GABELLI VALUE FUND INC, 485B24E, 1995-05-01

GABELLI VALUE FUND INC
485B24E, 1995-05-01

Previous: SUN LIFE OF CANADA U S VARIABLE ACCOUNT F, 485BPOS, 1995-05-01

Next: APPLEBEES INTERNATIONAL INC, 10-Q, 1995-05-01

Total number of pages: __
Exhibits Index begins on page: __
Registration Nos. 33-30139
811-5848

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933

Pre-Effective Amendment No.

Post-Effective Amendment No. 9
X

REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940

Amendment No. 11 X

THE GABELLI VALUE FUND INC.
(Exact name of Registrant as Specified in Charter)

One Corporate Center, Rye, New York 10580-1434
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (914)
921-5107

Mr. J. Hamilton Crawford, Jr., Esq.
Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580-1434
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering:
As soon as possible after this Post-Effective Amendment
becomes effective.

It is proposed that this filing will become effective:

immediately upon filing pursuant to Rule 485(b)
X on May 1, 1995 pursuant to Rule 485(b)
60 days after filing pursuant to Rule 485(a)(1)
on ________ pursuant to Rule 485(a)(1)
__ 75 days after filing pursuant to Rule 485(a)(2)
___ on ________ pursuant to Rule 485(a)(2)
___ This post-effective amendment designates a new
effective date for a previously filed post- effective
amendment

The Registrant previously has filed a declaration of indefinite
registration of its shares pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended (the "1940
Act"). Registrant's Rule 24f-2 Notice for the fiscal year ended
December 31, 1994 was filed on February 28,
1995.

CALCULATION OF REGISTRATION FEE UNDER
THE SECURITIES ACT OF 1933(1)

Proposed Proposed
Maximum Maximum
Offering Aggrgate
Title of Securities Amount Being Price Per Offering Amount of
Being Registered Registered Unit (2) Price (3) Registration Fee

Shares of Common 3,877,723.80 $11.92 $290,000 $100
Stock par value $.001
per share of
The Gabelli Value Fund Inc.

(1) The shares being registered as set forth in this table are
in addition to the indefinite number of shares of common stock
which Registrant has registered under the Securities Act of
1933, as amended (the "1933 Act"), pursuant to Rule 24f-2
under the 1940 Act. Registrant's Rule 24f-2 Notice for its
fiscal year ended December 31, 1994, was filed on February
28, 1995.

(2) Based on the Registrant's closing price of $11.92 on
April 20, 1995 pursuant to Rule 457(d) under the 1933 Act
and Rule 24e-2(a) under the 1940 Act.

(3) In response to Rule 24e-2(b) under the 1940 Act: (1)
the calculation of the maximum aggregate offering price is
made pursuant to Rule 24e-2; (2) 5,257,189 shares of common
stock were redeemed by the Registrant during the fiscal year
ended December 31, 1994; (3) 1,403,794 shares have been
used for reductions pursuant to Rule 24f-2 during the current
year; and (4) 3,853,395 shares are being used for reduction in
this amendment pursuant to Rule 24e-2(a).

THE GABELLI VALUE FUND INC.

FORM N-1A

CROSS REFERENCE SHEET

PURSUANT TO RULE 495(a)

Part A
Item No.
Prospectus Captions

1. Cover Page Cover
Page

2. Synopsis
Prospectus Summary; The

Fund's Expenses

3. Condensed Financial
Information
Financial Highlights

4. General Description of Registrant Cover
Page; Prospectus

Summary; The Fund and its

Investment Policies; Other

Investments; Special

Investment Methods;

General Information

5. Management of the Fund Cover Page;
Prospectus

Summary; The Fund and its

Investment Policies;

Management of the Fund;

Purchase of Shares; General

Information

5A. Management's Discussion of Fund Performance Not
applicable

6. Capital Stock and Other Securities
Prospectus Summary; Dividends,

Distributions and Taxes;
General
Information

7. Purchase of Securities Being Offered Prospectus
Summary; Purchase of
Shares;
Valuation of Shares;
General
Information

8. Redemption or Repurchase Prospectus Summary;
Redemption of Shares

9. Pending Legal Proceedings Not
applicable

Part B Statement of Additional
Item No. Information Caption

10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and History Not Applicable

13. Investment Objectives and Policies Investment
Policies; Other Investments; Special Investment Methods;
Investment Restrictions

14. Management of the Fund Directors and Officers; The
Adviser

15. Control Persons and Principal Holders of Securities
Directors and Officers

16. Investment Advisory and Other Services The Adviser;
Sub-Administrator; Directors and Officers; Distributor;
Distibution Plan; Custodian, Transfer Agent and Dividend
Disbursing Agent; Experts; see Prospectus - "Management of
the Fund"

17. Brokerage Allocation Portfolio Transactions and
Brokerage

18. Capital Stock and Other Securities Dividends,
Distributions and Taxes; General Information

19. Purchase, Redemption and Pricing Redemption of
Shares, Net Asset
of Securities Being Offered Value

20. Tax Status Dividends, Distributions and Taxes

21. Underwriters Distributor; Distribution Plan

22. Calculation of Performance Data Calculation of
Investment Performance

23. Financial Statements Financial Statements

THE GABELLI VALUE FUND INC.

PART A

PROSPECTUS

<PAGE>

- --------------------------------------------------------------------------------
The Gabelli Value Fund Inc.

One Corporate Center, Rye, New York 10580-1434
Telephone: 1-800-GABELLI (1-800-422-3554)

Gabelli Funds, Inc.

Investment Adviser

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PROSPECTUS MAY 1, 1995

The Gabelli Value Fund Inc. (the "Fund") is a non-
diversified, open-end
management investment company, the investment objective of
which is long-term
capital appreciation. The Fund seeks to achieve its objective by
investing
primarily in equity securities of companies that the Fund's
investment adviser,
Gabelli Funds, Inc. (the "Adviser"), believes are undervalued
and that by virtue
of anticipated developments or catalysts particularly applicable
to such
companies may, in the Adviser's judgment, achieve significant
capital
appreciation. There is no assurance that the Fund's investment
objective will be
attained. See "The Fund and its Investment Policies."

A maximum sales load of 5.50% will be imposed on
purchases (5.82% of the
amount invested). The minimum initial investment is $1,000.
There is no minimum
requirement for subsequent purchases, although some brokers
or dealers may
impose their own minimum requirements. Investments for
Individual Retirement
Accounts have different requirements. Shareholders may
redeem shares on any day
the Fund calculates its net asset value. See "Purchase of
Shares" and
"Redemption of Shares."

This Prospectus sets forth concisely the information about
the Fund that
prospective investors ought to know before making an
investment decision.
Investors are encouraged to read this Prospectus carefully and
retain it for
future reference. Additional information about the Fund is
contained in a
Statement of Additional Information, as amended or
supplemented from time to
time, dated May 1, 1995, that is available upon request and
without charge by
calling the Fund at 1-800-GABELLI [422-3554]; by writing the
Fund at the address
set forth above or in the manner described under "Purchase of
Shares" herein or
by contacting the broker through whom you purchased shares
or Gabelli & Company,
Inc. ("Gabelli & Company"). The Statement of Additional
Information has been
filed with the Securities and Exchange Commission and is
incorporated by
reference into this Prospectus in its entirety.

------------------------

- --------------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------

<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the
more detailed
information appearing elsewhere in this Prospectus.

THE FUND: The Gabelli Value Fund Inc. is a non-diversified,
open-end management
investment company which commenced operations on
September 29, 1989.

INVESTMENT OBJECTIVE: The Fund's investment objective is
long-term capital
appreciation. The Fund seeks to achieve its objective by
investing primarily in
equity securities of companies that the Fund's Adviser believes
are undervalued
and that by virtue of anticipated developments or catalysts
particularly
applicable to such companies may, in the Adviser's judgment,
achieve significant
capital appreciation.

INVESTMENT CHARACTERISTICS AND RISKS: The Fund may
invest in, among other
things, unregistered convertible securities, securities of issuers
involved in
corporate reorganizations, warrants, rights, securities of foreign
issuers and
forward commitments for securities purchased on a "when
issued" or "delayed
delivery" basis. Convertible securities are not typically rated
within the four
highest categories by the rating agencies and are, therefore,
not generally
considered investment grade. There is no minimum rating that
is acceptable for
investment by the Fund; however, it is the Fund's current
operating policy that
not more than 35% of the Fund's portfolio will consist of debt
securities
considered by the rating agencies, or, if unrated, judged by the
Adviser to be
predominantly speculative and involving major risk exposure to
adverse
conditions, including securities of issuers in default. The Fund
will, however,
limit its investments in securities of issuers in default, which
are included
within the 35% limitation, to not more than 5% of its total
assets. These
investments may involve special risks. See "Other Investments"
in the Statement
of Additional Information. The Fund may also purchase or sell
exchange traded
options, engage in certain short sales of securities, enter into
repurchase
agreements, lend its portfolio securities to securities broker-
dealers or
financial institutions and borrow money for short-term credits
from banks as may
be necessary for the clearance of portfolio transactions and for
temporary or
emergency purposes. These techniques may also involve
special risks. See
"Special Investment Methods."

MANAGEMENT AND FEES: The Adviser serves as the Fund's
investment adviser and is
paid a monthly fee at an annual rate of 1.00% of the value of
the Fund's average
daily net assets for its services. The advisory fee is higher than
that paid by
most mutual funds. See "Management of the Fund."

HOW TO PURCHASE SHARES: Shares of the Fund may be
purchased through certain
registered broker-dealers and from State Street Bank and Trust
Company ("State
Street"), the transfer agent for the Fund, or Boston Financial
Data Services
("BFDS"), an affiliate of State Street performing shareholder
services for the
Fund, at the net asset value per share next determined after
receipt of an order
plus the applicable sales charge. A maximum sales charge of
5.50% will be
imposed on purchases (5.82% of the amount invested), subject
to reduction based
on the amount of investment. The minimum initial investment is
$1,000. The Fund
imposes no minimum for subsequent investments although
some registered
broker-dealers may impose their own minimum. Investments
through an Individual
Retirement Account ("IRA") or other retirement plans, however,
have different
requirements. There is no initial minimum investment required
for accounts
establishing an automatic investment plan. See "Purchase of
Shares."

DISTRIBUTION PLAN: The Fund has adopted a Distribution Plan
pursuant to Rule
12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act").
Under the Plan, the Fund will make monthly payments to
certain registered
broker-dealers who enter into agreements with the Fund
calculated at the annual
rate of 0.25% of the value of the average daily net assets of
the Fund
attributable to outstanding shares of the Fund sold by those
broker-dealers.

<PAGE>

HOW TO SELL SHARES: Shares of the Fund may be redeemed
through certain
registered broker-dealers and the Fund's transfer agent by the
shareholder at
any time at the net asset value next computed after the
redemption request is
received. See "Redemption of Shares."

DIVIDENDS AND REINVESTMENT: Dividends and distributions
will be automatically
reinvested for each shareholder's account at net asset value in
additional
shares of the Fund, unless the shareholder instructs the Fund
to pay all
dividends and distributions in cash and to credit the amounts to
his or her
brokerage account or to pay the amounts by check. There are
no sales or other
charges in connection with the reinvestment of dividends and
capital gains
distributions. There is no fixed dividend rate, and there can be
no assurance
that the Fund will pay any dividends or realize any capital
gains. However, the
Fund currently intends to pay dividends at least annually and
capital gains
distributions, if any, on an annual basis. See "Dividends,
Distributions and
Taxes."

THE FUND'S EXPENSES

<TABLE>
<S>
<C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales load (as a percentage of offering price) imposed
on purchases.............................. 5.50%
Sales load imposed on reinvested
dividends............................................................... None
Deferred sales
load..................................................................................
.... None
Redemption
fees..................................................................................
........ None
ANNUAL FUND OPERATING EXPENSES: (Percent of average
daily net assets)
Management
fee....................................................................................
....... 1.00%
Distribution (Rule 12b-1)
expenses.......................................................................
0.25%
Other
expenses...........................................................................
................ 0.25%

- ----
Total Operating
Expenses...........................................................................
...... 1.50%

=====
</TABLE>

The foregoing table is to assist you in understanding the
various costs and
expenses that an investor in the Fund will bear directly or
indirectly. The
category "Other expenses" is based on amounts for the
preceding fiscal year. The
Fund's operating expenses may be subject to state expense
limitations that may
require that a certain amount of the expenses paid be
reimbursed to the Fund.
For further information regarding these expense reimbursement
obligations, see
"The Adviser" and "Sub-Administrator" in the Statement of
Additional
Information.

EXAMPLE*

The following example demonstrates the projected dollar
amount of total
cumulative expenses that may be incurred over various periods
with respect to a
hypothetical investment in the Fund. These amounts are based
upon payment by an
investor of an initial sales load at the maximum 5.50% rate
(sales load as a
percent of the offering price) and payment by the Fund of
operating expenses at
the levels set forth in the table above, and are also based upon
the following
assumptions:

1 3 5 10

YEAR YEARS YEARS YEARS
---
- --- ------ ------ -------
<S>
<C> <C> <C> <C>
A shareholder would pay the following expenses on a $1,000
investment, assuming (1)
a 5% annual return and (2) redemption at the end of each
time period............. $ 69 $100 $132 $ 225
</TABLE>

- ---------------

* The amounts listed in this example should not be considered
as representative
of future expenses, and actual expenses may be greater or
less than those
indicated. Moreover, while the example assumes a 5% annual
return, the Fund's
actual performance will vary and may result in an actual
return greater or
less than 5%.

<PAGE>

FINANCIAL HIGHLIGHTS

The per share data and ratios in the table below have been
audited by Price
Waterhouse LLP, independent accountants, whose unqualified
report on this
information appears in the Fund's Annual Report for the fiscal
year ended
December 31, 1994. This table should be read in conjunction
with the financial
statements and related notes that are incorporated by reference
in the Statement
of Additional Information.

PER SHARE AMOUNTS FOR A FUND SHARE OUTSTANDING
THROUGHOUT EACH PERIOD/YEAR ENDED
DECEMBER 31,

<TABLE>
<CAPTION>
1994 1993
1992 1991(a) 1990 1989*
---------- ---------- ----------
- ---------- ---------- -----------
<S> <C> <C>
<C> <C> <C> <C>
Operating performance:
Net asset value, beginning of year........... $ 12.09 $
10.13 $ 9.48 $ 8.51 $ 9.58 $ 9.45
---------- ---------- ----------
- ---------- ---------- -----------
Net investment income........................ 0.09 0.05
0.09 0.13 0.45 0.16
Net realized and unrealized gain/(loss) on
investments................................ (0.09) 3.95
1.11 1.17 (0.98) 0.04
---------- ---------- ----------
- ---------- ---------- -----------
Total from investment operations............. 0.00
4.00 1.20 1.30 (0.53) 0.20
---------- ---------- ----------
- ---------- ---------- -----------
Distributions to shareholders from:
Net investment income...................... (0.09) (0.01)
(0.09) (0.19) (0.54) (0.06)
Distributions in excess of net investment
income................................... (0.00)(b) (0.04)
- -- -- -- --
Net realized gains......................... (1.50) (1.99)
(0.46) (0.14) -- (0.01)
Distributions in excess of net realized
gains.................................... (0.01) -- -
- - -- -- --
---------- ---------- ----------
- ---------- ---------- -----------
Total distributions.......................... (1.60) (2.04)
(0.55) (0.33) (0.54) (0.07)
========
======== ======== ========
======== =========
Net asset value, end of year................. $ 10.49 $
12.09 $ 10.13 $ 9.48 $ 8.51 $ 9.58
========
======== ======== ========
======== =========
Total Return **.............................. 0.0% 39.4%
12.7% 15.3% (5.6)% 2.1%
========
======== ======== ========
======== =========
Ratios to average net assets/supplemental
data:
Net assets, end of year (in 000's)........... $436,629
$491,193 $423,381 $574,676 $850,685 $
1,126,146
Ratio of net investment income to average
net assets............................... 0.73% 0.38%
0.75% 1.43% 4.45% 6.06%+
Ratio of operating expenses to average net
assets................................... 1.50% 1.53%
1.52% 1.45% 1.39% 1.48%+
Portfolio turnover rate...................... 66.6% 21.4%
0.1% 16.2% 58.6% 73.3%
</TABLE>

- ---------------

* The Fund commenced operations on September 29, 1989.

** Total return represents aggregate total return for the period
indicated and
does not reflect any applicable sales charges. Total return
for the period
of less than one year is not annualized.

+ Annualized.

(a) Per share amounts have been calculated using the monthly
average share
method for the year ended December 31, 1991.

(b) Amount represents less than $0.01 per share.

THE FUND AND ITS INVESTMENT POLICIES

The Fund is an open-end, non-diversified management
investment company
organized as a corporation under the laws of the State of
Maryland on July 20,
1989. The Fund's investment objective is long-term capital
appreciation. The
Fund regards its receipt of income as an incidental
consideration. The
investment objective is fundamental and may not be changed
without the approval
of the holders of a majority of the Fund's outstanding shares.
There is, of
course, no guarantee that the Fund will achieve its investment
objective. As a
"non-diversified" investment company, the Fund is not subject
to the provisions
of the 1940 Act that otherwise would limit the proportion of its
assets that may
be invested in obligations of a single issuer. Consequently,
because the Fund
may hold a relatively high proportion of its assets in a limited
number of
portfolio companies, an investment in the Fund may, under
certain circumstances,
present greater risk to an investor than an investment in a
diversified
investment company. The Fund will, however, comply with the

<PAGE>

diversification requirements imposed by the Internal Revenue
Code of 1986, as
amended (the "Code"). For further information on the Code's
diversification
requirements, see "Dividends, Distributions and Taxes" in this
Prospectus and in
the Statement of Additional Information.

In pursuing the Fund's investment objective, the Adviser
seeks companies
that it believes are undervalued and that by virtue of
anticipated developments
or catalysts particularly applicable to such companies may, in
the Adviser's
judgment, achieve significant capital appreciation. In identifying
such
companies, the Adviser seeks to invest in companies that, in
the public market,
are selling at a significant discount to their private market
value, the value
the Adviser believes informed industrialists would be willing to
pay to acquire
companies with similar characteristics. If investor attention is
focused on the
underlying asset values of these companies through an
emerging or anticipated
development or other catalyst, an investment opportunity to
realize this private
market value may exist. Undervaluation of a company can
result from a variety of
factors, such as a lack of investor recognition of (1) the
underlying value of a
company's fixed assets, (2) the value of a consumer or
commercial franchise, (3)
changes in the economic or financial environment particularly
affecting a
company, (4) new, improved or unique products or services,
(5) new or rapidly
expanding markets, (6) technological developments or
advancements affecting a
company or its products, or (7) changes in governmental
regulations, political
climate or competitive conditions. The actual developments or
catalysts
particularly applicable to a given company that may, in the
Adviser's judgment,
lead to significant appreciation of that company's securities
include: a change
in management or management policies; the acquisition of a
significant equity
position by an investor or group of investors acting in concert;
a merger,
reorganization, sale of a division, or a third-party or issuer
tender offer; the
spin-off to shareholders of a subsidiary, division or other
substantial assets;
or a recapitalization, an internal reorganization or the retirement
or death of
a senior officer or substantial shareholder. In addition to the
foregoing
factors, developments and catalysts, the Adviser, in selecting
investments, also
considers the market price of the issuer's securities, its balance
sheet
characteristics and the perceived strength of its management.

The Fund seeks to achieve its objective by investing
primarily in a
portfolio of common stocks, preferred stocks and other
securities convertible
into, or exchangeable for, common stocks. When the Adviser
believes that a
defensive investment posture is warranted or when
opportunities for capital
appreciation do not appear attractive, the Fund may temporarily
invest all or a
portion of its assets in short-term money market instruments,
such as
obligations of the U.S. Government and its agencies and
instrumentalities,
high-quality commercial paper and bank certificates of deposit
and time
deposits, repurchase agreements with respect to such
instruments, and money
market mutual funds not affiliated with the Fund, Lehman
Brothers Inc. ("Lehman
Brothers") or Gabelli & Company.

Further information about the Fund's investment policies,
including a list
of those restrictions on the Fund's investment activities that
cannot be changed
without shareholder approval, appears in the Statement of
Additional
Information.

OTHER INVESTMENTS

CORPORATE REORGANIZATIONS

The Fund, consistent with its investment objective and
policies of seeking
long-term capital appreciation from securities of companies
that, in the public
market, are selling at a significant discount to their private
market value, may
invest up to 50% of its total assets in securities for which a
tender or
exchange offer has been made or announced and in securities
of companies for
which a merger, consolidation, liquidation or similar
reorganization proposal
has been announced ("reorganization securities"). Frequently,
the holders of
securities of companies involved in such transactions will
receive new
securities ("substituted securities") in

<PAGE>

exchange therefore. No more than 30% of the Fund's total
assets, however, may be
invested in reorganization securities where the Adviser
anticipates selling the
reorganization securities or the substituted securities within six
months or
less of the initial purchase of the reorganization securities,
except that this
limitation will not apply to reorganization securities that have
been purchased
to supplement a position in such securities held by the Fund for
more than six
months. The principal risk of this type of investing is that the
anticipated
offers or proposals may not be consummated within the time
and under the terms
contemplated at the time of the investment, in which case,
unless replaced by an
equivalent or increased offer or proposal that is consummated,
the Fund may
sustain a loss on its investments.

CONVERTIBLE AND NONCONVERTIBLE CORPORATE
OBLIGATIONS

Corporate obligations include securities such as bonds,
debentures, notes
or other similar securities issued by corporations. These
obligations can be
further subdivided into convertible and nonconvertible
securities. Unlike a
nonconvertible corporate obligation, a convertible corporate
obligation may be
converted into or exchanged for a prescribed amount of
common stock or other
equity security of the same or different issuer within a
particular period of
time at a specified price or formula.

The Fund believes that investing in convertible and
nonconvertible
corporate obligations is consistent with the Fund's investment
objective of
seeking securities of companies that, in the public market, can
provide
significant long-term capital appreciation. Due to a variety of
factors, it is
possible that the potential for capital gain on a convertible
security may be
less than that of the underlying common stock. Convertible
securities, however,
are senior to common stock in an issuer's capital structure and
are consequently
of higher quality and entail less risk than the issuer's common
stock, although
the extent to which the risk is reduced depends in large
measure upon a variety
of factors, including the creditworthiness of the issuer and its
overall capital
structure.

The Fund may purchase convertible securities or
nonconvertible debt
securities without limitation, except that no more than 35% of
the Fund's total
assets may be invested in convertible securities or
nonconvertible debt
securities having a rating lower than a Standard & Poor's
Ratings Group ("S&P")
rating of "CCC", a Moody's Investors Service, Inc. ("Moody's")
rating of "Caa"
or, if unrated, judged by the Adviser to be of comparable
quality. However, as a
matter of current operating policy, the Adviser and Fund have
agreed that the
Fund will not invest more than 35% of the Fund's total assets
in debt securities
rated less than S&P's BBB or the equivalent by other major
rating agencies or,
if unrated, judged by the Adviser to be of comparable quality.
These debt
securities are predominantly speculative and involve major risk
exposure to
adverse conditions, and are often referred to in the financial
press as "junk
bonds."

The ratings of Moody's and S&P generally represent the
opinions of those
organizations as to the quality of the securities that they rate.
Such ratings,
however, are relative and subjective, are not absolute
standards of quality and
do not evaluate the market risk of the securities. Although the
Adviser uses
these ratings as a criterion for the selection of securities for the
Fund, the
Adviser also relies on its independent analysis to evaluate
potential
investments for the Fund. See Appendix A -- "Description of
Corporate Bond
Ratings" in the Statement of Additional Information.

Within the Fund's limitation on the purchase of lower-rated
and unrated
securities, the Fund may invest up to 5% of its total assets in
securities of
issuers in default.

WARRANTS AND RIGHTS

The Fund may invest up to 5% of its net assets in warrants
or rights (other
than those acquired in units or attached to other securities) that
entitle the
holder to buy equity securities at a specific price for a specific
period of
time but will do so only if the equity securities are deemed
appropriate by the
Adviser for inclusion in

<PAGE>

the Fund's portfolio. It is the current intention of the Fund not
to invest more
than 2% of its net assets in warrants or rights that are not
listed on the New
York Stock Exchange ("NYSE") or the American Stock
Exchange ("AMEX"), although
the Board of Directors in the future may permit up to 5% of the
Fund's net
assets to be invested in such unlisted warrants and rights.

FOREIGN SECURITIES

The Fund may invest up to 25% of its total assets in
foreign securities.
Investing in securities of foreign companies and foreign
governments, which
generally are denominated in foreign currencies, may involve
certain risk and
opportunity considerations not typically associated with
investing in domestic
companies and could cause the Fund to be affected favorably
or unfavorably by
changes in currency exchange rates and revaluations of
currencies. In addition,
less information may be available about foreign companies than
about domestic
companies, and foreign companies and foreign governments
generally are not
subject to uniform accounting, auditing and financial reporting
standards or to
other regulatory practices and requirements comparable to
those applicable to
domestic companies. Foreign securities and their markets may
not be as liquid as
United States securities and their markets. Securities of some
foreign companies
may involve greater market risk than securities of United States
companies.
Investment in foreign securities may result in higher expenses
than investment
in domestic securities because of the payment of fixed
brokerage commissions on
foreign exchanges, which generally are higher than
commissions on United States
exchanges, and the imposition of transfer taxes or transaction
charges
associated with foreign exchanges. Investment in foreign
securities also may be
subject to local economic or political risks, including instability
of some
foreign governments, the possibility of currency blockage or the
imposition of
withholding taxes on dividend or interest payments, and the
potential for
expropriation, nationalization or confiscatory taxation and
limitations on the
use or removal of funds or other assets.

Among the foreign securities in which the Fund may invest
are those issued
by companies located in developing countries, which are
countries in the initial
stages of their industrialization cycles. Investing in the equity
and debt
markets of developing countries involves exposure to economic
structures that
are generally less diverse and less mature, and to political
systems that can be
expected to have less stability, than those of developed
countries. The markets
of developing countries historically have been more volatile
than the markets of
the more mature economies of developed countries, but often
have provided higher
rates of return to investors. The Fund may also invest in debt
securities of
foreign governments.

The Fund may purchase American Depositary Receipts
("ADRs") or U.S.
dollar-denominated securities of foreign issuers that are not
included in the
25% foreign securities limitation. ADRs are receipts issued by
U.S. banks or
trust companies with respect to securities of foreign issuers
held on deposit
for use in the U.S. securities markets. While ADRs may not
necessarily be
denominated in the same currency as the securities into which
they may be
converted, many of the risks associated with foreign securities
may also apply
to ADRs. See "Other Investments -- Investment in Foreign
Securities" in the
Statement of Additional Information.

SHORT-TERM INVESTMENTS

As noted above, in certain circumstances the Fund may
invest in short-term
money market instruments such as obligations of the U.S.
Government and its
agencies and instrumentalities, high quality commercial paper
(rated "A-1" or
better by S&P or "P-1" or better by Moody's) and bank
certificates of deposit
and time deposits, and may engage in repurchase agreement
transactions with
respect to those instruments.

<PAGE>

In addition, the Fund may invest in money market mutual
funds not
affiliated with the Fund, Lehman Brothers or Gabelli &
Company. The investment
policy with respect to investment companies generally is set
forth below under
"Other Investment Companies."

OTHER INVESTMENT COMPANIES

INVESTMENTS IN SMALL, UNSEASONED COMPANIES AND
OTHER ILLIQUID SECURITIES

The Fund may invest up to 5% of its net assets in small,
less well-known
companies which (including predecessors) have operated less
than three years.
The securities of these kinds of companies may have limited
liquidity.

