UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANIES
Investment Company Act file number 811-05848
The Gabelli Value Fund Inc.
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
Rye, New York 10580-1422
(Address of principal executive offices) (Zip code)
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1422
(Name and address of agent for service)
registrant’s telephone number, including area code: 1-800-422-3554
Date of fiscal year end: December 31
Date of reporting period: June 30, 2009
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
The Report to Shareholders is attached herewith.
The Gabelli Value Fund Inc.
Semi-Annual Report
June 30, 2009
June 30, 2009
To Our Shareholders,
During the second quarter of 2009, the net asset value (“NAV”) per Class A Share of The Gabelli Value Fund Inc. (the “Fund”) rose 21.9%, while the Standard & Poor’s (“S&P”) 500 Index was up 15.9% and the Dow Jones Industrial Average increased 12.0%. For the six month period ended June 30, 2009, the Fund was up 8.8% versus an increase of 3.2% for the S&P 500 Index and a decrease of 1.9% for the Dow Jones Industrial Average.
Enclosed are the financial statements and the investment portfolio as of June 30, 2009.
Comparative Results
Average Annual Returns through June 30, 2009 (a)
Since | ||||||||||||||||||||||||||||||||
Year to | Inception | |||||||||||||||||||||||||||||||
Quarter | Date | 1 Year | 3 Year | 5 Year | 10 Year | 15 Year | (9/29/89) | |||||||||||||||||||||||||
Gabelli Value Fund Class A | 21.92 | % | 8.78 | % | (28.94 | )% | (10.60 | )% | (3.20 | )% | 0.15 | % | 7.95 | % | 8.76 | % | ||||||||||||||||
14.91 | (b) | 2.52 | (b) | (33.03 | )(b) | (12.35 | )(b) | (4.34 | )(b) | (0.44 | )(b) | 7.52 | (b) | 8.44 | (b) | |||||||||||||||||
S&P 500 Index | 15.92 | 3.19 | (26.20 | ) | (8.22 | ) | (2.24 | ) | (2.22 | ) | 6.92 | 7.31 | ||||||||||||||||||||
Dow Jones Industrial Average | 11.96 | (1.93 | ) | (22.96 | ) | (6.34 | ) | (1.65 | ) | (0.37 | ) | 8.16 | 8.58 | |||||||||||||||||||
Nasdaq Composite Index | 21.05 | 15.33 | (27.98 | ) | (10.83 | ) | (4.35 | ) | (1.70 | ) | 6.58 | 7.11 | ||||||||||||||||||||
Class B | 21.53 | 8.25 | (29.53 | ) | (11.30 | ) | (3.95 | ) | (0.56 | ) | 7.43 | 8.37 | ||||||||||||||||||||
16.53 | (c) | 3.25 | (c) | (33.06 | )(c) | (12.19 | )(c) | (4.33 | )(c) | (0.56 | ) | 7.43 | 8.37 | |||||||||||||||||||
Class C | 21.50 | 8.24 | (29.56 | ) | (11.29 | ) | (3.94 | ) | (0.53 | ) | 7.45 | 8.39 | ||||||||||||||||||||
20.50 | (d) | 7.24 | (d) | (30.27 | )(d) | (11.29 | ) | (3.94 | ) | (0.53 | ) | 7.45 | 8.39 | |||||||||||||||||||
Class I | 21.95 | 8.79 | (28.81 | ) | (10.51 | ) | (3.14 | ) | 0.19 | 7.97 | 8.78 |
In the current prospectus, the expense ratios for Class A, B, C, and I Shares are 1.41%, 2.16%, 2.16%, and 1.16%, respectively. Class I Shares have no sales charge. The maximum sales charge for Class A, B, and C Shares is 5.75%, 5.00%, and 1.00%, respectively.
