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THE GABELLI VALUE FUND INC.
One Corporate Center
Rye, New York 10580-1434
SEMI-ANNUAL REPORT -1995
TO OUR SHAREHOLDERS:
Strong corporate profits and declining long-term interest rates pushed the
stock market to record highs in the second quarter of 1995. Technology related
issues as well as financial stocks were particularly buoyant. With the appetite
for transactions whetted by IBM's hostile offer for Lotus, and with the market
likely to ferret out small and medium capitalization companies, the performance
of our Fund should again return to its historical relationship to other
benchmarks.
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INVESTMENT RESULTS (a)
Quarter
--------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
<S> <C> <C> <C> <C> <C> <C>
1995: Net Asset Value...................... $11.41 $11.75 -- -- --
Total Return......................... 8.8% 3.0% -- -- --
- ---------------------------------------------------------------------------------------------------------------
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)
- ---------------------------------------------------------------------------------------------------------------
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<CAPTION>
Average Annual Returns - June 30, 1995 (a)
------------------------------------------
<S> <C>
1 Year........................................ 17.2%
........................................ 10.8%(c)
5 Year........................................ 14.1%
........................................ 12.9%(c)
Life of Fund (b).............................. 12.4%
........................................ 11.3%(c)
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<CAPTION>
Dividend History
- ---------------------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
- ----------------- -------------- ------------------
<S> <C> <C>
December 30, 1994 $1.600 $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
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(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.
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For the three months ended June 30, 1995, The Gabelli Value Fund's (the
"Fund") net asset value increased a pale 3.0% to $11.75 per share. This compares
to gains of 9.5% for the unmanaged Standard & Poor's 500 Index ("S&P 500") and
6.5% and 9.4%, respectively, for the Value Line Composite and Russell 2000
Index, each of which are unmanaged indicators of stock market performance. For
the six months ended June 30, 1995, the Fund gained 12.0%, versus 20.2% for the
S&P 500, 12.1% for the Value Line Composite, and 14.4% for the Russell 2000
Index.
The Fund's total return since inception on September 29, 1989, through
June 30, 1995, was 95.7%, which reflects an average annual total return of 12.4%
assuming reinvestment of all dividends and distributions. This compares to the
S&P 500's average annual return of 10.9% over the same period. The Fund's three-
and five-year average annual total returns through June 30, 1995, were 19.2% and
14.1%, respectively. This compares with average annual returns of 13.2% and
12.1% for the S&P 500 during the respective periods. On June 30, 1995, the
Fund's shareholder base was 39,085, and total net assets were $463.8 million.
COMMENTARY
At the beginning of 1995, we opined that due to cost cutting and
productivity gains, corporate profits would remain strong even in a slowing
economy. We did not anticipate fully the 170 basis point decline in long-term
interest rates that has helped to propel the stock market to its present levels.
Despite the current conjecture that the Federal Reserve will cut
short-term interest rates to ensure a "soft landing" for the economy, we suspect
long-term and perhaps short-term rates are near an intermediate-term bottom.
This may restrain stocks over the balance of the year. However, we believe
companies that continue to report positive earnings and cash flow gains will be
adequately rewarded. In short, stock pickers will have an opportunity to excel.
INTERVIEW WITH MARIO GABELLI
We thought we would share with you BARRON'S 1995 midyear interview with
our Chief Investment Officer. Discussion of individual companies is not
necessarily reflective of the Fund's entire portfolio.
BARRON'S 1995 MIDYEAR ROUNDTABLE
BARRON'S: TELL US, MARIO, WILL THE REST OF `95 BE AS GOOD AS THE FIRST
HALF?
GABELLI: When we started the year, I basically said, "Look, every
company I follow has been cutting costs and earnings are going to be good.
Well, earnings have been terrific."
Q: OKAY. WE'LL GRANT, TOO, THAT THERE'S MORE DEAL ACTIVITY, AS YOU
PREDICTED.
GABELLI: My prescription for 1995 was that we were going to have a deal a
day; that the phenomenon was going to be global and focused; that certain
companies would buy other companies to gain distribution or product
niches. I also pointed to Jack Welch and Kemper as the beginning of the
third wave of takeovers, in which hostile deals would become increasingly
common. And you saw, just in the last three months - what's that company?
- IBM launched a hostile bid for a company they wanted. And
Ingersoll-Rand, which is a really sleepy company that you would never
dream would do a hostile, took over Clark Equipment. You also saw it with
International Paper trying to overbid a Swiss paper company, taking it to
court. What I did not get right was the level of interest rates. I felt
rates wouldn't back off from 8% - and they've had one of the bigger
rallies in the last six months.
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Q: SO NOW WHAT?
GABELLI: Going forward, I see earnings continuing to be quite good.
However - and this is important - the Street is starting to up their
expectations, so you're going to start seeing some disappointments. And
when you see disappointments, you're going to see some air pockets in
stocks. For example, in the last couple of days consumer related companies
like Sunbeam and Ethan Allen got absolutely blasted in the market. Certain
niches in the health care area, where they've had earnings
disappointments, are other examples. So the earnings front could be
terrific over the next 12 months, but if the Street is starting to
discount a lot, what turns out to be just a good quarter is going to look
lousy.
On the interest-rate front I'll try again: at 6.5%, rates are not going to
go down from here.
Q: WHY NOT?
GABELLI: I'm looking at cyclical inflation at 3.6%. In addition, I see a
couple of things, like the LDCs' huge need for capital. Since they have a
higher return, they can pay more for debt. So you have an embedded
structural demand for capital in emerging countries that probably will
keep real rates of return higher than they have historically been.
Therefore, on balance, the things that have lifted the market are not
there anymore.
Q: BUT - DON'T TELL US - INDIVIDUAL STOCKS ARE ANOTHER MATTER FOR A SAVVY
STOCK PICKER LIKE YOU.
GABELLI: How did you guess? Individual stocks are going to do quite well
in their sectors. In the takeover game, even you can identify some fairly
obvious trends.
