GABELLI VALUE FUND INC, N-30B-2, 1998-08-27

GABELLI VALUE FUND INC
N-30B-2, 1998-08-27

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<PAGE>

THE GABELLI VALUE FUND
One Corporate Center
Rye, New York 10580-1434
SEMI-ANNUAL REPORT
JUNE 30, 1998

* * * *

Morningstar rated Gabelli Value Fund 4 Stars overall and for the five
year period Ended 6/30/98 among 2545 and 1462 domestic equity funds,
respectively. The Fund Received 3 stars for the three year period
ended 6/30/98 among 2545 domestic equity funds.

TO OUR SHAREHOLDERS,

In the second quarter of 1998, there was a continuation of the best of
times for large cap stocks and the worst of times for small cap stocks. During
the quarter, the large cap market, as measured by the Standard & Poor's 500
Index, rose by 3.3% while small cap stocks, as measured by the Russell 2000
Index, declined by 4.7%. U.S. government bonds rallied in a classic global
"flight to quality", with the yield on the 30 year U.S. Treasury Bond falling to
5.57% in mid-June.

Be reminded, The Gabelli Value Fund is a focused investment vehicle rooted
in the Graham & Dodd style of value investing. Ten stocks will generally
represent 50% of the portfolio. The performance of concentrated portfolios like
ours will generally be impacted more fully by our relative success in picking
stocks.

INVESTMENT PERFORMANCE

For the second quarter ended June 30, 1998, The Gabelli Value Fund's (the
"Fund") total return was 3.1%. The Standard & Poor's ("S&P") 500 had a return of
3.3% while the Value Line Composite and Russell 2000 Index declined 3.0% and
4.7%, respectively, over the same period. Each index is an unmanaged indicator
of stock market performance. Over the trailing twelve month period, the Fund was
up 43.4%. The S&P 500, Value Line Composite and Russell 2000 rose 30.2%, 20.6%
and 16.5%, respectively, over the same twelve month period.

For the five year period ended June 30, 1998, the Fund's return averaged
22.6% annually, versus average annual returns of 23.1%, 17.6% and 16.1% for the
S&P 500, Value Line Composite and Russell 2000, respectively. Since inception on
September 29, 1989 through June 30, 1998, the Fund had a total return of 308.5%,
which equates to an average annual return of 17.4%.

- --------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Morningstar proprietary
ratings reflect historical risk adjusted performance as of June 30, 1998 and
are subject to change every month. Morningstar ratings are calculated from a
Fund's three, five and ten year average annual returns in excess of 90-day
T-bill returns with appropriate fee adjustments and a risk factor that
reflects fund performance below 90-day T-Bill returns. The top 10% of the
funds in an investment category receive five stars, the next 22.5% receive
four stars and the next 35% receive three stars.

<PAGE>

<TABLE>

INVESTMENT RESULTS (a)
- --------------------------------------------------------------------------------
<CAPTION>

Quarter
-----------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
<S> <C> <C> <C> <C> <C>
1998: Net Asset Value ......... $16.43 $16.94 __ __ __
Total Return ............ 14.9% 3.1% __ __ __
- --------------------------------------------------------------------------------
1997: Net Asset Value ......... $11.63 $14.11 $15.73 $14.30 $14.30
Total Return ............ 1.0% 21.3% 11.5% 8.6% 48.2%
- --------------------------------------------------------------------------------
1996: Net Asset Value ......... $12.88 $13.08 $12.63 $11.52 $11.52
Total Return ............ 10.9% 1.6% (3.4)% 0.0% 8.7%
- --------------------------------------------------------------------------------
1995: Net Asset Value ......... $11.41 $11.75 $12.81 $11.61 $11.61
Total Return ............ 8.8% 3.0% 9.0% 0.3% 22.5%
- --------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Average Annual Returns - June 30, 1998--(a)
-------------------------------------------

<TABLE>
Dividend History
- -----------------------------------------------------------------------------
<CAPTION>
Payment (ex) Date Rate Per Share Reinvestment Price
- ----------------- -------------- ------------------
<S> <C> <C> <C> <C>
December 29, 1997 $2.720 $14.01
December 27, 1996 $1.110 $11.57
December 27, 1995 $1.230 $11.56
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 $0.068 $ 9.58
</TABLE>

(a) Total returns 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.
- --------------------------------------------------------------------------------

<PAGE>

WHAT WE DO

The success of momentum investing in recent years and
investors' desire for instant gratification have combined to
make value investing appear dull. At the risk of being dull, [GRAPHIC]
we will once again describe the "boring" value approach that
has seen us through both good and bad markets over the last
eight years at The Gabelli Value Fund and for over 20 years
at Gabelli Asset Management Company. In past reports, we
have tried to articulate our investment philosophy and
methodology. The accompanying 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 (PMV) 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 the globalization of the market in filmed entertainment and
telecommunications, and micro trends, such as an increased focus on productivity
enhancing goods and services.

COMMENTARY

In compiling our thoughts for this shareholder letter, we looked forward by
looking through the rear view mirror. In the process, we witnessed the testimony
of Federal Reserve Board Chairman Alan Greenspan and we could not say it any
better. To quote Alan...

<PAGE>

"Mr. Chairman And members of the Committee, I Appreciate this opportunity
to present the Federal Reserve's Midyear report on monetary policy.

Overall, the performance of the U.S. economy continues to be impressive.
Over the first part of the year, we experienced further gains in output and
employment, subdued prices, and moderate long-term interest rates. important
crosscurrents, however, have been impacting the economy. With labor markets very
tight and domestic final demand retaining considerable momentum, the risks of a
pickup in inflation remain significant. But inventory investment, which was
quite rapid late last year and early this year, appears to have slowed, perhaps
appreciably. Moreover, the economic and financial troubles in Asian economies
are now demonstrably restraining demands for U.S. goods and services -- and
those troubles could intensify and spread further. Weighting these forces, the
Federal Open Market Committee chose to keep the stance of policy unchanged over
the first half of 1998. However, should pressures on labor resources begin to
show through more impressively in cost increases, policy action may need to
counter any associated tendency for prices to accelerate before it undermines
this extraordinary expansion."

