GABELLI VALUE FUND INC, N-30D, 1998-05-26

GABELLI VALUE FUND INC
N-30D, 1998-05-26

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<PAGE>

THE GABELLI VALUE FUND
One Corporate Center
Rye, New York 10580-1434
FIRST QUARTER REPORT
MARCH 31, 1998

* * * * *

MORNINGSTAR RATED THE GABELLI VALUE FUND 5 STARS FOR THE FIVE YEAR PERIOD
ENDED 3/31/98 AMONG 1363 DOMESTIC EQUITY FUNDS. THE FUND RECEIVED 4 STARS
OVERALL AND 3 STARS FOR THE THREE YEAR PERIOD ENDED 3/31/98 AMONG 2437 FUNDS.

TO OUR SHAREHOLDERS,

After a brief retreat in early January, stocks regained their momentum and
indices across the market capitalization spectrum closed the quarter at or near
record highs. The favorable economic backdrop for stocks - low inflation, low
interest rates and solid corporate earnings growth - continued to buoy the
market. However, the greatest driving force for the stock market continues to be
liquidity. Deals, restructurings and share repurchase programs proved to be
powerful factors underneath the market's strength. With the relatively
uninspiring returns available from traditional alternatives to owning stocks,
cash continued to flow into U.S. equity investments.

As evidenced by the Dow Jones Industrial Average's (DJIA) and Standard &
Poor's 500's (S&P 500) lead over smaller capitalization indices, big continued
to be most beautiful. However, small and mid-cap stocks delivered excellent
absolute returns.

INVESTMENT PERFORMANCE

For the first quarter ended March 31, 1998, The Gabelli Value Fund's total
return was a solid 14.9%. The Standard & Poor's (S&P) 500, Value Line Composite
and Russell 2000 Index had returns of 13.9%, 11.6% and 10.1%, respectively, over
the same period. Each index is an unmanaged indicator of stock market
performance. The Fund was up 68.7% over the trailing twelve month period. The
S&P 500, Value Line Composite and Russell 2000 rose 48.0%, 43.0% and 42.0%,
respectively, over the same twelve month period.

For the five year period ended March 31, 1998, the Fund's return averaged
23.5% annually, versus average annual returns of 22.4%, 18.9% and 17.7% for the
S&P 500, Value Line Composite and Russell 2000, respectively. Since inception on
September 29, 1989 through March 31, 1998, the Fund has a total return of
296.2%, which equates to an average annual return of 17.6%
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results. Morningstar proprietary
ratings reflect historical risk adjusted performance as of March 31, 1998 and
are subject to change every month. Morningstar ratings are calculated from
the 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>

INVESTMENT RESULTS (a)

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
-----------------QUARTER----------------------
1ST 2ND 3RD 4TH YEAR
--- --- --- --- ----
<S> <C> <C> <C> <C> <C>
1998: Net Asset Value ........ $16.43 -- -- -- --
Total Return ........... 14.9% -- -- -- --
- -----------------------------------------------------------------------------------------------
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 - MARCH 31, 1998(a)
--------------------------------------------

<TABLE>
<CAPTION>
- ---------------------DIVIDEND HISTORY--------------------
PAYMENT (EX) DATE RATE PER SHARE REINVESTMENT PRICE
- ----------------- -------------- ------------------
<S> <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.
- --------------------------------------------------------------------------------
2

<PAGE>

WHAT WE DO [PICTURE]

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, 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

IT JUST KEEPS GOING, GOING AND GOING!

Despite being targeted by evil forces such as the Asian economic meltdown,
high profile earnings disappointments in the technology sector and
off-the-historical chart valuations, the stock market, like the "Energizer
Bunny", just keeps going, going and going. We clearly underestimated the
market's potential. The bad news is that based on almost any valuation
benchmark, stocks are currently in historically unprecedented territory and the
margin of safety is razor thin.

