SECURITIES & EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2011~~March 31, 2012

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File No. ~~1-106~~001-14761

GAMCO INVESTORS, INC.
(Exact name of Registrant as specified in its charter)

New York			13-4007862
(State of other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

One Corporate Center, Rye, NY			10580-1422
(Address of principle executive offices)			(Zip Code)

(914) 921-3700
Registrant’s telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx Noo Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer", "accelerated filer", and "smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨		Accelerated filer x

Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

Indicate the number of shares outstanding of each of the Registrant’s classes of Common Stock, as of the latest practical date.

Class		Outstanding at ~~October 31, 2011~~April 30, 2012
Class A Common Stock, .001 par value		~~6,666,654~~6,592,716
Class B Common Stock, .001 par value		~~20,106,746~~20,040,746

INDEX

GAMCO INVESTORS, INC. AND SUBSIDIARIES


PART I.	FINANCIAL INFORMATION


Item 1.	Unaudited Condensed Consolidated Financial Statements

	Condensed Consolidated Statements of Income:
	- Three months ended ~~September 30,~~March 31, 2012 and 2011 ~~and 2010~~

	~~- Nine months ended September 30, 2011 and 2010~~Condensed Consolidated Statements of Comprehensive Income:




	- Three months ended March 31, 2012 and 2011

	Condensed Consolidated Statements of Financial Condition:
	- ~~September 30, 2011~~March 31, 2012
	- December 31, ~~2010~~2011
	- ~~September 30, 2010~~March 31, 2011

	Condensed Consolidated Statements of ~~Equity and Comprehensive Income:~~
	Equity:
	- ~~Nine~~Three months ended ~~September 30,~~March 31, 2012 and 2011 ~~and 2010~~

	Condensed Consolidated Statements of Cash Flows:
	- ~~Nine~~Three months ended ~~September 30,~~March 31, 2012 and 2011 ~~and 2010~~

	Notes to Unaudited Condensed Consolidated Financial Statements

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.	Quantitative and Qualitative Disclosures About Market Risk (Included in Item 2)

Item 4.	Controls and Procedures

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.	Exhibits

SIGNATURES

GAMCO INVESTORS, INC. AND SUBSIDIARIES	GAMCO INVESTORS, INC. AND SUBSIDIARIES													GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME	CONDENSED CONSOLIDATED STATEMENTS OF INCOME													CONDENSED CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED	UNAUDITED													UNAUDITED
(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)													(Dollars in thousands, except per share data)


		Three Months Ended						Nine Months Ended							Three Months Ended
		September 30,						September 30,							March 31,
		2011			2010			2011			2010				2012			2011
Revenues
Investment advisory and incentive fees		$	65,244		$	50,249		$	197,407		$	149,862			$	67,783		$	62,911
Distribution fees and other income																11,623			10,345
Institutional research services			3,421			4,005			11,311			11,953				2,343			3,649
Distribution fees and other income			11,486			8,189			33,419			23,125
Total revenues			80,151			62,443			242,137			184,940				81,749			76,905
Expenses
Compensation			32,010			26,661			99,792			78,745				34,554			33,417
Management fee			1,387			3,540			8,126			7,368				4,184			3,113
Distribution costs			11,091			7,710			34,108			21,840				10,177			13,429
Other operating expenses			5,002			5,023			18,193			15,528				5,822			6,186
Total expenses ~~(a)~~			49,490			42,934			160,219			123,481				54,737			56,145		(a)

Operating income			30,661			19,509			81,918			61,459				27,012			20,760
Other income (expense)
Net gain/(loss) from investments			(16,152	)		13,916			(3,743	)		11,351
Net gain from investments																13,878			8,740
Interest and dividend income			1,823			2,012			5,620			3,916				1,236			1,936
Interest expense			(4,418	)		(3,295	)		(10,688	)		(9,993	)			(4,404	)		(2,867	)
Total other income (expense), net			(18,747	)		12,633			(8,811	)		5,274
Total other income, net																10,710			7,809
Income before income taxes			11,914			32,142			73,107			66,733				37,722			28,569
Income tax provision			4,745			11,686			26,978			24,381				13,756			10,288
Net income			7,169			20,456			46,129			42,352				23,966			18,281
Net income/(loss) attributable to noncontrolling interests			(530	)		350			140			471
Net income attributable to noncontrolling interests																130			638
Net income attributable to GAMCO Investors, Inc.'s shareholders		$	7,699		$	20,106		$	45,989		$	41,881			$	23,836		$	17,643

Net income attributable to GAMCO Investors, Inc.'s shareholders
per share:
Basic		$	0.29		$	0.75		$	1.72		$	1.55			$	0.90		$	0.66

Diluted		$	0.29		$	0.73		$	1.72		$	1.53			$	0.90		$	0.65

Weighted average shares outstanding:
Basic			26,496			26,828			26,686			26,996				26,415			26,901

Diluted			26,576			28,364			26,772			27,818				26,533			27,008

Dividends declared:		$	0.04		$	0.93		$	0.11		$	0.99			$	0.04		$	0.03
(a) Nine months ended September 30, 2011 includes $5.6 million in costs directly related to the launch of a new closed-end fund.
(a) Includes $5.6 million in costs directly related to the launch of a new closed-end fund.														(a) Includes $5.6 million in costs directly related to the launch of a new closed-end fund.

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
(Dollars in thousands, except per share data)

September 30, December 31, September 30,
2011 2010 2010
ASSETS
Cash and cash equivalents, including restricted cash of $0, $0 and $62,308, respectively $ 335,656 $ 169,601 $ 294,271
Investments in securities 270,323 305,486 228,210
Investments in partnerships 98,286 82,871 79,244
Receivable from brokers 67,064 46,621 62,209
Investment advisory fees receivable 23,451 44,660 17,145
Income tax receivable and deferred tax assets 227 325 -
Other assets 25,883 23,172 21,140
  Total assets $ 820,890 $ 672,736 $ 702,219

LIABILITIES AND EQUITY
Payable to brokers $ 15,590 $ 1,554 $ 4,151
Income taxes payable and deferred tax liabilities 21,235 23,225 4,533
Capital lease obligation 5,100 5,182 5,197
Compensation payable 31,559 23,771 23,575
Securities sold, not yet purchased 6,743 19,299 18,446
Mandatorily redeemable noncontrolling interests 1,490 1,444 1,367
Accrued expenses and other liabilities 31,450 23,089 25,436
  Sub-total 113,167 97,564 82,705

5.5% Senior notes (due May 15, 2013) 99,000 99,000 99,000
5.875% Senior notes (due June 1, 2021) 100,000 - -
6.5% Convertible note (due October 2, 2018; repaid October 13, 2010) - - 60,000
Zero coupon subordinated debentures, Face value: $86.4 million (due December 31, 2015) 62,973 59,580 -
  Total liabilities 375,140 256,144 241,705

Redeemable noncontrolling interests 38,050 26,984 15,994
Commitments and contingencies (Note J)
Equity
  GAMCO Investors, Inc. stockholders' equity
    Class A Common Stock, $0.001 par value; 100,000,000 shares authorized;
      13,600,897, 13,255,503 and 13,202,489 issued, respectively; 6,666,654,
      6,763,221 and 6,970,410 outstanding, respectively 13 13 13
    Class B Common Stock, $0.001 par value; 100,000,000 shares authorized;
      24,000,000 shares issued; 20,106,746, 20,290,140 and 20,292,104 shares
      outstanding, respectively 20 20 20
    Additional paid-in capital 264,028 262,108 255,860
    Retained earnings 413,295 370,272 425,383
    Accumulated comprehensive income 18,425 25,389 19,306
    Treasury stock, at cost (6,934,243, 6,492,282 and 6,232,079 shares, respectively) (291,781 ) (271,773 ) (259,442 )
  Total GAMCO Investors, Inc. stockholders' equity 404,000 386,029 441,140
Noncontrolling interests 3,700 3,579 3,380
Total equity 407,700 389,608 444,520

Total liabilities and equity $ 820,890 $ 672,736 $ 702,219

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
UNAUDITED
(Dollars in thousands, except per share data)


	Three Months Ended
	March 31,
	2012			2011

Net income	$	23,966		$	18,281
Other comprehensive income, net of tax:
Foreign currency translation		(17	)		24
Net unrealized gains on securities available for sale		3,457			2,487
Other comprehensive income		3,440			2,511

Comprehensive income		27,406			20,792
Less: Comprehensive income attributable to noncontrolling interests		(130	)		(638	)

Comprehensive income attributable to GAMCO Investors, Inc.	$	27,276		$	20,154

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME
UNAUDITED
(In thousands)

For the Nine Months Ended September 30, 2011
GAMCO Investors, Inc. shareholders
Additional Accumulated Redeemable
Noncontrolling Common Paid-in Retained Comprehensive Treasury Noncontrolling Comprehensive
Interests Stock Capital Earnings Income Stock Total Interests Income
Balance at December 31, 2010 $ 3,579 $ 33 $ 262,108 $ 370,272 $ 25,389 $ (271,773 ) $ 389,608 $ 26,984 $ -
Redemptions of redeemable
noncontrolling interests - - - - - - - (2,340 ) -
Contributions from redeemable
noncontrolling interests - - - - - - - 17,490 -
Deconsolidation of
Partnership - - - - - - - (4,103 ) -
Net income 121 - - 45,989 - - 46,110 19 46,129
Net unrealized losses on
securities available for sale,
net of income tax benefit ($4,093) - - - - (6,969 ) - (6,969 ) - (6,969 )
Foreign currency translation - - - - 5 - 5 - 5
Dividends declared ($0.11 per
share) - - - (2,966 ) - - (2,966 ) - -
Stock based compensation
expense - - 1,920 - - - 1,920 - -
Purchase of treasury stock - - - - - (20,008 ) (20,008 ) - -
Balance at September 30, 2011 $ 3,700 $ 33 $ 264,028 $ 413,295 $ 18,425 $ (291,781 ) $ 407,700 $ 38,050 $ 39,165
Comprehensive income attributable
to noncontrolling interest (140 )
Total comprehensive income
attributable to GAMCO Investors, Inc. $ 39,025

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
(Dollars in thousands, except per share data)

	March 31,			December 31,			March 31,
	2012			2011			2011
ASSETS
Cash and cash equivalents	$	324,630		$	276,340		$	164,671
Investments in securities		257,607			238,333			279,713
Investments in sponsored registered investment companies		62,305			59,214			65,903
Investments in partnerships		101,685			100,893			94,584
Receivable from brokers		29,298			20,913			43,308
Investment advisory fees receivable		27,193			32,156			24,992
Income tax receivable		39			39			302
Other assets		23,668			28,861			24,030
Total assets	$	826,425		$	756,749		$	697,503

LIABILITIES AND EQUITY
Payable to brokers	$	22,366		$	10,770		$	7,998
Income taxes payable and deferred tax liabilities		24,782			15,296			25,035
Capital lease obligation		5,043			5,072			5,151
Compensation payable		28,834			17,695			22,883
Securities sold, not yet purchased		9,657			5,488			15,550
Mandatorily redeemable noncontrolling interests		1,390			1,386			1,466
Accrued expenses and other liabilities		28,692			24,441			28,351
Sub-total		120,764			80,148			106,434

5.5% Senior notes (due May 15, 2013)		99,000			99,000			99,000
5.875% Senior notes (due June 1, 2021)		100,000			100,000			-
Zero coupon subordinated debentures, Face value: $86.3 million at March 31, 2012 and
December 31, 2011 and $86.4 million at March 31, 2011 (due December 31, 2015)		65,300			64,119			60,697
Total liabilities		385,064			343,267			266,131

Redeemable noncontrolling interests		16,828			6,071			28,884
Commitments and contingencies (Note J)
Equity
GAMCO Investors, Inc. stockholders' equity
Preferred stock, $.001 par value; 10,000,000 shares authorized;
none issued and outstanding
Class A Common Stock, $0.001 par value; 100,000,000 shares authorized;
13,760,697, 13,627,397 and 13,256,203 issued, respectively; 6,592,716,
6,684,149 and 6,872,333 outstanding, respectively		13			13			13
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized;
24,000,000 shares issued; 20,040,746, 20,070,746 and 20,190,140 shares
outstanding, respectively		20			20			20
Additional paid-in capital		265,280			264,409			262,686
Retained earnings		431,963			409,191			387,101
Accumulated other comprehensive income		25,960			22,520			27,900
Treasury stock, at cost (7,167,981, 6,943,248 and 6,653,870 shares, respectively)		(302,152	)		(292,181	)		(278,870	)
Total GAMCO Investors, Inc. stockholders' equity		421,084			403,972			398,850
Noncontrolling interests		3,449			3,439			3,638
Total equity		424,533			407,411			402,488

Total liabilities and equity	$	826,425		$	756,749		$	697,503

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES	GAMCO INVESTORS, INC. AND SUBSIDIARIES																										GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY																											CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
UNAUDITED	UNAUDITED																										UNAUDITED
(In thousands)	(In thousands)																										(In thousands)