Q: WHY NOT JUST TELL US ABOUT THEM?
GABELLI: There are the broadcasters, the banks, the brokers - you can take
a triple-B approach. The broadcasters, because of changes in regulations.
I identified this back in January and they have done spectacularly well.
The brokers, because Glass-Steagall is going to be changed, as we also
discussed at the Roundtable. We've already seen the Germans going into
Britain and buying Kleinwort; the Dresdner Bank did the deal. You're going
to see, if Glass-Steagall is changed, that it rings a big bell for banks
to get into the brokerage business. Then there are the banks themselves.
Every day, you're seeing a bank deal in the headlines. Those 8,000 banks -
or whatever the number is - are going to be consolidated.
At the same time, people want industrial companies in America. You
continue to have restructurings, ITT being the most visible. In that
particular case, it's happening because Rand Araskog was a real Latin
scholar and remembers "Gallia est omnis divisa in partes tres," except
that he thought it was "ITT est omnis divisa in partes tres" [ITT's parts
are worth more than the whole].
My conclusion is that over the next six months, the next twelve months,
you're going to have some fairly strong stocks.
Q: WHICH, IS THE QUESTION.
GABELLI: I just got back from a quick trip abroad - six countries in six
days or something. Being in Kuwait and driving to the border there, I got
the feeling I wouldn't want to play golf on the border
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because I slice. Being in Jerusalem, one hopes there is peace and a great
deal of opportunity. Being in Italy, which is about 30 minutes by F16 to
Bosnia, you worry about those pockets of conflict. But I was also in Paris
and stopped off at the Paris Air Show, where I saw some other dynamics.
Q: SURE, AERODYNAMICS.
GABELLI: Those too! But one of the dynamics that is very clear to me, and
which I talked about at the Roundtable, is that there are three billion
new consumers out there. You have them in China. You have them in India.
The 5% of the population in India that's middle-class is bigger than the
population of Italy. It's almost as big as the population of Germany. And
they are going to travel. I was on enough airplanes to make me sensitive
to the age of those machines.
Q: THERE MUST BE AN INVESTMENT IDEA IN HERE SOMEWHERE?
GABELLI: Boeing has an advantage, from a currency point of view, and
because of its technology position. Also, because an aging fleet needs to
be replaced. And from the point of view that the growth in these emerging
markets is consumer-driven. So Boeing - and vendors to Boeing - are going
to be quite attractive over the next two or three years. I like a bunch of
companies in the Boeing-vendor category. One might argue that I should
just buy Boeing at $64 or buy Honeywell, which makes some advanced
avionics for it, at $42 - and I'm kind of orienting my thinking in that
fashion. But the ones that I'm particularly fond of - and I have ridden
them up and down - are the nuts and bolts makers.
Q: CAN YOU BE A TAD MORE SPECIFIC?
GABELLI: There's a company called SPS Technologies, with 5.5 million
shares outstanding and a new management. The stock is at $37. Earnings
this year should be $2.35 - $2.50, and they are going to march right up to
$5 by 1998. Management will make some acquisitions on top of that, so
you're talking about $7 - $8 of earnings. The stock is going to sell at a
materially higher price. Hi-Shear is a company that sells at $7 and has
six million shares outstanding. It's a small cap, but it's breaking even
at the bottom of its cycle and - as soon as Boeing starts shipping more -
they're going to get better orders.
Then, you have some bigger companies like Crane, which has 30 million
shares on the New York Stock Exchange and trades at $36. They earned $1.85
in `94; they're going to do $2.40 this year. Earnings are going to march
right up to $3.50 - $5.00 by the year 2000. In the Boeing category, they
make things like anti-skid brakes, so the planes stop when you want them
to. They make pumps. And they've bought a couple of other small suppliers
to Boeing, so they have a package there. We are also very fond of another
company, called Ametek, on the New York Stock Exchange. It has about 34
million shares outstanding. The stock is at $17. They are going to do
$1.35 this year, which marches steadily up to about three bucks in the
year 2000. We're a major shareholder. They've been buying back the stock.
They're very shareholder-sensitive, they're cash-generators. And the only
part of Ametek's business that's been limping is this aerospace part,
where they do precision instruments, fluid gauges and so on.
Then we like a company called Curtiss-Wright. I've liked it for a long
time.
Q: NO KIDDING!
GABELLI: I know, I've been on it for 10 years. Eventually, like a stopped
clock, I'll be right. They've got close to $100 million, or $20 a share,
in cash. And they make things like wing-flap
4
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actuators and they are getting orders on the new Boeings. Right now there
is an air pocket in earnings. But the stock has drifted up with the
market.
Another is Kollmorgen, which makes certain types of motors. It's a $7
stock, 10 million shares. This year, they'll have earnings of about 50
cents a share, with its price marching up to close to $32 by the year
2000. At $7, I figure this is what my good buddy, Peter, would call a
"four-bagger." They're starting to get their act together.
Q: KOLLMORGEN ISN'T EXACTLY A PURE PLAY ON BOEING?
GABELLI: No, whereas SPS and Hi-Shear are. With Ametek, it's cyclically
depressed; roughly one-third of their business. But Boeing and its vendors
are such an obvious play in terms of the airline stocks doing better,
which obviously improves their ability to finance new planes. And it's not
only U.S.-oriented - Boeing is very much in the global market. My last
name in that sector is Sequa. They make jet-engine parts and their
Chromalloy division makes parts that have to go into airplanes every time
they're periodically overhauled. The stock is at $31 and they can do about
$3.50 a share, looking out to `97-'98. They've made a series of blunders
that cost the shareholders a bundle. But, hopefully, they'll just wait for
the cycle to catch up now.
Q: WHAT ELSE ARE YOU DOING?
GABELLI: Another area is telephones. In Kuwait, the phone service was
fabulous. In Jerusalem, it was terrific. Every day, around the world, long
distance rates are coming down and demand is growing double-digits, both
for voice and data. So I like the long-distance companies. I like AT&T and
I like Sprint.
Q: NOW YOU LIKE SPRINT?