(a) | Returns represent past performance and do not guarantee future results. Total returns and average annual returns reflect changes in share price and reinvestment of distributions and are net of expenses. 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 returns for periods of less than one year are not annualized. Current performance may be lower or higher than the performance data presented. Visit www.gabelli.com for performance information as of the most recent month end. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The prospectus contains more information about this and other matters and should be read carefully before investing. The Class A Shares NAVs per share are used to calculate performance for the periods prior to the issuance of Class B Shares and Class C Shares on March 15, 2000 and the Class I Shares on January 11, 2008. The actual performance of the Class B Shares and Class C Shares would have been lower due to the additional expenses associated with these classes of shares. The actual performance of the Class I Shares would have been higher due to lower expenses related to this class of shares. The S&P 500 Index is an unmanaged indicator of stock market performance. The Dow Jones Industrial Average is an unmanaged index of 30 large industrial stocks and the Nasdaq Composite Index is an unmanaged indicator of stock market performance. Dividends are considered reinvested. You cannot invest directly in an index. | |
(b) | The maximum sales charge on Class A Shares is 5.75%. | |
(c) | Performance results include the deferred sales charges for the Class B Shares upon redemption at the end of the quarter, year to date, one year, three year, and five year periods of 5%, 5%, 5%, 3%, and 2%, respectively, of the Fund’s NAV per share at the time of purchase or sale, whichever is lower. Class B Shares are not available for new purchases. | |
(d) | Performance results include the deferred sales charges for the Class C Shares upon redemption at the end of the quarter, year to date, and one year periods of 1% of the Fund’s NAV per share at the time of purchase or sale, whichever is lower. |
We have separated the portfolio manager’s commentary from the financial statements and investment portfolio due to corporate governance regulations stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that the content of the portfolio manager’s commentary is unrestricted. The financial statements and investment portfolio are mailed separately from the commentary. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com/funds.
The Gabelli Value Fund Inc.
Disclosure of Fund Expenses (Unaudited)
Disclosure of Fund Expenses (Unaudited)
For the Six Month Period from January 1, 2009 through June 30, 2009 | Expense Table |
We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of a fund. When a fund’s expenses are expressed as a percentage of its average net assets, this figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The Expense Table below illustrates your Fund’s costs in two ways:
Actual Fund Return: This section provides information about actual account values and actual expenses. You may use this section to help you to estimate the actual expenses that you paid over the period after any fee waivers and expense reimbursements. The “Ending Account Value” shown is derived from the Fund’s actual return during the past six months, and the “Expenses Paid During Period” shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund under the heading “Expenses Paid During Period” to estimate the expenses you paid during this period.
Hypothetical 5% Return: This section provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio. It assumes a hypothetical annualized return of 5% before expenses during the period shown. In this case — because the hypothetical return used is not the Fund’s actual return — the results do not apply to your investment and you cannot use the hypothetical account value and expense to estimate the actual ending account balance or expenses you paid for the period. This example is useful in making comparisons of the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees, if any, which are described in the Prospectus. If these costs were applied to your account, your costs would be higher. Therefore, the 5% hypothetical return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Beginning | Ending | Annualized | Expenses | |||||||||||||
Account Value | Account Value | Expense | Paid During | |||||||||||||
01/01/09 | 06/30/09 | Ratio | Period* | |||||||||||||
The Gabelli Value Fund Inc. | ||||||||||||||||
Actual Fund Return | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,087.80 | 1.56 | % | $ | 8.08 | ||||||||
Class B | $ | 1,000.00 | $ | 1,082.50 | 2.31 | % | $ | 11.93 | ||||||||
Class C | $ | 1,000.00 | $ | 1,082.40 | 2.31 | % | $ | 11.93 | ||||||||
Class I | $ | 1,000.00 | $ | 1,087.90 | 1.31 | % | $ | 6.78 | ||||||||
Hypothetical 5% Return | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,017.06 | 1.56 | % | $ | 7.80 | ||||||||
Class B | $ | 1,000.00 | $ | 1,013.34 | 2.31 | % | $ | 11.53 | ||||||||
Class C | $ | 1,000.00 | $ | 1,013.34 | 2.31 | % | $ | 11.53 | ||||||||
Class I | $ | 1,000.00 | $ | 1,018.30 | 1.31 | % | $ | 6.56 |
* | Expenses are equal to the Fund’s annualized expense ratio for the last six months multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
2
Summary of Portfolio Holdings (Unaudited)
The following table presents portfolio holdings as a percent of net assets as of June 30, 2009:
The Gabelli Value Fund Inc.
