Financial Results
Total revenues rose 34% to $59.2 million for the three months ended September 30, 2000 versus $44.1 million for the third quarter of 1999. Operating income for the quarter was $24.5 million, 26% higher than the $19.5 million recorded in the prior year. Net income soared 42% to $14.5 million in the third quarter of 2000 as compared to $10.2 million in the third quarter of the prior year. Diluted earnings per share was $0.48 in 2000, 41% higher than per share earnings of $0.34 in the third quarter of 1999.

For the nine months ended September 30, 2000 total revenues climbed to $174.1 million up 38% over total revenues of $126.4 million in 1999. Operating income was $74.8 million in the first nine months of 2000, an increase of 41% over the year earlier period. Net income rose 37% to $42.7 million in 2000 as compared to $31.2 million in 1999. Diluted earnings per share was $1.43, an increase of 38% from $1.04 in the first nine months of 1999 (excluding a $1.03 per share non-recurring charge from the first quarter of 1999).

The solid gains in operating results were principally achieved through the growth in assets under management. We completed the quarter with $23.8 billion under management, 28% ahead of the $18.6 billion in assets managed at September 30, 1999.

The Company continues on its record pace in accumulating assets under management and in increasing its overall market share with net cash flows totaling nearly $900 million in the third quarter of 2000 and $2.1 billion over the first nine months. Substantially all new net cash flows during the quarter and year-to-date have been into our higher margin equity products, principally our open end equity mutual funds. Fund flows into our highly regarded non-market correlated arbitrage partnerships and our global equity long/short funds helped to more than double assets under management in our alternative investment products to $416 million at September 30, 2000 from $198 million in 1999.

Selected Highlights

Selected highlights from our third quarter:

• Our open end Blue Chip Value Fund, managed by Barbara Marcin, CFA, celebrated its first year of investment operation on August 26, 2000 and was up a stellar 33.3%.

• Our open end Utilities Fund, launched under Tim O'Brien, CFA, also had its first birthday on August 31, 2000. It's return for the first twelve months was 33.1%. We enthusiastically endorse Tim's vision that utilities represent solid investment opportunities.

• We continue to expand our efforts in alternative investments. European Partners (a long/short European equity fund launched this year) had a positive performance, as did all of our hedge funds. Our Arbitrage Partnership - where returns are not correlated to the overall market - enjoyed solid positive performance.

• The Gabelli Global Multimedia Trust Inc. (NYSE: "GGT") completed its Rights Offering with the issuance of nearly 3.6 million shares. This offering permitted our long-term investors to participate in the growth opportunities we see.

• The Gabelli Equity Trust Inc. (NYSE: "GAB") announced its intention to offer a 6 for 1 Rights Offering expected to be completed in the fourth quarter of 2000.

• Our high net worth business (GAMCO) surpassed $10 billion in assets under management with net new accounts through September 30, 2000 already exceeding the total new accounts gained for all of 1999.

Welcome to our Newest Director
On August 7th we announced that Paul B. Guenther, Chairman of the New York Philharmonic and of Fordham University and former president of the Paine Webber Group, Inc., has joined our Board of Directors. We are fortunate to have Paul join us as we benefit from his more than thirty years of experience in the securities industry.

Share Repurchase Program
During the third quarter we purchased 65,000 shares at an average cost of $22.72 per share as part of the Board approved Share Repurchase Program. This brings repurchases in 2000 to 175,000 shares at an average cost of $18.50 per share. We have repurchased a total of 475,700 shares since this program was initiated in the second quarter of 1999. The total number of shares outstanding at September 30, 2000 was 29,524,300 comprised of 5,524,300 of Class A shares and 24 million of Class B shares.

Financial Strengths
Our assets included cash and investments on September 30, 2000 of $267 million compared to $185 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.

Outlook
In the short-term, GBL's results reflect the ebbs and flows of market sentiment (MR. MARKET). As we write this report, the market is sorting out what we refer to as the six E's: Euro, election, energy, economy, earnings, and (e)valuation.

We remain dedicated to generating risk-adjusted returns for our clients by focusing on each company's specific fundamentals. In the long run, this will accrue to the benefit of all our constituents.

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

Forward-Looking Information
This Shareholders' Report contains certain forward looking information, including without limitation, business strategies and growth objectives, intrinsic value and the overall outlook for 2000 (including without limitation certain contemplated transactions). 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
Management Grid

Unaudited Consolidated Statements of Income

Unaudited Condensed Consolidated Statements
of Financial Condition

Unaudited Condensed Consolidated Statements of Income

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