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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000935069-01-000166.txt : 20010308
<SEC-HEADER>0000935069-01-000166.hdr.sgml : 20010308
ACCESSION NUMBER:		0000935069-01-000166
CONFORMED SUBMISSION TYPE:	N-30D
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20001231
FILED AS OF DATE:		20010307

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GABELLI EQUITY TRUST INC
		CENTRAL INDEX KEY:			0000794685
		STANDARD INDUSTRIAL CLASSIFICATION:	 []
		IRS NUMBER:				222736509
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		N-30D
		SEC ACT:		
		SEC FILE NUMBER:	811-04700
		FILM NUMBER:		1562535

	BUSINESS ADDRESS:	
		STREET 1:		ONE CORP CENTER
		CITY:			RYE
		STATE:			NY
		ZIP:			10580
		BUSINESS PHONE:		9149215070
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-30D
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>GABELLI EQUITY TRUST AR 2000
<TEXT>

                          [GRAPHIC OF US FLAG OMITTED]

             [GRAPHIC OF THE GABELLI EQUITY TRUST INC. LOGO OMITTED]

                          [GRAPHIC OF MOUNTAIN OMITTED]

ANNUAL REPORT
DECEMBER 31, 2000
<PAGE>
            [GRAPHIC OF THE GABELLI EQUITY TRUST INC. LOGO OMITTED]

              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.

[FLAG GRAPHICS OMITTED]

 ALABAMA    ALASKA    ARIZONA    ARKANSAS    CALIFORNIA    COLORADO
CONNECTICUT    DELAWARE    FLORIDA    GEORGIA

  HAWAII    IDAHO    ILLINOIS    INDIANA    IOWA    KANSAS    KENTUCKY
LOUISIANA    MAINE    MARYLAND

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

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

 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.
<PAGE>

                                             [PHOTO OF MARIO J. GABELLI OMITTED]
                         [GRAPHIC OF THE GABELLI EQUITY TRUST INC. LOGO OMITTED]

TO OUR SHAREHOLDERS,

      In 2000, we encountered a challenging market for stocks. From inception in
1986  through  year-end  2000,  the Gabelli  Equity  Trust has provided a 13.70%
average annualized return. We are proud of this performance track record, and we
are  dedicated  to building  on our  success in the new year ahead.  Of equal or
greater  importance,  we believe your assets were exposed to less  business risk
and less market risk (than the Standard  &Poor's ["S&P"] 500 Index),  the latter
defined as volatility and referred to as beta by quantitatively-oriented  market
observers.

INVESTMENT PERFORMANCE

      For the fourth quarter ended December 31, 2000, The Gabelli Equity Trust's
(the "Equity  Trust") net asset value ("NAV") total return  declined 2.66% after
adjusting  for the  reinvestment  of the $0.50 per  share  distribution  paid on
December 26, 2000. The S&P 500 and the Nasdaq  Composite  Indices declined 7.82%
and 32.70%,  respectively,  while the Dow Jones  Industrial  Average rose 1.70%,
over the same  period.  Each index is an  unmanaged  indicator  of stock  market
performance.  The  Equity  Trust fell  4.39% for 2000  after  adjusting  for the
reinvestment  of the  $1.31  per  share in  distributions.  The S&P 500,  Nasdaq
Composite Index, and Dow Jones Industrial  Average declined 9.10%,  39.18%,  and
4.69%, respectively, over the same twelve-month period.

      For the two-year  period ended December 31, 2000, the Equity Trust's total
return averaged 11.27% annually,  including  reinvestments of $2.48 per share in
distributions and an adjustment of $0.75 per share  attributable to the spin-off
of the Gabelli  Utility  Trust,  versus  average  annual total returns of 4.90%,
6.41%,  and  10.11%  for the S&P 500,  Nasdaq  Composite  Index,  and Dow  Jones
Industrial  Average,  respectively.  For the five-year period ended December 31,
2000,  the Equity  Trust's  total return  averaged  14.04%  annually,  including
reinvestments of $5.69 per share in distributions and an adjustment of $0.75 per
share attributable to the spin-off of the Gabelli Utility Trust,  versus average
annual  total  returns of  18.33%,  18.96%,  and 18.21% for the S&P 500,  Nasdaq
Composite Index, and Dow Jones Industrial Average, respectively.

      For the ten-year  period ended December 31, 2000, the Equity Trust's total
return averaged 14.27% annually,  including reinvestments of $11.03 per share in
distributions,  adjustments of $1.50 per share  attributable  to the spin-off of
the  Gabelli  Utility  Trust  and  the  Gabelli  Global  Multimedia  Trust,  and
adjustments of $1.65 per share attributable to rights offerings,  versus average
annual  total  returns of  17.44%,  20.78%,  and 17.88% for the S&P 500,  Nasdaq
Composite Index, and Dow Jones Industrial Average, respectively. Since inception
on August 21, 1986 through  December 31, 2000, the Equity Trust had a cumulative
total  return of 532.89%,  including  adjustments  of $18.60 for  distributions,
rights offerings,  spin-offs,  and taxes paid on undistributed long term capital
gains, which equates to an average annual total return of 13.70%.

      The Equity  Trust's  common shares ended the fourth  quarter at $11.44 per
share on the New York Stock Exchange,  a premium to the net asset value of 5.03%
and a total return of 4.10% for the fourth  quarter.  The Equity  Trust's common
shares rose 1.91% over the trailing  twelve-month period after adjusting for all
distributions.

RIGHTS OFFERING 2001 -- AN OUTSTANDING SUCCESS -- THANK YOU

      The Equity Trust Rights  Offering  proved once again to be an overwhelming
success.  Rights offerings have historically been a fair and efficient method to
raise additional capital. This method is widely used in England. The traditional
rights offering allows an issuer's  shareholders to participate  directly in the
growth  of  that  issuer  by  purchasing  additional  common  shares  at  a  set
subscription price.

      Shareholders  of record on January 10, 2001 were issued one Right for each
share of the Equity Trust.  Six Rights were required to purchase one  additional
share of the Equity Trust at $7.00 per share without incurring commission costs.
Shareholders  remitted over $225 million in subscription  requests, of which the
Trust retained $126 million for the 18,114,735 shares offered.

[PYRAMID GRAPHIC OMITTED]
TEXT AS FOLLOWS:

EPS
PMV
MANAGEMENT
CASH FLOW
RESEARCH
<PAGE>

      Furthermore, since these Rights were transferable,  shareholders who chose
not to exercise their Rights,  could sell their Rights.  The market value of the
Rights during the subscription  period was such that sellers of the Rights would
have regained a portion of the ultimate  decline in the value of their  holdings
that resulted from the Offering. Our subscription agent, EquiServe,  sold Rights
in the open  market  through  Gabelli & Company,  Inc.  at a nominal  commission
through February 12, 2001.

      We  appreciate  the efforts of the brokerage  community in explaining  the
offering to their clients, resulting in a high level of participation.

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


- --------------------------------------------------------------------------------
                   Average Annual Returns - December 31, 2000
                   ------------------------------------------
                      NAV Average            Average Annual
                   Annual Return (a)      Investment Return (c)
                   -----------------      ---------------------
  1 Year ...........     (4.39)%                 1.91%
  5 Year ...........     14.04%                 16.54%
  10 Year ..........     14.27%                 14.82%
  Life of Fund (b) .     13.70%                 13.54%
- --------------------------------------------------------------------------------

(a) 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.
Based on  initial  net asset  value of  $9.34.  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) Based on initial  offering  price of $10.00 and closing market values on the
New York Stock Exchange.
- --------------------------------------------------------------------------------
                                        2
                                     <PAGE>

YEAR IN REVIEW

      Value investing is dead! Fundamentals don't matter! High equity valuations
are completely  justified!  New economy  companies are priceless and old economy
companies are worthless!  You can't pay too much for dot-com stocks!  Technology
company  earnings  are  immune to the  economic  cycle!  Utility  stocks are for
widows, orphans and fools!

      In retrospect,  all these pronouncements seem silly. But, at the beginning
of the year,  this rhetoric was gospel to many  investors.  True  believers were
severely  punished as "Mr. Market"  debunked all these myths in 2000.  Investors
who  abandoned  value  to  chase  last  year's   performance   leaders  suffered
substantial  losses when the dot-com bubble burst and technology  stock earnings
proved quite vulnerable in a rapidly decelerating  economy.  More prudent folks,
who remained committed to value principals, survived this year's troubled market
with most, if not all, of their investment capital intact.

      The market's  dismal fourth quarter  performance led to the worst year for
equities since 1981. Over the last several years,  we have repeatedly  expressed
our concern over high equity  valuations  in general,  and  economically  absurd
growth stock valuations in particular.  This year, our concern proved warranted.
The bad news is that the value of most  investors'  equity  portfolios  is lower
than it was a year ago.  The good news is that  equity  valuations  are now much
more  reasonable  relative to largely  favorable  long-term  fundamentals.  More
reasonable  valuations  provide a more solid  foundation for the market to build
upon in future years.

      The dominant  market trends of 1999 -- new economy  stocks soaring and old
economy  stocks  languishing  -- carried over into the first two months of 2000.
Then, the dot-com bubble burst and tech stocks declined sharply. Investors began
focusing  on what we  coined  the five E's:  Energy,  the  Euro,  the  Election,
Earnings,  and the Economy.  Oil prices hit a decade high of $38 per barrel, and
remained  above $30 through much of the year,  before  retreating to the mid-$20
range at its close. The Euro dropped to 83 to the dollar,  down from 120, before
rebounding in the fourth  quarter.  The robust U.S.  economy,  which six Federal
Reserve  hikes had failed to  restrain,  began  showing  signs of slowing in the
early summer. By the third quarter,  investors were questioning whether it would
be a soft or hard landing. A host of third quarter earnings  warnings,  followed
by disappointing reported results,  aborted the summer rally and sent the market
into a tailspin.  In the fourth quarter, the 37-day uncertainty  surrounding the
presidential election ignited psychological gridlock and the rout was on.

LOOKING AHEAD

      As we prepare this letter, the Federal Reserve has already cut the Federal
Funds Rate by 100 basis points  through the end of January.  It will take awhile
for monetary policy alone to provide ballast for the "supertanker"  economy, and
we believe anemic first and perhaps second quarter earnings will unfold, even if
the Fed continues to cut interest rates.

      Looking ahead to the second half of 2001,  our forecast is for an economic
(and earnings)  recovery.  Oil prices have retreated and should remain stable as
reduced  demand and increased  production  bring an equilibrium to prices in the
low  $20's  per  barrel  area.  The  dollar  has  weakened   against  the  Euro,
foreshadowing  some  improvement  in the  balance  of trade  deficit  and better
earnings for U.S. based  multinationals.  Although  President George W. Bush won
the  narrowest  of  victories  and  Congress is almost  evenly split along party
lines,  we expect a shift away from creeping  socialism  toward more  unfettered
capitalism. Reports from Washington indicate tax relief is on the horizon. After
a slow start,  we believe S&P 500  earnings  growth  will be  buttressed  by its
roughly one-third non-U.S. component, and come in with a respectable 5% in 2001,
and Russell 2000 (small cap stocks)  earnings growth will be materially  higher.
Equity valuations are now much more reasonable across the board.  Finally,  Wall
Street's  overly  optimistic  earnings  estimates  are rapidly  being reduced to
reflect  current  economic  realities.  This should  limit  widespread  earnings
disappointments  going  forward,  and  eventually  result in  pleasant  earnings
surprises, helping to renew investor confidence and revive the market.