Entertainment | 18.6 | % | ||
Cable and Satellite | 13.4 | % | ||
Metals and Mining | 9.1 | % | ||
Food and Beverage | 6.6 | % | ||
Diversified Industrial | 6.1 | % | ||
Consumer Products | 5.5 | % | ||
Telecommunications | 5.4 | % | ||
Equipment and Supplies | 3.9 | % | ||
Financial Services | 3.7 | % | ||
Electronics | 3.3 | % | ||
Environmental Services | 2.8 | % | ||
Energy and Utilities | 2.7 | % | ||
Broadcasting | 2.4 | % | ||
Publishing | 2.1 | % | ||
Automotive: Parts and Accessories | 2.0 | % | ||
Consumer Services | 1.8 | % | ||
Communications Equipment | 1.7 | % | ||
Aerospace | 1.6 | % | ||
Machinery | 1.3 | % | ||
Real Estate | 1.1 | % | ||
Retail | 1.0 | % | ||
Hotels and Gaming | 1.0 | % | ||
Business Services | 0.9 | % | ||
Aviation: Parts and Services | 0.5 | % | ||
Specialty Chemicals | 0.4 | % | ||
Wireless Communications | 0.4 | % | ||
Computer Software and Services | 0.4 | % | ||
Agriculture | 0.4 | % | ||
Health Care | 0.3 | % | ||
Automotive | 0.1 | % | ||
Transportation | 0.0 | % | ||
Manufactured Housing | 0.0 | % | ||
Other Assets and Liabilities (Net) | (0.5 | )% | ||
100.0 | % | |||
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Form N-Q, the last of which was filed for the quarter ended March 31, 2009. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at 800-GABELLI (800-422-3554).The Fund’s Form N-Q is available on the SEC’s website at www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Proxy Voting
The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30th, no later than August 31st of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.
3
The Gabelli Value Fund Inc.
Schedule of Investments — June 30, 2009 (Unaudited)
Schedule of Investments — June 30, 2009 (Unaudited)
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
COMMON STOCKS — 100.5% | ||||||||||||
Aerospace — 1.6% | ||||||||||||
500 | Lockheed Martin Corp | $ | 12,900 | $ | 40,325 | |||||||
1,000,000 | Rolls-Royce Group plc† | 7,007,796 | 5,947,387 | |||||||||
85,800,000 | Rolls-Royce Group plc, Cl. C† | 124,728 | 141,158 | |||||||||
7,145,424 | 6,128,870 | |||||||||||
Agriculture — 0.4% | ||||||||||||
50,000 | Archer-Daniels-Midland Co. | 1,216,271 | 1,338,500 | |||||||||
500 | The Mosaic Co. | 8,345 | 22,150 | |||||||||
1,224,616 | 1,360,650 | |||||||||||
Automotive — 0.1% | ||||||||||||
10,000 | Navistar International Corp.† | 309,727 | 436,000 | |||||||||
Automotive: Parts and Accessories — 2.0% | ||||||||||||
2,000 | BERU AG | 218,785 | 212,393 | |||||||||
38,000 | China Yuchai International Ltd. | 300,576 | 272,460 | |||||||||
218,000 | Genuine Parts Co. | 5,804,525 | 7,316,080 | |||||||||
16,000 | Proliance International Inc.† (a) | 70,925 | 2,253 | |||||||||
6,394,811 | 7,803,186 | |||||||||||
Aviation: Parts and Services — 0.5% | ||||||||||||
3,000 | BBA Aviation plc | 6,033 | 5,627 | |||||||||
40,000 | Curtiss-Wright Corp. | 730,684 | 1,189,200 | |||||||||
370,000 | GenCorp Inc.† | 3,165,332 | 706,700 | |||||||||
160,000 | The Fairchild Corp., Cl. A† | 416,434 | 2,880 | |||||||||
4,318,483 | 1,904,407 | |||||||||||
Broadcasting — 2.4% | ||||||||||||
900,000 | CBS Corp., Cl. A, Voting | 16,395,337 | 6,255,000 | |||||||||
212,000 | Liberty Media Corp. — Capital, Cl. A† | 2,087,617 | 2,874,720 | |||||||||
18,482,954 | 9,129,720 | |||||||||||
Business Services — 0.9% | ||||||||||||
27,000 | Akamai Technologies Inc.† | 684,738 | 517,860 | |||||||||
35,300 | Ascent Media Corp., Cl. A† | 912,006 | 938,274 | |||||||||
14,000 | Broadridge Financial Solutions Inc. | 164,276 | 232,120 | |||||||||
16,000 | Ideation Acquisition Corp.† | 124,182 | 123,360 | |||||||||
68,000 | Intermec Inc.† | 1,474,883 | 877,200 | |||||||||
30,000 | Nashua Corp.† | 255,780 | 201,000 | |||||||||