For the Nine Months Ended September 30, 2010
For the three months ended March 31, 2012																											For the three months ended March 31, 2012
					GAMCO Investors, Inc. shareholders																									GAMCO Investors, Inc. stockholders
							Additional					Accumulated									Redeemable																Accumulated
		Noncontrolling			Common		Paid-in		Retained			Comprehensive			Treasury						Noncontrolling			Comprehensive								Additional					Other									Redeemable
		Interests			Stock		Capital		Earnings			Income			Stock			Total			Interests			Income				Noncontrolling		Common		Paid-in		Retained			Comprehensive			Treasury						Noncontrolling
Balance at December 31, 2009		$	4,043		$	33	$	251,591	$	410,473		$	19,088		$	(241,567	)	$	443,661		$	1,464		$	-
																												Interests		Stock		Capital		Earnings			Income			Stock			Total			Interests
Balance at December 31, 2011																												$	3,439	$	33	$	264,409	$	409,191		$	22,520		$	(292,181	)	$	407,411		$	6,071
Redemptions of redeemable
noncontrolling interests			-			-		-		-			-			-			-			(475	)		-				-		-		-		-			-			-			-			(3	)
Contributions from redeemable
noncontrolling interests			-			-		-		-			-			-			-			14,700			-				-		-		-		-			-			-			-			10,640
Dividends paid to noncontrolling
interests			(829	)		-		-		-			-			-			(829	)		-			-
Net income			166			-		-		41,881			-			-			42,047			305			42,352
Net income (loss)																													10		-		-		23,836			-			-			23,846			120
Net unrealized gains on
securities available for sale,
net of income tax ($129)			-			-		-		-			220			-			220			-			220
net of income tax ($2,031)																													-		-		-		-			3,457			-			3,457			-
Foreign currency translation			-			-		-		-			(2	)		-			(2	)		-			(2	)			-		-		-		-			(17	)		-			(17	)		-
Dividends declared ($0.99 per
Dividends declared ($0.04 per
share)			-			-		-		(26,971	)		-			-			(26,971	)		-			-				-		-		-		(1,064	)		-			-			(1,064	)		-
Stock based compensation
expense			-			-		4,221		-			-			-			4,221			-			-				-		-		871		-			-			-			871			-
Exercise of stock options
including tax benefit			-			-		48		-			-			-			48			-			-
Purchase of treasury stock			-			-		-		-			-			(17,875	)		(17,875	)		-			-				-		-		-		-			-			(9,971	)		(9,971	)		-
Balance at September 30, 2010		$	3,380		$	33	$	255,860	$	425,383		$	19,306		$	(259,442	)	$	444,520		$	15,994		$	42,570
Comprehensive income attributable
to noncontrolling interest																									(471	)
Total comprehensive income
attributable to GAMCO Investors, Inc.																								$	42,099
Balance at March 31, 2012																												$	3,449	$	33	$	265,280	$	431,963		$	25,960		$	(302,152	)	$	424,533		$	16,828

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(In thousands)

Nine Months Ended
September 30,
2011 2010
Operating activities
Net income $ 46,129 $ 42,352
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
  Equity in net gains from partnerships (268 ) (4,869 )
  Depreciation and amortization 642 520
  Stock based compensation expense 1,920 4,221
  Deferred income taxes (1,358 ) 724
  Tax benefit from exercise of stock options - 8
  Foreign currency translation gain/(loss) 5 (2 )
  Fair value of donated securities 111 (608 )
  Gains on sales of available for sale securities (584 ) (13 )
  Amortization of discount on convertible debt - 52
  Accretion of zero coupon debentures 3,393 -
  Loss on extinguishment of debt - 497
(Increase) decrease in assets:
  Investments in trading securities 5,417 (64,863 )
  Investments in partnerships:
    Contributions to partnerships (13,283 ) (18,143 )
    Distributions from partnerships 3,312 6,423
  Receivable from brokers (26,130 ) (32,137 )
  Investment advisory fees receivable 21,339 18,539
  Income tax receivable and deferred tax assets 98 -
  Other assets (2,424 ) (194 )
Increase (decrease) in liabilities:
  Payable to brokers 14,036 3,756
  Income taxes payable and deferred tax liabilities 3,726 (4,843 )
  Compensation payable 7,787 10,273
  Mandatorily redeemable noncontrolling interests 47 (255 )
  Accrued expenses and other liabilities 9,579 (192 )
Total adjustments 27,365 (81,106 )
Net cash provided by (used in) operating activities $ 73,494 $ (38,754 )

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
UNAUDITED
(In thousands)

For the three months ended March 31, 2011
			GAMCO Investors, Inc. stockholders
										Accumulated
					Additional					Other								Redeemable
	Noncontrolling		Common		Paid-in		Retained			Comprehensive		Treasury						Noncontrolling
	Interests		Stock		Capital		Earnings			Income		Stock			Total			Interests
Balance at December 31, 2010	$	3,579	$	33	$	262,108	$	370,272		$	25,389	$	(271,773	)	$	389,608		$	26,984
Redemptions of redeemable
noncontrolling interests		-		-		-		-			-		-			-			(839	)
Contributions from redeemable
noncontrolling interests		-		-		-		-			-		-			-			6,263
Deconsolidation of
Partnership		-		-		-		-			-		-			-			(4,103	)
Net income		59		-		-		17,643			-		-			17,702			579
Net unrealized gains on
securities available for sale,
net of income tax ($1,460)		-		-		-		-			2,487		-			2,487			-
Foreign currency translation		-		-		-		-			24		-			24			-
Dividends declared
($0.03 per share)		-		-		-		(814	)		-		-			(814	)		-
Stock based compensation
expense		-		-		578		-			-		-			578			-
Purchase of treasury stock		-		-		-		-			-		(7,097	)		(7,097	)		-
Balance at March 31, 2011	$	3,638	$	33	$	262,686	$	387,101		$	27,900	$	(278,870	)	$	402,488		$	28,884

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED (continued)
(In thousands)

Nine Months Ended
September 30,
2011 2010
Investing activities
Purchases of available for sale securities $ (4,374 ) $ (12 )
Proceeds from sales of available for sale securities 5,685 2,014
Return of capital on available for sale securities 1,262 1,901
Increase in restricted cash - (50 )
Net cash provided by investing activities 2,573 3,853

Financing activities
Contributions from redeemable noncontrolling interests 17,490 14,700
Redemptions of redeemable noncontrolling interests (2,340 ) (475 )
Issuance of 5.875% Senior notes due June 1, 2021 100,000 -
Issuance costs on the 5.875% Senior notes due June 1, 2021 (934 ) -
Repayment of 6% Convertible note due August 14, 2011 - (40,400 )
Proceeds from exercise of stock options - 40
Dividends paid (2,966 ) (26,565 )
Dividends paid to noncontrolling interests - (829 )
Purchase of treasury stock (20,008 ) (17,875 )
Net cash provided by (used in) financing activities 91,242 (71,404 )
Effect of exchange rates on cash and cash equivalents (3 ) (2 )
Net increase (decrease) in cash and cash equivalents 167,306 (106,307 )
Cash and cash equivalents at beginning of period 169,601 338,270
Decrease in cash from deconsolidation of partnership (1,251 ) -
Cash and cash equivalents at end of period $ 335,656 $ 231,963
Supplemental disclosures of cash flow information:
Cash paid for interest $ 3,554 $ 9,775
Cash paid for taxes $ 23,587 $ 28,004

Non-cash activity:
- On January 1, 2011, GAMCO Investors, Inc. was no longer deemed to have control over a certain partnership which
resulted in the deconsolidation of that partnership and decreases of approximately $1,251 of cash and cash
equivalents, $2,852 of net assets and $4,103 of noncontrolling interests.
- For the nine months ended September 30, 2011 and September 30, 2010, the Company accrued restricted stock
award dividends of $27 and $405, respectively.
See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(In thousands)

	Three Months Ended
	March 31,
	2012			2011
Operating activities
Net income	$	23,966		$	18,281
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in net gains from partnerships		(3,351	)		(2,977	)
Depreciation and amortization		180			274
Stock based compensation expense		871			578
Deferred income taxes		1,515			1,649
Foreign currency translation gain/(loss)		(17	)		24
Fair value of donated securities		83			-
Gains on sales of available for sale securities		(279	)		(101	)
Accretion of zero coupon debentures		1,180			1,117
Loss on extinguishment of debt		1			-
(Increase) decrease in assets:
Investments in trading securities		(13,604	)		(44,589	)
Investments in partnerships:
Contributions to partnerships		(23,293	)		(6,583	)
Distributions from partnerships		25,852			3,026
Receivable from brokers		(8,385	)		(2,373	)
Investment advisory fees receivable		4,963			19,798
Income tax receivable and deferred tax assets		-			23
Other assets		5,023			(1,129	)
Increase (decrease) in liabilities:
Payable to brokers		11,596			6,444
Income taxes payable and deferred tax liabilities		5,940			(1,035	)
Compensation payable		11,139			(891	)
Mandatorily redeemable noncontrolling interests		4			23
Accrued expenses and other liabilities		4,227			6,531
Total adjustments		23,645			(20,191	)
Net cash provided by (used in) operating activities	$	47,611		$	(1,910	)

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED (continued)
(In thousands)

	Three Months Ended
	March 31,
	2012			2011
Investing activities
Purchases of available for sale securities	$	(4	)	$	(4	)
Proceeds from sales of available for sale securities		525			101
Return of capital on available for sale securities		571			631
Net cash provided by investing activities		1,092			728

Financing activities
Contributions from redeemable noncontrolling interests		10,640			6,263
Redemptions of redeemable noncontrolling interests		(3	)		(839	)
Dividends paid		(1,070	)		(814	)
Purchase of treasury stock		(9,971	)		(7,097	)
Net cash used in financing activities		(404	)		(2,487	)
Effect of exchange rates on cash and cash equivalents		(9	)		(10	)
Net increase (decrease) in cash and cash equivalents		48,290			(3,679	)
Cash and cash equivalents at beginning of period		276,340			169,601
Decrease in cash from deconsolidation of partnership		-			(1,251	)
Cash and cash equivalents at end of period	$	324,630		$	164,671
Supplemental disclosures of cash flow information:
Cash paid for interest	$	322		$	271
Cash paid for taxes	$	6,038		$	9,167

Non-cash activity:
- On January 1, 2011, GAMCO Investors, Inc. was no longer deemed to have control over a certain partnership which
resulted in the deconsolidation of that partnership and decreases of approximately $1,251 of cash and cash
equivalents, $2,852 of net assets and $4,103 of noncontrolling interests.
- For the three months ended March 31, 2012 and March 31, 2011, the Company accrued restricted stock
award dividends of $13 and $7, respectively.
See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2011~~March 31, 2012

(Unaudited)

A. Significant Accounting Policies

Basis of Presentation

Unless we have indicated otherwise, or the context otherwise requires, references in this report to “GAMCO Investors, Inc.,” “GAMCO,” “the Company,” “GBL,” “we,” “us” and “our” or similar terms are to GAMCO Investors, Inc., its predecessors and its subsidiaries.

The unaudited interim condensed consolidated financial statements of GAMCO included herein have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP in the United States for complete financial statements. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of financial position, results of operations and cash flows of GAMCO for the interim periods presented and are not necessarily indicative of a full year’s results.

The condensed consolidated financial statements include the accounts of GAMCO and its subsidiaries, including our new broker-dealer, G.distributors, LLC, a wholly-owned subsidiary of GAMCO, which became the distributor for the Gabelli/GAMCO family of funds on August 1, 2011. Intercompany accounts and transactions are eliminated.

These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2010~~2011 from which the accompanying condensed consolidated financial statements were derived.

~~Certain items previously reported have been reclassified to conform to~~The Company has now separately disclosed the ~~current period’s~~amount of investments in sponsored registered investment companies as a new line item in the condensed consolidated statements of financial condition. These amounts were previously included within investments in securities in the condensed consolidated statements ~~presentation.~~of financial condition.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported inon the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Recent Accounting Developments

In ~~January 2010,~~May 2011, the Financial Accounting Standards Board (“FASB”) issued guidance to improve disclosures about fair value measurements. The guidance affects all entities that are required to make disclosures about recurring and nonrecurring fair value measurements. The guidance requires new disclosures regarding purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company adopted the applicable portions of this guidance on January 1, 2011 without a material impact to the consolidated financial statement disclosures.

~~In May 2011, the FASB~~ issued guidance on fair value measurement which expands existing disclosure requirements for fair value measurements and makes other amendments. The guidance requires, for level 3 fair value measurements, (1) a quantitative disclosure of the unobservable inputs and assumptions used in the measurement, (2) a description of the valuation processes in place, and (3) a narrative description of the sensitivity of the fair value to changes in unobservable inputs and interrelationships between those inputs. Additionally, the guidance requires disclosure of the level in the fair value hierarchy of items that are not measured at fair value in the statement of financial ~~position~~condition but whose fair value must be disclosed and clarifies that the valuation premise and highest and best use concepts are not relevant to financial ~~instruments.~~assets or liabilities. The guidance is effective for ~~fiscal years~~interim and annual periods beginning after December 15, ~~2011 and for interim periods within those fiscal years.~~2011. The ~~application of~~Company adopted this guidance ~~will result in enhanced footnote disclosure upon adoption~~ on January 1, ~~2012.~~

2012 and has reflected the new disclosures in the condensed consolidated financial statements.

In June 2011, the FASB issued guidance which revises the manner in which entities present comprehensive income in their financial statements. The new guidance requires entities to report comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, which is consistent with the income statement format used currently, and the second statement would include components of other comprehensive income (“OCI”). The guidance does not change the items that must be reported in OCI. In December 2011, the FASB indefinitely deferred a portion of the guidance that would have required entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which the net income is presented and the statement in which other comprehensive income is presented. The guidance is effective for fiscal years beginning after December 15, 2011, and for interim periods within those fiscal years. The ~~application of this~~Company adopted the guidance ~~is not expected to be material to~~on January 1, 2012 and opted for the two separate but consecutive statements approach. Accordingly, the Company now presents the condensed consolidated ~~financial statements.~~statements of comprehensive income immediately following the condensed consolidated statements of income.

In ~~September~~December 2011, the FASB issued guidance which ~~permits~~creates new disclosure requirements about the nature of an ~~entity to make a qualitative assessment~~entity’s right of ~~whether it is more likely than not that a reporting unit’s fair value is less than~~offset and related arrangements associated with its carrying value before applying the quantitative two-step goodwill impairment model that is currently in place. If it is determined through the qualitative assessment that a reporting unit’s fair value is more likely than not greater than its carrying value, the remaining impairment steps would be unnecessary.financial instruments and derivative instruments. The ~~qualitative assessment is optional, allowing companies to go directly to the quantitative assessment. This guidance is~~disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim ~~goodwill impairment tests performed in fiscal years beginning after December 15, 2011.~~periods therein, with retrospective application required. The new disclosures are designed to make financial statements that are prepared under U.S. GAAP more comparable to those prepared under International Financial Reporting Standards. The Company is currently evaluating the impact that the application of this guidance ~~is not expected to be material to the condensed consolidated financial statements.~~will have on its disclosures.