GABELLI: Sprint I like, not because the management has great vision, and
not because they are doing a joint venture with Deutsche Telekom and
France Telecom. But I like what they're doing with the cable companies -
using the cable structure, both marketing and distribution, to gain access
to customers. They are positioning themselves to be a global brand-name
factor in local telephony. So at $34 I like Sprint, even though I have had
some difficulties with management's vision in the past - or lack thereof.
Q: IS THAT IT, MARIO?
GABELLI: Are you kidding? In the global game, you have things like music,
that travel well. I'm sure Batman Forever will do quite well in the global
interactive-couch potato game. So I'm still recommending stocks like Time
Warner and Viacom. Entertainment is terrific. When I was driving from the
airport in Kuwait, every house had a dish on it. In India they've gone
from 500,000 to 16 million satellite dishes. In Iran, they have them - and
they're not supposed to. In Indonesia they are growing. Other things that
travel well are CNN, Turner Broadcasting and News Corp. And Disney
cartoons - everybody I talked to wants a cartoon channel.
Q: THAT SAYS SOMETHING.
GABELLI: I also like other companies in the global media area. I talked
about Seagram in January. Essentially, they sold plastics, contrary to the
advice in The Graduate and got into filmed entertainment. Seagram is
probably going to figure out a way to get a network distributor; they'll
buy a CBS at some point, even though the price is a little rich here.
5
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Another we're participating in is American Brands which I also mentioned at the
Roundtable. They are in the golf business. There are 14,500 golf courses that
are growing at 5%. More people are playing. People want to travel but they'd all
travel to places where there's a golf course. This company has the Foot-Joy and
Titleist brands. Unfortunately, they'll make the mistake of trying to buy
Callaway Golf. They are better off aggressively buying back their own stock. But
on the other side, they'll probably follow the path of ITT. They'll split the
company up into three: their consumer brands, their global tobacco business in
the U.K. and their liquids business, which is primarily alcohol.
Q: WHAT IS IT WORTH?
GABELLI: The company is worth about $65, if they do nothing but continue to buy
back their stock and not do silly things like buy Callaway, even though it's
synergistic. But even if they do, the stock has a value of $100 by the year 2000
- - and it's selling at $38 with a fat dividend. Now, they have a high propensity
to do something dumb, but if they do, they'll become the target of a hostile
takeover. And investors like me are going to support that. The management has
been told they should really be aggressively doing smart things like buying back
the stock or restructuring, not making investment bankers rich by doing deals
they bring to them.
Q: TOO BAD YOU NEVER SPEAK YOUR MIND.
GABELLI: Another idea that's right in front of my nose is that cigars are back.
Premium cigars are back in particular, and there is only one publicly-held cigar
company in the U.S., Culbro. Culbro imports cigars. Pre-Castros are in, Castros
are in and post-Castros are going to be in. So the stock is selling around $28.
The stock spiked five or ten points because they announced a deal with a Spanish
tobacco company. But my point is that, even if the deal breaks, demand for
premium cigars is one of the great little growth industries. Everybody is
smoking. I'm just trying to figure out where.
Q: ON THE TRUMAN BALCONY! BUT GO ON.
GABELLI: In the restructuring camp, I also like an old favorite, which I own a
lot of, Hilton. They put the company up for auction. They got a lot of bidders,
but not for the whole company. That may also have been the case with Multimedia,
which I recommended in January and still like. They are going to split Hilton in
two. And when somebody sits down and calculates the present value of the parts,
it'll be interesting. So I like Hilton at $67. The spin-offs, in hotels and in
gaming, are going to find their own respective suitors. Finally, going back to
another old idea, regulatory change coming out of the Telecommunications
Deregulation Act of 1995 or 1996 will allow broadcasters to be basically
non-controlled. Cable will be able to get into telephone; telephones will be
able to get into cable. We're going to see a lot of mergers and acquisitions. On
my list of transaction-driven companies are all the small ones: Media General,
Multimedia, Outlet Communications, Citicasters and a bunch of radio operators.
BARRON'S: THANKS, MARIO.
6
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WHAT WE DO
We do what is described as bottom up research: we read annual reports; we
visit the competition; we talk to customers; we go belly to belly with
management. We structure our portfolio by picking stocks.
In past reports, we have tried to articulate our investment philosophy and
methodology. The following graphic further illustrates the interplay among the
four components of our valuation approach.
Our focus is on free cash flow; earnings before interest, taxes,
depreciation and amortization (EBITDA) minus the capital expenditures necessary
to grow the business. We believe free cash flow is the best barometer of a
business' value. Rising free cash flow often foreshadows net earnings
improvement. We also look at earnings per share trends. Unlike Wall Street's
ubiquitous earnings momentum players, we do not try to forecast earnings with
accounting precision and then trade stocks based on quarterly expectations and
realities. We simply try to position ourselves in front of long-term earnings
uptrends. In addition, we analyze on and off balance sheet assets and
liabilities such as plant and equipment, inventories, receivables, and legal,
environmental and health care issues. We want to know everything and anything
that will add to or detract from our private market value estimates. Finally, we
look for a catalyst; something happening in the company's industry or indigenous
to the company itself that will surface value. In the case of the independent
telephone stocks, the catalyst is a regulatory change. In the agricultural
equipment business, it is the increasing worldwide demand for American food and
feed crops. In other instances, it may be a change in management, sale or
spin-off of a division or the development of a profitable new business.
Once we identify stocks that qualify as fundamental and conceptual
bargains, we then become patient investors. This has been a proven long-term
method for preserving and enhancing wealth in the U.S. equities market. At the
margin, our new investments are focused on businesses that are well managed and
will benefit from sustainable long-term economic dynamics. These include macro
trends, such as globalization of the market in filmed entertainment and
telecommunications, and micro trends, such as increased focus on productivity
enhancing goods and services.