The Fund will not, in the aggregate, invest more than 10%
of its net assets
in small, unseasoned companies, securities that are restricted
for public sale,
securities for which market quotations are not readily available,
repurchase
agreements maturing or terminable in more than seven days
and all other illiquid
securities. Securities freely saleable among qualified
institutional investors
pursuant to Rule 144A under the Securities Act of 1933, as
amended (the "1933
Act"), and as adopted by the Securities and Exchange
Commission ("SEC"), may be
treated as liquid if they satisfy liquidity standards established
by the Board
of Directors. The continued liquidity of such securities is not as
well assured
as that of publicly traded securities, and accordingly, the Board
of Directors
will monitor their liquidity.

RISK FACTORS

There are a number of issues that an investor should
consider in evaluating
the Fund. The Fund may invest substantially in securities of
companies that are
involved or may become involved in extraordinary transactions,
including
corporate reorganizations. See "Corporate Reorganizations"
above. Certain
affiliates of the Adviser in the ordinary course of their business
may acquire
for their own account from time to time securities (including
controlling
positions) in companies that may also be suitable investments
for the Fund.
However, under certain circumstances the Fund may be
precluded by Section 17(d)
of the 1940 Act and Rule 17d-1 thereunder (which regulate
joint transactions
between an investment company and its affiliates) from
investing in those
securities absent exemptive relief from the SEC. However,
while the securities
in which the Fund may invest might therefore be limited to
some extent, the
Adviser does not believe that the investment activities of its
affiliates will
have a material adverse effect upon the Fund in seeking to
achieve its
investment objective. Many companies in the past several years
have adopted
so-called "poison pill" and other defensive measures that may
have the effect of
limiting the amount of securities in any one issuer that may be
acquired by the
Adviser and its affiliates for the account of the Fund and other
investment
management clients, discouraging or hindering non-negotiated
offers for a
company or possibly preventing the completion of any such
offer. Moreover, the
Fund may invest in lower rated securities, including securities
of issuers that
are in default. These securities carry a higher risk of failure to
pay principal
and interest when due and the market to sell such securities
may be limited. See
"Special Investment Methods -- Convertible and Nonconvertible
Corporate
Obligations" in the Statement of Additional Information. The
Fund is a
non-diversified investment company and, as such, may invest a
substantial
portion of its assets in a limited number of portfolio companies.
See "The Fund
and its Investment Policies." The Adviser relies to a
considerable extent on the
expertise of Mr. Mario J. Gabelli and there is no assurance that
a suitable
replacement could be found for him

<PAGE>

in the event of his death, disability or resignation. See
"Management of the
Fund." See "Redemption of Shares."

For further information on the investment policies of the
Fund, see
"Investment Policies" and "Other Investments" in the
Statement of Additional
Information.

SPECIAL INVESTMENT METHODS

BORROWING

The Fund may not borrow money except for (1) short-term
credits from banks
as may be necessary for the clearance of portfolio transactions,
and (2)
borrowings from banks for temporary or emergency purposes,
including the meeting
of redemption requests, that would otherwise require the
untimely disposition of
the Fund's portfolio securities. Borrowing for any purpose,
including
redemptions, may not, in the aggregate, exceed 15% of the
value of the Fund's
total assets, and borrowing for purposes other than meeting
redemptions may not
exceed 5% of the value of the Fund's total assets at the time
borrowing is made.
The Fund will not borrow (leverage) to make additional
investments when any
borrowing remains unpaid. The Fund will not mortgage, pledge
or hypothecate any
of its assets except that, in connection with the borrowings
described above,
not more than 20% of the total assets of the Fund may be
used as collateral.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements with
primary government
securities dealers recognized by the Federal Reserve Bank of
New York and member
banks of the Federal Reserve System that furnish collateral at
least equal in
value or market price to the amount of their repurchase
obligation. In a
repurchase agreement, the Fund purchases a debt security
from a seller who
undertakes to repurchase the security at a specified resale price
on an agreed
future date. Repurchase agreements are generally for one
business day and
generally will not have a duration of longer than one week. The
SEC has taken
the position that, in economic reality, a repurchase agreement
is a loan by the
Fund to the other party to the transaction secured by securities
transferred to
the Fund. The resale price generally exceeds the purchase price
by an amount
which reflects an agreed upon market interest rate for the term
of the
repurchase agreement. The primary risk is that, if the seller
defaults, the Fund
might suffer a loss to the extent that the proceeds from the
sale of the
underlying securities and other collateral held by the Fund are
less than the
repurchase price. The Adviser will monitor the creditworthiness
of the other
parties to the repurchase agreements.

The Fund may not enter into repurchase agreements which
would cause more
than 5% of the value of its total assets to be so invested. This
percentage
limitation does not apply to repurchase agreements involving
U.S. Government
obligations, or obligations of its agencies or instrumentalities,
for a period
of a week or less. The term of each of the Fund's repurchase
agreements will
always be less than one year and the Fund will not enter into
repurchase
agreements of a duration of more than seven days if, taken
together with all
other illiquid securities in the Fund's portfolio, more than 10%
of its net
assets would be so invested.

SHORT SALES AGAINST THE BOX

The Fund may from time to time make short sales of
securities it owns or
has the right to acquire through conversion or exchange of
other securities it
owns. A short sale is "against the box" to the extent that the
Fund
contemporaneously owns or has the right to obtain, at no
added cost, securities
identical to those sold short. In a short sale, the Fund does not
immediately
deliver the securities sold or receive the proceeds from the sale.
The Fund may
not make short sales or maintain a short position if it would
cause more than
25% of the Fund's total assets, taken at market value, to be
held as collateral
for the sales.

<PAGE>

The Fund may make a short sale in order to hedge against
market risks when
it believes that the price of a security may decline, causing a
decline in the
value of a security owned by the Fund or security convertible
into, or
exchangeable for, the security, or when the Fund does not
want to sell the
security it owns, because, among other reasons, it wishes to
defer recognition
of gain or loss for U.S. federal income tax purposes.

WHEN ISSUED, DELAYED DELIVERY SECURITIES AND
FORWARD COMMITMENTS

The Fund may enter into forward commitments for the
purchase of securities.
Such transactions may include purchases on a "when issued"
or "delayed delivery"
basis. In some cases, a forward commitment may be
conditioned upon the
occurrence of a subsequent event, such as approval and
consummation of a merger,
corporate reorganization of debt restructuring, i.e., a when, as
and if issued
security. When such transactions are negotiated, the price is
fixed at the time
of the commitment, with payment and delivery taking place in
the future,
generally a month or more after the date of the commitment.
While the Fund will
only enter into a forward commitment with the intention of
actually acquiring
the security, the Fund may sell the security before the
settlement date if it is
deemed advisable. Securities purchased under a forward
commitment are subject to
market fluctuation, and no interest or dividends accrue to the
Fund prior to the
settlement date.

LENDING OF PORTFOLIO SECURITIES

The Fund may lend securities from its portfolio to brokers,
dealers and
other financial organizations. This practice is expected to help
the Fund
generate revenue to defray certain operating expenses. Loans
by the Fund, if and
when made, (1) will be collateralized in accordance with
applicable regulatory
requirements and (2) will be limited so that the value of all
loaned securities
does not exceed 33% of the value of the Fund's total assets.
The current
intention of the Fund, however, is to limit the value of all
loaned securities
to no more than 5% of the Fund's total assets. Under extreme
circumstances,
there may be a restriction on the Fund's ability to sell the
collateral and the
Fund could suffer a loss. See "Special Investment Methods --
Lending of
Portfolio Securities" in the Statement of Additional Information.

DERIVATIVE INSTRUMENTS

OPTIONS. The Fund may purchase or sell (that is, write)
listed options on
securities as a means of achieving additional return or of
hedging the value of
the Fund's portfolio. The Fund may write covered call options
on common stocks
that it owns or has an immediate right to acquire through
conversion or exchange
of other securities in an amount not to exceed 25% of total
assets; or invest up
to 10% of its total assets in the purchase of put options on
common stocks that
the Fund owns or may acquire through the conversion or
exchange of other
securities that it owns. The Fund may only buy options that are
listed on a
national securities exchange.

A call option is a contract that gives the holder of the
option the right
to buy from the writer (seller) of the call option, in return for a
premium
paid, the security underlying the option at a specified exercise
price at any
time during the term of the option. The writer of the call option
has the
obligation upon exercise of the option to deliver the underlying
security upon
payment of the exercise price during the option period.

A put option is a contract that, in return for the premium,
gives the
holder of the option the right to sell to the writer (seller) the
underlying
security at a specified price during the term of the option. The
writer of the
put, who receives the premium, has the obligation to buy the
underlying security
upon exercise, at the exercise price during the option period.

<PAGE>

An option may be closed out only on an exchange that
provides a secondary
market for an option of the same series. Although the Fund will
generally
purchase or write only those options for which there appears to
be an active
secondary market, there is no assurance that a liquid secondary
market on an
exchange will exist for any particular option. The Fund will not
purchase
options if, as a result, the aggregate cost of all outstanding
options exceeds
10% of the Fund's total assets. See "Options" in the Statement
of Additional
Information.

The Fund may write put and call options on stock indexes
for the purposes
of increasing its gross income and protecting its portfolio
against declines in
the value of the securities it owns or increases in the value of
securities to
be acquired. In addition, the Fund may purchase put and call
options on stock
indexes in order to hedge its investments against a decline in
value or to
attempt to reduce the risk of missing a market or industry
segment advance.
Options on stock indexes are similar to options on specific
securities. However,
because options on stock indexes do not involve the delivery of
an underlying
security, the option represents the holder's right to obtain from
the writer
cash in an amount equal to a fixed multiple of the amount by
which the exercise
price exceeds (in the case of a put) or is less than (in the case
of a call) the
closing value of the underlying stock index on the exercise
date. Therefore,
while one purpose of writing such options is to generate
additional income for
the Fund, the Fund recognizes that it may be required to deliver
an amount of
cash in excess of the market value of a stock index at such
time as an option
written by the Fund is exercised by the holder. The writing and
purchasing of
options is a highly specialized activity which involves
investment techniques
and risks different from those associated with ordinary portfolio
securities
transactions. The successful use of protective puts for hedging
purposes depends
in part on the Adviser's ability to predict future price
fluctuations and the
degree of correlation between the options and securities
markets.

FUTURES CONTRACTS AND OPTIONS ON FUTURES.
Depending upon market conditions
prevailing at such time and its perceived investment needs, the
Fund may enter
into futures contracts and options on futures contracts that are
traded on a
U.S. exchange or board of trade. These investments, if any,
may be made by the
Fund solely for the purpose of hedging against changes in the
value of its
portfolio securities and the aggregate initial margins and
premiums thereon
would not constitute more than 5% of the Fund's total assets.

Futures and options on futures entail certain risks, including
but not
limited to the following: no assurance that futures contracts or
options on
futures can be offset at favorable prices, possible reduction of
the Fund's
yield due to the use of hedging, possible reduction in value of
both the
securities hedged and the hedging instrument, possible lack of
liquidity due to
daily limits on price fluctuation, imperfect correlation between
the contracts
and the securities being hedged, and potential losses in excess
of the amount
invested in the futures contracts themselves.

For further information on the investment policies of the
Fund, see
"Investment Policies" and "Special Investment Methods" in the
Statement of
Additional Information.

MANAGEMENT OF THE FUND

Overall responsibility for management and supervision of
the Fund rests
with the Fund's Board of Directors.

INVESTMENT ADVISER -- GABELLI FUNDS, INC.

Gabelli Funds, Inc. was organized in 1980 and serves as
investment adviser
to the Fund. Gabelli Funds, Inc. also serves as the investment
adviser to The
Gabelli ABC Fund; The Gabelli Small Cap Growth Fund; The
Gabelli Equity Income
Fund; The Gabelli Growth Fund; The Gabelli Asset Fund; The
Gabelli Global
Telecommunications Fund; The Gabelli Global Interactive Couch
Potato(TM)(C)
Fund; The Gabelli Global

<PAGE>

Convertible Securities Fund, The Gabelli U.S. Treasury Money
Market Fund and
Gabelli Gold Fund, Inc., which are open-end investment
companies and The Gabelli
Equity Trust Inc., The Gabelli Convertible Securities Fund Inc.
and The Gabelli
Global Multimedia Trust Inc., which are closed-end investment
companies, having
aggregate assets as of March 31, 1995, in excess of $3.70
billion. GAMCO
Investors, Inc. ("GAMCO"), an investment adviser for
individuals, pension
trusts, profit-sharing trusts and endowments, is a subsidiary of
the Adviser
with aggregate assets in excess of $4.50 billion under its
management as of
March 31, 1995. Teton Advisers LLC, a subsidiary of the
Adviser, manages the
Westwood Funds with aggregate assets of approximately $28
million as of March
31, 1995. The current business address of the Adviser is One
Corporate Center,
Rye, New York, 10580-1434.

The Adviser and its affiliates act as investment advisers to
other clients
that may invest in the same securities. As a result, clients of
the Adviser and
its affiliates hold substantial positions in the same issuers of
securities. If
a substantial position in an issuer is held, liquidity and
concentration
considerations may limit the ability of the Adviser to add to the
position on
behalf of the Fund or other clients or to readily dispose of the
position.
Although the availability at acceptable prices of such securities
may from time
to time be limited, it is the policy of the Adviser and its
affiliates to
allocate purchases and sales of such securities in a manner
believed by the
Adviser to be equitable to all clients, including the Fund. The
Adviser may on
occasion give advice or take action with respect to other clients
that differs
from the actions taken with respect to the Fund.

The Adviser manages the Portfolio of the Fund in
accordance with the Fund's
stated investment objectives and policies, makes investment
decisions for the
Fund, places orders to purchase and sell securities on behalf of
the Fund, and
oversees the administration of all aspects of the Fund's
business and affairs,
all subject to the supervision and direction of the Directors.

As compensation for its services and the related expenses
borne by the
Adviser, the Adviser is paid a fee, computed and payable
monthly, equal, on an
annual basis, to 1.00% of the value of the Fund's average daily
net assets,
which is higher than that paid by most mutual funds. By its
agreement with the
Fund (the "Advisory Contract"), the Adviser has undertaken
certain expense
reimbursement obligations that are described in the Statement
of Additional
Information under "The Adviser." The Statement of Additional
Information
contains further information about the Advisory Contract,
including a more
complete description of the advisory, administration and
expense arrangements
contained therein.

Mr. Mario J. Gabelli, Chairman of the Board, Chief
Executive Officer and
Chief Investment Officer of the Adviser and Chairman of the
Board, President and
Chief Investment Officer of the Fund, is responsible for
managing the day-to-day
investment operations of the Fund, including the making of
investment decisions.
Mr. Gabelli also acts as Chairman of the Board and Chief
Executive Officer of
GAMCO and is an officer or director of various other companies
owned or
controlled by the Adviser. Accounts under the management of
the Adviser and
GAMCO will tend, subject to differences in investment
objectives and authorized
investment practices, to hold many of the same securities
because many of the
accounts are under the overall direction of Mr. Gabelli. In
addition to his
positions with the Adviser and its subsidiaries, Mr. Gabelli
serves as an
officer and/or director of various other companies. Owing to
the diverse nature
of Mr. Gabelli's responsibilities with respect to the Adviser, its
subsidiaries
and other companies with which he is affiliated, he will devote
less than
substantially all of his time to the Fund, although this is not
expected to
affect adversely the operations or management of the Fund.
There is no contract
of employment between Mr. Gabelli and the Adviser or any of
its subsidiaries and
there can be no assurance that a suitable replacement could be
found for him in
the event of his death, disability or resignation.

The management discussion and analysis of the Fund's
performance during the
fiscal year ended December 31, 1994 is included in the Fund's
Annual Report to
Shareholders dated December 31, 1994. The

<PAGE>

Fund's Annual Report may be obtained upon request and
without charge by writing
or calling the Fund at the address or telephone number listed on
page one of
this Prospectus.

SUB-ADMINISTRATOR -- THE SHAREHOLDER SERVICES
GROUP, INC.

The Shareholder Services Group, Inc. ("TSSG"), a
subsidiary of First Data
Corporation, located at Exchange Place, Boston, Massachusetts
02109, serves as
the Fund's sub-administrator.

Pursuant to a sub-administration agreement with the
Adviser, TSSG
calculates the net asset value of the Fund's shares and
generally assists in all
aspects of the Fund's administration and operation. The
Adviser pays TSSG a
monthly fee, based on the value of the aggregate average daily
net assets of all
funds under its administration managed by the Adviser as
follows: up to $1
billion - 0.10%; $1 billion to $1.5 billion - 0.08%; $1.5 billion
to $3 billion
- - 0.03%; over $3 billion - 0.02%.

PORTFOLIO TRANSACTIONS

The Advisory Contract contains provisions relating to the
selection of
securities brokers to effect the portfolio transactions of the
Fund. Under those
provisions, the Adviser may (1) direct Fund portfolio brokerage
to Gabelli &
Company, a broker-dealer affiliate of the Adviser; (2) pay
commissions to
brokers other than Gabelli & Company which are higher than
might be charged by
another qualified broker to obtain brokerage and/or research
services considered
by the Adviser to be useful or desirable for its investment
management of the
Fund and/or other advisory accounts under the management of
the Adviser and any
investment adviser affiliated with it; and (3) consider the sales
of shares of
the Fund by brokers other than Gabelli & Company as a factor
in its selection of
brokers for Fund portfolio transactions. For further information
on the Fund's
portfolio and brokerage practices, see "Portfolio Transactions
and Brokerage" in
the Statement of Additional Information.

PORTFOLIO TURNOVER

The Fund will buy and sell securities to accomplish its
investment
objective. The investment policies of the Fund may lead to
frequent changes in
investments, particularly in periods of rapidly fluctuating
interest or currency
exchange rates and volatile equity markets. The portfolio
turnover may be higher
than that of other investment companies. While portfolio
turnover is impossible
to predict with certainty, the Adviser expects that the annual
turnover rate of
the Fund will not exceed 150%. A portfolio turnover rate of
100% would occur if
all the stocks in the portfolio were replaced once in a one-year
period. As a
general rule, a high turnover rate will cause the Fund to realize
more capital
gains and losses and incur higher transaction costs, and this
will affect the
amount of income realized by the Fund and the amount of
dividends and
distributions paid, or deemed paid, to its shareholders. For the
fiscal years
ended December 31, 1993 and December 31, 1994, the
Fund's portfolio turnover
rates were 21.4% and 66.6%, respectively.

Portfolio turnover generally involves some expense to the
Fund, including
brokerage commissions or dealer mark-ups and other
transaction costs on the sale
of securities, and reinvestment in other securities and may
make it more
difficult to qualify as a "Regulated Investment Company" under
the Code, with
respect to the Code's 30% limitation on gains from securities
held less than
three months. See "Dividends, Distributions and Taxes" in this
Prospectus and
the Statement of Additional Information. The portfolio turnover
rate is computed
by dividing the lesser of the amount of the securities purchased
or securities
sold by the average monthly value of securities owned during
the year (excluding
securities whose maturities at acquisition were one year or
less).

<PAGE>

PURCHASE OF SHARES

Purchase of Fund shares may be made through brokerage
accounts maintained
through Gabelli & Company or through any other firm with
whom the Fund enters
into an arrangement for the distribution of its shares on
substantially
identical terms as those agreed upon with Gabelli & Company.
Purchases may also
be made through any registered broker-dealer with whom
Gabelli & Company enters
into a selling agreement ("Soliciting Broker-Dealers"). Payment
for the shares
must be made directly to the firm through which the order was
placed or to the
Fund's transfer agent. Gabelli & Company may enter into
selling or selected
broker-dealer agreements with Soliciting Broker-Dealers
pursuant to which
Gabelli & Company may reallow a portion of the sales charge to
Soliciting
Broker-Dealers in accordance with the schedule set forth
below. The reallowance
to Soliciting Broker-Dealers may be changed at any time by
Gabelli & Company.

PURCHASES BY MAIL

Direct purchases for new accounts may be made by
completing an application
obtained from Gabelli & Company or a Soliciting Broker-Dealer
and mailing the
application to BFDS, with a check for the amount of the
investment. The mailing
address of the Fund is The Gabelli Funds, P.O. Box 8308,
Boston, Massachusetts,
02266-8308. Subsequent purchases do not require a
completed application and can
be made by mailing a check, as indicated above, or by bank
wire or personal
delivery.

PURCHASE PRICE

The minimum investment is $1,000 for initial purchases.
There is no minimum
requirement for subsequent purchases, although some
brokerage firms may impose
their own minimum requirements. Investments through an IRA
or other retirement
plans, however, have lower minimum requirements. See
"Retirement Plans." No
maintenance fee will be charged in connection with any Gabelli
& Company
brokerage account through which an investor purchases or
holds shares. The Fund
will not issue certificates evidencing Fund shares unless
specifically requested
by an investor who is a shareholder of record. For those
shareholders who hold
certificates, additional steps must be taken by them, which
need not be taken by
shareholders who do not hold certificates, before they can
redeem their shares.
See "Redemption of Shares." Shares will be sold at their net
asset value next
determined after a purchase order is received as discussed
below, plus the
applicable sales charge also described below. The public
offering price is
subject to a sales charge, which is imposed in accordance with
the following
schedule:

<TABLE>
<CAPTION>
SALES
CHARGE SALES CHARGE REALLOWANCE TO
AS %
OF THE AS % OF SOLICITING
AMOUNT OF INVESTMENT
OFFERING PRICE AMOUNT INVESTED BROKER- DEALERS
--------------------------------------------------------------------- -------------
- - --------------- --------------
<S> <C>
<C> <C>
Less than $100,000...................................................
5.50% 5.82% 4.50%
$100,000 but under
$250,000.......................................... 4.50%
4.71% 3.75%
$250,000 but under
$500,000.......................................... 3.50%
3.63% 3.00%
$500,000 but under $1 million........................................
2.75% 2.83% 2.50%
$1 million or more...................................................
2.00% 2.04% 1.75%
</TABLE>

Purchase orders for shares received prior to the close of
regular trading
on the NYSE, currently 4:00 p.m., New York time, on any day
that the Fund
calculates its net asset value, are priced according to the net
asset value
determined on that day. Purchase orders received after the
close of trading on
the NYSE are priced as of the time the net asset value is next
determined. If
shares are purchased through a Soliciting Broker-Dealer, the
Soliciting
Broker-Dealer must receive the order before the close of the
NYSE and

<PAGE>

transmit it to Gabelli & Company by 5:00 p.m., New York time,
to receive that
day's public offering price. See "Valuation of Shares." Payment
for shares
purchased through a brokerage firm is generally due on the fifth
business day
(after June 7, 1995, the third business day) after purchases are
effected (each
such day being a "Settlement Date") at the appropriate net
asset value plus the
applicable sales charge. The Fund and Gabelli & Company
reserve the right in
their sole discretion (1) to suspend the offering of the Fund's
shares and (2)
to reject purchase orders when, in the judgment of the Fund's
management, such
rejection is in the best interest of the Fund.

REDUCED SALES CHARGES

Reduced sales charges are available to investors who are
eligible to
combine their purchases of Fund shares to receive volume
discounts. Investors
eligible to receive volume discounts are individuals and their
immediate
families, tax-qualified employee benefit plans and a trustee or
other fiduciary
purchasing shares for a single trust estate or single fiduciary
account even
though more than one beneficiary is involved. Investors
interested in an
explanation of volume discounts should contact their brokerage
firm or Gabelli &
Company. Reduced sales charges are also available under a
combined right of
accumulation, under which an investor may combine the value
of shares already
held in the Fund along with the value of the Fund shares being
purchased, to
qualify for a reduced sales charge. For example, if an investor
owns shares of
the Fund that have an aggregate value of $100,000, and
makes an additional
investment in the Fund of $4,000, the sales charge applicable
to the additional
investment would be 4.50%, rather than the 5.50% normally
charged on a $4,000
purchase.

By initially investing at least $1,000 in the Fund and
submitting a Letter
of Intent to Gabelli & Company, a "single purchaser" may make
purchases of
shares of the Fund during a 13-month period at the reduced
sales charge rates
applicable to the aggregate amount of the intended purchases
stated in the
Letter. The Letter may apply to purchases made up to 90 days
before the date of
the Letter.

Shares of the Fund may be offered without a sales charge
to (1) employees
of Gabelli & Company, Boston Safe Deposit and Trust Company
("Boston Safe"),
State Street, BFDS and TSSG and Soliciting Broker-Dealers,
employee benefit
plans for those employees and the spouses and minor children
of such employees
when orders on their behalf are placed by such employees (the
minimum initial
investment for such purchases is $500); (2) the Adviser,
GAMCO, officers,
directors, trustees, general partners, directors and employees
of other
investment companies managed by the Adviser, employee
benefit plans for such
persons and their spouses and minor children when orders on
their behalf are
placed by such persons (with no required minimum initial
investment); (3) any
other investment company in connection with the combination
of such company with
the Fund by merger, acquisition of assets or otherwise; (4)
shareholders who
have redeemed shares in the Fund and who wish to reinvest
their redemption
proceeds in the Fund, provided the reinvestment is made within
30 days of the
redemption; (5)tax-exempt organizations enumerated in Section
501(c)(3) of the
Code and private, charitable foundations that in each case
make lump-sum
purchases of $100,000 or more; (6) qualified employee benefit
plans established
pursuant to Section 457 of the Code that have established
omnibus accounts with
the Fund; (7) qualified employee benefit plans having more than
one hundred eligible employees and a minimum of $1 million in
plan assets invested in the Fund (plan sponsors are encouraged
to notify the Fund's distributor when they first satisfy these
requirements); (8) any unit investment trusts registered under
the 1940 Act which are
sponsored by Bear, Stearns & Co., Inc. and which have shares
of the Fund as a
principal investment; (9) investment advisory clients of GAMCO
participating in
its asset allocation program; or (10) employee participants of
organizations
adopting the 401(k) Plan sponsored by the Adviser. Investors
who qualify under
the categories described above should contact their brokerage
firm or Gabelli &
Company.

When payment is made to a brokerage firm by an investor
before a Settlement
Date, unless otherwise directed by an investor, the monies may
be held as a free
credit balance in the investor's brokerage account and the
brokerage firm may
benefit from the temporary use of these monies. The investor
may designate

<PAGE>

another use for the monies prior to the Settlement Date, such
as investment in a
money market fund. If the investor instructs a brokerage firm to
invest the
monies in a money market fund, the amount of the investment
will be included as
part of the average daily net assets of both the Fund and the
money market fund,
and any affiliates of Gabelli & Company which serve the funds
in an investment
advisory, administrative or other capacity will benefit from the
fact that they
are receiving fees from both investment companies computed
on the basis of their
average daily net assets. The Board of Directors of the Fund is
advised of the
benefits to Gabelli & Company resulting from five-day
settlement procedures
(after June 7, 1995, three-day settlement procedures) and will
take such
benefits into consideration when reviewing the distribution
agreement for
continuance.

Gabelli & Company imposes no restrictions on the transfer
of shares held by
it for clients in "street name" in either certificated or
uncertificated form.

Gabelli & Company is an indirect majority-owned subsidiary
of the Adviser.

The Fund has agreed to indemnify Gabelli & Company
against certain
liabilities, including liabilities arising under the 1933 Act.

DISTRIBUTION PLAN

Pursuant to a Distribution Plan (the "Plan") adopted by the
Fund pursuant
to Rule 12b-1 under the 1940 Act, the Fund will make monthly
payments to
registered broker-dealers, including Gabelli & Company, who
entered into an
agreement with the Fund (each, a "Designated Dealer")
calculated at the annual
rate of 0.25% of the value of the average daily net assets of
the Fund
attributable to outstanding shares of the Fund sold by the
Designated Dealer
(including additional shares acquired by reinvestment of
dividends). Gabelli &
Company may in turn enter into selling agreements with
Soliciting Broker-Dealers
whereby all or a portion of the monthly payments paid to
Gabelli & Company
pursuant to the Plan will be paid by Gabelli & Company to a
Soliciting
Broker-Dealer for activities intended to result in the distribution
of Fund
shares as described below.

