THE GABELLI VALUE FUND INC.
THIRD QUARTER REPORT
SEPTEMBER 30, 2000
[GRAPHIC OF FOUR STARS OMITTED]
MORNINGSTAR RATED[TRADE MARK] GABELLI VALUE FUND 4 STARS
OVERALL AND FOR THE THREE-YEAR PERIOD ENDED 09/30/00
AMONG 3876 DOMESTIC EQUITY FUNDS, AND FOR THE FIVE
AND TEN-YEAR PERIODS ENDED 09/30/00 AMONG 2419 AND
796 DOMESTIC EQUITY FUNDS, RESPECTIVELY.
FORBES
HONOR ROLL SELECTION*
TO OUR SHAREHOLDERS,
Declining market interest rates (bond yields), a quiescent Federal
Reserve, and reasonable second quarter earnings spawned a late summer rally,
temporarily putting the Standard & Poor's 500 and Nasdaq Composite Indices into
positive performance territory for the year. However, stocks retreated in
September as higher oil prices, the plummeting Euro, and third quarter earnings
jitters eroded investor confidence. The Dow Jones Industrial Average ("DJIA")
managed a slight gain for the third quarter, but the S&P 500 and Nasdaq
Composite Indices closed with losses.
INVESTMENT PERFORMANCE
For the third quarter ended September 30, 2000, The Gabelli Value Fund's
(the "Fund") net asset value fell 2.38%. The Standard & Poor's ("S&P") 500 Index
and the Nasdaq Composite Index declined 0.97% and 7.35%, respectively, while the
Value Line Composite and Russell 2000 Indices rose 6.40% and 1.11%,
respectively, over the same period. Each index is an unmanaged indicator of
stock market performance. The Fund was up 6.24% over the trailing twelve-month
period. The S&P 500, Nasdaq Composite, Value Line Composite and Russell 2000
Indices rose 13.27%, 33.99%, 17.59% and 23.39%, respectively, over the same
twelve-month period.
For the ten-year period ended September 30, 2000, the Fund's total return
averaged 19.65% annually versus average annual returns of 19.42%, 26.67%, 17.45%
and 16.93% for the S&P 500, Nasdaq Composite, Value Line Composite and Russell
2000 Indices, respectively. Since inception on March 3, 1986 through September
30, 2000, the Fund had a cumulative total return of 431.49%, which equates to an
average annual total return of 16.38%.
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Morningstar proprietary
ratings reflect historical risk adjusted performance as of September 30, 2000
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. * As cited in FORBES MAGAZINE dated 8/21/00.The honorees
are chosen annually; funds must be open to new investors and have had the same
management for at least five years. Sector funds and closed-end funds are
excluded.
<PAGE>
INVESTMENT RESULTS (CLASS A SHARES) (a)
--------------------------------------------------------------------------------
Quarter
---------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
2000: Net Asset Value $18.70 $18.89 $18.44 -- --
Total Return (3.9)% 1.0% (2.4)% -- --
--------------------------------------------------------------------------------
1999: Net Asset Value $17.29 $19.58 $18.93 $19.45 $19.45
Total Return 7.5% 13.2% (3.3)% 12.1% 31.9%
--------------------------------------------------------------------------------
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%
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1990: Net Asset Value $9.23 $9.36 $8.19 $8.51 $8.51
Total Return (2.4)% 1.4% (12.5)% 9.0% (5.6)%
--------------------------------------------------------------------------------
1989: Net Asset Value __ __ __ $9.58 $9.58
--------------------------------------------------------------------------------
Total Return __ __ __ 2.1%(b) 2.1%(b)
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------------------------------------------------------
Average Annual Returns (Class A Shares)
---------------------------------------
September 30, 2000 (a)
----------------------
1 Year..................................... 6.24%
................................. 0.40%(c)
5 Year..................................... 20.03%
................................. 18.67%(c)
10 Year.................................... 19.65%
................................. 18.97%(c)
Life of Fund (b) .......................... 16.38%
................................. 15.78%(c)
------------------------------------------------------
Dividend History
-----------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
----------------- -------------- ------------------
December 27, 1999 $1.720 $18.98
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
(a) Total returns and average annual returns reflect changes in share price and
reinvestment of dividends and are net of expenses for Class A Shares. 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. Performance of Class B and Class C Shares which
were first offered on March 1, 2000 would be lower due to higher distribution
and service fees. (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.
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2
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COMMENTARY
THE FIVE E'S
In the third quarter of 2000, investors focused on the five E's--Energy,
the Euro, the Economy, Earnings, and the Election. We will share our perspective
on the five E's and offer an opinion on how they may impact the market going
forward.
