  Annualized.

                 See accompanying notes to financial statements.

                                       30



                         AUTOMATIC DIVIDEND REINVESTMENT
                        AND VOLUNTARY CASH PURCHASE PLAN

ENROLLMENT IN THE PLAN

      It is the policy of The  Gabelli  Equity  Trust Inc.  ("Equity  Trust") to
automatically   reinvest   dividends.   As  a   "registered"   shareholder   you
automatically  become a participant  in the Equity  Trust's  Automatic  Dividend
Reinvestment  Plan (the "Plan").  The Plan  authorizes the Equity Trust to issue
shares to participants  upon an income dividend or a capital gains  distribution
regardless  of whether  the shares are trading at a discount or a premium to net
asset value. All  distributions  to shareholders  whose shares are registered in
their  own  names  will be  automatically  reinvested  pursuant  to the  Plan in
additional  shares of the Equity Trust.  Plan  participants may send their stock
certificates to State Street Bank and Trust Company ("State  Street") to be held
in their  dividend  reinvestment  account.  Registered  shareholders  wishing to
receive their distribution in cash must submit this request in writing to:

                          The Gabelli Equity Trust Inc.
                     c/o State Street Bank and Trust Company
                                  P.O. Box 8200
                              Boston, MA 02266-8200

      Shareholders  requesting this cash election must include the shareholder's
name and  address as they  appear on the share  certificate.  Shareholders  with
additional  questions  regarding  the Plan may contact  State  Street at 1 (800)
336-6983.

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

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

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

                                       31




      The automatic  reinvestment  of dividends and capital gains  distributions
will not  relieve  participants  of any  income tax which may be payable on such
distributions.  A participant in the Plan will be treated for Federal income tax
purposes  as  having  received,  on a  dividend  payment  date,  a  dividend  or
distribution in an amount equal to the cash the participant  could have received
instead of shares.

      The Equity  Trust  reserves  the right to amend or  terminate  the Plan as
applied to any voluntary  cash  payments  made and any dividend or  distribution
paid  subsequent to written notice of the change sent to the members of the Plan
at least 90 days before the record date for such dividend or  distribution.  The
Plan also may be  amended  or  terminated  by State  Street on at least 90 days'
written notice to participants in the Plan.

VOLUNTARY CASH PURCHASE PLAN

      The  Voluntary  Cash  Purchase  Plan  is  yet  another   vehicle  for  our
shareholders  to increase  their  investment  in the Equity  Trust.  In order to
participate in the Voluntary Cash Purchase  Plan,  shareholders  must have their
shares registered in their own name.

      Participants in the Voluntary Cash Purchase Plan have the option of making
additional  cash payments to State Street for  investments in the Equity Trust's
shares at the then current  market price.  Shareholders  may send an amount from
$250 to $10,000.  State  Street  will use these funds to purchase  shares in the
open  market on or about the 15th of each month.  State  Street will charge each
shareholder  who  participates  $0.75,  plus a pro rata  share of the  brokerage
commissions.  Brokerage  charges for such purchases are expected to be less than
the usual  brokerage  charge for such  transactions.  It is  suggested  that any
voluntary cash payments be sent to State Street Bank and Trust Company, P.O. Box
8200,  Boston,  MA  02266-8200  such that State Street  receives  such  payments
approximately 10 days before the 15th of the month.  Funds not received at least
five  days  before  the  investment  date  shall be held for  investment  in the
following month. A payment may be withdrawn without charge if notice is received
by State Street at least 48 hours before such payment is to be invested.

      For  more  information   regarding  the  Dividend  Reinvestment  Plan  and
Voluntary Cash Purchase Plan,  brochures are available by calling (914) 921-5070
or by writing directly to the Equity Trust.

                                       32



                             DIRECTORS AND OFFICERS

                          THE GABELLI EQUITY TRUST INC.
                    ONE CORPORATE CENTER, RYE, NY 10580-1434

DIRECTORS

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

Dr. Thomas E. Bratter
  PRESIDENT, JOHN DEWEY ACADEMY

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

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

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

Karl Otto Pohl
  FORMER PRESIDENT, DEUTSCHE BUNDESBANK

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

Salvatore J. Zizza
  CHAIRMAN, HALLMARK ELECTRICAL SUPPLIES CORP.


OFFICERS

Mario J. Gabelli, CFA
  PRESIDENT & CHIEF INVESTMENT OFFICER

Bruce N. Alpert
  VICE PRESIDENT & TREASURER

Carter W. Austin
  VICE PRESIDENT

James E. McKee
  SECRETARY


INVESTMENT ADVISOR

Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1434


CUSTODIAN

Boston Safe Deposit and Trust Company


COUNSEL

Willkie Farr & Gallagher


TRANSFER AGENT AND REGISTRAR

State Street Bank and Trust Company


STOCK EXCHANGE LISTING

                COMMON     7.25% PREFERRED   7.20% PREFERRED
              -----------  ---------------   ---------------
NYSE-
Symbol:           GAB           GAB Pr           GAB PrB
Shares
Outstanding:  127,620,323     5,367,900         6,600,000

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

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

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

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

THE GABELLI EQUITY TRUST INC.
ONE CORPORATE CENTER
RYE, NY 10580-1434
(914) 921-5070
HTTP://WWW.GABELLI.COM

SEMI-ANNUAL REPORT
JUNE 30, 2001

                                                                     GBFCM 06/01