Gabelli Asset Management, Inc. reported record results for the second quarter and six months ended June 30, 2000. We are pleased to bring you the highlights.

Financial Results
Total revenues rose 34% to $57.1 million for the three months ended June 30, 2000 versus $42.6 million for the second quarter of 1999. Operating income for the quarter was $24.9 million, 48% higher than the $16.8 million recorded in the prior year. Net income climbed per share 23% to $0.48 per share on 29.6 million shares outstanding versus $0.39 per share on 29.9 million shares outstanding in the prior year.

For the first six months of 2000 total revenues climbed to $114.9 million up nearly 40% over the $82.3 million recorded in the first half of 1999. Operating income was $50.3 million in the first half of 2000, an increase of 50% over the year earlier period. Net income rose 35% to $28.3 million in 2000 as compared to $20.9 million in the first half of 1999. On a per share basis we earned $0.95 per share, a 36% increase over net income of $0.70 per share in the first six months of 1999 (excluding a $1.03 per share non-recurring charge from the first quarter of 1999). Including this non-recurring charge, the Company had a net loss per share of $0.33 for the first six months of 1999.

Revenues and operating earnings growth are driven by the growth in assets under management. We completed the quarter with $23.3 billion under management, 24% ahead of the $18.8 billion in assets managed at June 30, 1999. Assets managed in our open-end equity mutual funds jumped more than 41% to $9.5 billion at June 30, 2000 versus $6.7 billion at June 30, 1999. Second quarter net cash flows of $390 million included $502 million of net cash flows into our higher margin equity products partially offset by a $112 million decline in lower margin fixed income products. For the first half of 2000, $1.2 billion in net cash flows were received, substantially all into our equity products including our highly regarded non-market-correlated arbitrage partnerships which more than doubled to $344 million at June 30, 2000 from $165 million in the second quarter of 1999.

Selected Highlights
Selected highlights in our second quarter include:

• We commenced operations in London, UK with the establishment of Gabelli Asset Management U.K. We expect to increase our presence in the UK and mainland Europe in an effort to attract and service European institutional and high net worth clients. Additionally, we have expanded our dedicated European research and portfolio management functions, and launched a new fund, Gabelli European Partners. The fund is a European equity long/short portfolio utilizing a "bottom-up" stock selection process to identify mispriced securities and the catalyst in place to realize returns. The fund focuses on all sectors in Western Europe, and its stock selection draws on the stock-picking experience of the managers in a wide range of industries.

• We completed the assimilation of the Comstock mutual funds into the Gabelli Mathers mutual fund product line which now offers two new choices for those investors seeking non-market-correlated open-end mutual fund investments. These funds added $80 million in assets and 20,000 new investors to the Gabelli family of funds.

• Our open-end mutual funds benefited from $363 million of cash flow in the second quarter.

• Our closed-end fund, Gabelli Global Multimedia, listed on the New York Stock Exchange, initiated a rights offering (our sixth for all our closed-end funds).

• Assets under management in our alternative investments exceeded the $300 million mark. Our arbitrage partnership led the way, as it generated significant non-market correlated returns.

• Gabelli Asset Management, Inc., our institutional and separate accounts business, held its Fifteenth Annual Investment Symposium on May 16th. We reviewed the economic and investment dynamics that will influence our clients' investments over the balance of 2000. A live webcast of the event was available through our website.

• Our website, introduced two new features. Our Online Real Time Chat Support provides clients with access to a "live" client representative to assist with investment or account questions, a feature unique to Gabelli.

  Our "Meet the Managers" program provides a regular forum to chat with our portfolio managers on a wide variety of investment issues. We invite all our shareholders to visit us on the web.

Financial Strengths
Our assets included cash and investments at June 30, 2000 of $227 million as compared to $153 million a year ago. Our outstanding debt of $50 million will be tax deductible when paid, reducing the net cost to $30.9 million. Overall we continue to maintain a strong and liquid balance sheet to capitalize on opportunities.

We remain focused on building global brand awareness, developing a broader array of investment products, expanding channels of distribution and, most importantly, generating risk-adjusted performance and exceptional client service. These are the critical factors in growing the intrinsic value of our Company to which we are fully committed.

We thank our clients and our professional staff for their support, confidence and encouragement as we build on our strong foundation to deliver on our growth objectives and to enhance shareholder value.

Forward-Looking Information
This Shareholders' Report contains forward-looking information, including without limitation, certain of our business strategies and growth objectives. It should be recognized that such information are estimates or forecasts based upon various assumptions including those set forth herein as well as meeting the Company's internal operating performance assumptions, competitive conditions, and the expected performance of the economy and financial markets as they impact the Company's business. There may be other unknown risks, uncertainties or factors that may result in actual results, performance or achievements being materially different. There is no assurance that the forward-looking matters can be accomplished on terms acceptable to the Company or what the terms thereof may be. As a result of the foregoing and other factors, no assurance can be given as to future results and neither the Company nor any other person assumes responsibility for the accuracy or completeness of such information.

Mario J. Gabelli
Chairman & Chief Executive Officer

Assets Under
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Unaudited Consolidated Statements of Income

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Unaudited Condensed Consolidated Statements of Income

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