Granted, it would be hard to imagine a better economic scenario for stocks.
Economists are pegging inflation at 2.0% or lower and interest rates are low.
Despite selected earnings dislocations resulting from Asian economic weakness,
domestic corporate profits, on the whole, are meeting

<PAGE>

consensus expectations and Wall Street economists are predicting even better
earnings growth in 1999. On the supply and demand front - remember that stocks
go up in the short run when there are more buyers than sellers - continued
strong merger and acquisition activity and substantial share repurchase programs
are shrinking supply at a time when demand for stocks keeps rising. Put it all
together, and it is understandable that stocks are advancing.

<TABLE>
- -----------------------------------------------------------------------------------------
Flow of Funds
($ Billions)

<CAPTION>
1993 1994 1995 1996 1997
---- ---- ------ ------ ------
<S> <C> <C> <C> <C> <C>
SOURCES
- -------
U.S. Deals $234 $340 $ 511 $ 652 $ 919
Stock Buybacks 37 46 99 176 179
Equity Mutual Funds Net 130 119 128 222 232
Dividends 204 230 274 309 333
---- ---- ------ ------ ------
SOURCES: 605 735 1,012 1,359 1,663
---- ---- ------ ------ ------
USES
- ----
IPOs 103 62 82 115 118
U.S./International Equity Capital Flow
U.S. Purchases of Non-U.S. Equities 309 434 396 514 762
International Purchases of U.S. Equities 246 387 346 457 723
Net Flow: 63 47 50 57 39
---- ---- ------ ------ ------
USES: 166 109 132 172 157
---- ---- ------ ------ ------
NET FLOW OF FUNDS: $439 $626 $ 880 $1,187 $1,506
==== ==== ====== ====== ======

SOURCES: SECURITIES DATA CORP, INVESTMENT COMPANY INSTITUTE, BIRINYI ASSOCIATES.
- -----------------------------------------------------------------------------------------
</TABLE>

BEAR WATCH

Today, the two questions confronting equity investors are: What could
happen to disrupt this ideal economic environment for stocks? And, even if the
economic news continues to be good, isn't it already more than fully reflected
in stock prices? In our last report to you, we shared a laundry list of our
investment anxieties, which included problems in Asia spilling into Latin
American currencies and economies, wage inflation not matched by productivity
gains, oil prices rising significantly from today's low levels, a prospective
crisis in confidence if Treasury Secretary Rubin leaves and the possibility that
Federal Reserve Board Chairman Greenspan may step down at the end of his current
term, and last, but not least, high equity valuations and a low margin of
safety.

We have many of the same worries today and our concern over equity
valuations has been heightened by the market's sharp rise in the first quarter.
As we have stated many times in the past, we believe valuations do matter and
that ultimately stocks will trade at rational relationships to their economic
value. We have to question whether even the best companies in this "best of all
possible worlds" for stocks should trade at 50+ times earnings and three to four
times annual earnings growth rates. We are sure value investors share this
concern. However, money continues to flow into arguably the most overvalued
sector of the market - the mega-cap growth stocks. It is somewhat of a reverse
panic. Investors are afraid not to own these stocks. Mr. Market remains at work.
It is increasingly difficult for us to find bargains in this environment.

<PAGE>

One would think professional investors (ie: mutual fund managers) would be
exhibiting more restraint. Unfortunately, with mutual fund investors
increasingly focused on short term performance, portfolio managers holding cash
in a rising market have the life expectancy of fast dogs that chase cars. Many
are holding their noses, closing their eyes, crossing their fingers and making
investments that are difficult to justify on a fundamental basis. They may
continue to be rewarded for throwing in the valuation towel. But, at some point,
they and their shareholders will receive a painful reminder that the market will
not suffer fools indefinitely.

FINDING VALUE IN AN OVERVALUED STOCK MARKET

With the stock market at current levels, true investment bargains are
getting harder to come by. We do not have a philosophical problem keeping powder
dry when values become more scarce. The Fund's cash position has increased to
approximately 15% of assets at the end of the quarter. We believe the biggest
pocket of value contains strong franchises in consolidating industries. This
quarter, we have received premium bids on two portfolio holdings:

o Southern New England Telecommunications is being acquired by SBC
Communications, and

o Echlin is being pursued by SPX Corp.

