THE GABELLI VALUE FUND INC.
SEMI-ANNUAL REPORT
JUNE 30, 2000
[Graphic of 4 stars omitted]
MORNINGSTAR RATED(TM) GABELLI VALUE FUND 4 STARS OVERALL AND
FOR THE THREE-YEAR PERIOD ENDED 06/30/00 AMONG 3642
DOMESTIC EQUITY FUNDS, AND FOR THE FIVE AND TEN-YEAR
PERIODS ENDED 06/30/00 AMONG 2328 AND 783 DOMESTIC EQUITY
FUNDS, RESPECTIVELY.
=====================
FORBES
HONOR ROLL SELECTION
=====================
TO OUR SHAREHOLDERS,
At the end of the first quarter of 2000, long-dormant value stocks were
finally attracting attention. The sharp technology stock correction, which began
in the second week of March, revived the antiquated notion that the severely
depressed stocks of high quality companies in out-of-favor industry groups might
be an attractive alternative to the richly priced technology stocks. This
all-but-forgotten concept gained credence as the previous drivers of the NASDAQ
continued to plummet in April. However, investors quickly lost interest in the
merits of value investing when technology stocks began rebounding in late May.
By the end of the second quarter, all eyes were once again focused on technology
stocks, leaving the rest of the market adrift. The Dow Jones Industrial Average
("DJIA") and Standard & Poor's 500 Index materially outperformed the NASDAQ
Composite Index during the second quarter, but momentum had clearly shifted back
to technology stocks at its close.
While public market speculators remain ambivalent about fundamentally
inexpensive, high quality companies in more prosaic businesses, the true
connoisseurs of value--corporate acquirers and leveraged buy out groups--are
aggressively taking advantage of all the attractive merchandise in the market's
discount bin. And, of course, value investors like us call this "our space".
INVESTMENT PERFORMANCE
For the second quarter ended June 30, 2000, The Gabelli Value Fund's (the
"Fund") total return was 1.02%. The Standard & Poor's ("S&P") 500, Value Line
Composite and Russell 2000 Indices declined 2.66%, 0.41% and 3.78%,
respectively, over the same period. Each index is an unmanaged indicator of
stock market performance. The Fund was up 5.22% over the trailing twelve-month
period. The S&P 500,
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Morningstar proprietary
ratings reflect historical risk adjusted performance as of June 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)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Quarter
-----------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
<S> <C> <C> <C> <C> <C>
2000: Net Asset Value ................... $18.70 $18.89 -- -- --
Total Return ...................... (3.9)% 1.0% -- -- --
------------------------------------------------------------------------------------------------------------
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%
------------------------------------------------------------------------------------------------------------
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>
-------------------------------------------------------
Average Annual Returns (Class A Shares)
---------------------------------------
June 30, 2000 (a)
-----------------
1 Year .................................. 5.22%
.................................. (0.57)%(c)
5 Year .................................. 22.71%
.................................. 21.34%(c)
10 Year .................................. 18.34%
.................................. 17.68%(c)
Life of Fund (b) ......................... 17.05%
.................................. 16.44%(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.
--------------------------------------------------------------------------------
2
<PAGE>
Value Line Composite and Russell 2000 Indices rose 7.24%, 1.47% and 14.32%,
respectively, over the same twelve-month period.
For the ten-year period ended June 30, 2000, the Fund's total return
averaged 18.34% annually versus average annual returns of 17.79%, 14.04% and
13.57% for the S&P 500, Value Line Composite and Russell 2000 Indices,
respectively. Since inception on September 29, 1989 through June 30, 2000, the
Fund had a cumulative total return of 444.46%, which equates to an average
annual total return of 17.05%.
[Graphic omitted]
[Pyramid text as follows:]
EPS
PMV
MANAGEMENT
CASH FLOW
RESEARCH
COMMENTARY
"WHAT, ME WORRY?"
The labor market remains tight and the threat of wage-driven inflation is
quite real. Despite six Federal Reserve interest rate hikes over the last
eighteen months, the economy is still growing at a pace that troubles the
monetary authorities. This is also an election year. While the campaign has been
a relatively quiet one, the rhetoric is sure to heat up as we approach November.
Political posturing on economic issues, principally how to re-allocate the
growing budget surplus, may rattle the financial markets. Finally, while there
are large pockets of attractive fundamental values in the equity markets, the
overall market, as measured by the S&P 500 Index, is still rather richly priced
relative to historic norms.
Of concern to us is the soaring trade deficit. Thus far, the world has
been happy to finance this deficit by buying U.S. stocks and bonds. This has
worked out well for all concerned. However, if we see inflation continue to
trend higher and if the U.S. financial markets sputter, international investors
may seek opportunities elsewhere. Reduced global demand for U.S. financial
assets may have a greater impact on stocks and bonds than the aforementioned
economic, political, and market issues. If international demand dries up, the
favorable supply/demand dynamics the U.S. financial markets have enjoyed over
the last decade may be disrupted. In addition, the Federal Reserve may have to
pump up interest rates even further, and at the wrong time, to defend the
dollar.
That is the dark side. The bright side is that we are finally seeing
evidence of economic deceleration. Housing starts and home sales are down
substantially, and with the exception of oil, commodity prices have stabilized.
The most recently released employment numbers were relatively benign and there
are indications that consumer confidence has been dented. For the time being,
the Federal Reserve has spared us an additional rate hike. We just may be
returning to a "Goldilocks" economy--not too hot, not too cool, but just
right--that will help propel stocks higher. We have labeled this rosy economic
scenario "Soft Landing Part II". Ideally, we will see a much broader market
advance in which companies in a wider range of industries participate.
A TUG OF WAR
For brief periods during the second quarter, market activity looked like a
tug-of-war between technology and value stocks. When the tech-heavy NASDAQ
Composite was down, the value-oriented Dow Jones was up, and vice-versa. This
raises the question of whether tech stocks must fall before stocks from value
sectors may rise, and if so, what economic and market phenomena may cause such a
reversal in fortune.