[PYRAMID GRAPHIC OMITTED]
PYRAMID TEXT AS FOLLOWS:
EPS
PMV
MANAGEMENT
CASH FLOW
RESEARCH
ENERGY
The price of oil hit a ten-year high in the third quarter. Gasoline prices
exceeded $2.00 per gallon in many areas of the country this summer and home
heating costs are expected to rise by 50% this winter. Rising oil prices have
already sparked demonstrations in Europe and energy has become a political issue
in the U.S. as well. Although OPEC has increased production and is publicly
targeting a $25 to $28 per barrel price, global inventories are still tight and
the price of oil remains well over $30 per barrel. The U.S. is attempting to
influence the world energy market by dipping into its strategic oil reserves.
However, this is not likely to have a meaningful near term impact on oil prices.
Treasury Secretary Lawrence Summers recently characterized high oil prices as
"the biggest cloud in the relatively blue sky" of a fundamentally sound global
economy. We agree.
We do not anticipate a repeat of the 1973-74 oil shock, which sent the
global economy into recession and sparked the last great bear market in stocks.
After the Gulf War, we doubt Middle East oil producers, particularly the
Saudi's, would risk alienating their protectors. Only in our worst nightmares do
we consider the impact that $50 per barrel of oil would have on today's equity
markets. Our best guess is that oil prices will decline from their peaks, but
remain high enough to keep pressure on global economies.
THE EURO
In January 2999, the Euro was introduced with great fanfare. Originally
expected to be a strong international currency, the Euro has declined against
the Japanese yen and plummeted against the U.S. dollar.
[GRAPHIC OMITTED]
EURO VS. U.S. DOLLAR
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
1999 2000
------ ------
Jan 1.1874 1.0155
1.1761 1.0309
1.1637 1.0335
1.1675 1.0324
1.1556 1.0294
1.1535 1.0252
1.1555 1.0322
1.1698 1.0281
1.1687 1.0270
1.1592 1.0128
1.1603 1.0121
1.1604 1.0115
1.1574 1.0133
1.1578 1.0100
1.1583 1.0019
1.1568 1.0041
1.1575 1.0011
1.1478 0.9890
1.1393 0.9765
1.1374 0.9757
Feb 1.1303 0.9731
1.1328 0.9768
1.1338 0.9887
1.1308 0.9760
1.1283 0.9783
1.1297 0.9862
1.1303 0.9914
1.1330 0.9865
1.1303 0.9847
1.1283 0.9783
1.1247 0.9834
1.1191 0.9842
1.1231 0.9863
1.1223 0.9850
1.1072 1.0060
1.1037 1.0017
1.0994 0.9931
1.0975 0.9763
1.1069 0.9669
1.0993 0.9643
1.0891 0.9700
Mar 1.0929 0.9619
1.0887 0.9618
1.0825 0.9603
1.0843 0.9560
1.0901 0.9576
1.0873 0.9684
1.0961 0.9659
1.0917 0.9648
1.0948 0.9644
1.0930 0.9696
1.0916 0.9710
1.1017 0.9694
1.0993 0.9710
1.0925 0.9703
1.0918 0.9608
1.0919 0.9691
1.0924 0.9724
1.0872 0.9645
1.0745 0.9614
1.0718 0.9524
1.0734 0.9594
1.0809 0.9574
1.0780 0.9560
Apr 1.0707 0.9588
1.0842 0.9647
1.0785 0.9580
1.0842 0.9590
1.0785 0.9588
1.0843 0.9591
1.0780 0.9551
1.0780 0.9524
1.0718 0.9564
1.0690 0.9550
1.0610 0.9477
1.0631 0.9369
1.0614 0.9376
1.0599 0.9379
1.0633 0.9396
1.0590 0.9265
1.0649 0.9217
1.0618 0.9083
1.0597 0.9089
1.0566 0.9120
1.0570 0.9068
1.0594 0.8891
May 1.0725 0.8907
1.0779 0.8953
1.0785 0.8950
1.0790 0.9023
1.0723 0.9097
1.0667 0.9021
1.0624 0.9080
1.0652 0.9138
1.0672 0.9053
1.0672 0.8921
1.0643 0.8952
1.0632 0.8946
1.0575 0.9036
1.0589 0.9032
1.0469 0.9096
1.0439 0.9072
1.0426 0.9310
1.0436 0.9314
1.0446 0.9328
1.0360 0.9307
1.0347 0.9432
1.0330 0.9471
Jun 1.0298 0.9570
1.0442 0.9600
1.0451 0.9548
1.0479 0.9526
1.0519 0.9544
1.0418 0.9619
1.0420 0.9590
1.0303 0.9530
1.0329 0.9648
1.0368 0.9622
1.0324 0.9557
1.0322 0.9455
1.0320 0.9398
1.0371 0.9358
1.0443 0.9382
1.0372 0.9444
1.0339 0.9444
1.0300 0.9515
1.0248 0.9545
1.0224 0.9526
1.0252 0.9548
1.0221 0.9527
Jul 1.0200 0.9484
1.0187 0.9521
1.0138 0.9497
1.0179 0.9401
1.0216 0.9339
1.0221 0.9374
1.0204 0.9351
1.0204 0.9322
1.0418 0.9237
1.0526 0.9292
1.0509 0.9343
1.0501 0.9314