Payments under the Plan are not tied exclusively to the
distribution
expenses actually incurred by Designated Dealers and such
payments may exceed
their distribution expenses. Expenses incurred in connection
with the offering
and sale of shares may include, but are not limited to,
payments to the
Designated Dealer's (or its affiliates') sales personnel for selling
shares of
the Fund; costs of printing and distributing the Fund's
Prospectus, Statement of
Additional Information and sales literature; an allocation of
overhead and other
Designated Dealer branch office distribution-related expenses;
payments to and
expenses of persons who provide support services in
connection with the
distribution of shares of the Fund; and financing costs on the
amount of the
foregoing expenses.

The Board of Directors will evaluate the appropriateness of
the Plan and
its payment terms on a continuing basis and in doing so will
consider all
relevant factors, including expenses borne by Designated
Dealers in the current
year and in prior years and amounts received under the Plan.

AUTOMATIC INVESTMENT PLAN

The Fund offers an automatic monthly investment plan,
details of which can
be obtained from Gabelli & Company. There is no minimum
initial investment for
accounts establishing an automatic investment plan.

REDEMPTION OF SHARES

Shareholders may redeem their shares on any day the Fund
calculates its net
asset value. See "Valuation of Shares." Redemption requests
received by a
brokerage firm or the Fund's transfer agent, in proper form,

<PAGE>

prior to the close of regular trading on the NYSE will be
effected at the net
asset value per share determined on that day. Redemption
requests received after
the close of trading on the NYSE will be effected at the net
asset value per
share as next determined. The Fund normally transmits
redemption proceeds with
respect to redemption requests made through a brokerage firm
for credit to the
shareholder's account at no charge within seven days after
receipt of a
redemption request or by check directly to the shareholder.
Generally, these
funds will not be invested for the shareholder's benefit without
specific
instruction, and the brokerage firm will benefit from the use of
temporarily
uninvested funds. Redemption proceeds with respect to
redemption requests made
through Gabelli & Company normally will be transmitted by the
Fund's transfer
agent to the shareholder by check within seven days after
receipt of a
redemption request or to a shareholder's brokerage account
maintained by Gabelli
& Company. A shareholder who pays for Fund shares by
personal check will be
credited with the proceeds of the redemption of those shares
only after the
purchase check has been cleared, which may take up to 15
days. A shareholder who
anticipates the need for more immediate access to his or her
investment should
purchase shares with federal funds, bank wire or by a certified
or cashier's
check. Shareholders of the Fund may exchange their shares of
the Fund for shares
of certain other funds managed by the Adviser. Upon the
exchange, credit will be
given for the sales load previously paid in connection with the
purchase of Fund
shares. Please contact Gabelli & Company for additional
information.

A Fund account (other than an IRA) that is reduced by a
shareholder to a
value of $1,000 or less is subject to redemption by the Fund,
but only after the
shareholder has been given at least 30 days in which to
increase the account
balance to $1,000 or more.

REDEMPTION THROUGH BROKER-DEALERS

Redemption requests may be made through a brokerage
firm with which the
shareholder maintains a brokerage account. A shareholder
desiring to redeem Fund
shares represented by certificates must also present the
certificates to a
brokerage firm endorsed for transfer (or accompanied by an
endorsed stock
power), signed exactly as the shares are registered.
Redemption requests
involving shares represented by certificates will not be deemed
received until
the certificates are received by the Fund's transfer agent in
proper form.

Redemption requests made through Gabelli & Company with
respect to
uncertificated shares must be in writing addressed to the
Fund's transfer agent
at the address and in accordance with the signature guarantee
procedures
specified below under "Redemption by Mail" in order to be
deemed in proper form
or, if a brokerage account is maintained by a shareholder with
Gabelli &
Company, in writing, by telephone or in person. Redemption
requests made through
brokerage firms other than Gabelli & Company need to be made
in accordance with
that brokerage firm's redemption procedures.

REDEMPTION BY MAIL

Shares held directly at the transfer agent in the name of the
shareholder
may be redeemed by submitting a signature guaranteed written
request for
redemption to: THE GABELLI FUNDS, POST OFFICE BOX
8308, BOSTON, MASSACHUSETTS
02266-8308.

A written redemption request to the Fund's transfer agent
must (1) state
the number of shares or dollar amount to be redeemed, (2)
identify the
shareholder's account number and (3) be signed by each
registered owner exactly
as the shares are registered. If the shares to be redeemed were
issued in
certificate form the certificate must be endorsed for transfer or
accompanied by
an endorsed stock power and must be submitted to the Fund's
transfer agent
together with the redemption request. Any signature appearing
on a redemption
request, share certificate or stock power must be guaranteed
by a domestic bank,
a savings and loan institution, a domestic credit union, a
member bank of the
Federal Reserve System or a member firm of a national
securities exchange,
pursuant to the Fund's transfer agent's standards and
procedures. The Fund's
transfer

<PAGE>

agent may require additional supporting documents for
redemptions made by
corporations, executors, administrators, trustees or guardians.
A redemption
request will not be deemed to be properly received until the
Fund's transfer
agent receives all required documents in proper form.

REDEMPTION BY TELEPHONE

The Fund accepts telephone requests from any investor in a
direct
registered account for wire redemption in excess of $1,000
(but subject to a
$25,000 limitation) to a bank predesignated either on the
subscription order
form or in a subsequent written authorization with the signature
guaranteed. The
Fund accepts signature guaranteed written requests for
redemption by bank wire
without limitation. The proceeds are normally wired on the
following business
day. Your bank must be either a member of the Federal Reserve
System or have a
correspondent bank which is a member. Any change to the
banking information made
at a later date must be submitted in writing with a signature
guarantee. The
Fund will not impose a wire service fee. A shareholder's agent
or the
predesignated bank, however, may impose its own service fee
on wire transfers.

Requests for telephone redemption must be received
between 9:00 a.m. and
4:00 p.m. New York time. If your telephone call is received
after this time or
on a day when the NYSE is not open, a new request will be
required the following
business day. Shares are redeemed at the net asset value next
determined
following your request. Fund shares purchased by check or
through the automatic
purchase plan will not be available for redemption for up to
fifteen (15) days
following the purchase. Shares held in certificate form must be
returned to the
Transfer Agent for redemption of shares. Telephone redemption
is not available
for IRAs.

The proceeds of a telephone redemption may be directed to
an account in
another mutual fund advised by the Adviser, provided the
account is registered
in the redeeming shareholder's name. Such purchase will be
made at the
respective net asset value plus applicable sales charge, if any,
with credit for
any sales charge previously paid to Gabelli & Company.

The Fund and its transfer agent will not be liable for
following telephone
instructions reasonably believed to be genuine. In this regard
the Fund and its
transfer agent require personal identification information before
accepting a
telephone redemption. If the Fund or its transfer agent fails to
use reasonable
procedures, the Fund might be liable for losses due to
fraudulent instructions.

AUTOMATIC CASH WITHDRAWAL PLAN

The Fund offers shareholders whose accounts are
registered directly with
the transfer agent, an automatic cash withdrawal plan, under
which shareholders
who own shares of the Fund with a value of at least $10,000
may elect to receive
periodic cash payments monthly, quarterly or annually.
Automatic cash
withdrawals deplete the investor's principal and are treated as
redemptions
which may be taxable transactions. Investors contemplating
participation in this
automatic cash withdrawal plan should consult their tax
advisors. For further
information regarding the automatic cash withdrawal plan,
shareholders should
contact Gabelli & Company.

VALUATION OF SHARES

The Fund's net asset value per share is calculated on each
day, Monday
through Friday, except days on which the NYSE is closed. The
NYSE is currently
scheduled to be closed on New Year's Day, Presidents' Day,
Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and
Christmas and on the
preceding Friday or subsequent Monday when one of these
holidays falls on a
Saturday or Sunday, respectively.

<PAGE>

The Fund's net asset value per share is determined as of
the close of
regular trading on the NYSE, currently 4:00 p.m., New York
time, and is computed
by dividing the value of the Fund's net assets by the total
number of its shares
outstanding. The Fund uses market quotations in valuing its
portfolio
securities. Short-term investments that mature in 60 days or
less are valued at
amortized cost whenever the Fund's Board of Directors
determines that amortized
cost reflects fair value of these investments. Further
information regarding the
Fund's valuation policies is contained in the Statement of
Additional
Information under "Net Asset Value."

RETIREMENT PLANS

The Fund has available a form of IRA for investment in Fund
shares that may
be obtained from Gabelli & Company. Self-employed investors
may purchase shares
of the Fund through tax-deductible contributions to existing
retirement plans
for self-employed persons, known as Keogh or H.R. 10 plans.
The Fund does not
currently act as sponsor to such plans. Fund shares may also
be a suitable
investment for other types of qualified pension or profit-sharing
plans which
are employer sponsored, including deferred compensation or
salary reduction
plans known as "401(k) Plans" which give participants the right
to defer
portions of their compensation for investment on a tax-deferred
basis until
distributions are made from the plans. The minimum initial
investment for all
such retirement plans is $250. The minimum for all subsequent
investments is
$100.

Under the Code, individuals may make wholly or partly tax
deductible IRA
contributions of up to $2,000 annually, depending on whether
they are active
participants in an employer-sponsored retirement plan and on
their income level.
However, dividends and distributions held in the account are
not taxed until
withdrawn in accordance with the provisions of the Code. An
individual with a
non-working spouse may establish a separate IRA for the
spouse under the same
conditions and contribute a combined maximum of $2,250
annually to either or
both IRAs provided that no more than $2,000 may be
contributed to the IRA of
either spouse.

Investors should be aware that they may be subject to
penalties or
additional tax on contributions to or withdrawals from IRAs or
other retirement
plans which are not permitted by the applicable provisions of
the Code. Persons
desiring information concerning investments through IRAs or
other retirement
plans should write or telephone their brokerage firm or Gabelli
& Company.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Dividends and distributions will be automatically reinvested
for each
shareholder's account at net asset value in additional shares of
the Fund,
unless the shareholder instructs the Fund to pay all dividends
and distributions
in cash and to credit the amounts to his or her brokerage
account or to pay the
amounts by check. Fractional shares may be paid in cash. Cash
distributions to
brokerage firm clients are credited to a shareholder's brokerage
account or
mailed to the investor, at the investor's election, at the same
time dividend
reinvestments are made; cash distributions to clients of Gabelli
& Company will
be mailed at that time. Dividends from net investment income
and distributions
of net realized capital gains earned by the Fund, if any, will be
paid annually.
The Fund is subject to a 4% nondeductible excise tax
measured with respect to
certain undistributed amounts of ordinary income and capital
gains. If necessary
to avoid the application of this tax, and if in the best interest of
shareholders, the Fund's Board of Directors will, to the extent
permitted by the
SEC, declare and pay an additional distribution of the Fund's
net investment
income and net realized capital gains. There are no sales or
other charges in
connection with the reinvestment of dividends and capital gains
distributions.
There is no fixed dividend rate, and there can be no assurance
that the Fund
will pay any dividends or realize any capital gains.

<PAGE>

The Fund has qualified and intends to continue to qualify
for tax treatment
as a "Regulated Investment Company" under Subchapter M of
the Code to be
relieved of federal income tax on that part of its net investment
income and
realized capital gains which it pays out to its shareholders. To
qualify, the
Fund must meet certain tests, including distributing at least
90% of its
investment company taxable income, as that term is defined in
the Code, and
deriving less than 30% of its gross income from the sale or
other disposition of
certain investments held for less than three months (the "90%
requirement" and
the "30% requirement"). The loss of such status would result
in the Fund being
subject to the regular federal corporate income tax on its
taxable income and
gains. Legislation has been introduced in the U.S. congress that
would repeal
the 30% requirement. It is, however, impossible to predict
whether this
legislation will become law and, if it is so enacted, what form it
will
eventually take.

Dividends from net investment income and distributions of
realized
short-term capital gains are taxable to the recipient
shareholders as ordinary
income. The Fund's dividends, to the extent derived from
dividends attributable
to certain types of stock, will qualify for the dividends received
deduction for
corporations. Dividends and distributions declared by the Fund
may also be
subject to state and local taxes. Distributions out of long-term
capital gains,
of which shareholders will be notified, are taxable to the
recipient as
long-term capital gains. Prior to investing in shares of the Fund,
prospective
shareholders may wish to consult their tax advisors concerning
the federal,
state, local and foreign tax consequences of such an
investment. For further
information, see "Dividends, Distributions and Taxes" in the
Statement of
Additional Information.

CALCULATION OF INVESTMENT
PERFORMANCE

TOTAL RETURN

From time to time, the Fund may advertise its "average
annual total return"
over various periods of time. Total return figures show the
average percentage
change in value of an investment in the Fund from the
beginning date of the
measuring period to the end of the measuring period. These
figures reflect
changes in the price of the Fund's shares and assume that any
income dividends
and/or capital gains distributions made by the Fund during the
period were
reinvested in shares of the Fund. Figures will be given for the
recent one-,
five- and ten-year periods, or for the life of the Fund to the
extent it has not
been in existence for any such periods, and may be given for
other periods as
well, such as on a year-by-year basis. When considering
"average" total return
figures for periods longer than one year, it is important to note
that the
Fund's annual total return for any one year in the period might
have been
greater or less than the average for the entire period. The Fund
may also use
"aggregate" total return figures for various periods,
representing the
cumulative change in value of an investment in the Fund for the
specific period
(again reflecting changes in Fund share prices and assuming
reinvestment of
dividends and distributions). Aggregate total return may be
calculated either
with or without the effect of the maximum 5.5% sales load and
may be shown by
means of schedules, charts, or graphs, and may indicate
subtotals of the various
components of total return (that is, change in value of initial
investment,
income dividends, and capital gains distributions).

In reports or other communications to shareholders or in
advertising
material, the Fund may compare its performance with that of
other mutual funds
as listed in the rankings prepared by Lipper Analytical Services,
Incorporated
or similar independent services that monitor the performance of
mutual funds or
other industry or financial publications. It is important to note
that the total
return figures are based on historical earnings and are not
intended to indicate
future performance. The Statement of Additional Information,
under "Calculation
of Investment Performance," further describes the method used
to determine the
Fund's performance. Shareholders may make inquiries
regarding the Fund's total
return figures to Gabelli & Company.

<PAGE>

GENERAL INFORMATION

DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES

As a Maryland corporation, the Fund is not required, and
does not intend,
to hold regular annual shareholder meetings. It will hold an
annual meeting if
Directors are required to be elected under the 1940 Act and
may hold special
meetings for the consideration of proposals requiring
shareholder approval such
as changing fundamental policies. A meeting will be called to
consider replacing
the Fund's Directors upon the written request of the holders of
10% of the
Fund's shares. When matters are submitted for shareholder
vote, each shareholder
will have one vote for each full share owned and proportionate,
fractional votes
for fractional shares held. Shares of the Fund have equal rights
with respect to
voting, dividends and distributions upon liquidation. The Board
of Directors has
authority, without a vote of shareholders, to increase the
number of shares the
Fund is authorized to issue and to authorize and issue
additional classes of
stock by reclassifying unissued shares. There are no conversion
or preemptive
rights in connection with any shares of the Fund. All shares,
when issued in
accordance with the terms of the offering, will be fully paid and
nonassessable.

The Fund sends quarterly, semi-annual and annual reports
to all its
shareholders which include a list of portfolio securities and the
Fund's
financial statements which shall be audited annually.

CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING
AGENT

Boston Safe, a wholly-owned subsidiary of Mellon Bank
Corporation, is
located at One Boston Place, Boston, Massachusetts 02108,
and acts as custodian
of the Fund's cash and securities generally. State Street acts as
the Fund's
transfer agent and dividend disbursing agent for its shares.
BFDS, an affiliate
of State Street, will perform shareholder servicing for the Fund
on behalf of
State Street and is located at the BFDS Building, Two Heritage
Drive, Quincy, MA
02171.

INFORMATION FOR SHAREHOLDERS

All shareholder inquiries regarding administrative procedures
including the
purchase and redemption of shares should be directed to your
brokerage firm or
to Gabelli & Company, One Corporate Center, Rye, New York
10580-1434. For
assistance, call 1-800-422-3554 or 1-800-872-5365.

This Prospectus omits certain information contained in the
Registration
Statement filed with the SEC. Copies of the Registration
Statement including
items omitted herein, may be obtained from the SEC by paying
the charges
prescribed under its rules and regulations. The Statement of
Additional
Information included in such Registration Statement may be
obtained without
charge from the Fund or Gabelli & Company.

<PAGE>

- ----------------------------------------------
TABLE OF CONTENTS

<TABLE>
<S> <C>
Page
- ----------------------------------------------

Prospectus Summary....................... 2
The Fund's Expenses...................... 3
Financial Highlights..................... 4
The Fund and its Investment Policies..... 4
Other Investments........................ 5
Special Investment Methods............... 9
Management of the Fund................... 11
Purchase of Shares....................... 14
Redemption of Shares..................... 16
Valuation of Shares...................... 18
Retirement Plans......................... 19
Dividends, Distributions and Taxes....... 19
Calculation of Investment Performance.... 20
General Information...................... 21
</TABLE>

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, THE STATEMENT OF
ADDITIONAL INFORMATION AND IN THE FUND'S OFFICIAL
SALES LITERATURE IN CONNECTION
WITH THE OFFERING OF THE FUND'S SHARES, AND IF GIVEN
OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED
BY THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER IN ANY STATE IN WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFER MAY NOT
LAWFULLY BE MADE.
- ------------------------------------------------------

The
Gabelli
Value
Fund
Inc.
PROSPECTUS

MAY 1, 1995

GABELLI FUNDS, INC.
INVESTMENT ADVISER

GABELLI & COMPANY, INC.
DISTRIBUTOR

THE GABELLI VALUE FUND INC.

PART B

STATEMENT OF ADDITIONAL INFORMATION

THE GABELLI VALUE FUND INC.
One Corporate Center, Rye, New York 10580-1434
Statement of Additional Information
May 1, 1995
This Statement of Additional Information is not a
prospectus and is only authorized for distribution when
preceded or accompanied by The Gabelli Value Fund
Inc.'s (the "Fund") prospectus, as amended or
supplemented from time to time, dated May 1, 1995
(the "Prospectus"). This Statement of Additional
Information contains additional and more detailed information
than that set forth in the Prospectus and should be read in
conjunction with the Prospectus, additional copies of which
may be obtained without charge by calling the Fund at 1-800-
GABELLI (800) 422-3554, by writing the Fund at the address
set forth above or by contacting the broker through whom you
purchased shares or Gabelli & Company, Inc.

TABLE OF CONTENTS

Page
Investment Policies 2
Other Investments 2
Special Investment Methods 4
Investment Restrictions 10
Directors and Officers 12
The Adviser 15
Sub-Administrator 16
Distributor 17
Distribution Plan 18
Portfolio Transactions and Brokerage 18
Redemption of Shares 20
Net Asset Value 21
Dividends, Distributions and Taxes 21
Calculation of Investment Performance 23
Counsel 25
Experts 25
Custodian, Transfer Agent and Dividend Disbursing Agent
25
General Information 25
Financial Statements 26
Appendix A: Description of Corporate Bond Ratings
A-1

INVESTMENT POLICIES

The Fund seeks to achieve its objective by investing
primarily in a portfolio of common stocks, preferred stocks and
other securities convertible into, or exchangeable for, common
stocks. In pursuing the Fund's investment objective, the
Fund's investment adviser, Gabelli Funds, Inc. (the "Adviser"),
invests primarily in companies that the Adviser believes are
undervalued and that by virtue of anticipated developments or
catalysts particularly applicable to such companies may, in the
Adviser's judgment, achieve significant appreciation. In
identifying such companies, the Adviser seeks to invest in
companies that, in the public market, are selling at a significant
discount to their private market value, the value the Adviser
believes informed industrialists would be willing to pay to
acquire companies with similar characteristics. If investor
attention is focused on the underlying asset values of these
companies through an emerging or anticipated development or
other catalyst, an opportunity to realize this private market
value may exist. The Fund may also invest in obligations of the
U.S. Government and its agencies and instrumentalities,
corporate bonds, preferred stocks, convertible securities,
foreign securities, corporate reorganizations and/or short-term
money market instruments when deemed appropriate by the
Adviser.

The list of restrictions on the Fund's investment activities
that cannot be changed without shareholder approval is set
forth below under "Investment Restrictions."

OTHER INVESTMENTS

Corporate Reorganizations

The Fund may invest up to 50% of its total assets in
securities for which a tender or exchange offer has been made
or announced and in securities of companies for which a
merger, consolidation, liquidation or reorganization proposal has
been announced. The primary risk of this type of investing is
that if the contemplated transaction is abandoned, revised,
delayed or becomes subject to unanticipated uncertainties, the
market price of the securities may decline below the purchase
price paid by the Fund.

In general, securities that are the subject of such an offer
or proposal sell at a premium to their historic market price
immediately prior to the announcement of the offer or proposal.
The increased market price of these securities may also
discount what the stated or appraised value of the security
would be if the contemplated transaction were approved or
consummated. These investments may be advantageous when
the discount significantly overstates the risk of the
contingencies involved; significantly undervalues the securities,
assets or cash to be received by shareholders of the
prospective portfolio company as a result of the contemplated
transactions; or fails adequately to recognize the possibility that
the offer or proposal may be replaced or superseded by an
offer or proposal of greater value. The evaluation of these
contingencies requires unusually broad knowledge and
experience on the part of the Adviser that must appraise not
only the value of the issuer and its component businesses as
well as the assets or securities to be received as a result of the
contemplated transaction, but also the financial resources and
business motivation of the offer or as well as the dynamics of
the business climate when the offer or proposal is in progress.

Although the Fund limits to 30% of its total assets its
investments in corporate reorganization securities that it
expects to hold for less than six months, such transactions
may tend to increase the turnover ratio of the Fund thereby
increasing its brokerage and other transaction expenses as well
as making it more difficult for the Fund to meet the tests for
favorable tax treatment as a "Regulated Investment Company"
specified by the Internal Revenue Code of 1986, as amended
(the "Code"). See "Dividends, Distributions and Taxes." The
Adviser intends to select investments of the type described
that, in its view, have a reasonable prospect of capital
appreciation that is significant in relation to both the risk
involved and the potential of available alternate investments.
The Adviser will closely monitor the effect of such investments
on the tax qualification tests of the Code.

Convertible Securities

A convertible security entitles the holder to exchange the
security for a fixed number of shares of common stock or other
equity security, usually of the same company, at fixed prices
within a specified period of time. A convertible security entitles
the holder to receive the fixed-income of a bond or the dividend
preference of a preferred stock until the holder elects to
exercise the conversion privilege.

A convertible security's position in a company's capital
structure depends upon its particular provisions. In the case of
subordinated convertible debentures, the holders' claims on
assets and earnings are subordinated to the claims of others
and are senior to the claims of common shareholders.

To the degree that the price of a convertible security
rises above its investment value because of a rise in price of
the underlying common stock, it is influenced more by price
fluctuations of the underlying common stock and less by its
investment value. The price of a convertible security that is
supported principally by its conversion value will rise along with
any increase in the price of the common stock, and the price
generally will decline along with any decline in the price of the
common stock except that the security will receive additional
support as its price approaches investment value. A
convertible security purchased or held at a time when its price
is influenced by its conversion value will produce a lower yield
than nonconvertible senior securities with comparable
investment values. Convertible securities may be purchased by
the Fund at varying price levels above their investment values
and/or their conversion values in keeping with the Fund's
investment objective.

Many convertible securities in which the Fund will invest
have call provisions entitling the issuer to redeem the security
at a specified time and at a specified price. This is one of the
features of a convertible security that affects valuation. Calls
may vary from absolute calls to provisional calls. Convertible
securities with superior call protection usually trade at a higher
premium. If long-term interest rates decline, the interest rates
of new convertible securities will also decline. Therefore, in a
falling interest rate environment companies may be expected to
call convertible securities with high coupons and the Fund
would have to invest the proceeds from such called issues in
securities with lower coupons. Thus, convertible securities
with superior call protection will permit the Fund to maintain a
higher yield than issues without call protection.

Investments in Warrants and Rights

Warrants basically are options to purchase equity
securities at a specified price valid for a specific period of time.
Their prices do not necessarily move parallel to the prices of
the underlying securities. Rights are similar to warrants, but
normally have a short duration and are distributed directly by
the issuer to its shareholders. Rights and warrants have no
voting rights, receive no dividends and have no rights with
respect to the assets of the issuer.

Investments in Foreign Securities

The Fund may invest up to 25% of the value of its total
assets in foreign securities (not including American Depositary
Receipts ("ADRs")). Foreign securities investments may be
affected by changes in currency rates or exchange control
regulations, changes in governmental administration or
economic or monetary policy (in the United States and abroad)
or changed circumstances in dealings between nations.
Dividends paid by foreign issuers may be subject to withholding
and other foreign taxes that may decrease the net return on
these investments as compared to dividends paid to the Fund
by domestic corporations. It should be noted that there may be
less publicly available information about foreign issuers than
about domestic issuers, and foreign issuers are not subject to
uniform accounting, auditing and financial reporting standards
and requirements comparable to those of domestic issuers.
Securities of some foreign issuers are less liquid and more
volatile than securities of comparable domestic issuers and
foreign brokerage commissions are generally higher than in the
United States. Foreign securities markets may also be less
liquid, more volatile and less subject to government supervision
than those in the United States. Investments in foreign
countries could be affected by other factors not present in the
United States, including expropriation, confiscatory taxation
and potential difficulties in enforcing contractual obligations.
Securities purchased on foreign exchanges may be held in
custody by a foreign branch of a domestic bank.

Other Investment Companies

The Fund reserves the right to invest up to 10% of its
total assets in the securities of money market mutual funds,
which are open-end investment companies, and closed-end
investment companies, including small business investment
companies, none of which are affiliated with the Fund, Lehman
Brothers Inc. ("Lehman Brothers") or Gabelli & Company, Inc.
("Gabelli & Company"). No more than 5% of the Fund's total
assets may be invested in the securities of any one investment
company and the Fund may not own more than 3% of the
securities of any investment company. Money market mutual
funds are investment companies that are regulated under the
Investment Company Act of 1940, as amended (the "1940
Act"). As open-end management companies like the Fund,
money market mutual funds make continuous offerings of
redeemable shares to the public and stand ready to sell and
redeem these shares daily. Generally speaking, these mutual
funds offer investors the opportunity to invest in a
professionally managed diversified portfolio of short-term debt
obligations, including U.S. Treasury bills and notes and other
U.S. Government securities, certificates of deposits, bankers'
acceptances, repurchase agreements and commercial paper.
Many of the costs, including the investment advisory fee,
attendant with the operation of money market mutual funds
and other management investment companies are borne by
shareholders; assuming the Fund was a shareholder in a money
market mutual fund (or other management investment
company) it, like other shareholders, would bear its
proportionate share of these costs. These costs will be borne
indirectly by shareholders of the Fund resulting in the payment
by shareholders of duplicative fees, including investment
advisory fees.

Investments in Small, Unseasoned Companies

The securities of small, unseasoned companies may have
a limited trading market, which may adversely affect their
disposition and can result in their being priced lower than what
might otherwise be the case. If other investment companies
and investors who invest in these issuers trade the same
securities when the Fund attempts to dispose of its holdings,
the Fund may receive lower prices than what might otherwise
be obtained.