-- Excerpt from the Monetary Policy Testimony and Report to Congress Before
the Subcommittee on Domestic and International Monetary Policy of the Committee
on Banking and Financial Services, U.S. House of Representatives, July 21, 1998.

BEATING UP THE LITTLE GUYS

While investors worry about a substantial correction or even a bear market
for the Dow Jones Industrial Average ("DJIA") and S&P 500, small cap stocks are
already experiencing one. Although as of the end of second quarter 1998, the
Russell 2000 is up modestly, approximately 60% of all Nasdaq listed stocks are
off 20% or more from their 52 week highs. What is wrong with small cap stocks?
In our opinion, nothing. In fact, we believe that small companies operating
primarily in the domestic market are far less vulnerable to Asian economic
problems than the large multinationals. This has not prevented investors from
abandoning small cap stocks to chase large cap stock returns. Is this likely to
change in the foreseeable future? We do not know and in a sense, do not care. We
are patient value investors who count on Mr. Market's mood swings to allow us to
buy quality companies at discount prices. The fact that Mr. Market, perhaps
fueled by the migration of assets into S&P index funds, is mindlessly lavishing
attention on large companies and ignoring more fundamentally attractive smaller
ones, makes it easier for us to pick up small cap stock bargains.

<PAGE>

DEAL ACTIVITY SURFACES VALUE

One component of our investment methodology is to identify industry and
sector trends and themes ahead of the curve and position ourselves to benefit
from these developments. Industry consolidation is one such trend. As we have
discussed in previous letters, the continued strong merger and acquisition
activity is providing a tailwind to the excellent performance of the Fund this
year. The accompanying tables illustrate how deal activity surfaced value in a
small sample of the portfolio holdings.

- --------------------------------------------------------------------------------
<TABLE>

1998 COMPLETED DEALS
<CAPTION>
FUND HOLDING CLOSING DATE % RETURN(a)
------------ ------------ -----------
<S> <C> <C>
Ticketmaster Group Inc. 6/24 24.6%
Lukens Inc. 6/04 12.0
Handy & Harman 4/06 2.2

PERCENTAGE CHANGES THROUGH JUNE 30, 1998 FOR ANNOUNCED DEALS

SECOND YEAR-TO-DATE
CURRENT FUND HOLDINGS QUARTER RETURN(b) RETURN(b)
--------------------- ----------------- ---------
<S> <C> <C>
Cable Michigan Inc. 52.9% 70.5%
Tele-Communications Inc. 23.6 37.6
Echlin Inc. (6.4) 35.6
Southern New England Telecommunications Corp. (9.8) 30.2
Giant Food Inc. 10.9 27.1
Quaker State Corp. (13.0) 15.9
BET Holdings Inc. 3.0 15.2
Ragan (Brad) Inc. 6.3 3.8
</TABLE>
- --------------------------------------------------------------------------------
(a) Represents changes in share price and dividends paid from December 31,
1997 through the closing date.
(b) Represents changes in share price and dividends paid from the beginning
of the period through June 30, 1998. Note: See the Portfolio of Investments for
a complete listing of holdings.
- --------------------------------------------------------------------------------

THE ENVELOPE PLEASE. THE WINNERS ARE...!

Media companies, most notably Seagram, Viacom and News Corp., were
applauded by the market this quarter. Telecommunications franchises such as
Century Telephone Enterprises and Telecom Italia Mobile also did well.
Additionally, broadcasters Grupo Televisa and Gray Communications found the
winners circle. Once again, takeouts such as PolyGram, Giant Food,
Tele-Communications Inc. and Tele-Communications Inc. / Liberty Media Group
buoyed performance.

<PAGE>

AND SOME LOSERS

As might be expected from the potentially negative impact of the Asian
crisis on the manufacturing sector, companies such as Ferro, Barnes Group,
Coltec Industries, Ampco-Pittsburgh and Deere got hit hard this quarter. Deere's
problem is not so much from international competition for its state-of-the-art
farm equipment, but from the impact of weak foreign currencies and economies on
the American farmer. American agricultural exports to Asia and the former Soviet
Union will likely trend down. Competiti on from Latin American agricultural
exporters will heat up. These global dynamics, coupled with the absence of
agricultural price supports, will likely pinch the pockets of American farmers,
who will probably be more reluctant to invest in new Deere equipment. Gambling
stocks such as Mirage Resorts and Circus Circus Enterprises also folded.

Should we have followed momentum investors out of these stocks? That is not
our style. We believe these companies still have strong franchises and very
attractive long term business prospects. We have always been willing to tolerate
poor short term, market related performance from portfolio companies we believe
are positioned to provide superior long term results.

TOO MUCH OF A GOOD THING?

Investors' cool response to the Norwest/Wells Fargo and Citicorp/Travelers
mergers and the government's new found sensitivity to the further consolidation
of American industry has led some market observers to proclaim the end of what
we have termed the third great wave of takeovers.

Upon his widely rumored demise, Mark Twain said, "The reports of my death
are greatly exaggerated". We echo these sentiments in regard to the premature
obituary for deals. We will likely see fewer deals in those industries like
aerospace that have already undergone extensive consolidation. Also, with some
takeover yeast baked into bank stock valuations, future deals may not be at the
kind of premium prices seen in recent years.

But, we believe the "urge to merge" will remain strong in many other
industry groups. We expect to see more mega-deals in the telecommunications
arena as the big hitters jockey for position in this globally deregulated
business. We anticipate more big media deals as the leaders extend their global
franchises. Manufacturing companies are still looking to acquire complimentary
product lines and boost global market shares. Importantly, small companies have
become cheaper making them even more attractive targets at a time when lower
long term capital gains tax rates have made it more profitable for
owner/managers to cash in the chips.