1.0653 0.9391
1.0628 0.9413
1.0645 0.9331
1.0716 0.9246
1.0696 0.9266
1.0680 0.9228
1.0769 0.9137
1.0794 0.9042
1.0771 0.9075
1.0712 0.9105
Aug 1.0752 0.9019
1.0664 0.8991
1.0635 0.9077
1.0570 0.9046
1.0559 0.9037
1.0524 0.9135
1.0508 0.9143
1.0644 0.9152
1.0655 0.9068
1.0553 0.9027
1.0502 0.8965
1.0468 0.8967
1.0440 0.9028
1.0464 0.9024
1.0449 0.9002
1.0581 0.8966
1.0583 0.8924
1.0691 0.8878
1.0607 0.8993
1.0582 0.8876
1.0591 0.8702
1.0541 0.8740
Sep 1.0401 0.8664
1.0401 0.8624
1.0404 0.8596
1.0388 0.8640
1.0417 0.8617
1.0401 0.8572
1.0409 0.8527
1.0462 0.8514
1.0503 0.8463
1.0416 0.8559
1.0469 0.8794
1.0432 0.8738
1.0513 0.8813
1.0616 0.8807
1.0642 0.8830
1.0717 0.8842
1.0704 0.8788
1.0692 0.8745
1.0703 0.8727
1.0722 0.8691
1.0633 0.8686
Oct 1.0737 0.8682
1.0761 0.8716
1.0803 0.8644
1.0888 0.8567
1.0864 0.8491
1.0833 0.8509
1.0764 0.8391
1.0808 0.8412
1.0679 0.8406
1.0668 0.8364
1.0578 0.8365
1.0533 0.8274
1.0519 0.8273
1.0519 0.8408
1.0495 0.8433
1.0507 0.8485
1.0487 0.8588
1.0439 0.8579
1.0402 0.8619
1.0362 0.8585
1.0402 0.8585
Nov 1.0444 0.8554
1.0315 0.8574
1.0316 0.8624
1.0319 0.8574
1.0403 0.8571
1.0306 0.8534
1.0315 0.8517
1.0329 0.8487
1.0262 0.8460
1.0177 0.8424
1.0199 0.8401
1.0138 0.8383
1.0103 0.8503
1.0077 0.8545
1.0068 0.8577
1.0026 0.8694
1.0016 0.8768
Dec 1.0253 0.8876
1.0223 0.8803
1.0262
1.0165
1.0161
1.0122
1.0068
1.0066
1.0169
1.0089
1.0068
1.0097
1.0080
1.0164
1.0132
1.0046
1.0029
1.0064
1.0070
3
<PAGE>
The plunging Euro presents a threat to the U.S. economy and stock market.
Europe is by far the largest market for U.S. exports. As the dollar strengthens
against the Euro, our exports become more expensive for European and other
global consumers. Conversely, European imports become cheaper for American
consumers as well as Latin American and Asian purchasers. This is making the
already troublesome balance of trade deficit even more problematic for the U.S.
Eventually, the dollar will have to be contained. While this will help on the
balance of trade front, it may have the adverse affect of reducing foreign
investment in U.S. capital markets. This is a long-term quandary without any
easy solutions.
A secondary effect of the weak Euro--but one with a more immediate impact
on U.S. stocks--is that the earnings for U.S. multi-national companies that do a
significant amount of business in Europe are being penalized significantly as
Euro denominated revenues and profits are translated back into dollars for
reporting purposes. This results in earnings shortfalls for some of the U.S.
market's "bellwether" stocks.
THE ECONOMY
Prior to the rapid increase in oil prices and the collapse of the Euro,
the global economic picture looked relatively bright. Asia had recovered, Europe
was gaining momentum, and after six Federal Reserve interest rate hikes, the
U.S. economy appeared headed for a soft landing. Now, this comfortable economic
scenario is threatened. Will we have a "hard landing?"
EARNINGS
The potential for slower economic growth in the U.S. has investors
questioning whether third and fourth quarter corporate 2000 earnings will meet
what may now be optimistic expectations.
Relatively high equity valuations do not leave much room for earnings
disappointments. The most richly valued sectors of the market (technology in
particular) are well above Benjamin Graham's "safety net". To wit, technology
bellwether Intel lost approximately 20% of its market value in after hours
trading following its announcement that third quarter revenues and earnings
would fall modestly short of consensus Wall Street expectations. After a sharp
decline on the opening bell the next day, stocks rebounded and ended the day
mixed. We question whether stocks will continue to be so resilient if we see
more widespread disappointments during the upcoming 2000 earnings reporting
seasons.
