<PAGE> 1
THE GABELLI VALUE FUND INC.
THIRD QUARTER REPORT
SEPTEMBER 30, 1999
[GRAPHIC]
Morningstar Rated(TM) Gabelli Value Fund 5 stars overall and for the three-year
period ended 9/30/99 among 3210 domestic equity funds, 5 stars for the ten-year
period ended 9/30/99 among 751 domestic equity funds, and 4 stars for the
five-year period ended 9/30/99 among 2010 domestic equity funds.
TO OUR SHAREHOLDERS,
Through most of the third quarter of 1999, stocks were slowly sinking under
the weight of a declining bond market, a tumbling dollar, and the prospect of
more aggressive Federal Reserve monetary policy tightening. Technology
stocks--the last bastion of strength in an otherwise weak market--finally
cracked in the last two weeks of the quarter, sending virtually all market
indices sharply lower.
INVESTMENT PERFORMANCE
For the third quarter ended September 30, 1999, The Gabelli Value Fund's
(the "Fund") net asset value declined 3.32%. The Standard & Poor's ("S&P") 500,
Value Line Composite and Russell 2000 Indices declined 6.24%, 8.18% and 6.32%,
respectively, over the same period. Each index is an unmanaged indicator of
stock market performance. The Fund was up 41.03% over the trailing twelve-month
period. The S&P 500, Value Line Composite and Russell 2000 Indices rose 27.79%,
22.44% and 19.07%, respectively, over the same twelve-month period.
For the ten-year period ended September 30, 1999, the Fund's total return
averaged 17.47% annually versus average annual total returns of 16.80%, 12.26%
and 10.93% for the S&P 500, Value Line Composite and Russell 2000 Indices,
respectively. Since inception on September 29, 1989 through September 30, 1999,
the Fund had a cumulative total return of 400.27%, which equates to an average
annual total return of 17.45%.
[GRAPHIC]
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, we will once again describe the "boring" value approach
that has seen us through both good and bad markets over the last ten years at
The Gabelli Value Fund and for over 22 years at Gabelli Asset
- -------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Morningstar proprietary
ratings reflect historical risk adjusted performance as of September 30, 1999
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 a
broad asset class receive five stars, the next 22.5% receive four stars, the
next 35% receive three stars, the next 22.5% receive two stars and the bottom
10% receive one star.
<PAGE> 2
INVESTMENT RESULTS (a)
<TABLE>
<CAPTION>
Quarter
------------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
<S> <C> <C> <C> <C> <C> <C> <C>
1999: Net Asset Value............. $17.29 $19.58 $18.93 -- --
Total Return................ 7.5% 13.2% (3.3)% -- --
- ----------------------------------------------------------------------------------------------------
1998: Net Asset Value............. $16.43 $16.94 $14.71 $16.08 $16.08
Total Return................ 14.9% 3.1% (13.2)% 19.8% 23.2%
- ----------------------------------------------------------------------------------------------------
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 - September 30, 1999 (a)
- -----------------------------------------------------
<S> <C>
1 Year...................41.03%
...................33.24%(c)
5 Year...................22.74%
...................21.36%(c)
10 Year..................17.47%
...................16.81%(c)
Life of Fund (b).........17.45%
...................16.79%(c)
</TABLE>
<TABLE>
<CAPTION>
Dividend History
------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
----------------- -------------- ------------------
<S> <C> <C>
December 28, 1998 $1.490 $15.54
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 investment operations
on September 29, 1989. (c) Includes the effect of the maximum 5.5% sales
charge at beginning of period.
2
<PAGE> 3
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. equity markets. 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
TOO MUCH OF A GOOD THING?
In the third quarter of 1999, the U.S. economy continued to barrel along at
a pace that investors feared would lead to higher inflation. Paced by the long
anticipated recovery in Japan, Asian economies are perking up. Coupled with
prospects that European economies are gaining momentum, this has spawned concern
that synchronized global growth would further increase inflationary pressure
here at home. All of this positive global economic news was simply too much of a
good thing for the U.S. bond market, which continued to slide.