<PAGE>

As for government meddling? We agree with Federal Reserve Board Chairman
Alan Greenspan's recent comments to Congress that deals are a natural part of
the free market process. There is certainly ample evidence worldwide that
consolidation helps energize economies. As we expect the Clinton Administration
learned from the health care debacle, if it isn't broken, there is little
political incentive to try to fix it. While the job dislocation that generally
accompanies consolidation is an issue that lends itself to political football,
with today's strong labor market, we do not think it will evolve into any
government restraints on deals without legitimate antitrust implications.

DIALING UP A BIG DEAL - "MA BELL" IS NOW RIDING MOTORCYCLES

Deregulation and technology have been driving change in the global
telecommunications industry. The need for speed is swiftly changing the "dial
tone" into the "web tone" as the telephone, computer and television converge
into one all purpose interactive information and entertainment instrument.
Convergence has just taken a leap forward with the prospective merger of AT&T
and cable television leader Tele-Communications Inc.

Does the proposed AT&T/TCI combination make sense? We think so. The
transaction gives AT&T the digital platform to compete in the local telephone
business. It also allows them to bundle long distance, local telephony, Internet
access and entertainment programming services on one line, passing approximately
one-third of all U.S. homes.

How will this change the global telecommunications/media landscape? It
opens the door for other long distance companies to break into local telephone
monopolies and perhaps for local telephone operators to further their inroads to
the long distance business. It dramatically increases the value of the cable
television industry's millions of coaxial connections into homes worldwide. It
will push the pace in which telephone infrastructure is upgraded to match
cable's digital and high speed capacity. It puts increasing pressure on every
global telecommunications company to create business combinations that will
allow them to compete with the full range of services that AT&T/TCI would be
capable of delivering. Finally, as additional business combinations are formed,
"content and creativity" providers could continue to be viewed as appetizing
targets.

LET'S TALK STOCKS

The following are stock specifics on selected holdings of our Fund.
Favorable earnings prospects do not necessarily translate into higher stock
prices, but they do express a positive trend which we believe will develop over
time.

<PAGE>

Cablevision Systems Corp. (CVC - $83.50 - ASE), based in Woodbury, NY, owns
and operates cable television systems in 18 states serving 2,844,000 basic
service subscribers at year end 1997. CVC's revenue per subscriber is the
highest in the cable industry. CVC has exercised its option to purchase ITT's
50% stake in MSG (Madison Square Garden) Properties, including the NY Knicks
and NY Rangers. In March, Cablevision purchased Tele-Communications Inc.'s
New York area cable properties with 829,000 subscribers by issuing almost
24.5 million shares (adjusted for the March 30, 1998 two-for-one stock split)
and assuming $670 million of TCI's debt. These shares represent a one-third
stake in CVC. The company's new, vigorous activity includes the sale of a
40% stake in Rainbow Sports to a News Corp./TCI joint venture with the
proceeds used to pay down a significant portion of MSG's debt. With its
upgraded cable systems, CVC is well-positioned to offer telephony, high speed
data and enhanced video services.

Chris-craft Industries Inc. (CCN -
$54.6875 - NYSE), through its 79%
ownership of BHC Communications (BHC - -----------------------------------
$140.3125 - ASE), is primarily a Chris-Craft Industries
television broadcaster. BHC owns and -----------------------------------
operates UPN affiliated stations in New |
York (WWOR), Los Angeles (KCOP) and 79% |
Portland (KPTV). BHC also owns 59% of |
United Television (UTVI - $114.50 - -----------------------------------
Nasdaq), which operates an NBC BHC Communications
affiliate, an ABC affiliate and four UPN -----------------------------------
affiliates. United Television has |
purchased WHSW in Baltimore for $80 59% |
million and has an agreement to purchase |
WRBW, a UPN affiliate in Orlando, for -----------------------------------
$60 million. Chris-Craft's television United Television
stations constitute one of the nation's -----------------------------------
largest television station groups,
reaching approximately 22% of U.S.
households. The Chris-Craft complex is
debt free and strongly positioned to
expand its operations with roughly $1.5
billion in cash and marketable
securities.

Dekalb Genetics Corp. (DKB - $94.625 - NYSE), an agricultural genetics and crop
biotechnology company, develops and sells hybrid seeds and is the second largest
supplier of hybrid seed corn. DeKalb was recently put up for sale by the
founding Roberts family. Monsanto (MTC - $55.875 - NYSE), which already owns 40%
of DeKalb, won the three-month-long auction and is to pay $100 in cash for each
additional share, or $2.3 billion.

Echlin Inc. (ECH - $49.0625 - NYSE), a leading producer of quality automotive
parts, is a worldwide manufacturer of brake, engine, power transmission, and
steering and suspension system products for a wide range of vehicles and
off-road equipment. Two-thirds of Echlin's business is replacement parts
used to repair cars and trucks. These products are sold to a broad base of
aftermarket customers who then supply the parts to professional technicians
and do-it-yourselfers. Dana Corp. (DCN - $53.50 - NYSE) successfully outbid
SPX Corp. (SPW - $64.375 - NYSE) and has acquired the company with Echlin's
shareholders receiving 0.9293 Dana shares for each Echlin share.

<PAGE>

Media General Inc. (MEG'A - $49.25 - ASE) is a Richmond, Virginia-based
communications company, publishing newspapers throughout the Southeast with
daily circulation of 247,000. Media General operates fourteen network
television stations in Southeastern markets, including Tampa, Birmingham and
Jacksonville and two cable television systems in Virginia. The relaxation of
broadcast station ownership restrictions provided by The Telecommunications
Reform Act of 1996 is driving industry consolidation and is increasing the
franchise values of strong, well-positioned media properties such as those
owned by Media General. The company also produces newsprint from recycled
newspapers at its Garden State Paper Co.