When we review the portfolio, we see dozens of small and mid-sized
franchises in a range of industries that we believe would be attractive
acquisitions for larger companies looking to grow their businesses.

We also think we can continue to make good money on restructuring
candidates. This quarter, Whitman Corp. spun-off Hussmann International, its
commercial refrigeration business, and Midas Muffler to shareholders. The three
pieces are now trading well above Whitman's price prior to the spin-offs. ITT
Industries announced it is considering selling its auto parts business. If they
do sell, we think we will see a better appraisal for the company's much more
profitable pump and valve and defense electronics businesses. The Fund owns many
more companies whose parts, in our view, are worth considerably more than the
current market value of the whole. We believe corporate managements will
continue to restructure their companies in ways that make strategic and
financial sense.

In addition, there are several industry groups that despite strong
performance over the last year or so, still seem quite reasonable to us. Looking
ahead, we think investors will more fully appreciate industries and companies in
which the cash flow and earnings picture is not clouded by uncertainties over
the impact of foreign operations and currency turmoil. True to our stock picking
discipline, we have been and will continue to be selective in these and other
industry groups - focusing, as always, on quality companies trading at a
discount to our appraisal of economic value.

PATIENCE REWARDED

In the Barron's 1998 Roundtable segment reprinted in the Fund's 1997 Annual
Report, we highlighted Seagram's and Viacom as relatively large portfolio
holdings that did not perform well in what was quite a good year for the Fund.
We reviewed our assessment of the values, talked about some of the positive
events happening at each company and reaffirmed our commitment to these loaded
laggards.

<PAGE>

Our patience has been rewarded with Seagram's stock gaining 18% and Viacom
stock climbing 30% in the first quarter of 1998. In the case of Seagram's, we
cannot isolate any single event responsible for the stock's excellent
performance this quarter. We think Wall Street finally did its homework and came
to the conclusion that the rather complex transaction with Home Shopping Network
and the purchase of the additional 50% of USA Network made good financial and
strategic sense.

The move in Viacom was quite literally "Titanic". This blockbuster will
certainly boost parent company Viacom's 1998 earnings. However, in our opinion,
the turnaround in the other Blockbuster (Blockbuster Entertainment, Viacom's
huge video rental business), will provide even greater benefits for the company
going forward. Especially important, the company continues to pare debt, with a
big paydown coming from the sale of Simon & Schuster's publishing operations.

QUIPS ON MANAGEMENT

Our Chief Investment Officer, Mario J. Gabelli, was recently interviewed by
a leading investor relations consulting firm to discuss how we, as securities
analysts, evaluate corporate managements. We would like to share with you
excerpts from this interview...

"Ideally, we like to own great companies with great management. Our second
choice is great companies with mediocre management. Occasionally, we will take a
chance on mediocre companies with talented new management that we believe can
dramatically improve the business. Our rational is simple - we believe a
princess who kisses a frog is more likely to turn into a frog than the frog is
to turn into a prince.

We don't feel we ask too much from corporate managements. We want them to
have vision as to how the world is changing and a sensible plan to position
their companies to take advantage of change rather than be overwhelmed by it. We
want them to be focused on competitive issues in their industry and be proactive
rather than reactive in meeting challenges from their competitors. We expect
CEOs and CFOs, who in our opinion, should be joined at the hip, to know their
companies intimately. If I or another one of our analysts spots something
unusual in an annual report or 10-K, I expect management to be able to explain
it. We want management to be honest with us. We always ask them to detail their
company's strengths and weaknesses. When we hear a lot about the former and
virtually nothing about the latter, we tend to be a little suspicious. Finally,
and most importantly, we expect them to serve the interest of their companies'
real owners - the shareholders. Managements that build a wall around themselves
and their companies' values are betraying shareholders.