Long term, synchronized global growth is a blessing--we should all be
thinking in terms of Gross World Product ("GWP") rather than Gross Domestic
Product ("GDP"). However, in the short term it may put additional pressure on
the Fed to press down on the monetary brakes. Investors should view this as a
dose of cod liver oil--bitter medicine, but a tonic that will improve the long
term health of the economy and the stock market. Unfortunately, "Mr. Market"
often does not like to take his medicine and additional Fed interest rate hikes
and higher bond yields are not likely to improve his mood. So, even though third
quarter corporate earnings are likely to be quite strong, price/earnings ("P/E")
multiples (a function of investor psychology and interest rates) may continue to
contract, sending stocks even lower. The good news in this scenario would be the
return of Ben Graham's "margin of safety" to the market.
3
<PAGE> 4
If the domestic economy begins to decelerate in the fourth quarter and the
Fed declares a monetary cease-fire, "Mr. Market" may be in a better mood.
Although P/E multiples are not likely to expand, they may stabilize, allowing
earnings to rally stocks. However, with equity valuations still at relatively
lofty levels, advances will engender additional speculative risks.
THE DOLLAR IN LIMBO--HOW LOW CAN IT GO?
As we write, the dollar has hit a four-year low against the yen. This is
another good news/bad news situation. A cheaper dollar benefits U.S. exporters
and ultimately would help reduce trade deficits, which have been running at
extraordinarily high levels. It also bolsters dollar denominated earnings from
the international operations of U.S. companies. However, over the short term, it
actually increases dollar calculated trade deficits. Perhaps most importantly, a
lower dollar is potentially inflationary, because the prices of imported
products that U.S. consumers treasure will move higher. If the American consumer
is willing to pay these higher prices for Toyota cars and trucks, Sony big
screen televisions, and Sega video games, it will soon be reflected in the
Consumer Price Index ("CPI"). This leads us to another important question...
WILL FATIGUE HIT THE AMERICAN CONSUMER?
High employment and the "wealth effect" of a rising housing and stock
market have buoyed consumer confidence. Discretionary income has risen as a
result of depressed energy prices, low mortgage rates, and rising wages. If the
domestic economy does slow down, consumers may become more concerned about job
security. When investors receive third quarter statements from their brokers,
money managers and mutual funds, they will realize that their net worth has been
trimmed. Americans are paying more at the pump for gasoline and their home
heating bills will be significantly higher this winter. Variable rate mortgage
payments will increase and new fixed rate mortgages are higher. So, consumers
will not be able to raise spending money by leveraging real estate assets--no
more "take the home mortgage from $100,000 to $150,000 with the same monthly
payments and pocket the difference". As aforementioned, the prices for imported
goods are increasing. Will all this be enough to cause the American consumer to
tighten the purse strings? Or, will a significant tax cut--the Republicans are
running on the "3 Fs" (Faith, Finances, and Family)--embolden the American
consumer and keep the economic wheels moving here and abroad?
DEALS, DEALS, DEALS--A VALUE INVESTORS' BEST FRIEND
We have discussed some of the issues likely to impact the economy and the
stock market over the short term. Being investors, not clairvoyants, we have not
come to any rock solid conclusions. One thing we are much more certain about
that is ongoing, and perhaps accelerating, is global consolidation. As economic
borders continue to be eliminated and regulatory barriers fall, bigger is
better. Companies that can extend their franchises and lower their costs will be
the ultimate winners in the global economic village.