Mediaone Group Inc. (UMG - $43.9375 - NYSE), recently split-off from US West
Media Group, is a cable distributor committed to providing multiple services
with an emphasis on high speed transmission. Following the sale of its
investment in Dex and the resale of its wireless operations, MediaOne has a
strong financial position which should allow the company to be one of the
leaders in the upgrading of cable infrastructures.

Navistar International Corp. (NAV - $28.875 - NYSE) is the leading North
American producer of heavy duty trucks, medium duty trucks and school buses.
The company also manufactures mid-range, 175 to 300 horsepower, diesel
engines. NAV has a leading 40% share of the medium duty truck market and 21%
share of the heavy duty truck market. NAV participates in cyclical
industries. With the truck industry rebounding, the company should generate
substantial cash flow, which would not initially be taxed due to its large
(nearly $1.8 billion) tax loss carryforwards. Part of the anticipated
increase in cash flow is likely to be directed to a six year, $650 million
capital spending, development and production program for the company's "next
generation" truck.

Tele-communications Inc. (TCOMA - $38.4375 - NASDAQ), one of the largest
cable TV operators in the U.S., is guided by Dr. John Malone - one of the
most shareholder sensitive managers we have found. Regulation has
historically played an important role in the valuation of cable properties.
Passage of The Telecommunications Reform Act of 1996, combined with the
current deregulatory climate in Congress, is providing a significant catalyst
for cable stocks. TCOMA is a well-positioned industry leader, from its
wireless telephony PCS venture with Sprint, Comcast and Cox Communications to
its innovative Internet access business, dubbed "@Home", and its 80% stake in
Tele-Communications International (TINTA - $20.0938 - Nasdaq). An important
strategic shift for the company is underway as some cable properties are
being sold or transferred to allianced-partners, shifting debt and
strengthening the company's balance sheet. AT&T (T - $57.125 - NYSE)
recently agreed to acquire TCI, offering 0.7757 AT&T shares for each TCOMA
share.

<PAGE>

USA Networks Inc. (USAI - $25.125 - NASDAQ) is a diversified entertainment
and electronic commerce company. Chairman and CEO Barry Diller has brought
together the following assets under one umbrella: the USA Network, the
Sci-Fi Channel, USA Networks Studios, USA Broadcasting, Home Shopping Network
and Ticketmaster. Plans are to integrate these assets, leveraging
programming, production capabilities and electronic commerce across its
strong distribution platform.

Viacom Inc. (VIA - $58.50 - ASE; VIA'B - $58.25 - ASE), long a major provider
of entertainment "content", has evolved into one of the world's dominant
media companies. Following its acquisitions of Paramount Communications and
Blockbuster Entertainment, the company is now divesting non-core assets to
reduce its debt of approximately $10 billion and is focusing on the global
expansion of its media franchises. The company divested its cable systems
subsidiary in a transaction with Tele-Communications Inc. which reduced
Viacom's debt by $1.7 billion and the number of common shares outstanding by
about four percent. Its radio group, Evergreen Media, is being sold for $1.1
billion in cash. Its publishing business, Simon & Schuster, has been put up
for sale. Viacom is well-positioned in music (notably MTV) and cable
networks (such as Nickelodeon).

MINIMUM INITIAL INVESTMENT - $1,000

The Fund's minimum initial investment for both regular and retirement
accounts is $1,000. There are no subsequent investment minimums. No initial
minimum is required for those establishing an Automatic Investment Plan.

THE ROTH IRA

The Taxpayer Relief Act of 1997 included new tax incentives and more
opportunities to save for retirement and other major expenditures. The Roth IRA
is just one of these new opportunities now available at Gabelli Funds. Our
investor representatives are available at 1-800-GABELLI (1-800-422-3554) to
speak with you about establishing a new Roth IRA and to discuss your investment
choices.

INTERNET

You can now visit us on the Internet. Our home page at
http://www.gabelli.com contains information about Gabelli Funds, Inc., the
Gabelli Mutual Funds, IRAs, 401(k)s, quarterly reports, closing prices and other
current news. You can send us e-mail at [email protected].

<PAGE>

IN CONCLUSION

We believe it is still too early to accurately assess the impact of Asian
economic distress on the U.S. economy and corporate earnings. However, Asia's
problems may prolong investment uncertainty and restrain stock prices, perhaps
for the balance of the year. Looking farther ahead, we believe equities will
still provide investors with superior risk adjusted returns relative to other
asset classes and that our value discipline will enable us to provide
satisfactory returns over the long term.

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
business day for further information.

Sincerely,

/s/ Mario J. Gabelli

MARIO J. GABELLI, CFA
Portfolio Manager and
Chief Investment Officer

August 1, 1998

---------------------------------------------------------------
TOP TEN HOLDINGS
JUNE 30, 1998
-------------

Media General Inc. Chris-Craft Industries Inc.
Viacom Inc. Tele-Communications Inc.
Cablevision Systems Corp. USA Networks Inc.
MediaOne Group Inc. DeKalb Genetics Corp.
Navistar International Corp. Echlin Inc.
---------------------------------------------------------------

NOTE: The views expressed in this report reflect those of the portfolio
manager only through the end of the period of this report as stated on the
cover. The manager's views are subject to change at any time based on market
and other conditions.