B. Investment in Securities

Investments in securities at ~~September 30, 2011,~~March 31, 2012, December 31, ~~2010~~2011 and ~~September 30, 2010~~March 31, 2011 consisted of the following:

	March 31, 2012				December 31, 2011				March 31, 2011
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Government obligations	$	48,624	$	48,630	$	42,124	$	42,126	$	12,069	$	12,076
Common stocks		156,206		170,224		153,294		159,314		210,956		225,589
Mutual funds		1,086		1,495		1,084		1,307		1,190		1,629
Convertible bonds		-		-		-		-		163		175
Preferred stocks		-		-		-		-		-		-
Other investments		601		571		466		399		465		476
Total trading securities		206,517		220,920		196,968		203,146		224,843		239,945

Available for sale securities:
Common stocks		16,158		34,578		16,487		33,282		16,835		37,408
Mutual funds		1,362		2,109		1,362		1,905		1,503		2,360
Total available for sale securities		17,520		36,687		17,849		35,187		18,338		39,768

Total investments in securities	$	224,037	$	257,607	$	214,817	$	238,333	$	243,181	$	279,713

September 30, 2011 December 31, 2010 September 30, 2010
Cost Fair Value Cost Fair Value Cost Fair Value
(In thousands)
Trading securities:
  Government obligations $ 18,698 $ 18,699 $ 27,327 $ 27,288 $ 1,388 $ 1,363
  Common stocks 166,989 160,861 158,455 170,374 122,720 128,386
  Mutual funds 1,096 1,202 1,205 1,554 1,194 1,365
  Convertible bonds - - 574 620 762 938
  Preferred stocks - - 1,783 1,973 1,783 1,834
  Other investments 442 396 1,559 1,350 785 582
Total trading securities 187,225 181,158 190,903 203,159 128,632 134,468

Available for sale securities:
  Common stocks 16,724 31,903 16,835 37,139 16,918 31,594
  Mutual funds 41,718 57,262 43,707 65,188 44,717 62,148
Total available for sale securities 58,442 89,165 60,542 102,327 61,635 93,742

Total investments in securities $ 245,667 $ 270,323 $ 251,445 $ 305,486 $ 190,267 $ 228,210

Securities sold, not yet purchased at ~~September 30, 2011,~~March 31, 2012, December 31, ~~2010~~2011 and ~~September 30, 2010~~March 31, 2011 consisted of the following:

	March 31, 2012				December 31, 2011				March 31, 2011
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
Trading securities:	(In thousands)
Common stocks	$	9,016	$	9,553	$	5,271	$	5,415	$	14,044	$	15,550
Other		21		104		49		73		-		-
Total securities sold, not yet purchased	$	9,037	$	9,657	$	5,320	$	5,488	$	14,044	$	15,550

Investments in sponsored registered investment companies at March 31, 2012, December 31, 2011 and March 31, 2011 consisted of the following:

	March 31, 2012				December 31, 2011				March 31, 2011
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Mutual funds	$	15	$	17	$	15	$	18	$	15	$	25
Total trading securities		15		17		15		18		15		25

Available for sale securities:
Closed-end funds		36,546		58,721		37,104		55,855		39,232		61,734
Mutual funds		2,204		3,567		2,213		3,341		2,345		4,144
Total available for sale securities		38,750		62,288		39,317		59,196		41,577		65,878

Total investments in sponsored
registered investment companies	$	38,765	$	62,305	$	39,332	$	59,214	$	41,592	$	65,903

September 30, 2011 December 31, 2010 September 30, 2010
Proceeds Fair Value Proceeds Fair Value Proceeds Fair Value
Trading securities: (In thousands)
Common stocks $ 7,979 $ 6,743 $ 19,071 $ 19,299 $ 18,026 $ 18,387
Other - - - - 56 59
Total securities sold, not yet purchased $ 7,979 $ 6,743 $ 19,071 $ 19,299 $ 18,082 $ 18,446

Management determines the appropriate classification of debt and equity securities at the time of purchase and reevaluates such designation as of each balance sheet date. Investments in United States Treasury Bills and Notes with maturities of greater than three months at the time of purchase are classified as investments in securities, and those with maturities of three months or less at time of purchase are classified as cash equivalents. A substantial portion of investments in securities are held for resale in anticipation of short-term market movements and therefore are classified as trading securities. Trading securities are stated at fair value, with any unrealized gains or losses, reported in current period earnings. Available for sale (“AFS”) investments are stated at fair value, with any unrealized gains or losses, net of taxes, reported as a component of equity except for losses deemed to be other than temporary which are recorded as unrealized losses in the condensed consolidated statements of income. ~~There was no impairment of AFS securities for the three or nine month periods ended September 30, 2011 and September 30, 2010.~~

The Company recognizes all derivatives as either assets or liabilities measured at fair value and includes them in either investments in securities or securities sold, not yet purchased on the condensed consolidated statements of financial condition. From time to time, the Company and/or the partnerships and offshore funds that the Company consolidates will enter into hedging transactions to manage their exposure to foreign currencies and equity prices related to their proprietary investments. For the three ~~and nine~~ months ended ~~September 30, 2011, the Company had no derivative transactions. For the three months ended September 30, 2010,~~March 31, 2012, the Company had derivative transactions in equity derivatives which resulted in net losses of ~~$36,000. For the nine months ended September 30, 2010,~~$29,000. At March 31, 2011, the Company ~~had derivative transactions in equity derivatives which resulted in net losses of $154,000.~~did not hold any derivatives. At March 31, 3012 and December 31, ~~2010 and September 30, 2010,~~2011, we held derivative contracts on ~~403,000~~1 million equity shares and ~~265,000~~142,000 equity shares, respectively, and the fair value was ~~$1.0 million~~$105,000 and ~~$285,000,~~$24,000, respectively; these are included in investments in securities in the condensed consolidated statements of financial condition. ~~At September 30, 2011, the Company did not hold any derivatives.~~ These transactions are not designated as hedges for accounting purposes, and therefore changes in fair values of these derivatives are included in net ~~gain/(loss)~~gain from investments in the condensed consolidated statements of income.

~~At September 30, 2011, December 31, 2010~~

The following is a summary of the cost, gross unrealized gains, gross unrealized losses and ~~September 30, 2010, the~~ fair value of ~~common stock investments~~ available for sale ~~was $31.9 million, $37.1 million and $31.6 million, respectively. The total unrealized gains for common stock~~ investments ~~available for sale securities with unrealized gains was $15.2 million, $20.3 million and $14.7 million at September 30, 2011,~~as of March 31, 2012, December 31, ~~2010~~2011 and ~~September 30, 2010, respectively. There were no unrealized losses for common stock investments available for sale at September 30, 2011, December~~March 31, 2010 or September 30, 2010. At September 30, 2011, December 31, 2010 and September 30, 2010, the fair value of mutual fund investments available for sale with unrealized gains was $57.2 million, $65.2 million and $62.1 million, respectively. The total unrealized gains for mutual fund investments available for sale securities with unrealized gains at September 30, 2011, December 31, 2010 and September 30, 2010 was $15.6 million, $21.5 million and $17.4 million, respectively. At September 30, 2011, the fair value of mutual fund investments available for sale with unrealized losses was $0.1 million. The total unrealized losses for mutual fund investments available for sale with unrealized losses was less than $0.1 million at September 30, 2011. At December 31, 2010 and September 30, 2010, there were no unrealized losses for mutual fund investments available for sale.2011:

	March 31, 2012
			Gross		Gross
			Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Common stocks	$	16,158	$	18,420	$	-		$	34,578
Closed-end Funds		36,546		22,189		(14	)		58,721
Mutual funds		3,566		2,110		-			5,676
Total available for sale securities	$	56,270	$	42,719	$	(14	)	$	98,975

	December 31, 2011
			Gross		Gross
			Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Common stocks	$	16,487	$	16,795	$	-		$	33,282
Closed-end Funds		37,104		18,779		(28	)		55,855
Mutual funds		3,575		1,671		-			5,246
Total available for sale securities	$	57,166	$	37,245	$	(28	)	$	94,383

	March 31, 2011
			Gross		Gross
			Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Common stocks	$	16,835	$	20,573	$	-		$	37,408
Closed-end Funds		39,232		22,502					61,734
Mutual funds		3,848		2,656		-			6,504
Total available for sale securities	$	59,915	$	45,731	$	-		$	105,646

Unrealized changes to fair value, net of taxes, for the three months ended ~~September 30,~~March 31, 2012 and March 31, 2011 of $3.5 million and ~~September 30, 2010 of $7.9 million in losses and $3.3~~$2.5 million in gains, respectively, have been included in other comprehensive income, a component of equity, at ~~September 30, 2011~~March 31, 2012 and ~~September 30, 2010.~~March 31, 2011. Return of capital on available for sale securities were $0.6 million for both the three months ended ~~September 30, 2011~~March 31, 2012 and September 30, 2010 was $0.5 million and $0.6 million, respectively. There were no sales of investments available for sale for the three months ended September 30, 2011 or September 30, 2010. Unrealized changes to fair value, net of taxes, for the nine months ended September 30, 2011 and September 30, 2010 of $7.0 million in losses and $0.2 million in gains, respectively, have been included in other comprehensive income, a component of equity, at September 30, 2011 and September 30, 2010. Return of capital on available for sale securities for the nine months ended September 30, 2011 and September 30, 2010 was $1.3 million and $1.9 million, respectively.March 31, 2011. Proceeds from sales of investments available for sale were approximately ~~$5.7~~$0.5 million and ~~$2.0~~$0.1 million for the ~~nine~~three month periods ended ~~September 30,~~March 31, 2012 and March 31, 2011, ~~and September 30, 2010,~~ respectively. For the ~~nine~~three months ended ~~September 30,~~March 31, 2012 and March 31, 2011, ~~and September 30, 2010,~~ gross ~~realized~~ gains on the sale of investments available for sale amounted to ~~$0.6~~$0.3 million and ~~$13,000, respectively; there~~$0.1 million, respectively, and were reclassed from other comprehensive income into the condensed consolidated statements of income. There were no ~~gross realized~~ losses on the sale of investments available for ~~sale.~~sale for the three months ended March 31, 2012 or March 31, 2011. The basis on which the cost of a security sold is determined is specific identification.

Investments classified as available for sale that are in an unrealized loss position for which other-than-temporary impairment has not been recognized consisted of the following:

	March 31, 2012							December 31, 2011							March 31, 2011
			Unrealized							Unrealized							Unrealized
	Cost		Losses			Fair Value		Cost		Losses			Fair Value		Cost		Losses		Fair Value
(in thousands)
Mutual Funds	$	97	$	(14	)	$	83	$	101	$	(28	)	$	73	$	-	$	-	$	-

September 30, 2011 December 31, 2010 September 30, 2010
Unrealized Unrealized Unrealized
Cost Losses Fair Value Cost Losses Fair Value Cost Losses Fair Value
(in thousands)
Mutual Funds $ 100 $ (21 ) $ 79 $ - $ - $ - $ - $ - $ -

At ~~September 30,~~March 31, 2012 and December 31, 2011, there was one holding in a loss position which was not deemed to be other-than-temporarily impaired ~~because it passed scrutiny in our evaluation of~~due to the length of time that it had been in a loss position and because it passed scrutiny in our evaluation of issuer-specific and industry-specific considerations. In this specific instance, the investment at ~~September 30,~~March 31, 2012 and December 31, 2011 was a ~~mutual~~closed-end fund with diversified holdings across multiple companies and across multiple industries. The one holding was impaired for ~~four~~ten and seven consecutive months, respectively. The value of this holding at March 31, 2012 and ~~its fair value at September 30,~~December 31, 2011 was $0.1 ~~million.~~million for both periods.

1113

At March 31, 2011, there were no available for sale holdings in loss positions.

For the three months ended March 31, 2012 and 2011, there were no losses on available for sale securities deemed to be other than temporary.

C. Investments in Partnerships, Offshore Funds and Variable Interest Entities

The Company is general partner or co-general partner of various sponsored limited partnerships and the investment manager of various sponsored offshore funds, and have investments totaling $86.9 million, $86.9 million and $74.4 million at March 31, 2012, December 31, 2011 and March 31, 2011, respectively, whose underlying assets consist primarily of marketable securities (the “affiliated entities”). We also have investments in unaffiliated partnerships, offshore funds and other ~~entities.~~entities of $14.8 million, $14.0 million and $20.2 million at March 31, 2012, December 31, 2011 and March 31, 2011, respectively (the “unaffiliated entities”). We evaluate each entity for the appropriate accounting treatment and disclosure. Certain of the affiliated entities are ~~consolidated, generally because a majority~~consolidated. In addition, our statement of the equity is owned by the Company. Other investment partnerships for which we serve as the general partner but have only a minority ownership interest are not consolidated because the limited partners have substantive rights to replace the Company as general partner. Our balance sheetfinancial condition caption ~~“investments~~“Investments in partnerships” includes those investments, in both affiliated and unaffiliated entities, which the Company accounts for under the equity method of accounting, ~~and~~as well as certain investments ~~in consolidated~~that the feeder funds hold that ~~the Company accounts for~~are carried at fair value, as described ~~below.~~in Note D. The Company reflects the equity in earnings of these equity method investees and the change in fair value of the consolidated feeder funds under the caption ~~net gain/(loss)~~“Net gain from ~~investments~~investments” on the condensed consolidated statements of income.

~~We also have sponsored a~~The following table highlights the number of ~~investment vehicles where we are the investment manager in which we do not have an equity investment. These vehicles are considered variable interest~~ entities (“VIEs”), and we are not the primary beneficiary because we do not absorb a majority of the entities’ expected losses or expected returns. The Company has not provided any financial or other support to these entities. The total assets of these entities at September 30, 2011, December 31, 2010 and September 30, 2010 were $29.5 million, $13.3 million and $11.8 million, respectively. Our maximum exposure to loss as a result of our involvement with the VIEs is limited to the deferred carried interest that we have in one of the VIEs. On September 30, 2011, December 31, 2010 and September 30, 2010, we had a deferred carried interest in one of the VIE offshore funds of approximately $47,000, $325,000 and $307,000, respectively, and it was included in investments in partnerships on the condensed consolidated statements of financial condition. Additionally,consolidate as the general partner or investment manager to these VIEs, the Company earns fees for performing these roles. These revenues and associated receivables are dependent upon the AUM levels in the VIEs, would vary depending on these AUMs and would be reflected in the condensed consolidated statements of income, condensed consolidated statements of financial condition and condensed consolidated statements of cash flows.