Contrary to popular opinion, the future elimination of pooling of interest
accounting in mergers is not going to slow what we have coined "The Third Great
Wave of Takeovers". In fact, it will accelerate the process over the next year
as deals get done ahead of the accounting rules changes. Beyond 2001, different
accounting rules will be no match for the powerful economic forces that are
driving global consolidation. Wall Street will learn to value companies based on
free cash flow--earnings before
4
<PAGE> 5
interest, taxes, depreciation, and amortization (or EBITDA), minus capital
expenditures. This method is already the valuation standard for several of the
industries we have followed for years, including broadcasting and cable
television. Free cash flow is what any savvy business buyer looks at when
evaluating an acquisition in any industry. As more deals get done in a wider
range of industries, corporate managements will wean Wall Street analysts and
investors from net earnings oriented valuations (price/earnings ratios) and lead
them to understand that free cash flow is the best barometer of the value of a
business.
THIS QUARTER'S SCORECARD
Wireless stocks performed well this quarter as several deals in the
industry helped surface value. Rogers Cantel, Telephone & Data Systems, and
Telecom Italia Mobile made it to the first page of our performance list. The
Federal Communications Commission's ("FCC") decision to allow broadcasters to
own two television stations in the same market focused investor attention on
small group broadcasters such as BHC Communications, Chris-Craft, and Gray
Communications, all of which delivered attractive returns. Gold stocks Barrick
Gold, Echo Bay Mines, Homestake Mining, Newmont Mining, and Placer Dome
glittered this quarter as gold prices moved higher. Gaming industry holding
Aztar also came up a winner.
In general, cyclical companies struggled as investors feared that
additional Fed tightening would take the starch out of the economy. Portfolio
disappointments included auto parts manufacturers Modine, and Dana, and
aerospace component companies Barnes Group and Fairchild. Based on valuations
relative to earnings power through the economic cycle, we believe these
cyclicals as well as other companies in the portfolio are outstanding values.
VIACOM AND CBS--DAN RATHER, MEET THE RUGRATS
We are not likely to see cartoon characters on the CBS Evening News, but
there is a great deal of synergy in the new Viacom/CBS. The combined company
joins Time Warner, News Corp., and Disney in the pantheon of fully integrated
media companies. They have content--Paramount Pictures, CBS' programming assets,
and Simon & Schuster publishing--and distribution--the CBS Television Network,
CBS Radio, Viacom's thriving cable networks (MTV, VH-1, and Nickelodeon), and
CBS' huge outdoor advertising (billboard) business. Any advertiser looking to
reach any demographic consumer segment will not have to go anywhere else. This
"one stop shopping" feature for advertisers, the complete vertical integration
of the company, and the ability to cross-market its own products should enhance
revenues and drive down costs. In addition, CBS' Mel Karmazin is a worthy heir
apparent to Viacom's energetic Chairman Sumner Redstone, thus diluting Wall
Street's concern regarding the management succession question at Viacom. Both
CBS' and Viacom's stock prices moved higher on the announcement of the merger,
an indication that Wall Street understands that one plus one equals more than
two in this combined company.
BROADCAST NEWS
The FCC's August 1999 decision to allow duopolies--ownership of two
television stations in the same market--should accelerate consolidation in the
broadcast industry. Any broadcaster with a station in the top fifty markets will
likely be entertaining overtures from the likes of NBC (owned by General
5
<PAGE> 6
Electric), ABC (owned by Disney), the new CBS/Viacom, and larger independent
broadcasters, such as Tribune. NBC has already purchased a 32% position in
Paxson Communications. We expect to see portfolio holdings such as Gray
Communications, Chris-Craft Industries, BHC Communications, and Ackerley Group
receive a lot of attention in the months ahead.
WIRELESS WORKS
About one year ago, AT&T began to set a new standard for the wireless
communications industry. By piecing together a nearly seamless national network,
eliminating roaming charges, and lowering prices to 20 cents per minute for
calls to anywhere in the U.S., AT&T has forced other wireless providers to
follow suit. The push is on for low cost national and even global wireless
services. Prices throughout the industry are dropping and usage is increasing.
New programs such as "calling party pays" and prepaid plans are also making
wireless services more attractive. Finally, laptop computer sales continue to
rise, and more data is moving over wireless systems. This further fuels demand
for wireless spectrum and enhances the value of wireless assets.