THE ELECTION
After this summer's relatively quiet campaigning, the political rhetoric
is heating up as we approach the November election. There are very clear
differences in the Republicans' and Democrats' positions on a number of economic
issues, in particular, what to do with the growing Federal Government budget
surplus. The Republicans favor large tax cuts. The Democrats are advocating
using the surplus to continue to reduce government debt and plug some holes in
the social safety net. The Republicans tend to view consolidation as an integral
part of global economic evolution. The Democrats are concerned that
consolidation will reduce competition, leaving consumers vulnerable. The
Republicans do not want to interfere in the energy markets. The Democrats are
calling for action. As we write, it appears the election is up for grabs,
creating even more uncertainty in an already uncertain economic and market
environment.
4
<PAGE>
OUR ADVICE
Our stock selection process is based on a "bottoms up" approach. We review
relevant economic and market issues--a list of our current hopes and fears--and
offer carefully considered opinions on their short-term investment implications.
This is a courtesy to shareholders that want to know what we are thinking. It
does not influence our investment strategy. We strive to identify and invest in
undervalued companies with favorable long-term business prospects. Over the
short term, these stocks will be impacted by broad market trends. Over the long
term, they will be judged on their own individual merit. So, our advice to
shareholders is simply to be patient and have faith that selected businesses
purchased at reasonable prices to intrinsic value will produce long-term
rewards.
INVESTMENT SCOREBOARD
Most of the Fund's outstanding performers in the third quarter were from
the Consumer Products industry, such as Shaw Industries, Energizer Holdings,
Carter-Wallace and Ralston Purina Group. In the broadcasting field, the winners
were Paxson Communications, Gray Communications and Chris-Craft. Aviation
holdings Barnes Group and Fairchild Corp. also enjoyed good reviews this
quarter.
Each quarter, we recognize our holdings that performed poorly.
Telecommunications companies such as Citizens Communications, Sprint PCS Group
and Nextel declined sharply. All are past portfolio stars which we believe can
rebound in the year ahead. Publishing companies Penton Media, Media General, and
Meredith Corp. also had a negative impact on the Fund this quarter.
TMT
Technology, media, and telecommunications ("TMT") stocks produced
exceptional returns in 1997-99. This year, media and telecommunications stocks
languished. This is partially the result of good old-fashioned profit taking in
stocks that had delivered spectacular returns and momentum investors were
dumping.
However, there are other factors that have temporarily soured investors on
media and telecommunication stocks. Consolidation has slowed as regulators here
and abroad are redefining "competitive" standards. European regulators rejected
Time Warner's proposed acquisition of European recorded music powerhouse EMI.
The WorldCom/Sprint merger was derailed by U.S. regulators. U.S. antitrust
authorities are taking a hard look at the Time Warner/AOL deal. These actions
have put potential international telecommunications acquirers such as Deutsche
Telecom temporarily on hold. Smaller deals without antitrust implications are
being completed. However, these smaller deals do not generate the kind of
headlines that captivate investors. Is this the start of a global regulatory
backlash? We do not think so. Consolidation in these industries makes economic
sense in a truly global marketplace.
The constricted capital markets are also causing disruption. As a result
of the "dot.com" stock massacre, the new issue market appears to be closed for
the season and venture capital firms have pulled in their horns. Internet
start-ups are not the only companies being hurt. Promising young media and
telecommunications companies are just not going to be able to survive without
being able to tap the equity or venture capital markets for cash infusions.
These cash-burn casualties will be absorbed by larger entities at rock-bottom
prices, indiscriminately depressing asset values for more worthy competitors.
For
5
<PAGE>
example, Time Warner Telecom scooped up bankrupt competitive local exchange
carrier ("CLEC") GST Telecommunications at a fire sale price. Shortly
thereafter, virtually every CLEC stock got shelled.
Media and telecommunications companies do face serious challenges in the
years ahead. Not all will be up to the task. The Internet is the competitive
tool of the future, but not all media companies will make a successful
transition into the online world. This will be a particularly tough hurdle for
print media companies without a well-planned Internet strategy. The long
distance telephony market is besieged by cutthroat competition and pricing. This
will likely continue for the foreseeable future as margins and earnings are
sacrificed on the altar of market share. Technology will bring new entrants and
established companies will have to fight vigorously to preserve their
franchises.
All things considered, how do we feel about the media and
telecommunications stocks that have rewarded us so generously over the past
several years, but performed so poorly in 2000? Just fine thank you. There are
going to be winners and losers in these rapidly changing industries. Risk and
reward always go hand in hand. Going forward, stock selection remains the key to
making money in these dynamic industries. The silver lining in the cloud
overhanging the media and telecommunications groups is that we now have more
value oriented opportunities to choose from. We believe if we do our analysis,
we can identify many of the companies that will prosper while avoiding most of
those that will fail. A solid stock picking batting average in these groups
should produce attractive long-term returns.
A MEDIA BASTILLE DAY?