~~In the case of two VIEs, we have determined that we are the primary beneficiary of each because we absorb a majority of each entity’s expected losses; therefore~~well as under which accounting guidance they are consolidated, ~~in the financial statements. The Company has not provided any financial support to these VIEs but does earn fees as the~~including consolidated feeder funds (“CFFs”), which retain their specialized investment manager. The assets of these VIEs may only be used to satisfy obligations of the VIEs. The following table presents the balances related to these VIEs that were included on the condensed consolidated statements of financial condition as well as GAMCO’s net interest in these VIEs:company accounting, partnerships and offshore funds.

Entities consolidated
	CFFs				Partnerships					Offshore Funds					Total
	VIEs		VOEs		VIEs		VOEs			VIEs			VOEs		VIEs			VOEs
Entities consolidated at December 31, 2010		1		2		-		2			1			-		2			4
Additional consolidated entities		-		-		-		-			-			1		-			1
Deconsolidated entities		-		-		-		(1	)		-			-		-			(1	)
Entities consolidated at March 31, 2011		1		2		-		1			1			1		2			4
Additional consolidated entities		-		-		-		-			-			-		-			-
Deconsolidated entities		-		-		-		-			(1	)		-		(1	)		-
Entities consolidated at December 31, 2011		1		2		-		1			-			1		1			4
Additional consolidated entities		-		-		-		-			-			-		-			-
Deconsolidated entities		-		-		-		-			-			-		-			-
Entities consolidated at March 31, 2012		1		2		-		1			-			1		1			4

September 30,
2011
(In thousands)
Cash and cash equivalents $ 251
Investments in securities 44,227
Investments in partnerships 1,489
Receivable from brokers 50,060
Other assets 70
Securities sold, not yet purchased (3,786 )
Accrued expenses and other liabilities (525 )
Redeemable noncontrolling interests (37,289 )
GAMCO's net interests in consolidated VIEs $ 54,497

On January 1, 2011, upon analysis of several factors, including the additional contribution of capital from unrelated third parties into a partnership that we consolidated for the year ended and as of December 31, 2010, we determined that the Company was no longer deemed to control the partnership, resulting in the deconsolidation of this partnership, effective January 1, 2011. The deconsolidation did not result in the recognition of any gain or loss. The Company continues to serve as the general partner and ~~earns~~earn fees for this role, and it also maintains an investment in the deconsolidated partnership which is included in investments in partnerships on the condensed consolidated statements of financial condition and is accounted for under the equity method (which approximates fair value).

~~At September 30, 2011, December 31, 2010 and September 30, 2010, and for~~

The following table includes the three and nine months ended September 30, 2011 and September 30, 2010, the Company consolidated two limited partnerships and one offshore fund (the “consolidated feeder funds”) that owned 100% of their offshore master funds. The Company retained the specialized investment company accounting of the consolidated feeder funds in the Company’s consolidated financial statements. Included in the investment in partnershipsnet impact by line item on the ~~Company’s~~condensed consolidated ~~statement~~statements of financial condition asfor each category of ~~September 30, 2011, December 31, 2010 and September 30, 2010, are $27.1 million $27.7 million, and $26.8 million, respectively, which represent the~~entity consolidated ~~feeder fund’s proportionate investment in the master funds carried at fair value at those dates.~~(in thousands):

	March 31, 2012
	Prior to
	Consolidation		CFFs			Partnerships			Offshore Funds			As Reported
Assets
Cash and cash equivalents	$	322,523	$	-		$	2,107		$	-		$	324,630
Investments in securities		236,387		-			6,503			14,717			257,607
Investments in sponsored investment companies		62,289		-			16			-			62,305
Investments in partnerships		109,136		990			(8,441	)		-			101,685
Receivable from brokers		18,400		-			121			10,777			29,298
Investment advisory fees receivable		27,189		5			(1	)		-			27,193
Other assets		23,691		16			-			-			23,707
Total assets	$	799,615	$	1,011		$	305		$	25,494		$	826,425
Liabilities and equity
Securities sold, not yet purchased	$	9,633	$	-		$	-		$	24		$	9,657
Accrued expenses and other liabilities		101,149		59			38			9,861			111,107
Total debt		264,300		-			-			-			264,300
Redeemable noncontrolling interests		-		952			267			15,609			16,828
Total equity		424,533		-			-			-			424,533
Total liabilities and equity	$	799,615	$	1,011		$	305		$	25,494		$	826,425

	December 31, 2011
	Prior to
	Consolidation		CFFs			Partnerships			Offshore Funds			As Reported
Assets
Cash and cash equivalents	$	259,531	$	15,000		$	1,809		$	-		$	276,340
Investments in securities		225,599		-			6,211			6,523			238,333
Investments in sponsored investment companies		59,197		-			17			-			59,214
Investments in partnerships		107,981		933			(8,021	)		-			100,893
Receivable from brokers		17,593		-			270			3,050			20,913
Investment advisory fees receivable		32,157		1			(2	)		-			32,156
Other assets		43,889		(14,989	)		-			-			28,900
Total assets	$	745,947	$	945		$	284		$	9,573		$	756,749
Liabilities and equity
Securities sold, not yet purchased	$	5,488	$	-		$	-		$	-		$	5,488
Accrued expenses and other liabilities		69,929		51			28			4,652			74,660
Total debt		263,119		-			-			-			263,119
Redeemable noncontrolling interests		-		894			256			4,921			6,071
Total equity		407,411		-			-			-			407,411
Total liabilities and equity	$	745,947	$	945		$	284		$	9,573		$	756,749

	March 31, 2011
	Prior to
	Consolidation		CFFs			Partnerships			Offshore Funds			As Reported
Assets
Cash and cash equivalents	$	162,685	$	-		$	32		$	1,954		$	164,671
Investments in securities		196,142		-			6,542			77,029			279,713
Investments in sponsored investment companies		65,879		-			24			-			65,903
Investments in partnerships		155,507		1,124			(8,587	)		(53,460	)		94,584
Receivable from brokers		24,631		-			2,390			16,287			43,308
Investment advisory fees receivable		25,043		9			(2	)		(58	)		24,992
Other assets		24,258		10			-			64			24,332
Total assets	$	654,145	$	1,143		$	399		$	41,816		$	697,503
Liabilities and equity
Securities sold, not yet purchased	$	3,279	$	-		$	-		$	12,271		$	15,550
Accrued expenses and other liabilities		88,681		95			55			2,053			90,884
Total debt		159,697		-			-			-			159,697
Redeemable noncontrolling interests		-		1,048			344			27,492			28,884
Total equity		402,488		-			-			-			402,488
Total liabilities and equity	$	654,145	$	1,143		$	399		$	41,816		$	697,503

1215

The following table includes the net impact by line item on the condensed consolidated statements of income for each category of entity consolidated (in thousands):

	Three Months Ended March 31, 2012
	Prior to
	Consolidation		CFFs			Partnerships			Offshore Funds			As Reported
Total revenues	$	82,579	$	(1	)	$	(1	)	$	(828	)	$	81,749
Total expenses		54,521		23			11			182			54,737
Operating income		28,058		(24	)		(12	)		(1,010	)		27,012
Total other income, net		9,544		85			23			1,058			10,710
Income before income taxes		37,602		61			11			48			37,722
Income tax provision		13,756		-			-			-			13,756
Net income		23,846		61			11			48			23,966
Net income attributable to noncontrolling interests		10		61			11			48			130
Net income attributable to GAMCO	$	23,836	$	-		$	-		$	-		$	23,836

	Three Months Ended March 31, 2011
	Prior to
	Consolidation		CFFs			Partnerships			Offshore Funds			As Reported
Total revenues	$	76,968	$	(4	)	$	(1	)	$	(58	)	$	76,905
Total expenses		55,974		31			15			125			56,145
Operating income		20,994		(35	)		(16	)		(183	)		20,760
Total other income, net		6,996		251			96			466			7,809
Income before income taxes		27,990		216			80			283			28,569
Income tax provision		10,288		-			-			-			10,288
Net income		17,702		216			80			283			18,281
Net income attributable to noncontrolling interests		59		216			80			283			638
Net income attributable to GAMCO	$	17,643	$	-		$	-		$	-		$	17,643

Variable Interest Entities

We also have sponsored a number of investment vehicles where we are the general partner or investment manager. These vehicles are variable interest entities (“VIEs”), and we are not the primary beneficiary because we do not absorb a majority of the entities’ expected losses or expected returns. The Company has not provided any financial or other support to these entities. The total assets of these entities at March 31, 2012, December 31, 2011 and March 31, 2011 were $74.5 million, $73.7 million and $9.8 million, respectively. Our maximum exposure to loss as a result of our involvement with the VIEs is limited to the investment in one VIE and the deferred carried interest that we have in another. On March 31, 2012 and December 31, 2011, we had an investment in one of the VIE offshore funds of approximately $8.2 million and $5.0 million, respectively, which was included in investments in partnerships on the condensed consolidated statements of financial condition. On March 31, 2012, December 31, 2011 and March 31, 2011, we had a deferred carried interest in one of the VIE offshore funds of approximately $49,000, $47,000 and $48,000, respectively, which was included in investments in partnerships on the condensed consolidated statements of financial condition. Additionally, as the general partner or investment manager to these VIEs the Company earns fees in relation to these roles, which given a decline in AUMs of the VIEs would result in lower fee revenues earned by the Company which would be reflected on the condensed consolidated statements of income, condensed consolidated statements of financial condition and condensed consolidated statements of cash flows.

Prior to January 1, 2011, we were consolidating two VIEs since we had determined that we were the primary beneficiary of each because we had equity interests and absorbed a majority of each entity’s expected losses; therefore they were consolidated in the financial statements. Effective October 1, 2011, we deconsolidated one of the VIEs upon analysis of several factors, including the redemption of $49.2 million of proprietary capital from this VIE, we determined that the Company was no longer deemed to be the primary beneficiary of the VIE. The deconsolidation did not result in the recognition of any gain or loss. The Company has not provided any financial support to these VIEs but does continue to serve as the investment manager and earn fees for this role, and it also maintains an investment in the deconsolidated VIE, which is included in investments in partnerships on the condensed consolidated statements of financial condition and is accounted for under the equity method (which approximates fair value). The assets of these VIEs may only be used to satisfy obligations of the VIEs. The following table presents the balances related to these VIEs that are consolidated and were included on the condensed consolidated statements of financial condition as well as GAMCO’s net interest in these VIEs:

	March 31,			December 31,			March 31,
	2012			2011			2011
(In thousands)
Cash and cash equivalents	$	-		$	15,000		$	-
Investments in securities		-			-			-
Investments in partnerships		17,183			1,433			1,598
Receivable from brokers		-			-			-
Other assets		-			-			-
Securities sold, not yet purchased		-			-			-
Accrued expenses and other liabilities		(7	)		(15,006	)		(41	)
Redeemable noncontrolling interests		(403	)		(381	)		(522	)
GAMCO's net interests in consolidated VIEs	$	16,773		$	1,046		$	1,035

D. Fair Value

All of the instruments within cash and cash equivalents, investments in securities and securities sold, not yet purchased are measured at fair value. Certain investments in partnerships are also measured at fair value.

The Company’s assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy in accordance with the FASB’s guidance on fair value measurement. The levels of the fair value hierarchy and their applicability to the Company are described below:

-	Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities at the reporting date. Level 1 assets include cash equivalents, government obligations, open-end mutual funds, closed-end funds and equities.
-	Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities that are not active and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly-quoted intervals. Assets that generally are included in this category may include certain limited partnership interests in private funds in which the valuations for substantially all of the investments within the fund are based upon Level 1 or Level 2 inputs and over the counter derivatives that have inputs to the valuations that can generally be corroborated by observable market data.
-	Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Assets included in this category generally include equities that trade infrequently and direct private equity investments held within consolidated partnerships.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Investments are transferred into or out of any level at their beginning period values.

The availability of observable inputs can vary from product to product and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized as Level 3.

The valuation process and policies reside with the financial reporting and accounting group which reports to the Chief Financial Officer. The Company uses the “market approach” valuation technique to value its investments in Level 3 investments. The Company’s valuation of the Level 3 investments has been based upon either i) the recent sale prices of the issuers or ii) the net assets, book value or cost basis of the issuer when there is no recent sales prices available.

In the absence of a closing price, an average of the bid and ask price is used. Bid prices reflect the highest price that the market is willing to pay for an asset. Ask prices represent the lowest price that the market is willing to accept for an asset.

Cash equivalents – Cash equivalents primarily consist of an affiliated money market mutual fund which is invested solely in U.S. Treasuries. U.S. Treasury Bills and Notes with maturities of three months or less at the time of purchase are also considered cash equivalents. Cash equivalents are valued using quoted market prices.

Investments in securities and securities sold, not yet purchased – Investments in securities and securities sold, not yet purchased are generally valued based on quoted prices from an exchange. To the extent these securities are actively traded, valuation adjustments are not applied, and they are categorized in Level 1 of the fair value hierarchy. Securities categorized in Level 2 investments are valued using other observable inputs. Nonpublic and infrequently traded investments are included in Level 3 of the fair value hierarchy because significant inputs to measure fair value are unobservable.

Investments in Partnerships – The Company’s investments include limited partner investments in consolidated feeder funds. The Company considers the net asset value of the master funds held by the consolidated feeder fund to be the best estimate of fair value. Investments in private funds that are redeemable at the measurement date or within the near term, are categorized in Level 2 of the fair value hierarchy. These funds primarily invest in long and short investments in debt and equity securities that are traded in public and over-the-counter exchanges in the United States and are generally classified as Level 1 assets or liabilities in the master funds’ financial statements. We may redeem our investments in these funds monthly with 30 days’ notice.