SPECIAL INVESTMENT METHODS

Repurchase Agreements

The Fund may engage in repurchase agreements as set
forth in the Prospectus. A repurchase agreement is an
instrument under which the purchaser (that is, the Fund)
acquires a debt security and the seller agrees, at the time of
the sale, to repurchase the obligation at a mutually agreed upon
time and price, thereby determining the yield during the
purchaser's holding period. This results in a fixed rate of return
insulated from market fluctuations during this period. The
underlying securities are ordinarily U.S. Treasury or other
government obligations or high quality money market
instruments. The Fund will require that the value of the
underlying securities, together with any other collateral held by
the Fund, always equals or exceeds the amount of the
repurchase obligation of the other party. The Fund's risk is
primarily that, if the seller defaults, the proceeds from the
disposition of the underlying securities and other collateral for
the seller's obligation are less than the repurchase price. If the
seller becomes insolvent, the Fund might be delayed in or
prevented from selling the collateral. In the event of a default or
bankruptcy by a seller, the Fund will promptly seek to liquidate
the collateral. To the extent that the proceeds from any sale of
the collateral upon a default in the obligation to repurchase is
less than the repurchase price, the Fund will experience a loss.
If the financial institution that is a party to the repurchase
agreement petitions for bankruptcy or becomes subject to the
U.S. Bankruptcy Code, the law regarding the rights of the Fund
is unsettled. As a result, under extreme circumstances, there
may be a restriction on the Fund's ability to sell the collateral
and the Fund could suffer a loss.

Convertible and Nonconvertible Corporate Obligations

Corporate obligations include securities such as bonds,
debentures, notes or other similar securities issued by
corporations. These obligations can be further subdivided into
convertible and nonconvertible securities. Unlike a
nonconvertible corporate obligation, a convertible corporate
obligation may be converted into or exchanged for a prescribed
amount of common stock or other equity security of the same
or different issuer within a particular period of time at a
specified price or formula.

The Fund believes that investing in convertible and
nonconvertible corporate obligations is consistent with the
Fund's investment objective of seeking securities of companies
that in the public market, can provide significant long-term
capital appreciation. For example, an issuer's ability to repay
principal and interest when due may be underestimated by the
market; as a result, that issuer may be required to pay a higher
interest rate or its debt securities may be selling at a lower
market price than issuers of similar strength. When the market
recognizes their inherent value, the Fund anticipates that the
price of such securities will appreciate. In the case of
convertible securities, the market's recognition of a company's
real value and, in turn, the market value of its convertible
securities, may not occur until some anticipated development
or other catalyst emerges to cause an increase in the market
value of the company's common stock. In the case of any
corporate obligation under evaluation by the Adviser for
purchase by the Fund, the receipt of income is an incidental
consideration.

The Fund may invest up to 5% of its total assets in
securities of issuers in default. The Fund will invest in
securities of issuers in default only when the Adviser believes
that such issuers will honor their obligations or emerge from
bankruptcy protection and the value of these securities will
appreciate. By investing in securities of issuers in default the
Fund bears the risk that such issuers will not continue to honor
their obligations nor emerge from bankruptcy protection or that
the value of such securities will not appreciate.

Subsequent to its purchase by the Fund, an issue of
securities may cease to be rated or its ratings may be reduced
below the minimum required for purchase by the Fund. In
addition, it is possible that Moody's Investor Services, Inc.
("Moody's") and Standard & Poor's Ratings Group

("S&P") might not timely change their ratings of a
particular issue to reflect subsequent events. None of these
events will require the sale of the securities by the Fund,
although the Adviser will consider these events in determining
whether the Fund should continue to hold the securities. To
the extent that the ratings given by Moody's or S&P for
securities may change as a result of changes in the ratings
systems or due to a corporate reorganization of Moody's and/or
S&P, the Fund will attempt to use comparable ratings as
standards for its investments in accordance with the
investment objectives and policies of the Fund.

Low-rated and comparable unrated securities (a) will
likely have some quality and protective characteristics that, in
the judgment of the rating organization, are outweighed by
large uncertainties or major risk exposures to adverse
conditions and (b) are predominantly speculative with respect
to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation.

While the market values of low-rated and comparable
unrated securities tend to react less to fluctuations in interest
rate levels than the market values of higher-rated securities, the
market values of certain low-rated and comparable unrated
securities also tend to be more volatile and sensitive to
individual corporate developments and changes in economic
conditions than higher-rated securities. In addition, low-rated
securities and comparable unrated securities generally present a
higher degree of credit risk. Issuers of low-rated and
comparable unrated securities are often highly leveraged and
may not have more traditional methods of financing available to
them so that their ability to service their debt obligations during
an economic downturn or during sustained periods of rising
interest rates may be impaired. The risk of loss due to default
by such issuers is significantly greater because low-rated and
comparable unrated securities generally are unsecured and
frequently are subordinated to the prior payment of senior
indebtedness. The Fund may incur additional expenses to the
extent that it is required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings. The
existence of limited markets for low-rated and comparable
unrated securities may diminish the Fund's ability to obtain
accurate market quotations for purposes of valuing such
securities and calculating its net asset value. Moreover,
because not all dealers maintain markets in all low-rated and
comparable unrated securities, there is no established retail
secondary market for many of these securities and the Fund
does not anticipate that those securities could be sold other
than to institutional investors.

Fixed-income securities, including low-rated securities
and comparable unrated securities, frequently have call or buy-
back features that permit their issuers to call or repurchase the
securities from their holders, such as the Fund. If an issuer
exercises these rights during periods of declining interest rates,
the Fund may have to replace the security with a lower-yielding
security, thus resulting in a decreased return to the Fund.

The market for certain low-rated and comparable unrated
securities has experienced a major economic recession. The
recession has adversely affected the value of such securities.
Such economic downturn also may affect the ability of the
issuers of such securities to repay principal and pay interest
thereon.

Short Sales Against the Box

The Fund may sell securities "short against the box."
While a short sale is the sale of a security that the Fund does
not own, it is "against the box" if at all times when the short
position is open the Fund owns an equal amount of securities
or securities convertible into, or exchangeable without further
consideration for, securities of the same issue as the securities
sold short.

To secure its obligations to deliver the securities sold
short, the Fund will deposit in escrow in a separate account
with the Fund's custodian, Boston Safe Deposit and Trust
Company ("Boston Safe"), an amount at least equal to the
securities sold short or securities convertible into, or
exchangeable for, the securities. The Fund may close out a
short position by purchasing and delivering an equal amount of
securities sold short, rather than by delivering securities already
held by the Fund, because the Fund may want to continue to
receive interest and dividend payments on securities in its
portfolio that are convertible into the securities sold short.

Options

The Fund may, from time to time, purchase or sell (that
is, write) listed call or put options on securities as a means of
achieving additional return or of hedging the value of the
Fund's portfolio. A call option is a contract that, in return for a
premium, gives the holder of the option the right to buy from
the writer of the call option the security underlying the option
at a specified exercise price at any time during the term of the
option. The writer of the call option has the obligation, upon
exercise of the option, to deliver the underlying security upon
payment of the exercise price during the option period. A put
option is the reverse of a call option, giving the holder the right
to sell the security to the writer and obligating the writer to
purchase the underlying security from the holder.

A call option is "covered" if the Fund owns the
underlying security covered by the call or has an absolute and
immediate right to acquire that security without additional cash
consideration (or for additional cash consideration held in a
segregated account by its custodian) upon conversion or
exchange of other securities held in its portfolio. A call option
is also covered if the Fund holds a call on the same security as
the call written where the exercise price of the call held is (1)
equal to or less than the exercise price of the call written or (2)
greater than the exercise price of the call written if the
difference is maintained by the Fund in cash, U.S. Government
securities or other high grade short-term obligations in a
segregated account held with its custodian. A put option is
"covered" if the Fund maintains cash or other high grade short-
term obligations with a value equal to the exercise price in a
segregated account held with its custodian, or else holds a put
on the same security as the put written where the exercise
price of the put held is equal to or greater than the exercise
price of the put written.

If the Fund has written an option, it may terminate its
obligation by effecting a closing purchase transaction. This is
accomplished by purchasing an option of the same series as
the option previously written. However, once the Fund has
been assigned an exercise notice, the Fund will be unable to
effect a closing purchase transaction. Similarly, if the Fund is
the holder of an option it may liquidate its position by effecting
a closing sale transaction. This is accomplished by selling an
option of the same series as the option previously purchased.
There can be no assurance that either a closing purchase or
sale transaction can be effected when the Fund so desires.

The Fund will realize a profit from a closing transaction if
the price of the transaction is less than the premium received
from writing the option or is more than the premium paid to
purchase the option; the Fund will realize a loss from a closing
transaction if the price of the transaction is more than the
premium received from writing the option or is less than the
premium paid to purchase the option. Since call option prices
generally reflect increases in the price of the underlying
security, any loss resulting from the repurchase of a call option
may also be wholly or partially offset by unrealized appreciation
of the underlying security. Other principal factors affecting the
market value of a put or a call option include supply and
demand, interest rates, the current market price and price
volatility of the underlying security and the time remaining until
the expiration date.

An option position may be closed out only on an
exchange which provides a secondary market for an option of
the same series. Although the Fund will generally purchase or
write only those options for which there appears to be an
active secondary market, there is no assurance that a liquid
secondary market on an exchange will exist for any particular
option. In such event it might not be possible to effect closing
transactions in particular options, so that the Fund would have
to exercise its options in order to realize any profit and would
incur brokerage commissions upon the exercise of call options
and upon the subsequent disposition of underlying securities
for the exercise of put options. If the Fund, as a covered call
option writer, is unable to effect a closing purchase transaction
in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying
security upon exercise or otherwise covers the position.

In addition to options on securities, the Fund may also
purchase and sell call and put options on securities indexes. A
stock index reflects in a single number the market value of
many different stocks. Relative values are assigned to the
stocks included in an index and the index fluctuates with
changes in the market values of the stocks. The options give
the holder the right to receive a cash settlement during the
term of the option based on the difference between the
exercise price and the value of the index. By writing a put or
call option on a securities index, the Fund is obligated, in return
for the premium received, to make delivery of this amount.
The Fund may offset its position in stock index options prior to
expiration by entering into a closing transaction on an
exchange or it may let the option expire unexercised.

Use of options on securities indexes entails the risk that
trading in the options may be interrupted if trading in certain
securities included in the index is interrupted. The Fund will
not purchase these options unless the Adviser is satisfied with
the development, depth and liquidity of the market and the
Adviser believes the options can be closed out.

Price movements in the Fund's portfolio may not
correlate precisely with movements in the level of an index and,
therefore, the use of options on indexes cannot serve as a
complete hedge and will depend, in part, on the ability of the
Adviser to predict correctly movements in the direction of the
stock market generally or of a particular industry. Because
options on securities indexes require settlement in cash, the
Adviser may be forced to liquidate portfolio securities to meet
settlement obligations.

The Fund has qualified and intends to continue to qualify
as a "Regulated Investment Company" under the Code. One
requirement for such qualification is that the Fund must derive
less than 30% of its gross income from gains from the sale or
other disposition of securities held for less than three months.
Therefore, the Fund may be limited in its ability to engage in
options transactions.

Although the Adviser will attempt to take appropriate
measures to minimize the risks relating to the Fund's writing of
put and call options, there can be no assurance that the Fund
will succeed in any option-writing program it undertakes.

Lending of Portfolio Securities

Consistent with applicable regulatory requirements, the
Fund may lend its portfolio securities to securities broker-
dealers or financial institutions, provided that the loans are
callable at any time by the Fund (subject to the notice
provisions described below), and are at all times secured by
cash or cash equivalents, which are maintained in a segregated
account pursuant to applicable regulations and that are equal to
at least the market value, determined daily, of the loaned
securities. The advantage of the loans is that the Fund
continues to receive the income on the loaned securities while
at the same time earns interest on the cash amounts deposited
as collateral, which will be invested in short-term obligations.
The Fund will not lend its portfolio securities if the loans are
not permitted by the laws or regulations of any state in which
its shares are qualified for sale and will not lend more than
33% of the value of its total assets.

A loan may generally be terminated by the borrower on
one business day's notice, or by the Fund on five business
days' notice. If the borrower fails to deliver the loaned
securities within five days after receipt of notice, the Fund
could use the collateral to replace the securities while holding
the borrower liable for any excess of replacement cost over
collateral. As with any extensions of credit, there are risks of
delay in recovery and in some cases even loss of rights in the
collateral should the borrower of the securities fail financially.
However, loans of portfolio securities will only be made to firms
deemed by the Fund's management to be creditworthy and
when the income that can be earned from the loans justifies the
attendant risks. The Board of Directors will oversee the
creditworthiness of the contracting parties on an ongoing basis.
Upon termination of the loan, the borrower is required to return
the securities to the Fund. Any gain or loss in the market price
during the loan period would inure to the Fund. The risks
associated with loans of portfolio securities are substantially
similar to those associated with repurchase agreements. Thus,
if the party to whom the loan was made petitions for
bankruptcy or becomes subject to the U.S. Bankruptcy Code,
the law regarding the rights of the Fund is unsettled. As a
result, under extreme circumstances, there may be a restriction
on the Fund's ability to sell the collateral and the Fund could
suffer a loss.

When voting or consent rights that accompany loaned
securities pass to the borrower, the Fund will follow the policy
of calling the loaned securities, to be delivered within one day
after notice, to permit the exercise of such rights if the matters
involved would have a material effect on the Fund's investment
in such loaned securities. The Fund will pay reasonable
finder's, administrative and custodial fees in connection with a
loan of its securities.

When Issued, Delayed Delivery Securities and Forward
Commitments

The commitment for the purchase of a "when, as and if
issued security" will not be recognized in the portfolio of the
Fund until the Adviser determines that issuance of the security
is probable. At such time, the Fund will record the transaction
and, in determining its net asset value, will reflect the value of
the security daily. The Fund will also establish at that time a
segregated account with Boston Safe in which it will maintain
cash or liquid high-grade debt securities at least equal in value
to the amount of its commitments. The Adviser does not
believe that the net asset value of the Fund will be adversely
affected by its purchase of securities on this basis.

Futures Contracts and Options on Futures

The Fund has authorized the Adviser to enter into futures
contracts that are traded on a U.S. exchange or board of trade,
provided, however, that the Fund will not enter into futures
contacts for which the aggregate initial margins and premiums
would exceed 5% of the fair market value of the Fund's assets.
Although the Fund has no current intention of using options on
futures contracts, the Fund may at some future date authorize
the Adviser to enter into options on futures contracts, subject
to the limitations stated in the preceding sentence. These
investments will be made by the Fund solely for the purpose of
hedging against changes in the value of its portfolio securities
and in the value of securities it intends to purchase. Such
investments will only be made if they are economically
appropriate to the reduction of risks involved in the
management of the Fund. In this regard, the Fund may enter
into futures contracts or options on futures for the purchase or
sale of securities indices or other financial instruments including
but not limited to U.S. Government securities.

Futures
exchanges and trading in the United States are regulated under
the Commodity Exchange Act by the Commodity Futures
Trading Commission.

A "sale" of a futures contract (or a "short" futures
position) means the assumption of a contractual obligation to
deliver the securities underlying the contract at a specified price
at a specified future time. A "purchase" of a futures contract
(or a "long" futures position) means the assumption of a
contractual obligation to acquire the securities underlying the
contract at a specified price at a specified future time. Certain
futures contracts, including stock and bond index futures, are
settled on a net cash payment basis rather than by the sale and
delivery of the securities underlying the futures contracts.

No consideration will be paid or received by the Fund
upon the purchase or sale of a futures contract. Initially, the
Fund will be required to deposit with the broker an amount of
cash or cash equivalents equal to approximately 1% to 10% of
the contract amount (this amount is subject to change by the
exchange or board of trade on which the contract is traded and
brokers or members of such board of trade may charge a higher
amount). This amount is known as "initial margin" and is in the
nature of a performance bond or good faith deposit on the
contract. Subsequent payments, known as "variation margin,"
to and from the broker will be made daily as the price of the
index or security underlying the futures contract fluctuates. At
any time prior to the expiration of a futures contract, the
portfolio may elect to close the position by taking an opposite
position, which will operate to terminate the Fund's existing
position in the contract.

An option on a futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in a
futures contract at a specified exercise price at any time prior
to the expiration of the option. Upon exercise of an option, the
delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account
attributable to that contract, which represents the amount by
which the market price of the futures contract exceeds, in the
case of a call, or is less than, in the case of a put, the exercise
price of the option on the futures contract. The potential loss
related to the purchase of an option on futures contracts is
limited to the premium paid for the option (plus transaction
costs). Because the value of the option purchased is fixed at
the point of sale, there are no daily cash payments by the
purchaser to reflect changes in the value of the underlying
contract; however, the value of the option does change daily
and that change would be reflected in the net asset value of
the portfolio.

As noted above, the Fund may authorize the Adviser to
use such instruments depending upon market conditions
prevailing at such time and the perceived investment needs of
the Fund. However, in no event may the Fund enter into
futures contracts or options on futures contracts if,
immediately thereafter, the sum of the amount of margin
deposits on the Fund's existing futures contracts and premiums
paid for options would exceed 5% of the value of the Fund's
total assets after taking into account unrealized profits and
losses on any existing contracts. In the event the Fund enters
into long futures contracts or purchases call options, an
amount of cash, obligations of the U.S. Government and its
agencies and instrumentalities or other high grade debt
securities equal to the market value of the contract will be
deposited and maintained in a segregated account with the
Fund's custodian to collateralize the positions, thereby insuring
that the use of the contract is unleveraged.

INVESTMENT RESTRICTIONS

The Fund has adopted the following investment
restrictions for the protection of shareholders that may not be
changed without the approval of a majority of the Fund's
shareholders, defined as the lesser of (1) 67% of the Fund's
shares present at a meeting if the holders of more than 50% of
the outstanding shares are present in person or by proxy, or (2)
more than 50% of the Fund's outstanding shares. Under these
restrictions, the Fund may not:

1. Invest more than 25% of the value of its total
assets in any particular industry (this restriction does not apply
to obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities);

2. Purchase securities on margin, but it may obtain
short-term credits from banks as may be necessary for the
clearance of purchase and sales of portfolio securities;

3. Make loans of its assets except for: (a) purchasing
debt securities, (b) engaging in repurchase agreements as set
forth in the Prospectus, and (c) lending its portfolio securities
consistent with applicable regulatory requirements and as set
forth in the Prospectus;

4. Borrow money except subject to the restrictions
set forth in the Prospectus;

5. Mortgage, pledge or hypothecate any of its assets
except that, in connection with permissible borrowings
mentioned in restriction (4) above, not more than 20% of the
assets of the Fund (not including amounts borrowed) may be
used as collateral and that collateral arrangements with respect
to the writing of options or any other hedging activity are not
deemed to be pledges of assets and these arrangements are
not deemed to be the issuance of a senior security as set forth
below in restriction (11);

6. Except to the extent permitted by restriction
(14) below, invest in any investment company
affiliated with the Fund, Lehman Brothers or Gabelli &
Company, invest more than 5% of its total assets in the
securities of any one investment company, own more than 3%
of the securities of any investment company or invest more
than 10% of its total assets in the securities of all other
investment companies;

7. Engage in the underwriting of securities, except
insofar as the Fund may be deemed an underwriter under the
Securities Act of 1933, as amended, in disposing of a portfolio
security;

8. Invest, in the aggregate, more than 10% of the
value of its net assets in securities for which market quotations
are not readily available, securities which are restricted for
public sale, in repurchase agreements maturing or terminable in
more than seven days and all other illiquid securities;

9. Purchase or otherwise acquire interests in real
estate, real estate mortgage loans or interests in oil, gas or
other mineral exploration or development programs;

10. Purchase or acquire commodities or commodity
contracts except that the Fund may purchase or sell futures
contracts and related options thereon if thereafter no more than
5% of its total assets are invested in margin and premiums;

11. Issue senior securities, except insofar as the Fund
may be deemed to have issued a senior security in connection
with: (a) borrowing money in accordance with restriction (4)
above, (b) lending portfolio securities, (c) entering into
repurchase agreements, (d) purchasing or selling options
contracts, (e) purchasing or selling futures contracts and
related options thereon, or (f) acquiring when issued or delayed
delivery securities and forward commitments;

12. Sell securities short, except transactions involving
selling securities short "against the box;"

13. Purchase warrants if, thereafter, more than 5% of
the value of the Fund's net assets would consist of such
warrants, but warrants attached to other securities or acquired
in units by the Fund are not subject to this restriction; or

14. Invest in companies for the purpose of exercising
control, except transactions involving investments in
investment companies for the purpose of effecting mergers and
other corporate reorganizations involving the Fund and such
other investment companies.

If any percentage limitation is adhered to at the time of
an investment, a later increase or decrease in the percentage of
assets resulting from a change in the values of portfolio
securities or in the amount of the Fund's assets will not
constitute a violation of such restriction. In order to permit the
sale of the Fund's shares in certain states, the Fund may make
commitments more restrictive than the investment restrictions
described above.

DIRECTORS AND OFFICERS

The Directors and principal officers of the Fund,
their ages, and their principal occupations for the
past five years, are listed below. Directors deemed to be
"interested persons" of the Fund for purposes of the 1940 Act
are indicated by an asterisk.

Name, Age and Position(s) with Principal
Occupations During Last Five Years;
Fund and Address Affiliations with
the Adviser

Mario J. Gabelli, CFA*(52) Chairman of the
Board, President, Chief Executive
Rye, New York 10580-1434 Officer and Chief
Investment Officer of the Adviser;
Chairman, President and Chairman of the Board and
Chief Executive Officer
Chief Investment Officer of GAMCO; Chairman of the
Board, President and
One Corporate Center Chief Investment Officer The
Gabelli Equity Trust and The Gabelli Global Multimedia Trust
Inc.; Trustee of The Gabelli Asset Fund and The Gabelli Growth
Fund; President and Director of The Gabelli Series Funds, Inc.,
Gabelli Global Series Funds, Inc., Gabelli Equity Series Funds,
Inc. and Gabelli Investor Funds, Inc.; and President and Trustee
of The Gabelli Money Market Funds; Chairman of the Board and
Director of Lynch Corporation and Gabelli Gold Fund, Inc.;
Director and Adviser of Gabelli International Ltd.

William Callaghan (51) President of Bill Callaghan
Associates Ltd., an
Director executive search company. Director of The
Gabelli
130 East 40th Street Equity Trust Inc. and The
Gabelli Global
New York, New York 10016 Multimedia Trust Inc.

Felix J. Christiana (70) Former Senior Vice President of
Dry Dock Savings
Director Bank. Director of The Gabelli Series Funds,
Inc.,
45 Pondfield Parkway The Gabelli Equity Trust Inc.,
The Gabelli Global
Mt. Vernon, New York 10552 Multimedia Trust Inc.,
Gabelli Equity Series Funds, Inc., Gabelli Global Series Funds,
Inc., and The Treasurer's Fund, Inc., and a Trustee of The
Gabelli Asset Fund and The Gabelli Growth Fund.

Anthony J. Colavita (59) President and Attorney at Law
in the law firm of
Director Anthony J. Colavita, P.C.; Trustee of The
Gabelli
575 White Plains Road Asset Fund, The Gabelli Growth
Fund The
Eastchester, New York 10709 Gabelli Money Market
Funds and the Westwood Funds. Director of Gabelli Equity
Series Funds, Inc., Gabelli Global Series Funds, Inc., Gabelli
Investor Funds, Inc., The Gabelli Series Funds, Inc. and Gabelli
Gold Fund, Inc.

Robert J. Morrissey (55) Partner in the law firm of
Morrissey Hawkins;
Director Former partner in the law firm of Withington
Cross
Two International Place Park & Groden. Director of
Gabelli Equity Series
Boston, Massachusetts 02110 Funds, Inc.

Karl Otto Pohl* (65) Partner, Sal Oppenheim Jr. &
Cie. (private
Director investment bank); Former President of the
Deutsche
One Corporate Center Bundesbank (Germany's Central
Bank) and
Rye, New York 10580-1434 Chairman of its Central
Bank Council (1980-1991); Currently Board Member of Zurich
Versicherungs-Gesellschaft (Insurance); the International
Council for J.P. Morgan & Co.; Supervisory Board Member of
Royal Dutch (petroleum company); Supervisory Board Members
of ROBECo/o Group; and Advisory Director of Unilever N.V.
and Unilever Deutschland; Director/Trustee of all the mutual
funds advised by Gabelli Funds, Inc. since February 1992.

Anthony R. Pustorino, CPA (69) Professor of
Accounting at Pace University;
Director Formerly President and shareholder,
Pustorino
121 Arleigh Road Puglisi & Co., P.C., certified public
accountants
Douglastown, New York 11363 from 1961 to
1990. Director of The Gabelli Series Funds, Inc., Gabelli Equity
Series Funds, Inc., The Gabelli Equity Trust Inc., The Gabelli
Global Multimedia Trust Inc., The Treasurer's Fund, Inc., and a
Trustee of The Gabelli Asset Fund and The Gabelli Growth
Fund.

Bruce N. Alpert (43) Vice President, Treasurer and
Chief Financial
Chief Operating Officer, Officer of the Investment
Advisory Division of the
Vice President and Treasurer Adviser, Treasurer of The
Gabelli Equity Trust Inc.
One Corporate Center and The Gabelli Global
Multimedia Trust Inc.,
Rye, New York 10580-1434 President and Treasurer
of The Gabelli Asset Fund and The Gabelli Growth Fund; Vice
President and Treasurer of The Gabelli Convertible Securities
Fund, Gabelli Equity Series Funds, Inc., Gabelli Investor Funds,
Inc., Gabelli Global Series Funds, Inc. and Gabelli Money
Market Funds, Manager of Teton Advisers, LLC and Vice
President of the Westwood Funds.

J. Hamilton Crawford, Jr. (65) Senior Vice President and
General Counsel of the
Secretary Investment Advisory Division of the Adviser.
Mr.
One Corporate Center Crawford is also Secretary of
all mutual funds
Rye, New York 10580-1434 advised by the Adviser
and Teton Advisers, LLC. Prior to July 1, 1992, Mr. Crawford
was an attorney in private practice from 1990-1992 and was
Executive Vice President and General Counsel of Prudential
Mutual Fund Management Inc. with which he was associated
from 1988-1990.

_____________________
Mr. Pohl receives fees from the Adviser but has no
obligation to provide any services to the Adviser. Although this
relationship does not appear to require designation of Mr. Pohl
as an interested person, the Fund is currently
making such designation in order to avoid the possibility that
Mr. Pohl's independence would be questioned.

Remuneration. No director, officer or employee of
Gabelli & Company or the Adviser or of any affiliate of Gabelli
& Company or the Adviser will receive any
compensation from the Fund for serving as an officer or
director of the Fund. The Fund pays each of its Directors who
is not a director, officer or employee of the Adviser or any of
their affiliates, $10,000 per annum plus $1,000 per meeting
attended and reimburses each Director for related travel and
out-of-pocket expenses. The Fund also pays each Director
serving as Chairman of the Audit, Investment, Proxy or
Nominating Committees $2,500 per annum. For the year ended
December 31, 1994, such fees totalled $93,000.

Each Director serves as a director or trustee of
certain other mutual funds for which Gabelli Funds, Inc. serves
as Investment Adviser and Gabelli & Company serves as
Distributor. As of April 1, 1995, the Directors and officers of
the Fund owned less than 1% of the outstanding common
stock of the Fund.

The following table sets forth certain information
regarding the compensation of the Fund as Directors and
officers. Except as disclosed below, no executive officer or
person affiliated with the Fund received compensation in
excess of $60,000 from the Fund for the fiscal year ended
December 31, 1994.