[FIGURE]
OUR APPROACH
The Fund is a non-diversified mutual fund which invests in a concentrated
portfolio of equity securities believed to have favorable EBITDA prospects. This
strategy allows the Fund to make larger commitments in industries or companies
which we believe offer dynamic growth opportunities than is possible with a more
diversified portfolio. Consistent with this approach, the top ten holdings of
the Fund represented nearly 53% of the portfolio at June 30, 1995.
LET'S TALK STOCKS
The following are stock specifics on selected holdings of our Fund's
investments. Favorable EBITDA prospects do not necessarily translate into higher
stock prices, but they do express a positive trend which we believe will develop
over time.
American Brands, Inc. (AMB - $39.75 - NYSE), based in Old Greenwich,
Connecticut, is a holding company for five separate business units:
international tobacco (Gallaher, the largest tobacco company in the United
Kingdom), distilled spirits (Jim Beam bourbon), hardware (Moen faucets), office
products
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(Acco) and golf products (Titleist and Pinnacle golf balls). All are
strong cash flow generators and are leaders in their respective fields. A new
management team is transforming American Brands into a focused consumer products
company. The company's shares trade at more than a 30% discount from its
estimated 1995 PMV, which we expect to increase to $100 per share by the year
2000.
American Express Company (AXP - $35.125 - NYSE), founded in 1850, is a
diversified travel and financial services company operating in 160 countries
around the world. The company is best known for its American Express card. Less
well recognized are its other important 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 1994
Harvey Golub, Chairman and CEO, continued his program of refocusing AXP on its
core charge card and travel services businesses by spinning off Lehman Brothers
Holdings Inc. We look for earnings growth at double digit rates over the balance
of this decade.
Chris-Craft Industries, Inc. (CCN - $35.00 - NYSE) is primarily engaged in
television broadcasting through its roughly 70% ownership of BHC Communications,
Inc. (BHC - $80.375 - ASE). BHC owns and operates independent TV stations in Los
Angeles (KCOP) and Portland, Oregon (KPTV). BHC also controls 50% of United
Television, Inc. (UTVI - $71.00 - 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 called United Paramount Television Network (UPN).
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. CCNis the eighth-largest TVstation group owner in the U.S., covering
almost 20% of TV households.
General Electric Company (GE - $56.375 - NYSE) is one of the largest and most
diversified industrial companies in the world, having an equity market valuation
of $100 billion. Operating segments include aircraft engines, appliances,
broadcasting (NBC), industrial products like lighting and locomotives, plastic
materials and power generating turbines and a hugely successful financial
services business. Under Jack Welch's prodding, GE has recorded a series of
impressive earnings gains.
Hilton Hotels Corporation (HLT - $70.25 - 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
(LADGY - $2.6875 - NASDAQ). 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's board has approved a plan to spin off the company's gaming
operations. The share-for-share, tax-free transaction is expected to be
completed early next year.
Media General, Inc. (MEG'A - $30.50 - ASE), our largest holding, representing
close to 15% of the Fund, is a Richmond, VA-based company publishing daily
newspapers in Richmond, VA, Tampa, FL, and Winston-Salem, NC. Media General owns
three network TV stations in Tampa, Charleston, SC, and Jacksonville, FL, and a
cable television franchise in Fairfax County, VA. With a recovery in the
operations and values of media properties, the successful defense of the
Richmond franchise from encroachment by the Washington Post, and a pickup in
transactions in the cable arena, this company is poised for a significant
rebound.
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Tele-Communications, Inc. (TCOMA - $23.4375 - NASDAQ) is the largest cable
television multiple system operator (MSO) in the U.S., serving some 12 million
subscribers. Regulation historically has driven the outlook for cable stocks.
With a deregulation-minded Congress in place, the outlook is once again
improving. (Proposed legislation which provides for reduced rate regulation and
higher cross ownership of cable television systems represents a significant,
favorable catalyst for cable. We are tracking this process closely.) TCI is
well-positioned for the future. Last year in association with Comcast
Corporation (CMCSA - $18.1875 - NASDAQ) and Cox Communications Inc. (COX -
$19.375 - NYSE), TCI established a joint venture and strategic alliance with
Sprint Corporation (FON - $33.625 - NYSE) to provide both wired and wireless
telephone services in competition with the local telephone industry, utilizing
TCI's cable infrastructure and Sprint's well-recognized national brand name. The
joint venture is one of the largest bidders for new PCS spectrum and looks to
emerge as one of the best-positioned competitors to the cellular telephone
duopoly. TCI has recently announced various financial restructuring moves which
we expect will benefit the price of the stock this year.
Time Warner Inc. (TWX - $41.125 - 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. Its most
recent summer blockbuster, Batman Forever, grossed $150 million in its first few
weeks in theaters. 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. Under the aegis of Gerald M. Levin,
investors can expect significant returns.
Viacom Inc. (VIA - $46.50 - ASE; VIA'B - $46.375 - 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.
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 is available through many brokerage
firms, as well as directly through Gabelli & Company.
GABELLI U.S. TREASURY MONEY MARKET FUND
Shareholders in 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 privileges. The Fund's expenses are
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.
9
<PAGE>
IN CONCLUSION
The first half of 1995 has been terrific for equity investors. We believe
the market will prove to be a sterner test in the second half, with stock
selection more critical to success.
As always, we have reservations regarding the broad market. At current
levels, investors have made a big bet that the economy will slow down without
stalling and that inflation and interest rates will remain low. If reality does
not conform with expectations, stocks could hit an air pocket.
Regardless of what Mr. Market has in store for us over the balance of the
year, we believe our portfolio offers excellent fundamental long-term value. We
remain confident that if we buy good businesses at opportunistic prices, we will
enhance the value of the assets you have entrusted to us.
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.
Sincerely,
/s/ MARIO J. GABELLI
MARIO J. GABELLI, CFA
President and
July 17, 1995 Chief Investment Officer
TOP TEN HOLDINGS
JUNE 30, 1995
<TABLE>
<CAPTION>
<S> <C>
Media General, Inc. General Electric Company
Chris-Craft Industries, Inc. Multimedia, Inc.
Tele-Communications, Inc. American Brands, Inc.