<PAGE>

THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS--97.4%
AEROSPACE--0.5%
200,000 Fairchild Corp., Cl.
A+............................ $ 4,108,085 $ 4,037,500
------------ ------------
AGRICULTURE--2.3%
190,000 DeKalb Genetics Corp.,
Cl. B......................... 17,905,801 17,978,750
------------ ------------
AUTOMOTIVE: PARTS AND ACCESSORIES--2.5%
357,000 Echlin Inc. .................... 13,749,875 17,515,312
13,000 Modine Manufacturing Co. ....... 465,017 450,125
20,000 Quaker State Corp. ............. 272,538 327,500
30,000 Ragan (Brad) Inc.+.............. 702,688 1,177,500
------------ ------------
15,190,118 19,470,437
------------ ------------
AVIATION: PARTS AND SERVICES--0.4%
22,000 Barnes Group Inc. .............. 631,381 595,375
150,000 Coltec Industries
Inc. ......................... 2,182,327 2,981,250
5,000 Precision Castparts
Corp. ........................ 295,844 266,875
------------ ------------
3,109,552 3,843,500
------------ ------------
BROADCASTING--7.7%
158,800 Ackerley Group Inc. ............ 2,454,903 3,334,800
504,020 Chris-Craft Industries
Inc+. ........................ 13,037,915 27,563,593
110,000 Gray Communications
Systems Inc., Cl.
B............................. 2,336,155 3,396,250
450,000 Grupo Televisa SA,
GDR+.......................... 9,817,771 16,931,250
120,000 Liberty Corp. .................. 3,138,944 6,037,500
275,000 Paxson Communications
Corp., Cl. A+................. 2,227,090 3,334,375
------------ ------------
33,012,778 60,597,768
------------ ------------
BUSINESS SERVICES--0.4%
127,000 Berlitz International
Inc., New+.................... 1,976,475 3,429,000
3,000 Republic Services Inc., Cl. A... 72,000 72,000
------------ ------------
2,048,475 3,501,000
------------ ------------
CABLE--17.1%
18,750 Cable Michigan Inc.+............ 118,625 731,250
600,000 Cablevision Systems
Corp., Cl. A+................. 14,309,897 50,100,000
1,100,000 MediaOne Group Inc. ............ 28,986,587 48,331,250
720,000 TCI Ventures Group.............. 5,192,986 14,445,000
530,000 Tele-Communications
Inc., Cl. A, New+............. 7,109,525 20,371,875
------------ ------------
55,717,620 133,979,375
------------ ------------
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMUNICATIONS EQUIPMENT--0.4%
40,000 Northern Telecom
Ltd. ........................ $ 748,500 $ 2,270,000
30,000 Scientific-Atlanta
Inc. ........................ 545,488 761,250
------------ ------------
1,293,988 3,031,250
------------ ------------
CONSUMER PRODUCTS--2.2%
420,000 Carter-Wallace Inc. ........... 6,097,656 7,586,250
100,000 General Cigar Holdings Inc. ... 1,489,813 987,500
168,000 General Cigar Holdings
Inc., Cl. B (a)+............. 1,414,002 1,659,000
50,000 Ralston Purina Group........... 2,098,598 5,840,625
41,700.... Syratech Corp.+................ 983,310 1,334,400
------------ ------------
12,083,379 17,407,775
------------ ------------
CONSUMER SERVICES--0.6%
15,000 Cendant Corp. ................. 283,250 313,125
155,000 Loewen Group Inc. ............. 4,081,745 4,185,000
------------ ------------
4,364,995 4,498,125
------------ ------------
DIVERSIFIED INDUSTRIAL--2.6%
20,970 Bethlehem Steel
Corp. ....................... 243,776 260,814
80,000 Honeywell Inc. ................ 5,047,484 6,685,000
175,000 ITT Industries Inc. ........... 4,965,846 6,540,625
216,000 Katy Industries
Inc. ........................ 1,812,634 3,942,000
60,000 Lamson & Sessions
Co.+......................... 355,813 371,250
250,000 Tyler Corp.+................... 578,550 2,578,125
20,000 WHX Corp. ..................... 268,650 257,500
------------ ------------
13,272,753 20,635,314
------------ ------------
ENERGY--1.4%
150,000 Pennzoil Co. .................. 10,282,733 7,593,750
136,000 Southwest Gas Corp. ........... 2,487,675 3,323,500
------------ ------------
12,770,408 10,917,250
------------ ------------
ENTERTAINMENT--14.0%
180,660 Ascent Entertainment
Group Inc.+.................. 1,859,301 2,009,843
175,000 BET Holdings Inc., Cl.
A+........................... 9,201,778 11,014,063
64,000 GC Companies Inc.+............. 2,740,331 3,320,000
10,000 PolyGram NV.................... 528,018 508,750
781,500 USA Networks Inc.+............. 10,153,063 19,635,188
72,000 Tele-Communications
Inc./ Liberty Media
Group, Cl. A................. 2,782,618 2,794,500
1,200,000 Viacom Inc., Cl. A+............ 38,520,667 70,200,000
------------ ------------
65,785,776 109,482,344
------------ ------------
</TABLE>

See accompanying notes to financial statements.