Toward the end of this quarter, we celebrated a blessed event. Telephone &
Data Systems, one of our larger holdings, sold its personal communications
services ("PCS") business Aerial Communications to VoiceStream Wireless.
Although we like the investment prospects for PCS, TDS obtained a premium price
for this business, and in the process of eliminating an asset that demanded
considerable capital expenditures, improved its net earnings outlook. TDS stock
made a move upward in the midst of the market declines during the last two weeks
of September. In addition, this transaction should help to surface value in our
other wireless communications holdings.
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.
Chris-Craft Industries Inc. (CCN - $56.125 - NYSE), through its 80% ownership of
BHC Communications (BHC - $139.50 - AMEX), is primarily a television
broadcaster. BHC owns and operates UPN affiliated stations in New York (WWOR),
Los Angeles (KCOP) and Portland, Oregon (KPTV). BHC also owns 59% of United
Television (UTVI - $112.75 - Nasdaq), which operates an NBC affiliate, an ABC
affiliate and five UPN affiliates. United Television recently completed the
purchase of WHSW in Baltimore for $80 million. The station's call letters were
changed to WUTB and the station became a UPN affiliate. UTVI also acquired WRBW,
a UPN affiliate in Orlando, for $60 million in July 1998. Chris-Craft's
television stations constitute one of the nation's largest television station
groups, reaching approximately 22% of U.S. households. Chris-Craft is a major
beneficiary of the recent FCC ruling allowing television duopoly, or ownership
of two stations in a market. The Chris-Craft complex is debt free and strongly
positioned to expand its operations, with roughly $1.5 billion in cash and
marketable securities.
Dana Corp. (DCN - $37.125 - NYSE) is one of the world's largest independent
suppliers to vehicular, off-highway and industrial manufacturers and related
aftermarkets. Dana produces engine, drive-train and braking components and
systems. Founded in 1904 and based in Toledo, Ohio, the company
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<PAGE> 7
operates 330 major facilities in 32 countries and employs more than 86,000
people. A significant portion of the Automotive Aftermarket Group's resources
came to Dana from its acquisition of Echlin.
Liberty Media Group (LMG'A - $37.125 - NYSE) is engaged in businesses which
provide programming services, including production, acquisition and distribution
through all available media formats, as well as businesses engaged in electronic
retailing, direct marketing and other services. LMG holds interests in
globally-branded entertainment networks such as Discovery Channel, USA Network,
QVC, Encore and STARZ!. Liberty's assets also include interests in international
video distribution businesses international telephony and domestic wireless,
plant and equipment manufacturers, and other businesses related to broadband
services. Liberty Media Group Class A and Class B common stock are tracking
stocks of AT&T Corp. (T - $43.50 - NYSE) and are now traded on the New York
Stock Exchange.
MediaOne Group Inc. (UMG - $68.3125 - NYSE) is one of the nation's leading
broadband services companies. UMG provides more than five million subscribers in
17 states with basic and premium cable television services and has recently
introduced high speed Internet access, telephone services and digital television
in some of its service areas. MediaOne was created from the 1996 union of
telecommunications company MediaOne Group (formerly US West Media Group) and
Continental Cablevision. Headquartered in Englewood, Colorado, the company is
conducting a national upgrade of its hybrid fiber optic/coaxial cable ("HFC")
network to broadband technology, which improves traditional cable service and
enables next-generation products and services. UMG's investment interests
include 25% of Time Warner Entertainment (which includes Warner Brothers Studio
and Home Box Office), 24% of PCS Prime Co. and almost 27% of TeleWest plc. The
number three U.S. cable television provider recently agreed to be acquired by
AT&T Corp. (T - $43.50 - NYSE) for $54 billion.