Hilton Hotels Corporation Time Warner Inc.
American Express Company Viacom Inc.
</TABLE>
10
<PAGE>
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ----------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS--95.8%
CABLE--23.5%
150,000 Home Shopping
Network, Inc.+...... $ 1,208,288 $ 1,275,000
2,245,000 Media General, Inc.,
Class A............. 50,104,679 68,472,500
425,700 Multimedia, Inc.,
New+................ 14,553,116 16,495,875
980,000 Tele-Communications,
Inc., Class A+...... 13,861,028 22,968,750
------------ ------------
79,727,111 109,212,125
------------ ------------
CONSUMER PRODUCTS--12.7%
407,600 American Brands,
Inc................. 14,290,456 16,202,100
164,400 Carter-Wallace,
Inc................. 2,326,250 1,870,050
360,000 General Electric
Company............. 18,070,180 20,295,000
150,000 Ralston Purina
Group............... 5,746,908 7,650,000
100,000 Syratech
Corporation+........ 1,767,238 1,837,500
60,000 Tambrands Inc......... 2,371,750 2,565,000
430,000 Whitman Corporation... 3,411,786 8,331,250
------------ ------------
47,984,568 58,750,900
------------ ------------
BROADCASTING--11.3%
146,600 BHC Communications,
Inc., Class A+...... 11,227,380 11,782,975
778,770 Chris-Craft
Industries,
Inc................. 22,125,262 27,256,950
50,000 Grupo Televisa S.A.,
GDR................. 994,875 1,018,750
110,000 Liberty Corporation... 2,631,819 2,997,500
9,000 LIN Television
Corporation+........ 68,458 302,625
100,000 Turner Broadcasting
System, Inc.,
Class A............. 1,540,938 2,000,000
100,000 United Television,
Inc................. 5,845,218 7,100,000
------------ ------------
44,433,950 52,458,800
------------ ------------
TELECOMMUNICATIONS--7.1%
220,000 AT&T Corp............. 11,953,515 11,687,500
200,000 BCE Inc............... 6,948,850 6,425,000
76,000 C-TEC Corporation+.... 1,270,000 1,909,500
28,000 Lincoln
Telecommunications
Company............. 375,125 441,000
<CAPTION>
MARKET
SHARES COST VALUE
- ----------- ------------ ------------
<C> <S> <C> <C>
10,000 Motorola, Inc......... $ 132,223 $ 671,250
20,000 Northern Telecom
Limited............. 769,250 730,000
35,000 Southern New England
Telecommunications
Corporation......... 1,063,482 1,233,750
290,000 Sprint Corporation.... 6,940,773 9,751,250
------------ ------------
29,453,218 32,849,250
------------ ------------
WIRELESS COMMUNICATIONS--6.6%
160,000 AirTouch
Communications
Inc.+............... 3,646,584 4,560,000
435,000 Century Telephone
Enterprises, Inc.... 8,732,336 12,343,125
95,900 LIN Broadcasting
Corporation+........ 9,428,098 12,131,350
40,000 Telephone and Data
Systems, Inc........ 1,517,000 1,455,000
------------ ------------
23,324,018 30,489,475
------------ ------------
HOTELS/CASINOS--6.1%
200,000 Aztar Corporation+.... 692,948 1,850,000
25,000 Circus Circus
Enterprises,
Inc.+............... 658,125 881,250
320,000 Hilton Hotels
Corporation......... 21,223,089 22,480,000
100,000 Mirage Resorts,
Incorporated+....... 1,984,412 3,062,500
------------ ------------
24,558,574 28,273,750
------------ ------------
FINANCIAL SERVICES--6.0%
580,000 American Express
Company............. 13,688,339 20,372,500
230,000 Lehman Brothers
Holdings Inc........ 4,278,572 5,031,250
65,000 Salomon Inc........... 2,814,375 2,608,125
------------ ------------
20,781,286 28,011,875
------------ ------------
INDUSTRIAL EQUIPMENT AND SUPPLIES--5.3%
50,000 Ampco-Pittsburgh
Corporation......... 250,017 456,250
100,000 AptarGroup, Inc....... 920,111 3,212,500
13,000 Brad Ragan, Inc.+..... 256,025 409,500
65,000 Deere & Company....... 3,298,625 5,565,625
135,000 Gerber Scientific,
Inc................. 999,851 2,261,250
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ----------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
INDUSTRIAL EQUIPMENT AND SUPPLIES (CONTINUED)
220,000 Navistar International
Corporation+........ $ 4,462,212 $ 3,327,500
175,000 Pittway Corporation,
Class A............. 1,997,258 8,006,250
28,000 Sequa Corporation,
Class A+............ 863,234 819,000
20,000 Teledyne, Inc......... 360,048 490,000
------------ ------------
13,407,381 24,547,875
------------ ------------
ENTERTAINMENT--4.6%
210,000 Time Warner Inc....... 5,914,270 8,636,250
195,000 Viacom Inc., Class
A+.................. 4,327,240 9,067,500
82,000 Viacom Inc., Class
B+.................. 2,583,000 3,802,750
------------ ------------
12,824,510 21,506,500
------------ ------------
AUTOMOTIVE--2.7%
270,000 General Motors
Corporation......... 11,885,389 12,656,250
------------ ------------
HEALTH CARE--1.7%
315,000 Marion Merrell
Dow Inc. ........... 7,915,301 8,032,500
------------ ------------
BUSINESS SERVICES--1.2%
79,250 Berlitz International,
Inc., New+.......... 1,164,954 1,168,938