                                        3
                                     <PAGE>

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

EURO VS. U.S. DOLLAR

                    For 1999          For 2000          For 2001
Jan                 1.1812            1.0155            0.9465
                    1.176             1.0309            0.9477
                    1.1636            1.0335            0.945
                    1.1672            1.0324            0.9535
                    1.1554            1.0294            0.9486
                    1.1534            1.0252            0.94
                    1.1548            1.0322            0.9409
                    1.1698            1.0281            0.9525
                    1.1689            1.027             0.9486
                    1.1591            1.0128            0.942
                    1.161             1.0121            0.9373
                    1.1575            1.0115            0.9308
                    1.1577            1.0133            0.9437
                    1.1582            1.01              0.9369
                    1.1566            1.0019            0.9375
                    1.1577            1.0041            0.9389
                    1.1481            1.0011            0.9258
                    1.1395            0.989             0.9219
                    1.1371            0.9765            0.9213
                    1.1303            0.9757            0.918
Feb                 1.1328            0.9731            0.9267
                    1.1339            0.9768            0.9309
                    1.1306            0.9887            0.9387
                    1.1283            0.976             0.9357
                    1.1296            0.9783            0.9398
                    1.13              0.9862
                    1.1331            0.9914
                    1.1303            0.9865
                    1.1282            0.9847
                    1.1189            0.9783
                    1.123             0.9834
                    1.1223            0.9842
                    1.1075            0.9863
                    1.1037            0.985
                    1.0993            1.006
                    1.0972            1.0017
                    1.1068            0.9931
                    1.0995            0.9763
                    1.0891            0.9669
                    1.0931            0.9643
                    1.0888            0.97
Mar                 1.0824            0.9619
                    1.0843            0.9618
                    1.0899            0.9603
                    1.0873            0.956
                    1.0961            0.9576
                    1.0932            0.9684
                    1.0936            0.9659
                    1.093             0.9648
                    1.0915            0.9644
                    1.1015            0.9696
                    1.099             0.971
                    1.0923            0.9694
                    1.0915            0.971
                    1.0918            0.9703
                    1.0921            0.9608
                    1.0871            0.9691
                    1.0743            0.9724
                    1.0716            0.9645
                    1.0732            0.9614
                    1.0808            0.9524
                    1.0782            0.9594
                    1.0782            0.9574
                    1.0706            0.956
Apr                 1.0838            0.9588
                    1.0784            0.9647
                    1.0835            0.958
                    1.0786            0.959
                    1.0842            0.9588
                    1.078             0.9591
                    1.0779            0.9551
                    1.0717            0.9524
                    1.0688            0.9564
                    1.0608            0.955
                    1.063             0.9477
                    1.0612            0.9369
                    1.0598            0.9376
                    1.0634            0.9379
                    1.059             0.9396
                    1.0649            0.9265
                    1.0616            0.9217
                    1.0591            0.9083
                    1.0564            0.9089
                    1.0571            0.912
                    1.0593            0.9068
                    1.0724            0.8891
May                 1.0779            0.8907
                    1.0781            0.8953
                    1.0787            0.895
                    1.072             0.9023
                    1.0666            0.9097
                    1.0626            0.9021
                    1.065             0.908
                    1.0672            0.9138
                    1.0672            0.9053
                    1.0641            0.8921
                    1.063             0.8952
                    1.0577            0.8946
                    1.0593            0.9036
                    1.0587            0.9032
                    1.0471            0.9096
                    1.0439            0.9072
                    1.0422            0.931
                    1.0449            0.9314
                    1.0357            0.9328
                    1.0355            0.9307
                    1.0327            0.9432
                    1.0296            0.9471
Jun                 1.0438            0.957
                    1.045             0.96
                    1.0477            0.9548
                    1.0516            0.9526
                    1.0416            0.9544
                    1.042             0.9619
                    1.0298            0.959
                    1.0329            0.953
                    1.0368            0.9648
                    1.0323            0.9622
                    1.0323            0.9557
                    1.0316            0.9455
                    1.0372            0.9398
                    1.0448            0.9358
                    1.0373            0.9382
                    1.0337            0.9444
                    1.031             0.9444
                    1.0236            0.9515
                    1.0244            0.9545
                    1.0249            0.9526
                    1.0224            0.9548
                    1.0198            0.9527
Jul                 1.0186            0.9484
                    1.0139            0.9521
                    1.0176            0.9497
                    1.0215            0.9401
                    1.022             0.9339
                    1.0203            0.9374
                    1.0203            0.9351
                    1.042             0.9322
                    1.0526            0.9237
                    1.0509            0.9292
                    1.0497            0.9343
                    1.0651            0.9314
                    1.0627            0.9391
                    1.0644            0.9413
                    1.0719            0.9331
                    1.0694            0.9246
                    1.0661            0.9266
                    1.068             0.9228
                    1.0766            0.9137
                    1.0793            0.9042
                    1.077             0.9075
                    1.0694            0.9105
Aug                 1.0752            0.9019
                    1.066             0.8991
                    1.0636            0.9077
                    1.0568            0.9046
                    1.0557            0.9037
                    1.0525            0.9135
                    1.0505            0.9143
                    1.0643            0.9152
                    1.0654            0.9068
                    1.0553            0.9027
                    1.0506            0.8965
                    1.0461            0.8967
                    1.0441            0.9028
                    1.046             0.9024
                    1.0445            0.9002
                    1.0581            0.8966
                    1.0582            0.8924
                    1.0689            0.8878
                    1.0605            0.8993
                    1.0581            0.8876
                    1.059             0.8702
                    1.0543            0.874
Sep                 1.0402            0.8664
                    1.04              0.8624
                    1.0408            0.8596
                    1.0385            0.864
                    1.0418            0.8617
                    1.0399            0.8572
                    1.0408            0.8527
                    1.046             0.8514
                    1.05              0.8463
                    1.0415            0.8559
                    1.0466            0.8794
                    1.0431            0.8738
                    1.0509            0.8813
                    1.0613            0.8807
                    1.0643            0.883
                    1.0718            0.8842
                    1.0703            0.8788
                    1.0693            0.8745
                    1.0704            0.8727
                    1.0721            0.8691
                    1.063             0.8686
Oct                 1.0737            0.8682
                    1.0758            0.8716
                    1.0799            0.8644
                    1.0887            0.8567
                    1.0863            0.8491
                    1.0833            0.8509
                    1.0765            0.8391
                    1.0808            0.8412
                    1.0678            0.8406
                    1.0666            0.8364
                    1.0578            0.8364
                    1.0532            0.8274
                    1.0519            0.8273
                    1.0518            0.8408
                    1.0494            0.8433
                    1.0506            0.8485
                    1.0485            0.8588
                    1.044             0.8579
                    1.04              0.8619
                    1.0363            0.8585
                    1.0401            0.8585
Nov                 1.0436            0.8554
                    1.0315            0.8574
                    1.0315            0.8624
                    1.0312            0.8574
                    1.0403            0.8571
                    1.0297            0.8534
                    1.0313            0.8517
                    1.0327            0.8487
                    1.0261            0.846
                    1.0176            0.8424
                    1.0137            0.8401
                    1.01              0.8383
                    1.0077            0.8503
                    1.0059            0.8544
                    1.0023            0.8577
                    1.0016            0.8694
                    1.0252            0.8768
                    1.0222            0.8876
                    1.0263            0.8803
                    1.0161            0.8881
Dec                 1.0158            0.8891
                    1.012             0.8842
                    1.0067            0.8776
                    1.0066            0.8774
                    1.0169            0.8755
                    1.0088            0.8861
                    1.0066            0.8983
                    1.0093            0.8929
                    1.008             0.8903
                    1.0162            0.906
                    1.0128            0.9112
                    1.0136            0.9231
                    1.0068            0.9306
                    1.0045            0.9258
                    1.0024            0.9393
                    1.007

ADDITIONAL CATALYSTS

      Going forward, new full disclosure regulations (so-called FD rules) should
compel Wall Street to focus more on  fundamentals  in the future.  Too many Wall
Street  analysts  have been  serving as  investment  bankers in drag - tailoring
their stock  recommendations  to please existing  investment banking clients and
attract new ones,  rather  than  providing  an honest  appraisal  of  companies'
fundamental  prospects.  In  addition,  too much focus was placed on  short-term
earnings  dynamics  rather than long term  fundamentals.  To wit, you could have
filled a small library with Wall Street's dot-com stock recommendations when the
new  issues  market was at its  hottest in early  2000.  In  addition,  momentum
investors  needed early insights into monthly data,  which were not available to
the  general  investor,   to  maintain  their  game.   Consequently,   investors
concentrating on fundamentals should receive more support from Wall Street going
forward.  We believe this will benefit value  oriented  fundamentalists  such as
yours truly.  Some have described our research process as "going belly to belly"
with  management,  and seeing  customers  and  competitors.  This will help Wall
Street  refocus its research on smaller  companies as they provide good insights
into larger companies in an industry.

      Currently,  the  Financial  Accounting  Standards  Board  (FASB) is in the
process of  substantially  altering  APB 17,  which is an  accounting  rule that
focuses on the  amortization  of  goodwill.  Under the  original  APB 17, when a
company makes an acquisition under the purchase method of accounting, the excess
of cost over the fair value of the net assets  acquired  is recorded as goodwill
and put on the balance sheet. The goodwill is then amortized over a period of no
longer than 40 years -- impacting reported  earnings.  Under the new proposal by
the FASB (which is still in the exposure  draft phase),  goodwill would still be
recognized and placed on the balance sheet,  but it would no longer be amortized
over  40  years.  Instead,   goodwill  would  be  reviewed  for  impairment  and
periodically  written down.  Simply stated,  using purchase  accounting  will no
longer be a deterrent to transactions.  This should fuel the propensity for deal
activity.


                                        4
                                     <PAGE>

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

U.S. DEAL ACTIVTY

1991                 $  135,000,000,000
1992                    150,000,000,000
1993                    234,000,000,000
1994                    340,000,000,000
1995                    511,000,000,000
1996                    652,000,000,000
1997                    919,000,000,000
1998                  1,620,000,000,000
1999                  1,745,000,000,000
2000                  1,833,000,000,000

      An  added  element   spurring  on  M&A  activity  is  the  change  in  the
Hart-Scott-Rodino (HSR) Act. HSR was enacted to provide the public with adequate
visibility to a corporate  transaction.  Previously,  any stock purchase  larger
than $15 million  required a notice  filing under  Hart-Scott-Rodino.  Effective
February 1, 2001,  this "bar" has been raised to $50 million -- permitting  more
"involuntary"  deals to take place.  Our  portfolio  is full of small  companies
trading at discounts to Private  Market Value,  defined as the price an informed
industrialist  would be  willing  to pay for the  company's  assets.  We  expect
takeover lightning to hit more of these small cap portfolio holdings in the year
ahead.

      Finally,  banking company regulations are also in transition.  One element
affecting  their  reported  earnings  are new  accounting  rules  which  require
companies to record  derivative  instruments and certain  hedging  activities at
fair market  value.  Changes in the fair market  values of these items will flow
through  a  bank's  P&L,  creating  volatility  in  earnings.   Formerly,  these
transactions had no effect on earnings. The same may apply to debt instruments.

- --------------------------------------------------------------------------------
                           FLOW OF FUNDS ($ Billions)

SOURCES                        1997       1998      1999      2000
- -------                       ------     ------    ------    ------
U.S. Deals                    $  919     $1,620    $1,745    $1,833
Stock Buybacks                   181        207       176       227
Mutual Fund                      232        159       222       297
Dividends                        335        352       371       400
                              ------     ------    ------    ------
TOTAL SOURCES:                $1,667     $2,338    $2,514    $2,757
                              ======     ======    ======    ======

SOURCE: THOMSON FINANCIAL SECURITIES DATA, BIRINYI ASSOCIATES
- --------------------------------------------------------------------------------


                                        5
                                     <PAGE>

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 our Equity Trust.  The  accompanying
table  illustrates  how deal  activity  surfaced  value in a small sample of the
portfolio holdings.


- --------------------------------------------------------------------------------
                              2000 COMPLETED DEALS

<TABLE>
<CAPTION>
                                                      NUMBER       AVERAGE COST     CLOSING
   FUND HOLDING                                    OF SHARES (a)   PER SHARE (b)   PRICE (c)   CLOSING DATE   %RETURN (d)
   ------------                                    -------------   -------------   ---------   ------------   -----------

   FIRST QUARTER 2000 ANNOUNCED DEALS
   ----------------------------------
<S>                                                  <C>              <C>            <C>         <C>          <C>
   Associated Group Inc., Cl. A                      133,000          $2.67          $87.88      01/17/00     3,191.39%
   Associated Group Inc., Cl. B                      133,000           2.67           88.06      01/17/00     3,198.13%
   Aliant Inc.                                        16,670           9.77           19.02      01/28/00        94.68%
   Imasco Ltd.                                       100,000          26.48           28.70      02/02/00         8.38%
   Pittway Corp.                                     370,000          34.23           45.50      02/04/00        32.92%
   Public Service Co. of North Carolina                6,000          28.99           33.00      02/16/00        13.83%
   New England Electric System                        25,000          48.28           54.19      03/23/00        12.24%
   Ascent Entertainment Group Inc.                   105,768           9.07           15.25      03/28/00        68.14%

   SECOND QUARTER 2000 ANNOUNCED DEALS
   -----------------------------------
   TNP Enterprises Inc.                                5,000          38.28           43.94      04/07/00        14.79%
   Atlantic Richfield Co.                             70,000          53.59           77.00      04/17/00        43.68%
   General Cigar Holdings Inc.                       180,000          10.93           15.25      05/08/00        39.52%
   General Cigar Holdings Inc., Cl. B                105,000           6.22           15.25      05/08/00       145.18%
   Celestial Seasonings Inc.                          58,500          17.25           38.50      05/30/00       123.19%
   Mirage Resorts Inc.                               100,000           5.32           20.94      05/31/00       293.61%
   Todd AO Corp., Cl. A                               65,000           2.73           26.19      06/12/00       859.34%
   Hussmann International Inc.                       379,000          17.94           29.00      06/13/00        61.65%
   Wynn's International Inc.                          60,000          11.24           22.88      07/21/00       103.56%

   SECOND QUARTER 2000 FINANCIAL ENGINEERING
   -----------------------------------------
   General Motors Corp.                               52,058          30.33           86.94      05/19/00       186.65%

   THIRD QUARTER 2000 ANNOUNCED DEALS
   ----------------------------------
   Kansas City Southern Industries Inc.                7,500           1.86            6.25      07/13/00       236.02%
   TV Guide Inc., Cl. A                               25,000          26.79           45.63      07/13/00        70.32%
   COMSAT Corp.                                      100,000          26.41           28.38      08/03/00         7.46%
   Cable & Wireless HKT Ltd., ADR                     50,000          18.15           23.75      08/07/00        30.85%
   Verio Inc.                                          1,000          49.94           59.94      08/30/00        20.02%
   Italy Fund Inc.                                    40,250           8.97           18.69      09/05/00       108.36%
   Mark IV Industries Inc.                           300,000          15.16           23.00      09/15/00        51.72%
   KPN NV                                             38,800           1.38           44.88      09/20/00     3,152.17%
</TABLE>
- --------------------------------------------------------------------------------
                                        6
                                     <PAGE>
- --------------------------------------------------------------------------------
                        2000 COMPLETED DEALS (CONTINUED)

<TABLE>
<CAPTION>
                                                      NUMBER       AVERAGE COST     CLOSING
   FUND HOLDING                                    OF SHARES (a)   PER SHARE (b)   PRICE (c)   CLOSING DATE   %RETURN (d)
   ------------                                    -------------   -------------   ---------   ------------   -----------

   FOURTH QUARTER 2000 ANNOUNCED DEALS
   -----------------------------------
<S>                                                  <C>              <C>            <C>         <C>           <C>
   Dun & Bradstreet Corp.                             30,000          $29.25         $36.19      10/03/00       23.72%
   Bestfoods Inc.                                    300,000           66.02          73.00      10/04/00       10.57%
   Dexter Corp.                                       40,000           32.91          65.64      10/05/00       99.45%
   Life Technologies Inc.                             40,294           39.12          63.02      10/05/00       61.08%
   St. Joe Co.                                       253,000            7.40          19.19      10/10/00      159.28%
   ProSieben Media AG, Pfd.                           10,000           56.89         119.88      10/13/00      110.72%
   Sybron Chemicals Corp.                            105,000           21.43          34.97      10/20/00       63.17%
   Columbia Energy Group                             100,000           62.63          71.88      11/01/00       14.76%
   Eastern Enterprises                               150,000           51.09          64.63      11/09/00       26.49%
   AstraZeneca plc, Stockholm                         35,146           36.52          49.29      11/13/00       34.96%
   Telecom Italia SpA                                400,040            2.13          11.43      11/13/00      436.61%
   Novartis AG, Registered                           108,000            8.75          39.63      11/14/00      352.86%
   Seagram Co.                                       195,000           41.48          47.63      11/30/00       14.83%
   Florida Progress Corp.                            100,000           46.98          54.48      12/01/00       15.96%
   Canal Plus, ADR                                   160,000            8.47          27.88      12/11/00      229.16%
   Sybron International Corp.                          1,000           25.80          29.00      12/12/00       12.40%
   PepsiAmericas Inc.                                150,000            3.52           4.40      12/14/00       25.06%
   Glaxo Wellcome plc                                 50,000           20.19          27.35      12/27/00       35.46%
   Morgan (J.P.) & Co. Inc.                           13,000           96.75         165.50      12/31/00       71.06%
   St. Joseph Light & Power Co.                       15,000           20.71          24.50      12/31/00       18.30%

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

<FN>
(a) Number of shares held by the Fund on the final day of trading for the
    issuer.
(b) Average purchase price of issuer's shares held by the Fund 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
</FN>
</TABLE>
- --------------------------------------------------------------------------------

YEAR-END INVESTMENT SCORECARD

      Many of the Fund's  holdings in the  financial  services  industry  posted
solid returns for the year,  including  Allstate,  State Street, RAS SpA, Lehman
Brothers,   and  Mellon   Financial.   Consumer   products   companies  such  as
Carter-Wallace,  Gallaher  Group,  and Shaw  Industries also enhanced the Fund's
performance for the year. Food companies  including Keebler Foods,  Quaker Oats,
Tootsie Roll Industries, and Diageo nourished returns.

      Telecommunications and communications  equipment  manufacturers  including
BCE,  Sprint,  AT&T,  and Lucent  Technologies  were  among our major  portfolio
disappointments.  Later in this  report,  we will focus on what we believe to be
temporary  problems in this dynamic growth sector.  Media stocks such as Viacom,
AT&T Liberty  Media  Group,  and USA Networks  declined  sharply as  advertising
supported media company  earnings were threatened by the slowing economy and the
absence of spending on the Olympics, political activity, and the Internet, which
had bolstered 2000 earnings.  Industrial cyclicals in a wide range of industries
were also casualties of the rapidly decelerating economy.