We are not for or against corporate managements. We are for shareholders -
our clients. We don't encourage managements to run their companies to maximize
short term returns and sacrifice long term value. In fact, we respect managers
that are willing to suffer through a few bad quarters for the greater long term
good of their companies. Unlike many Wall Street research teams, we don't ask
management to assess the value of their companies or to forecast future cash
flows and earnings. That's our job. We ask only that they do their jobs--build
the value of their businesses in a manner that benefits long term shareholders."

<PAGE>

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.

CABLEVISION SYSTEMS CORP. (CVC - $65.75 - ASE), based in Woodbury, NY, is a
major cable TV operator serving 2.9 million subscribers, including managed
systems. 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. Cablevision has also
purchased Tele-Communications Inc.'s ten New York area cable properties with
roughly 820,000 subscribers by issuing over 12.2 million shares (a one-third
interest in the company) and assuming about $670 million of TCI's debt. 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.

CENTURY TELEPHONE ENTERPRISES INC. (CTL - $61.125 - NYSE), based in Monroe,
Louisiana, is the tenth largest local telephone company with over 500,000 access
lines in 14 states in the South and Midwest. Century Telephone is also the tenth
largest domestic cellular company. Through acquisitions, CTL has created
clusters of rural telephone and cellular companies within commuting distance of
metropolitan areas in states including Wisconsin, Michigan, Ohio, Louisiana and
Arkansas. With the $2.2 billion acquisition of Portland-based Pacific Telecom,
CTL is adding seven states, ten cellular markets and 640,000 access lines to its
business base. The acquired operations are expected to nearly double Century's
revenues. The company continues to build value through other ventures, primarily
its long distance and competitive local exchange carrier (CLEC) operations.

CHRIS-CRAFT INDUSTRIES INC. (CCN - $58.9375 - NYSE), through its 79% ownership
of BHC Communications (BHC - $141.125 - ASE), is primarily a television
broadcaster. BHC owns and operates UPN affiliated TV stations in New York
(WWOR), Los Angeles (KCOP) and Portland (KPTV). BHC also owns 59% of United
Television (UTVI - $108.375 - Nasdaq), which operates an NBC affiliate, an ABC
affiliate and four UPN affiliates. United Television has purchased WHSW in
Baltimore for $80 million and has an agreement to purchase WRBW, a UPN affiliate
in Orlando, for approximately $60 million. Chris-Craft's 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 $1.6 billion in cash
and marketable securities.

ECHLIN INC. (ECH - $52.4375 - NYSE) is a leading producer of quality automotive
parts. The company 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

<PAGE>

aftermarket customers who then supply the parts to professional technicians and
do-it-yourselfers. Echlin has become the target of a hostile takeover bid by SPX
Corp. (SPW - $76.3125 - NYSE).

GRUPO TELEVISA SA (TV - $36.625 - NYSE) is a Mexico-based entertainment company
that dominates the Spanish speaking world through its fully integrated mix of
content and distribution. The company is an excellent vehicle for accessing the
growth in disposable income among the Spanish speaking population on a global
basis. The business mix includes film, music, cable television and broadcasting.
Grupo Televisa also has valuable holdings in PanAmSat (SPOT - $60.875 - Nasdaq)
and Univision Communications (UVN - $37.25 - NYSE). A five year restructuring
plan - "Televisa 2000" - is designed to cut costs by $90 million annually over
the next three years and to raise Televisa's cash flow margin by more than 25%.

MEDIA GENERAL INC. (MEG'A - $49.1875 - ASE) is a Richmond, VA-based
communications company, publishing 21 daily newspapers throughout the Southeast.
Media General operates fourteen network television stations in Southeastern
markets, including Birmingham, Tampa 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.

TELE-COMMUNICATIONS INC. (TCOMA - $31.0938 - 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
Inc. (TINTA - $20.125 - 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.
Cost reduction programs, including overhead reduction, are showing substantial
progress and increasing operating cash flow.

US WEST MEDIA GROUP (UMG - $34.75 - NYSE), the cable television arm of US West
Inc., is the owner and operator of cellular, cable TV and telephone directory
businesses in the United States and in various international markets. AirTouch
Communications has agreed to acquire the domestic wireless operations of US West
Media Group for stock valued at $4.3 billion and the assumption of $1.4 billion
of debt. UMG's international wireless operations are not included.