10,000 Honeywell, Inc. ...... 437,125 431,250
20,000 LEGENT Corporation+... 872,553 875,000
10,000 Lotus Development
Corporation+........ 618,275 637,500
139,000 Nashua Corporation.... 5,619,723 2,641,000
------------ ------------
8,712,630 5,753,688
------------ ------------
PUBLISHING--1.2%
40,000 McGraw-Hill
Companies, Inc. .... 2,808,788 3,035,000
220,000 Western Publishing
Group, Inc.+........ 3,530,251 2,475,000
------------ ------------
6,339,039 5,510,000
------------ ------------
<CAPTION>
MARKET
SHARES COST VALUE
- ----------- ------------ ------------
<C> <S> <C> <C>
METALS AND MINING--1.2%
75,000 Barrick Gold
Corporation......... $ 2,129,630 $ 1,893,750
60,000 Echo Bay Mines
Ltd. ............... 755,625 540,000
40,000 Homestake Mining
Company............. 868,500 660,000
65,000 Placer Dome Inc. ..... 1,594,613 1,698,125
200,000 Royal Oak Mines
Inc.+............... 802,333 625,000
------------ ------------
6,150,701 5,416,875
------------ ------------
DIVERSIFIED INDUSTRIAL--1.1%
3,900 Brady (W.H.) Co.,
Class A............. 131,820 265,200
48,500 Culbro Corporation+... 827,127 1,600,500
217,500 Katy Industries,
Inc. ............... 1,818,150 1,712,812
54,000 Lamson &
Sessions Co.+....... 271,163 310,500
35,000 Trinity Industries,
Inc. ............... 421,960 1,163,750
------------ ------------
3,470,220 5,052,762
------------ ------------
AUTOMOTIVE: PARTS AND ACCESSORIES--1.1%
90,000 Handy & Harman........ 1,364,600 1,395,000
50,000 Johnson Controls,
Inc................. 1,390,779 2,825,000
50,000 Quaker State
Corporation......... 570,157 750,000
------------ ------------
3,325,536 4,970,000
------------ ------------
ENERGY--0.9%
16,000 Atlantic Richfield
Company............. 1,603,480 1,756,000
30,000 Burlington Resources
Inc. ............... 1,226,301 1,106,250
580,000 Kaneb Services,
Inc.+............... 2,424,826 1,232,500
------------ ------------
5,254,607 4,094,750
------------ ------------
RETAIL--0.6%
82,000 Hartmarx
Corporation+........ 658,010 410,000
153,000 Neiman Marcus Group,
Inc. ............... 2,270,387 2,180,250
------------ ------------
2,928,397 2,590,250
------------ ------------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ----------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
FOOD AND BEVERAGE--0.4%
26,000 Ralcorp
Holdings, Inc.+..... $ 1,149,026 $ 594,750
40,000 Seagram
Company Ltd......... 1,090,750 1,385,000
------------ ------------
2,239,776 1,979,750
------------ ------------
SPECIALITY CHEMICAL--0.4%
70,000 Ferro Corporation..... 1,085,838 1,855,000
------------ ------------
AVIATION: PARTS AND SERVICE--0.1%
34,000 Hudson General
Corporation......... 625,007 690,625
------------ ------------
TOTAL COMMON STOCKS................. 356,427,057 444,703,000
------------ ------------
PREFERRED STOCK--0.0%
INDUSTRIAL EQUIPMENT AND SUPPLIES--0.0%
200 Teledyne, Inc., Series
E, Pfd. ............ 2,022 2,925
------------ ------------
COMMON STOCK WARRANTS AND RIGHTS--0.1%
ENTERTAINMENT--0.1%
159,200 Viacom Inc., Variable
Common Rights,
expires
09/29/1995+......... 167,355 238,800
10,000 Viacom Inc., Class B,
Warrants, expires
06/06/1997+......... 13,125 36,875
------------ ------------
TOTAL COMMON STOCK WARRANTS AND
RIGHTS............................ 180,480 275,675
------------ ------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT COST VALUE
- ----------- ------------ ------------
<C> <S> <C> <C>
CORPORATE BONDS--1.7%
ENTERTAINMENT--1.7%
$6,718,000.. Time Warner Inc.,
Conv. Sub. Deb.,
8.75% due
01/10/2015.......... $ 7,096,103 $ 7,011,913
997,000 Viacom Inc.,
Ex. Sub. Deb.,
8.00% due
07/07/2006.......... 646,804 969,582
------------ ------------
TOTAL CORPORATE BONDS............... 7,742,907 7,981,495
------------ ------------
U.S. TREASURY BILL--1.3%
6,000,000 5.39%++ due
09/07/1995.......... 5,938,913 5,938,913
------------ ------------
REPURCHASE AGREEMENT--1.0%
4,516,000 Agreement with UBS
Securities Inc.,
6.02% due
07/03/1995(a)....... 4,516,000 4,516,000
------------ ------------
TOTAL INVESTMENTS......... 99.9% $374,807,379(b) 463,418,008
===========
OTHER ASSETS AND
LIABILITIES (NET)....... 0.1 355,801
----- ------------
NET ASSETS................ 100.0% $463,773,809
===== ===========
</TABLE>
- ------------------------------
(a) Agreement dated 06/30/1995, to be repurchased at $4,518,266, collateralized
by $4,330,000 U.S. Treasury Bonds, 7.75% due 12/31/1999 (value $4,606,254).
(b) Aggregate cost for Federal tax purposes was $375,013,452. Net unrealized
appreciation for Federal tax purposes was $88,404,556 (gross unrealized
appreciation was $98,592,584 and gross unrealized depreciation was
$10,188,028).
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
GDR--Global Depositary Receipt
See Notes to Financial Statements.