The following ~~table presents~~tables present information about the Company’s assets and liabilities by major categories measured at fair value on a recurring basis as of ~~September 30, 2011,~~March 31, 2012, December 31, ~~2010~~2011 and ~~September 30, 2010~~March 31, 2011 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of ~~September 30, 2011~~March 31, 2012 (in thousands)

	Quoted Prices in Active		Significant Other		Significant		Balance as of			Quoted Prices in Active		Significant Other		Significant		Balance as of
	Markets for Identical		Observable		Unobservable		September 30,			Markets for Identical		Observable		Unobservable		March 31,
Assets	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2011			Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2012
Cash equivalents	$	335,098	$	-	$	-	$	335,098		$	324,333	$	-	$	-	$	324,333
Investments in partnerships		-		27,071		-		27,071			-		23,166		-		23,166
Investments in securities:
AFS - Common stocks		31,903		-		-		31,903			34,578		-		-		34,578
AFS - Mutual funds		57,262		-		-		57,262			2,109		-		-		2,109
Trading - Government obligations		18,699		-		-		18,699
Trading - Gov't obligations											48,630		-		-		48,630
Trading - Common stocks		160,259		8		594		160,861			169,463		114		647		170,224
Trading - Mutual funds		1,202		-		-		1,202			1,495		-		-		1,495
Trading - Other		38		-		358		396			293		-		278		571
Total investments in securities		269,363		8		952		270,323			256,568		114		925		257,607
Investments in sponsored registered investment companies:									Investments in sponsored registered investment companies:
AFS - Closed-end Funds											58,721		-		-		58,721
AFS - Mutual Funds											3,567		-		-		3,567
Trading - Mutual funds											17		-		-		17
Total investments in sponsored
registered investment companies											62,305		-		-		62,305
Total investments		269,363		27,079		952		297,394			318,873		23,280		925		343,078
Total assets at fair value	$	604,461	$	27,079	$	952	$	632,492		$	643,206	$	23,280	$	925	$	667,411
Liabilities
Trading - Common stocks	$	6,743	$	-	$	-	$	6,743		$	9,553	$	-	$	-	$	9,553
Trading - Other											-		104		-		104
Securities sold, not yet purchased	$	6,743	$	-	$	-	$	6,743		$	9,553	$	104	$	-	$	9,657

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, ~~2010~~2011 (in thousands)

	Quoted Prices in Active		Significant Other		Significant		Balance as of
	Markets for Identical		Observable		Unobservable		December 31,
Assets	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2011
Cash equivalents	$	260,969	$	-	$	-	$	260,969
Investments in partnerships		-		27,122		-		27,122
Investments in securities:
AFS - Common stocks		33,282		-		-		33,282
AFS - Mutual funds		1,905		-		-		1,905
Trading - Gov't obligations		42,126		-		-		42,126
Trading - Common stocks		158,623		21		670		159,314
Trading - Mutual funds		1,307		-		-		1,307
Trading - Other		55		60		284		399
Total investments in securities		237,298		81		954		238,333
Investments in sponsored registered investment companies:
AFS - Closed-end Funds		55,855		-		-		55,855
AFS - Mutual Funds		3,341		-		-		3,341
Trading - Mutual funds		18		-		-		18
Total investments in sponsored
registered investment companies		59,214		-		-		59,214
Total investments		296,512		27,203		954		324,669
Total assets at fair value	$	557,481	$	27,203	$	954	$	585,638
Liabilities
Trading - Common stocks	$	5,415	$	-	$	-	$	5,415
Trading - Other		-		73		-		73
Securities sold, not yet purchased	$	5,415	$	73	$	-	$	5,488

Quoted Prices in Active Significant Other Significant Balance as of
Markets for Identical Observable Unobservable December 31,
Assets Assets (Level 1) Inputs (Level 2) Inputs (Level 3) 2010
Cash equivalents $ 167,548 $ - $ - $ 167,548
Investments in partnerships - 27,690 - 27,690
Investments in securities:
  AFS - Common stocks 37,139 - - 37,139
  AFS - Mutual funds 65,188 - - 65,188
  Trading - Government obligations 27,288 - - 27,288
  Trading - Common stocks 170,204 23 147 170,374
  Trading - Mutual funds 1,554 - - 1,554
  Trading - Convertible bonds 620 - - 620
  Trading - Preferred stocks 1,973 - - 1,973
  Trading - Other 72 1,000 278 1,350
Total investments in securities 304,038 1,023 425 305,486
Total investments 304,038 28,713 425 333,176
Total assets at fair value $ 471,586 $ 28,713 $ 425 $ 500,724
Liabilities
  Trading - Common stocks $ 19,299 $ - $ - $ 19,299
Securities sold, not yet purchased $ 19,299 $ - $ - $ 19,299

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of ~~September 30, 2010~~March 31, 2011 (in thousands)

	Quoted Prices in Active		Significant Other		Significant		Balance as of
	Markets for Identical		Observable		Unobservable		March 31,
Assets	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2011
Cash equivalents	$	161,946	$	-	$	-	$	161,946
Investments in partnerships		-		28,473		-		28,473
Investments in securities:
AFS - Common stocks		37,408		-		-		37,408
AFS - Mutual funds		2,360		-		-		2,360
Trading - Gov't obligations		12,076		-		-		12,076
Trading - Common stocks		225,008		13		568		225,589
Trading - Mutual funds		1,629		-		-		1,629
Trading - Convertible bonds		175		-		-		175
Trading - Other		120		-		356		476
Total investments in securities		278,776		13		924		279,713
Investments in sponsored registered investment companies:
AFS - Closed-end Funds		61,734		-		-		61,734
AFS - Mutual Funds		4,144		-		-		4,144
Trading - Mutual funds		25		-		-		25
Total investments in sponsored
registered investment companies		65,903		-		-		65,903
Total investments		344,679		28,486		924		374,089
Total assets at fair value	$	506,625	$	28,486	$	924	$	536,035
Liabilities
Trading - Common stocks	$	15,550	$	-	$	-	$	15,550
Securities sold, not yet purchased	$	15,550	$	-	$	-	$	15,550

Quoted Prices in Active Significant Other Significant Balance as of
Markets for Identical Observable Unobservable September 30,
Assets Assets (Level 1) Inputs (Level 2) Inputs (Level 3) 2010
Cash equivalents $ 293,661 $ - $ - $ 293,661
Investments in partnerships - 26,795 - 26,795
Investments in securities:
  AFS - Common stocks 31,594 - - 31,594
  AFS - Mutual funds 62,148 - - 62,148
  Trading - Government obligations 1,363 - - 1,363
  Trading - Common stocks 128,113 90 183 128,386
  Trading - Mutual funds 1,365 - - 1,365
  Trading - Convertible bonds 938 - - 938
  Trading - Preferred stocks 1,821 - 13 1,834
  Trading - Other 204 285 93 582
Total investments in securities 227,546 375 289 228,210
Total investments 227,546 27,170 289 255,005
Total assets at fair value $ 521,207 $ 27,170 $ 289 $ 548,666
Liabilities
  Trading - Common stocks $ 18,387 $ - $ - $ 18,387
  Trading - Other 59 - - 59
Securities sold, not yet purchased $ 18,446 $ - $ - $ 18,446

The following tables present additional information about assets ~~and liabilities~~ by major categories measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value.

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended March 31, 2012 (in thousands)

								Total
								Unrealized
								Gains or		Total
			Total Realized and					(Losses)		Realized
	December		Unrealized Gains or					Included in		and								Transfers
	31, 2011		(Losses) in Income					Other		Unrealized								In and/or
	Beginning					AFS		Comprehensive		Gains or								(Out) of		Ending
Asset	Balance		Trading			Investments		Income		(Losses)			Purchases		Sales			Level 3		Balance
Financial
instruments owned:
Trading - Common
stocks	$	670	$	-		$	-	$	-	$	-		$	57	$	(80	)	$	-	$	647
Trading - Other		284		(2	)		-		-		(2	)		4		(8	)		-		278
Total	$	954	$	(2	)	$	-	$	-	$	(2	)	$	61	$	(88	)	$	-	$	925

There were no transfers between any Levels during the three months ended March 31, 2012.

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended ~~September 30,~~March 31, 2011 (in thousands)

							Total																			Total
							Unrealized																			Unrealized
							Gains or		Total																	Gains or		Total
			Total Realized and				(Losses)		Realized													Total Realized and				(Losses)		Realized
	June		Unrealized Gains or				Included in		and							Transfers				December		Unrealized Gains or				Included in		and							Transfers
	30, 2011		(Losses) in Income				Other		Unrealized							In and/or				31, 2010		(Losses) in Income				Other		Unrealized							In and/or
	Beginning				AFS		Comprehensive		Gains or							(Out) of		Ending		Beginning				AFS		Comprehensive		Gains or							(Out) of		Ending
Asset	Balance		Trading		Investments		Income		(Losses)		Purchases		Sales			Level 3		Balance		Balance		Trading		Investments		Income		(Losses)		Purchases		Sales			Level 3		Balance
Financial
instruments owned:
Trading - Common
stocks	$	584	$	10	$	-	$	-	$	10	$	-	$	-		$	-	$	594	$	147	$	21	$	-	$	-	$	21	$	400	$	-		$	-	$	568
Trading - Other		369		12		-		-		12		3		(26	)		-		358		278		126		-		-		126		-		(48	)		-		356
Total	$	953	$	22	$	-	$	-	$	22	$	3	$	(26	)	$	-	$	952	$	425	$	147	$	-	$	-	$	147	$	400	$	(48	)	$	-	$	924

There were no transfers between any Levels during the three months ended ~~September 30,~~March 31, 2011.

E. Debt

Debt consists of the following:

	March 31, 2012				December 31, 2011				March 31, 2011
	Carrying		Fair Value		Carrying		Fair Value		Carrying		Fair Value
	Value		Level 2		Value		Level 2		Value		Level 2
(In thousands)
5.5% Senior notes	$	99,000	$	100,733	$	99,000	$	93,070	$	99,000	$	102,614
5.875% Senior notes		100,000		104,375		100,000		100,733		-		-
0% Subordinated debentures		65,300		66,774		64,119		58,899		60,697		57,006
Total	$	264,300	$	271,882	$	263,119	$	252,702	$	159,697	$	159,620

1520

~~Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Nine Months Ended September 30, 2011 (in thousands)~~

Total
Unrealized
Gains or Total
Total Realized and (Losses) Realized
December Unrealized Gains or Included in and Transfers
31, 2010 (Losses) in Income Other Unrealized In and/or
Beginning AFS Comprehensive Gains or (Out) of Ending
Asset Balance Trading Investments Income (Losses) Purchases Sales Level 3 Balance
Financial
instruments owned:
Trading - Common
stocks $ 147 $ 47 $ - $ - $ 47 $ 414 $ (14 ) $ - $ 594
Trading - Other 278 135 - - 135 13 (74 ) 6 358
Total $ 425 �� $ 182 $ - $ - $ 182 $ 427 $ (88 ) $ 6 $ 952

There were no transfers between Level 1 and Level 2 during the nine months ended September 30, 2011. During the nine months ended September 30, 2011, the Company reclassified approximately $6,000 of investments from Level 1 to Level 3. The reclassifications were due to decreased availability of market price quotations and were based on the values at the beginning of the period in which the reclassifications occurred.

~~Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended September 30, 2010 (in thousands)~~

Total
Unrealized
Gains or Total
Total Realized and (Losses) Realized Net
June Unrealized Gains or Included in and Transfers
30, 2010 (Losses) in Income Other Unrealized Purchases In and/or
Beginning AFS Comprehensive Gains or and Sales, (Out) of Ending
Asset Balance Trading Investments Income (Losses) net Level 3 Balance
Financial
instruments owned:
Trading - Common
stocks $ 272 $ 18 $ - $ - $ 18 $ (107 ) $ - $ 183
Trading - Preferred
stocks 11 2 - - 2 - - 13
Trading - Other 93 - - - - - - 93
Total $ 376 $ 20 $ - $ - $ 20 $ (107 ) $ - $ 289

~~There were no transfers between any Levels during the three months ended September 30, 2010.~~

~~Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Nine Months Ended September 30, 2010 (in thousands)~~

Total
Unrealized
Gains or Total
Total Realized and (Losses) Realized Net
December Unrealized Gains or Included in and Transfers
31, 2009 (Losses) in Income Other Unrealized Purchases In and/or
Beginning AFS Comprehensive Gains or and Sales, (Out) of Ending
Asset Balance Trading Investments Income (Losses) net Level 3 Balance
Financial
instruments owned:
Trading - Common
stocks $ 205 $ 47 $ - $ - $ 47 $ (139 ) $ 70 $ 183
Trading - Preferred
stocks 15 (2 ) - - (2 ) - - 13
Trading - Other 90 3 - - 3 - - 93
Total $ 310 $ 48 $ - $ - $ 48 $ (139 ) $ 70 $ 289

There were no transfers between Level 1 and Level 2 holdings during the nine months ended September 30, 2010. During the nine months ended September 30, 2010, the Company reclassified approximately $23,000 of investments from Level 1 to Level 3 and $47,000 from Level 2 to Level 3. The reclassifications were due to decreased availability of market price quotations and were based on the values at the beginning of the period in which the reclassification occurred.

Unrealized Level 3 gains and/or losses included within net gain/(loss) from investments in the condensed consolidated statements of income for the three months ended September 30, 2011 and September 30, 2010 were approximately $22,000 of gains and $20,000 of gains, respectively, and for the nine months ended September 30, 2011 and September 30, 2010 were approximately $182,000 of gains and $48,000 of gains, respectively, for those Level 3 securities held at September 30, 2011 and September 30, 2010, respectively.