VIACOM INC. (VIA - $53.125 - ASE; VIA'B - $53.75 - 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 n umber of common shares outstanding by about four
percent. Its radio group, Evergreen Media, is being sold for $1.1 billion in
cash.

<PAGE>

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.

IN CONCLUSION

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.

The Gabelli Value Fund has enjoyed another solid quarter in another year in
which we will strive to achieve our long term goal of generating a real rate of
return in excess of ten percent. We are concerned about equity valuations, but
believe the portfolio is positioned in industries and companies that still offer
good fundamental value. We think the portfolio will continue to benefit from
ongoing merger and acquisition and restructuring activity. We thank you for your
loyalty and as always, pledge our best efforts on your behalf.

Sincerely,

/s/ Mario J. Gabelli, CFA

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

April 30, 1998

- --------------------------------------------------------------------------------
TOP TEN HOLDINGS
MARCH 31, 1998

Media General Inc. Echlin Inc.
Viacom Inc. Grupo Televisa SA
Cablevision Systems Corp. Century Telephone Enterprises
Chris-Craft Industries Inc. Tele-Communications Inc.
US West Media Group USA Networks 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 -- MARCH 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ ------
<S> <C> <C>
COMMON STOCKS--83.7%
AEROSPACE--0.6%
200,000 Fairchild Corp., Cl. A+................................. $ 4,312,500
------------
AUTOMOTIVE: PARTS AND ACCESSORIES--3.2%
370,000 Echlin Inc. ............................................ 19,401,875
100,000 Handy & Harman.......................................... 3,518,750
20,000 Quaker State Corp. ..................................... 376,250
30,000 Ragan (Brad) Inc.+...................................... 1,125,000
------------
24,421,875
------------
AVIATION: PARTS AND SERVICES--0.5%
15,000 Barnes Group Inc. ...................................... 499,687
150,000 Coltec Industries Inc.+................................. 3,750,000
------------
4,249,687
------------
BROADCASTING--7.9%
120,000 Ackerley Group Inc...................................... 2,452,500
493,020 Chris-Craft Industries Inc.+............................ 29,057,366
106,000 Gray Communications Systems Inc., Cl. B................. 3,074,000
460,000 Grupo Televisa SA, GDR+................................. 16,847,500
120,000 Liberty Corp. .......................................... 6,120,000
275,000 Paxson Communications Corp., Cl. A+..................... 3,059,375
------------
60,610,741
------------
BUSINESS SERVICES--1.0%
119,000 Berlitz International Inc., New+........................ 3,220,437
80,000 Computer Sciences Corp.+................................ 4,400,000
------------
7,620,437
------------
CABLE--12.0%
18,750 Cable Michigan Inc.+.................................... 478,125
610,000 Cablevision Systems Corp., Cl. A+....................... 40,107,500
580,000 TCI Ventures Group...................................... 10,186,250
530,000 Tele-Communications Inc., Cl. A, New+................... 16,479,688
700,000 US WEST Media Group+.................................... 24,325,000
------------
91,576,563
------------
COMMUNICATIONS EQUIPMENT--0.4%
43,000 Northern Telecom Ltd. .................................. 2,778,875
30,000 Scientific-Atlanta Inc. ................................ 586,875
------------
3,365,750
------------
CONSUMER PRODUCTS--2.1%
350,000 Carter-Wallace Inc. .................................... 6,365,625