3
<PAGE>
Let's examine the economic hypothesis being used to glorify technology
stocks and relegate value stocks to investment purgatory. The NASDAQ Composite
and DJIA began to diverge at the end of the second quarter of 1999, when it
became clear the Federal Reserve was determined to raise short-term interest
rates until the economy slowed. Technology company earnings were thought to be
largely immune to higher interest rates and a slower economy--an argument that
had validity due to strong secular growth trends in many tech sectors. Earnings
for economically sensitive companies would trend lower as the economy
decelerated--also a reasonable assumption. Despite the Federal Reserve's best
efforts, the economy continued to barrel along and we saw solid earnings gains
across the industry group spectrum. Tech stocks were grandly rewarded for
meeting or exceeding earnings estimates, but better than expected earnings for
companies in other industries were largely ignored. At the close of this
reporting period, the NASDAQ Composite had a trailing price/earnings ("P/E")
multiple of 128.1, while the Dow Jones Industrials had a trailing P/E of 21.8.
P/Es are a function of earnings growth rates and interest rates. A company
growing earnings at 30% per year deserves a higher P/E than a company growing
earnings at 10% annually. However, P/Es are also a reflection of investor
sentiment. Presently, quality tech stocks are priced as if nothing can go wrong
and quality companies in other industries are priced as if nothing can go right.
This challenges economic reality.
Wall Street analysts are paid to look forward, but their forecasts are
generally strongly biased by the past. Over the last several years, leading
technology companies' earnings have beaten consensus projections. Analysts have
responded by raising the earnings bar, at least in part to justify soaring
valuations. If the economy slows, technology spending may moderate as well, and
tech companies' earnings may fall short of what we believe are overly optimistic
forecasts. High valuations leave little room for even modest earnings
disappointments. Just ask the folks at Qualcomm and Lucent Technologies.
As for the rest of the market, if the economy is slowing, earnings for
economically sensitive companies may have peaked, albeit a year later than many
anticipated. Cyclical stocks have received little tribute for better than
expected earnings. In fact, we believe that significantly lower earnings are
already baked into valuations. So, any pleasant surprises should generate
enthusiasm. Other industry groups such as food and drug stocks suffered more
from investor indifference than any present or potential earnings dislocations.
Media stocks, which stalled in 2000 after exceptionally strong performance in
1998-99, may recapture stock market interest as consolidation in the industry
accelerates. In the last year we have seen AOL combine with Time Warner, Viacom
acquire CBS, and the recently announced Vivendi/Canal Plus/Seagram merger. We
think there are many more deals, big and small, on the horizon as content and
distribution are linked to improve media companies' competitive positions on the
world stage. Telecommunications stocks have also taken a well-deserved rest this
year. However, the three forces driving the industry--technology, deregulation,
and consolidation--remain firmly in place.
We are investment realists. Technology is the pre-eminent growth industry
in the world and over the long term discriminating tech investors should receive
generous rewards. However, the current diet of nothing but super rich technology
stocks is dangerous. The addition of some high protein, low calorie items from
some other investment food groups will help promote healthier long-term results.
DEALS...DEALS...AND MORE DEALS
A component of our investment methodology is to identify industry and
sector trends and themes ahead of the curve and position ourselves to take
advantage of these developments. Consolidation in a
4
<PAGE>
particular industry is one such dynamic. As we have shared with you in previous
quarterly letters, the continued high level of activity in mergers and
acquisitions contributed significantly to the solid performance of our Asset
Fund. The accompanying table illustrates how deal activity surfaced value in a
small sample of the portfolio holdings.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
2000 COMPLETED DEALS
NUMBER AVERAGE COST CLOSING
FUND HOLDING OF SHARES (a) PER SHARE (b) PRICE (c) CLOSING DATE %RETURN (d)
------------ --------- --------- ----- ------------ -------
FIRST QUARTER 2000 ANNOUNCED DEALS
----------------------------------
<S> <C> <C> <C> <C> <C>
Watkins-Johnson Co. 145,000 $30.16 $41.00 02/01/00 35.94%
Pittway Corp., Cl. A 200,000 2.06 45.50 02/04/00 2,108.74%
Ascent Entertainment Group Inc. 317,700 11.34 15.25 03/28/00 34.48%
SECOND QUARTER 2000 ANNOUNCED DEALS
-----------------------------------
General Cigar Holdings Inc. 643,900 13.03 15.25 05/09/00 17.04%
General Cigar Holdings Inc., Cl. B 168,000 8.42 15.25 05/09/00 81.12%
Celestial Seasonings Inc. 38,000 17.09 38.50 05/30/00 125.28%
Mirage Resorts Inc. 15,000,000 17.51 20.94 06/01/00 19.59%
Hussmann International Inc. 1,079,600 24.40 29.00 06/14/00 18.85%
SECOND QUARTER 2000 FINANCIAL ENGINEERING
-----------------------------------------
General Motors Corp. 11,155 68.56 86.94 05/19/00 N/A
-------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Number of shares held by the Fund on the final day of trading for the
issuer.
(b) Average purchase price of issuer's shares held by the Fund on the final day
of trading for the issuer.
(c) Closing price on the final day of trading for the issuer or the tender price
on the closing date of the tender offer.
(d) Represents average estimated return based on average cost per share and
closing price per share.
NOTE: SEE THE PORTFOLIO OF INVESTMENTS FOR A COMPLETE LISTING OF HOLDINGS.
--------------------------------------------------------------------------------
INVESTMENT SCOREBOARD
Food stocks, which we highlighted as appetizing values in our first
quarter report, nourished returns, with stocks such as Corn Products
International, Diageo, and Pepsi Bottling Group, posting gains. Financial
Service stocks Mellon Financial, Pioneer Group, ReliaStar Financial Corp, and
St. Paul Companies Inc, all provided a boost to the Fund's performance.
Publishing companies (Readers Digest, Penton Media, McGraw Hill and Meredith)
also bolstered Fund performance.
This quarter, Pioneer Group was boosted by a sizeable takeover premium.