Compensation Table

Pension Total
Retirement Estimated Compensation from
Aggregate Benefits Accrued Annual the Fund and Fund
Name of Person Compensation as part of Fund Benefits Upon Complex paid to
and Position from the Fund Expenses Retirement Directors*

Mario J. Gabelli $0 0
N/A $0
Chairman of the Board

William Callaghan $14,000 0
N/A $28,000 (3)
Director

Felix Christiana $14,000 0
N/A $64,500 (9)
Director

Anthony J. Colavita $16,500 0
N/A $62,000 (10)
Director

Robert J. Morrissey $16,500 0
N/A $26,500 (3)
Director

Karl Otto Pohl $13,000 0 N/A $64,750 (12)
Director

Anthony Pustorino $19,000 0 N/A $69,000 (8)
Director

___________________________________
* Represents the total compensation paid to such persons
during the fiscal year ending December 31, 1994
by investment companies (including the Fund) from which such
person receives compensation that are
part of the same fund complex as the Fund because they have
common or affiliated investment advisers.
The number in parenthesis represents the number of such
investment companies.

THE ADVISER

The adviser to the Fund is Gabelli Funds, Inc., a New
York corporation organized in 1980 with principal offices
located at One Corporate Center, Rye, New York 10580-1434.
The Investment Advisory Division of the Adviser also serves as
investment adviser to: The Gabelli Equity Trust Inc., The
Gabelli Convertible Securities Fund Inc. and The Gabelli Global
Multimedia Trust Inc., which are closed-end investment
companies; and The Gabelli Growth Fund, The Gabelli Asset
Fund, The Gabelli Small Cap Growth Fund, The Gabelli Equity
Income Fund, The Gabelli US Treasury Money Market Fund,
The Gabelli ABC Fund, The Gabelli Global Telecommunications
Fund, The Gabelli Global Interactive Couch Potato Fund, and
The Gabelli Global Convertible Securities Fund and Gabelli Gold
Fund, Inc., which are open-end investment companies.

The Adviser currently serves as investment adviser to the
Fund pursuant to an investment advisory agreement dated
March 1, 1994 (the "Advisory Agreement"), which was
approved by the Fund's Board of Directors, including a majority
of the Directors who are not "interested persons" of the Fund,
at a Board Meeting held on November 17, 1993, and was
approved by the Fund's shareholders at a Special Meeting of
Shareholders held on February 25, 1994. Pursuant to the
Advisory Agreement, the Fund employs the Adviser to act as
its investment adviser and to oversee the administration of all
aspects of the Fund's business affairs and to provide, or
arrange for others whom it believes to be competent to provide
certain services. The Adviser is generally responsible for the
investment and management of the Fund's assets, subject to
and in accordance with the Fund's investment objective,
policies, and restrictions as stated in the Prospectus and herein.
In discharging its responsibility, the Adviser determines and
monitors the investments of the Fund. In addition, the Adviser
has full authority to implement its determinations by selecting
and placing individual transactions on behalf of the Fund.

Under the Advisory Agreement, the Adviser also provides
or arranges for the following services: (i) maintains the Fund's
books and records, such as journals, ledger accounts and other
records in accordance with applicable laws and regulations to
the extent not maintained by the Fund's custodian, transfer
agent or dividend disbursing agent; (ii) transmitting purchase
and redemption orders for Fund shares to the extent not
transmitted by the Fund's distributor or others who purchase
and redeem shares; (iii) initiating all money transfers to the
Fund's custodian and from the Fund's custodian for the
payment of the Fund's expenses, investments, dividends and
share redemption; (iv) reconciling account information and
balances among the Fund's custodian, transfer agent,
distributor, dividend disbursing agent and the Adviser; (v)
providing the Fund, upon request, with such office space and
facilities, utilities and office equipment as are adequate for the
Fund's needs; (vi) preparing, but not paying for, all reports by
the Fund to its shareholders and all reports and filings required
to maintain the registration and qualification of the Fund's
shares under federal and state law including periodic updating
of the Fund's registration statement and Prospectus (including
its Statement of Additional Information); (vii) supervising the
calculation of the net asset value of the Fund's Shares; and
(viii) preparing notices and agendas for meetings of the Fund's
shareholders and the Fund's Board of Directors as well as
minutes of such meetings in all matters required by applicable
law to be acted upon by the Board of Directors.

The Advisory Agreement provides that, absent willful
misfeasance, bad faith, gross negligence or reckless disregard
of duty, the Adviser shall not be liable to the Fund for any error
of judgment or mistake of law or for any loss sustained by the
Fund. The Fund has agreed by the terms of the Advisory
Agreement that the word "Gabelli" in its name is derived from
the name of the Adviser that in turn is derived from the name
of Mario J. Gabelli; that the name is the property of the Adviser
for copyright and other purposes; and that, therefore, the name
may freely be used by the Adviser for other investment
companies, entities or products. The Fund has further agreed
that in the event that for any reason, the Adviser ceases to be
its investment adviser, the Fund will, unless the Adviser
otherwise consents in writing, promptly take all steps
necessary to change its name to one which does not include
"Gabelli."

The Advisory Agreement is terminable without penalty
by the Fund on sixty days' written notice when authorized
either by majority vote of its outstanding voting shares or by
vote of a majority of its Board of Directors, or by the Adviser
on sixty days' written notice, and will automatically terminate
in the event of its "assignment" as defined by the 1940 Act.
The Advisory Agreement provides that, unless terminated, it
will remain in effect until March 1, 1996, and from year to year
thereafter as long as such continuance is annually approved by
the Board of Directors or by majority vote of its outstanding
voting shares and, in either case, by a majority vote of the
Directors who are not parties to the Advisory Agreement or
"interested persons," as defined by the 1940 Act, of any such
party cast in person at a meeting called specially for the
purpose of voting on the continuance of the Advisory
Agreement.

As compensation for its services and the related
expenses borne by the Adviser, the Adviser is paid a fee
computed and payable monthly, equal, on an annual basis, to
1.00% of the value of the Fund's average daily net assets
which is higher than that paid by most mutual funds. Prior to
March 1, 1994, the Adviser was paid a fee for investment
advisory services only as it did not provide administrative
services. The fee, which was computed and payable monthly,
was equal, on an annual basis, to 0.75% of the value of the
Fund's average daily net assets. For the fiscal years ended
December 31, 1992, December 31, 1993 and December
31, 1994, the Fund paid investment advisory fees to the
Adviser amounting to $3,679,622, $3,452,075 and
$4,417,116 respectively. The Advisory Agreement also
provides that if in any fiscal year the aggregate expenses of the
Fund (including fees pursuant to the Advisory Agreement, but
excluding interest, taxes, brokerage, distribution fees paid
pursuant to the Fund's plan of distribution and, if permitted by
state securities commissions, extraordinary expenses) exceed
the most restrictive expense limitations imposed by the
securities laws of any state having jurisdiction over the Fund,
the Adviser has agreed to reimburse the Fund for the amount of
such excess up to the amount of fees accrued for such fiscal
year. The most restrictive state limitation is currently believed
to be 2.5% of the first $30 million of average net assets, 2.0%
of the next $70 million of average net assets and 1.5% of the
remaining average net assets. Fund expenses are accrued
monthly and the monthly fee otherwise payable to the Adviser
is reduced to the extent that Fund expenses exceed the amount
of such limitation and, to the extent such excess is greater than
the monthly fee of the Adviser, the amount of such excess is
reimbursed by the Adviser. As the result of an exemption by
the California Department of Corporations, the expenses
incurred by the Fund under its distribution plan are no longer
required by the law of any state in which its shares are
registered or qualified for sale to be included in the computation
of the expenses which the Adviser has undertaken to reimburse
to the Fund. The expenses which may be incurred by the Fund
in any fiscal year pursuant to the Fund's plan of distribution
(see "Distribution Plan," below) is 0.25% of the value of its
average daily net assets.

SUB-ADMINISTRATOR

The Shareholder Services Group, Inc. ("TSSG") a
subsidiary of First Data Corporation, serves as sub-
administrator to the Fund pursuant to a sub-administration
agreement with the Adviser (the "Sub-Administration
Agreement"). Under the Sub-Administration Agreement, TSSG
(a) assists in supervising all aspects of the Fund's operations
except those performed by the Adviser under its advisory
agreement with the Fund; (b) supplies the Fund with office
facilities (which may be in TSSG's own offices), statistical and
research data, data processing services, clerical, accounting
and bookkeeping services, including, but not limited to, the
calculation of the net asset value of shares in the Fund, internal
auditing and legal services, internal executive and
administrative services, and stationery and office supplies; (c)
prepares and distributes materials for all Fund Board of
Directors' Meetings including the mailing of all Board materials
and collates the same materials into the Board books and
assists in the drafting of minutes of the Board Meetings; (d)
prepares reports to Fund shareholders, tax returns and reports
to and filings with the Securities and Exchange Commission
(the "SEC") and state Blue Sky authorities; (e) calculates the
Fund's net asset value per share, provides any equipment or
services necessary for the purpose of pricing shares or valuing
the Fund's investment portfolio and, when requested,
calculates the amount of all applicable "Blue Sky" expense
limitations and the amounts permitted for the payment of
distribution expenses under any distribution plan adopted by
the Fund; (f) provides compliance testing of all Fund activities
against applicable requirements of the 1940 Act and the rules
thereunder, the Code, and the Fund's investment restrictions;
(g) furnishes to the Adviser such statistical and other factual
information and information regarding economic factors and
trends as the Adviser from time to time may require; and (h)
generally provides all administrative services that may be
required for the ongoing operation of the Fund in a manner
consistent with the requirements of the 1940 Act.

On May 6, 1994, TSSG became the Fund's sub-
administrator pursuant to an assignment of the Sub-
Administration Agreement between the Adviser and The Boston
Company Advisors, Inc. ("Boston Advisors"). For the services
it provides, the Advisor pays TSSG a monthly fee based on the
value of the aggregate average daily net assets of all funds
under its administration managed by the Adviser as follows: up
to $1 billion - 0.10%; $1 billion to $1.5 billion - 0.08%; $1.5
billion to $3 billion - 0.03%; over $3 billion - 0.02%. Prior to
January 31, 1995, the Advisor paid TSSG a monthly fee
calculated at the annual rate of 0.15% of the Fund's average
daily net assets, reduced by an amount equal to one-fourth of
any expense reimbursement obligations that are incurred by the
Adviser to the Fund pursuant to the Advisory Agreement.

Prior to March 1, 1994, Boston Advisors was the
administrator of the Fund pursuant to an administration
agreement with the Fund and performed substantially the same
services as sub-administrator thereafter.

For the fiscal years ended, December 31, 1992,
December 31, 1993 and the fiscal period from January 1, 1994
through February 28, 1994, the Fund paid administration fees
to Boston Advisors amounting to $1,226,666, $1,150,692 and
$196,808, respectively. For the period from March 1, 1994
through May 5, 1994, the Adviser paid to Boston Advisors
$217,666 in sub-administration fees and for the period from
May 6, 1994 through December 31, 1994, the Adviser paid
TSSG $447,304 in sub-administration fees.

DISTRIBUTOR

The Fund has entered into a distribution agreement with
Gabelli & Company and may enter into substantially identical
arrangements with other firms. Gabelli & Company is a New
York corporation which is a subsidiary of the Adviser and has
its principal offices at One Corporate Center, Rye, New York
10580). Gabelli & Company solicits offers for the purchase of
shares of the Fund on a best efforts basis. Expenses normally
attributable to the sale of Fund shares which are not paid by
the Fund (see "Distribution Plan" and "Management of the
Fund" in the Prospectus) are paid by Gabelli & Company.
Gabelli & Company may enter into selling agreements with
registered broker-dealers ("Soliciting Broker-Dealers") pursuant
to which Gabelli & Company may reallow the sales charge to
Soliciting Broker-Dealers in accordance with the schedule set
forth in the Prospectus under "Purchase of Shares."

The table below sets forth the commissions (sales
charges) on sales of the Fund's shares received by Shearson
Lehman Brothers and Gabelli & Company for the periods
indicated:

Year Ended Year Ended Year Ended
December 31, 1994 December 31,
1993 December 31, 1992

Shearson Lehman Brothers N/A $10,268* $128,720
Gabelli & Company, Inc. 200,857
378,861 44,526

* Reflects commissions (sales charges) paid to Shearson
Lehman Brothers prior to the acquisition of certain assets of
Shearson Lehman Brothers by Smith Barney on July 30, 1993.
As of such date Shearson Lehman Brothers
ceased to be an underwriter for the Fund.

DISTRIBUTION PLAN

The Fund has adopted a plan of distribution (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act. Under its terms,
the Plan remains in effect so long as its continuance is
specifically approved at least annually by vote of the Fund's
Board of Directors, including a majority of the Directors who
are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Fund
("Independent Directors"). The Plan may not be amended to
increase materially the amount to be spent for the services
provided by the Designated Dealers thereunder without
shareholder approval, and all material amendments of the Plan
must also be approved by the Directors in the manner
described above. The Plan may be terminated at any time,
without penalty, by vote of a majority of the Independent
Directors, or by a vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act). Under the
Plan, Designated Dealers will provide the Directors periodic
reports of amounts expended under the Plan and the purpose
for which such expenditures were made. For the fiscal year
ended December 31, 1994, the Fund made aggregate
distribution payments of approximately $1,153,481
pursuant to the Plan. Such payments included payments of
approximately $78,307 for support services, $1,081,968 to
sales personnel of Designated Dealers, $84,495 for advertising
expenses and $24,915 for printing and mailing expenses to
selected dealers. For a more complete description of the
Plan, see "Distribution Plan" in the Prospectus.

PORTFOLIO TRANSACTIONS AND BROKERAGE

Under the Advisory Agreement, the Adviser is authorized
on behalf of the Fund to employ brokers to effect the purchase
or sale of portfolio securities with the objective of obtaining
prompt, efficient and reliable execution and clearance of such
transactions at the most favorable price obtainable at
reasonable expense ("best execution"). Transactions on U.S.
stock exchanges involve the payment of negotiated brokerage
commissions, which may vary among different brokers.
Transactions in securities other than those for which a
securities exchange is the principal market are generally done
through the principal market maker. However, such
transactions may be effected through a brokerage firm and a
commission paid whenever it appears that the broker can
obtain a more favorable overall price. In general, there may be
no stated commission in the case of securities traded on the
over-the-counter markets, but the prices of those securities
may include undisclosed commissions or markups. Option
transactions will usually be effected through a broker and a
commission will be charged. The Fund also expects that
securities will be purchased at times in underwritten offerings
where the price includes a fixed amount of compensation
generally referred to as a concession or discount.

The Adviser and its affiliates currently serve as
investment adviser to a number of investment companies and
private account clients and may in the future act as advisers to
others. It is the policy of the Adviser and its affiliates to
allocate investments suitable and appropriate for each such
client in a manner believed by the Adviser to be equitable to
each client. In making such allocations among the Fund and
other client accounts, the main factors considered are the
respective investment objectives, the relative size of portfolio
holdings of the same or comparable securities, the availability
of cash for investment, the size of investment commitments
generally held and the opinions of the persons responsible for
managing the portfolios of the Fund and other client accounts.

The following table sets forth certain information
regarding the Fund's payment of brokerage commissions to
Gabelli & Company, Shearson Lehman Brothers (while it was an
underwriter to the Fund) and Keeley Investment Corp.:

Fiscal Year Ended
December 31
Commissions Paid

Total Brokerage Commissions 1992
$263,689
1993
$334,632
1994
$622,746

Commissions paid to Gabelli & Company 1992
$18,225
1993
$23,400
1994
$25,912

Commissions paid to Shearson Lehman Brothers
1992 $32,160
1993*
$22,958
1994 $ 0

Commissions paid to Keeley Invetment Corp.
1992 $9,625
1993 $22,150
1994 $9,415

% of Total Brokerage Commissions paid to Gabelli & Company
1994
4.2%

% of Total Brokerage Commissions paid to Keeley Investment
Corp. 1994 1.5%

% of Total Transactions involving Commissions paid to
Gabelli & Company 1994
4.2%

% of Total Transactions involving Commissions paid to Keeley
Investment Corp.
1994
1.1%

_____________
* Reflects brokerage commissions paid to Shearson
Lehman Brothers for the period January 1, 1993
through July 30, 1993 during which time it served as an
underwriter of the Fund.

The policy of the Fund regarding purchases and sales of
securities and options for its portfolio is that primary
consideration will be given to obtaining best execution. The
Adviser may also give consideration to placing portfolio
transactions with those brokers and dealers who also furnish
research and other services to the Fund or the Adviser of the
type described in Section 28(e) of the Securities Exchange Act
of 1934. In doing so, the Fund may also pay higher
commission rates than the lowest available to obtain brokerage
and research services provided by the broker effecting the
transaction for the Fund and for other advisory accounts over
which the Adviser or its affiliates exercise investment
discretion. These services may include, but are not limited to,
any one or more of the following: information as to the
availability of securities for purchase or sale; statistical or
factual information or opinions pertaining to investments; wire
services; and appraisals or evaluations of portfolio securities.

The Adviser may also place orders for the purchase or
sale of portfolio securities with Gabelli & Company or an
affiliate of the Adviser, when it appears that Gabelli &
Company can obtain a price and execution which is at least as
favorable as that obtainable by other qualified brokers. As
required by Rule 17e-1 under the 1940 Act, the Board of
Directors has adopted "Procedures" that provide that the
commissions paid to Gabelli & Company or affiliated
brokers on stock exchange transactions must be
consistent with those charged by such firms in similar
transactions to unaffiliated clients that are comparable to the
Fund. Rule 17e-1 under the 1940 Act and the Procedures
contain requirements that the Board, including those directors
who are not "interested persons" of the Fund, conduct periodic
compliance reviews of such brokerage allocations and review
the Procedures at least annually to determine their continuing
appropriateness. The Adviser is also required to furnish reports
and maintain records in connection with the reviews.

To obtain the best execution of portfolio trades on the
New York Stock Exchange ("NYSE"), Gabelli & Company
controls and monitors the execution of such transactions on
the floor of the NYSE through independent "floor brokers" or
the Designated Order Turnaround ("DOT") System of the NYSE.
These transactions are then cleared, confirmed to the Fund for
the account of Gabelli & Company, and settled directly with the
custodian of the Fund by a clearing house member firm which
remits the commission less its clearing charges to Gabelli &
Company. Pursuant to an agreement with the Fund, Gabelli &
Company pays all charges incurred for these services and
reports at least quarterly to the Board of Directors the amount
of the expenses and commissions for its brokerage services,
which is subject to review and approval of the Board of
Directors including those directors who are not "interested
persons" of the Fund. Gabelli & Company may also effect Fund
portfolio transactions in the same manner and pursuant to the
same arrangements on other national securities exchanges that
adopt direct access rules similar to those of the NYSE. In
addition, Gabelli & Company may directly execute transactions
for the Fund on the floor of any exchange, provided: (i) the
Board of Directors has expressly authorized Gabelli & Company
to effect such transactions; and (ii) Gabelli & Company annually
advises the Fund of the aggregate compensation it earned on
such transactions.

REDEMPTION OF SHARES

Payment of the redemption price for shares redeemed
may be made either in cash or in portfolio securities (selected in
the discretion of the Board of Directors of the Fund and taken
at their value used in determining the Fund's net asset value
per share as described below under "Net Asset Value"), partly
in cash and partly in portfolio securities. However, payments
will be made wholly in cash unless the Board of Directors
believes that economic conditions exist which would make
such a practice detrimental to the best interests of the Fund. If
payment for shares redeemed is made wholly or partly in
portfolio securities, brokerage costs may be incurred by the
investor in converting the securities to cash. The Fund will not
distribute in-kind portfolio securities that are not readily
marketable. The Fund has filed a formal election with the SEC
pursuant to which the Fund will only effect a redemption in
portfolio securities where the particular shareholder of record is
redeeming more than $250,000 or 1% of the Fund's total net
assets, whichever is less, during any 90 day period. In the
opinion of the Fund's management, however, the amount of a
redemption request would have to be significantly greater than
$250,000 or 1% of total net assets before a redemption wholly
or partly in portfolio securities was made.

Cancellation of purchase orders for Fund shares (as, for
example, when checks submitted to purchase shares are
returned unpaid) causes a loss to be incurred when the net
asset value of the Fund shares on the date of cancellation is
less than on the original date of purchase. The investor is
responsible for the loss, and the Fund, to the extent permissible
by law, may reimburse itself or Gabelli & Company for the loss
by automatically redeeming shares from any account registered
at any time in that shareholder's name, or by seeking other
redress. In the event shares held in the account of the
shareholder are not sufficient to cover such loss, Gabelli &
Company will promptly reimburse the Fund for the amount of
such unrecovered loss.

NET ASSET VALUE

For purposes of determining the Fund's net asset value
per share, readily marketable portfolio securities listed on the
NYSE are valued, except as indicated below, at the last sale
price reflected at the close of the NYSE on the business day as
of which the value is being determined. If there has been no
sale on that day, the securities are valued at the mean of the
closing bid and asked prices on that day. If no bid or asked
prices are quoted on that day, then the security is valued by
that method as the Board of Directors shall determine in good
faith to reflect its fair market value, although the actual
calculation may be done by others. Options are priced at 4:15
p.m. and are generally valued at the last sale price or, in the
absence of a last sale price, the last offer price. Readily
marketable securities not listed on the NYSE but listed on other
national securities exchanges or admitted to trading on the
National Association of Securities Dealers Automated
Quotations, Inc. ("NASDAQ") National List are valued in like
manner. Portfolio securities traded on more than one national
securities exchange are valued at the last sale price on the
business day as of which that value is being determined as
reflected on the composite tape at the close of the exchange
representing the principal market for the securities.

Readily marketable securities traded in the over-the-
counter market, including listed securities whose primary
market is believed by the Adviser to be over-the-counter but
excluding securities admitted to trading on the NASDAQ
National List, are valued at the mean of the current bid and
asked prices as reported by NASDAQ, or, in the case of
securities not quoted by NASDAQ, the National Quotation
Bureau or other comparable sources as the Board of Directors
deems appropriate to reflect their fair value.

U.S. Government obligations and other debt instruments
having sixty days or less remaining until maturity are stated at
amortized cost. Debt instruments having a greater remaining
maturity will be valued at the highest bid price obtained for a
dealer maintaining an active market in that security or on the
basis of prices obtained from a pricing service approved as
reliable by the Board of Directors. All other investment assets,
including restricted and not readily marketable securities, are
valued by the Fund under procedures established by and under
the general supervision and responsibility of the Fund's Board
of Directors designed to reflect in good faith the fair value of
such securities.

DIVIDENDS, DISTRIBUTIONS AND TAXES

General

Under the Code, amounts not distributed on a timely
basis in accordance with a calendar year distribution
requirement are subject to a nondeductible 4% excise tax. To
avoid the tax, the Fund must distribute during each calendar
year, at least the sum of (1) 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar
year, (2) 98% of its capital gains in excess of its capital losses
for the twelve-month period ending on October 31 of the
calendar year, or upon election during the calendar year and (3)
all ordinary income and net capital gains for previous years that
were not previously distributed. A distribution will be treated
as paid during the calendar year if it is paid during the calendar
year or declared by the Fund in October, November or
December of the year, payable to shareholders of record as of
a specified date in such a month and actually paid by the Fund
during January of the following year. Any such distributions
paid during January of the following year will be deemed to be
paid and received on December 31 of the year the distributions
are declared.

Gains or losses on the sales of securities by the Fund will
be long-term capital gains or losses if the securities have been
held by the Fund for more than twelve months. Gains or losses
on the sale of securities held for twelve months or less will be
short-term capital gains or losses.

The Fund has qualified and intends to continue to qualify
as a "Regulated Investment Company" under Subchapter M of
the Code. If so qualified, the Fund will not be subject to federal
income tax on its net investment income and net short-term
and long-term capital gains, if any, realized during any taxable
year in which it distributes such income and capital gains to its
shareholders. Although the Fund is non-diversified for
purposes of the 1940 Act, the Fund nevertheless is subject to
diversification requirements under Subchapter M. In general,
the Code requires the Fund to diversify its holdings so that, at
the close of each quarter of its taxable year, (1) at least 50%
of the value of its total assets consist of cash, cash items, U.S.
Government securities, securities of other regulated investment
companies, and other securities limited generally with respect
to any one issuer to not more than 5% of the total assets of
the Fund and not more than 10% of the outstanding voting
securities of each issuer, and (2) not more than 25% of the
value of its assets is invested in the securities of any issuer
(other than U.S. Government securities or the securities of
other regulated investment companies).

If the Fund is the holder of record of any stock on the
record date for any dividends payable with respect to such
stock, such dividends shall be included in the Fund's gross
income as of the later of (a) the date such stock became ex-
dividend with respect to such dividends (i.e., the date on which
a buyer of the stock would not be entitled to receive the
declared, but unpaid, dividends) or (b) the date the Fund
acquired such stock. Accordingly, in order to satisfy its income
distribution requirements, the Fund may be required to pay
dividends based on anticipated earnings, and shareholders may
receive dividends in an earlier year than would otherwise be the
case.

The Fund's transactions in futures contracts and options
will be subject to special provisions of the Code that, among
other things, may affect the character of gains and losses
realized by the Fund (i.e., may affect whether gains or losses
are ordinary or capital), may accelerate recognition of income
to the Fund and may defer Fund losses. These rules could
therefore affect the character, amount and timing of
distributions to shareholders. These provisions also (a) will
require the Fund to mark-to-market certain types of the
positions in its portfolio (i.e., treat them as if they were closed
out), and (b) may cause the Fund to recognize income without
receiving cash with which to make distributions in amounts
necessary to satisfy the 90% and 98% distribution
requirements for avoiding income and excise taxes described
above and in the Prospectus. The Fund anticipates that its
futures contracts and options activities will not cause it to
violate the 30% requirement described in the Prospectus. The
Fund will monitor its transactions, will make the appropriate tax
elections and will make the appropriate entries in its books and
records when it acquires any futures contract, option or hedged
investment in order to mitigate the effect of these rules and
prevent disqualification of the Fund as a regulated investment
company.

Distributions

Distributions of investment company taxable income
(which includes interest and the excess of net short-term
capital gains over long-term capital losses, but not the excess
of net long-term capital gains over net short-term capital losses)
are taxable to a U.S. shareholder as ordinary income, whether
paid in cash or shares. Dividends paid by the Fund will qualify
for the 70% deduction generally available for dividends
received by corporations to the extent the Fund's income
consists of qualified dividends received from U.S. corporations.
Distributions of net capital gains (which consists of the excess
of net long-term capital gains over net short-term capital
losses), if any, are taxable as long-term capital gains, whether
paid in cash or in shares, regardless of how long the
shareholder has held the Fund's shares, and are not eligible for
the dividends received deduction. Shareholders receiving
distributions in the form of newly issued shares will have a
basis in such shares of the Fund equal to the fair market value
of such shares on the distribution date. If the net asset value of
shares is reduced below a shareholder's cost as a result of a
distribution by the Fund, such distribution will be taxable even
though it represents a return of invested capital. The price of
shares purchased at this time may reflect the amount of the
forthcoming distribution. Those purchasing just prior to a
distribution will receive a distribution which will nevertheless be
taxable to them.

Sales of Shares

Upon a sale or exchange of his or her shares, a
shareholder will realize a taxable gain or loss depending upon
his or her basis in the shares. The gain or loss will be treated
as long-term capital gain or loss if the shares have been held
for more than one year. Any loss realized on a sale or
exchange will be disallowed to the extent the shares disposed
of are replaced within a period of 61 days beginning 30 days
before and ending 30 days after the shares are disposed of. In
such case, the basis of the shares acquired will be adjusted to
reflect the disallowed loss. Any loss realized by a shareholder
on the sale of Fund shares held by the shareholder for six
months or less will be treated for tax purposes as a long-term
capital loss to the extent of any distributions of long-term
capital gains received by the shareholder with respect to such
shares. However, capital losses are deductible only against
capital gains plus, for individuals, up to $3,000 of ordinary
income.