203,000 General Cigar Holdings Inc., Cl. B+..................... 3,108,437
45,000 Ralston Purina Group.................................... 4,770,000
41,700 Syratech Corp.+......................................... 1,480,350
------------
15,724,412
------------
CONSUMER SERVICES--1.1%
100,000 Loewen Group Inc. ...................................... 2,525,000
205,000 Ticketmaster Group Inc.+................................ 6,175,625
------------
8,700,625
------------
DIVERSIFIED INDUSTRIAL--2.5%
80,000 Honeywell Inc. ....................................... $ 6,615,000
140,000 ITT Industries Inc. .................................. 5,328,750
216,000 Katy Industries Inc. ................................. 4,104,000
60,000 Lamson & Sessions Co.+................................ 397,500
25,000 Lukens Inc. .......................................... 817,188
250,000 Tyler Corp.+.......................................... 1,937,500
------------
19,199,938
------------
ENERGY--1.4%
120,000 Pennzoil Co. ......................................... 7,755,000
136,000 Southwest Gas Corp. .................................. 2,839,000
------------
10,594,000
------------
ENTERTAINMENT--12.0%
175,660 Ascent Entertainment Group Inc.+...................... 1,811,494
175,000 BET Holdings Inc., Cl. A+............................. 10,696,875
56,000 GC Companies Inc.+.................................... 2,929,500
500,000 USA Networks Inc.+.................................... 13,625,000
1,170,000 Viacom Inc., Cl. A+................................... 62,156,250
------------
91,219,119
------------
EQUIPMENT AND SUPPLIES--5.4%
75,000 Aeroquip-Vickers Inc. ................................ 4,335,937
210,000 AMP Inc. ............................................. 9,200,625
50,000 Ampco-Pittsburgh Corp. ............................... 925,000
25,000 Deere & Co. .......................................... 1,548,438
12,000 Flowserve Corp. ...................................... 391,500
130,000 Gerber Scientific Inc. ............................... 3,388,125
210,000 Hussmann International Inc. .......................... 3,937,500
132,000 Pittway Corp., Cl. A.................................. 9,504,000
75,000 Sequa Corp., Cl. A+................................... 5,545,313
24,500 Sequa Corp., Cl. B+................................... 1,932,437
5,000 Smith (A.O.) Corp. ................................... 222,500
------------
40,931,375
------------
FINANCIAL SERVICES--1.5%
120,000 American Bankers Insurance Group Inc. ................ 7,740,000
30,000 Lehman Brothers Holdings Inc. ........................ 2,246,250
39,500 Pioneer Group Inc. ................................... 1,234,375
------------
11,220,625
------------
FOOD AND BEVERAGE--3.5%
33,739 Advantica Restaurant Group Inc.+...................... 316,303
55,000 Corn Products International Inc.+..................... 1,973,125
200,000 Quaker Oats Co. ...................................... 11,450,000
90,000 Seagram Co. Ltd. ..................................... 3,436,875
500,000 Whitman Corp. ........................................ 9,875,000
------------
27,051,303
------------
HEALTH CARE--0.3%
250,000 IVAX Corp.+........................................... 2,187,500
------------
HOTELS AND GAMING--2.3%
502,000 Aztar Corp.+.......................................... 4,329,750
180,000 Circus Circus Enterprises Inc.+....................... 3,780,000
100,601 Gaylord Entertainment Co., Cl. A...................... 3,596,486
110,000 Hilton Hotels Corp. .................................. 3,506,250
110,000 Mirage Resorts Inc.+.................................. 2,674,375
------------
17,886,861
------------
</TABLE>