13
<PAGE>
THE GABELLI VALUE FUND INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995 (UNAUDITED)
- -------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
- -------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost $374,807,379)...... $463,418,008
Cash........................................... 8,368
Receivable for investments sold................ 2,851,644
Dividends and interest receivable.............. 837,305
Receivable for Fund shares sold................ 72,420
Other receivables.............................. 12,623
----------
Total Assets................................. 467,200,368
----------
LIABILITIES:
Payable for investments purchased.............. 2,376,609
Payable for investment advisory fee............ 382,125
Payable for Fund shares redeemed............... 319,196
Payable for distribution fees.................. 35,964
Accrued Directors' fees........................ 23,500
Accrued expenses and other payables............ 289,165
----------
Total Liabilities............................ 3,426,559
----------
Net assets applicable to 39,481,196 shares of
common stock outstanding................... $463,773,809
==========
NET ASSETS CONSIST OF:
Shares of common stock at par value............ $ 39,481
Additional paid-in capital..................... 360,468,851
Accumulated net realized gain on investments... 13,173,934
Undistributed net investment income............ 1,480,914
Net unrealized appreciation of investments..... 88,610,629
----------
Total Net Assets............................. $463,773,809
==========
Net Asset Value and redemption price per share
($463,773,809 / 39,481,196 shares out-
standing; 300,000,000 shares authorized of
$0.001 par value).......................... $11.75
-----
-----
Maximum offering price per share
($11.75 / .945, based on maximum sales
charge of 5.5% of the offering price at
June 30, 1995)............................. $12.43
-----
-----
INVESTMENT INCOME:
Dividend income (net of foreign withholding
taxes of $37,550)............................. $ 3,378,688
Interest income................................. 1,514,023
----------
Total Investment Income....................... 4,892,711
----------
EXPENSES:
Investment advisory fee......................... 2,267,134
Distribution fees............................... 566,784
Transfer agent fees............................. 299,587
Directors' fees................................. 54,612
Legal and audit fees............................ 20,475
Other........................................... 198,928
----------
Total Expenses................................ 3,407,520
----------
NET INVESTMENT INCOME............................. 1,485,191
----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS:
Net realized gain on investments sold........... 15,266,541
Net realized loss on futures transactions....... (322,155)
----------
Net realized gain on investments............ 14,944,386
----------
Net unrealized appreciation of investments:
Beginning of period........................... 53,719,877
End of period................................. 88,610,629
----------
Change in net unrealized appreciation of
investments............................... 34,890,752
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS... 49,835,138
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... $51,320,329
==========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED 6/30/95 ENDED
(UNAUDITED) 12/31/94
------------- ------------
<S> <C> <C>
Net investment income............................................................................. $ 1,485,191 $ 3,351,716
Net realized gain on investments.................................................................. 14,944,386 55,349,863
Net change in unrealized appreciation of investments.............................................. 34,890,752 (59,398,869)
------------ ------------
Net increase/(decrease) in net assets resulting from operations................................... 51,320,329 (697,290)
Distributions to shareholders from:
Net investment income........................................................................... -- (3,351,716)
Distributions in excess of net investment income................................................ -- (4,277)
Net realized gain on investments................................................................ -- (55,458,014)
Distributions in excess of net realized gain on investments..................................... -- (192,460)
Net increase/(decrease) in net assets from Fund share transactions................................ (24,175,517 ) 5,139,564
------------ ------------
Net increase/(decrease) in net assets............................................................. 27,144,812 (54,564,193)
NET ASSETS:
Beginning of period............................................................................... 436,628,997 491,193,190
------------ ------------
End of period (including undistributed net investment income of $1,480,914 at June 30, 1995)...... $463,773,809 $436,628,997
============ ============
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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.
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. U.S. government securities and other debt instruments that mature in
60 days or fewer are valued at amortized cost, unless the Board of Directors
determines that such valuation does not constitute fair value. Debt instruments
having a greater maturity are valued at the highest bid price obtained from a
dealer maintaining an active market in those securities or on the basis of
prices obtained from a pricing service approved as reliable by the Board of
Directors.
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.
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
15
<PAGE>
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
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.
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.
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.
2. AGREEMENTS WITH AFFILIATED PARTIES. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which 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. In accordance with the Advisory Agreement, the Adviser manages the
Fund's portfolio, makes investment decisions for the Fund, places orders to
purchase and sell securities of the Fund, and oversees the administration of all
aspects of the Fund's business and affairs. The Adviser is obligated to
reimburse the Fund in the event the Fund's expenses exceed the most restrictive
expense ratio limitation imposed by any state. No such reimbursement was
required during the year ended December 31, 1994 or the six months ended June
30, 1995.
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. For the
16
<PAGE>
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
six months ended June 30, 1995, the Fund incurred distribution costs under the
Plan of $566,784, representing 0.25 percent of the value of the Fund's average
daily net assets.
4. PORTFOLIO SECURITIES. Cost of purchases and proceeds from sales of
securities for the six months ended June 30, 1995, other than U.S. government
and short-term securities, aggregated $120,100,909 and $154,317,589,
respectively.
5. TRANSACTIONS WITH AFFILIATES. During the six months ended June 30, 1995, the
Fund paid brokerage commissions of $39,995 to Gabelli & Company and its
affiliates. For the six months ended June 30, 1995, Gabelli & Company informed
the Fund that it received $85,698 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>
SIX MONTHS ENDED YEAR ENDED
6/30/95 12/31/94
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold.......................................... 607,183 $ 6,869,803 1,403,794 $ 16,737,922
Shares issued upon reinvestment of dividends......... -- -- 4,854,034 51,002,186
Shares redeemed...................................... (2,750,853) (31,045,320) (5,257,189) (62,600,544)
---------- ------------ ---------- ------------
Net increase/(decrease).............................. (2,143,670) $(24,175,517) 1,000,639 $ 5,139,564
========== ============ ========== ============
</TABLE>
17
<PAGE>
THE GABELLI VALUE FUND INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Per share amounts for a Fund share outstanding throughout each period.