Backup Withholding

The Fund may be required to withhold federal income tax
at the rate of 31% with respect to (1) taxable dividends and
distributions and (2) proceeds of any redemptions of Fund
shares if a shareholder fails to provide the Fund with his or her
correct taxpayer identification number or to make required
certifications, or who has been notified by the Internal Revenue
Service that he or she is subject to backup withholding.
Backup withholding is not an additional tax. Any amounts
withheld may be credited against a shareholder's federal
income tax liability.

Foreign Withholding Taxes

Income received by the Fund from sources within foreign
countries may be subject to withholding and other taxes
imposed by such countries. Tax conventions between certain
countries and the United States may reduce or eliminate such
taxes. It is impossible to determine the rate of foreign tax in
advance since the amount of the Fund's assets to be invested
in various countries is not known. Because the Fund will not
have more than 50% of its total assets invested in securities of
foreign governments or corporations, the Fund will not be
entitled to "pass-through" to shareholders the amount of
foreign taxes paid by the Fund.

Shareholders are urged to consult their attorneys or tax
advisers regarding specific questions as to federal, state, local
or foreign taxes.

CALCULATION OF INVESTMENT PERFORMANCE

From time to time, the Fund may quote its performance
in advertisements or in reports and other communications to
shareholders.

Average Annual Total Return

The Fund's "average annual total return" figures, as
described in the Prospectus, are computed according to a
formula prescribed by the SEC. The formula can be expressed
as follows:

P(1+T)n = ERV

Where: P = a hypothetical initial payment of
$1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical
$1,000 investment made at the beginning of a 1-, 5- or 10-year
period at the end of a 1-, 5- or 10-year period (or fractional
portion thereof), assuming reinvestment of all dividends and
distributions.

The following average annual total return figures
calculated in accordance with the above formula assume that
the maximum 5.50% sales load has been deducted from the
hypothetical $1,000 initial investment at the time of purchase.

(5.5)% for the one-year fiscal period from January
1, 1994 through December 31, 1994;

10.0% for the period from the Fund's
commencement of operations on September 29, 1989 through
December 31, 1994.

Aggregate Total Return

The Fund's aggregate total return figures, as described in
the Prospectus, represent the cumulative change in the value
an investment in the Fund for the specified period and are
computed according to the following formula:
AGGREGATE TOTAL RETURN = ERV-P
P

Where: P = a hypothetical initial payment of
$10,000.
ERV = Ending Redeemable Value of a hypothetical
$10,000 investment made at the beginning of a 1-, 5-, or 10-
year period (or fractional portion thereof) at the end of the 1-,
5-, or 10-year period (or fractional portion thereof), assuming
reinvestment of all dividends and distributions.

The Fund's aggregate total return was as follows for the
periods indicated:

0.0% for the one-year fiscal period from January 1,
1994 through December 31, 1994;

74.7% for the period from the Fund's
commencement of operations on September 29, 1989 through
December 31, 1994.

These aggregate total return figures do not assume that
the maximum 5.50% sales load has been deducted from the
investment at the time of purchase. If the maximum sales
charge had been deducted at the time of purchase, the Fund's
aggregate total returns for the same periods would have been
(5.5)% and 65.1%, respectively.

The Fund's performance will vary from time to time
depending upon market conditions, the composition of its
portfolio and its operating expenses. Consequently, any given
performance quotation should not be considered representative
of the Fund's performance for any specified period in the
future. In addition, because the performance will fluctuate, it
may not provide a basis for comparing an investment in the
Fund with certain bank deposits or other investments that pay
a fixed yield for a stated period of time.
Investors comparing the Fund's performance with that of other
mutual funds should give consideration to the quality and
maturity of the respective investment companies' portfolio
securities.

COUNSEL

Willkie Farr & Gallagher, 153 E. 53rd Street, New York,
New York 10022, serves as legal counsel for the Fund.

EXPERTS

The financial statements incorporated by reference in this
Statement of Additional Information have been so incorporated
in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of that firm as experts in
auditing and accounting. Price Waterhouse LLP serves as the
Fund's independent accountants and in that capacity examines
the Fund's annual financial statements.

CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING
AGENT

Boston Safe, an indirect wholly owned subsidiary
of Mellon Bank Corporation. , is located at One Boston
Place, Boston, Massachusetts 02108, and acts as custodian of
the Fund's cash and securities. Boston Financial Data Services
("BFDS"), an affiliate of State Street Bank and Trust Company
("State Street"), is located at the BFDS Building, Two Heritage
Drive, Quincy, MA 02171 and acts as the Fund's transfer
agent and dividend disbursing agent. Neither Boston Safe,
BFDS nor State Street assists in or is responsible for investment
decisions involving assets of the Fund.

GENERAL INFORMATION

The Fund's Articles of Incorporation provides that to the
fullest extent that limitations on the liability of Directors and
officers are permitted by the Maryland General Corporation
Law, the Securities Act of 1933, as amended, and the 1940
Act, Directors and officers shall be indemnified by the Fund
against judgments, penalties, fines, excise taxes, settlements
and reasonable expenses actually incurred in connection with
any action, suit or other proceeding. To the fullest extent
permitted by Maryland General Corporation Law, as amended
from time to time, the Fund's Articles of Incorporation also
provide that no Director or officer of the Fund shall be
personally liable to the Fund or its shareholders for money
damages, except to the extent such exemption from liability or
limitation thereof is not permitted by the 1940 Act. Nothing in
the Articles of Incorporation protects a Director against any
liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of duty involved in the conduct of his office.

The Fund reserves the right to create and issue a number
of series of shares, in which case the shares of each series
would have equal rights with respect to voting, dividends and
distributions upon liquidation, but would vote separately to
approve management agreements or changes in investment
policies. Shares of all series would vote together in the
election or selection of Directors, principal underwriters and
accountants. Upon liquidation of the Fund, shareholders of
each series would be entitled to share pro rata in the net assets
of their respective series available for distribution to
shareholders.

Shareholders are entitled to one vote for each full share
held and proportionate, fractional votes for fractional shares
held and may vote in the election of Directors and on other
matters submitted to meetings of shareholders. It is not
contemplated that regular annual meetings of shareholders will
be held. A meeting will be called to consider replacing the
Fund's Directors upon the written request of the holders of
10% of the Fund's shares. Shareholders have no preemptive
or conversion rights.

The Adviser's investment personnel may invest in
securities for their own account pursuant to a Code of Ethics
that establishes procedures for personal investing and restricts
certain transactions.

FINANCIAL STATEMENTS

The Fund's Annual Report for the fiscal year ended
December 31, 1994, is incorporated by reference herein,
and a copy of such Annual Report, which includes the Fund's
financial statements and the independent accountant's report
thereon, accompanies this Statement of Additional
Information.

APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS
MOODY'S INVESTORS SERVICE, INC.

Aaa: Bonds which are rated Aaa are judged to be the
best quality. They carry the smallest degree of investment risk
and are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of
such issues.

Aa: Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They
are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or
fluctuations of protective elements may be of greater amplitude
or there may be other elements present which make the long-
term risks appear somewhat larger than in Aaa securities.

A: Bonds which are rated A possess many favorable
investment attributes and are to be considered as upper
medium grade obligations. Factors giving security to principal
and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime
in the future.

Baa: Bonds which are rated Baa are considered as
medium grade obligations, i.e., they are neither highly
protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative
characteristics as well.

Ba: Bonds which are rated Ba are judged to have
speculative elements; their future cannot be considered as well
assured. Often the protection of interest and principal
payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.

B: Bonds which are rated B generally lack characteristics
of a desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.

Caa: Bonds which are rated Caa are of poor standing.
Such issues may be in default or there may be present
elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations
which are speculative in a high degree. Such issues are often
in default or have other market shortcomings.

C: Bonds which are rated C are the lowest rated class of
bonds, and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment
standing.

Unrated: Where no rating has been assigned or where a
rating has been suspended or withdrawn, it may be for reasons
unrelated to the quality of the issue.

Should no rating be assigned, the reason may be one of the
following:

1. An application for rating was not received or accepted.

2. The issue or issuer belongs to a group of securities that
are not rated as a matter of policy.

3. There is a lack of essential data pertaining to the issue or
issuer.

4. The issue was privately based, in which case the rating
is not published in Moody's Investors Service, Inc.'s
publications.

Suspension or withdrawal may occur if new and material
circumstances arise, the effects of which preclude satisfactory
analysis; if there is no longer available reasonable up-to-date
data to permit a judgment to be formed; if a bond is called for
redemption; or for other reasons.

Note: Those bonds in the Aa, A, Baa, Ba and B groups
which Moody's believe possess the strongest investment
attributes are designated by the symbols Aa-1, A-1, Baa-1, and
B-1.

STANDARD & POOR'S RATINGS GROUP

AAA: Bonds rated AAA have the highest rating assigned
by Standard & Poor's Ratings Group ("S&P"). Capacity to pay
interest and repay principal is extremely strong.

AA: Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the higher rated
issues only in small degree.

A: Bonds rated A have a strong capacity to pay interest
and repay principal although they are somewhat more
susceptible to the adverse effects of changes in circumstances
and economic conditions than bonds in the highest rated
categories.

BBB: Bonds rated BBB are regarded as having an
adequate capacity to pay interest and repay principal. Whereas
they normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely
to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than in higher rated
categories.

BB, B, CCC, CC, C: Bonds rated BB, B, CCC, CC and C
are regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in
accordance with the terms of this obligation. BB indicates the
lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality
and protective characteristics, they are outweighed by large
uncertainties of major risk exposures to adverse conditions.

C1: The rating C1 is reserved for income bonds on which
no interest is being paid.

D: Bonds rated D are in default, and payment of interest
and/or repayment of principal is in arrears.

Plus (+) or Minus (-): The ratings from "AA" to "CCC"
may be modified by the addition of a plus or minus sign to
show relative standing within the major rating categories.

NR: Indicates that no rating has been requested, that
there is insufficient information on which to base a rating, or
that S&P does not rate a particular type of obligation as a
matter of policy.
<PAGE>{PAGE|30}
G:\SHARED\3RDPARTY\GABVALUE\EDGAR\595SAI.DOC

G:\SHARED\3RDPARTY\GABVALUE\EDGAR\595SAI.DOC

A-{PAGE|2}
G:\SHARED\3RDPARTY\GABVALUE\EDGAR\595SAI.DOC

<PAGE>
THE GABELLI VALUE FUND INC.
One Corporate Center
Rye, New York 10580-1434
ANNUAL REPORT - 1994

TO OUR SHAREHOLDERS:

Following three consecutive years during which The
Gabelli Value Fund
Inc. (the "Fund") substantially exceeded its 10% real rate of
return target,
our portfolio finished the year virtually unchanged. The Federal
Reserve
Board's increases in short-term interest rates to pre-empt
inflation led to
weakness in the stock and bond markets throughout the year.
We continue to
focus on bottoms up research and are concentrating on good
companies selling
at a reasonable relationship to their intrinsic values and growth
rates. Our
top ten positions represent 57% of the Fund.

<TABLE>
INVESTMENT RESULTS (a)
- ----------------------------------------------------------------------------------------
- -------
<CAPTION>
QUARTER
-----------------------------------------
1ST 2ND 3RD 4TH
YEAR
--- --- --- --- ----
<S> <C> <C> <C>
<C> <C>
1994: Net Asset Value............... $11.37 $11.55
$12.43 $10.49 $10.49
Total Return.................. (6.0)% 1.6% 7.6%
(2.7)% 0.0%
- ----------------------------------------------------------------------------------------
- -------
1993: Net Asset Value............... $11.15 $11.93
$13.92 $12.09 $12.09
Total Return.................. 10.1% 7.0% 16.7%
1.5% 39.4%
- ----------------------------------------------------------------------------------------
- -------
1992: Net Asset Value............... $10.40 $ 9.84
$10.04 $10.13 $10.13
Total Return.................. 9.7% (5.4)% 2.0%
6.4% 12.7%
- ----------------------------------------------------------------------------------------
- -------
1991: Net Asset Value............... $ 9.51 $ 9.50 $ 9.57
$ 9.48 $ 9.48
Total Return.................. 11.8% (0.1)% 0.7%
2.5% 15.3%
- ----------------------------------------------------------------------------------------
- -------
1990: Net Asset Value............... $ 9.23 $ 9.36 $ 8.19
$ 8.51 $ 8.51
Total Return.................. (2.4)% 1.4% (12.5)%
9.0% (5.6)%
- ----------------------------------------------------------------------------------------
- -------
1989: Net Asset Value............... --- --- --- $
9.58 $ 9.58
Total Return.................. --- --- --- 2.1%
(b) 2.1% (b)
==============================
==============================
==============================
=====
<CAPTION>
AVERAGE ANNUAL RETURNS - DECEMBER 31, 1994 (a)
-----------------------------------------------
<S> <C>
Life of Fund (b)................. 11.2%
.......................... 10.0% (c)
5 Year .......................... 11.3%
.......................... 10.1% (c)
1 Year .......................... 0.0%
.......................... (5.5)% (c)
<CAPTION>
DIVIDEND HISTORY
- ---------------------------------------------------------
PAYMENT (EX) DATE RATE PER SHARE REINVESTMENT
PRICE
- ----------------- -------------- ------------------
<S> <C> <C>
December 30, 1994 $ 1.60 $10.49
December 31, 1993 $ 2.036 $12.09
December 31, 1992 $ 0.553 $10.13
December 31, 1991 $ 0.334 $ 9.48
December 31, 1990 $ 0.420 $ 8.51
March 19, 1990 $ 0.120 $ 9.21
December 29, 1989 $0.0678 $ 9.58
<FN>

(a) Total return and average annual returns reflect changes in
share price and
reinvestment of dividends and are net of expenses. The net
asset value of the
Fund is reduced on the ex-dividend (payment) date by the
amount of the dividend
paid. Of course, returns represent past performance and do not
guarantee future
results. Investment returns and the principal value of an
investment will
fluctuate. When shares are redeemed they may be worth more
or less than their
original cost. (b) From commencement of operations on
September 29, 1989.
(c) Includes the effect of the maximum 5.5% sales charge at
beginning of
period.
- ----------------------------------------------------------------------------------------
- -------
</TABLE>

<PAGE>

<TABLE>
COMPARISON OF CHANGE IN VALUE OF A $10,000
INVESTMENT
IN THE GABELLI VALUE FUND AND THE S&P 500
INDEX

DESCRIPTION OF CHART IN SHAREHOLDER LETTER

A line graph depicting the total growth (including reinvestment
of dividends and
capital gains) of a hypothetical investment of $10,000 in
Gabelli Value Fund's
shares on September 29, 1989 through December 31, 1994 as
compared with the
growth of a $10,000 investment in Standard & Poor's 500
Index. The plot points
used to draw the line graph were as follows:

<CAPTION>
GROWTH OF $10,000
GROWTH OF $10,000 INVESTMENT IN THE
INVESTED IN SHARES STANDARD & POOR'S
MONTH ENDED OF THE FUND 500 INDEX
<S> <C> <C>
9/29/89 $ 9,450 $10,000
12/31/89 $ 9,648 $10,210
12/31/90 $ 9,108 $ 9,893
12/31/91 $10,502 $12,910
12/31/92 $11,836 $13,556
12/31/93 $16,510 $14,925
12/31/94 $16,510 $15,119
</TABLE>

In the fourth quarter, the Fund's net asset value declined
2.7% to an
adjusted $12.09 per share on December 31, 1994 (adding back
the $1.60 per share
distribution paid on December 30, 1994) versus $12.43 per
share on September
30, 1994. This compares to the 0.0% return in the unmanaged
Standard & Poor's
500 Index, a widely accepted unmanaged index of stock
market performance, over
the same period. For the year, the Fund's total return was
unchanged versus
the 1.3% return in the Standard & Poor's 500 Index.

From inception on September 29, 1989 through
December 31, 1994, the
Fund achieved a 74.7% total return which reflects an average
annual total
return of 11.2% assuming reinvestment of all dividends and
distributions. The
three year total return of the Fund ending on December 31,
1994 was 57.1% which
equates to a 16.3% average annual return. The average annual
total returns for
the twelve months and five years ended December 31, 1994
and from inception on
September 29, 1989 through December 31, 1994, including
the maximum sales
charge of 5.5%, were (5.5)%, 10.1% and 10.0%, respectively.

COMMENTARY

Contracting price/earnings and price/cash flow multiples
consistent
with higher interest rates restrained stocks in general. In
addition,
telecommunications, cable television and entertainment and
information software
stocks - the industries converging to form the interactive media
superhighway -
had a bumpy ride as they hit some of the inevitable "potholes"
formed by the
reconstruction of our national communications system. Also,
despite much better
than expected earnings from industrial cyclicals, the group
struggled against
the strong headwind of rising interest rates.

The Fund did benefit from the early stages of what we
believe will be
the third great wave of corporate restructurings. Stocks like
American Express
Company (AXP - $29.50 - NYSE), American Brands, Inc. (AMB
- - $37.50 - NYSE) and
Hilton Hotels Corporation (HLT - $67.375 - NYSE) advanced as
their respective
corporate managements began reshaping the companies. We
expect to see more of
this type of restructuring, accompanied by an increase in
corporate takeovers
in 1995.

DESCRIPTION OF TRIANGULAR PICTURE IN THE
COMMENTARY SECTION

A triangle drawn over EPS, PMV, Management, Cash Flow and
Research showing
performance structure.

<PAGE>

THE YEAR IN REVIEW

At the beginning of the year, we opined that the
economy as measured by
GNP would rise 3% and that corporate profits would increase
by double digits.
In fact, the economy exceeded our bullish expectations. At the
same time, we
expressed our concerns that higher interest rates would result
in contracting
price/earnings multiples and a choppy stock market.

Our focus on undervalued assets helped as Hilton
(+12%), American
Express (+3%) and American Brands (+13%) all benefitted
from actual and
proposed corporate restructurings. Selected industry groups
also did well.
Cellular telephone stocks such as AirTouch Communications
(ATI- $29.125 - NYSE)
(+16%) and LIN Broadcasting Corporation (LINB - $133.50 -
NASDAQ) (+21%),
prospered as subscriber and cash flow growth surged.
Broadcasters, such as
United Television, Inc. (UTVI - $54.50 - NASDAQ) (+31%),
posted good gains as
advertiser-supported media rebounded with the economy.
Manufacturing companies
like AptarGroup Inc. (ATR - $28.75 - NYSE) (+38%), expanded
their international
franchises and the market responded.

There were also disappointments. Cable bashing by the
White House and
another round of rate reductions by the regulators crimped our
holdings in CATV
companies like Tele-Communications, Inc. (TCOMA - $21.75 -
NASDAQ) (-28%).
Profit taking in Time Warner Inc. (TWX - $35.125 - NYSE) (-
21%) also took its
toll on our portfolio. One particular portfolio culprit, C-TEC
Corporation
(CTEX - $19.875 - NASDAQ), plunged nearly 40% from its
high as management
destroyed the public value of its security through an ill
conceived rights
offering.

WHAT ABOUT 1995?

One of the major factors that will impact the domestic
economy going
forward is the rate of inflation. Obviously, Federal Reserve
Chairman Alan
Greenspan is determined not to let inflation accelerate on his
watch. As we see
it, the elements driving inflation in the months ahead are
commodity pricing
and inflation's service and labor components. We are at a stage
in the economy
where raw material costs will play a psychological and catalytic
role. In 1994,
we witnessed increases in the prices of selected goods such as
lumber, coffee
and copper, with intermediate goods rising sharply as the year
progressed. The
wild card this year will be oil. In the service component, rising
healthcare
costs have been contained. While these costs leaped forward
at rates as high as
15% per annum for years, 1994 actually saw costs rise under
5%. Competition
should continue to reign in healthcare costs going forward.

In the critical labor sector, however, the focus of the
worker in
America's heartland is shifting from worrying about being laid
off to "how many
days can I get away to go hunting?" The implication is that
labor costs will
rise. The ability to shift labor intensive manufacturing and
services to other
parts of the world has not, however, been lost on all involved -
including
labor. This should restrain inflation's labor component.

The statistical conclusion we reach is an inflation rate of
4.5% in
1995. Given that long-term interest rates are comprised of real
return plus
premiums for actual inflation and inflationary expectations, we
expect long
rates to go over 8% as we reach a cyclical peak in economic
activity. In
addition, the demand for funds by lesser developed countries
may also add to
nominal interest rates long-term borrowers receive. Short-term
rates should
also continue to rise.

<PAGE>

1995 - THE STOCK MARKET

The likelihood of higher interest rates and further multiple
contraction - the same dynamics that restrained stocks in 1994
- - is still in
place. Will the market retreat substantially from current levels?
That depends
on just how much inflation we actually experience, how much
capital flows out
of equity mutual funds back into money market instruments
and whether we
experience additional financial accidents. As previously
mentioned, we do see
inflationary pressure on the economy and expect the Fed to
react accordingly.
We do worry that the enormous amount of money that flowed
into equity mutual
funds over the last several years could reverse. To these
reservations, we add
a third concern: that some form of financial meltdown - big
loses in
derivatives trading such as the recently exposed difficulties in
Orange County,
California, or other currency crises, similar to the Mexican peso
debacle -
could stampede investors. Our 1994 forecast of an up 5% to
down 10% market for
the year is still realistic for 1995.

There is one notable trend we expect to impact our
portfolio favorably
in 1995. This trend, which we have shared with you on several
occasions in the
past, is the increased level of transactions inspired in part by
General
Electric's (GE - $51.00 - NYSE) unsolicited bid for Kemper on
March 14 of this
past year. In going after Kemper, GE's Jack Welch sounded a
resounding GONG,
making it acceptable to do hostile transactions to fill a product
niche or a
distribution channel. While the deal was never consummated ,
it signalled
another surge in takeovers, which should increase in kinetic
fashion in 1995.
Strong cash flow, a willing banking community, lower long-
term capital gains
taxes and a voracious appetite for deals by large, well-heeled
buyers, all
point to good opportunities for value investors, particularly in
small
companies.

Longer term, there are several other trends that should
benefit the
American economy, the stock market and your Fund. One is
consumerism. There are
3 billion people in China, India and emerging countries such as
Indonesia where
the gross domestic products ("GDP") are growing at a double
digit pace. This is
a boon for coveted American goods and services. In the past
four years, the 900
million people in India have increased their use of satellite
dishes from
400,000 to 10 million! Think of what that implies for American
entertainment
software producers like Time Warner and Viacom Inc. (VIA -
$41.625 - ASE).
Another way to quantify the enormous impact of this region is
to consider that
a one ounce increase in per capita beef consumption in China
translates into
Iowa having the equivalent of the fourth highest GDP in the
world. Think of
what this would do for Deere & Company (DE - $66.25 -
NYSE).

We also see a trend relating to competition with Japan.
Japanese
corporations are increasingly cash flow sensitive and are
shifting their focus
from gaining market share to increasing profitability. This spells
opportunity
for companies that compete directly with Japan and are
capable of accelerating
market share gains. The American automobile industry and
General Motors
Corporation (GM - $42.25 - NYSE) are good examples.

Another favorable trend is strong growth in travel related
services. A
one percent increase in real disposable income translates into a
1.5% rise in
the consumption of travel related services. Hilton and American
Express remain
strong favorites here.

<PAGE>

OUR RESPONSE

With our short-term reservations about the broad market
on record, we
do see opportunities for stock pickers in 1995.

We remain committed to selected telephone, cable
television and
entertainment and information software producers. Regulatory
change, new
technology and numerous joint ventures among participants in
all three
industries have created confusion for investors who can't see
the forest
through the trees. The forest is present in the form of
enormous incremental
revenues and earnings for well-managed companies in all three
industries. As
the interactive superhighway stretches out before us, quality
companies like
Tele-Communications, Inc., Time Warner Inc. and Viacom Inc.
will travel in the
fast lane.

We also see smaller entities, like Chris-Craft Industries,
Inc. (CCN -
$34.50 - NYSE), C-TEC Corporation and Media General, Inc.
(MEG'A - $28.375 -
ASE) succeeding on their own or through strategic alliances or
incorporation
into larger, more financially robust entities. A template for this
kind of
restructuring is the recent Cox Communications affiliation with
the cable
partnerships of Times Mirror. This is just the beginning of a
media "mating
game" that will continue for the balance of the decade.

After a bit of a beating in the latter half of 1994, we
believe
selected auto and auto parts stocks can do well in the year
ahead. General
Motors is making progress on all fronts: cost control, the
introduction of
competitive new auto lines and most importantly, a steady
regaining of market
share.

Finally, we expect the Fund to benefit from truly special
situations in
a variety of industries. Corporate restructurings and takeovers
will be the
catalyst. To repeat an earlier point, General Electric's proposed
takeover of
Kemper last March sounded a bell - - it made it OK once again
to do hostile
deals. When we look back a few years from now, we will see
that as a watershed
event: the beginning of a third great wave of takeovers in the
U.S. In the
1960s it was the conglomeratization of America. In the 1980s
it was the
leveraged buyout. In the 1990s it will be strategic acquisitions
designed to
expand and extend franchises throughout the global
marketplace. Our traditional
focus on dominant market share franchises selling at a deep
discount to "real
world" economic value, will put us directly in the path of global
consolidation
on numerous industry fronts.

LET'S TALK STOCKS

The following are stock specifics on selected holdings of
our Fund's
investments. Favorable earnings before interest, taxes,
depreciation, and
amortization ("EBITDA") prospects do not necessarily translate
into higher
stock prices, but they do express a positive trend which we
believe will
develop over time.

Time Warner Inc. (TWX - $35.125 - NYSE) is one of the largest
diversified media
and publishing companies in the world with a market
capitalization of over $15
billion. Warner Brothers Studios, the company's filmed
entertainment
subsidiary, was ranked number one at the box office for the
third consecutive
year. Time Warner is restructuring its business into copyright
and creativity
(notably publishing, music and filmed entertainment) on one
side and
distribution (mostly cable) on the other.

<PAGE>

American Express Company (AXP - $29.50 - NYSE) is best
known for its American
Express Card. Less recognized, however, are its other
operations such as
Minneapolis-based American Express Financial Advisors, Inc.
(formerly IDS
Financial Services), which sells financial products ranging from
mutual funds
to annuities. In 1993, American Express completed the sale of
The Boston
Company, Inc. and the brokerage and asset management
divisions of Shearson
Lehman Brothers, Inc. The former went to Mellon Bank
Corporation, while the
latter joined Primerica's Smith Barney unit. In 1994, Harvey
Golub, Chairman
and CEO, continued to demonstrate his desire to refocus AXP
on its core charge
card and travel services businesses by spinning off Lehman
Brothers, Inc. This
divestiture places American Express in a strong position to
focus on growing
its earnings at a double digit rate over the balance of this
decade.

Pet Incorporated (PT - $19.75 - NYSE), which was spun off
from the Whitman
Corporation on April 1, 1991, is a leading niche prepared food
company. Old El
Paso Mexican food and Progresso Soups, Pet's fastest growing
products, are
the bright stars in the company's product line. Other Pet
products include Van
de Kamp's frozen seafood, B&M Baked Beans, Ac'cent Brand
flavor enhancer and
Pet Evaporated Milk. Grand Metropolitan recently began a $26
cash tender offer
for Pet.

General Motors Corporation (GM - $42.25 - NYSE) is
benefitting from a sharp
recovery in North American auto sales. In 1994, its North
American
operations were profitable for the first time in four years and
international
profits continue to grow. Additionally, under the helm of Jack
Smith, GM is
improving the style and quality of its cars, rationalizing its
production
processes and greatly reducing its costs. With peak earning
power of over $10
per share, GM remains a core holding.