Navistar International Corp. (NAV - $46.50 - NYSE), with world headquarters in
Chicago, is a leading North American manufacturer and marketer of medium and
heavy trucks and school buses, and a worldwide leader in the manufacture of
mid-range diesel engines, produced in a range of 160 to 300 horsepower for the
International(R) brand. The company is also a private label designer and
manufacturer of diesel engines for the full-size pickup truck and van markets.
The company's products, parts and services are sold through a network of 1,000
International(R) brand dealer outlets in the United States, Canada, Brazil and
Mexico, and through more than 90 dealers in 75 countries. Navistar provides
financing for its customers and distributors principally through its
wholly-owned subsidiary, Navistar Financial Corp.
USA Networks Inc. (USAI - $38.75 - Nasdaq), through its subsidiaries, engages in
diversified media and electronic commerce businesses that include: electronic
retailing, ticketing operations and television broadcasting. Chairman and CEO
Barry Diller has brought together under one umbrella: the USA Network, the
Sci-Fi Channel, USA Networks Studios, USA Broadcasting, The Home Shopping
Network and the Ticketmaster Group. The plan is to integrate these assets,
leveraging programming, production capabilities and electronic commerce across
this strong distribution platform.
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.
7
<PAGE> 8
IN CONCLUSION
The short term outlook for the market is, as always, uncertain. Investor
psychology seems to have reversed itself. Last year, investors shrugged off bad
news--anemic earnings, international economic turmoil, and big losses from
highly leveraged hedge funds. This year, good news--a strong U.S. economy, solid
earnings, and the prospect for synchronized global growth--has investors
worried. "Mr. Market" will eventually sort all of this out. In the interim, we
will continue to focus on strong companies trading at discounted prices. In his
currently glum mood, "Mr. Market" may remain ambivalent to value. This should
only increase the appetite of business buyers aggressively seeking bargains.
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
October 25, 1999
TOP TEN HOLDINGS
SEPTEMBER 30, 1999
<TABLE>
<S> <C>
Navistar International
Viacom Inc. Corp.
Media General Inc. Chris-Craft Industries Inc.
Cablevision Systems Corp. Liberty Media Group
Telephone & Data Systems Inc. USA Networks Inc.
MediaOne Group Inc. Dana Corp.
</TABLE>
NOTE: The views expressed in this report reflect those of the portfolio manager
only through the end of the period stated in this report. The manager's views
are subject to change at any time based on market and other conditions.
8
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THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS--90.1%
AGRICULTURE--0.7%
567,000 Archer-Daniels-Midland Co. .......... $ 6,910,312
--------------
AUTOMOTIVE--0.1%
15,000 General Motors Corp. ................ 944,062
--------------
AUTOMOTIVE: PARTS AND ACCESSORIES--2.9%
620,000 Dana Corp. .......................... 23,017,500
260,000 Modine Manufacturing Co. ............ 6,061,250
40,000 Superior Industries International
Inc. ............................... 1,120,000
--------------
30,198,750
--------------
AVIATION: PARTS AND SERVICES--0.4%
75,000 Barnes Group Inc. ................... 1,504,687
265,000 Fairchild Corp., Cl. A+.............. 2,716,250
--------------
4,220,937
--------------
BROADCASTING--5.3%
160,000 Ackerley Group Inc. ................. 1,970,000
2,400 BHC Communications Inc., Cl. A....... 334,800
627,020 Chris-Craft Industries Inc.+......... 35,191,497
165,000 Gray Communications Systems Inc., Cl.
B................................... 2,371,875
122,000 Grupo Televisa SA, GDR+.............. 4,872,375
150,000 Liberty Corp. ....................... 6,956,250
277,800 Paxson Communications Corp., Cl.