~~E. Debt~~

September 30, December 31, September 30,
2011 2010 2010
(In thousands)
5.5% Senior notes $ 99,000 $ 99,000 $ 99,000
5.875% Senior notes 100,000 - -
6.5% Convertible note - - 60,000
0% Subordinated debentures 62,973 59,580 -
Total $ 261,973 $ 158,580 $ 159,000

On May 31, 2011, the Company issued $100 million of senior unsecured notes at ~~par maturing on June 1, 2021 and paying interest at the annual rate of 5.875% (the “2021 Notes”).~~par. The net proceeds of $99.1 million ~~from the issuance of the 2021 Notes are being~~were used for working capital and general corporate ~~purposes, which may include acquisitions.~~purposes. The issuance costs of $0.9 million have been capitalized and ~~are being~~will be amortized over the term of the debt. The notes mature on June 1, 2021 and bear interest ~~on the 2021 Notes is~~at 5.875% per annum, payable semi-annually on June 1 and December 1 of each year ~~commencing~~and commenced on December 1, 2011. Upon the occurrence of a change of control triggering event, as defined in the indenture, the Company would be required to offer to repurchase the notes at 101% of their principal amount.

On December 31, 2010, the Company issued $86.4 million in par value of five year zero coupon subordinated debentures due December 31, 2015 (“Debentures”) to its shareholders of record on December 15, 2010 through the declaration of a special dividend of $3.20 per share. The ~~2021 Notes~~Debentures have a par value of $100 and are callable at the option of the Company, in whole or in part, at any time or from time to time, at a redemption price equal to 100% of the principal amount of the Debentures to be redeemed. During the three months ended March 31, 2012, the Company repurchased 229 Debentures, having a face value of $22,900. The redemption was accounted for as an extinguishment of debt and resulted in a loss of $1,000 which was included in net gain from investments on the condensed consolidated statements of income. There were ~~issued pursuant~~no repurchases for the three month period ended March 31, 2011. The debt is being accreted to its face value using the ~~Company’s existing $400~~effective rate on the date of issuance of 7.45%. At March 31, 2012, December 31, 2011 and March 31, 2011, the debt was recorded at its accreted value of $65.3 million, ~~shelf registration statement filed with the SEC under which the remaining $300~~$64.1 million ~~is available through July 27, 2012.~~and $59.6 million, respectively.

The fair value of the Company’s debt, which is a Level 2 valuation, is estimated based on either quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities or using market standard ~~models depending on the characteristics of the debt issuance.~~models. Inputs in these standard models include credit rating, maturity and interest rate. A standard option pricing model was used to calculate the fair value of the conversion option embedded in the convertible debt at September 30, 2010, with significant inputs including volatility of GBL stock, interest rates, dividend yield and maturity. At September 30, 2011, December 31, 2010 and September 30, 2010, the fair value of the Company’s debt is estimated to be $255.1 million, $163.0 million and $166.6 million, respectively. The carrying value of the Company debt at September 30, 2011, December 31, 2010 and September 30, 2010 is $262.0 million, $158.6 million and $159.0 million, respectively. At the time of issuance on December 31, 2010, the effective interest rate for the zero coupon subordinated debentures due December 31, 2015 was 7.45%. The discount on the debt is being accreted to interest expense over the term of the debenture using the effective interest rate.

F. Income Taxes

The effective tax rate for the three ~~and nine~~ months ended ~~September 30, 2011~~March 31, 2012 was ~~39.8% and 36.9%, respectively,~~36.5% compared to ~~36.4% and 36.5%~~36.0% for the prior year three month period. Prior to the consolidation of certain partnerships and ~~nine month periods, respectively. The third quarter 2011 rate increase results from the change~~offshore entities, in ~~the mix of operating income and investment losses which raises our effective state tax rate in addition to losses from consolidated partnerships for~~ which no tax ~~benefits are~~liability or benefit is recorded at the corporate ~~level. The tax liability or benefit from these partnerships~~level but which flow directly to its partners, the effective tax rate was 36.5% and to36.8% for the ~~extent they relate to interests not held by GAMCO are included in net income attributable to noncontrolling interests.~~first quarter of 2012 and 2011, respectively.

G. Earnings Per Share

The computations of basic and diluted net income per share are as follows:

	Three Months Ended March 31,
(in thousands, except per share amounts)	2012		2011
Basic:
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	23,836	$	17,643
Weighted average shares outstanding		26,415		26,901
Basic net income attributable to GAMCO Investors, Inc.'s
shareholders per share	$	0.90	$	0.66

Diluted:
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	23,836	$	17,643

Weighted average share outstanding		26,415		26,901
Dilutive stock options and restricted stock awards		118		107
Total		26,533		27,008
Diluted net income attributable to GAMCO Investors, Inc.'s
shareholders per share	$	0.90	$	0.65

Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
(in thousands, except per share amounts) 2011 2010 2011 2010
Basic:
Net income attributable to GAMCO Investors, Inc.'s shareholders $ 7,699 $ 20,106 $ 45,989 $ 41,881
Weighted average shares outstanding 26,496 26,828 26,686 26,996
Basic net income attributable to GAMCO Investors, Inc.'s
  shareholders per share $ 0.29 $ 0.75 $ 1.72 $ 1.55

Diluted:
Net income attributable to GAMCO Investors, Inc.'s shareholders $ 7,699 $ 20,106 $ 45,989 $ 41,881
Add interest expense on convertible notes, net of management
  fee and taxes - 721 - 791
Total 7,699 20,827 45,989 42,672

Weighted average share outstanding 26,496 26,828 26,686 26,996
Dilutive stock options and restricted stock awards 80 262 86 238
Assumed conversion of convertible notes - 1,274 - 584
Total 26,576 28,364 26,772 27,818
Diluted net income attributable to GAMCO Investors, Inc.'s
  shareholders per share $ 0.29 $ 0.73 $ 1.72 $ 1.53

H. Stockholders’ Equity

Shares outstanding were ~~26.8~~26.6 million on ~~September 30, 2011, 27.1~~March 31, 2012, 26.8 million on December 31, ~~2010,~~2011, and ~~27.3~~27.1 million on ~~September 30, 2010.~~March 31, 2011.

~~On February 8, 2011, our Board~~Dividends

	Payment	Record
	Date	Date	Amount

Three months ended March 31, 2012	March 27, 2012	March 13, 2012	$ 0.04
Three months ended March 31, 2011	March 29, 2011	March 15, 2011	$ 0.03

Voting Rights

The holders of ~~Directors declared a quarterly dividend of $0.03 per share on its~~ Class A Common stock (“Class A Shares”) and Class B Common stock (“Class B ~~Shares”~~Stock”), payable on March 29, 2011 to shareholders of record on March 15, 2011. On May 6, 2011, our Board of Directors declared a quarterly dividend of $0.04 per share on its Class A Shares and Class B Shares, payable on June 28, 2011 to shareholders of record on June 14, 2011. On August 2, 2011, our Board of Directors declared a quarterly dividend of $0.04 per share on its Class A Shares and Class B Shares, payable on September 27, 2011 to shareholders of record on September 13, 2011.

On February 9, 2010, our Board of Directors declared a quarterly dividend of $0.03 per share on its Class A Shares and Class B Shares, payable on March 30, 2010 to shareholders of record on March 16, 2010. On May 4, 2010, our Board of Directors declared a quarterly dividend of $0.03 per share on its Class A Shares and Class B Shares, payable on June 29, 2010 to shareholders of record on June 15, 2010. On August 3, 2010, our Board of Directors declared a special dividend of $0.90 per share on its Class A Shares and Class B Shares, payable on September 14, 2010 to shareholders of record on August 31, 2010 and a quarterly dividend of $0.03 per share on its Class A Shares and Class B Shares, payable on September 28, 2010 to shareholders of record on September 14, 2010.

~~Voting Rights~~

~~The holders of Class A Shares and Class B Shares~~ have identical rights except that (i) holders of Class A ~~Shares~~Stock are entitled to one vote per share, while holders of Class B ~~Shares~~Stock are entitled to ten votes per share on all matters to be voted on by shareholders in general, and (ii) holders of Class A ~~Shares~~Stock are not eligible to vote on matters relating exclusively to Class B ~~Shares~~Stock and vice versa.

Stock Award and Incentive Plan

The Company maintains two ~~plans~~Plans approved by the shareholders, which are designed to provide incentives which will attract and retain individuals key to the success of GAMCO through direct or indirect ownership of our common stock. Benefits under the Plans may be granted in any one or a combination of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents and other stock or cash based awards. A maximum of 1.5 million shares of Class A ~~Shares~~Stock have been reserved for issuance under each of the ~~plans. With respect to stock options,~~Plans by a committee of the Board of Directors responsible for administering the Plans (“Compensation ~~Committee~~Committee”). Under the Plans, the committee may grant RSAs and either incentive or nonqualified stock options with a term not to exceed ten years from the grant date and at an exercise price that the committee may determine. Options granted under the Plans vest 75% after three years and 100% after four years from the date of grant and expire after ten years. Restricted stock award (“RSA”) shares granted under the Plans vest 30% after three years and 100% after five years.

On January 3, 2012, the Company approved the granting of 105,300 RSA shares at a grant date fair value of $43.49 per share. On January 15, 2011, and February 9, 2011, the Company approved the granting of 193,900 ~~restricted stock award (“RSA”)~~RSA shares and 3,300 RSA shares, respectively, at a grant date fair value of $48.85 per share and $45.77 per share, respectively. ~~On February 9, 2010, the Company approved the granting~~As of ~~88,800~~March 31, 2012, December 31, 2011 and March 31, 2011, there were 375,000 RSA shares, ~~at a grant date fair value of $40.64 per share to be issued on June 1, 2010. As of September 30, 2011 and September 30, 2010, there were 285,100~~275,600 RSA shares and ~~439,900~~293,800 RSA shares, respectively, outstanding that were previously issued at an average weighted grant price of ~~$45.52~~$45.14, $45.56 and ~~$56.96,~~$45.54, respectively. All grants of the RSA shares were recommended by the Company's Chairman, who did not receive ~~any~~a RSA, ~~shares,~~ and approved by the Compensation Committee. This expense, net of forfeitures, is ~~being~~ recognized over the vesting period for these awards which is 30% over three years from the date of grant and 70% over five years from the date of grant. During the vesting period, dividends to RSA holders are held for them until the RSA vesting dates and are forfeited if the grantee is no longer employed by the Company on the vesting dates. Dividends declared on these ~~RSA shares,~~RSAs, less estimated forfeitures, are charged to retained earnings on the declaration date.

In the fourth quarter of 2010, the Board of Directors of the Company approved the acceleration of the vesting of certain RSA shares resulting in the recognition of $5.5 million in stock compensation expense which would have been recorded in 2011 and 2012.

For the three months ended ~~September 30,~~March 31, 2012 and March 31, 2011, ~~and September 30, 2010,~~ we recognized stock-based compensation expense of ~~$0.7~~$0.9 million and ~~$1.4 million, respectively. For the nine months ended September 30, 2011 and September 30, 2010, we recognized stock-based compensation expense of $1.9 million and $4.2~~$0.6 million, respectively. Actual and projected stock-based compensation expense for RSA shares and options for the years ended December 31, ~~2010~~2011 through December 31, 2016 (based on awards currently issued or granted) is as follows ($ in thousands):

2010 2011 2012 2013 2014 2015 2016
Q1 $ 1,383 $ 577 $ 651 $ 650 $ 405 $ 366 $ 46
Q2 1,422 686 651 629 368 334 -
Q3 1,416 655 650 585 368 271 -
Q4 6,364 660 650 585 368 271 -
Full Year $ 10,585 $ 2,578 $ 2,602 $ 2,449 $ 1,509 $ 1,242 $ 46

		2011		2012		2013		2014		2015		2016
	Q1	$	577	$	871	$	870	$	625	$	494	$	175
	Q2		686		870		848		588		462		128
	Q3		655		870		805		588		399		128
	Q4		670		870		805		588		399		128
Full Year		$	2,588	$	3,481	$	3,328	$	2,389	$	1,754	$	559

The total compensation costs related to non-vested ~~restricted stock awards~~RSAs and options not yet recognized is approximately ~~$8.5 million. For the three and nine months ended September 30, 2011, there~~$10.6 million as of March 31, 2012. There were no options ~~exercised. For~~exercised in either the three ~~months~~month period ended September 30, 2010 there were no options exercised. For the nine months ended September 30, 2010, proceeds from the exercise of 1,600 stock options were $40,000 resulting in a tax benefit to GAMCO of $8,000.March 31, 2012 or March 31, 2011.

Stock Repurchase Program

In March 1999, GAMCO's Board of Directors established the Stock Repurchase Program to grant management the authority to repurchase shares of our Class A Common Stock. On May ~~4, 2010 and on May~~ 6, 2011, our Board of Directors authorized an incremental 500,000 shares to be added to the current buyback authorization. For the three months ended ~~September 30,~~March 31, 2012 and March 31, 2011, ~~and September 30, 2010,~~ the Company repurchased ~~11,752~~224,733 shares and ~~13,500~~161,588 shares, respectively, at an average price per share of ~~$42.07~~$44.35 and $36.01, respectively. For the nine months ended September 30, 2011 and September 30, 2010, the Company repurchased 441,961 shares and 424,200 shares, respectively, at an average price per share of $45.26 and $42.13,$43.91, respectively. From the inception of the program through ~~September 30, 2011, 7,335,047~~March 31, 2012, 7,568,785 shares have been repurchased at an average price of ~~$40.62~~$40.74 per share. At ~~September 30, 2011,~~March 31, 2012, the total shares available under the program to be repurchased in the future were ~~582,372.~~348,634.

I. Goodwill and Identifiable Intangible Assets

At ~~September 30, 2011,~~March 31, 2012, $3.5 million of goodwill is reflected within other assets on the condensed consolidated statements of financial condition with $3.3 million related to a 93%-owned subsidiary, Gabelli Securities, Inc. ~~(“GSI”).~~and $0.2 million related to G.distributors, LLC. The Company assesses the recoverability of goodwill ~~and other intangible assets~~ at least annually, or more often should events warrant, using a discounted cash flow method and a market approach. Due to the second quarter 2011 decision, pursuant to regulatory approvals received in April, to transfer the mutual fund distribution business from GSI’s broker dealer subsidiary to a direct subsidiaryqualitative assessment of ~~GAMCO on August 1, 2011,~~whether it is more likely than not that an impairment has occurred to determine if a quantitative analysis ~~was performed during the three months ended June 30, 2011 on the goodwill related to GSI. The goodwill was not deemed to be impaired and no impairment charge was recorded.~~is required. There were no indicators of impairment for the three months ended ~~September 30, 2011~~March 31, 2012 or the three ~~and nine~~ months ended ~~September 30, 2010,~~March 31, 2011, and as such there was no impairment analysis performed or charge recorded.

