GAMCO Small Cap Value Equity

Small Cap Value Equity

Philosophy:
In the tradition of Graham and Dodd, GAMCO employs fundamental research to identify companies with dominant industry positions that are selling at substantial discounts to their intrinsic or private market value.

Objectives:

10% real rate of return,
Capital preservation,
Risk control through diversification and internally generated research.

Methodology:
We use a three-pronged approach to value securities: free cash flow, earnings per share trends and Private Market Value (PMV) analysis. Once we have identified fundamental bargains, we seek a catalyst or element of change that will surface value and attract investor attention. Each portfolio is seperately managed and customized to meet specific client needs.

Portfolio Data:	(as of 12/31/1998)
Avg. Num. of positions:	74
Avg. Mkt. Capitalization:	$745 mm
Median Mkt. Capitalization:	$488 mm
Beta:	0.69
R-Squared:	0.73
Breakdown:	NYSE	68%
	AMEX	12%
	NASDAQ	20%
Manager:	Mario J. Gabelli

Annualized Returns (as of 12/31/98)	GAMCO(a) (Net)	Russell 2000	Top Positions(b) (as of 12/31/98)
1 Yr.	7.9%	-2.6%	Chris Craft	SPS Technologies
3 Yr.	20.3%	11.6%	Modine Manufacturing	Telephone & Data Systems
5 Yr.	17.2%	12.0%	Hudson General	USA Networks
10 Yr.	14.6%	13.0%	Whitman Corp.	General Cigar Holdings
			Rollins Inc.	Lawter International

The Gabelli Asset Management Company, Inc.(GAMCO) annualized rates of return are computed on a total return basis which includes all dividends, interest and accrued interest, and realized and unrealized gains and losses. All reuslts presented here are net of fees and expenses.

The Gabelli Small Cap Value composite represents fully discretionary, tax-exempt accounts. At 12/31/98, the composite included 6 accounts with an aggregate market value of $582 million. The minimum account size for separetely managed accounts is $5 million. No two portfolios are identical. Accounts not within this size and type may have experienced different results. The Russell 2000 index is an unmanaged index of 2,000 small-cap stocks.

(a)Past performance is no guarantee of future results. Performance results reflect the deduction of actual investment advisory fees and actual transaction costs. The Russell 2000 is an unmanaged index comprised of 2,000 stocks and does not necessarily reflect how a managed portfolio of equity securities would have performed.

(b) A list of all recommendations made within the past 12 months will be furnished upon request.

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