A+.................................. 3,403,050
--------------
55,099,847
--------------
BUILDING AND CONSTRUCTION--0.7%
150,000 Lone Star Industries Inc. ........... 7,481,250
--------------
BUSINESS SERVICES--1.8%
160,000 Berlitz International Inc., New+..... 3,370,000
110,369 Cendant Corp. ....................... 1,959,050
50,000 National Processing Inc.+............ 450,000
365,000 Nielsen Media Research Inc. ......... 13,573,437
--------------
19,352,487
--------------
CABLE--12.3%
940,000 Cablevision Systems Corp., Cl. A+.... 68,385,000
880,000 MediaOne Group Inc. ................. 60,115,000
--------------
128,500,000
--------------
COMMUNICATIONS EQUIPMENT--0.3%
37,000 Nortel Networks Corp. ............... 1,887,000
30,000 Scientific-Atlanta Inc. ............. 1,486,875
--------------
3,373,875
--------------
COMPUTER SOFTWARE AND SERVICES--0.1%
180,000 Tyler Technologies Inc. ............. 798,750
--------------
CONSUMER PRODUCTS--3.0%
505,000 Carter-Wallace Inc. ................. 9,026,875
16,800 Gallaher Group plc, ADR.............. 456,750
280,000 General Cigar Holdings Inc. ......... 1,890,000
168,000 General Cigar Holdings Inc., Cl. B+
(a)................................. 1,134,000
160,000 Hartmarx Corp.+...................... 640,000
250,000 Imasco Ltd. ......................... 6,531,057
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
10,000 National Presto Industries Inc. ..... $ 386,250
350,000 Ralston Purina Group................. 9,734,375
41,700 Syratech Corp.+...................... 458,700
85,000 Wolverine World Wide Inc. ........... 966,875
--------------
31,224,882
--------------
CONSUMER SERVICES--0.7%
500,000 Rollins Inc. ........................ 7,718,750
--------------
DIVERSIFIED INDUSTRIAL--1.3%
50,000 Ampco-Pittsburgh Corp. .............. 675,000
100,000 GenTek Inc.+......................... 1,137,500
225,000 Katy Industries Inc. ................ 2,700,000
70,000 Lamson & Sessions Co.+............... 363,125
100,000 Reynolds Metals Co. ................. 6,037,500
75,000 Tenneco Inc. ........................ 1,275,000
145,000 WHX Corp. ........................... 1,450,000
--------------
13,638,125
--------------
ELECTRONICS--0.3%
120,000 Watkins-Johnson Co. ................. 4,027,500
--------------
ENERGY AND UTILITIES--2.3%
700,000 Citizens Utilities Co., Cl. B+....... 7,918,750
80,000 Cilcorp Inc. ........................ 5,185,000
35,000 Devon Energy Corp. .................. 1,450,312
105,000 Florida Progress Corp. .............. 4,856,250
40,000 Pennzoil-Quaker State Co. ........... 505,000
156,000 Southwest Gas Corp. ................. 4,202,250
--------------
24,117,562
--------------
ENTERTAINMENT--16.0%
175,000 Ascent Entertainment Group Inc.+..... 2,406,250
150,000 GC Companies Inc.+................... 4,500,000
880,000 Liberty Media Group, Cl. A........... 32,670,000
790,000 USA Networks Inc.+................... 30,612,500
2,285,000 Viacom Inc., Cl. A+.................. 98,826,250
--------------
169,015,000
--------------
ENVIRONMENTAL SERVICES--0.9%
510,000 Waste Management Inc. ............... 9,817,500
--------------
EQUIPMENT AND SUPPLIES--6.8%
30,000 Deere & Co. ......................... 1,160,625
210,000 Flowserve Corp. ..................... 3,491,250
130,000 Gerber Scientific Inc. .............. 2,908,750
225,000 Hussmann International Inc. ......... 3,825,000
240,000 Mark IV Industries Inc. ............. 4,740,000
768,000 Navistar International Corp. ........ 35,712,000