INTERNATIONAL OUTLOOK

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

      Looking  ahead,  2001  should  be  profitable  for  U.S.  based  investors
participating  in overseas  markets.  Most of the Equity  Trust's  international
assets  are  invested  in  Europe,  where we  continue  to find good  investment
opportunities.

                                        7
                                     <PAGE>

      From a macro standpoint,  Europe's economic outlook appears solid. Clearly
any slowdown in the U.S. will impact  overseas  economies.  However,  we believe
that European economy should be able to withstand a mild slowdown in the U.S. In
aggregate,  European  economies  constitute a huge economic bloc and they mostly
trade among  themselves.  Euro-zone  exports to the U.S.  represent only 2.5% of
Gross Domestic  Product.  While the U.S. economy was performing  strongly during
the past few  years,  Europe  was  plodding  along  at a more  pedestrian  pace.
However, very rapid growth in the U.S. has given rise to some imbalances.  These
include  a large  current  account  deficit  and a very low,  or even  negative,
savings  rate.  Europe does not have these  imbalances.  Inflation is running at
about 2% and certainly the European  Central Bank could,  if it chooses,  reduce
short-term interest rates and follow the example of the Federal Reserve Bank.

      If, as we expect,  Europe's  economy grows at between 2% and 3%, corporate
earnings  growth should reach double digits.  With markets at current levels and
interest rates falling, equity valuations are relatively attractive. Add to this
a  continuation  of the high level of merger and  acquisition  activity,  and we
believe 2001 should be profitable  for investors in European  equities.  Looking
ahead,  U.S.  based  investors  should also get a "kicker" from a weaker dollar.
This  follows a number  of years of  dealing  with the  headwind  of the  rising
dollar. As the European economy outperforms the U.S. economy,  and U.S. interest
rates decline more rapidly than European  rates,  money is likely to flow out of
the dollar and into the Euro.

      How about Japan? We have been surprised by the terrible performance of the
Japanese  equity market.  It appears that equity market  sentiment is worse than
fundamentals  would  warrant.  Although many  financial  institutions  remain in
difficulty,  the real economy has made some progress.  Over one million new jobs
were  created  in the past year,  wages  have  recovered,  and  corporate  fixed
investment  has  risen  on the  back of good  corporate  profitability.  We have
concentrated our investments in globally competitive companies,  which have good
returns on invested  capital and  reasonable  valuations.  We have also tried to
avoid  companies  that  have  banks  as  shareholders,   since  these  financial
institutions may be forced sellers for balance sheet reasons. With the market at
its current  level,  we believe the  authorities  are under pressure to announce
further reform measures including permitting stock buy backs.

The following is an excerpt from Sandra Block's article in USATODAY, January 19,
2001

BUSH PORTFOLIO SHOWS FISCAL CONSERVATISM.

      It's  hard  to  tell  if  George  W.  Bush's   investment   portfolio   is
compassionate, but it's certainly conservative. The president has more than half
his assets in U.S. Treasury notes, according to financial disclosures filed last
year. Stocks and mutual funds account for 11% to 17% of his portfolio.  The rest
is invested in real estate,  cash and private  partnerships.  That strategy paid
off in 2000.

- ------------------------------
  GEORGE W. BUSH'S FUNDS
  ----------------------
  Gabelli Equity Trust
  Gabelli Global Multimedia
  Gabelli Utility Trust
  American Funds
- ------------------------------

      Northern Trust, the trust manager,  makes investment decisions without his
knowledge. The arrangement is designed to avoid conflicts of interest.

THE FIRST DECADE OF THE NEW MILLENNIUM

      The  longest  economic  expansion  and bull  market in history has spoiled
equity  investors.  With  the  exception  of 1991,  when  the S&P 500  retreated
approximately  3%, the value of equity indices has risen,  often  substantially,
every  year  in  the   decade.   How  will   investors   react  to  this  year's
disappointment? Our guess is with more resolve than might be expected.

      Economists  (even those at the Federal  Reserve),  business  leaders,  and
market strategists were taken by surprise by the economy's rapid deceleration in
the second half of 2000. To date,  investors  have reacted quite  responsibly --
bailing  out of  stocks  with  the  most  excessive  valuations  and  displaying
considerably  more  patience  with  more  fundamentally  sound  equities.  Going
forward,  we believe  investors  will be less prone to repeating the mistakes of
the past several years. They will recognize that valuations do matter,  even for
stocks in growth industries like technology.  If the economy  stabilizes,  as we
believe it will sometime in the first half of 2001, the ensuing market  recovery
will be based on  fundamentals,  not fantasy.  We believe this market will favor
portfolios comprised of fundamentally attractive equities.


                                        8
                                     <PAGE>

AND THE QUESTION IS ...

      OVER THE NEXT  SEVERAL  MONTHS,  THE OVERALL  MARKET  NEEDS TO  UNDERSTAND
WHETHER  MONETARY  POLICY  (GREENSPAN'S  RATE CUTS)  MARRIED WITH FISCAL  POLICY
(BUSH'S TAX CUTS) WILL PROVIDE THE BALLAST TO OVERCOME THE ECONOMIC DRAG CREATED
BY: A  CONSUMER  SPENDING  BINGE  (TIED TO THE STOCK  MARKET'S  WEALTH  EFFECT);
OVERSPENDING ON CAPITAL EQUIPMENT; AND A TRADE DEFICIT OF GIGANTIC PROPORTIONS.

LET'S TALK STOCKS

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

CABLEVISION SYSTEMS CORP. (CVC - $84.9375 - NYSE) is one of the nation's leading
communications and entertainment companies,  with a portfolio of operations that
spans  state-of-the-art,  high-speed  multimedia  delivery,  subscription  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  is a leader in delivering  cutting-edge  technological  innovation,
such as high speed  cable,  to the home.  Through  its  Rainbow  Media  Holdings
subsidiary,  Cablevision  manages  recognized content offerings such as American
Movie Classics,  Bravo and The Independent  Film Channel.  Cablevision  owns and
operates New York City's famed Madison Square  Garden,  which includes the arena
complex, the N.Y. Knicks, the N.Y. Rangers and the MSG network. The company also
operates  Radio  City  Entertainment  and holds a long term lease for Radio City
Music Hall, home of the world-famous Rockettes.

CARTER-WALLACE  INC.  (CAR -  $33.375  - NYSE),  founded  in 1880 as the  Carter
Medicine  Company  marketing a single  product called Carter Little Liver Pills,
now  manufactures  and sells a diversified line of consumer health care products
including toiletries, pharmaceuticals, diagnostic specialties, proprietary drugs
and pet supplies.  Such brands as Arrid  deodorant,  Nair hair remover and Pearl
Drops  toothpaste are  Carter-Wallace  products.  The company also sells certain
products exclusively in international markets.

CHRIS-CRAFT  INDUSTRIES INC. (CCN - $66.50 - NYSE), through its 80% ownership of
BHC   Communications   (BHC  -  $129.25  -  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 - $116.00 - 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 August 14,  News Corp.  (NWS - $32.25 -
NYSE)  announced that it would purchase  Chris-Craft  (along with BHC and United
Television) in a deal worth $5.35  billion.  According to the terms of the deal,
CCN  shareholders  will  receive  a  package  of cash and  securities  having an
"initial" stated value of $85 per share.

LIBERTY MEDIA GROUP (LMG'A - $13.5625 - 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.

TELECOM  ITALIA SPA  (TIT.MI - $11.06 - MILAN STOCK  EXCHANGE;  TI - $110.3125 -
NYSE) is the principal provider of domestic and international telecommunications
services  in  Italy.   Telecom   Italia  is  also  the  seventh   largest  fixed
telecommunications operator in Europe, as well as the largest mobile operator in
Europe,  through its 53% held  subsidiary,  Telecom Italia Mobile.  In addition,
Telecom  Italia  also  provides  leased  lines,  data  communications  services,
satellite  communications  services  and  the  development  and  manufacture  of
telecommunications equipment and networks.

                                        9
                                     <PAGE>

TELEPHONE & DATA SYSTEMS INC.  (TDS - $90.00 - AMEX)  provides  mobile and local
phone  services to 3.6 million  customers  in 35 states.  TDS  conducts the vast
majority of its cellular operations through its 81% owned United States Cellular
Corp.  (USM - $60.25 - AMEX) and conducts its 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 Corp. (VSTR -
$100.625 - Nasdaq),  TDS now owns 35.6 million shares of  VoiceStream  valued at
over $4.0 billion.  VoiceStream  is in the process of being acquired by Deutsche
Telekom (DT - $29.25 - NYSE), a former German phone monopoly,  for 3.2 DT shares
plus $30 in cash per VSTR share.

UNITED  TELEVISION  INC.  (UTVI - $116.00 -  NASDAQ),  headquartered  in Beverly
Hills,  California,  is a television  broadcasting group which owns and operates
seven of the stations (one ABC, one NBC and five UPN  affiliates)  that comprise
Chris-Craft's  (CCN - $66.50 - NYSE)  television  division.  UTVI stations cover
approximately  nine  percent of the U.S.  population.  UTVI is  58%-owned by BHC
Communications (BHC - $129.25 - AMEX). United Television is a beneficiary of the
recent FCC ruling allowing television duopoly, or ownership of two stations in a
single market. On August 14, News Corp. (NWS - $32.25 - NYSE) announced it would
purchase  United  Television  (along with  Chris-Craft  and BHC) in a deal worth
$5.35 billion.

VIACOM INC. (VIA - $47.00 - NYSE) is 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 (EX.PA - $65.81 - PARIS  STOCK  EXCHANGE;  V - $65.3125 -
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.

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 in each of the first  three  quarters  and $0.50 per share on December
26, 2000. The next distribution is scheduled for March 2001.

7.25% TAX ADVANTAGED CUMULATIVE PREFERRED STOCK -- DIVIDENDS

      The Equity Trust's 7.25% Tax Advantaged  Cumulative Preferred Stock paid a
cash  distribution  on December  26, 2000 of $0.453125  per share.  For the year
ended December 31, 2000,  Preferred Stock  shareholders  received  distributions
totaling  $1.8125,  the annual dividend rate per share of Preferred  Stock.  The
percentage  of this  distribution  treated as a long term  capital gain was 85%,
which results in a  tax-equivalent  stated yield (based on a $25.00  liquidation
value) of 9.24%. The next distribution is scheduled for March 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.

                                       10
                                     <PAGE>

      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               WHAT                       WHEN
- ---               ----                       ----
Mario Gabelli     Chief Investment Officer   First Monday of each month
Howard Ward       Large Cap Growth           First Tuesday of each month
Barbara Marcin    Large Cap Value            Last Wednesday of each month

                  SECTOR/SPECIALTY           2nd and 3rd Wednesday of each month
                  ----------------
Tim O'Brien       Utilities Industry
Caesar Bryan      International Investing
Ivan Arteaga      Telecom and Media
Hart Woodson      Global Convertibles

      The  second and third  Wednesday  of each  month  will  feature  portfolio
managers responsible for our more focused offerings.  All chat sessions are held
at 4:15 PM ET. Arrive early as  attendance  is limited.  Days and times may vary
based on portfolio manager availability.

      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.

IN CONCLUSION

      It is our job to begin each day  thinking  how we will earn money for you.
At times, we may be faced with a challenge in reaching our objectives because of
the  irrationality  of Mr. Market.  And, while we cannot and will not ignore the
overall price levels in the market,  there is an abundance of  opportunities  to
meet our  shared  long  term  objectives  in the years  ahead.  We thank you for
entrusting a portion of your investment assets to the Gabelli Asset Fund, and we
reaffirm our commitment to your financial well-being.  We are privileged to have
this opportunity, and we look forward to the next quarter century.

                                Sincerely,

                                /S/ SIGNATURE

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

February 1, 2001

- --------------------------------------------------------------------------------
                                TOP TEN HOLDINGS
                                DECEMBER 31, 2000
                                -----------------
            Chris-Craft Industries Inc.      Liberty Media Group
            Cablevision Systems Corp.        Berkshire Hathaway Inc.
            Viacom Inc.                      Telecom Italia SpA
            Telephone & Data Systems Inc.    Carter-Wallace Inc.
            United Television Inc.           Vivendi Universal SA
- --------------------------------------------------------------------------------

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.

                                       11
                                     <PAGE>

                          THE GABELLI EQUITY TRUST INC.
                                PORTFOLIO CHANGES
                         QUARTER ENDED DECEMBER 31, 2000
                                   (UNAUDITED)

                                                                    OWNERSHIP AT
                                                                    DECEMBER 31,
                                                         SHARES         2000
                                                         ------     ------------

NET PURCHASES
COMMON STOCKS
ACNielsen Corp. ................................         100,000         100,000
Albertson's Inc. ...............................          20,100         220,100
Apogent Technologies Inc. (a) ..................           1,000           1,000
Archer-Daniels-Midland Co. .....................         170,500       1,000,000
AT&T Corp. .....................................          50,000         369,994
AT&T Wireless Group ............................          10,000          60,000
Avaya Inc. (b) .................................           3,333           3,333
Banca Intesa SpA ...............................         175,000         175,000
Cendant Corp. ..................................          20,000         120,000
Coca-Cola Enterprises Inc. .....................          50,000          50,000
DDI Corp.(c) ...................................              59              89
Disney (Walt) Co. ..............................           5,000         150,000
Dun and Bradstreet Corp. (d) ...................          15,000          15,000
Energizer Holdings Inc. ........................          35,600         285,601
Florida East Coast Industries Inc.,
   Cl. B (e) ...................................          58,452          58,452
Fuller (H.B.) Co. ..............................           2,000          12,000
Gemstar-TV Guide International Inc. ............           2,000          18,432
General Chemical Group Inc. ....................          19,900         130,000
General Motors Corp., Cl. H ....................          10,000         176,323
Genuity Inc. ...................................         135,000         160,000
Gillette Co. ...................................         105,000         180,000
GlaxoSmithKline plc (f) ........................          25,036          75,036
Harcourt General Inc. ..........................          70,000         150,000
Hewlett-Packard Co. (g) ........................           4,000          44,000
Ingersoll-Rand Co. .............................           3,000          50,000
Interbrew ......................................          25,000          25,000
Invitrogen Corp. (h) ...........................          56,011          56,011
Keebler Foods Co. ..............................           1,800          21,800
Kellogg Co. ....................................         140,000         270,000
Leap Wireless International Inc. ...............          12,500          12,500
Lehman Brothers Holdings Inc. (g) ..............          21,000          42,000
Litton Industries Inc. .........................          20,000          20,000
Matsushita Electric Industrial Co. .............
   Ltd., ADR (i) ...............................          13,500          15,000
MCN Energy Group Inc. ..........................          40,000         100,000
Midas Inc. .....................................           5,833          70,000
Morgan (J.P.) & Co. Inc. .......................           1,000          13,000
Motorola Inc. ..................................          16,000          40,000
National Service Industries Inc. ...............           5,000         130,000
Newmont Mining Corp. ...........................          20,000          70,000
Nextel Communications Inc., Cl. A ..............           7,000          25,000
Niagara Mohawk Holdings Inc. ...................           3,500         210,000
Northeast Utilities ............................          20,000          50,000
NTL Inc. .......................................          28,000          42,625
PRIMEDIA Inc. ..................................          20,000          50,000
Progress Energy Inc. (j) .......................         100,000         100,000
Rogers Wireless Communications
   Inc., Cl. B .................................          15,000          40,000
Rohm & Haas Co. ................................          16,000         220,000
Rohm Co. Ltd. ..................................             600           2,000
Ryder System Inc. ..............................          10,000          45,000
Sealed Air Corp. ...............................          25,000          25,000
Seat-Pagine Gialle SpA (l) .....................          91,842          91,842
Shaw Industries Inc. ...........................          75,000         400,000
SJW Corp. ......................................             900           2,900
Smith Industries plc (m) .......................          12,420          12,420
Southwest Gas Corp. ............................          14,000          14,000
Stanley Electric Co. Ltd. ......................          22,000          42,000
Sybron Dental Specialties Inc. (a) .............             333             333
Syngenta AG (n) ................................               1               1
Syngenta AG, ADR (n) ...........................          11,697          11,697
Telefonica SA, ADR .............................          10,000         254,950
Thomas & Betts Corp. ...........................          62,000         112,000
Tootsie Roll Industries Inc. ...................           2,000          97,894
UnitedGlobalCom Inc., Cl. A ....................          25,000          60,000
Vivendi Universal SA, ADR (o) (p) ..............         220,000         220,000
VoiceStream Wireless Corp. .....................           1,500           1,955
Westvaco Corp. .................................          50,000         100,000