General Electric Company (GE - $51.00 - NYSE), with sales
expected to top $40
billion in 1995, stands among the world's largest industrial
concerns. As a
company with a global footprint, GE is a primary beneficiary of
a developing
European recovery and continued strength in the developing
markets of Asia and
Latin America. GE's varied businesses include financial services
(through
General Electric Capital Corporation), broadcasting (through the
NBC Television
Network) and jet engines. The company is also a leader in
home appliances and
industrial power systems. GE's controversial unit, Kidder
Peabody, has been
sold to PaineWebber. GE declared a 2-for-1 stock split in mid -
1994 and the
dividend was increased by 13.7%. Earnings should hit a record
level in 1995 and
the stock should benefit from a recently announced $5 billion
share repurchase
plan.

Media General, INC. (MEG'A - $28.375 - ASE) our largest
holding representing
15% of the Fund is a Richmond, Va. - based company with
interests in newspapers
(Richmond, Va., Tampa, Fl. and Winston - Salem, N.C.), TV
stations (Tampa,
Charleston, S.C. and Jacksonville, Fl.) and cable television
(Fairfax County,
Va). With a cyclical recovery in the operations and values of
media properties,
the defense of the Richmond franchise from encroachment
from the Washington
Post and the pickup in transactions in the cable arena, this
company is poised
for a rebound.

Viacom Inc. (VIA - $41.625 - ASE) has evolved into one of the
world's dominant
media companies. Following its recent acquisitions of
Paramount Communications
and Blockbuster Entertainment, the company is now selling
non-core assets and
focusing on the global expansion of its media franchises.

<PAGE>

Chris-Craft Industries, Inc. (CCN - $34.50 - NYSE) is primarily
engaged in
television broadcasting through its roughly 70% ownership of
BHC Communications
(BHC - $73.50 - ASE). BHC owns and operates independent TV
stations in Los
Angeles (KCOP) and Portland, Oregon (KPTV). BHC controls
50% of United
Television, Inc. (UTVI - $54.50 - NASDAQ), an operator of an
NBC - affiliated
TV station, an ABC affiliate and three independent outlets. BHC
has entered
into a partnership agreement with Paramount Communications,
Inc. to form and
launch a new, fifth television network to be called United
Paramou nt Television
Network. With about $1.5 billion in marketable securities and
cash, derived
from the 1993 disposition of Time Warner securities, CCN is
strongly positioned
to expand its operations. CCN is the eighth largest TV station
group owner in
the U.S., covering almost 20% of TV households.

Hilton Hotels Corporation (HLT - $67.375 - NYSE) is a major
lodging and gaming
company. Hilton owns and manages about 240 hotels
throughout the United States
and franchises the Hilton name to other hotel operators.
Hilton's hotels
include the Waldorf-Astoria (New York), the Beverly Hilton (Los
Angeles), the
Chicago Hilton and a 50% interest in Hilton Hawaiian Village.
HLT's
international hotel business is operated under the Conrad Hotels
name. Hotels
bearing the Hilton name outside the U.S. are properties of the
British company
Ladbroke Group, plc. HLT operates gaming properties, primarily
in Nevada with
two casino/hotels in Las Vegas, two in Reno and one in
Laughlin. HLT's Nevada
properties have about 11,000 rooms and more than 350,000
square feet of gaming
space. HLT has engaged an investment banking firm to study
strategic
alternatives for enhancing shareholder value; such alternatives
include the
sale of the entire company, a spin-off of one or more
businesses,
recapitalization, a business combination or a share repurchase
program. The
recent announcement by Promus Companies of a plan to spin-
off its hotel
properties (Embassy Suites and Hampton Inns) to its
shareholders, retaining
it's Harrah's casino/hotels, may provide a model for Hilton to
follow.

Caesars World, Inc. (CAW - $66.75 - NYSE) signed a definitive
agreement to be
acquired by ITT Corporation (ITT - $88.625 - NYSE) through a
$67.50 cash tender
offer. ITT needs the approval of regulators in Nevada, New
Jersey and Canada
to consummate the merger. These approvals are expected by
February 1, 1995. ITT
is also addressing potential problems the merger might create
with the NBA and
the NHL. (ITT is buying the N.Y. Knicks and the N.Y. Rangers
from Viacom.)
Their league policies prohibit franchise owners from having an
interest in a
sports-betting operation. (CAW runs the largest sports book in
Las Vegas.) ITT
anticipates all issues in this regard will be resolved promptly.
The Caesars
World acquisition would be a major boost to ITT's plan to
become a forceful
presence in entertainment-related industries.

MINIMUM INITIAL INVESTMENT - $1,000

The Fund's minimum initial investment is now $1,000.
IRAs may be
established with a minimum initial investment of $250. No
initial minimum is
required for those establishing an Automatic Investment Plan.
The Fund imposes
a maximum front-end sales charge of 5.5% and the Fund is
available through many
brokerage firms.

GABELLI U.S. TREASURY MONEY MARKET FUND

Shareholders of any of the Gabelli Funds may invest in
The Gabelli U.S.
Treasury Money Market Fund with an initial investment of
$3,000 or more. The
Fund provides checkwriting and exchange

<PAGE>

privileges. The Fund's expenses capped at .30% of average net
assets, making it
one of the most attractive U.S. Treasury-only money market
funds. With
dividends that are exempt from state and local income taxes in
all states, the
Fund is an excellent vehicle in which to store idle cash. Call us
at
1-800-GABELLI (1-800-422-3554) for a prospectus which gives
a more complete
description of the Fund, including management fees and
expenses. Read it
carefully before you invest or send money.

IN CONCLUSION

After three very rewarding years, the Fund bided time in
1994. We
acknowledge that there will be a challenging stock market
environment in the
first half of 1995. Investing in 1994 was like walking through
mud. There is
likely to be more slippery ground ahead. Our job is to find solid
footing in
the form of fundamentally undervalued stocks. That is precisely
the job we are
committed to.

Looking farther ahead, we believe the Fund is well
positioned in
industry groups and individual stocks with great potential for
the balance of
the decade. And, as in the past, we continue to focus on niche
markets such as
domestic franchises so that we may provide for you double
digit returns in a
single digit environment. We remain confident that our
annualized 10% real
rate of return objective is achievable. We will continue to
leverage our
research capabilities in industries like telecommunications and
media to extend
our global reach.

The Fund's daily net asset value is available in the
financial press
and each evening after 6:00 PM (Eastern Time) by calling 1-
800-GABELLI
(1-800-422-3554). The Fund's NASDAQ symbol is GABVX.
Please call us during the
day for further information.

In closing, we thank you for the trust you have shown in
our investment
capabilities and express our dedication to achieving our shared
financial goal:
to increase the value of the assets you have entrusted to us.

Sincerely,

MARIO J. GABELLI, CFA
President and
February 1, 1995 Chief Investment
Officer

---------------------------------------------------------------
TOP TEN HOLDINGS
DECEMBER 31, 1994
-----------------

Media General,Inc. American Express
Company
Caesars World, Inc. General Electric
Company
Time Warner Inc. Viacom Inc.
Chris-Craft Industries, Inc. Hilton Hotels
Corporation
Pet Incorporated General Motors
Corporation
---------------------------------------------------------------

<PAGE>

THE GABELLI VALUE FUND INC.
<TABLE>
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<CAPTION>
MARKET
SHARES COST VALUE
- --------- ------------- -------------
<C> <S> <C> <C>
COMMON STOCKS--94.5%
CABLE--18.0%
20,000 Home Shopping Network,
Inc.+.................... $ 233,720 $ 200,000
2,250,000 Media General, Inc., Class
A........................ 50,253,854 63,843,750
150,000 QVC Inc.+................. 6,399,872
6,318,750
380,000 Tele-Communications, Inc.,
Class A+................. 876,957 8,265,000
------------- -------------
57,764,403 78,627,500
------------- -------------
CONSUMER PRODUCTS--12.8%
350,000 American Brands, Inc...... 11,988,401
13,125,000
110,000 Carter-Wallace, Inc....... 1,672,519
1,430,000
360,000 General Electric Company... 18,070,180
18,360,000
35,000 Procter & Gamble
Company.................. 1,974,042 2,170,000
140,000 Ralston Purina Group...... 4,447,609
6,247,500
70,500 Syratech Corporation+..... 1,238,625
1,295,438
145,000 Tambrands Inc............. 6,022,342
5,600,625
450,000 Whitman Corporation....... 3,560,659
7,762,500
------------- -------------
48,974,377 55,991,063
------------- -------------
HOTELS AND CASINOS--10.8%
200,000 Aztar Corporation+........ 692,948
1,200,000
411,800 Caesars World, Inc.+...... 26,436,816
27,487,650
10,000 Circus Circus Enterprises,
Inc.+.................... 220,500 232,500
242,000 Hilton Hotels
Corporation.............. 15,502,655 16,304,750
95,000 Mirage Resorts Inc.+...... 1,806,662
1,947,500
1,700 United Inns Inc.+......... 42,097 42,075
------------- -------------
44,701,678 47,214,475
------------- -------------
BROADCASTING--9.0%
115,000 BHC Communications Inc.,
Class A+................. 8,907,174 8,452,500
759,000 Chris-Craft Industries,
Inc...................... 22,212,426 26,185,500
110,000 Liberty Corporation....... 2,631,819
2,791,250
16,000 LIN Television
Corporation+............. 126,405 364,000
95,000 Turner Broadcasting
Systems, Inc., Class A... 1,452,563
1,555,625
500 United Television,
Inc.+.................... 26,400 27,250
------------- -------------
35,356,787 39,376,125
------------- -------------
TELECOMMUNICATIONS--7.1%
235,000 AT&T Corporation.......... 12,775,515
11,808,750
200,000 BCE Inc................... 6,988,850
6,425,000
10,000 Cable & Wireless plc,
Sponsored ADR............ 194,250 175,000
76,000 C-TEC Corporation+........ 1,270,000
1,510,500
28,000 Lincoln Telecommunications
Company.................. 375,125 476,000
14,000 Motorola, Inc............. 183,943
810,250
60,000 Southern New England
Telecommunications
Corporation.............. 1,808,955 1,927,500
292,200 Sprint Corporation........ 6,967,587
8,072,025
------------- -------------
30,564,225 31,205,025
------------- -------------

<CAPTION>
MARKET
SHARES COST VALUE
- --------- ------------- -------------
<C> <S> <C> <C>
FINANCIAL SERVICES--6.6%
650,000 American Express
Company.................. $ 15,561,255 $
19,175,000
300,000 Lehman Brothers Holdings
Inc...................... 6,375,465 4,425,000
35,000 Mellon Bank Corporation... 1,269,730
1,071,875
10,000 Morgan (J. P.) & Co.
Incorporated............. 658,000 560,000
90,000 Salomon Inc............... 4,374,727
3,375,000
------------- -------------
28,239,177 28,606,875
------------- -------------
FOOD AND BEVERAGE--5.4%
970,000 Pet Incorporated.......... 14,405,569
19,157,500
33,333 Ralcorp Holdings Inc.+.... 1,473,095
741,659
288,000 Ralston-Continental Baking
Group+................... 1,871,730 1,080,000
255,000 RJR Nabisco Holdings+..... 1,406,488
1,402,504
35,000 Seagram Company Ltd....... 955,500
1,032,500
------------- -------------
20,112,382 23,414,163
------------- -------------
WIRELESS COMMUNICATIONS--5.3%
160,000 AirTouch Communications+.. 3,646,584
4,660,000
485,000 Century Telephone
Enterprises, Inc......... 9,628,181 14,307,500
32,000 LIN Broadcasting
Corporation+............. 1,508,846 4,272,000
------------- -------------
14,783,611 23,239,500
------------- -------------
INDUSTRIAL EQUIPMENT AND SUPPLIES--4.6%
50,000 Ampco-Pittsburgh
Corporation.............. 250,018 493,750
100,000 AptarGroup Inc............ 920,111
2,875,000
13,000 Brad Ragan, Inc.+......... 256,025
416,000
60,000 Deere & Company........... 2,936,750
3,975,000
280,000 Navistar International
Corporation+............. 5,836,750 4,235,000
180,000 Pittway Corporation, Class
A........................ 2,076,335 7,245,000
20,000 Sequa Corporation, Class
A+....................... 629,204 520,000
14,000 Teledyne, Inc.+........... 225,756
281,750
------------- -------------
13,130,949 20,041,500
------------- -------------
ENTERTAINMENT--4.4%
160,000 Time Warner Inc........... 3,853,484
5,620,000
194,200 Viacom Inc., Class A+..... 4,289,401
8,083,575
134,999 Viacom Inc., Class B+..... 4,252,468
5,484,334
------------- -------------
12,395,353 19,187,909
------------- -------------
AUTOMOTIVE--3.6%
375,000 General Motors
Corporation.............. 17,039,230 15,843,750
------------- -------------
BUSINESS SERVICES--1.3%
71,250 Berlitz International,
Inc., New+............... 1,051,054 926,250
135,000 Gerber Scientific Inc..... 999,851
1,755,000
139,000 Nashua Corporation........ 5,646,948
2,849,500
------------- -------------
7,697,853 5,530,750
------------- -------------
</TABLE>

See Notes to Financial Statements.

<PAGE>
<TABLE>
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31,
1994
- --------------------------------------------------------------------------------
<CAPTION>
MARKET
SHARES COST VALUE
- --------- ------------- -------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
DIVERSIFIED INDUSTRIAL--1.2%
3,900 Brady (W.H.) Co., Class A
(non-voting)............. $ 131,820 $ 189,150
40,000 Culbro Corporation+....... 581,193
535,000
5,000 ITT Corporation........... 409,000
443,125
215,300 Katy Industries Inc....... 1,799,065
1,830,050
54,000 Lamson & Sessions Co.+.... 271,163
324,000
14,000 Tenneco Inc............... 489,649
595,000
43,000 Trinity Industries,
Inc...................... 518,408 1,354,500
------------- -------------
4,200,298 5,270,825
------------- -------------
METALS AND MINING--1.1%
75,000 American Barrick
Resources Corporation.... 2,129,631
1,668,750
60,000 Echo Bay Mines Ltd........ 755,625
637,500
40,000 Homestake Mining
Company.................. 868,500 685,000
65,000 Placer Dome Inc........... 1,594,613
1,413,750
120,000 Royal Oak Mines Inc.+..... 559,146
390,000
------------- -------------
5,907,515 4,795,000
------------- -------------
PUBLISHING--0.9%
28,000 McGraw-Hill, Inc.......... 1,994,488
1,872,500
200,000 Western Publishing Group,
Inc.+.................... 3,348,443 1,900,000
------------- -------------
5,342,931 3,772,500
------------- -------------
AUTOMOTIVE: PARTS AND ACCESSORIES--0.8%
15,000 Handy & Harman............ 225,288
230,625
50,000 Johnson Controls, Inc..... 1,390,779
2,450,000
50,000 Quaker State Corporation . 570,157
700,000
------------- -------------
2,186,224 3,380,625
------------- -------------
ENERGY--0.8%
14,500 Atlantic Richfield
Company.................. 1,433,530 1,475,375
20,000 Burlington Resources
Inc...................... 865,676 700,000
520,000 Kaneb Services, Inc.+..... 2,337,526
1,105,000
------------- -------------
4,636,732 3,280,375
------------- -------------
SPECIALITY CHEMICAL--0.4%
70,000 Ferro Corporation......... 1,085,838
1,671,250
------------- -------------
RETAIL--0.3%
82,000 Hartmarx Corporation...... 658,010
481,750
70,000 Neiman-Marcus
Group, Inc............... 1,136,750 945,000
------------- -------------
1,794,760 1,426,750
------------- -------------
AVIATION: PARTS AND SERVICE--0.1%
34,000 Hudson General
Corporation+............. 625,007 535,500
------------- -------------
TOTAL COMMON STOCKS................... 356,539,330
412,411,460
------------- -------------

<CAPTION>
MARKET
SHARES COST VALUE
- --------- ------------- -------------
<C> <S> <C> <C>
COMMON STOCK WARRANTS AND RIGHTS--0.2%
ENTERTAINMENT--0.2%
89,999 Viacom Inc., Contingent
Value Rights, expires
07/07/1995+.............. $ 472,495 $
275,622
90,000 Viacom Inc., Variable
Common Rights, expires
09/29/1995+.............. 123,750 101,250
80,000 Viacom Inc., Class B,
Warrants, expires
06/06/1997+.............. 105,000 265,000
80,000 Viacom Inc., Class B,
Warrants, expires
06/06/1999+.............. 290,000 430,000
------------- -------------
TOTAL COMMON STOCK WARRANTS AND
RIGHTS............................... 991,245 1,071,872
------------- -------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- ------------
<C> <S> <C> <C> <C>
CORPORATE BONDS--5.4%
ENTERTAINMENT--5.4%
$ 23,000,000 Time Warner, Inc.,
Conv. Sub. Deb.,
8.750% due
01/10/2015............ 24,371,750
21,677,500
2,197,000 Viacom Inc., Ex. Sub.
Deb., 8.000% due
07/07/2006............ 1,425,304
1,886,674
------------- -------------
TOTAL CORPORATE BONDS................. 25,797,054
23,564,174
------------- -------------
U.S. TREASURY BILLS--5.7%
25,000,000 4.210% to 5.810++% due
01/19/1995-
03/09/1995............ 24,811,972
24,811,972
------------- -------------
REPURCHASE AGREEMENT -- 0.4%
1,903,000 Agreement with Goldman
Sachs & Company,
5.500% due
01/03/1995(a)......... 1,903,000
1,903,000
------------- -------------
TOTAL INVESTMENTS............ 106.2% $ 410,042,601(b)
463,762,478
===============
OTHER ASSETS AND
LIABILITIES (NET)........... (6.2)
(27,133,481)
------- -------------
NET ASSETS................... 100.0% $
436,628,997
========
=============
<FN>
- ---------------

+ Non-income producing security.
++ Represents annualized yield at date of purchase.
(a) Agreement dated 12/30/1994, to be repurchased at
$1,904,163, collateralized by $1,850,000 U.S. Treasury
Bonds, 8.375% due
08/18/2008 (value $2,003,441).
(b) Aggregate cost for Federal income tax purposes was
$410,268,107. Net unrealized appreciation for Federal income
tax
purposes was $53,494,371 (gross unrealized appreciation
was $74,562,377 and gross unrealized depreciation was
$21,068,006).
</TABLE>

See Notes to Financial Statements.

<PAGE>
THE GABELLI VALUE FUND INC.

<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
- -------------------------------------------------------
<S> <C>
ASSETS:
Investments, at value (Cost
$410,042,601)....................... $ 463,762,478
Cash.................................. 7,264
Dividends and interest receivable..... 1,289,746
Receivable for investment sold........ 1,007,699
Receivable for Fund shares sold....... 168,464
Other receivables..................... 12,623
-------------
Total Assets...................... 466,248,274
-------------
LIABILITIES:
Payable for investment purchased...... 19,441,477
Dividends payable..................... 8,612,236
Payable for Fund shares redeemed...... 867,367
Payable for investment advisory fee... 373,591
Payable for transfer agent fees....... 78,000
Payable for distribution fees......... 47,192
Accrued Directors' fees............... 23,000
Accrued expenses and other payables... 176,414
-------------
Total Liabilities................. 29,619,277
-------------
Net assets applicable to
41,624,866 shares of common
stock outstanding............... $ 436,628,997
=============
NET ASSETS consist of:
Shares of common stock at par value... $ 41,625
Additional paid-in-capital............ 384,642,224
Distributions in excess of net
realized gain on investments........ (1,770,452)
Distributions in excess of net
investment income................... (4,277)
Unrealized appreciation of
investments......................... 53,719,877
-------------
Total Net Assets.................. $ 436,628,997
=============
Net Asset Value and redemption
price per share ($436,628,997 /
41,624,866 shares outstanding)
(300,000,000 shares authorized
of $0.001 par value)............ $10.49
======
Maximum offering price per share
($10.49 / .945, based on maximum
sales charge of 5.5% of the
offering price at December 31,
1994)........................... $11.10
======
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
- -------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Dividend income (net of foreign
withholding taxes of $31,760)....... $ 6,081,131
Interest income....................... 4,180,442
-------------
Total Investment Income........... 10,261,573
-------------
EXPENSES:
Investment advisory fee............... 4,613,924
Distribution fees..................... 1,153,481
Transfer agent fees................... 552,484
Directors' fees....................... 97,974
Amortization of organization
expenses............................ 91,500
Legal and audit fees.................. 59,993
Other................................. 340,501
-------------
Total Expenses.................... 6,909,857
-------------
NET INVESTMENT INCOME................... 3,351,716
-------------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Net realized gain on investments
sold................................ 55,380,657
Net realized loss on written option
transactions........................ (17,212)
Net realized loss on futures
transactions........................ (13,582)
-------------
Net realized gain on investments.... 55,349,863
-------------
Net unrealized appreciation of
investments:
Appreciation-beginning of year...... 113,118,746
Appreciation-end of year............ 53,719,877
-------------
Change in net unrealized
appreciation of investments..... (59,398,869)
-------------
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS........................... (4,049,006)
-------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ (697,290)
=============
</TABLE>

See Notes to Financial Statements.

<PAGE>
<TABLE>
THE GABELLI VALUE FUND INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

YEAR YEAR

ENDED ENDED

12/31/94 12/31/93

- ------------- -------------
<S>
<C> <C>
Net investment
income................................................................. $
3,351,716 $ 1,735,788
Net realized gain on
investments......................................................
55,349,863 70,516,872
Net change in unrealized appreciation of
investments.................................. (59,398,869)
79,790,535

- ------------- -------------
Net increase/(decrease) in net assets resulting from
operations....................... (697,290) 152,043,195
Distributions to shareholders from:
Net investment
income...............................................................
(3,351,716) (298,994)
Distributions in excess of net investment
income.................................... (4,277)
(1,436,794)
Net realized gain on
investments....................................................
(55,458,014) (70,516,872)
Distributions in excess of net realized gain on
investments......................... (192,460) (6,833)
Paid-in
capital..................................................................... --
(82,407)
Net increase/(decrease) in net assets from Fund share
transactions.................... 5,139,564 (11,889,565)

- ------------- -------------
Net increase/(decrease) in net
assets................................................. (54,564,193)
67,811,730
NET ASSETS:
Beginning of
year.....................................................................
491,193,190 423,381,460

- ------------- -------------
End of
year........................................................................... $
436,628,997 $ 491,193,190

============= =============
</TABLE>

- --------------------------------------------------------------------------------
1994 TAX NOTICE TO SHAREHOLDERS
(UNAUDITED)

On December 30, 1994 the Fund paid to shareholders an
ordinary income
dividend (comprised of net investment income and short-term
capital gains) of
$.296 per share and a distribution of long-term capital gains of
$1.304 per
share. For 1994, 33.30% of such ordinary income dividend
qualifies for the
dividend received deduction available to corporations. The
distribution from
long-term capital gains is designated as a "Capital Gain
Dividend" and is
taxable to shareholders as a long-term capital gain. 10.0% of
the ordinary
income dividend from the Fund was derived from U.S. Treasury
Securities.
- --------------------------------------------------------------------------------

See Notes to Financial Statements.

<PAGE>

THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES. The Gabelli Value
Fund Inc. (the "Fund")
was organized on July 20, 1989 as a Maryland corporation.
The Fund is a
non-diversified, open-end management investment company
registered under the
Investment Company Act of 1940, as amended (the "1940
Act"). The Fund commenced
operations on September 29, 1989. The following is a
summary of significant
accounting policies followed by the Fund in the preparation of
its financial
statements.

SECURITY VALUATION. Portfolio securities which are traded
only on a nationally
recognized securities exchange or in the over-the-counter
market which are
National Market System Securities are valued at the last sale
price as of the
close of business on the day the securities are being valued, or
lacking any
sales, at the mean between closing bid and asked prices. Other
over-the-counter
securities are valued at the most recent bid prices as obtained
from one or more
dealers that make markets in the securities. Portfolio securities
which are
traded both in the over-the-counter market and on a stock
exchange are valued
according to the broadest and most representative market, as
determined by
Gabelli Funds, Inc. (the "Adviser"). Securities and assets for
which market
quotations are not readily available are valued at fair value as
determined in
good faith by or under the direction of the Board of Directors of
the Fund.
Options are generally valued at the last sale price or, in the
absence of a last
sale price, the last bid price. Short-term investments that
mature in more than
60 days are valued at the highest bid price obtained from a
dealer maintaining
an active market in that security. Short-term investments that
mature in 60 days
or less are valued at amortized cost, unless the Board of
Directors determines
that such valuation does not constitute fair value.

REPURCHASE AGREEMENTS. The Fund may engage in
repurchase agreement
transactions. Under the terms of a typical repurchase
agreement, the Fund takes
possession of an underlying debt obligation subject to an
obligation of the
seller to repurchase, and the Fund to resell, the obligation at an
agreed-upon
price and time, thereby determining the yield during the Fund's
holding period.
This arrangement results in a fixed rate of return that is not
subject to market
fluctuations during the Fund's holding period. The value of the
collateral is at
least equal at all times to the total amount of the repurchase
obligations,
including interest. In the event of counterparty default, the
Fund has the right
to use the collateral to offset losses incurred. There is potential
loss to the
Fund in the event the Fund is delayed or prevented from
exercising its rights to
dispose of the collateral securities, including the risk of a
possible decline
in the value of the underlying securities during the period while
the Fund seeks
to assert its rights. The Adviser, acting under the supervision of
the Board of
Directors, reviews the value of the collateral and the
creditworthiness of those
banks and dealers with which the Fund enters into repurchase
agreements to
evaluate potential risks.

OPTION ACCOUNTING. The Fund may purchase or write listed
call or put options on
securities as a means of achieving additional return or for
hedging the value of
the Fund's portfolio. Upon the purchase of a put or call option
by the Fund, the
premium paid is recorded as an investment, the value of which
is
marked-to-market daily. When a purchased option expires, the
Fund will realize a
loss in the amount of the cost of the option. When the Fund
enters into a
closing sale transaction, the Fund will realize a gain or loss
depending on
whether the sales proceeds from the closing sale transaction
are greater or less
than the cost of the option. When the Fund exercises a put
option, it will
realize a gain or

<PAGE>

THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

loss from the sale of the underlying security and the proceeds
from such sale
will be decreased by the premium originally paid. When the
Fund exercises a call
option, the cost of the security which the Fund purchases upon
exercise will be
increased by the premium originally paid.

When the Fund writes an option, an amount equal to the
premium received by
the Fund is recorded as a liability, the value of which is
marked-to-market
daily. When a written option expires, the Fund realizes a gain
equal to the
amount of the premium received. When the Fund enters into a
closing purchase
transaction, the Fund realizes a gain (or loss if the cost of the
closing
purchase transaction exceeds the premium received when the
option was sold)
without regard to any unrealized gain or loss on the underlying
security, and
the liability related to such option is eliminated. When a call
option is
exercised, the Fund realizes a gain or loss from the sale of the
underlying
security and the proceeds from such sale are increased by the
premium originally
received. When a put option is exercised, the amount of the
premium originally
received will reduce the cost of the security which the Fund
purchased upon
exercise.

The risk associated with purchasing options is limited to the
premium
originally paid. The risk in writing a call option is that the Fund
may forego
the opportunity of profit if the market price of the underlying
security
increases and the option is exercised. The risk in writing a put
option is that
the Fund may incur a loss if the market price of the underlying
security
decreases and the option is exercised. In addition, there is a
risk the Fund may
not be able to enter into a closing transaction because of an
illiquid secondary
market.