240,000 Pittway Corp., Cl. A................. 7,560,000
75,000 Sequa Corp., Cl. A+.................. 4,725,000
24,500 Sequa Corp., Cl. B+.................. 1,617,000
2,500 Smith (A.O.) Corp. .................. 75,625
7,500 Smith (A.O.) Corp., Cl. A............ 229,219
220,000 Watts Industries Inc. ............... 4,785,000
--------------
70,829,469
--------------
</TABLE>
9
<PAGE> 10
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS (CONTINUED) -- SEPTEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES--1.2%
20,000 Bank One Corp. ...................... $ 696,250
35,000 Chase Manhattan Corp. ............... 2,638,125
12,000 Lehman Brothers Holdings Inc. ....... 699,750
40,000 Mellon Bank Corp. ................... 1,350,000
85,000 Merrill Lynch & Co. ................. 5,710,937
110,000 Pioneer Group Inc. .................. 1,650,000
--------------
12,745,062
--------------
FOOD AND BEVERAGE--3.1%
35,000 Advantica Restaurant Group Inc.+..... 106,094
25,000 Bestfoods Inc. ...................... 1,212,500
55,000 Celestial Seasonings Inc.+........... 1,058,750
180,000 Corn Products International Inc. .... 5,478,750
350,000 PepsiCo Inc. ........................ 10,587,500
105,000 Seagram Co. ......................... 4,777,500
640,000 Whitman Corp. ....................... 9,120,000
--------------
32,341,094
--------------
HEALTH CARE--0.8%
85,000 American Home Products Inc. ......... 3,527,500
300,000 IVAX Corp.+ ......................... 4,950,000
--------------
8,477,500
--------------
HOTELS AND GAMING--3.7%
580,000 Aztar Corp.+ ........................ 5,945,000
262,000 Gaylord Entertainment Co., Cl. A..... 7,729,000
660,000 Hilton Hotels Corp. ................. 6,517,500
1,400,000 Ladbroke Group plc, ADR.............. 4,880,454
950,000 Mirage Resorts Inc. ................. 13,359,375
--------------
38,431,329
--------------
METALS AND MINING--0.6%
15,000 Barrick Gold Corp. .................. 326,250
500,000 Echo Bay Mines Ltd.+................. 968,750
80,000 Homestake Mining Co. ................ 735,000
30,000 Newmont Mining Corp. ................ 776,250
55,000 Placer Dome Inc. .................... 818,125
365,000 Royal Oak Mines Inc.+ ............... 14,917
2,000,000 TVX Gold Inc.+ ...................... 2,500,000
--------------
6,139,292
--------------
PUBLISHING--10.0%
25,000 McGraw-Hill Companies Inc. .......... 1,209,375
1,660,000 Media General Inc., Cl. A (b)........ 85,075,000
115,000 Meredith Corp. ...................... 4,175,938
350,000 Penton Media Inc. ................... 5,687,500
250,000 Reader's Digest Association Inc., Cl.
B................................... 6,593,750
32,000 Tribune Co. ......................... 1,592,000
--------------
104,333,563
--------------
REAL ESTATE--1.0%
730,000 Catellus Development Corp.+ ......... 8,577,500
130,000 Griffin Land & Nurseries Inc.+ ...... 1,405,625
--------------
9,983,125
--------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
RETAIL--2.5%
1,200,000 AutoNation Inc.+ .................... $ 15,075,000
15,000 Burlington Coat Factory Warehouse
Corp. .............................. 296,250
40,000 Delhaize America Inc., Cl. A......... 847,500
63,600 Ingles Markets Inc., Cl. A........... 838,725
140,000 Lillian Vernon Corp. ................ 1,750,000
298,000 Neiman Marcus Group Inc.+ ........... 6,965,750
--------------
25,773,225
--------------
SATELLITE--0.3%
103,753 COMSAT Corp. ........................ 3,073,683
132,600 TCI Satellite Entertainment Inc., Cl.