<PAGE>
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 1998 (UNAUDITED)
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<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ ------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
METALS AND MINING--0.6%
40,000 Barrick Gold Corp. .................................. $ 865,000
158,000 Echo Bay Mines Ltd.+................................. 365,375
75,000 Homestake Mining Co. ................................ 815,625
55,000 Placer Dome Inc. .................................... 725,312
465,000 Royal Oak Mines Inc.+................................ 552,187
300,000 TVX Gold Inc.+....................................... 975,000
------------
4,298,499
------------
PUBLISHING--13.3%
200,000 Golden Books Family Entertainment Inc.+.............. 2,300,000
55,000 McGraw-Hill Companies Inc. .......................... 4,183,438
1,700,000 Media General Inc., Cl. A............................ 83,618,750
165,000 Meredith Corp. ...................................... 6,950,625
29,000 Reader's Digest Association Inc., Cl. A.............. 792,063
130,000 Reader's Digest Association Inc., Cl. B.............. 3,493,750
------------
101,338,626
------------
REAL ESTATE--1.8%
650,000 Catellus Development Corp.+.......................... 12,065,625
130,000 Griffin Land & Nurseries Inc.+....................... 1,950,000
------------
14,015,625
------------
RETAIL--2.2%
25,000 Burlington Coat Factory Warehouse Corp. ............. 434,375
100,000 Giant Food Inc., Cl. A............................... 3,862,500
110,000 Hartmarx Corp.+...................................... 914,375
50,000 Ingles Markets Inc., Cl. A........................... 675,000
120,000 Lillian Vernon Corp. ................................ 2,092,500
210,000 Neiman Marcus Group Inc.+............................ 8,623,125
------------
16,601,875
------------
SPECIALITY CHEMICAL--0.5%
142,500 Ferro Corp. ......................................... 4,185,937
------------
TELECOMMUNICATIONS--3.1%
502,250 Citizen Utilities Co., Cl. B+........................ 5,305,016
46,300 Commonwealth Telephone Enterprises Inc.+............. 1,302,187
5,000 Frontier Corp. ...................................... 162,813
70,000 RCN Corp.+........................................... 3,508,750
184,400 Southern New England
Telecommunications Corp. ........................... 13,334,425
------------
23,613,191
------------
WIRELESS COMMUNICATIONS--4.5%
273,000 Century Telephone Enterprises Inc. .................. 16,687,125
150,000 COMSAT Corp. ........................................ 5,165,625
45,000 Loral Space & Communications Ltd.+................... 1,257,188
175,000 TCI Satellite Entertainment Inc., Cl. A+............. 1,246,875
250,000 Telecom Italia Mobile SpA............................ $ 1,342,332
180,000 Telephone and Data Systems Inc. ..................... 8,550,000
------------
34,249,145
------------
TOTAL COMMON STOCKS............................................. 639,176,209
------------
PREFERRED STOCK--0.5%
PUBLISHING--0.5%
155,500 News Corp. Ltd., Sponsored ADR
Preference Shares................................... 3,576,500
------------
PRINCIPAL
AMOUNT
- ---------

CORPORATE BOND--0.1%
ENTERTAINMENT--0.1%
$ 497,000 Viacom Inc., Sub. Deb.,
8.00% due 07/07/06............................... 508,804
------------
U.S. TREASURY BILL--14.6%
111,000,000 4.97%++ due 04/02/98.............................. 110,984,675
------------
REPURCHASE AGREEMENT--1.1%
8,726,000 Agreement with Salomon Inc., 5.90%
due 04/01/98(b).................................. 8,726,000
------------
TOTAL INVESTMENTS (Cost $491,452,045)(a)............ 100.0% 762,972,188

OTHER ASSETS AND LIABILITIES (NET).................. 0.0 342,801
----- ------------
NET ASSETS
(46,447,621 shares outstanding)................... 100.0% $763,314,989
===== ============
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE................................... $ 16.43
============
MAXIMUM OFFERING PRICE PER SHARE
($16.43/.945, based on maximum sales
charge of 5.5% of the offering price
at March 31, 1998)................................ $ 17.39
============

- ---------------
<CAPTION>
<S> <C> <C>

(a) For Federal tax purposes:
Aggregate cost $491,901,237
============
Gross unrealized appreciation $275,000,940
Gross unrealized depreciation (3,929,989)
------------
Net unrealized appreciation $271,070,951
============
(b) Agreement dated 03/31/98 to be repurchased at
$8,727,430 collateralized by $6,387,000 U.S. Treasury
Bond, 9.125% due 05/15/18 (value $9,124,929).
+ Non-income producing security
++ Represents annualized yield at date of purchase.
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt

</TABLE>

<PAGE>

THE GABELLI VALUE FUND INC.
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554] [PHOTO OF GABELLI]
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.
- -------------------------------------------------------------------------------

THE

GABELLI

VALUE

FUND

INC.

FIRST QUARTER REPORT
MARCH 31, 1998