                                                                    OWNERSHIP AT
                                                                    DECEMBER 31,
                                                         SHARES         2000
                                                         ------     ------------

Whitman Corp. (q) ..............................          41,595         491,595
Willamette Industries Inc. .....................         122,200         122,200
Wrigley (Wm.) Jr. Co. ..........................           1,000          76,000
XO Communications Inc., Cl. A ..................           5,000           8,000

PREFERRED STOCKS
ProSieben Sat.1 Media AG, Pfd. (k) .............          30,000          40,000

                                                       PRINCIPAL
                                                        AMOUNT
                                                       ---------
CORPORATE BONDS
Kaman Corp., Sub. Deb. Cv
   6.000%, 03/15/12  ...........................       $  59,000      $1,000,000


                                                         SHARES
                                                         ------
NET SALES
COMMON STOCKS
ArvinMeritor Inc. ..............................         (42,000)         13,000
AutoNation Inc. ................................        (114,000)        286,000
Bank One Corp. .................................          (5,000)        105,000
Bankgesellschaft Berlin AG .....................         (18,000)        282,000
BCE Inc. .......................................         (10,000)        230,000
Bestfoods Inc. .................................        (300,000)             --
Block (H&R) Inc. ...............................         (10,000)         90,000
Brau und Brunnen AG ............................         (18,000)             --
Cablevision Systems Corp., Cl. A ...............          (5,000)        515,000
Carter-Wallace Inc. ............................         (20,000)        520,000
Dana Corp. .....................................        (260,839)         34,161
Delhaize America Inc., Cl. A ...................          (5,000)         45,000
Dexter Corp. (h) ...............................         (40,000)             --
Donaldson, Lufkin & Jenrette Inc. ..............        (300,000)             --
Eastern Enterprises ............................        (150,000)             --
EnergyNorth Inc. ...............................         (12,100)             --
Federal-Mogul Corp. ............................         (40,000)             --
Florida Progress Corp. (j) .....................        (100,000)             --
Fortune Brands Inc. ............................         (25,000)        100,000
FujiSoft ABC Inc. ..............................          (4,500)             --
Gaylord Entertainment Co., Cl. A ...............         (15,500)        234,500
GC Companies Inc. ..............................         (25,000)         50,000
Genuine Parts Co. ..............................         (70,000)        200,000
Hain Celestial Group Inc. ......................         (10,000)         20,000
Hilton Hotels Corp. ............................        (137,000)        563,000
Hi-Shear Industries Inc. .......................        (145,000)             --
Honeywell Inc. .................................         (32,000)         93,000
IMS Health Inc. ................................         (70,000)             --
KDD Corp. (c) ..................................          (5,500)             --
KPN NV .........................................             (77)             --
Leucadia National Corp. ........................          (1,500)         64,000
Life Technologies Inc. (h) .....................         (40,294)             --
Lilly Industries Inc., Cl. A ...................         (20,000)             --
Loral Space & Communications Ltd. ..............          (5,000)        140,000
Mattel Inc. ....................................          (5,000)         45,000
McGraw-Hill Companies Inc. .....................          (1,000)         97,000
Nabisco Group Holdings Corp. (r) ...............         (20,000)             --
Nabisco Holdings Corp., Cl. A (s) ..............         (20,000)             --
Navistar International Corp. ...................         (10,000)        440,000
Northrop Grumman Corp. .........................          (5,000)         75,000
Pacific Century CyberWorks Ltd., ADR ...........          (4,445)         30,000
Pactiv Corp. ...................................        (505,000)        195,000
Pennzoil-Quaker State Co. ......................          (3,000)         75,000
Pepsi Bottling Group Inc. ......................         (20,000)             --
PepsiAmericas Inc. (q) .........................        (150,000)             --
PepsiCo Inc. ...................................         (10,000)        320,000
RCN Corp. ......................................          (5,000)        155,000
SBC Communications Inc. ........................          (5,000)        115,000
Schibsted ASA ..................................         (10,000)         50,000
Seagram Co. (p) ................................        (195,000)             --
Skandia Forsakrings AB .........................         (80,000)             --
SmithKline Beecham plc (f) .....................         (55,000)             --
Sybron Chemicals Inc. (t) ......................        (105,000)             --
Tenneco Automotive Inc. ........................        (130,000)             --


                 See accompanying notes to financial statements.

                                       12
                                     <PAGE>


                          THE GABELLI EQUITY TRUST INC.
                          PORTFOLIO CHANGES (CONTINUED)
                         QUARTER ENDED DECEMBER 31, 2000
                                   (UNAUDITED)

                                                                    OWNERSHIP AT
                                                                    DECEMBER 31,
                                                         SHARES         2000
                                                         ------     ------------
NET SALES (CONTINUED)
COMMON STOCKS (CONTINUED)
TI Group plc (m) ...............................         (27,000)             --
Tyco International Ltd. ........................         (20,000)         25,000
Tyler Technologies Inc. ........................         (10,000)         60,000
UCAR International Inc. ........................         (85,500)         64,500
Verizon Communications .........................         (15,000)        315,000
Wesley Jessen VisionCare Inc. ..................         (70,000)             --
Xerox Corp. ....................................         (25,000)         15,000

RIGHTS AND WARRANTS
Aegon NV, expire 02/04/01 ......................         (26,000)             --
Telesp Celular Participacoes SA (u) ............      (1,076,054)             --
Telesp Celular Participacoes SA, ADR (u) .......          (6,680)             --

  ------------------------------------
(a) Spinoff--3 shares of Apogent Technologies Inc. for every 1 share of Sybron
    Dental Specialties Inc.
(b) Spinoff--12 shares of Avaya Inc. for every 1 share of Lucent Technologies
    Inc.
(c) Merger--0.0109 shares of DDI Corp. for every 1 share of KDD Corp.
(d) Spinoff--1 share of Dun and Bradstreet Corp. for every 2 shares of Moody's
    Corp.
(e) Spinoff--1 share of Florida East Coast Industries Inc., Cl. B for every
    0.2310 shares of St. Joe Co.
(f) Merger--0.4552 shares of GlaxoSmithKline plc for every 1 share of SmithKline
    Beecham plc
(g) 2 for 1 stock split
(h) Merger--1.0417 shares of Invitrogen Corp. for every 1 share of Dexter Corp.
    and 0.4304 share of Invitrogen Corp. for every 1 share of Life Technologies
    Corp.
(i) 10 for 1 stock split
(j) Merger--1 share of Progress Group Inc. for every 1 share of Florida
    Progress Corp.
(k) 4  for  1  stock  split
(l) Spinoff--0.2295 shares of Seat-Pagine Gialle SpA for every 1 share of
    Telecom Italia SpA
(m) Merger--1 share of TI Group plc for every 0.4200 shares of Smiths Group plc
(n) Spinoff--1 share of Syngenta AG for every 40.2 shares of AstraZeneca plc
(o) Spinoff--0.4000 shares of Vivendi Universal, ADR for every 1 share of Canal
    Plus, ADR
(p) Merger--0.8000 shares of Vivendi Universal, ADR for every 1 share of Seagram
    Co.
(q) Merger--0.2773 shares of Whitman Corp. for every 1 share of PepsiAmericas
    Inc.
(r) Cash merger at $30.00 a share
(s) Cash merger at $55.00 a share
(t) Tender offer at $35.00 per share.
(u) Rights expired 10/02/00

                 See accompanying notes to financial statements.

                                       13
                                     <PAGE>

                          THE GABELLI EQUITY TRUST INC.
                            PORTFOLIO OF INVESTMENTS
                                DECEMBER 31, 2000

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

             COMMON STOCKS -- 94.2%
             TELECOMMUNICATIONS -- 8.7%
      8,132  Aliant Inc. ........................  $     72,479  $      180,560
      7,500  Allegiance Telecom Inc.+ ...........        74,063         166,992
     60,000  ALLTEL Corp. .......................       934,096       3,746,250
      4,000  AT&T Canada Inc., Cl. B+ ...........       126,625         116,750
    369,994  AT&T Corp. .........................     6,803,914       6,405,521
      3,333  Avaya Inc.+ ........................        26,540          34,372
    230,000  BCE Inc. ...........................     6,590,343       6,655,625
     33,400  Brasil Telecom
               Participacoes SA, ADR ............     1,940,826       1,970,600
     22,000  BroadWing Inc.+ ....................       480,335         501,875
  2,893,090  Cable & Wireless
               Jamaica Ltd. .....................       101,642         110,331
     95,000  Cable & Wireless plc ...............     1,170,181       1,281,456
    145,000  Cable & Wireless plc, ADR ..........     3,983,335       5,781,875
     60,000  CenturyTel Inc. ....................       430,644       2,145,000
     25,000  Citizens Communications Co. ........       386,313         328,125
    255,466  Commonwealth Telephone
               Enterprises Inc.+ ................     4,424,217       8,941,310
     20,000  Commonwealth Telephone
               Enterprises Inc., Cl. B+ .........       128,902         760,000
     35,000  Compania de
               Telecomunicaciones de
               Chile SA, ADR ....................       592,324         461,563
         89  DDI Corp. ..........................     1,053,124         429,413
     21,600  Elisa Communications
               Oyj., Cl. A ......................     1,175,397         464,998
    167,000  Embratel Participacoes
               SA, ADR+ .........................     3,517,106       2,619,813
         32  Japan Telecom Co. Ltd. .............       498,306         658,494
     30,000  Pacific Century CyberWorks
               Ltd., ADR+ .......................       789,361         183,750
    155,000  RCN Corp.+ .........................     1,100,476         978,438
      9,655  Rogers Communications
               Inc., Cl. B+ .....................       137,424         162,630
    110,345  Rogers Communications
               Inc., Cl. B, ADR+ ................     1,537,198       1,875,865
    115,000  SBC Communications Inc. ............     4,106,783       5,491,250
    330,000  Sprint Corp.+ ......................     8,411,018       6,703,125
    186,554  Tele Norte Leste
               Participacoes SA, ADR ............     2,554,387       4,255,763
      8,000  Telecom Argentina Stet
               France Telecom SA, ADR ...........       164,771         125,500
    400,040  Telecom Italia SpA .................       839,903       4,424,274
    124,000  Telecom Italia SpA, ADR ............     2,599,287      13,678,750
    254,950  Telefonica SA, ADR .................     9,757,413      12,747,500
     15,626  Telefonica SA, BDR+ ................       206,541         254,425
     36,000  Telefonos de Mexico
               SA, Cl. L, ADR ...................       639,025       1,624,500
     12,750  TELUS Corp. ........................       222,542         352,702
     52,500  TELUS Corp., ADR ...................       950,397       1,452,304
      4,250  TELUS Corp., Non-Voting ............        74,181         111,060
     27,500  TELUS Corp.,
               Non-Voting, ADR ..................       557,547         713,281
    315,000  Verizon Communications .............    11,552,220      15,789,375
      8,000  XO Communications
               Inc., Cl. A+ .....................       190,813         142,500
                                                   ------------  --------------
                                                     80,901,999     114,827,915
                                                   ------------  --------------
             BROADCASTING -- 8.4%
     50,000  Ackerley Group Inc. ................       544,975         450,000
    336,192  Chris-Craft Industries Inc.+ .......     4,285,059      22,356,768
    592,897  Chris-Craft Industries Inc.,
               Cl. B+ (a) .......................     8,836,236      39,427,650

                                                                      MARKET
    SHARES                                              COST          VALUE
    ------                                              ----          -----
     16,666  Corus Entertainment Inc.,
               Cl. B+ ...........................  $     62,036  $      432,736
     37,500  Gray Communications
               Systems Inc. .....................       493,649         592,969
    138,000  Grupo Televisa SA, GDR+ ............     3,048,195       6,201,375
    200,000  Liberty Corp. ......................     8,528,905       8,137,500
      4,000  Nippon Broadcasting
               System Inc. ......................       161,709         151,313
     50,375  NRJ Groupe+ ........................       483,579       1,439,637
    120,700  Paxson Communications
               Corp., Cl. A+ ....................     1,213,574       1,440,856
     17,700  RTLGroup (New York) ................       775,136       1,454,034
    100,000  Television Broadcasting Ltd. .......       396,239         525,647
    245,009  United Television Inc. .............    24,632,336      28,421,044
                                                   ------------  --------------
                                                     53,461,628     111,031,529
                                                   ------------  --------------
             FINANCIAL SERVICES -- 8.0%
     26,000  Aegon NV ...........................       931,905       1,075,502
      4,100  Allianz AG .........................     1,413,422       1,547,402
    110,000  Allstate Corp. .....................     3,185,026       4,791,875
    185,000  American Express Co. ...............     7,235,905      10,163,438
     30,000  Argonaut Group Inc. ................       855,370         630,000
    175,000  Banca Intesa SpA ...................       702,532         841,204
     90,000  Banco Santander Central
               Hispano SA, ADR ..................       322,130         950,625
     84,000  Bank of Ireland, Dublin ............       427,242         832,003
     15,000  Bank of Ireland, London ............        98,369         149,135
     56,000  Bank of Scotland ...................       350,184         585,988
    105,000  Bank One Corp. .....................     3,677,074       3,845,625
    282,000  Bankgesellschaft Berlin AG .........     5,606,801       4,011,022
        260  Berkshire Hathaway Inc.,
               Cl. A+ ...........................       824,299      18,460,000
     90,000  Block (H&R) Inc. ...................     3,078,207       3,723,750
     50,000  Commerzbank AG, ADR ................     1,189,067       1,431,735
      6,000  Credit Suisse Group ................     1,215,336       1,140,389
    150,000  Deutsche Bank AG, ADR ..............     6,224,445      12,505,394
     15,000  Dun and Bradstreet Corp.+ ..........       210,630         388,125
    110,000  First Union Corp. ..................     3,576,539       3,059,375
     25,000  Hibernia Corp., Cl. A ..............       198,750         318,750
     20,000  Invik & Co. AB, Cl. B ..............       936,800       1,632,129
    100,000  Irish Life &
               Permanent plc, Dublin ............       781,432       1,239,274
     42,000  Lehman Brothers
               Holdings Inc. ....................     1,237,837       2,840,250
     64,000  Leucadia National Corp. ............     2,040,082       2,268,000
     60,000  Mellon Financial Corp. .............     1,898,845       2,951,250
    110,000  Midland Co. ........................     1,199,131       3,052,500
     30,000  Moody's Corp. ......................       666,995         770,625
     13,000  Morgan (J.P.) & Co. Inc. ...........     1,257,712       2,151,500
    100,000  Nikko Securities Co. Ltd. ..........     1,088,253         774,956
     50,000  Prudential plc .....................       754,035         804,411
    100,000  RAS SpA ............................     1,011,006       1,559,419
     60,000  Riggs National Corp. ...............       552,538         836,250
     15,000  Societe Generale, Cl. A ............       922,356         932,272
     40,000  State Street Corp. .................     1,417,370       4,968,400
     30,000  Stilwell Financial Inc.+ ...........       470,955       1,183,125
     20,000  SunTrust Banks Inc. ................       419,333       1,260,000
        510  Swiss Re ...........................       977,697       1,222,678
     38,000  T. Rowe Price Associates Inc. ......     1,273,500       1,606,094
     50,000  Unitrin Inc. .......................       817,863       2,031,250
     30,000  Waddell & Reed
               Financial Inc., Cl. A ............       426,563       1,128,750
                                                   ------------  --------------
                                                     61,473,536     105,664,470
                                                   ------------  --------------


                 See accompanying notes to financial statements.