A+.................................. 530,400
--------------
3,604,083
--------------
SPECIALTY CHEMICALS--1.5%
25,000 Dexter Corp. ........................ 932,813
250,000 Ferro Corp. ......................... 5,328,125
100,000 General Chemical Group Inc. ......... 343,750
85,000 Monsanto Co. ........................ 3,033,437
118,000 Nalco Chemical Co. .................. 5,959,000
--------------
15,597,125
--------------
TELECOMMUNICATIONS--2.5%
172,462 Commonwealth Telephone Enterprises
Inc.+ .............................. 7,588,328
100,000 RCN Corp.+ .......................... 4,100,000
125,000 Rogers Communications Inc., Cl. B+... 2,101,563
220,000 US West Inc. ........................ 12,553,750
--------------
26,343,641
--------------
WIRELESS COMMUNICATIONS--7.0%
13,000 BCE Mobile Communications Inc.+ ..... 515,938
150,000 Rogers Cantel Mobile Communications
Inc., Cl. B......................... 3,553,125
250,000 Telecom Italia Mobile SpA............ 1,553,805
760,000 Telephone & Data Systems Inc. ....... 67,497,500
--------------
73,120,368
--------------
TOTAL COMMON STOCKS.................. 944,158,465
--------------
PREFERRED STOCKS--0.6%
PUBLISHING--0.4%
155,500 News Corp. Ltd., ADR Preference
Shares.............................. 4,149,906
--------------
SATELLITE--0.2%
145,000 Loral Space & Communications Ltd.,
6.00% Cv. Pfd....................... 2,492,188
--------------
TOTAL PREFERRED STOCKS............... 6,642,094
--------------
<CAPTION>
PRINCIPAL
AMOUNT
------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS--8.7%
$91,377,000 U.S. Treasury Bills,
4.42% to 4.56%++,
due 11/04/99 to 12/02/99............ 90,745,943
--------------
</TABLE>
10
<PAGE> 11
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS (CONTINUED) -- SEPTEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
-----
<C> <S> <C>
TOTAL INVESTMENTS--99.4%
(Cost $702,722,338)................. $1,041,546,502
OTHER ASSETS AND
LIABILITIES (NET)--0.6%............. 6,035,977
--------------
NET ASSETS--100.0%
(55,329,476 shares outstanding)..... $1,047,582,479
==============
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE..................... $18.93
=====
MAXIMUM OFFERING PRICE PER SHARE
($18.93/.945, based on maximum sales
charge of 5.5% of the offering price
at September 30, 1999).............. $20.03
=====
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF UNREALIZED
CONTRACTS DEPRECIATION
--------- ------------
<C> <S> <C>
FUTURES CONTRACTS
100 Short S&P 500 Index Futures
12/17/99............................ $ (61,102)
--------------
</TABLE>
- ------------------------------
(a) Security fair valued as determined by the Board of Directors.
(b) Security considered an affiliated holding because the Fund owns at least
5% of the outstanding shares.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR--American Depositary Receipt.
GDR--Global Depositary Receipt.
11
<PAGE> 12
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.)
<TABLE>
<S> <C>
BOARD OF DIRECTORS
Mario J. Gabelli, CFA Robert J. Morrissey
Chairman and Chief Attorney-at-Law
Investment Officer Morrissey, Hawkins & Lynch
Gabelli Asset Management
Inc.
Felix J. Christiana Karl Otto Pohl
Former Senior Vice President Former President
Dollar Dry Dock Savings Bank Deutsche Bundesbank
Anthony J. Colavita Anthony R. Pustorino
Attorney-at-Law Certified Public Accountant
Anthony J. Colavita, P.C. Professor, Pace University
OFFICERS
Mario J. Gabelli, CFA Bruce N. Alpert
President and Chief Chief Operating Officer
Investment Officer Vice President and
Treasurer
James E. McKee
Secretary
</TABLE>
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.
- ---------------------------------------
GAB409Q399SR
THE
GABELLI
VALUE
FUND
INC.
THIRD QUARTER REPORT
SEPTEMBER 30, 1999
[GRAPHIC]