In recent years, regulatory barricades in the media industry have been
coming down. Television and radio station cross-ownership barriers have fallen
and broadcast companies have been allowed to substantially expand their national
footprints. But, there are still walls preventing media companies from realizing
their full potential. Media companies are not permitted to own television
stations and newspapers in the same market. Broadcasters and cable television
companies still have onerous and unnecessary restrictions on the number of
customers they can service. We believe as the Internet Age unfolds--making
information and entertainment instantly available to an increasing percentage of
the American public--media companies will be liberated from largely unnecessary
restrictions. Federal Communications Commission ("FCC") Chairman William Kennard
is retiring after the election. The new FCC boss, whether a Democrat or a
Republican, may promote more market oriented regulation. Eventually, common
sense and economic realities will rise above politics, and media companies will
be unshackled. Our portfolio is well positioned to celebrate a Bastille Day for
the media industry. Content will again be King--just as Cash is again King.
SPECTRUM
America is well behind the rest of the developed world in building
state-of-the-art wireless communications systems. One of the reasons is that the
FCC has kept tight control over the transmission spectrum needed to fully
develop wireless networks. Broadcasters have been allocated large chunks of
spectrum to be used to deliver high definition television ("HDTV"). It now
appears that the demand for HDTV will fall well short of previous expectations.
Currently, there is a debate over whether the FCC should retake control of this
spectrum or allow broadcasters to sell it on the open market. We think the
latter option makes more sense. This is a win/win situation. Broadcasters could
make a bundle by
6
<PAGE>
auctioning off spectrum and wireless communications companies would be able to
acquire the spectrum they need to further develop their systems.
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 - $82.375 - NYSE), through its 80% ownership of
BHC Communications (BHC - $157.375 - 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 58% of United
Television (UTVI - $147.00 - Nasdaq), which operates an NBC affiliate, an ABC
affiliate and five UPN affiliates. 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 single
market. The Chris-Craft complex is debt free, with roughly $1.5 billion in cash
and marketable securities. On August 14, News Corp. (NWS - $56.0625 - NYSE)
announced that it would purchase Chris-Craft (along with BHC and United
Television) in a deal worth $5.35 billion. According to the terms of the deal,
CCN shareholders will receive a package of cash and securities having an
"initial" stated value of $85 per share.
LIBERTY CORP. (LC - $34.625 - NYSE), headquartered in Greenville, S.C., is a
holding company with operations in broadcasting and insurance. Liberty's Cosmos
Broadcasting owns and operates eleven network affiliated television stations in
the Southeast and Midwest. Six stations are affiliated with NBC, three with ABC
and two with CBS. These stations serve more than four million households.
Liberty Life is a regional insurer, with North Carolina, South Carolina and
Louisiana accounting for more than 50% of its premium volume. The insurance
segment specializes in providing agency (home service) and mortgage protection,
life and health insurance. In February 1999, Liberty hired an investment banker
and began a strategic review. In June, Liberty announced it would sell its
insurance operations to Royal Bank of Canada for $650 million, refocusing the
company on its broadcasting operations. The company's Cosmos Broadcasting unit
is also buying Civic Communications for $204 million, bringing the number of
television stations to fifteen.
LIBERTY MEDIA GROUP (LMG'A - $18.00 - NYSE), run by savvy media investor John
Malone, is engaged in businesses that provide programming services (including
production, acquisition and distribution through all 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 investment portfolio also
includes interests in international video distribution businesses, international
telephony and domestic wireless companies, 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.
MEDIA GENERAL INC. (MEG'A - $43.00 - AMEX) is a Richmond, Virginia-based
communications company, publishing newspapers throughout the Southeast with
daily circulation of around 860,000. This includes 5 daily newspapers, clustered
in Alabama and South Carolina, which the company bought from Thomson Corp. for
$237 million in August. Media General also operates twenty-one television
stations primarily
7
<PAGE>
located in Southeastern markets, including eight purchased from Spartan
Communications on March 27, 2000 for $605 million. The company also sold its
Garden State Paper Co. to Enron Corp. (ENE - $87.625 - NYSE) for $72 million in
August.
NAVISTAR INTERNATIONAL CORP. (NAV - $29.9375 - 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 [REGISTRATION MARK] 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 [REGISTRATION MARK] brand dealer outlets in the
United States, Canada, Brazil and Mexico, and through more than 90 separate
dealers in 75 countries. Navistar provides financing for its customers and
distributors principally through its wholly-owned subsidiary, Navistar Financial
Corporation.
SEAGRAM CO. (VO - $57.4375 - NYSE) operates two global businesses: beverages and
entertainment. The beverage group's major brands include Chivas Regal, Martell,
Mumm, Crown Royal and Seagram's Gin. With its $10.4 billion December acquisition
of Polygram, Seagram has created the world's leading music company, the
Universal Music Group. Seagram's entertainment business includes the Universal
Motion Pictures Group, the Universal Studios Recreation Group and a 46% interest
in USA Networks (USAI - $21.9375 - Nasdaq). On June 20th, Seagram agreed to
merge with French companies Vivendi and Canal Plus, creating a fully integrated
global media and communications company for the wired and wireless world.