                                       14
                                     <PAGE>

                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                                DECEMBER 31, 2000


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

             COMMON STOCKS (CONTINUED)
             ENTERTAINMENT -- 7.7%
    160,000  Canal Plus, ADR+ ...................  $     34,010  $      114,768
    150,000  Disney (Walt) Co. ..................     2,962,007       4,340,625
    100,000  EMI Group plc, ADR .................     1,189,467       1,641,701
     25,000  Fox Entertainment Group Inc. .......       556,125         446,875
     50,000  GC Companies Inc.+ .................       634,643         100,000
     18,432  Gemstar-TV Guide
               International Inc.+ ..............       754,976         854,784
    150,940  Granada Compass plc+ ...............     1,567,534       1,642,579
     24,000  Liberty Livewire Corp.,
               Cl. A+ ...........................        93,109         184,500
  1,550,000  Liberty Media Group,
               Cl. A+ ...........................     5,490,808      21,021,875
    145,000  Publishing &
             Broadcasting Ltd. ..................       802,475       1,051,187
     10,000  Six Flags Inc. .....................       140,273         171,875
    285,000  Time Warner Inc. ...................     8,740,875      14,888,400
    600,000  USA Networks Inc.+ .................     5,774,817      11,662,500
    920,000  Viacom Inc., Cl. A+ ................    10,493,642      43,240,000
                                                   ------------  --------------
                                                     39,234,761     101,361,669
                                                   ------------  --------------
             EQUIPMENT AND SUPPLIES -- 6.5%
    100,000  AMETEK Inc. ........................     1,394,214       2,593,750
    129,500  Amphenol Corp., Cl. A+ .............     1,682,269       5,074,781
     10,000  Caterpillar Inc. ...................       136,559         473,125
     95,000  CIRCOR International Inc.+ .........       981,440         950,000
    107,000  CLARCOR Inc. .......................     1,347,205       2,213,562
    320,000  Deere & Co. ........................     3,134,721      14,660,000
    255,000  Donaldson Co. Inc. .................     1,676,029       7,092,187
    130,000  Flowserve Corp. ....................     2,065,746       2,778,750
      6,500  Franklin Electric Co. ..............       210,022         445,250
    105,000  Gerber Scientific Inc. .............     1,157,606         899,062
    298,000  IDEX Corp. .........................     1,935,965       9,871,250
     50,000  Ingersoll-Rand Co. .................     1,785,398       2,093,750
     20,000  Litton Industries Inc.+ ............     1,575,376       1,573,750
     52,500  Lufkin Industries Inc. .............       945,848         941,719
      1,000  Manitowoc Co. Inc. .................        25,450          29,000
    440,000  Navistar International Corp.+ ......     6,770,459      11,522,500
     20,000  PACCAR Inc. ........................       450,000         985,000
     84,500  Sequa Corp., Cl. A+ ................     3,371,578       3,073,687
     75,000  Sequa Corp., Cl. B+ ................     3,888,160       4,181,250
    170,000  SPS Technologies Inc.+ .............     2,963,443       9,318,125
        333  Sybron Dental
               Specialties Inc.+ ................         4,835           5,619
     29,000  THK Co. Ltd. .......................       785,970         619,615
     64,500  UCAR International Inc.+ ...........       907,176         628,875
    250,000  Watts Industries Inc., Cl. A .......     3,331,739       3,468,750
    100,000  Weir Group plc .....................       420,789         354,778
                                                   ------------  --------------
                                                     42,947,997      85,848,135
                                                   ------------  --------------
             CONSUMER PRODUCTS -- 6.2%
     70,000  Altadis SA .........................     1,030,995       1,084,364
    520,000  Carter-Wallace Inc. ................     7,306,938      17,355,000
     43,000  Christian Dior SA ..................     1,514,055       2,060,903
     45,000  Church & Dwight Co. Inc. ...........       460,073       1,001,250
      1,100  Compagnie Financiere
               Richemont AG, Cl. A ..............     1,550,184       2,942,610
     35,000  Department 56 Inc.+ ................       394,267         402,500
    285,601  Energizer Holdings Inc.+ ...........     4,325,114       6,104,721
    100,000  Fortune Brands Inc. ................     2,647,425       3,000,000
    250,000  Gallaher Group plc, ADR ............     4,342,521       6,156,250
    180,000  Gillette Co. .......................     5,930,830       6,502,500



                                                                      MARKET
    SHARES                                              COST          VALUE
    ------                                              ----          -----
    100,000  Harley Davidson Inc. ...............  $    251,225  $    3,975,000
     15,000  Matsushita Electric Industrial
               Co. Ltd., ADR ....................       178,325         350,625
     45,000  Mattel Inc. ........................       638,812         649,800
     25,000  Maytag Corp. .......................       768,336         807,812
     40,000  National Presto Industries Inc. ....     1,478,912       1,227,500
     10,500  Nintendo Co. Ltd. ..................       849,921       1,654,071
     20,000  Philip Morris Companies Inc. .......       600,935         880,000
    625,000  Ralston Purina Group ...............     7,675,184      16,328,125
    400,000  Shaw Industries Inc. ...............     7,483,804       7,575,000
      1,500  Swatch Group AG ....................       892,765       1,874,421
     10,425  Syratech Corp.+ ....................       333,704          76,884
                                                   ------------  --------------
                                                     50,654,325      82,009,336
                                                   ------------  --------------
             FOOD AND BEVERAGE -- 5.8%
     10,108  Advantica Restaurant Group
               Inc.+ ............................        14,358           6,318
     15,000  Coca-Cola Co. ......................       682,312         914,063
     50,000  Coca-Cola Enterprises Inc. .........       816,250         950,000
     85,000  Corn Products International
               Inc. .............................     2,477,587       2,470,313
    120,000  Diageo plc, ADR ....................     4,308,989       5,325,000
    160,000  General Mills Inc. .................     4,592,082       7,130,000
     20,000  Hain Celestial Group Inc.+ .........       267,663         650,000
     15,000  Heinz (H.J.) Co. ...................       569,556         711,563
     25,000  Interbrew SA+ ......................       719,153         871,247
     21,800  Keebler Foods Co. ..................       891,803         903,338
    270,000  Kellogg Co. ........................     7,515,822       7,087,500
     60,500  LVMH Moet Hennessy Louis
               Vuitton, ADR .....................       416,625         790,281
    650,000  Parmalat Finanziaria SpA ...........       746,557       1,052,679
    320,000  PepsiCo Inc. .......................     9,857,214      15,860,000
     95,000  Quaker Oats Co. ....................     3,913,465       9,250,625
     60,000  Ralcorp Holdings Inc.+ .............       940,903         982,500
     97,894  Tootsie Roll Industries Inc. .......     1,580,980       4,509,242
     15,000  Unilever NV, New York ..............       765,900         944,063
    491,595  Whitman Corp. ......................     6,499,114       8,049,868
     76,000  Wrigley (Wm.) Jr. Co. ..............     3,649,977       7,281,750
                                                   ------------  --------------
                                                     51,226,310      75,740,350
                                                   ------------  --------------
             PUBLISHING -- 5.3%
     11,000  Dow Jones & Co. Inc. ...............       546,341         622,875
    150,000  Harcourt General Inc. ..............     6,684,706       8,580,000
    646,000  Independent News & Media
               plc, Dublin ......................     1,428,821       1,758,830
     97,000  McGraw-Hill Companies Inc. .........     2,192,694       5,686,625
    400,000  Media General Inc., Cl. A ..........     9,832,031      14,560,000
    128,000  Meredith Corp. .....................     2,123,657       4,120,000
    115,000  New York Times Co., Cl. A ..........       790,115       4,607,188
    145,000  News Corp. Ltd. ....................       796,385       1,127,970
      5,000  News Corp. Ltd., ADR ...............        54,120         161,250
     82,727  Pearson plc ........................     1,125,679       1,964,884
    400,000  Penton Media Inc. ..................     4,849,118      10,750,000
     50,000  PRIMEDIA Inc.+ .....................       596,143         596,875
     27,000  Pulitzer Inc. ......................     1,189,663       1,264,950
    160,000  Reader's Digest Association
               Inc., Cl. B ......................     4,110,972       5,600,000
     50,000  Schibsted ASA ......................       906,930         615,183
     91,842  Seat-Pagine Gialle SpA .............       204,007         204,785
    400,000  South China Morning
               Post Holdings ....................       273,726         297,439
     75,000  Thomas Nelson Inc. .................       908,325         525,000
    160,000  Tribune Co. ........................     5,390,834       6,760,000
                                                   ------------  --------------
                                                     44,004,267      69,803,854
                                                   ------------  --------------


                 See accompanying notes to financial statements.

                                       15
                                     <PAGE>

                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                                DECEMBER 31, 2000


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

             COMMON STOCKS (CONTINUED)
             WIRELESS COMMUNICATIONS -- 5.1%
     60,000  AT&T Wireless Group+ ...............  $  1,393,518  $    1,038,750
     12,500  Leap Wireless
               International Inc.+ ..............       364,116         312,500
     25,000  Nextel Communications
               Inc., Cl. A+ .....................       432,881         618,750
     40,000  Rogers Wireless
               Communications
               Inc., Cl. B+ .....................       935,018         707,500
    220,000  Sprint Corp. (PCS Group)+ ..........       287,077       4,496,250
     16,700  Tele Celular Sul
               Participacoes SA, ADR ............       266,992         436,288
     55,666  Tele Centro Oeste Celular
               Participacoes SA, ADR ............       166,868         539,264
      3,340  Tele Leste Celular
               Participacoes SA, ADR ............        89,340         115,230
      8,350  Tele Nordeste Celular
               Participacoes SA, ADR ............       123,227         345,481
      3,340  Tele Norte Celular
               Participacoes SA, ADR ............        51,601         112,725
  1,200,000  Telecom Italia Mobile SpA ..........     1,113,354       9,576,206
      8,350  Telemig Celular
               Participacoes SA, ADR ............       241,320         496,825
    450,000  Telephone & Data
               Systems Inc. .....................    11,087,191      40,500,000
     66,800  Telesp Celular
               Participacoes SA, ADR ............     2,135,936       1,803,600
    623,888  Vodafone Group plc .................       982,115       2,287,971
    100,000  Vodafone Group plc, ADR ............       927,768       3,581,250
      1,955  VoiceStream Wireless Corp.+ ........       165,750         196,722
                                                   ------------  --------------
                                                     20,764,072      67,165,312
                                                   ------------  --------------
             CABLE -- 4.0%
    515,000  Cablevision Systems Corp.,
               Cl. A+ ...........................     5,762,799      43,742,812
     40,000  Comcast Corp., Cl. A ...............       341,837       1,652,500
     90,000  Comcast Corp., Cl. A,
               Special ..........................       797,342       3,757,500
     42,625  NTL Inc.+ ..........................     1,454,341       1,020,336
     20,000  Shaw Communications Inc.,
               Cl. B ............................        52,983         466,042
     80,000  Shaw Communications Inc.,
               Cl. B, Non-Voting+ ...............       329,198       1,840,000
     60,000  UnitedGlobalCom Inc.,
               Cl. A+ ...........................     1,899,678         817,500
                                                   ------------  --------------
                                                     10,638,178      53,296,690
                                                   ------------  --------------
             ENERGY AND UTILITIES -- 3.4%
     73,400  AGL Resources Inc. .................     1,322,958       1,619,388
     34,000  Apache Corp. .......................       844,013       2,382,125
    120,000  BP Amoco plc .......................       725,215         967,982
    248,800  BP Amoco plc, ADR ..................     5,313,984      11,911,300
    110,000  Burlington Resources Inc. ..........     4,698,198       5,555,000
    150,000  Conoco Inc., Cl. A .................     3,397,784       4,293,750
    400,000  El Paso Electric Co.+ ..............     3,236,625       5,280,000
     20,000  Energy East Corp. ..................       429,788         393,750
     55,000  Halliburton Co. ....................     1,201,188       1,993,750
    100,000  MCN Energy Group Inc. ..............     2,410,180       2,768,750
    210,000  Niagara Mohawk
               Holdings Inc. ....................     3,101,421       3,504,375
    100,000  NiSource Inc.+ .....................       200,000         275,000
     50,000  Northeast Utilities ................     1,024,375       1,212,500
     75,000  Pennzoil-Quaker State Co.+ .........     1,373,582         965,625
    100,000  Progress Energy Inc. ...............        52,000          45,000
      2,900  SJW Corp. ..........................       345,316         295,800