Pioneer started the quarter at $23.25. On May 15, UniCredito Groupe agreed to
purchase all of the outstanding shares of Pioneer for $43.50 per share. One deal
that closed during the quarter was also particularly beneficial to Fund
performance. On June 13, we tendered all shares of Hussman International in a
deal with Ingersoll Rand that valued our Hussman shares at $29.00 per share, an
82% premium to our average purchase price.
After a long run of superior performance, stocks in the telecommunications
and media sectors had become somewhat extended and were due for a breather.
Among our biggest winners in quarters past, wireless communications stocks
(Rogers Cantel, Telecom Italia Mobile, Telephone & Data, and United States
Cellular) performed poorly this quarter. Almost all of our telecommunications
holdings declined, with Latin American operators getting particularly hard hit.
We believe they are still long term bargains and expect both
5
<PAGE>
earnings growth trends and ongoing consolidation to help them regain momentum.
The Interactive Age is still in its infancy. Going forward, quality distribution
(wired and wireless telecommunications systems and cable television and
broadcast networks) and information and entertainment content (publishers and
film and television production companies) will be among the world's most prized
assets. Automotive stocks (General Motors) and automotive parts and suppliers
(Genuine Parts, Superior Industries, Dana Corp, and Tenneco), were among others
that were hindrances on the Fund.
THE NEXT BIG MEDIA DEAL
The partnering of Viacom/CBS, AOL/Time Warner, Vivendi/Canal Plus/Seagram,
and Liberty Media Group/UnitedGlobalCom show that media industry mergers
marrying content to distribution are accelerating. There are still plenty of
attractive singles looking to partner up and the band is not ready for a break.
The big multimedia wolves are there, with News Corp's Rupert Murdoch circling
the dance hall, Viacom's Sumner Redstone and Mel Karmazin positioned by the
punch bowl, and AOL/Time Warner's Steve Case and Gerald Levin and Liberty
Media's John Malone catching their breath by the bandstand. Look, there's
Chris-Craft's Herb Siegel snapping his fingers and looking like he's finally
ready to cut the rug with somebody. And off in the corner is NBC's Bob Wright
wondering if GE's Jack Welch will set him free to pursue another liaison. USA
Networks' Barry Diller is flirting with everyone while trying to decide on the
appropriate partner. The whole place is a flutter with the rumor that AT&T's
Michael Armstrong may be showing up later.
CHEMICAL DEPENDENCE
Specialty chemicals companies are economically sensitive, but do not
generally experience the pricing pressure that could wipe out the earnings of
commodity chemical producers during economic downturns. That has not stopped
investors from dumping these stocks, which we feel are now among the most
attractive bargains in the stock market.
Recently, we have been adding a few names to the portfolio and increasing
our positions in existing specialty chemicals stock holdings. We believe
earnings will be better than expected and that the severely wounded specialty
chemicals stocks will attract a few predators. Lilly Industries, a specialty
coatings manufacturer, has just received a premium bid from Valspar. Putting a
comparable Private Market Value on portfolio holdings such as Ferro and General
Chemical indicates exceptional value. Dexter is up for sale. Great Lakes may
follow. So, we may soon have another test case of the real world economic value
of specialty chemicals companies.
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 - $67.875 - NYSE) is one of the nation's leading
communications and entertainment companies, with a portfolio of operations that
spans state-of-the-art, high-speed multimedia delivery, subscription cable
television services, championship professional sports teams and national cable
television networks. Headquartered in Bethpage, N.Y., Cablevision serves nearly
3 million cable customers
6
<PAGE>
in the most important cable TV market--New York. Cablevision is a leader in
delivering cutting-edge technological innovation, such as high-speed cable, to
the home. Through its Rainbow Media Holdings subsidiary, which the company is in
the process of spinning-off to shareholders, Cablevision manages recognized
content offerings such as American Movie Classics, Bravo and The Independent
Film Channel. Cablevision owns and operates New York City's famed Madison Square
Garden, which includes the arena complex, the N.Y. Knicks, the N.Y. Rangers and
the MSG network. Cablevision also operates Radio City Entertainment and holds a
long term lease for Radio City Music Hall, home of the world-famous Rockettes.
CHRIS-CRAFT INDUSTRIES INC. (CCN - $66.0625 - NYSE), through its 80% ownership
of BHC Communications (BHC - $152.00 - 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 - $128.75 - 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 - $54.50 - 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 MEDIA GROUP (LMG'A - $24.25 - NYSE) is engaged in businesses which
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 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.
LIBERTY CORP. (LC - $42.00 - 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 which may result in a spinoff. In June, Liberty
announced it will 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 15.
MEDIA GENERAL INC. (MEG'A - $48.5625 - AMEX) is a Richmond, Virginia-based
communications company, publishing newspapers throughout the Southeast with
daily circulation of around 770,000. The company is also buying 5 daily
newspapers with 90,000 in total daily circulation, clustered in Alabama and
South Carolina, from Thomson Corp. for $237 million. Media General also operates
twenty-one television stations primarily located in Southeastern markets,
including eight purchased from Spartan
7
<PAGE>
Communications on March 27, 2000 for $605 million. The company announced on July
13 that it will sell its Garden State Paper Co. to Enron Corp. (ENE - $64.50 -
NYSE) for $72 million.
NAVISTAR INTERNATIONAL CORP. (NAV - $31.0625 - 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[REGRISTRATION 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[REGRISTRATION 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 - $58.00 - 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 - $21.625 - NASDAQ). On June 20th, Seagram, Vivendi and
Canal Plus agreed to merge, creating a fully integrated global media and
communications company for the wired and wireless world.
TELEPHONE & DATA SYSTEMS INC. (TDS - $100.25 - 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 - $63.00 -
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 - $116.2967 - NASDAQ), TDS
now owns 35.6 million shares of VSTR valued at over $5.0 billion.
USA NETWORKS INC. (USAI - $21.625 - 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.
VIACOM INC. (VIA'A - $68.375 - NYSE), long a major provider of entertainment
"content", has evolved into one of the world's dominant media companies.
Non-core assets are being divested and debt has been reduced to approximately $8
billion. Viacom is focusing on the global expansion of its media franchises.