TELEPHONE & DATA SYSTEMS INC. (TDS - $110.70 - AMEX) is a diversified
telecommunications service company with cellular telephone, local telephone and
personal communications services ("PCS") operations. TDS serves 3.7 million
customers in 35 states. TDS conducts the vast majority of its cellular
operations through its 81% owned United States Cellular Corp. (USM - $70.00 -
AMEX) and conducts its telephone operations through its wholly-owned TDS
Telecommunications Corp. ("TDS Telecom") subsidiary, a full-service local
exchange carrier. Having completed a merger of its 82%-owned PCS subsidiary
Aerial Communications with VoiceStream Wireless (VSTR - $116.0625 - Nasdaq), TDS
now owns 35.6 million shares of VSTR valued at over $4.0 billion. VSTR is in the
process of being acquired by Deutsche Telecom (DT - $34.25 - NYSE), a former
German phone monopoly, for 3.2 DT shares plus $30 in cash per VSTR share.
USA NETWORKS INC. (USAI - $21.9375 - 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
8
<PAGE>
Investment Plan. Additionally, the Fund and other Gabelli Funds are available
through the no-transaction fee programs at many major brokerage firms.
WWW.GABELLI.COM
Please visit us on the Internet. Our homepage at http://www.gabelli.com
contains information about Gabelli Asset Management 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].
IN CONCLUSION
The market has behaved like a swimmer in distress in the third quarter of
2000. Every time stocks struggled to the surface, they were pulled back under
the waves. As we write, stocks are sinking under the weight of higher oil
prices, the weak Euro, and earnings uncertainties. Moderation in oil prices, a
firmer Euro, and solid third quarter earnings would provide a lifeline for
stocks. We will not speculate on the near term prospects for the market. We will
simply continue to practice our time tested investment strategy of buying
quality companies at discount prices. Over the long term, we remain confident
this will produce attractive returns.
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/ SIGNATURE
MARIO J. GABELLI, CFA
Portfolio Manager and
Chief Investment Officer
November 14, 2000
--------------------------------------------------------------------------------
TOP TEN HOLDINGS
SEPTEMBER 30, 2000
------------------
Viacom Inc. USA Networks Inc.
Telephone & Data Systems Inc. Liberty Media Group
Media General Inc. Navistar International Corp.
Cablevision Systems Corp. Seagram Co.
Chris-Craft Industries Inc. Liberty Corp.
--------------------------------------------------------------------------------
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.
9
<PAGE>
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS -- 90.0%
AEROSPACE -- 0.5%
200,000 Lockheed Martin Corp. ........................ $ 6,592,000
--------------
AGRICULTURE -- 0.4%
630,000 Archer-Daniels-Midland Co. ................... 5,433,750
--------------
AUTOMOTIVE -- 0.2%
40,000 General Motors Corp. ......................... 2,600,000
--------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 3.2%
620,000 Dana Corp. ................................... 13,330,000
630,000 GenCorp Inc. ................................. 5,118,750
520,000 Genuine Parts Co. ............................ 9,912,500
260,000 Modine Manufacturing Co. ..................... 7,324,687
30,000 Superior Industries International Inc. ....... 900,000
400,000 Tenneco Automotive Inc. ...................... 2,075,000
--------------
38,660,937
--------------
AVIATION: PARTS AND SERVICES -- 0.3%
85,000 Barnes Group Inc. ............................ 1,561,875
275,000 Fairchild Corp., Cl. A+ ...................... 1,753,125
--------------
3,315,000
--------------
BROADCASTING -- 7.9%
150,000 Ackerley Group Inc. .......................... 1,500,000
7,000 BHC Communications Inc., Cl. A+ .............. 1,101,625
730,000 Chris-Craft Industries Inc.+ ................. 60,133,750
170,000 Gray Communications Systems Inc., Cl. B ...... 1,774,375
45,000 Grupo Televisa SA, GDR+ ...................... 2,595,937
706,000 Liberty Corp. ................................ 24,445,250
340,000 Paxson Communications Corp., Cl. A+ .......... 3,910,000
--------------
95,460,937
--------------
BUSINESS SERVICES -- 0.8%
200,000 ANC Rental Corp.+ ............................ 1,150,000
158,000 Berlitz International Inc.+ .................. 1,343,000
600,369 Cendant Corp.+ ............................... 6,529,013
86,000 National Processing Inc.+ .................... 1,198,625
--------------
10,220,638
--------------
CABLE -- 5.3%
965,000 Cablevision Systems Corp., Cl. A+ ............ 63,991,562
--------------
COMMUNICATIONS EQUIPMENT -- 0.3%
50,000 Scientific-Atlanta Inc. ...................... 3,181,250