On March 10, 2008, the Enterprise Mergers and Acquisitions Fund's (the "Fund") Board of Directors, subsequent to obtaining shareholder approval, approved the assignment of the advisory contract to Gabelli Funds, LLC as the investment adviser to the Fund. GAMCO Asset Management Inc. had been the sub-adviser to the Fund. On July 8, 2008, the Fund was renamed the Gabelli Enterprise Merger and Acquisitions Fund. The amount paid for the assignment of the advisory contract was calculated based upon AUM on the six-month anniversary date subject to certain minimums. As a result of becoming the ~~adviser~~advisor to the ~~rebranded~~ Gabelli Enterprise Mergers and Acquisitions Fund and the associated consideration paid, the Company maintains an identifiable ~~indefinite-lived~~ intangible asset of $1.9 million within other assets on the condensed consolidated statements of financial condition at ~~both September 30,~~March 31, 2012, December 31, 2011 and ~~September 30, 2010.~~March 31, 2011. The investment advisory agreement is subject to annual renewal by the ~~Fund's~~fund's Board of Directors, which the Company expects to be renewed, and the Company does not expect to incur additional expense as a result, which is consistent with other investment advisory agreements entered into by the Company. The advisory contract is next up for renewal in February ~~2012.~~2013. The Company assesses the recoverability of this intangible asset at least annually, or more often should events warrant. There were no indicators of impairment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2012 or March 31, 2011, ~~or September 30, 2010,~~ and as such there was no impairment analysis performed or charge recorded.

J. Commitments and Contingencies

From time to time, the Company is named in legal actions and proceedings. These actions may seek substantial or indeterminate compensatory as well as punitive damages or injunctive relief. The Company is also subject to governmental or regulatory examinations or investigations. The examinations or investigations could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief. The Company cannot predict the ultimate outcome of such matters. The consolidated financial statements include the necessary provisions for losses that the Company believes are probable and estimable. Furthermore, the Company evaluates whether there exist losses which may be reasonably possible and, if material, makes the necessary disclosures. Such amounts, both those that are probable and those that are reasonably possible, are not considered material to the Company’s financial condition, operations or cash flows.

~~We indemnify~~The Company indemnifies the clearing brokers of ~~our affiliated broker-dealer~~Gabelli & Company for losses they may sustain from the customer accounts that trade on margin introduced by our broker-dealer subsidiary. At ~~September 30, 2011,~~March 31, 2012, the total amount of customer balances subject to indemnification (i.e., unsecured margin debits) was immaterial. The Company also has entered into arrangements with various other third parties many of which provide for indemnification of the third parties against losses, costs, claims and liabilities arising from the performance of ~~our~~ obligations under the agreements. The Company has had no claims or payments pursuant to these or prior agreements, and ~~we believe~~believes the likelihood of a claim being made is remote. ~~Management cannot~~The Company’s estimate ~~any potential maximum exposure due both to~~of the ~~remoteness~~value of ~~any potential claims~~such agreements is de minimis, and ~~the fact that items that would be included within any such calculated claim would be beyond the control of management. Consequently, no~~therefore an accrual has not been made inon the condensed consolidated financial statements.

K. Subsequent Events

Subsequent to September 30, 2011, we redeemed $49.2 million from a VIE, with a merger arbitrage strategy, and subsequently invested it into the GAMCO Merger Arbitrage Fund, a Luxembourg SICAV, in order to facilitate our penetration into the European market. Upon analysis of several factors including the redemption of the $49.2 million of proprietary capital from this VIE that we consolidated for the period ended and as of September 30, 2011, we determined that the Company was no longer deemed to be the primary beneficiary of the VIE resulting in the deconsolidation of this VIE effective OctoberOn May 1, 2011. The deconsolidation did not result in the recognition of any gain or loss. The Company continues to serve as the investment manager of the VIE and earns fees for this role, and it also maintains an investment of $4.3 million in the deconsolidated VIE. Accordingly effective October 1, 2011, the remaining $4.3 million investment in the VIE will be included in investments in partnerships on the condensed consolidated statements of financial condition and will be accounted for under the equity method (which approximates fair value).

~~The following table is provided to illustrate the effects of the deconsolidation on the balance sheet as if the transaction had occurred on September 30, 2011.~~

As Reported Adjustments As Adjusted
ASSETS
Cash and cash equivalents $ 335,656 $ 48,949 $ 384,605
Investments in securities 270,323 (44,227 ) 226,096
Investments in partnerships 98,286 4,250 102,536
Receivable from brokers 67,064 (50,060 ) 17,004
Other assets 49,561 14 49,575
  Total assets $ 820,890 $ (41,074 ) $ 779,816

LIABILITIES AND EQUITY
  Total liabilities 375,140 (4,179 ) 370,961

  Redeemable noncontrolling interests 38,050 (36,895 ) 1,155

  Total equity 407,700 - 407,700

  Total liabilities and equity $ 820,890 $ (41,074 ) $ 779,816

~~On November 7, 2011,~~2012, our Board of Directors declared a special dividend of ~~$1.00~~$0.25 per share onto all of its Class A ~~Shares~~ and Class B ~~Shares, payable on November 22, 2011~~shareholders in addition to ~~shareholders of record on November 17, 2011, as well as a~~its quarterly dividend of $0.04 per share payable on June 26, 2012 to its Class A ~~Shares~~ and Class B ~~Shares, payable on December 27, 2011 to~~ shareholders of record on ~~December 13, 2011.~~June 12, 2012.

On May 1, 2012 our Board of Directors authorized the Company to renew its shelf registration, before the expiration of its current shelf in July 2012, that will allow it to issue up to $500 million in a combination of senior and subordinated debt securities, convertible debt securities and common and preferred securities.

2123

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (INCLUDING QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK)

Overview

GAMCO through the Gabelli brand, well known for its Private Market Value (PMV) with a CatalystTM investment approach, is a widely-recognized provider of investment advisory services to mutual funds, institutional and high net worth investors, and investment partnerships, principally in the United States. Through Gabelli & Company, Inc. (“Gabelli & Company”), we provide institutional research and brokerage services to institutional clients and investment partnerships. Through ~~Gabelli & Company, until July 31, 2011, and through~~ G.distributors, LLC ~~effective August 1, 2011,~~(“G.distributors”) we provide mutual fund distribution. We generally manage assets on a fully discretionary basis and invest in a variety of U.S. and international securities through various investment styles. Our revenues are based primarily on the Company’s levels of assets under management and fees associated with our various investment products.

Since 1977, we have been identified with and have enhanced the “value” style approach to investing. Our investment objective is to earn a superior risk-adjusted return for our clients over the long-term through our proprietary fundamental research. In addition to our value portfolios, we offer our clients a broad array of investment strategies that include global, growth, international and convertible products. We also offer a series of investment partnership (performance fee-based) vehicles that provide a series of long-short investment opportunities in market and sector specific opportunities, including offerings of non-market correlated investments in merger arbitrage, as well as fixed income strategies.

Our revenues are highly correlated to the level of assets under management and fees associated with our various investment products, rather than our own corporate assets. Assets under management, which are directly influenced by the level and changes of the overall equity markets, can also fluctuate through acquisitions, the creation of new products, the addition of new accounts or the loss of existing accounts. Since various equity products have different fees, changes in our business mix may also affect revenues. At times, the performance of our equity products may differ markedly from popular market indices, and this can also impact our revenues. General stock market trends will have the greatest impact on our level of assets under management and hence, on revenues.

We conduct our investment advisory business principally through: GAMCO Asset Management Inc. (Separate Accounts), Gabelli Funds, LLC (Mutual Funds) and Gabelli Securities, Inc. (Investment Partnerships). We also act as an underwriter and provide institutional research through Gabelli & Company, one of our broker-dealer subsidiaries. The distribution of our open-end funds ~~was~~is conducted through ~~Gabelli & Company, until July 31, 2011, and through G.distributors, LLC, our newly formed broker-dealer subsidiary, effective August 1, 2011.~~G.distributors.

Assets under management (“AUM”) were ~~$31.3~~$36.7 billion as of ~~September 30, 2011,~~March 31, 2012, an increase of ~~6.2%~~3.6% from AUM of ~~$29.5~~$35.4 billion at ~~September 30, 2010~~March 31, 2011 and ~~13.3% below~~7.6% above the ~~June 30,~~December 31, 2011 AUM of ~~$36.1~~$34.1 billion. ~~Highlights are as follows:~~

~~Our open-end equity funds’ AUM were $11.5~~Fund flows in the first quarter of 2012 were $2.6 billion consisting of market appreciation of $2.3 billion and net cash inflows of $0.3 billion. Average total AUM was $35.8 billion in the 2012 quarter versus $33.9 billion in the prior year period, an increase of 5.6%. Average AUM in our open-end equity funds, a key driver to our investment advisory fees, was $12.8 billion in the first quarter of 2012, up 9.4% from the 2011 quarter average AUM of $11.7 billion, ~~on September 30, 2011, 15.1% higher than the $10.0 billion on September 30, 2010 and 11.2% lower than the $12.9 billion on June 30, 2011.~~

-	~~Our closed-end funds had AUM of $5.4 billion on September 30, 2011, up 6.4% from $5.0 billion on September 30, 2010 but down 14.4% from $6.3 billion on June 30, 2011.~~

In addition to management fees, we earn incentive fees for certain institutional client assets, assets attributable to preferred issues for our closed-end funds, our Gabelli Global Deal Fund (NYSE: GDL) and investment partnership assets. As of March 31, 2012, assets with incentive based fees were $3.7 billion, 2.6% lower than the $3.8 billion on March 31, 2011 but 2.8% above the $3.6 billion on December 31, 2011.

-	Our institutional and private wealth management business ended the quarter with $12.0 billion in AUM, declining 3.2% from the $12.4 billion on September 30, 2010 and 18.4% below the June 30, 2011 level of $14.7 billion.

-	~~Our investment partnerships’ AUM were $627 million on September 30, 2011 versus $466 million on September 30, 2010 and $609 million on June 30, 2011.~~

-	AUM in The Gabelli U.S. Treasury Money Market Fund, our 100% U.S. Treasury money market fund, was $1.9 billion at September 30, 2011 increasing 15.3% from the $1.6 billion at both June 30, 2011 and September 30, 2010.

In addition to management fees, we earn incentive fees for certain institutional client assets, assets attributable to preferred issues for our closed-end funds, our Gabelli Global Deal Fund (NYSE: GDL) and investment partnership assets. As of September 30, 2011, assets with incentive based fees were $3.4 billion, unchanged from the $3.4 billion on September 30, 2010 and 10.5% below the $3.8 billion on June 30, 2011.

2224

The Company reported Assets Under Management as follows (in millions):

Table I: Fund Flows - 1st Quarter 2012
								Closed-end Fund
			Market					distributions,
	December 31,		appreciation/		Net cash			net of			March 31,
	2011		(depreciation)		flows			reinvestments			2012
Equities:
Open-end Funds	$	12,273	$	858	$	(135	)	$	-		$	12,996
Closed-end Funds		5,799		336		40			(108	)		6,067
Institutional & PWM - direct		10,853		883		295			-			12,031
Institutional & PWM - sub-advisory		2,600		252		72			-			2,924
Investment Partnerships		605		15		(26	)		-			594
SICAV (a)		105		2		11			-			118
Total Equities		32,235		2,346		257			(108	)		34,730
Fixed Income:
Money-Market Fund		1,824		-		98			-			1,922
Institutional & PWM		26		-		-			-			26
Total Fixed Income		1,850		-		98			-			1,948
Total Assets Under Management	$	34,085	$	2,346	$	355		$	(108	)	$	36,678

The Company reported Assets Under Management as follows (in millions):

Table I: Fund Flows - 3rd Quarter 2011
Closed-end Fund
Market distributions,
June 30, appreciation/ Net cash net of September 30,
2011 (depreciation) flows reinvestments 2011
Equities:
Open-end Funds $ 12,912 $ (1,790 ) $ 347 $ - $ 11,469
Closed-end Funds 6,259 (894 ) 94 (104 ) 5,355
Institutional & PWM - direct 11,735 (2,358 ) 267 - 9,644
Institutional & PWM - sub-advisory 2,953 (547 ) (80 ) - 2,326
Investment Partnerships 609 (1 ) 19 - 627
Total Equities 34,468 (5,590 ) 647 (104 ) 29,421
Fixed Income:
Money-Market Fund 1,643 - 252 - 1,895
Institutional & PWM 26 - - - 26
Total Fixed Income 1,669 - 252 - 1,921
Total Assets Under Management $ 36,137 $ (5,590 ) $ 899 $ (104 ) $ 31,342

Table II: Assets Under Management
	March 31,		March 31,		%
	2011		2012		Inc.(Dec.)
Equities:
Open-end Funds	$	12,348	$	12,996		5.2	%
Closed-end Funds		6,170		6,067		(1.7	)
Institutional & PWM - direct		11,780		12,031		2.1
Institutional & PWM - sub-advisory		2,937		2,924		(0.4	)
Investment Partnerships		547		594		8.6
SICAV (a)		-		118		n/m
Total Equities		33,782		34,730		2.8
Fixed Income:
Money-Market Fund		1,583		1,922		21.4
Institutional & PWM		26		26		-
Total Fixed Income		1,609		1,948		21.1
Total Assets Under Management	$	35,391	$	36,678		3.6	%

Table II: Fund Flows - Nine months ended September 30, 2011
Closed-end Fund
Market distributions,
December 31, appreciation/ Net cash net of September 30,
2010 (depreciation) flows reinvestments 2011
Equities:
Open-end Funds $ 11,252 $ (1,228 ) $ 1,445 $ - $ 11,469
Closed-end Funds 5,471 (556 ) 725 (a) (285 ) 5,355
Institutional & PWM - direct 11,005 (1,523 ) 162 - 9,644
Institutional & PWM - sub-advisory 2,637 (375 ) 64 - 2,326
Investment Partnerships 515 8 104 - 627
Total Equities 30,880 (3,674 ) 2,500 (285 ) 29,421
Fixed Income:
Money-Market Fund 1,616 - 279 - 1,895
Institutional & PWM 26 - - - 26
Total Fixed Income 1,642 - 279 - 1,921
Total Assets Under Management $ 32,522 $ (3,674 ) $ 2,779 $ (285 ) $ 31,342
(a) Includes $392 million from the launch of a new closed-end fund.