Viacom is particularly well-positioned in music (notably MTV) and cable networks
(such as Nickelodeon). On May 3, Viacom closed the merger with CBS in a $49.6
billion transaction.
MINIMUM INITIAL INVESTMENT - $1,000
The Fund's minimum initial investment for regular accounts is $1,000.
There are no subsequent investment minimums. No initial minimum is required for
those establishing an Automatic Investment Plan.
8
<PAGE>
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
It has been a dull market for everything but technology stocks this
quarter. After a breathtaking nosedive that temporarily frightened investors
into more reasonably priced market sectors, technology stocks are once again
soaring and attracting almost all of investors' attention and resources. The
rest of the market remains earthbound.
Value honey is attracting bees. The takeover of portfolio companies,
announced plans for the potential sale of others, and investors' focus on other
potential industry group targets helped propel the Fund to a modest
outperformance of the market averages. We believe merger and acquisition
activity will continue to provide a performance tailwind for the portfolio even
in what may continue to be a lackluster market.
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
August 14, 2000
------------------------------------------------------------------
TOP TEN HOLDINGS
JUNE 30, 2000
-------------
Viacom Inc. Liberty Media Group
Media General Inc. USA Networks Inc.
Telephone & Data Systems 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 -- JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------ ---- ------
<S> <C> <C> <C>
COMMON STOCKS -- 89.7%
AGRICULTURE -- 0.5%
625,000 Archer-Daniels-Midland Co. ........... $ 9,526,150 $ 6,132,812
------------ ------------
AUTOMOTIVE -- 0.2%
45,845 General Motors Corp. ................. 3,134,415 2,661,875
------------ ------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 3.1%
630,000 Dana Corp. ........................... 26,152,271 13,348,125
550,000 GenCorp Inc. ......................... 5,944,731 4,400,000
515,000 Genuine Parts Co. .................... 12,609,018 10,300,000
260,000 Modine Manufacturing Co. ............. 8,282,310 7,020,000
45,000 Superior Industries
International Inc. ................. 1,130,006 1,158,750
400,000 Tenneco Automotive Inc. .............. 3,750,573 2,100,000
------------ ------------
57,868,909 38,326,875
------------ ------------
AVIATION: PARTS AND SERVICES -- 0.2%
80,000 Barnes Group Inc. .................... 1,754,506 1,305,000
260,000 Fairchild Corp., Cl. A+ .............. 3,252,099 1,267,500
------------ ------------
5,006,605 2,572,500
------------ ------------
BROADCASTING -- 7.4%
150,000 Ackerley Group Inc. .................. 2,315,758 1,762,500
5,000 BHC Communications
Inc., Cl. A ........................ 701,300 760,000
756,250 Chris-Craft Industries Inc.+ ......... 25,102,423 49,959,766
170,000 Gray Communications
Systems Inc., Cl. B ................ 2,391,530 1,657,500
58,000 Grupo Televisa SA, GDR+ .............. 1,288,825 3,998,375
706,500 Liberty Corp. ........................ 30,592,962 29,673,000
340,000 Paxson Communications
Corp., Cl. A+ ...................... 3,135,875 2,890,000
------------ ------------
65,528,673 90,701,141
------------ ------------
BUSINESS SERVICES -- 1.3%
160,000 Berlitz International Inc.+ .......... 2,838,075 1,440,000
500,369 Cendant Corp.+ ....................... 9,143,504 7,005,166
83,000 National Processing Inc.+ ............ 751,169 1,037,500
120,000 Verio Inc.+ .......................... 6,987,282 6,658,125
------------ ------------
19,720,030 16,140,791
------------ ------------
CABLE -- 5.3%
950,000 Cablevision Systems
Corp., Cl. A+ ...................... 12,236,966 64,481,250
------------ ------------
COMMUNICATIONS EQUIPMENT -- 0.3%
54,000 Scientific-Atlanta Inc. .............. 493,127 4,023,000
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 0.0%
175,000 Tyler Technologies Inc. .............. 374,300 448,437
------------ ------------
CONSUMER PRODUCTS -- 3.6%
575,000 Carter-Wallace Inc. .................. 8,909,119 11,571,875
MARKET
SHARES COST VALUE
------ ---- ------
275,001 Energizer Holdings Inc.+ ............. $ 5,456,214 $ 5,018,765
170,000 Fortune Brands Inc. .................. 4,164,083 3,920,625
56,400 Gallaher Group plc, ADR .............. 1,188,447 1,209,075
180,000 Hartmarx Corp.+ ...................... 1,201,687 461,250
22,000 National Presto Industries Inc. 748,312 676,500
1,000,000 Ralston Purina Group ................. 18,092,719 19,937,500
43,000 Syratech Corp.+ ...................... 993,791 338,625
85,000 Wolverine World Wide Inc. ............ 855,819 839,375
------------ ------------
41,610,191 43,973,590
------------ ------------
CONSUMER SERVICES -- 0.6%
515,000 Rollins Inc. ......................... 8,982,402 7,660,625
------------ ------------
DIVERSIFIED INDUSTRIAL -- 0.7%
50,000 Ampco-Pittsburgh Corp. ............... 250,017 556,250
160,000 GenTek Inc. .......................... 1,683,134 1,790,000
40,000 Honeywell Inc. ....................... 1,331,100 1,347,500
230,000 Katy Industries Inc. ................. 2,013,753 2,702,500
100,000 Lamson & Sessions Co.+ ............... 602,089 1,531,250
145,000 WHX Corp.+ ........................... 1,613,331 797,500
------------ ------------
7,493,424 8,725,000
------------ ------------
ELECTRONICS -- 0.4%
237,400 Thomas & Betts Corp. ................. 5,970,404 4,540,275
------------ ------------
ENERGY AND UTILITIES -- 3.0%
160,000 Columbia Energy Group ................ 10,120,638 10,500,000
250,000 Conectiv Inc. ........................ 4,000,315 3,890,625
75,000 Florida Progress Corp. ............... 3,493,864 3,515,625
156,000 Southwest Gas Corp. .................. 3,027,730 2,730,000
200,000 Vastar Resources Inc. ................ 16,291,700 16,425,000
------------ ------------
36,934,247 37,061,250
------------ ------------
ENTERTAINMENT -- 21.4%
150,000 GC Companies Inc.+ ................... 5,696,631 3,356,250
1,750,000 Liberty Media Group, Cl. A+ .......... 8,697,534 42,437,500
525,000 Seagram Co. .......................... 30,174,094 30,450,000
1,550,000 USA Networks Inc.+ ................... 10,696,564 33,518,750
2,220,000 Viacom Inc., Cl. A+ .................. 35,982,867 151,792,500