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

     14,000  Southwest Gas Corp. ................  $    289,625  $      306,250
     15,000  St. Joseph Light &
               Power Co. ........................       310,677         367,500
      4,907  Total Fina Elf SA ..................       655,890         729,734
                                                   ------------  --------------
                                                     30,932,819      44,867,579
                                                   ------------  --------------
             DIVERSIFIED INDUSTRIAL -- 3.0%
    195,000  Ampco-Pittsburgh Corp. .............     2,627,873       2,340,000
     50,000  Cooper Industries Inc. .............     1,799,362       2,296,875
    150,000  Crane Co. ..........................     1,879,227       4,265,625
    102,000  GATX Corp. .........................     1,533,375       5,087,250
    150,000  GenTek Inc. ........................     1,491,896       2,475,000
     93,000  Honeywell Inc. .....................     3,167,790       4,400,062
    142,500  ITT Industries Inc.+ ...............     4,378,799       5,521,875
    390,000  Lamson & Sessions Co.+ .............     2,415,785       4,095,000
    130,000  National Service Industries
               Inc. .............................     2,956,716       3,339,375
     78,715  Park-Ohio Holdings Corp.+ ..........       993,487         383,736
     12,420  Smith Industries plc ...............       223,040         149,908
     82,000  Swire Pacific Ltd., Cl. A ..........       553,597         591,353
     75,000  Thomas Industries Inc. .............       769,882       1,743,750
     50,000  Trinity Industries Inc. ............       945,000       1,250,000
     25,000  Tyco International Ltd. ............       796,965       1,387,500
                                                   ------------  --------------
                                                     26,532,794      39,327,309
                                                   ------------  --------------
             HEALTH CARE -- 2.3%
     40,000  American Home
               Products Corp. ...................     1,929,781       2,542,000
     60,000  Amgen Inc.+ ........................       256,894       3,836,250
      1,000  Apogent Technologies Inc.+ .........        20,960          20,500
     10,000  AstraZeneca plc, London ............       385,298         504,158
     35,146  AstraZeneca plc,
               Stockholm ........................     1,255,532       1,750,683
     10,000  Aventis SA .........................       748,895         877,819
     26,000  Biogen Inc.+ .......................       181,025       1,561,625
     75,036  GlaxoSmithKline plc+ ...............     1,817,378       2,116,236
      4,000  GlaxoSmithKline plc, ADR ...........       216,096         224,000
     56,011  Invitrogen Corp.+ ..................     2,678,982       4,837,950
      1,150  Novartis AG ........................     1,431,247       2,033,169
    108,000  Novartis AG, Registered ............       948,510       4,833,000
     45,000  Pfizer Inc. ........................       240,750       2,070,000
        140  Roche Holding AG ...................     1,332,861       1,426,350
     20,000  Sanofi Synthelabo SA ...............       967,750       1,333,158
     14,000  Takeda Chemical
               Industries Ltd. ..................       809,212         828,721
                                                   ------------  --------------
                                                     15,221,171      30,795,619
                                                   ------------  --------------
             AUTOMOTIVE: PARTS AND ACCESSORIES -- 2.1%
     13,000  ArvinMeritor Inc. ..................       273,635         147,875
     25,802  Borg-Warner Automotive
               Inc. .............................     1,143,687       1,032,080
     34,161  Dana Corp. .........................       726,835         523,090
     75,000  Delphi Automotive
               Systems Corp.+ ...................       835,469         843,750
    260,000  GenCorp Inc. .......................     2,470,673       2,502,500
    200,000  Genuine Parts Co. ..................     5,117,042       5,237,500
    117,000  Johnson Controls Inc. ..............     2,017,008       6,084,000
     70,000  Midas Inc. .........................     1,119,036         835,625
    330,000  Modine Manufacturing Co. ...........     4,284,009       6,847,500
     80,000  Scheib (Earl) Inc.+ ................       749,281         195,000
    163,000  Standard Motor Products Inc. .......     1,748,388       1,202,125
     70,000  Superior Industries
               International Inc. ...............     1,819,682       2,209,375
    105,000  TransPro Inc. ......................       936,808         269,062
                                                   ------------  --------------
                                                     23,241,553      27,929,482
                                                   ------------  --------------


                 See accompanying notes to financial statements.

                                       16
                                     <PAGE>

                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                                DECEMBER 31, 2000


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

             COMMON STOCKS (CONTINUED)
             BUSINESS SERVICES -- 2.0%
    100,000  ACNielsen Corp.+ ...................  $  3,630,000  $    3,625,000
     60,000  ANC Rental Corp.+ ..................       578,273         210,000
    120,000  Cendant Corp.+ .....................     2,177,158       1,155,000
      1,000  CheckFree Corp.+ ...................         9,040          43,062
    100,000  Landauer Inc. ......................       647,252       1,825,000
     58,500  Nashua Corp.+ ......................       548,437         259,740
     10,833  Reuters Holdings plc, ADR ..........       815,788       1,067,050
     13,000  Secom Co. Ltd. .....................       813,097         848,073
    250,000  Securicor Group plc ................             0         571,378
      3,500  SYNAVANT Inc.+ .....................        27,506          16,406
     30,900  Vivendi Universal SA ...............     2,117,043       2,033,620
    220,000  Vivendi Universal SA, ADR ..........     9,410,390      14,368,750
                                                   ------------  --------------
                                                     20,773,984      26,023,079
                                                   ------------  --------------
             PAPER AND FOREST PRODUCTS -- 1.9%
    260,000  Greif Bros. Corp., Cl. A ...........     4,845,131       7,410,000
      3,400  Greif Bros. Corp., Cl. B ...........        69,824          91,800
    195,000  Pactiv Corp.+ ......................     2,055,445       2,413,125
     25,000  Sealed Air Corp.+ ..................       748,750         762,500
    253,000  St. Joe Co. ........................     1,873,208       5,566,000
    100,000  Westvaco Corp. .....................     2,732,434       2,918,750
    122,200  Willamette Industries Inc. .........     5,612,565       5,735,763
                                                   ------------  --------------
                                                     17,937,357      24,897,938
                                                   ------------  --------------
             HOTELS AND GAMING -- 1.7%
    120,000  Aztar Corp.+ .......................       843,207       1,552,500
     90,000  Boca Resorts Inc., Cl. A+ ..........       787,000       1,293,750
    234,500  Gaylord Entertainment Co. ..........     6,082,795       4,895,188
      5,000  GTECH Holdings Corp.+ ..............        86,269         102,813
  1,045,000  Hilton Group plc ...................     3,273,995       3,262,534
    563,000  Hilton Hotels Corp. ................     6,189,127       5,911,500
      5,000  MGM Mirage .........................        97,035         140,938
    430,000  Park Place
               Entertainment Corp.+ .............     2,424,893       5,133,125
                                                   ------------  --------------
                                                     19,784,321      22,292,348
                                                   ------------  --------------
             RETAIL -- 1.6%
    220,100  Albertson's Inc. ...................     6,226,408       5,832,650
    286,000  AutoNation Inc.+ ...................     3,254,803       1,716,000
     16,000  Coldwater Creek Inc.+ ..............       300,359         497,000
     45,000  Delhaize America Inc.,
               Cl. A ............................     1,071,255         795,938
    100,000  Lillian Vernon Corp. ...............     1,362,258         700,000
    350,000  Neiman Marcus Group
               Inc., Cl. B.+ ....................     8,521,973      11,593,750
                                                   ------------  --------------
                                                     20,737,056      21,135,338
                                                   ------------  --------------
             SPECIALTY CHEMICALS -- 1.4%
      5,400  Ciba Specialty Chemicals,
               ADR+ (b) .........................        21,140         159,560
     10,000  du Pont de Nemours
               (E.I.) & Co. .....................       327,500         483,125
    315,000  Ferro Corp. ........................     5,692,776       7,245,000
     12,000  Fuller (H.B.) Co. ..................       457,469         473,438
    130,000  General Chemical
               Group Inc. .......................       367,869         130,000
    210,000  Omnova Solutions Inc. ..............     1,767,940       1,260,000
    220,000  Rohm & Haas Co. ....................     6,947,543       7,988,750
          1  Syngenta AG+ .......................             6              53
     11,697  Syngenta AG, ADR+ ..................        22,129         127,936
                                                   ------------  --------------
                                                     15,604,372      17,867,862
                                                   ------------  --------------

                                                                      MARKET
    SHARES                                              COST          VALUE
    ------                                              ----          -----
             AGRICULTURE -- 1.2%
  1,000,000  Archer-Daniels-Midland
               Co. ..............................  $ 13,728,377  $   15,000,000
      5,000  Delta & Pine Land Co. ..............        84,396         104,687
                                                   ------------  --------------
                                                     13,812,773      15,104,687
                                                   ------------  --------------
             REAL ESTATE -- 1.0%
    450,000  Catellus Development
               Corp.+ ...........................     6,751,839       7,875,000
     75,000  Cheung Kong (Holdings) Ltd. ........       871,487         959,146
     44,000  Florida East Coast
               Industries Inc., Cl. A ...........       523,108       1,578,500
     58,452  Florida East Coast
               Industries Inc., Cl. B ...........       964,986       1,998,311
     55,000  Griffin Land &
               Nurseries Inc.+ ..................       513,143         632,500
      4,753  HomeFed Corp.+ .....................           851           4,040
                                                   ------------  --------------
                                                      9,625,414      13,047,497
                                                   ------------  --------------
             ENVIRONMENTAL SERVICES -- 0.8%
     60,000  Republic Services Inc.+ ............       783,447       1,031,250
    360,000  Waste Management Inc. ..............     6,733,942       9,990,000
                                                   ------------  --------------
                                                      7,517,389      11,021,250
                                                   ------------  --------------
             CONSUMER SERVICES -- 0.8%
     40,000  Loewen Group Inc. ..................        48,700           1,240
    510,000  Rollins Inc. .......................     5,737,037      10,231,875
                                                   ------------  --------------
                                                      5,785,737      10,233,115
                                                   ------------  --------------
             AEROSPACE -- 0.8%
    100,000  BAE Systems plc ....................       638,350         570,632
    100,000  Lockheed Martin Corp. ..............     2,641,248       3,395,000
     75,000  Northrop Grumman Corp. .............     4,812,089       6,225,000
                                                   ------------  --------------
                                                      8,091,687      10,190,632
                                                   ------------  --------------
             COMMUNICATIONS EQUIPMENT -- 0.8%
     68,000  Acterna Corp.+ .....................       245,121         918,000
    290,000  Allen Telecom Inc.+ ................     2,191,166       5,201,875
     40,000  Lucent Technologies Inc. ...........       415,799         540,000
     40,000  Motorola Inc. ......................       467,603         810,000
     22,000  Nokia Corp., Cl. A, ADR ............       627,321         957,000
     44,000  Scientific-Atlanta Inc. ............       355,750       1,432,750
                                                   ------------  --------------
                                                      4,302,760       9,859,625
                                                   ------------  --------------
             ELECTRONICS -- 0.7%
     38,000  Fujitsu Ltd. .......................     1,155,689         560,350
      3,000  Hitachi Ltd., ADR ..................       218,796         259,687
      4,000  Molex Inc., Cl. A ..................       151,563         101,750
      1,500  NEC Corp., ADR .....................        43,625         135,375
     16,640  Philips Electronics NV .............       691,118         609,584
     38,800  Philips Electronics NV, ADR ........        53,456       1,406,500
      2,000  Rohm Co. Ltd. ......................       598,271         380,035
     16,000  Sony Corp. .........................     1,305,897       1,106,830
     32,000  Sony Corp., ADR ....................       828,824       2,232,000
     42,000  Stanley Electric Co. Ltd. ..........       508,025         382,487
    112,000  Thomas & Betts Corp. ...............     1,856,485       1,813,000
                                                   ------------  --------------
                                                      7,411,749       8,987,598
                                                   ------------  --------------
             AUTOMOTIVE -- 0.6%
     10,000  Ford Motor Co. .....................       309,640         234,375
    157,942  General Motors Corp. ...............     4,799,093       8,045,171
                                                   ------------  --------------
                                                      5,108,733       8,279,546
                                                   ------------  --------------


                 See accompanying notes to financial statements.

                                       17
                                     <PAGE>

                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                                DECEMBER 31, 2000


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

             COMMON STOCKS (CONTINUED)
             AVIATION: PARTS AND SERVICES -- 0.5%
    100,000  Curtiss-Wright Corp. ...............  $  2,491,103  $    4,650,000
    110,000  Fairchild Corp., Cl. A+ ............     1,442,877         605,000
     44,000  Precision Castparts Corp. ..........       729,212       1,850,750
                                                   ------------  --------------
                                                      4,663,192       7,105,750
                                                   ------------  --------------
             BUILDING AND CONSTRUCTION -- 0.5%
     90,000  CRH plc ............................     1,150,986       1,674,709
     32,222  Huttig Building
               Products Inc.+ ...................        81,163         132,916
     15,000  Martin Marietta
             Materials Inc. .....................       322,687         634,500
    150,000  Nortek Inc.+ .......................     1,988,594       3,553,125
      5,000  Nortek Inc.,
               Special Common+ (a) ..............        72,155         118,437
                                                   ------------  --------------
                                                      3,615,585       6,113,687
                                                   ------------  --------------
             SATELLITE -- 0.4%
    176,323  General Motors Corp.,
               Cl. H+ ...........................     2,476,689       4,055,429
    340,000  Liberty Satellite &
               Technology Inc., Cl. A+ ..........       900,012       1,073,125
    140,000  Loral Space &
               Communications Ltd.+ .............     1,569,687         446,250
                                                   ------------  --------------
                                                      4,946,388       5,574,804
                                                   ------------  --------------
             TRANSPORTATION -- 0.3%
     73,000  AMR Corp.+ .........................     1,415,510       2,860,688
      7,500  Kansas City Southern
               Industries Inc. ..................        13,986          75,938
     31,273  MIF Ltd.+ ..........................       449,997         400,730
     45,000  Ryder System Inc. ..................     1,044,066         748,125
                                                   ------------  --------------
                                                      2,923,559       4,085,481
                                                   ------------  --------------
             CLOSED END FUNDS -- 0.3%
     59,000  Central European Equity
               Fund Inc. ........................       740,735         763,312
     70,000  Dresdner RCM
               Europe Fund Inc. .................       512,662         799,400
     25,000  France Growth Fund Inc. ............       246,844         262,500
     40,250  Italy Fund Inc. ....................       360,845         430,172
     68,000  New Germany Fund Inc. ..............       750,658         603,500
     45,942  Royce Value Trust Inc. .............       519,501         663,288
                                                   ------------  --------------
                                                      3,131,245       3,522,172
                                                   ------------  --------------
             COMPUTER SOFTWARE AND SERVICES -- 0.2%
     10,000  Capcom Co. Ltd. ....................       409,362         343,257
     40,000  Computer Associates
               International Inc. ...............     1,131,704         780,000
    160,000  Genuity Inc.+ ......................       884,995         810,000
      3,300  Obic Co. Ltd. ......................       419,600         681,672
     60,000  Tyler Technologies Inc. ............       286,613         101,250
                                                   ------------  --------------
                                                      3,132,274       2,716,179
                                                   ------------  --------------
             METALS AND MINING -- 0.1%
     72,500  Harmony Gold Mining Co.
               Ltd. .............................       347,738         337,598
     12,500  Harmony Gold Mining Co.
               Ltd., ADR ........................        77,344          58,594
     70,000  Newmont Mining Corp. ...............     1,527,982       1,194,375
     25,000  Placer Dome Inc. ...................       272,669         240,625
                                                   ------------  --------------
                                                      2,225,733       1,831,192
                                                   ------------  --------------