Table III: Assets Under Management by Quarter
											% Increase/
											(decrease) from
		3/11		6/11		9/11		12/11		3/12		3/11		12/11
Equities:
Open-end Funds	$	12,348	$	12,912	$	11,469	$	12,273	$	12,996		5.2	%	5.9	%
Closed-end Funds		6,170		6,259		5,355		5,799		6,067		(1.7	)	4.6
Institutional & PWM - direct		11,780		11,735		9,644		10,853		12,031		2.1		10.9
Institutional & PWM - sub-advisory		2,937		2,953		2,326		2,600		2,924		(0.4	)	12.5
Investment Partnerships		547		609		627		605		594		8.6		(1.8	)
SICAV (a)		-		-		-		105		118		n/m		12.4
Total Equities		33,782		34,468		29,421		32,235		34,730		2.8		7.7
Fixed Income:
Money-Market Fund		1,583		1,643		1,895		1,824		1,922		21.4		5.4
Institutional & PWM		26		26		26		26		26		-		-
Total Fixed Income		1,609		1,669		1,921		1,850		1,948		21.1		5.3
Total Assets Under Management	$	35,391	$	36,137	$	31,342	$	34,085	$	36,678		3.6	%	7.6	%
(a) Includes $100 million and $102 million of proprietary seed capital at December 31, 2011 and March 31, 2012, respectively.

Table III: Assets Under Management
September 30, September 30, %
2010 2011 Inc.(Dec.)
Equities:
Open-end Funds $ 9,962 $ 11,469 15.1 %
Closed-end Funds 5,033 5,355 6.4
Institutional & PWM - direct 10,172 9,644 (5.2 )
Institutional & PWM - sub-advisory 2,218 2,326 4.9
Investment Partnerships 466 627 34.5
Total Equities 27,851 29,421 5.6
Fixed Income:
Money-Market Fund 1,644 1,895 15.3
Institutional & PWM 26 26 -
Total Fixed Income 1,670 1,921 15.0
Total Assets Under Management $ 29,521 $ 31,342 6.2 %

Table IV: Assets Under Management by Quarter
% Increase/
(decrease) from
9/10 12/10 3/11 6/11 9/11 9/10 6/11
Equities:
Open-end Funds $ 9,962 $ 11,252 $ 12,348 $ 12,912 $ 11,469 15.1 % (11.2 %)
Closed-end Funds 5,033 5,471 6,170 6,259 5,355 6.4 (14.4 )
Institutional & PWM - direct 10,172 11,005 11,780 11,735 9,644 (5.2 ) (17.8 )
Institutional & PWM - sub-advisory 2,218 2,637 2,937 2,953 2,326 4.9 (21.2 )
Investment Partnerships 466 515 547 609 627 34.5 3.0
Total Equities 27,851 30,880 33,782 34,468 29,421 5.6 (14.6 )
Fixed Income:
Money-Market Fund 1,644 1,616 1,583 1,643 1,895 15.3 15.3
Institutional & PWM 26 26 26 26 26 - -
Total Fixed Income 1,670 1,642 1,609 1,669 1,921 15.0 15.1
Total Assets Under Management $ 29,521 $ 32,522 $ 35,391 $ 36,137 $ 31,342 6.2 % (13.3 %)

2425

Relative long-term investment performance ~~remains strong.~~remained strong with approximately 30%, 45%, 63% and 67% of ~~all~~ firm wide mutual funds performed in the top half of their Lipper categories on a one-, three-, five-, and ten-year total return basis, respectively as of ~~September 30, 2011.~~March 31, 2012. Also, ~~44%~~33% of the firm’s mutual funds that are rated have a 4- or 5-star ~~3 year~~overall Morningstar RatingTM.

Gabelli/GAMCO Funds Morningstar Ratings Based on Risk Adjusted returns as of September 30, 2011 for funds that we manage

Gabelli/GAMCO Funds Morningstar Ratings Based on Risk Adjusted returns as of March 31, 2012 for funds that we manage

Overall Rating

3 Year Rating

5 Year Rating

10 Year Rating

Overall Rating

3 Year Rating

5 Year Rating

10 Year Rating

Morningstar

# of

Morningstar

# of

FUND

Category

Stars

Funds

Stars

Funds

Stars

Funds

Stars

Funds

Gabelli ABC AAA

Mid-Cap Growth

êêêêê

676

êêêê

676

êêêêê

601

êêêê

404

Mid-Cap Growth

êêêê

676

êêêêê

601

êêêê

404

Gabelli Asset AAA

Large Blend

êêêêê

1652

êêêê

1652

êêêêê

1408

êêêêê

832

Large Blend

êêêêê

1652

êêêêê

1652

êêêê

1408

êêêêê

832

Gabelli Blue Chip Value AAA

Large Blend

êêê

1652

êêê

1652

êêê

1408

êê

832

Gabelli Dividend Growth AAA

Large Blend

êêê

1652

êê

1652

êêê

1408

êêê

832

Gabelli Equity Income AAA

Large Value

êêêêê

1114

êêêê

1114

êêêêê

964

êêêêê

545

Large Value

êêêêê

1114

êêêê

1114

êêêêê

964

êêêêê

545

Gabelli Small Cap Growth AAA

Small Blend

êêêêê

578

êêêêê

578

êêêêê

493

êêêêê

289

Small Blend

êêêêê

578

êêê

578

êêêêê

493

êêêêê

289

Gabelli SRI Green AAA

World Stock

êêêêê

692

êêêêê

692

n/a

World Stock

êêê

692

êêê

692

n/a

Gabelli Utilities AAA

Specialty-Utilities

êêê

êêêê

êêê

Specialty-Utilities

êêêê

êêê

êêêêê

êêê

Gabelli Value A

Mid-Cap Blend

êêê

369

êêê

369

êêê

305

êê

193

Mid-Cap Blend

êê

369

êêêê

369

êê

305

êê

193

Gabelli Woodland Small Cap Value AAA

Small Blend

êêê

578

êê

578

êêê

493

n/a

Gabelli Focus Five AAA

Small Blend

êêê

578

êê

578

êêê

493

n/a

GAMCO Vertumnus AAA

Convertibles

êê

Convertibles

êê

GAMCO Global Growth AAA

World Stock

êêê

692

êêê

692

êêê

491

êêê

276

World Stock

êêê

692

êêê

692

êêêê

491

êêê

276

GAMCO Global Opportunity AAA

World Stock

êêêê

692

êêêê

692

êêêê

491

êêê

276

World Stock

êêêê

692

êêê

692

êêê

491

êêêê

276

GAMCO Global Telecommunications AAA

Specialty-Communications

êêê

êê

êêê

êêêê

Specialty-Communications

êêê

êê

êêê

êêêê

GAMCO Gold AAA

Specialty-Precious Metals

êêê

Gabelli Gold AAA

Specialty-Precious Metals

êêê

GAMCO Growth AAA

Large Growth

êê

1479

êê

1479

êê

1261

788

Large Growth

êê

1479

êêê

1479

êê

1261

788

GAMCO International Growth AAA

Foreign Large Growth

êêêê

206

êêêêê

206

êêêê

163

êêê

104

Foreign Large Growth

êêê

206

êêêê

206

êêê

163

êêê

104

GAMCO Mathers

Conservative Allocation

544

êê

442

170

Conservative Allocation

544

442

170

Gabelli Enterprise Mergers & Acquisitions A

Mid-cap Blend

êêêê

369

êêêê

369

êêêê

305

êêê

193

Mid-cap Blend

êêê

369

êê

369

êêêê

305

êêê

193

Percent of Rated funds rated 4 or 5 stars

44.44%

47.06%

31.25%

33.33%

22.22%

41.18%

37.50%

The Overall Morningstar Rating™ is derived from a weighted average of the performance figures associated with its three, five and ten year (if applicable) Morningstar Rating metrics.

Data presented reflects past performance, which is no guarantee of future results. Ratings are for Class AAA or A shares noted above. Other classes may have different performance

characteristics. Unrated funds and closed-end funds are not listed above. The percentage of 4 and 5 star funds are calculated based on the total number of GAMCO/Gabelli

Funds that are rated for a given period. For each fund with at least a three year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return

measure (including the effects of sales charges, loads, and redemption fees) that accounts for variation in a fund's monthly performance, placing more emphasis on downward variations

and rewarding consistent performance. The top 10% of the funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2

stars, and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the

proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its

content providers are responsible for any damages or losses arising from any use of this information. Investors should consider the investment objectives, risks, charges and expenses

of the funds carefully before investing. Each Fund's prospectus contains this and other information about the Funds and is available, along with information on other Gabelli

Funds, by calling 800-GABELLI (422-3554), online at www.gabelli.com/funds or from your financial advisor. The prospectus should be read carefully before investing.

Distributed by G.distributors, LLC, One Corporate Center, Rye, NY 10580

The inception date for the Gabelli SRI Green Fund was June 1, 2007. The inception date for the Gabelli Woodland Small Cap Value Fund was December 31, 2002.

Data presented reflects past performance, which is no guarantee of future results. Ratings are for Class AAA or A shares noted above. Other classes may have different

performance characteristics. Unrated funds and closed-end funds are not listed above. The percentage of 4 and 5 star funds are calculated based on the total number of

GAMCO/Gabelli Funds that are rated for a given period. For each fund with at least a three year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-

Adjusted Return measure (including the effects of sales charges, loads, and redemption fees) that accounts for variation in a fund's monthly performance, placing more emphasis on

downward variations and rewarding consistent performance. The top 10% of the funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the

next 22.5% receive 2 stars, and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight

variations in the distribution percentages.) Strong relative performance is not indicative of positive fund returns. Performance for some funds was negative for certain periods.

(3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its contentproviders are responsible for any damages or losses arising from any use of this information.

Investors should carefully consider the investment objectives, risks, charges, andexpenses of each fund before investing. Each fund's prospectus contains information about these

and other matters and should be read carefully before investing. Each fund's share price will fluctuate with changes in the market value of the fund's portfolio securities. Stocks

are subject to market, economic and business risks that cause their prices to fluctuate. When you sell fund shares, they may be worth less than what you paid for them.

Consequently, you can lose money by investing in any of the funds. You can obtain a prospectus by calling 800-GABELLI (422-3554), online at www.gabelli.com, or from

your financial advisor. Distributed by G.distributors, LLC, One Corporate Center, Rye New York, 10580.

The inception date for the Gabelli SRI Green Fund was June 1, 2007. The inception date for the Gabelli Focus Five Fund was December 31, 2002.

2526

GABELLI/GAMCO FUNDS

Gabelli/GAMCO Funds Lipper Rankings as of September 30, 2011

Gabelli/GAMCO Funds Lipper Rankings as of March 31, 2012

1 Yr - 9/30/10-9/30/11

3 Yrs - 9/30/08-9/30/11

5 Yrs - 9/30/06-9/30/11

10 Yrs - 9/30/01-9/30/11

1 Yr - 3/31/11-3/31/12

3 Yrs - 3/31/09-3/31/12

5 Yrs - 3/31/07-3/31/12

10 Yrs - 3/31/02-3/31/12

Percentile

Rank /

Percentile

Rank /

Percentile

Rank /

Percentile

Rank /

Percentile

Rank /

Percentile

Rank /

Percentile

Rank /

Percentile

Rank /

Fund Name

Lipper Category

Rank

Total Funds

Rank

Total Funds

Rank

Total Funds

Rank

Total Funds

Lipper Category

Rank

Total Funds

Rank

Total Funds

Rank

Total Funds

Rank

Total Funds

Gabelli Asset; AAA

Multi-Cap Core Funds

247/794

83/690

36/580

29/296

Multi-Cap Core Funds

406/715

103/620

68/540

30/291

Gabelli Value Fund; A

Multi-Cap Growth Funds

247/500

88/413

147/333

83/228

Multi-Cap Core Funds

426/715

21/620

152/540

78/291

Gabelli SRI; AAA

Mid-Cap Growth Funds

224/401

18/355

Global Small/Mid-Cap Funds

78/81

49/72

Gabelli Eq:Eq Inc; AAA

Equity Income Funds

133/288

64/251

49/202

10/103

Equity Income Funds

195/294

55/251

53/214

9/109

GAMCO Growth; AAA

Large-Cap Growth Funds

683/777

573/676

483/587

310/371

Large-Cap Core Funds

483/1,045

395/937

215/819

444/519

Gabelli Eq:SC Gro; AAA

Small-Cap Core Funds

347/730

132/659

49/531

28/315

Small-Cap Core Funds

361/680

428/618

68/501

31/296

Gabelli Eq:Wd SCV; AAA

Small-Cap Core Funds

667/730

554/659

226/531

Gabelli Focus Five Fund;AAA

Small-Cap Core Funds

633/680

430/618

244/501

GAMCO Gl:Oppty; AAA

Global Large-Cap Growth

53/111

10/100

27/74

4/39

Global Large-Cap Growth

84/102

39/87

39/73

9/45

GAMCO Gl:Growth; AAA

Global Large-Cap Growth

65/111

44/100

30/74

21/39

Global Large-Cap Growth

28/102

9/87

19/73

21/45

GAMCO Gold; AAA

Precious Metal Funds

38/73

29/58

21/44

12/33

Precious Metal Funds

8/74

32/59

23/50

19/35

GAMCO Intl Gro; AAA

International Large-Cap Growth

8/247

3/219

33/180

37/116

International Large-Cap Growth

36/226

14/214

53/180

42/113

Gabelli Bl Chp Val; AAA

Large-Cap Core Funds

960/1,107

569/990

449/835

212/510

Gabelli Dividend Growth Fund; AAA

Large-Cap Core Funds

721/,045

630/937

482/819

112/519

Gabelli Inv:ABC; AAA