------------ ------------
91,247,690 261,555,000
------------ ------------
ENVIRONMENTAL SERVICES -- 1.4%
70,000 Republic Services Inc.+ .............. 964,676 1,120,000
850,000 Waste Management Inc. ................ 17,991,508 16,150,000
------------ ------------
18,956,184 17,270,000
------------ ------------
EQUIPMENT AND SUPPLIES -- 6.1%
200,000 CIRCOR International Inc.+ ........... 2,066,888 1,637,500
30,000 Deere & Co. .......................... 804,338 1,110,000
370,000 Flowserve Corp. ...................... 7,170,644 5,573,125
130,000 Gerber Scientific Inc. ............... 1,111,661 1,495,000
865,000 Mark IV Industries Inc. .............. 16,096,563 18,056,875
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------ ---- ------
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
EQUIPMENT AND SUPPLIES (CONTINUED)
1,050,000 Navistar International
Corp.+ .................... $ 30,191,397 $ 32,615,625
75,000 Sequa Corp., Cl. A+ ......... 2,704,459 2,864,062
24,500 Sequa Corp., Cl. B+ ......... 1,203,320 1,416,406
6,000 Smith (A.O.) Corp., Cl. A ... 168,575 120,750
320,000 UCAR International Inc.+ .... 5,650,534 4,180,000
420,000 Watts Industries Inc., Cl. A 5,235,511 5,302,500
------------ ------------
72,403,890 74,371,843
------------ ------------
FINANCIAL SERVICES -- 1.0%
30,000 Mellon Financial Corp. ...... 1,064,250 1,093,125
191,000 Pioneer Group Inc.+ ......... 3,510,357 8,093,625
40,000 ReliaStar Financial Corp. ... 2,055,437 2,097,500
10,000 St. Paul Companies Inc. ..... 243,265 341,250
------------ ------------
6,873,309 11,625,500
------------ ------------
FOOD AND BEVERAGE -- 2.6%
50,000 Advantica Restaurant
Group Inc.+ ............... 287,582 48,437
130,000 Bestfoods Inc. .............. 8,774,214 9,002,500
285,000 Corn Products
International Inc. ........ 7,920,113 7,552,500
100,000 Diageo plc, ADR ............. 3,573,578 3,556,250
34,000 Hain Celestial Group Inc.+ .. 454,400 1,247,375
30,000 Pepsi Bottling Group Inc. ... 560,125 875,625
800,000 Whitman Corp. ............... 9,662,139 9,900,000
------------ ------------
31,232,151 32,182,687
------------ ------------
HEALTH CARE -- 1.1%
35,000 American Home
Products Corp. ............ 1,550,179 2,056,250
160,000 Shared Medical Systems Corp. 11,546,003 11,670,000
------------ ------------
13,096,182 13,726,250
------------ ------------
HOTELS AND GAMING -- 2.8%
600,000 Aztar Corp.+ ................ 4,319,446 9,300,000
270,000 Gaylord Entertainment Co. ... 7,844,274 5,805,000
2,000,000 Hilton Group plc ............ 8,212,481 7,020,782
1,300,000 Hilton Hotels Corp. ......... 14,568,625 12,187,500
------------ ------------
34,944,826 34,313,282
------------ ------------
METALS AND MINING -- 0.4%
15,000 Barrick Gold Corp. .......... 269,828 272,813
500,000 Echo Bay Mines Ltd.+ ........ 1,487,760 500,000
80,000 Homestake Mining Co. ........ 952,438 550,000
78,000 Newmont Mining Corp. ........ 1,931,413 1,686,750
65,000 Placer Dome Inc. ............ 756,700 621,563
365,000 Royal Oak Mines Inc.+ ....... 533,235 1,825
2,500,000 TVX Gold Inc.+ .............. 2,926,267 1,562,500
------------ ------------
8,857,641 5,195,451
------------ ------------
MARKET
SHARES COST VALUE
------ ---- ------
PAPER AND FOREST PRODUCTS -- 0.4%
17,682 International Paper Co. ..... $ 586,821 $ 527,145
600,000 Pactiv Corp.+ ............... 6,992,674 4,725,000
------------ ------------
7,579,495 5,252,145
------------ ------------
PUBLISHING -- 8.7%
23,000 McGraw Hill Companies Inc. .. 719,735 1,242,000
1,653,500 Media General Inc., Cl. A (a) 34,511,846 80,298,094
120,000 Meredith Corp. .............. 2,437,907 4,050,000
340,000 Penton Media Inc. ........... 4,046,666 11,900,000
250,000 Reader's Digest
Association Inc., Cl. B ... 6,210,153 9,140,625
------------ ------------
47,926,307 106,630,719
------------ ------------
REAL ESTATE -- 1.1%
750,000 Catellus Development
Corp.+ .................... 9,453,786 11,250,000
130,000 Griffin Land &
Nurseries Inc.+ ........... 1,463,689 1,600,625
------------ ------------
10,917,475 12,850,625
------------ ------------
RETAIL -- 2.0%
25,000 Albertson's Inc. ............ 629,605 831,250
1,380,000 AutoNation Inc.+ ............ 17,704,316 9,746,250
118,000 Blockbuster Inc., Cl. A ..... 1,414,924 1,143,125
20,000 Burlington Coat Factory
Warehouse Corp. ........... 298,467 216,250
70,000 Delhaize America Inc., Cl. A 1,833,067 1,238,125
80,000 Ingles Markets Inc., Cl. A .. 990,728 835,000
140,000 Lillian Vernon Corp. ........ 2,004,440 1,470,000
298,000 Neiman Marcus Group
Inc., Cl. B+ .............. 7,843,569 8,269,500
------------ ------------
32,719,116 23,749,500
------------ ------------
SATELLITE -- 1.5%
245,000 COMSAT Corp. ................ 5,789,033 6,048,438
111,000 General Motors Corp., Cl. H+ 10,007,379 9,740,250
200,000 Loral Space &
Communications Ltd.+ ...... 3,021,758 1,387,500
130,000 TCI Satellite Entertainment
Inc., Cl. A+ .............. 1,102,068 1,129,375
------------ ------------
19,920,238 18,305,563
------------ ------------
SPECIALTY CHEMICALS -- 1.3%
150,000 Dexter Corp. ................ 6,279,304 7,200,000
270,000 Ferro Corp. ................. 4,947,249 5,670,000
190,000 General Chemical Group Inc. . 486,375 130,625
90,000 Rohm & Haas Co. ............. 3,106,837 3,105,000
------------ ------------
14,819,765 16,105,625
------------ ------------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------ ---- ------
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- 4.2%
688,750 AT&T Corp. .......................... $ 23,374,453 $ 21,781,719
12,000 Cable & Wireless plc, ADR ........... 585,348 600,750
820,000 Citizens Communications Co. ......... 8,642,240 14,145,000
172,462 Commonwealth Telephone
Enterprises Inc.+ ................. 3,170,439 8,116,493
92,000 RCN Corp.+ .......................... 572,109 2,334,500
130,000 Rogers Communications
Inc., Cl. B, ADR+ ................. 2,259,296 3,705,000
------------ --------------
38,603,885 50,683,462
------------ --------------
WIRELESS COMMUNICATIONS -- 7.1%
135,000 Rogers Cantel Mobile
Communications Inc., Cl. B+ ....... 2,189,050 4,539,375
900,000 Telecom Italia Mobile SpA ... ....... 5,746,347 9,220,017
713,700 Telephone & Data
Systems Inc. ...................... 33,769,173 71,548,425
19,000 United States Cellular Corp.+ ....... 1,147,763 1,197,000