--------------
COMPUTER SOFTWARE AND SERVICES -- 0.0%
110,000 Tyler Technologies Inc. ...................... 220,000
--------------
CONSUMER PRODUCTS -- 4.8%
575,000 Carter-Wallace Inc. .......................... 14,051,562
275,001 Energizer Holdings Inc.+ ..................... 6,737,520
60,000 Gallaher Group plc, ADR ...................... 1,395,000
195,000 Hartmarx Corp.+ .............................. 585,000
25,000 National Presto Industries Inc. .............. 748,437
1,000,000 Ralston Purina Group ......................... 23,687,500
529,300 Shaw Industries Inc. ......................... 9,792,050
43,000 Syratech Corp.+ .............................. 338,625
85,000 Wolverine World Wide Inc. .................... 791,562
--------------
58,127,256
--------------
MARKET
SHARES VALUE
------ ------
CONSUMER SERVICES -- 0.6%
515,000 Rollins Inc. ................................. $ 7,628,437
--------------
DIVERSIFIED INDUSTRIAL -- 1.1%
50,000 Ampco-Pittsburgh Corp. ....................... 512,500
160,000 GenTek Inc. .................................. 2,440,000
200,000 Honeywell Inc. ............................... 7,125,000
235,700 Katy Industries Inc. ......................... 1,649,900
69,000 Lamson & Sessions Co.+ ....................... 819,375
140,000 WHX Corp.+ ................................... 210,000
--------------
12,756,775
--------------
ELECTRONICS -- 0.6%
400,000 Thomas & Betts Corp. ......................... 6,975,000
--------------
ENERGY AND UTILITIES -- 1.6%
110,000 Columbia Energy Group ........................ 7,810,000
250,000 Conectiv Inc. ................................ 4,468,750
70,000 Florida Progress Corp. ....................... 3,705,625
155,000 Southwest Gas Corp. .......................... 3,245,312
--------------
19,229,687
--------------
ENTERTAINMENT -- 18.7%
170,000 GC Companies Inc.+ ........................... 510,000
1,800,000 Liberty Media Group, Cl. A+ .................. 32,400,000
525,000 Seagram Co. .................................. 30,154,687
20,000 Six Flags Inc. ............................... 310,000
1,550,000 USA Networks Inc.+ ........................... 34,003,125
2,210,000 Viacom Inc., Cl. A+ .......................... 129,285,000
--------------
226,662,812
--------------
ENVIRONMENTAL SERVICES -- 1.6%
100,000 Republic Services Inc.+ ...................... 1,312,500
1,020,000 Waste Management Inc. ........................ 17,786,250
--------------
19,098,750
--------------
EQUIPMENT AND SUPPLIES -- 5.2%
200,000 CIRCOR International Inc.+ ................... 2,062,500
40,000 Deere & Co. .................................. 1,330,000
500,000 Flowserve Corp. .............................. 8,218,750
130,000 Gerber Scientific Inc. ....................... 1,121,250
150,000 Ingersoll-Rand Co. ........................... 5,081,250
1,055,000 Navistar International Corp.+ ................ 31,584,062
75,000 Sequa Corp., Cl. A+ .......................... 3,187,500
24,500 Sequa Corp., Cl. B+ .......................... 1,457,750
320,000 UCAR International Inc.+ ..................... 4,060,000
420,000 Watts Industries Inc., Cl. A ................. 4,200,000
--------------
62,303,062
--------------
FINANCIAL SERVICES -- 2.3%
200,000 Donaldson, Lufkin & Jenrette Inc. ............ 17,887,500
9,000 Mellon Financial Corp. ....................... 417,375
210,000 Pioneer Group Inc.+ .......................... 9,233,438
--------------
27,538,313
--------------
FOOD AND BEVERAGE -- 5.4%
196,700 Bestfoods Inc. ............................... 14,309,925
400,000 Coca-Cola Enterprises Inc. ................... 6,375,000
295,000 Corn Products International Inc. ............. 6,711,250
130,000 Diageo plc, ADR .............................. 4,590,625
10
<PAGE>
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS (CONTINUED) -- SEPTEMBER 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
FOOD AND BEVERAGE (CONTINUED)
445,000 Flowers Industries Inc. ...................... $ 8,677,500
300,000 Keebler Foods Co.+ ........................... 12,600,000
1,080,000 Whitman Corp. ................................ 12,487,500
--------------
65,751,800
--------------
HEALTH CARE -- 0.1%
20,000 American Home Products Corp. ................. 1,131,250
--------------
HOTELS AND GAMING -- 3.0%
600,000 Aztar Corp.+ ................................. 9,225,000
270,000 Gaylord Entertainment Co. .................... 6,446,250
2,000,000 Hilton Group plc ............................. 5,736,580
1,300,000 Hilton Hotels Corp. .......................... 15,031,250
--------------
36,439,080
--------------
METALS AND MINING -- 0.4%
15,000 Barrick Gold Corp. ........................... 228,750