<PAGE>
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
EQUIPMENT AND SUPPLIES--8.9%
100,000 Aeroquip-Vickers
Inc. ................ $ 4,775,010 $ 5,837,500
205,000 AMP Inc. .............. 8,574,232 7,046,875
50,000 Ampco-Pittsburgh
Corp. ............... 250,018 768,750
25,000 Deere & Co. ........... 456,192 1,321,875
125,000 Flowserve Corp. ....... 3,537,283 3,046,875
130,000 Gerber Scientific
Inc. ................ 1,111,661 2,957,500
210,000 Hussmann International
Inc. ................ 1,541,431 3,937,500
970,000 Navistar International
Corp. ............... 25,705,000 28,008,750
132,000 Pittway Corp., Cl. A... 729,436 9,751,500
75,000 Sequa Corp., Cl. A+.... 2,704,459 5,006,250
24,500 Sequa Corp., Cl. B+.... 1,203,320 1,935,500
5,000 Smith (A.O.) Corp. .... 208,100 255,313
------------ ------------
50,796,142 69,874,188
------------ ------------
FINANCIAL SERVICES--1.9%
45,000 Allied Group Inc. ..... 2,093,505 2,106,562
160,000 American Bankers
Insurance Group
Inc. ................ 10,122,477 9,620,000
30,000 Lehman Brothers
Holdings Inc. ....... 565,875 2,326,875
42,300 Pioneer Group Inc. .... 1,211,891 1,113,019
------------ ------------
13,993,748 15,166,456
------------ ------------
FOOD AND BEVERAGE--3.7%
33,739 Advantica Restaurant
Group Inc.+.......... 315,000 328,955
65,000 Corn Products
International
Inc.+................ 2,140,792 2,218,125
200,000 Quaker Oats Co. ....... 6,847,661 10,987,500
40,000 Seagram Co. Ltd. ...... 1,323,775 1,637,500
606,500 Whitman Corp. ......... 7,093,618 13,949,500
------------ ------------
17,720,846 29,121,580
------------ ------------
HEALTH CARE--0.4%
300,000 IVAX Corp.+............ 2,829,106 2,775,000
------------ ------------
HOTELS AND GAMING--1.9%
502,000 Aztar Corp.+........... 3,577,923 3,419,875
180,000 Circus Circus
Enterprises Inc.+.... 4,431,358 3,048,750
140,601 Gaylord Entertainment
Co., Cl. A........... 4,016,759 4,534,382
60,000 Hilton Hotels Corp. ... 1,675,632 1,710,000
110,000 Mirage Resorts Inc.+... 1,136,669 2,344,375
------------ ------------
14,838,341 15,057,382
------------ ------------
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
METALS AND MINING--0.5%
35,000 Barrick Gold Corp. .... $ 803,975 $ 671,563
158,000 Echo Bay Mines Ltd.+... 1,008,691 355,500
75,000 Homestake Mining
Co. ................. 941,563 778,125
55,000 Placer Dome Inc. ...... 651,513 646,250
465,000 Royal Oak Mines
Inc.+................ 831,854 406,875
300,000 TVX Gold Inc.+......... 845,911 918,750
------------ ------------
5,083,507 3,777,063
------------ ------------
PAPER AND FOREST PRODUCTS--0.3%
70,000 Sealed Air Corp. ...... 2,769,700 2,572,500
------------ ------------
PUBLISHING--13.3%
220,000 Golden Books Family
Entertainment
Inc.+................ 3,027,507 845,625
60,000 McGraw-Hill Companies
Inc. ................ 2,597,189 4,893,750
1,700,000 Media General Inc., Cl.
A.................... 34,591,004 83,725,000
165,000 Meredith Corp. ........ 3,250,132 7,744,688
50,000 Reader's Digest
Association Inc., Cl.
A.................... 1,260,813 1,356,250
180,000 Reader's Digest
Association Inc., Cl.
B.................... 4,387,481 4,882,500
8,000 Tribune Co. ........... 545,650 550,500
------------ ------------
49,659,776 103,998,313
------------ ------------
REAL ESTATE--1.8%
650,000 Catellus Development
Corp.+............... 8,033,386 11,496,875
130,000 Griffin Land &
Nurseries
Inc.+................ 1,463,689 2,275,000
------------ ------------
9,497,075 13,771,875
------------ ------------
RETAIL--5.2%
425,000 American Stores Co. ... 10,614,220 10,279,687
25,000 Burlington Coat Factory
Warehouse Corp. ..... 322,047 562,500
214,800 Giant Food Inc., Cl.
A.................... 8,190,521 9,249,825
125,000 Hartmarx Corp.+........ 963,262 945,313
50,000 Ingles Markets Inc.,
Cl. A................ 654,178 725,000
130,000 Lillian Vernon Corp.... 1,856,440 2,161,250
100,000 Mercantile Stores
Co. ................. 7,884,060 7,893,750
210,000 Neiman Marcus Group
Inc.+................ 4,147,362 9,121,875
------------ ------------
34,632,090 40,939,200
------------ ------------
SPECIALITY CHEMICALS--0.5%
142,500 Ferro Corp. ........... 1,796,269 3,607,031
------------ ------------
</TABLE>

See accompanying notes to financial statements.

<PAGE>
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS--2.8%
552,250 Citizen Utilities Co.,
Cl. B+............... $ 5,491,846 $ 5,315,406
46,300 Commonwealth Telephone
Enterprises Inc.+.... 331,188 1,221,163
75,000 Frontier Corp. ........ 2,285,357 2,362,500
134,000 RCN Corp.+............. 729,739 2,596,250
150,000 Southern New England
Telecommunications
Corp. ............... 6,457,176 9,825,000
10,000 US West Inc.+.......... 484,552 470,000
------------ ------------
15,779,858 21,790,319
------------ ------------
WIRELESS COMMUNICATIONS--4.1%
324,000 Century Telephone
Enterprises Inc. .... 4,603,083 14,863,500
150,000 COMSAT Corp. .......... 3,501,997 4,246,875
45,000 Loral Space &
Communications
Ltd.+................ 631,125 1,271,250
50,000 Rogers Cantel Mobile
Communications Inc.,
Cl. B................ 647,525 625,000
200,000 TCI Satellite
Entertainment Inc.,
Cl. A+............... 1,665,188 1,175,000
250,000 Telecom Italia Mobile
SpA.................. 332,242 1,529,478
210,000 Telephone and Data
Systems Inc. ........ 9,199,191 8,268,750
------------ ------------
20,580,351 31,979,853
------------ ------------
TOTAL COMMON STOCKS................ 480,640,537 763,811,148
------------ ------------
PREFERRED STOCK--0.5%
PUBLISHING--0.5%
155,500 News Corp. Ltd., ADR
Preference Shares.... 2,390,998 4,392,875
------------ ------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- ---------
<C> <S> <C> <C>
CORPORATE BOND--0.1%
ENTERTAINMENT--0.1%
$ 497,000 Viacom Inc., Sub.
Deb., 8.00% due
07/07/06............ 322,429 513,463
------------ ------------
U.S. GOVERNMENT OBLIGATIONS--1.4%
11,000,000 U.S. Treasury Bills,
4.91% to 4.94%++
due 07/23/98........ 10,967,449 10,967,449
------------ ------------
PRINCIPAL
AMOUNT COST VALUE
- ---------- ------------ ------------
REPURCHASE AGREEMENT--0.7%
$5,366,000 Agreement with Salomon
Inc., 5.85% due
07/01/98(b)......... $ 5,366,000 $ 5,366,000
------------ ------------
</TABLE>