------------ --------------
42,852,333 86,504,817
------------ --------------
TOTAL COMMON STOCKS ................. 767,830,330 1,097,771,890
------------ --------------
PREFERRED STOCKS -- 0.6%
PUBLISHING -- 0.6%
155,500 News Corp. Ltd., Pfd., ADR .......... 2,390,998 7,386,250
------------ --------------
PRINCIPAL
AMOUNT
---------
U.S. GOVERNMENT OBLIGATIONS -- 4.5%
$56,100,000 U.S. Treasury Bills,
5.52% to 5.81% ++,
due 07/20/00 to 09/14/00 ............ 55,552,703 55,562,266
------------ --------------
REPURCHASE AGREEMENTS -- 3.2%
38,580,000 Agreement with State Street
Bank & Trust Co., 6.50%, dated
06/30/00, due 07/03/00, proceeds at
maturity $38,600,898 (b) ............ 38,580,000 38,580,000
------------ --------------
TOTAL
INVESTMENTS -- 98.0% $864,354,031 $1,199,300,406
============
OTHER ASSETS AND
LIABILITIES (NET) -- 2.0% ........... 24,079,889
--------------
NET ASSETS -- 100.0%
(64,753,469 shares outstanding) ..... $1,223,380,295
------------------------
For Federal tax purposes:
Aggregate cost ....................... $ 864,354,031
==============
Gross unrealized appreciation ........ $ 406,680,518
Gross unrealized depreciation ........ (71,734,143)
--------------
Net unrealized appreciation .......... $ 334,946,375
==============
NUMBER OF UNREALIZED
CONTRACTS APPRECIATION
--------- ------------
FUTURES CONTRACTS
100 Short S&P 500 Index Futures
09/14/00 ............................ $ 729,170
--------------
</TABLE>
(a) Security considered an affiliated holding because the Fund owns at least
5% of the outstanding shares.
(b) Collateralized by U.S. Treasury Bond, 8.75%, due 05/15/17, market value
$39,357,900.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR - American Depositary Receipt.
GDR - Global Depositary Receipt.
See accompanying notes to financial statements.
12
<PAGE>
THE GABELLI VALUE FUND INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost $864,354,031) ............... $1,199,300,406
Cash and foreign currency, at value
(Cost $157,764) ....................................... 152,044
Receivable for investments sold ......................... 49,782,762
Receivable for Fund shares sold ......................... 1,051,191
Dividends and interest receivable ....................... 751,403
---------------
TOTAL ASSETS ............................................ 1,251,037,806
---------------
LIABILITIES:
Payable for investments purchased ....................... 25,327,273
Payable for Fund shares redeemed ........................ 625,029
Payable for investment advisory fees .................... 1,006,434
Payable for distribution fees ........................... 142,837
Payable to custodian .................................... 7,200
Payable for shareholder servicing fees .................. 263,500
Variation margin ........................................ 252,500
Other accrued expenses .................................. 32,738
---------------
TOTAL LIABILITIES ....................................... 27,657,511
---------------
NET ASSETS applicable to 64,753,469
shares outstanding .................................... $1,223,380,295
==============
NET ASSETS CONSIST OF:
Shares of capital stock at par value .................... $ 64,753
Additional paid-in capital .............................. 798,904,040
Accumulated net investment loss ......................... (1,422,309)
Accumulated net realized gain on
investments, futures contracts and
foreign currency transactions ......................... 90,152,816
Net unrealized appreciation on investments
and foreign currency transactions ..................... 335,680,995
---------------
TOTAL NET ASSETS ........................................ $1,223,380,295
==============
SHARES OF CAPITAL STOCK:
CLASS A:
Net Asset Value and redemption price per share
(64,741,664 shares outstanding) ...................... $18.89
======
Maximum sales charge ................................... 5.50%
======
Maximum offering price per share (NAV / 0.945,
based on maximum sales charge
of 5.5% of the offering price
at June 30, 2000) .................................... $19.99
======
CLASS B:
Net Asset Value, offering and redemption
price per share
(5,930 shares outstanding) ........................... $18.88(a)
======
CLASS C:
Net Asset Value, offering and redemption
price per share
(5,875 shares outstanding) ........................... $18.88(a)
======
(a) Redemption price varies based on length of time held.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes of $27,371) ............. $ 4,276,160
Interest ................................................ 2,288,611
--------------
TOTAL INVESTMENT INCOME ................................. 6,564,771
--------------
EXPENSES:
Investment advisory fees ................................ 5,879,024
Distribution fees ....................................... 1,469,987
Shareholder services fees ............................... 407,132
Custodian fees .......................................... 65,232
Shareholder communications expenses ..................... 60,688
Directors' fees ......................................... 27,883
Registration fees ....................................... 23,817
Legal and audit fees .................................... 18,060
Miscellaneous expenses .................................. 35,257
--------------
TOTAL EXPENSES .......................................... 7,987,080
--------------
NET INVESTMENT LOSS ..................................... (1,422,309)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS, FUTURES CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments,
futures contracts and foreign
currency transactions ................................. 89,073,258
Net realized gain on investments
in securities of affiliated issuers ................... 886,178
Net change in unrealized appreciation
on investments, futures contracts
and foreign currency transactions ..................... (122,927,377)
--------------
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS, FUTURES CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS ......................... (32,967,941)
--------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ....................................... $ (34,390,250)
==============
See accompanying notes to financial statements.