500,000 Echo Bay Mines Ltd.+ ......................... 375,000
80,000 Homestake Mining Co. ......................... 415,000
110,000 Newmont Mining Corp. ......................... 1,870,000
65,000 Placer Dome Inc. ............................. 613,438
365,000 Royal Oak Mines Inc.+ ........................ 2,373
540,000 TVX Gold Inc. ................................ 877,500
--------------
4,382,061
--------------
PAPER AND FOREST PRODUCTS -- 0.6%
625,000 Pactiv Corp.+ ................................ 6,992,188
--------------
PUBLISHING -- 7.8%
18,000 McGraw Hill Companies Inc. ................... 1,144,125
1,670,000 Media General Inc., Cl. A (a) ................ 71,810,000
120,000 Meredith Corp. ............................... 3,540,000
300,000 Penton Media Inc. ............................ 8,250,000
250,000 Reader's Digest Association Inc., Cl. B ...... 7,890,625
45,000 Tribune Co. .................................. 1,963,125
--------------
94,597,875
--------------
REAL ESTATE -- 1.2%
750,000 Catellus Development Corp.+ .................. 13,125,000
130,000 Griffin Land & Nurseries Inc.+ ............... 1,641,250
--------------
14,766,250
--------------
RETAIL -- 2.3%
250,000 Albertson's Inc. ............................. 5,250,000
1,500,000 AutoNation Inc.+ ............................. 9,000,000
130,000 Blockbuster Inc., Cl. A ...................... 1,145,625
20,000 Burlington Coat Factory Warehouse Corp. ...... 286,250
35,000 Delhaize America Inc., Cl. A ................. 610,313
90,000 Ingles Markets Inc., Cl. A ................... 990,000
140,000 Lillian Vernon Corp. ......................... 1,365,000
322,000 Neiman Marcus Group Inc., Cl. B+ ............. 9,217,250
--------------
27,864,438
--------------
SATELLITE -- 1.3%
355,000 General Motors Corp., Cl. H+ ................. 13,198,900
130,000 Liberty Satellite & Technology Inc., Cl. A+ .. 1,381,250
225,000 Loral Space & Communications Ltd.+ ........... 1,378,125
--------------
15,958,275
--------------
MARKET
SHARES VALUE
------ ------
SPECIALTY CHEMICALS -- 1.4%
270,000 Ferro Corp. .................................. $ 5,146,875
200,000 General Chemical Group Inc. .................. 187,500
380,000 Rohm & Haas Co. .............................. 11,043,750
--------------
16,378,125
--------------
TELECOMMUNICATIONS -- 3.3%
620,983 AT&T Corp. ................................... 18,241,376
800,000 Citizens Communications Co. .................. 10,750,000
185,462 Commonwealth Telephone Enterprises Inc.+ ..... 6,838,911
92,000 RCN Corp.+ ................................... 1,909,000
115,000 Rogers Communications Inc., Cl. B, ADR+ ...... 2,724,063
--------------
40,463,350
--------------
WIRELESS COMMUNICATIONS -- 7.8%
20,000 Nextel Communications Inc., Cl. A+ ........... 935,000
135,500 Rogers Wireless
Communications Inc., Cl. B + ............... 4,115,813
90,000 Sprint Corp. (PCS Group)+ .................... 3,155,625
900,000 Telecom Italia Mobile SpA .................... 7,274,717
700,000 Telephone & Data Systems Inc. ................ 77,490,000
12,000 United States Cellular Corp.+ ................ 840,000
--------------
93,811,155
--------------
TOTAL COMMON STOCKS .......................... 1,088,532,013
--------------
PREFERRED STOCKS -- 0.4%
PUBLISHING -- 0.4%
95,000 News Corp. Ltd., Pfd., ADR ................... 4,453,125
--------------
PRINCIPAL
AMOUNT
------
U.S. GOVERNMENT OBLIGATIONS -- 7.2%
$88,650,000 U.S. Treasury Bills,
6.12% to 6.15%++,
due 11/14/00 to 12/14/00
6.46%, 10/02/00 ............................ 87,671,241
--------------
REPURCHASE AGREEMENTS -- 4.0%
47,960,000 Agreement with State Street Bank & Trust Co.,
6.46%, dated 09/29/00, due 10/02/00,
proceeds at maturity $47,985,818
10/02/00 (b) ............................... 47,960,000
--------------
TOTAL INVESTMENTS -- 101.6%
(Cost $936,129,392) ........................ 1,228,616,379
OTHER ASSETS AND
LIABILITIES (NET) -- (1.6%) ................ (19,096,045)
--------------
NET ASSETS -- 100.0% ......................... $1,209,520,334
==============
------------------------
(a) Security considered an affiliated holding because the Fund owns at least 5%
of the outstanding shares.
(b) Collateralized by U.S. Treasury Bond, 8.50%, due 02/15/20, market value
$48,923,373.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR - American Depositary Receipt.
GDR - Global Depositary Receipt.
11
<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 &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
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.
--------------------------------------------------------------------------------
GAB409Q300SR
[PHOTO OF MARIO J. GABELLI OMITTED]
THE
GABELLI
VALUE
FUND
INC.
THIRD QUARTER REPORT
SEPTEMBER 30, 2000