<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS........ 100.1% $499,687,413 785,050,935
============
OTHER ASSETS AND
LIABILITIES (NET)...... (0.1)% (576,075)
----- ------------
NET ASSETS
(46,317,229 shares
outstanding)........... 100.0% $784,474,860
===== ============
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE............... $16.94
======

MAXIMUM OFFERING PRICE PER SHARE
($16.94 / .945, based on
maximum sales charge of 5.5%
of the offering price at June
30, 1998)..................... $17.93
======
</TABLE>

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

<TABLE>
<S> <C>
For Federal tax purposes:
Aggregate cost...................... $499,687,413
============
Gross unrealized appreciation....... $298,694,555
Gross unrealized depreciation....... (13,331,033)
------------
Net unrealized appreciation......... $285,363,522
============
</TABLE>

(a) Security fair valued as determined by the Board of Directors.
(b) Agreement dated 06/30/98 to be repurchased at $5,366,872
collateralized by $3,894,000 U.S. Treasury Bond, 8.875% due
07/01/98 (value $5,607,136).
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR-- American Depositary Receipt.
GDR-- Global Depositary Receipt.

See accompanying notes to financial statements.

<PAGE>

THE GABELLI VALUE FUND INC.

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- -------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost $499,687,413)...... $785,050,935
Foreign currency, at value (Cost $16,459)...... 16,599
Cash........................................... 24,571
Dividends and interest receivable.............. 382,397
Receivable for investments sold................ 3,409,637
Receivable for capital shares sold............. 1,448,321
------------
TOTAL ASSETS................................. 790,332,460
------------
LIABILITIES:
Payable for investments purchased.............. 2,198,679
Payable for capital shares redeemed............ 2,675,380
Payable for investment advisory fees........... 613,284
Payable for distribution fees.................. 153,321
Accrued Directors' fees........................ 21,500
Other accrued expenses......................... 195,436
------------
TOTAL LIABILITIES............................ 5,857,600
------------
NET ASSETS applicable to 46,317,229 shares
outstanding................................ $784,474,860
============
NET ASSETS CONSIST OF:
Capital stock, at par value.................... $ 46,317
Additional paid-in capital..................... 461,238,078
Accumulated net investment loss................ (698,740)
Accumulated net realized gain on investments... 38,525,543
Net unrealized appreciation on investments..... 285,363,662
------------
TOTAL NET ASSETS............................. $784,474,860
============
NET ASSET VALUE and redemption price per
share ($784,474,860 / 46,317,229 shares
outstanding; 300,000,000 shares authorized
of $0.001 par value)....................... $16.94
======
Maximum offering price per share
($16.94 / .945, based on maximum sales
charge of 5.5% of the offering price at
June 30, 1998)............................. $17.93
======
</TABLE>

STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- -------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes of $6,494)..... $ 2,346,936
Interest....................................... 1,976,229
------------
TOTAL INVESTMENT INCOME...................... 4,323,165
------------
EXPENSES:
Investment advisory fees....................... 3,542,423
Distribution fees.............................. 1,004,960
Shareholder services fees...................... 223,926
Directors' fees................................ 32,543
Legal and audit fees........................... 25,077
Miscellaneous expenses......................... 192,976
------------
TOTAL EXPENSES............................... 5,021,905
------------
NET INVESTMENT LOSS.......................... (698,740)
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments, futures
contracts and foreign currency
transactions................................. 38,279,241
Net change in unrealized appreciation on
investments, futures contracts and foreign
currency transactions........................ 80,811,568
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS, FUTURES CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS........................ 119,090,809
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS..................................... $118,392,069
============
</TABLE>

STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
------------------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment loss....................................... $ (698,740) $ (2,253,147)
Net realized gain on investments, futures contracts and
foreign currency transactions........................... 38,279,241 99,629,391
Net change in unrealized appreciation on investments,
futures contracts and foreign currency transactions..... 80,811,568 103,506,441
------------ ------------
Net increase in net assets resulting from operations.... 118,392,069 200,882,685
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments.......................... -- (96,768,357)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net increase in net assets from capital share
transactions............................................ 69,535,750 31,596,675
------------ ------------
Net increase in net assets.............................. 187,927,819 135,711,003
NET ASSETS:
Beginning of period....................................... 596,547,041 460,836,038
------------ ------------
End of period............................................. $784,474,860 $596,547,041
============ ============
</TABLE>

See accompanying notes to financial statements.

<PAGE>

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

1. DESCRIPTION. 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"), whose primary objective is long term capital
appreciation. The Fund commenced operations on September 29, 1989.

2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.

SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("Nasdaq") or traded on foreign exchanges are
valued at the last sale price on that exchange as of the close of business on
the day the securities are being valued (if there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day). All other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest average of the bid and asked prices. Portfolio securities traded on more
than one national securities exchange or market are valued according to the
broadest and most representative market, as determined by the Adviser. When
market quotations are not readily available, portfolio securities are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision of the Board of Directors. Short term debt
securities with remaining maturities of 60 days or less are valued at amortized
cost, unless the Directors determine such does not reflect the securities' fair
value, in which case these securities will be valued at their fair value as
determined by the Directors. Debt instruments having a greater maturity are
valued at the highest bid price obtained from a dealer maintaining an active
market in those securities. Options are valued at the last sale price on the
exchange on which they are listed. If no sales of such options have taken place
that day, they will be valued at the mean between their closing bid and asked
prices.

REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
government securities dealers recognized by the Federal Reserve Board, with
member banks of the Federal Reserve System or with other brokers or dealers that
meet credit guidelines established by the Directors. 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. The Fund will always receive and
maintain securities as collateral whose market value, including accrued
interest, will be at least equal to 100% of the dollar amount invested by the
Fund in each agreement. The Fund will make payment for such securities only upon
physical delivery or upon evidence of book entry transfer of the collateral to
the account of the custodian. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market on a
daily basis

<PAGE>
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------

to maintain the adequacy of the collateral. If the seller defaults and the value
of the collateral declines or if bankruptcy proceedings are commenced with
respect to the seller of the security, realization of the collateral by the Fund
may be delayed or limited.

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 included in
unrealized gains or losses. The Fund recognizes a realized gain or loss when the
contract is closed. At June 30, 1998, there were no open futures contracts.

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.

FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are maintained
in United States ("U.S.") dollars. Foreign currencies, investments and other
assets and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated at the exchange rate prevailing
on the respective dates of such transactions. Unrealized gains and losses, which
result from changes in foreign exchange rates and/or changes in market prices of
securities, have been included in unrealized appreciation/depreciation on
investments. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.

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

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. 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

<PAGE>
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------

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.

Dividends and interest from non-U.S. sources received by the Fund are generally
subject to non-U.S. withholding taxes at rates ranging up to 30%. Such
withholding taxes may be reduced or eliminated under the terms of applicable
U.S. income tax treaties, and the Fund intends to undertake any procedural steps
required to claim the benefits of such treaties.

3. INVESTMENT ADVISORY AGREEMENT. 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% of the value of the Fund's average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs and pays the compensation of all
Officers and Directors of the Fund who are its affiliates.

4. DISTRIBUTION PLAN. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. For the six months
ended June 30, 1998 the Fund incurred distribution costs payable to Gabelli &
Company, Inc., an indirect wholly-owned subsidiary of the Adviser, of
$1,004,960, or 0.25% of average daily net assets, the annual limitation under
the Plan. Such payments are accrued daily and paid monthly.

5. PORTFOLIO SECURITIES. Purchases and sales of securities for the six months
ended June 30, 1998, other than short term securities, aggregated $218,082,560
and $149,954,682, respectively.

6. TRANSACTIONS WITH AFFILIATES. During the six months ended June 30, 1998, the
Fund paid brokerage commissions of $155,805 to Gabelli & Company, Inc. and its
affiliates. For the six months ended June 30, 1998, Gabelli & Company, Inc.
informed the Fund that it received $318,574 from investors representing
commissions (sales charges and underwriting fees) on sales of Fund shares.

7. CAPITAL STOCK TRANSACTIONS. Transactions in shares of capital stock were as
follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
--------------------------- -----------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold.......................................... 11,298,703 $ 175,408,029 1,973,979 $ 29,851,529
Shares issued upon reinvestment of dividends......... -- -- 6,078,762 85,160,680
Shares redeemed...................................... (6,705,372) (105,872,279) (6,348,961) (83,415,534)
---------- ------------- ---------- ------------
Net increase....................................... 4,593,331 $ 69,535,750 1,703,780 $ 31,596,675
========== ============= ========== ============
</TABLE>

<PAGE>

THE GABELLI VALUE FUND INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

Selected data for a share of capital stock outstanding throughout each period:

<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31,
JUNE 30, 1998 ----------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of period... $ 14.30 $ 11.52 $ 11.61 $ 10.49 $ 12.09 $ 10.13
-------- -------- -------- -------- -------- --------
Net investment income (loss)........... (0.02) (0.05) (0.02) 0.05 0.09 0.05
Net realized and unrealized gain (loss)
on investments....................... 2.66 5.55 1.04 2.30 (0.09) 3.95
-------- -------- -------- -------- -------- --------
Total from investment operations....... 2.64 5.50 1.02 2.35 0.00 4.00
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income.................. -- -- -- (0.05) (0.09) (0.01)
In excess of net investment income..... -- -- -- -- (0.00)(a) (0.04)
Net realized gain on investments....... -- (2.72) (1.10) (1.18) (1.50) (1.99)
In excess of net realized gain
on investments....................... -- -- -- -- (0.01) --
Paid-in capital........................ -- -- (0.01) -- -- --
-------- -------- -------- -------- -------- --------
Total distributions.................... -- (2.72) (1.11) (1.23) (1.60) (2.04)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD......... $ 16.94 $ 14.30 $ 11.52 $ 11.61 $ 10.49 $ 12.09
======== ======== ======== ======== ======== ========
Total return+.......................... 18.5% 48.2% 8.7% 22.5% 0.0% 39.4%
RATIOS TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)... $784,475 $596,547 $460,836 $486,144 $436,629 $491,193
Ratio of net investment income (loss)
to average net assets................ (0.20)%(b) (0.45)% (0.12)% 0.42% 0.73% 0.38%
Ratio of operating expenses
to average net assets................ 1.42%(b) 1.42% 1.40% 1.50% 1.50% 1.53%
Portfolio turnover rate................ 23% 44% 37% 65% 67% 21%
</TABLE>

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

+ 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.
(a) Amount represents less than $0.005 per share.
(b) Annualized.

See accompanying notes to financial statements.

<PAGE>

THE GABELLI VALUE FUND INC.
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
FAX: 1-914-921-5118
HTTP://WWW.GABELLI.COM
E-MAIL: [email protected]
(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
Chairman and Chief Attorney-at-Law
Investment Officer Morrissey & Hawkins
Gabelli Funds, Inc.

Bill Callaghan Karl Otto Pohl
President Former President
Bill Callaghan Associates Deutsche 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

James E. McKee
Secretary

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.
- --------------------------------------------------------------------------------

[PHOTO]

THE
GABELLI
VALUE
FUND
INC.

SEMI-ANNUAL REPORT
JUNE 30, 1998