                                                                      MARKET
    SHARES                                              COST          VALUE
    ------                                              ----          -----
             COMPUTER HARDWARE -- 0.1%
     44,000  Hewlett-Packard Co. ................  $  1,792,291  $    1,388,750
     15,000  Xerox Corp. ........................       183,563          69,375
                                                   ------------  --------------
                                                      1,975,854       1,458,125
                                                   ------------  --------------
             EDUCATIONAL SERVICES -- 0.0%
     10,000  Benesse Corp. ......................     1,029,239         371,278
                                                   ------------  --------------
             TOTAL COMMON
               STOCKS ...........................   735,371,811   1,241,388,432
                                                   ------------  --------------
             PREFERRED STOCKS -- 0.2%
             PUBLISHING -- 0.1%
     42,000  News Corp. Ltd., Pfd., ADR .........       634,176       1,220,625
                                                   ------------  --------------
             BROADCASTING -- 0.1%
     40,000  ProSieben Sat.1 Media
               AG, Pfd. .........................       568,909       1,182,943
                                                   ------------  --------------
             TELECOMMUNICATIONS -- 0.0%
     15,000  Citizens Communications Co.,
               5.00% Cv. Pfd. ...................       772,625         795,000
                                                   ------------  --------------
             WIRELESS COMMUNICATIONS -- 0.0%
 10,760,547  Telesp Celular
               Participacoes SA, Pfd.+ ..........        82,623         113,400
                                                   ------------  --------------
             TOTAL PREFERRED
               STOCKS ...........................     2,058,333       3,311,968
                                                   ------------  --------------
  PRINCIPAL
   AMOUNT
  ---------
             CORPORATE BONDS -- 0.2%
             AVIATION: PARTS AND SERVICES -- 0.1%
$ 1,000,000  Kaman Corp.,
               Sub. Deb. Cv.
               6.00%, 03/15/12 ..................       942,411         913,750
                                                   ------------  --------------
             AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.1%
  1,500,000  Standard Motor Products Inc.,
               Sub. Deb. Cv.
               6.75%, 07/15/09 ..................     1,425,781         708,750
                                                   ------------  --------------
             PUBLISHING -- 0.0%
    200,000  News America Holdings Inc.,
               Sub. Deb. Cv.
               Zero Coupon, 03/31/02 ............       181,981         282,652
                                                   ------------  --------------
             HOTELS AND GAMING -- 0.0%
    200,000  Hilton Hotels Corp.,
               Sub. Deb. Cv.
               5.00%, 05/15/06 ..................       158,236         170,250
                                                   ------------  --------------
             CONSUMER PRODUCTS -- 0.0%
  1,000,000  Pillowtex Corp.,
               Sub. Deb. Cv.
               6.00%, 03/15/12+ .................       402,850           2,500
                                                   ------------  --------------
             TOTAL CORPORATE
               BONDS ............................     3,111,259       2,077,902
                                                   ------------  --------------
   SHARES
  -------
             WARRANTS -- 0.0%
             FOOD AND BEVERAGE -- 0.0%
     62,463  Advantica Restaurant
               Group Inc.,
               expire 01/07/05+ .................       105,603           1,952
                                                   ------------  --------------


                 See accompanying notes to financial statements.

                                       18
                                     <PAGE>

                          THE GABELLI EQUITY TRUST INC.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                                DECEMBER 31, 2000


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

             U.S. GOVERNMENT OBLIGATIONS -- 3.6%
$48,000,000  U.S. Treasury Bills,
               5.47% to 6.37%++,
               due 02/01/01 to 05/24/01(c) ......  $ 47,497,065  $   47,498,663
                                                   ------------  --------------
             REPURCHASE AGREEMENTS -- 1.5%
 19,762,000  Agreement with State Street
               Bank & Trust Co., 5.95%, dated
               12/29/00, due 01/02/01, proceeds
               at maturity $19,775,065 (d) ......    19,762,000      19,762,000
                                                   ------------  --------------
  TOTAL INVESTMENTS -- 99.7% ....................  $807,906,071   1,314,040,917
                                                   ============
  OTHER ASSETS, LIABILITIES,
    AND LIQUIDATION VALUE
    OF CUMULATIVE PREFERRED STOCK -- (9.9)% ...................    (130,000,003)
                                                                 --------------
  NET ASSETS - COMMON STOCK -- 89.8%
    (108,688,410 common shares outstanding) ...................   1,184,040,914
                                                                 --------------
  NET ASSETS - PREFERRED STOCK -- 10.2%
    (5,368,900 preferred shares outstanding) ..................     134,222,500
                                                                 --------------
  TOTAL NET ASSETS -- 100.0% ..................................  $1,318,263,414
                                                                 ==============

  NET ASSET VALUE PER COMMON SHARE
    ($1,184,040,914 / 108,688,410 shares outstanding)                    $10.89
                                                                         ======

  PRINCIPAL                                         SETTLEMENT     UNREALIZED
   AMOUNT                                              DATE       APPRECIATION
  ---------                                         ----------    ------------
  FORWARD FOREIGN EXCHANGE CONTRACTS
6,627,720(e) Deliver Hong Kong Dollars
               in exchange for
               USD 851,441 .....................      08/03/01           $2,559
                                                                         ======
  NUMBER OF
  CONTRACTS
  ---------
  FUTURES CONTRACTS -- SHORT POSITION
        310  S&P 500 Index Futures
               03/15/01 .........................                    $2,257,126
                                                                     ==========

                                                EXPIRATION DATE/       MARKET
                                                 EXERCISE PRICE        VALUE
                                                ----------------       ------
  WRITTEN CALL OPTIONS -- SHORT POSITION
     250     Tyco International Ltd.               Jan. 01/40          $406,250
                                                                       ========
- -------------------

             For Federal tax purposes:
             Aggregate cost ...................................    $810,087,798
                                                                   ============
             Gross unrealized appreciation ....................    $536,753,798
             Gross unrealized depreciation ....................     (32,800,679)
                                                                   ------------
             Net unrealized appreciation ......................    $503,953,119
                                                                   ============
- -------------------

  (a) Security fair valued under procedures established by the Board of
      Directors.
  (b) Security exempt from registration under Rule 144A of the Securities Act of
      1933, as amended. These securities may be resold in transactions exempt
      from registration, normally to qualified institutional buyers. At December
      31, 2000, the market value of Rule 144A securities amounted to $159,560 or
      0.0% of total net assets.
  (c) At December 31, 2000, $6,500,000 of the principal amount was pledged as
      collateral for futures contracts.
  (d) Collateralized by U.S. Treasury Note, 4.75%, due 11/15/08, market value
      $20,162,085.
  (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 ............................       82.0%    $1,077,626,331
       Latin America ............................        1.7         22,719,757
       Europe ...................................       13.2        173,321,221
       South Africa .............................        0.1          1,778,067
       Asia/Pacific Rim .........................        1.8         23,286,621
       Canada ...................................        1.2         15,308,920
                                                       -----     --------------
       Total Investments ........................      100.0%    $1,314,040,917
                                                       =====     ==============

                 See accompanying notes to financial statements.

                                       19
                                     <PAGE>

                          THE GABELLI EQUITY TRUST INC.
                       STATEMENT OF ASSETS AND LIABILITIES
                                DECEMBER 31, 2000

ASSETS:
  Investments, at value (Cost $807,906,071) .......   $1,314,040,917
  Cash and foreign currency, at value
     (Cost $455,581) ..............................          458,320
  Segregated cash held at broker ..................          417,375
  Dividends and interest receivable ...............        1,095,980
  Receivable for investments sold .................        7,420,204
  Variation margin ................................        1,410,500
  Unrealized appreciation on forward foreign
     exchange contracts ...........................            2,559
  Other assets ....................................           46,092
                                                      --------------
  TOTAL ASSETS ....................................    1,324,891,947
                                                      --------------
LIABILITIES:
  Options written (premium received $417,375) .....          406,250
  Payable for investments purchased ...............        4,523,664
  Dividends payable ...............................          165,751
  Payable for cumulative preferred stock repurchased         115,538
  Payable for investment advisory fees ............          993,913
  Payable to custodian ............................           35,200
  Other accrued expenses and liabilities ..........          388,217
                                                      --------------
  TOTAL LIABILITIES ...............................        6,628,533
                                                      --------------
  NET ASSETS ......................................   $1,318,263,414
                                                      ==============
NET ASSETS CONSIST OF:
  Cumulative Preferred Stock (7.25%, $25.00
     liquidation value, $0.001 par value,
     8,000,000 shares authorized with 5,368,900
     shares issued and outstanding) ...............   $  134,222,500
   Capital stock, at par value ....................          108,688
   Additional paid-in capital .....................      677,156,930
   Distributions in excess of net realized gain on
      investments, futures contracts and
      foreign currency transactions ...............       (1,633,207)
   Net unrealized appreciation on investments,
      futures contracts and foreign currency
      transactions ................................      508,408,503
                                                      --------------
   TOTAL NET ASSETS ...............................   $1,318,263,414
                                                      ==============
   NET ASSET VALUE PER COMMON SHARE
      ($1,184,040,914 / 108,688,410 shares
      outstanding; 192,000,000 shares
      authorized of $0.001 par value) .............           $10.89
                                                              ======

                             STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2000

INVESTMENT INCOME:
  Dividends (net of foreign taxes of $205,950) ....    $  15,789,185
  Interest ........................................        4,426,192
                                                       -------------
  TOTAL INVESTMENT INCOME .........................       20,215,377
                                                       -------------
EXPENSES:
  Investment advisory fees ........................       13,085,773
  Legal and audit fees ............................          422,907
  Shareholder communications expenses .............          402,413
  Shareholder services fees .......................          333,890
  Payroll .........................................          151,858
  Custodian fees ..................................          137,755
  Directors' fees .................................          134,295
  Miscellaneous expenses ..........................          144,892
                                                       -------------
  TOTAL EXPENSES ..................................       14,813,783
                                                       -------------
  LESS:  CUSTODIAN FEE CREDIT .....................          (51,753)
                                                       -------------
  NET EXPENSES ....................................       14,762,030
                                                       -------------
  NET INVESTMENT INCOME ...........................        5,453,347
                                                       -------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
  ON INVESTMENTS, FUTURES CONTRACTS
  AND FOREIGN CURRENCY TRANSACTIONS:
  Net realized gain on investments ................      127,128,637
  Net realized loss on foreign currency transactions        (228,175)
  Net realized gain on options ....................           17,450
  Net realized gain on futures contracts ..........       12,866,875
                                                       -------------
  Net realized gain on investments, futures
     contracts and foreign currency transactions ..      139,784,787
                                                       -------------
  Net change in unrealized appreciation on
     investments, futures contracts and foreign
     currency transactions ........................     (193,936,839)
                                                       -------------
  NET REALIZED AND UNREALIZED LOSS
     ON INVESTMENTS, FUTURES CONTRACTS
     AND FOREIGN CURRENCY TRANSACTIONS ............      (54,152,052)

  NET DECREASE IN NET ASSETS RESULTING
     FROM OPERATIONS ..............................    $ (48,698,705)
                                                       =============


                       STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>

                                                                                            YEAR ENDED           YEAR ENDED
                                                                                        DECEMBER 31, 2000    DECEMBER 31, 1999
                                                                                        -----------------    -----------------
<S>                                                                                       <C>                  <C>
OPERATIONS:
   Net investment income .............................................................    $    5,453,347       $    4,337,238
   Net realized gain on investments, futures contracts and foreign currency transactions     139,784,787          133,912,661
   Net change in unrealized appreciation (depreciation) on investments, futures contracts
      and foreign currency transactions ..............................................      (193,936,839)         212,400,838
                                                                                          --------------       --------------
   NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...................       (48,698,705)         350,650,737
                                                                                          --------------       --------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
   Net investment income .............................................................        (4,400,558)          (3,195,371)(a)
   Net realized gain on investments, futures contracts and foreign currency transactions    (133,922,564)        (128,585,766)(a)
   In excess of net realized gain on investments,
      futures contracts and foreign currency transactions ............................        (2,381,208)                  --
   Paid-in capital ...................................................................                --          (72,433,677)(a)
                                                                                          --------------       --------------
   TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS ..................................      (140,704,330)        (204,214,814)
                                                                                          --------------       --------------
DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:
   Net investment income .............................................................          (304,788)            (235,810)
   Net realized gain on investments, futures contracts and foreign currency transactions      (9,440,571)          (9,545,528)
                                                                                          --------------       --------------
   TOTAL DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS ...............................        (9,745,359)          (9,781,338)
                                                                                          --------------       --------------
TRUST SHARE TRANSACTIONS:
   Net increase in net assets from Equity Trust share transactions ...................        14,165,101           15,103,360
   Net decrease from repurchase of preferred stock ...................................          (394,388)            (306,572)
                                                                                          --------------       --------------
   NET INCREASE (DECREASE) IN NET ASSETS .............................................      (185,377,681)         151,451,373
NET ASSETS:
   Beginning of period ...............................................................     1,503,641,095        1,352,189,722
                                                                                          --------------       --------------
   End of period .....................................................................    $1,318,263,414       $1,503,641,095
                                                                                          ==============       ==============
<FN>
(a) A distribution of $79,587,260 for The Gabelli Utility Trust spin-off from
    net investment income, realized short-term gains, realized long-term gains,
    and paid-in-capital were $1,091,937, $7,908,851, $36,310,892 and
    $34,275,580, respectively.
</FN>
</TABLE>

                 See accompanying notes to financial statements.

                                       20
                                     <PAGE>

                          THE GABELLI EQUITY TRUST INC.
                          NOTES TO FINANCIAL STATEMENTS

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.

      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.

                                       21
                                     <PAGE>


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


      The option  activity for Equity Trust for the year ended December 31, 2000
was as follows:

                                                    NUMBER OF
                                                    CONTRACTS     PREMIUMS
                                                    ---------     --------
Call options outstanding at December 31, 1999 .....     --              --
Call options written during the period ............    300        $439,975
Call options expired during the period ............     --              --
Call options closed during the period .............    (50)        (22,600)
                                                       ---        --------
Call options outstanding at December 31, 2000 .....    250        $417,375
                                                       ===        ========

      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.

      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  ("Cumulative  Preferred  Stock")  are  accrued  on a daily  basis and are
determined as described in Note 5.

                                       22
                                     <PAGE>

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

      For the year  ended  December  31,  2000,  reclassifications  were made to
decrease  accumulated  undistributed  net investment income for $748,001 with an
offsetting  adjustment  to  distributions  in  excess  of net  realized  gain on
investments, futures contracts and foreign currency transactions.

      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. In accordance with the Advisory
Agreement,  the Adviser provides a continuous  investment program for the Equity
Trust's  portfolio and oversees the  administration of all aspects of the Equity
Trust's  business and affairs.  The Adviser has agreed to reduce the  management
fee on the incremental assets attributable to the Cumulative  Preferred Stock if
the total  return  of the net asset  value of the  common  shares of the  Equity
Trust, including  distributions and advisory fee subject to reduction,  does not
exceed the stated dividend rate of the Cumulative  Preferred Stock. For the year
ended  December 31, 2000, the Equity Trust's total return on the net asset value
of the common shares did not exceed the stated  dividend rate of the  Cumulative
Preferred  Stock.  Thus, such management fees were not earned on the incremental
assets.

      During the year ended December 31, 2000,  Gabelli & Company,  Inc. and its
affiliates  received $586,533 in brokerage  commissions as a result of executing
agency transactions in portfolio securities on behalf of the Equity Trust.

4.  PORTFOLIO  SECURITIES.   Cost  of  purchases  and  proceeds  from  sales  of
securities,  other than short-term  securities,  for the year ended December 31,
2000 aggregated $438,895,782 and $582,615,174, respectively.

5. CAPITAL. The Articles of Incorporation, dated May 19, 1986, permit the Equity
Trust to issue 200,000,000 shares of common stock (par value $0.001).