13
<PAGE>
THE GABELLI VALUE FUND INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
-------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment loss .......................................... $ (1,422,309) $ (4,011,383)
Net realized gain on investments, futures contracts
and foreign currency transactions .......................... 89,959,436 100,851,425
Net change in unrealized appreciation on investments,
futures contracts and foreign currency transactions ........ (122,927,377) 175,404,520
-------------- ---------------
NET INCREASE (DECREASE)IN NET ASSETS RESULTING FROM OPERATIONS (34,390,250) 272,244,562
-------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments ............................. -- (98,020,328)
-------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .......................... -- (98,020,328)
-------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Class A ...................................................... 52,231,777 232,283,949
Class B ...................................................... 109,710 --
Class C ...................................................... 108,614 --
-------------- ---------------
Net increase in net assets from capital share transactions ... 52,450,101 232,283,949
-------------- ---------------
NET INCREASE IN NET ASSETS ................................... 18,059,851 406,508,183
NET ASSETS:
Beginning of period .......................................... 1,205,320,444 798,812,261
-------------- ---------------
End of period ................................................ $1,223,380,295 $ 1,205,320,444
============== ===============
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
1. ORGANIZATION. The Gabelli Value Fund Inc. (the "Fund") was organized on July
20, 1989 as a Maryland corporation. The Fund is a non-diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Fund's primary objective is long term
capital appreciation. The Fund commenced investment operations on September 29,
1989.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("NASDAQ") or traded on foreign exchanges are
valued at the last sale price on that exchange as of the close of business on
the day the securities are being valued (if there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day). All other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest average of the bid and asked prices. Portfolio securities traded on more
than one national securities exchange or market are valued according to the
broadest and most representative market, as determined by Gabelli Funds, LLC
(the "Adviser"). Securities and assets for which market quotations are not
readily available are valued at their fair value as determined in good faith
under procedures established by and under the general supervision of the Board
of Directors. Short term debt securities with remaining maturities of 60 days or
less are valued at amortized cost, unless the Directors determine such does not
reflect the securities' fair value, in which case these securities will be
valued at their fair value as determined by the Directors. Debt instruments
having a maturity greater than 60 days are valued at the highest bid price
obtained from a dealer maintaining an active market in those securities.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System or with other brokers or dealers
that meet credit guidelines established by the Adviser and reviewed by the Board
of Directors. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
The Fund will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 100% of the dollar
amount invested by the Fund in each agreement. The Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the adequacy of the collateral.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
15
<PAGE>
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose of
hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin." Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuation of the
value of the contract. The daily changes in the contract are included in
unrealized gains or losses. The Fund recognizes a realized gain or loss when the
contract is closed.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk that
the Fund may not be able to enter into a closing transaction because of an
illiquid secondary market.
FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are maintained
in United States (U.S.) dollars. Foreign currencies, investments and other
assets and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated at the exchange rate prevailing
on the respective dates of such transactions. Unrealized gains and losses, which
result from changes in foreign exchange rates and/or changes in market prices of
securities, have been included in unrealized appreciation/depreciation on
investments and foreign currency transactions. Net realized foreign currency
gains and losses resulting from changes in exchange rates include foreign
currency gains and losses between trade date and settlement date on investment
securities transactions, foreign currency transactions and the difference
between the amounts of interest and dividends recorded on the books of the Fund
and the amounts actually received. The portion of foreign currency gains and
losses related to fluctuation in exchange rates between the initial trade date
and subsequent sale trade date is included in realized gain/(loss) on
investments.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund, timing differences and
differing characterization of distributions made by the Fund.
16
<PAGE>
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended. As a result, a Federal income tax provision is not required.
Dividends and interest from non-U.S. sources received by the Fund are generally
subject to non-U.S. withholding taxes at rates ranging up to 30%. Such
withholding taxes may be reduced or eliminated under the terms of applicable
U.S. income tax treaties, and the Fund intends to undertake any procedural steps
required to claim the benefits of such treaties. If the value of more than 50%
of the Fund's total assets at the close of any taxable year consists of stocks
or securities of non-U.S. corporations, the Fund is permitted and may elect to
treat any non-U.S. taxes paid by it as paid by its shareholders.
3. INVESTMENT ADVISORY AGREEMENT. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00% of the value of the Fund's average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs and pays the compensation of all
officers and Directors of the Fund who are its affiliates.
4. DISTRIBUTION PLAN. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. For the six months
ended June 30, 2000, the Fund incurred distribution costs payable to Gabelli &
Company, Inc., an affiliate of the Adviser, of $1,469,679 for Class A shares, or
0.25% of average daily net assets, the annual limitation under the Plan. Class B
and Class C shares incurred distribution costs of $182 and $186, respectively,
or 1.00% of average daily net assets, the annual limitation under the Plan. Such
payments are accrued daily and paid monthly.