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED DECEMBER 31,
6/30/95 ---------------------------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991(A) 1990 1989*
---------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of
period.......................... $ 10.49 $ 12.09 $ 10.13 $ 9.48 $ 8.51 $ 9.58 $ 9.45
-------- -------- -------- -------- -------- -------- ----------
Net investment income............. 0.04 0.09 0.05 0.09 0.13 0.45 0.16
Net realized and unrealized
gain/(loss) on investments...... 1.22 (0.09) 3.95 1.11 1.17 (0.98) 0.04
-------- -------- -------- -------- -------- -------- ----------
Total from investment
operations...................... 1.26 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 period.... $ 11.75 $ 10.49 $ 12.09 $ 10.13 $ 9.48 $ 8.51 $ 9.58
======== ======== ======== ======== ======== ======== ==========
Total return**.................... 12.0% 0.0% 39.4% 12.7% 15.3% (5.6)% 2.1%
======== ======== ======== ======== ======== ======== ==========
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period
(in 000's)...................... $463,774 $436,629 $491,193 $423,381 $574,676 $850,685 $1,126,146
Ratio of net investment income
to average
net assets.................... 0.66%+ 0.73% 0.38% 0.75% 1.43% 4.45% 6.06%+
Ratio of operating expenses to
average
net assets.................... 1.50%+ 1.50% 1.53% 1.52% 1.45% 1.39% 1.48%+
Portfolio turnover rate........... 26.8% 66.6% 21.4% 0.1% 16.2% 58.6% 73.3%
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* The Fund commenced operations on September 29, 1989.
** Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the period
and sold at the end of the period including reinvestment of dividends 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>
18
<PAGE>
GABELLI FAMILY OF FUNDS
Distributed by Gabelli & Company, Inc.
One Corporate Center, Rye, NY 10580-1435
GABELLI ASSET FUND ____________________________________________________________
Invests in a diversified portfolio of companies selling below their private
market value. The Fund's primary objective is to seek growth of capital.
(No-load)
Portfolio Manager: Mario J. Gabelli, CFA
GABELLI GROWTH FUND ___________________________________________________________
Invests in a diversified portfolio of common stocks that have favorable, yet
undervalued, prospects for earnings growth. The Fund's primary objective is to
seek capital appreciation by employing an earnings-driven investment approach.
(No-load)
Portfolio Manager: Howard F. Ward, CFA
GABELLI VALUE FUND _____________________________________________________________
Invests in a concentrated portfolio of securities of companies which are selling
below their private market value. The Fund's primary objective is long-term
capital appreciation. $250 initial minimum for IRAs.
Portfolio Manager: Mario J. Gabelli, CFA
Max. Sales charge: 5 1/2%
GABELLI SMALL CAP GROWTH FUND __________________________________________________
Invests primarily in equity securities of smaller companies (companies with a
total market capitalization of less than $500 million) which are believed likely
to have rapid growth in revenues and earnings. The Fund's primary objective is
to seek capital appreciation.
Portfolio Manager: Mario J. Gabelli, CFA
Max. Sales charge: 4 1/2%
GABELLI EQUITY INCOME FUND _____________________________________________________
Invests primarily in a portfolio of income producing equity securities. Pays
quarterly dividends. The Fund's primary objective is to seek a high level of
total return.
Portfolio Manager: Mario J. Gabelli, CFA
Max. Sales charge: 4 1/2%
GABELLI'S WESTWOOD FUNDS _______________________________________________________
Three investment portfolios, designed to pursue a variety of investment
objectives:
Westwood Equity Fund seeks capital appreciation,
Westwood Balanced Fund seeks income and growth, and
Westwood Intermediate Bond Fund seeks current income.
(No-load)
Portfolio Managers: Susan Byrne & Pat Fraze
GABELLI U.S. TREASURY MONEY MARKET FUND ________________________________________
Invests exclusively in short-term U.S. Treasury securities. The Fund's primary
objective is to provide high current income consistent with the preservation of
principal and liquidity. Features low expenses, free checkwriting, telephone
exchange and redemption privileges. Portfolio Manager: Ronald Eaker
GABELLI GLOBAL SERIES __________________________________________________________
GABELLI GLOBAL TELECOMMUNICATIONS FUND
Invests in telecommunications companies throughout the world. Targets
undervalued companies with strong earnings per share and cash flow dynamics.
The Fund's primary objective is to seek capital appreciation. (No-load)
Team Manager: Mario J. Gabelli, CFA
GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
Invests principally in bonds and preferred stocks which are convertible into
common stock of foreign and domestic companies. The Fund's primary
objective is to seek a high level of total return through a combination of
current income and capital appreciation. (No-load)
Portfolio Manager: Hart Woodson
GABELLI GLOBAL INTERACTIVE COUCH POTATO(TM)(C) FUND
Invests in companies involved in communications, creativity and copyright
throughout the world. The Fund will also invest in companies participating
in emerging technological advances in interactive services and products. The
Fund's primary objective is to seek capital appreciation. (No-load)
Portfolio Manager: Mario J. Gabelli, CFA
GABELLI GOLD FUND ______________________________________________________________
Invests in a global portfolio of equity securities of gold mining and related
companies. The Fund's primary objective is to seek capital appreciation.
Investment in gold stocks is considered speculative and is affected by a variety
of worldwide economic, financial and political factors. (No-load)
Portfolio Manager: Caesar Bryan
GABELLI INTERNATIONAL GROWTH FUND ______________________________________________
Invests in a diversified portfolio of equity securities of companies outside of
the U.S. Seeks to achieve international diversification and capital
appreciation, and to serve as a complement to a domestic investment portfolio.
(No-load)
Portfolio Manager: Caesar Bryan
The five funds above invest in foreign securities which involves risks not
ordinarily associated with investments in domestic issues, including currency
fluctuation, economic and political risks.
To request a prospectus, call
1-800-GABELLI (1-800-422-3554)
Or, visit our Internet homepage at:
HTTP:/WWW.GABELLI.COM/GABELLI
The prospectus(es) contain more complete information, including fees and
expenses, and should be read carefully prior to investing.
<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.)
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<S> <C>
BOARD OF DIRECTORS
Mario J. Gabelli, CFA Robert J. Morrissey
Chairman 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 Professor, Pace University
Bank
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
James E. McKee
Secretary
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CUSTODIAN
Boston Safe Deposit and Trust Company
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Willkie Farr & Gallagher
UNDERWRITER
Gabelli & Company, Inc.
- -------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
Gabelli Value Fund Inc. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
- -------------------------------------------------------------
LOGO
THE
GABELLI
VALUE
FUND
INC.
SEMI-ANNUAL REPORT
JUNE 30, 1995