      Transactions in capital stock were as follows:

<TABLE>
<CAPTION>
                                                YEAR ENDED                      YEAR ENDED
                                            DECEMBER 31, 2000                DECEMBER 31, 1999
                                         -----------------------          -----------------------
                                           Shares      Amount              Shares        Amount
                                         ---------   -----------          ---------   -----------
<S>                                      <C>         <C>                  <C>         <C>
Shares issued upon reinvestment
  of dividends and distributions .....   1,311,793   $14,165,101          1,260,270   $15,103,360
                                         ---------   -----------          ---------   -----------
Net increase .........................   1,311,793   $14,165,101          1,260,270   $15,103,360
                                         =========   ===========          =========   ===========
</TABLE>

      The Equity Trust's Articles of Incorporation  authorize the issuance of up
to  8,000,000  shares  of $0.001  par  value  Cumulative  Preferred  Stock.  The
Cumulative  Preferred  Stock is senior to the  common  stock and  results in the
financial  leveraging of the common stock. Such leveraging tends to magnify both
the risks and opportunities to Common  Shareholders.  Dividends on shares of the
Cumulative Preferred Stock are cumulative.  The Equity Trust is required to meet
certain asset coverage tests 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 Cumulative  Preferred Stock in whole
or in part at the redemption price. During the year ended

                                       23
                                     <PAGE>

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

December 31, 2000,  the Equity Trust  repurchased  17,500  shares of  Cumulative
Preferred  Stock at a cost of  $394,388  and at an  average  price of $22.54 per
share.  During the year ended  December 31, 1999,  the Equity Trust  repurchased
13,600  shares of  Cumulative  Preferred  Stock at a cost of $306,572  and at an
average price of $22.54 per share. At December 31, 2000, 5,368,900 shares of the
Cumulative  Preferred Stock were  outstanding at the fixed dividend rate of 7.25
percent  per share and  accrued  dividends  amounted  to  $162,186.  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
Investment  Company Act of 1940  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.  SUBSEQUENT  EVENT.  On January 10, 2001,  the Equity Trust  distributed  one
transferable  right for each of the  108,688,408  common shares  outstanding  to
shareholders  of record on that date.  Six rights were  required to purchase one
additional  common  share at the  subscription  price of $7.00  per  share.  The
subscription  period expired on February 13, 2001. The rights offering was fully
subscribed resulting in the issuance of 18,114,735 common shares and proceeds of
$126,803,145 to the Equity Trust,  prior to the deduction of estimated  expenses
of  $500,000.  The  net  asset  value  per  share  of the  Equity  Trust  common
shareholders  was  reduced by  approximately  $0.62 per share as a result of the
issuance.

                                       24
                                     <PAGE>

                          THE GABELLI EQUITY TRUST INC.
                              FINANCIAL HIGHLIGHTS

SELECTED DATA FOR AN EQUITY TRUST COMMON SHARE OUTSTANDING THROUGHOUT EACH
PERIOD:
<TABLE>
<CAPTION>
                                                                                  YEAR ENDED DECEMBER 31,
                                                             ---------------------------------------------------------------
OPERATING PERFORMANCE:                                         2000(A)       1999(A)      1998(A)      1997(A)      1996(A)
                                                             ----------    ----------   ----------   ----------   ----------
<S>                                                          <C>           <C>          <C>          <C>          <C>
   Net asset value, beginning of period .................    $    12.75    $    11.47   $    11.56   $     9.77   $     9.95
                                                             ----------    ----------   ----------   ----------   ----------
   Net investment income ................................          0.05          0.04         0.07         0.08         0.11
   Net realized and unrealized gain (loss)
     on investments .....................................         (0.51)         3.25         1.09         2.75         0.71
                                                             ----------    ----------   ----------   ----------   ----------
   Total from investment operations .....................         (0.46)         3.29         1.16         2.83         0.82
                                                             ----------    ----------   ----------   ----------   ----------
   Offering expenses charged to capital surplus .........            --            --        (0.04)          --           --
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
   Net investment income ................................         (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 .....................         (1.25)        (1.21)(b)    (1.10)       (0.92)       (0.78)
   In excess of net realized gain on investments ........         (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)       --           --
   Net realized gain on investments .....................         (0.09)        (0.09)       (0.05)          --           --
                                                             ----------    ----------   ----------   ----------   ----------
   Total distributions ..................................         (1.40)        (2.01)       (1.21)       (1.04)       (1.00)
                                                             ----------    ----------   ----------   ----------   ----------
   NET ASSET VALUE, END OF PERIOD .......................    $    10.89    $    12.75   $    11.47   $    11.56   $     9.77
                                                             ==========    ==========   ==========   ==========   ==========
   Market value, end of period ..........................    $    11.44    $    12.56   $    11.56   $    11.69   $     9.38
                                                             ==========    ==========   ==========   ==========   ==========
   Net asset value total return++ .......................         (4.39)%       29.49%        9.55%       30.46%        9.00%
                                                             ==========    ==========   ==========   ==========   ==========
   Total investment return+ .............................          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) .................    $1,318,263    $1,503,641   $1,352,190   $1,210,570   $1,015,437
   Net assets attributable to common shares,
     end of period (in 000's) ...........................    $1,184,041    $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 ............          0.42%         0.34%        0.60%        0.76%       1.07%
   Ratio of operating expenses to average
     net assets attributable to common stock ............          1.14%         1.27%        1.15%        1.14%       1.18%
   Ratio of operating expenses to average
     total net assets (e) ...............................          1.03%         1.15%        1.09%        1.14%       1.18%
   Portfolio turnover rate ..............................          32.1%         38.0%        39.8%        39.2%       18.9%
   PREFERRED STOCK:
   Liquidation value, end of period (in 000's) ..........    $  134,223    $  134,660   $  135,000           --           --
   Total shares outstanding (in 000's) ..................         5,369         5,386        5,400           --           --
   Asset coverage .......................................           972%        1,117%       1,001%          --           --
   Liquidation preference per share .....................    $     25.00   $    25.00   $    25.00           --           --
   Average market value (d) .............................    $     22.62   $    24.43   $    25.63           --           --
 --------------------------
<FN>
  + 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.
 ++ 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.
(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.
</FN>
</TABLE>

                 See accompanying notes to financial statements.

                                       25
                                     <PAGE>

                          THE GABELLI EQUITY TRUST INC.
                        REPORT OF INDEPENDENT ACCOUNTANTS

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

In our opinion, the accompanying statement of assets and liabilities,  including
the portfolio of  investments,  and the related  statements of operations and of
changes  in net assets  and the  financial  highlights  present  fairly,  in all
material respects,  the financial position of The Gabelli Equity Trust Inc. (the
"Equity Trust") at December 31, 2000, the results of its operations for the year
then  ended,  the  changes  in its net  assets  for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting  principles  generally accepted
in the United  States of  America.  These  financial  statements  and  financial
highlights   (hereafter   referred  to  as  "financial   statements")   are  the
responsibility  of the  Equity  Trust's  management;  our  responsibility  is to
express  an  opinion  on these  financial  statements  based on our  audits.  We
conducted our audits of these  financial  statements in accordance with auditing
standards generally accepted in the United States of America, which require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates made by management,  and evaluating the overall financial
statement presentation.  We believe that our audits, which included confirmation
of  securities  at December 31, 2000 by  correspondence  with the  custodian and
brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
February 14, 2001

                                       26
                                     <PAGE>

                          THE GABELLI EQUITY TRUST INC.
                       INCOME TAX INFORMATION (UNAUDITED)
                                DECEMBER 31, 2000

CASH DIVIDENDS AND DISTRIBUTIONS

<TABLE>
<CAPTION>
                                                TOTAL AMOUNT        ORDINARY        LONG-TERM        DIVIDEND
              PAYABLE          RECORD               PAID           INVESTMENT        CAPITAL       REINVESTMENT
               DATE             DATE            PER SHARE (A)        INCOME         GAINS (A)          PRICE
              -------          ------           -------------      ----------       ---------      ------------
<S>           <C>                <C>               <C>               <C>             <C>             <C>
COMMON SHARES
              03/27/00           03/17/00          $0.2700           $0.0404         $0.2296         $11.9245
              06/26/00           06/16/00           0.2700            0.0404          0.2296          12.2692
              09/25/00           09/15/00           0.2700            0.0404          0.2296          11.6140
              12/26/00           12/15/00           0.5000            0.0745          0.4255          10.7100
                                                   -------           -------         -------
                                                   $1.3100           $0.1957         $1.1143
PREFERRED SHARES
              03/27/00           03/20/00          $0.4531           $0.0677         $0.3854
              06/26/00           06/19/00           0.4531            0.0677          0.3854
              09/26/00           09/18/00           0.4532            0.0678          0.3854
              12/26/00           12/18/00           0.4531            0.0678          0.3853
                                                   -------           -------         -------
                                                   $1.8125           $0.2710         $1.5415
</TABLE>

    A Form  1099-DIV  has been  mailed to all  shareholders  of  record  for the
distributions  mentioned above, setting forth specific amounts to be included in
the 2000 tax  returns.  Ordinary  income  distributions  include net  investment
income and realized net short-term  capital gains. 100% of the long-term capital
gains  paid by the  Equity  Trust in 2000 was  classified  as "20%  Rate  Gains"
subject to a maximum tax rate of 20% (or 10%  depending on an  individual's  tax
bracket).  Capital gain  distributions  are reported in box 2a of Form 1099-DIV.

NON-TAXABLE RETURN OF CAPITAL

    The amount received as a non-taxable (return of capital) distribution should
be applied  to reduce  the tax cost of shares.  There is no return of capital in
2000.

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

    The Equity  Trust  paid to common and  preferred  shareholders  an  ordinary
income  dividend of $0.1957 per share and  $0.2710 per share,  respectively,  in
2000. The percentage of such dividends that qualifies for the dividends received
deduction  available to  corporations  is 52.69% for all such  dividends paid in
2000. The percentage of the ordinary  income  dividends paid by the Equity Trust
during 2000 derived  from U.S.  Government  Securities  was 3.47%.  However,  it
should be noted that the  Equity  Trust did not hold more than 50% of its assets
in U.S. Government Securities at the end of each calendar quarter during 2000.

                 HISTORICAL DISTRIBUTION SUMMARY - COMMON STOCK

<TABLE>
<CAPTION>
                                SHORT-        LONG-                  UNDISTRIBUTED  TAXES PAID ON
                                TERM          TERM      NON-TAXABLE    LONG-TERM    UNDISTRIBUTED                 ADJUSTMENT
                INVESTMENT     CAPITAL       CAPITAL     RETURN OF      CAPITAL        CAPITAL         TOTAL          TO
                  INCOME      GAINS (B)       GAINS       CAPITAL        GAINS        GAINS (C)    DISTRIBUTIONS  COST BASIS
                 ---------    ---------      -------    -----------  -------------  -------------  -------------  ----------
<S>               <C>          <C>          <C>          <C>            <C>           <C>            <C>          <C>
2000 ..........   $0.04070     $0.15500     $1.11430        --            --             --          $1.31000        --
1999 (d) ......    0.03010      0.21378      0.99561     $0.91176         --             --           2.15125     $0.91176-
1998 ..........    0.06420        --         1.10080        --            --             --           1.16500        --
1997 ..........    0.07610      0.00210      0.93670      0.02510         --             --           1.04000      0.02500-
1996 ..........    0.10480        --         0.78120      0.11400         --             --           1.00000      0.11400-
1995 (e) ......    0.12890        --         0.49310      0.37800         --             --           1.00000      0.37800-
1994 (f) ......    0.13536      0.06527      0.30300      1.38262         --             --           1.88625      1.38262-
1993 (g) ......    0.13050      0.02030      0.72930      0.22990         --             --           1.11000      0.22990-
1992 (h) ......    0.20530      0.04050      0.29660      0.51760         --             --           1.06000      0.51760-
1991 (i) ......    0.22590      0.03990      0.14420      0.68000         --             --           1.09000      0.68000-
1990 ..........    0.50470        --         0.22950      0.44580         --             --           1.18000      0.44580-
1989 ..........    0.29100      0.35650      0.66250        --          $0.6288       $0.2138         1.31000      0.41500+
1988 ..........    0.14500      0.20900      0.19600        --           0.2513        0.0854         0.55000      0.16590+
1987 ..........    0.25600      0.49100      0.33500        --            --             --           1.08200        --

                                           HISTORICAL DISTRIBUTION SUMMARY - PREFERRED STOCK

2000 ..........   $0.0567      $0.2143      $1.5415         --            --            --           $1.81250        --
1999 ..........    0.0437       0.3164       1.4524         --            --            --            1.81250        --
1998 ..........    0.0560         --         0.9610         --            --            --            1.01700        --
- --------------------------
<FN>
(a) Total amounts differ due to rounding.
(b) Taxable as ordinary income.
(c) Net Asset Value is reduced by this amount on the last business day of the
    year.
(d) On July 9, 1999, the Company distributed shares of The Gabelli Utility Trust
    valued at $9.8125 per share.
(e) On October 19, 1995, the Company distributed Rights equivalent to $0.37 per
    share based upon full subscription of all issued shares.
(f) On November 15, 1994, the Company distributed shares of The Gabelli Global
    Multimedia Trust Inc. valued at $8.0625 per share.
(g) On July 14, 1993, the Company distributed Rights equivalent to $0.50 per
    share based upon full subscription of all issued shares.
(h) On September 28, 1992, the Company distributed Rights equivalent to $0.36
    per share based upon full subscription of all issued shares.
(i) On October 21, 1991, the Company distributed Rights equivalent to $0.42 per
    share based upon full subscription of all issued shares.
  - Decrease in cost basis.
  + Increase in cost basis.
</FN>
</TABLE>

                                       27
                                     <PAGE>

                         AUTOMATIC DIVIDEND REINVESTMENT
                        AND VOLUNTARY CASH PURCHASE PLAN

ENROLLMENT IN THE PLAN

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

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

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

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

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

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

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

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

VOLUNTARY CASH PURCHASE PLAN

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

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

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

- --------------------------------------------------------------------------------
  The Annual Meeting of the Equity Trust's  stockholders  will be held at 9:30
  A.M. on Monday,  May 14, 2001, at the  Greenwich  Public  Library,  101 West
  Putnam Avenue in Greenwich, Connecticut.
- --------------------------------------------------------------------------------
                                       28
                                     <PAGE>

                             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

Felix J. Christiana
  FORMER SENIOR VICE PRESIDENT,
  DOLLAR DRY DOCK SAVINGS BANK

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, PACE UNIVERSITY

Salvatore J. Zizza
  CHAIRMAN, THE BETHLEHEM 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
                            ------   ---------------
NYSE-Symbol:                 GAB          GAB Pr
Shares Outstanding:      108,688,410     5,368,900

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.
- --------------------------------------------------------------------------------
                                    <PAGE>
                         THE GABELLI EQUITY TRUST INC.

                   ONE CORPORATE CENTER, RYE, NY 10580-1434

                     PHONE: 1-800-GABELLI (1-800-422-3554)
                 FAX: 1-914-921-5118 INTERNET: WWW.GABELLI.COM
                         E-MAIL: CLOSEDEND@GABELLI.COM
                                                                  GBFCM-AR-12/00
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