5. PORTFOLIO SECURITIES. Purchases and sales of securities for the six months
ended June 30, 2000, other than short term securities, aggregated $431,094,951
and $423,446,381, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the six months ended June 30, 2000, the
Fund paid brokerage commissions of $628,740 to Gabelli & Company, Inc. and its
affiliates. During the six months ended June 30, 2000, Gabelli & Company, Inc.
informed the Fund that it received $996,057 from investors representing
commissions (sales charges and underwriting fees) on sales of Fund shares.
17
<PAGE>
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
7. CAPITAL STOCK TRANSACTIONS. Transactions in shares of capital stock were as
follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
CLASS A CLASS A
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
Shares sold 9,781,467 $ 181,732,927 46,091,287 $ 854,723,224
Shares issued upon reinvestment of dividends -- -- 4,831,785 91,140,380
Shares redeemed (7,013,320) (129,501,150) (38,641,620) (713,579,655)
---------- ------------- ---------- -------------
Net increase 2,768,147 $ 52,231,777 12,281,452 $ 232,283,949
========== ============= ========== =============
CLASS B (A)
---------------------------
Shares sold 5,930 $ 109,710
========== =============
CLASS C (A)
---------------------------
Shares sold 5,875 $ 108,614
========== =============
</TABLE>
(a) From commencement of offering on March 1, 2000.
8. TRANSACTIONS IN SECURITIES OF AFFILIATED ISSUERS. The 1940 Act defines
affiliated issuers as those in which the Fund's holdings of an issuer represent
5% or more of the outstanding voting securities of the issuer. A summary of the
Fund's transactions in the securities of these issuers during the six months
ended June 30, 2000, is set forth below:
<TABLE>
<CAPTION>
PERCENT
NET OWNED
BEGINNING SHARES ENDING REALIZED DIVIDEND VALUE AT OF SHARES
SHARES SOLD SHARES GAIN INCOME JUNE 30, 2000 OUTSTANDING
---------- -------- -------- -------- -------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Media General Inc., CI. A 1,752,000 (98,500) 1,653,500 $886,178 $547,520 $80,298,094 6.90%
======== ======== ===========
</TABLE>
9. NEW SHARE CLASSES. The Board of Directors of the Fund approved a Rule 18f-3
Multi-Class Plan relating to the creation of two additional classes of shares of
the Fund -- Class B Shares and Class C Shares (the "New Share Classes"). The
existing class of shares was redesignated as Class A Shares. In addition, the
Board had also approved an Amended and Restated Distribution Agreement, Rule
12b-1 plans for each of the New Share Classes and an Amended and Restated Plan
of Distribution for the existing class of shares (Class A Shares). The New Share
Classes were offered to the public as of March 1, 2000. Class A Shares are
subject to a maximum front-end sales charge of 5.75%. Class B Shares are subject
to a contingent deferred sales charge (CDSC) upon redemption within six years of
purchase. The applicable CDSC is equal to a declining percentage of the lesser
of the net asset value per share at the date of original purchase or at the date
of redemption, based on the length of time held. Class C Shares are subject to a
1% CDSC for two years after purchase.
18
<PAGE>
THE GABELLI VALUE FUND INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS
--------------------------------------------------------- ---------------------------------------------------
Net
Net Asset Realized and Total Net
Period Value, Net Unrealized from Net Realized
Ended Beginning Investment Gain (Loss) on Investment Investment Gain on Paid-In Total
December 31 of Period Income (Loss) Investments Operations Income Investments Capital Distributions
------------ ---------- ------------ -------------- ---------- ---------- ----------- ------- -------------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000(a) $19.45 $(0.02) $(0.54) $(0.56) -- -- -- --
1999 16.08 (0.06) 5.15 5.09 -- $(1.72) -- $(1.72)
1998 14.30 (0.05) 3.32 3.27 -- (1.49) -- (1.49)
1997 11.52 (0.05) 5.55 5.50 -- (2.72) -- (2.72)
1996 11.61 (0.02) 1.04 1.02 -- (1.10) $(0.01) (1.11)
1995 10.49 0.05 2.30 2.35 $(0.05) (1.18) -- (1.23)
CLASS B
2000(a)(b) 18.20 (0.07) 0.75 0.68 -- -- -- --
CLASS C
2000(a)(b) 18.20 (0.07) 0.75 0.68 -- -- -- --
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
----------------------------------------------------------
Net
Net Asset Net Assets Investment Operating
Period Value End of Income(Loss) to Expenses to Portfolio
Ended End of Total Period Average Net Average Net Turnover
December 31 Period Return+ (in 000's) Assets Assets Rate
------------ --------- ------ ---------- -------- -------- ---------
CLASS A
<S> <C> <C> <C> <C> <C> <C>
2000(a) $18.89 (2.9)% $1,223,157 (0.24)%(c) 1.36%(c) 38%
1999 19.45 31.9 1,205,320 (0.40) 1.38 59
1998 16.08 23.2 798,812 (0.41) 1.40 46
1997 14.30 48.2 596,547 (0.45) 1.42 44
1996 11.52 8.7 460,836 (0.12) 1.40 37
1995 11.61 22.5 486,144 0.42 1.50 65
CLASS B
2000(a)(b) 18.88 3.7 112 (0.99)(c) 2.11(c) 38
CLASS C
2000(a)(b) 18.88 3.7 111 (0.99)(c) 2.11(c) 38
</TABLE>
--------------------------------
+ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of dividends and does not reflect any applicable
sales charges. Total return for the period of less than one year is not
annualized.
(a) For the period ended June 30, 2000; unaudited.
(b) From commencement of offering on March 1, 2000.
(c) Annualized.
See accompanying notes to financial statements.
19
<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.
--------------------------------------------------------------------------------
GAB409Q200SR
[Photo of Mario J. Gabelli omitted]
THE
GABELLI
VALUE
FUND
INC.
SEMI-ANNUAL REPORT
JUNE 30, 2000