FUTURES CONTRACTS. The Fund may engage in futures
contracts for the purpose of
hedging against changes in the value of its portfolio securities
and in the
value of securities it intends to purchase. Upon entering into a
futures
contract, the Fund is required to deposit with the broker an
amount of cash or
cash equivalents equal to a certain percentage of the contract
amount. This is
known as the "initial margin." Subsequent payments ("variation
margin") are made
or received by the Fund each day, depending on the daily
fluctuation of the
value of the contract. The daily changes in the contract are
recorded as
unrealized gains or losses. The Fund recognizes a realized gain
or loss when the
contract is closed. The net unrealized
appreciation/(depreciation) is shown in
the financial statements.

There are several risks in connection with the use of futures
contracts as
a hedging device. The change in value of futures contracts
primarily corresponds
with the value of their underlying instruments, which may not
correlate with the
change in value of the hedged investments. In addition, there is
the risk that
the Fund may not be able to enter into a closing transaction
because of an
illiquid secondary market.

SECURITIES TRANSACTIONS AND INVESTMENT INCOME.
Securities transactions are
accounted for on the trade date with realized gain or loss on
investments
determined using specific identification as the cost method.
Interest income
(including amortization of premium and discount) is recorded as
earned.

<PAGE>

THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS.
Dividend income and dividends and
distributions to shareholders are recorded on the ex-dividend
date. Income
distributions and capital gain distributions are determined in
accordance with
income tax regulations which may differ from generally
accepted accounting
principles. These differences are primarily due to differing
treatments of
income and gains on various investment securities held by the
Fund, timing
differences and differing characterization of distributions made
by the Fund.

PROVISION FOR INCOME TAXES. The Fund has qualified and
intends to continue to
qualify as a regulated investment company under Subchapter M
of the Internal
Revenue Code of 1986, as amended. As a result, a Federal
income tax provision is
not required.

DEFERRED ORGANIZATION EXPENSES. A total of $610,000
was incurred in connection
with the organization of the Fund. These costs were deferred
and amortized on a
straight-line basis over a period of 60 months from the date the
Fund commenced
investment operations. As of December 31, 1994, all such
costs have been fully
amortized.

2. AGREEMENTS WITH AFFILIATED PARTIES. At a Special
Meeting of Shareholders
held on February 25, 1994, shareholders of the Fund approved
a new investment
advisory agreement (the "Advisory Agreement") between the
Fund and the Adviser,
effective as of March 1, 1994, which combined investment
advisory and
administrative fees and their respective responsibilities within
one agreement.
Prior to March 1, 1994, the Fund had an administration
agreement with The Boston
Company Advisors, Inc. ("Boston Advisors"), an indirect
wholly-owned subsidiary
of Mellon Bank Corporation.

The Advisory Agreement provides that the Fund will pay
the Adviser a fee,
computed daily and paid monthly, at the annual rate of 1.00
percent of the value
of the Fund's average daily net assets, to provide a continuous
investment
program for the Fund's portfolio, provide all facilities and
personnel,
including officers required for its administrative management,
and pay the
compensation of all officers and directors who are its affiliates.
Prior to
March 1, 1994, the Fund paid the Adviser and Boston Advisors
a fee computed
daily and paid monthly at the annual rate of 0.75 percent and
0.25 percent of
the value of the Fund's average daily net assets for investment
advisory and
administrative services, respectively. Administration fees paid
to Boston
Advisors for the period prior to March 1, 1994 were $196,808
and are included
under investment advisory fees in the statement of operations
for the year ended
December 31, 1994.

3. DISTRIBUTION PLAN. The Fund has adopted a plan of
distribution (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act. Under the Plan,
the Fund pays Gabelli
& Company, Inc. ("Gabelli & Company"), an indirect majority-
owned subsidiary of
the Adviser, a distribution fee, accrued daily and paid monthly,
calculated at
the annual rate of 0.25 percent of the value of the Fund's
average daily net
assets, for activities primarily intended to result in the sale of
its shares of
common stock.

4. PORTFOLIO SECURITIES. Cost of purchases and proceeds
from sales of
securities for the year ended December 31, 1994, other than
U.S. government and
short-term securities, aggregated $305,213,643 and
$272,819,815, respectively.

<PAGE>

THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

Option activity for the year ended December 31, 1994 was
as follows:

NUMBER

CONTRACTS PREMIUM

- ----- ---------
<S>
<C> <C>
Options outstanding at December 31,
1993............................................. 0 $ 0
Options
written......................................................................
200 72,098
Options
exercised....................................................................
(200) (72,098)

- ----- ---------
Options outstanding at December 31,
1994............................................. 0 $ 0

===== =========
</TABLE>

5. TRANSACTIONS WITH AFFILIATES. During the year ended
December 31, 1994, the
Fund paid brokerage commissions of $35,327 to Gabelli &
Company and its
affiliates.

For the year ended December 31, 1994, Gabelli & Company
informed the Fund
that it received $200,857 from investors representing
commissions (sales charges
and underwriting fees) on sales of Fund shares.

6. SHARES OF COMMON STOCK. Common stock transactions
were as follows:

<TABLE>
<CAPTION>
YEAR
ENDED YEAR ENDED
12/31/94
12/31/93
---------------------------
- -- -----------------------------
SHARES
AMOUNT SHARES AMOUNT
----------- -----------
- -- ----------- -------------
<S> <C>
<C> <C> <C>
Sold...................................................... 1,403,794 $
16,737,922 987,775 $ 12,390,011
Issued upon reinvestment of dividends.....................
4,854,034 51,002,186 5,108,881 61,766,369
Redeemed.................................................. (5,257,189)
(62,600,544) (7,262,762) (86,045,945)
----------- -----------
- -- ----------- -------------
Net increase/(decrease)................................. 1,000,639
$ 5,139,564 (1,166,106) $ (11,889,565)

========== =============
========== =============
</TABLE>

<PAGE>
THE GABELLI VALUE FUND INC.
<TABLE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

Per share amounts for a Fund share outstanding throughout
each period/year ended
December 31,

<CAPTION>
1994 1993
1992 1991(A) 1990 1989*
--------- --------- ---------
- --------- --------- -----------
<S> <C> <C>
<C> <C> <C> <C>
Operating performance:
Net asset value, beginning of year............. $ 12.09 $
10.13 $ 9.48 $ 8.51 $ 9.58 $ 9.45
--------- --------- ---------
- --------- --------- -----------
Net investment income.......................... 0.09 0.05
0.09 0.13 0.45 0.16
Net realized and unrealized gain/(loss) on
investments.................................. (0.09) 3.95
1.11 1.17 (0.98) 0.04
--------- --------- ---------
- --------- --------- -----------
Total from investment operations............... 0.00
4.00 1.20 1.30 (0.53) 0.20
--------- --------- ---------
- --------- --------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income........................ (0.09) (0.01)
(0.09) (0.19) (0.54) (0.06)
Distributions in excess of net investment
income..................................... (0.00)(b) (0.04)
- -- -- --
Net realized gains........................... (1.51) (1.99)
(0.46) (0.14) -- (0.01)
Distributions in excess of net realized
gains...................................... (0.01) -- --
- -- -- --
--------- --------- ---------
- --------- --------- -----------
Total distributions............................ (1.60) (2.04)
(0.55) (0.33) (0.54) (0.07)
=========
========= ========= =========
========= ==========
NET ASSET VALUE, end of year................... $ 10.49 $
12.09 $ 10.13 $ 9.48 $ 8.51 $ 9.58
=========
========= ========= =========
========= ==========
Total return**................................. 0.0% 39.4%
12.7% 15.3% (5.6)% 2.1%
=========
========= ========= =========
========= ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
NET ASSETS, end of year (in 000's)............. $ 436,629 $
491,193 $ 423,381 $ 574,676 $ 850,685 $
1,126,146
Ratio of net investment income to average net
assets..................................... 0.73% 0.38%
0.75% 1.43% 4.45% 6.06%+
Ratio of operating expenses to average net
assets..................................... 1.50% 1.53%
1.52% 1.45% 1.39% 1.48%+
Portfolio turnover rate........................ 66.6% 21.4%
0.1% 16.2% 58.6% 73.3%
<FN>
- ---------------
* The Fund commenced operations on September 29, 1989.
** Total return represents aggregate total return for the
period indicated and
does not reflect any applicable sales charges.
Total return for the period of less than one year is not
annualized.
+ Annualized.
(a) Per share amounts have been calculated using the monthly
average share
method for the year ended December 31, 1991.
(b) Amount represents less than $0.01 per share.
</TABLE>

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THE GABELLI VALUE FUND INC.
In our opinion, the accompanying statement of assets and
liabilities, including
the portfolio of investments, and the related statements of
operations and of
changes in net assets and the financial highlights present fairly,
in all
material respects, the financial position of The Gabelli Value
Fund Inc. (the
"Fund") at December 31, 1994, the results of its operations for
the year then
ended, the changes in its net assets for each of the two years
in the period
then ended and the financial highlights for each of the five
years in the period
then ended and for the period September 29, 1989
(commencement of operations)
through December 31, 1989, in conformity with generally
accepted accounting
principles. These financial statements and financial highlights
(hereafter
referred to as "financial statements") are the responsibility of
the Fund's
management; our responsibility is to express an opinion on
these financial
statements based on our audits. We conducted our audits of
these financial
statements in accordance with generally accepted auditing
standards which
require that we plan and perform the audit to obtain reasonable
assurance about
whether the financial statements are free of material
misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and
disclosures in the financial statements, assessing the
accounting principles
used and significant estimates made by management, and
evaluating the overall
financial statement presentation. We believe that our audits,
which included
confirmation of securities at December 31, 1994 by
correspondence with the
custodian and brokers, provide a reasonable basis for the
opinion expressed
above.

PRICE WATERHOUSE LLP

1177 Avenue of the Americas
New York, New York
February 9, 1995

<PAGE>

THE GABELLI VALUE FUND INC.
ONE CORPORATE CENTER
RYE, NY 10580-1434
1-800-GABELLI

[1-800-422-3554]
(Net Asset Value may be obtained daily
by calling 1-800-GABELLI after 6:00 p.m.)

BOARD OF DIRECTORS

Mario J. Gabelli, CFA Robert J. Morrissey
President and Chief Attorney-at-Law
Investment Officer Morrissey & Hawkins
Gabelli Funds, Inc.

Bill Callaghan Karl Otto Pohl
President Former President
Bill Callaghan Associates Deutsch Bundesbank

Felix J. Christiana Anthony R. Pustorino
Former Senior Vice President Certified Public
Accountant
Dollar Dry Dock Savings Bank Professor, Pace
University

Anthony J. Colavita
Attorney-at-Law
Anthony J. Colavita, P.C.

OFFICERS
Mario J. Gabelli, CFA Bruce N. Alpert
President and Chief Chief Operating Officer,
Investment Officer Vice President and
Treasurer

J. Hamilton Crawford, Jr.
Secretary

CUSTODIAN
Boston Safe Deposit and Trust Company

TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company

LEGAL COUNSEL
Willkie Farr & Gallagher

UNDERWRITER
Gabelli & Company, Inc.

- --------------------------------------------------------------------------------
These financial statements are submitted for the general
information of the
shareholders of The Gabelli Value Fund Inc. They are not
authorized for
distribution to prospective investors unless preceded or
accompanied by an
effective prospectus.
- --------------------------------------------------------------------------------

THE
GABELLI
VALUE
FUND
INC.

ANNUAL
REPORT
DECEMBER 31,
1994

THE GABELLI VALUE FUND INC.

PART C

FINANCIAL STATEMENTS AND EXHIBITS

THE GABELLI VALUE FUND INC.
Part C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

Part A: Financial Highlights

Part B: Audited financial statements for the fiscal
year ended December 31, 1994 are incorporated into the
Statement of Additional Information by reference to the
Registrant's Annual Report:

Portfolio of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements

Report of Independent Accountants

Part C: Consent of Independent Accountants is filed herein

(b) Exhibits

All references are to the Registrant's registration statement on
Form N-1A as filed with the Securities and Exchange
Commission ("SEC") on July 24, 1989, File Nos. 33-30139 and
811-5848 (the "Registration Statement").

(1) Registrant's Articles of Incorporation are incorporated by
reference to the Registration Statement.

(2) Registrant's Bylaws are incorporated by reference to Pre-
Effective Amendment No. 2 to the Registration Statement, as
filed with the SEC on September 20, 1989 ("Pre-Effective
Amendment No. 2").

(3) Not Applicable.

(4) Specimen copies of certificates for shares issued by
Registrant are incorporated by reference to Pre-Effective
Amendment No. 2.

(5)(a) Form of Investment Advisory Agreement
with Gabelli Funds dated March 1, 1994 is incorporated by
reference to Post-Effective Amendment No. 7 to the
Registration Statement, as filed with the SEC on March 1, 1994
("Post-Effective Amendment No. 7).

(6)(a) Form of Distribution Agreement (Subscription Period)
with Gabelli & Company, Inc. and Shearson Lehman Hutton
Inc. dated September 21, 1989 is incorporated by reference to
Pre-Effective Amendment No. 1 to the Registration Statement,
as filed with the SEC on August 29, 1989 ("Pre-Effective
Amendment No. 1").

(6)(b) Distribution Agreement with Gabelli & Company, Inc.
dated July 31, 1993 is incorporated by reference to Post-
Effective Amendment No. 7.

(6)(c) Designated Dealer Agreement with Gabelli &
Company, Inc. dated September 18, 1989 is filed herein.

(7) Not applicable.

(8) Form of Custody Agreement with Boston Safe Deposit
and Trust Company dated September 19, 1989 is incorporated
by reference to Pre-Effective Amendment No. 1.

(9)(a) Transfer Agency Agreement with State
Street Bank and Trust Company dated November 17, 1993 is
incorporated by reference to Post-Effective Amendment No. 7.

(9)(b) Sub-Administration Agreement with Boston
Advisors dated March 1, 1994 is incorporated by reference to
Post-Effective Amendment No. 8 to the Registration Statement,
as filed with the SEC on April 29, 1994.

(9)(c) Assignment of Sub-Administration Agreement
dated May 1, 1994 with The Shareholder Services Group, Inc.
is filed herein.

(10) Opinion of Counsel regarding share registration
pursuant to Rule 24e-2 is filed herein.

(11) Consent of Independent Accountants is filed herein.

(12) Not applicable.

(13) Subscription Agreement is incorporated by reference to
Pre-Effective Amendment No. 2.

(14) Plan for Individual Retirement Accounts is incorporated
by reference to Post-Effective Amendment No. 1 to the
Registration Statement, as filed with the SEC on March 29,
1990 ("Post-Effective Amendment No. 1").

(15) Form of Plan of Distribution is incorporated by reference
to Pre-Effective Amendment No. 2.

(16) Performance Data is incorporated by reference to Post-
Effective Amendment No. 1.

(27) Financial Data Schedule is filed herein.

Item 25. Persons controlled by or Under Common Control
with Registrant.

None

Item 26: Number of Holders of Securities

(1) (2)

Title of Class Number of Record
Holders
As of April 17,
1995

Common Stock
40,016
Value $.001 per
Share

Item 27: Indemnification

The response to this Item 27 is incorporated by reference
to Pre-Effective Amendment No. 2.

Item 28: Business and Other Connections of Investment
Adviser

Gabelli Funds, Inc. (the "Adviser") is a registered
investment adviser providing investment management and
administrative services to the Registrant. The Adviser also
provides similar services to other mutual funds.

The information required by this Item 28 with
respect to any other business, profession, vocation or
employment of a substantial nature engaged in by directors and
officers of the Adviser during the past two years is
incorporated by reference to Form ADV filed by the Adviser
pursuant to the Investment Advisers Act of 1940 (SEC file No.
801-37706).

Item 29: Principal Underwriter

Gabelli & Company Inc. currently acts as distributor
for The Gabelli Asset Fund, The Gabelli Equity Series Funds,
Inc., The Gabelli Growth Fund, The Gabelli Global Convertible
Securities Fund, The Gabelli Equity Trust Inc., The Gabelli
Global Multimedia Trust Inc., The Gabelli Small Cap Growth
Fund, The Gabelli Equity Income Fund, The Gabelli Gold Fund,
The Gabelli U.S. Treasury Money Market Fund, The Gabelli ABC
Fund, The Gabelli Value Fund Inc. and The Gabelli Global Series
Funds, Inc.

The information required by this Item 29 with respect to
each director, officer or partner of Gabelli & Company, Inc. is
incorporated by reference to Schedule A of Form BD filed by
Gabelli & Company, Inc. pursuant to the Securities Exchange
Act of 1934, as amended (SEC File No. 8-21373).

Item 30. Location of Accounts and Records

All accounts, books and other documents required
by Section 31(a) of the 1940 Act and Rules 31a-1 through
31a-3 thereunder are maintained at the offices of The
Shareholder Services Group, Inc., One Exchange Place, Boston,
Massachusetts: Boston Safe Deposit and Trust Company, One
Boston Place, Boston, Massachusetts; State Street Bank and
Trust Company c/o Boston Financial Data Services, Two
Heritage Drive, Quincy, Massachusetts and Gabelli Funds, Inc.,
One Corporate Center, Rye, New York.

Item 31. Management Services

Not applicable.

Item 32. Undertakings

(a) Not applicable.

(b) Not applicable.

(c) The Registrant hereby undertakes to furnish to
each person to whom a Prospectus of the Registrant is
delivered a copy of the Registrant's latest annual report, upon
request and without charge.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, the
Registrant, THE GABELLI VALUE FUND INC., certifies that it
meets the requirements for effectiveness of this Post-Effective
Amendment to its Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933, and the Registrant
has duly caused this Post-Effective Amendment to its
Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of New York
and State of New York, on the 27th day of April, 1995.

THE GABELLI VALUE FUND INC.

By: /s/ Mario J. Gabelli
Mario J. Gabelli
Chairman of the Board of Directors

Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment to its Registration
Statement has been signed below by the following persons in
the capacities and on the dates indicated.

Signature Title
Date

/s/ Mario J. Gabelli Chairman of the Board of Directors
April 27, 1995
Mario J. Gabelli (President and Chief Investment
Officer)

/s/ Bruce N. Alpert Vice President and Treasurer
April 27, 1995
Bruce N. Alpert (Chief Operating Officer)

/s/ William Callaghan Director
April 27, 1995
William Callaghan

/s/ Felix J. Christiana Director
April 27, 1995
Felix J. Christiana

/s/ Anthony J. Colavita Director
April 27, 1995
Anthony J. Colavita

/s/ Robert J. Morrissey Director
April 27, 1995
Robert J. Morrissey

/s/ Karl Otto Pohl Director
April 27, 1995
Karl Otto Pohl

/s/ Anthony R. Pustorino Director
April 27, 1995
Anthony R. Pustorino

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION

(6)(c) Designated Dealer Agreement dated September 18,
1989 with Gabelli & Company, Inc.

(9)(c) Assignment of Sub-Administration Agreement dated May
1, 1994 with The Shareholder Services Group, Inc.

(10) Opinion of Counsel

(11) Consent of Independent Accountants

(27) Financial Data Schedule

EXHIBIT (6)(c)

EXHIBIT (9)(c)

EXHIBIT (10)

EXHIBIT (11)

EXHIBIT (27)

{PAGE|18}
G:\SHARED\3RDPARTY\GABVALUE\EDGAR\EDGAR#9.DOC

<PAGE>{PAGE|30}
G:\SHARED\3RDPARTY\GABVALUE\EDGAR\595SAI.DOC

September 18, 1989

Gabelli & Company, Inc.
655 Third Avenue
New York, New York 10017

Gentlemen:

In connection with the initial and continuous offering (collectively, the
"Offering") of an indefinite number of shares (the "Shares") of common
stock, par value $.001, of The Gabelli Value Fund Inc., a Maryland
corporation (the "Company"), you will bear all expenses which represent
payment for activities in which you engage that are primarily intended to
result in the sale of the Shares, including, but not limited to, the following:

(a) payments made to your sales personnel and other underwriters
with whom you are affiliated for selling Shares;

(b) costs of printing and distributing the Company's prospectus,
statement of additional information and sales literature to prospective
shareholders of the Company;

(d) payments to, and expenses of, persons who provide support
services in connection with the distribution of the Shares; and

(e) financing costs incurred by you on the amount of the foregoing
expenses.

In consideration of the foregoing, as promptly as is possible after the
last day of each month this Agreement is in effect, the Company shall pay
you a fee, calculated daily and paid monthly, at the annual rate of 0.25% of
the average daily net assets of the Company attributable to outstanding
Shares sold by you (including additional Shares acquired by reinvestment of
dividends). The payment by the Company of such fees is authorized
pursuant to the Distribution Plan (the "Plan") adopted in accordance with
Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"Investment Company Act").
This Agreement shall continue in effect until one year from the date
hereof and thereafter for successive annual periods, provided such
continuance is specifically approved at least annually by (i) a vote of a
majority of the Directors of the Company or a vote of a majority of the
outstanding voting securities of the Company, and (ii) a vote of a majority of
those Directors of the Company who are not interested persons of the
Company and who have no direct or indirect financial interest in the
operation of the Plan, in this Agreement or any agreement related to the
Plan (the "Qualified Directors") by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement shall be
terminable at any time by the Company without penalty, (a) by vote of a
majority of the Qualified Directors, or by vote of the holders of a majority of
the outstanding voting securities of the Company on not less than 60 days'
written notice, or (b) upon not less than 60 days' written notice by you.
This Agreement shall also terminate automatically in the event of its
assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities", "interested persons", and "assignment" shall
have the same meaning as such terms have in the Investment Company
Act.)

If this Agreement reflects our understanding with respect to the
foregoing, please so indicate by signing the enclosed copy of this letter and
returning it in the envelope provided.

Sincerely,

THE GABELLI VALUE FUND INC.

By: /s/ Bruce Alpert
Name: Bruce Alpert
Title: Vice President

Accepted:

GABELLI & COMPANY, INC.

By: /s/ Stephen G. Bondi
Name: Stephen G. Bondi
Title: Vice President

Gabelli & Company, Inc. -{PAGE|3}- September 18, 1989

G:\SHARED\3RDPARTY\GABVALUE\AGRMTS\DESIGDL.DOC

The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109

Gentlemen:

This letter acknowledges the consent of Gabelli Funds, Inc. to the
assignment of the Sub-Administration Agreement dated March 1, 1994
between The Boston Company Advisors, Inc. ("Boston Advisors") and
Gabelli Funds, Inc., as amended (collectively, the "Agreement") to The
Shareholder Services Group, Inc. ("TSSG"), and the waiver of the Gabelli
Funds, Inc. of Section 7 of the Agreement with respect to the automatic
termination of the Agreement upon its assignment. This acknowledgment
will be effective upon the consummation of the proposed acquisition of The
Boston Company Inc.'s third party mutual fund administration business by
TSSG (the "Proposed Transaction"). We understand that, effective upon
the completion of the Proposed Transaction, TSSG will assume all of Boston
Advisors' rights and obligations under the Agreement accruing after that
date and that The Boston Company, Inc. and its affiliates, including Boston
Advisors, will no longer be liable under the Agreement or responsible for any
acts or omissions of TSSG occurring after that time.

Sincerely,

Gabelli Funds, Inc.

By: /s/ Bruce Alpert
Title: CFO Gabelli Funds Division
Date: May 1, 1994

G:\SHARED\3RDPARTY\GABVALUE\AGRMTS\ASSGMT.DOC

VENABLE, BAETJER AND HOWARD, LLP
1800 Mercantile Bank & Trust Building
Two Hopkins Plaza
Baltimore, Maryland 21201-2978

April 27, 1995

The Gabelli Value Fund Inc.
One Corporate Center
Rye, New York 10580

Ladies and Gentlemen:

We understand that The Gabelli Value Fund Inc., a Maryland
corporation (the "Fund"), is about to register 3,877,723.80 shares of
common stock, $.00l par value per share (the "Shares"), pursuant to Post-
Effective Amendment No. 9 to the Fund's Registration Statement under the
Securities Act of l933, as amended, and in reliance upon Rule 24e-2 under
the Investment Company Act of l940, as amended (the "l940 Act").

We have acted as special Maryland counsel for the Fund since
its organization and are familiar with its Charter and Bylaws. We have
examined the Prospectus and Statement of Additional Information included
in its Registration Statement on Form N-1A, as amended, (the
"Prospectus"), and have examined and relied upon such corporate records
of the Fund and other documents and certificates as to factual matters as
we deem necessary for the purpose of this opinion.

We have assumed, without independent verification, the
genuineness of signatures, the authenticity of all documents submitted to us
as originals, and the conformity with originals of all documents submitted to
us as copies.

Based upon the foregoing, we are of the opinion that the
Shares of the Fund to be offered for sale pursuant to the Prospectus are, to
the extent of the number of shares authorized to be issued by the Fund in
its Articles of Incorporation, duly authorized and when sold, issued and paid
for as contemplated by the Prospectus will
<PAGE>

The Gabelli Value Fund Inc.
April 27, 1995
Page 2

have been validly issued, full paid and nonassessable under the laws of the
State of Maryland.

This letter expresses our opinion as to the Maryland General
Corporation Law governing the authorization and issuance of stock, but
does not extend to the securities or "Blue Sky" laws of Maryland or to
federal securities laws or to other laws.

We consent to the filing of this opinion as part of Post-Effective
Amendment No. 9 to the Registration Statement. This opinion may not be
relied upon by any other person or for any other purpose without our prior
written consent.

Very truly yours,

VENABLE, BAETJER AND HOWARD,
LLP

BA3DOCS1/0013257.01

Consent of Independent Public Accountants

We hereby consent to the incorporation by reference in the Statement of
Additional Information and the Prospectus, constituting parts of this Post-
Effective Amendment No. 9 to the registration statement on Form N-1A (the
Registration Statement"), of our report dated February 9, 1995, relating to
the financial statements and financial highlights of The Gabelli Value Fund
Inc. We also consent to the reference to us under the heading "Experts" in
such Statement of Additional Information and to the reference to us under
the heading "Financial Highlights" in such Prospectus.

Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York
April 27, 1995

<ARTICLE> 6
<SERIES>
<NUMBER> 0
<NAME> Gabelli Value Fund Inc.

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 410,042,601
<INVESTMENTS-AT-VALUE> 463,762,478
<RECEIVABLES> 2,465,909
<ASSETS-OTHER> 12,623
<OTHER-ITEMS-ASSETS> 7,264
<TOTAL-ASSETS> 466,248,274
<PAYABLE-FOR-SECURITIES> 19,441,477
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,177,800
<TOTAL-LIABILITIES> 29,619,277
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 384,683,849
<SHARES-COMMON-STOCK> 41,624,866
<SHARES-COMMON-PRIOR> 40,624,227
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (4,277)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1,770,452)
<ACCUM-APPREC-OR-DEPREC> 53,719,877
<NET-ASSETS> 436,628,997
<DIVIDEND-INCOME> 6,081,131
<INTEREST-INCOME> 4,180,442
<OTHER-INCOME> 0
<EXPENSES-NET> 6,909,857
<NET-INVESTMENT-INCOME> 3,351,716
<REALIZED-GAINS-CURRENT> 55,349,863
<APPREC-INCREASE-CURRENT> (59,398,869)
<NET-CHANGE-FROM-OPS> (697,290)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,355,993)
<DISTRIBUTIONS-OF-GAINS> (55,650,474)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,403,794
<NUMBER-OF-SHARES-REDEEMED> 5,257,189
<SHARES-REINVESTED> 4,854,034
<NET-CHANGE-IN-ASSETS> (54,564,193)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,469,841)
<GROSS-ADVISORY-FEES> 4,613,924
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,909,857
<AVERAGE-NET-ASSETS> 461,392,352
<PER-SHARE-NAV-BEGIN> 12.09
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> (0.09)
<PER-SHARE-DIVIDEND> (0.09)
<PER-SHARE-DISTRIBUTIONS> (1.51)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.49
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>