Original GBL Prospectus - Gabelli

Competition and Competitors with Greater Resources
The investment management business is intensely competitive with low barriers to entry and is
undergoing substantial consolidation. Many organizations in this industry are attempting to market to and
service the same clients as the Company, not only with mutual fund products and services, but also with a
wide range of other Ñnancial products and services. Many of the Company's competitors have greater
distribution capabilities, oÅer more product lines and services, and may also have a substantially greater
amount of assets under management and Ñnancial resources. These competitors would tend to have a
substantial advantage over the Company during periods when the Company's investment performance is not
strong enough to counter these competitors' greater marketing resources. See ""Business Ì Competition.''
Reliance on Third-Party Distribution Programs
The Company has recently experienced signiÑcant growth in sales of its open-end Mutual Funds through
Third-Party Distribution Programs, most of which is from NTF Programs. Approximately $900 million of the
Company's assets under management in the open-end Mutual Funds as of September 30, 1998 were obtained
through NTF Programs. The cost of participating in Third-Party Distribution Programs is higher than the
Company's direct distribution costs, and there can be no assurance that the cost of Third-Party Distribution
Programs will not increase in the future. Any increase would be likely to have an adverse eÅect on the
Company's proÑt margins and results of operations. In addition, there can be no assurance that the Third-
Party Distribution Programs will continue to distribute the Mutual Funds. At September 30, 1998,
approximately 89% of the NTF Program net assets in the Gabelli and Gabelli Westwood families of funds are
attributable to two NTF Programs. Further, 89% of the total assets in The Treasurer's Funds are attributable
to one Third-Party Distribution Program. The decision by these Third-Party Distribution Programs to
discontinue distribution of the Mutual Funds could have an adverse eÅect on the Company's growth of assets
under management.
Fee Pressures Could Reduce ProÑt Margins
There has been a trend toward lower fees in some segments of the investment management industry. In
order for the Company to maintain its fee structure in a competitive environment, the Company must be able
to provide clients with investment returns and service that will encourage them to be willing to pay such fees.
Accordingly, there can be no assurance that the Company will be able to maintain its current fee structure.
Fee reductions on existing or future new business could have an adverse impact on the Company's proÑt
margins and results of operations.
Possibility of Losses Associated with Underwriting, Trading and Market-Making Activities
The Company's underwriting, trading and market-making activities are primarily conducted through its
subsidiary, Gabelli & Company, both as principal and agent. Such activities subject the Company's capital to
signiÑcant risks of loss. The risks of loss include those resulting from ownership of securities, extension of
credit, leverage, liquidity, counterparty failure to meet commitments, client fraud, employee errors,
misconduct and fraud (including unauthorized transactions by traders), failures in connection with the
processing of securities transactions and litigation. The Company has procedures and internal controls to
address such risks but there can be no assurance that these procedures and controls will prevent losses from
occurring.
Dependence on Information Systems
The Company operates in an industry that is highly dependent on its information systems and technology.
The Company outsources a signiÑcant portion of its information systems operations to third parties who are
responsible for providing the management, maintenance and updating of such systems. There can be no
assurance, however, that the Company's information systems and technology will continue to be able to
accommodate the Company's growth, or that the cost of maintaining such outsourcing arrangements will not
increase from its current level. Such a failure to accommodate growth, or an increase in costs related to these
information systems, could have a material adverse eÅect on the Company.
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