25,000 | The Brink’s Co. | 766,153 | 725,750 | |||||||||
4,382,018 | 3,615,564 | |||||||||||
Cable and Satellite — 13.4% | ||||||||||||
130,000 | Adelphia Communications Corp., Cl. A† (a) | 91,925 | 0 | |||||||||
130,000 | Adelphia Communications Corp., Cl. A, Escrow† (a) | 0 | 0 | |||||||||
130,000 | Adelphia Recovery Trust† | 0 | 130 | |||||||||
1,375,000 | Cablevision Systems Corp., Cl. A | 4,150,349 | 26,688,750 | |||||||||
32,000 | Comcast Corp., Cl. A, Special | 672,022 | 451,200 | |||||||||
145,000 | DISH Network Corp., Cl. A† | 3,153,705 | 2,350,450 | |||||||||
36,000 | EchoStar Corp., Cl. A† | 980,040 | 573,840 | |||||||||
235,000 | Liberty Global Inc., Cl. A† | 4,232,581 | 3,734,150 | |||||||||
373,000 | Rogers Communications Inc., Cl. B | 1,543,575 | 9,604,750 | |||||||||
150,000 | Scripps Networks Interactive Inc., Cl. A | 4,795,973 | 4,174,500 | |||||||||
146,000 | The DIRECTV Group Inc.† | 3,142,347 | 3,607,660 | |||||||||
22,762,517 | 51,185,430 | |||||||||||
Communications Equipment — 1.7% | ||||||||||||
20,000 | Alcatel-Lucent, ADR† | 152,650 | 49,600 | |||||||||
400,000 | Corning Inc. | 3,689,406 | 6,424,000 | |||||||||
30,000 | Motorola Inc. | 210,940 | 198,900 | |||||||||
5,000 | Nortel Networks Corp.† | 384 | 218 | |||||||||
4,053,380 | 6,672,718 | |||||||||||
Computer Software and Services — 0.4% | ||||||||||||
8,000 | Alibaba.com Ltd.† | 14,075 | 14,183 | |||||||||
27,000 | Metavante Technologies Inc.† | 641,208 | 698,220 | |||||||||
45,000 | Yahoo! Inc.† | 1,149,740 | 704,700 | |||||||||
1,805,023 | 1,417,103 | |||||||||||
Consumer Products — 5.5% | ||||||||||||
60,000 | Energizer Holdings Inc.† | 1,407,595 | 3,134,400 | |||||||||
567 | Givaudan SA | 161,240 | 347,079 | |||||||||
30,000 | Hartmarx Corp.† | 74,470 | 300 | |||||||||
1,000 | National Presto Industries Inc. | 29,828 | 76,100 | |||||||||
97,000 | Pactiv Corp.† | 881,531 | 2,104,900 | |||||||||
940,000 | Swedish Match AB | 12,894,334 | 15,261,224 | |||||||||
2,000 | Wolverine World Wide Inc. | 19,468 | 44,120 | |||||||||
15,468,466 | 20,968,123 | |||||||||||
Consumer Services — 1.8% | ||||||||||||
50,000 | Brink’s Home Security Holdings Inc.† | 1,158,313 | 1,415,500 | |||||||||
44,500 | IAC/InterActiveCorp.† | 1,061,305 | 714,225 | |||||||||
282,000 | Liberty Media Corp. — Interactive, Cl. A† | 5,099,069 | 1,412,820 | |||||||||
165,000 | Rollins Inc. | 829,471 | 2,856,150 | |||||||||
42,000 | TiVo Inc.† | 322,342 | 440,160 | |||||||||
8,470,500 | 6,838,855 | |||||||||||
Diversified Industrial — 6.1% | ||||||||||||
42,000 | Ampco-Pittsburgh Corp. | 210,015 | 984,900 | |||||||||
16,000 | Cooper Industries Ltd., Cl. A | 535,734 | 496,800 | |||||||||
178,000 | Crane Co. | 4,648,453 | 3,971,180 | |||||||||
73,837 | Griffon Corp.† | 712,572 | 614,324 | |||||||||
302,000 | Honeywell International Inc. | 8,755,483 | 9,482,800 |
See accompanying notes to financial statements.
4
The Gabelli Value Fund Inc.
Schedule of Investments (Continued) — June 30, 2009 (Unaudited)
Schedule of Investments (Continued) — June 30, 2009 (Unaudited)
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Diversified Industrial (Continued) | ||||||||||||
116,000 | ITT Corp. | $ | 4,906,736 | $ | 5,162,000 | |||||||
200,000 | Katy Industries Inc.† | 1,264,172 | 276,000 | |||||||||
1,000 | Pentair Inc. | 31,908 | 25,620 | |||||||||
90,000 | Tyco International Ltd. | 4,106,856 | 2,338,200 | |||||||||
25,171,929 | 23,351,824 | |||||||||||
Electronics — 3.3% | ||||||||||||
22,000 | LoJack Corp.† | 100,376 | 92,180 | |||||||||
195,000 | LSI Corp.† | 1,144,959 | 889,200 | |||||||||
197,000 | Texas Instruments Inc. | 4,837,487 | 4,196,100 | |||||||||
4,000 | Thermo Fisher Scientific Inc.† | 92,199 | 163,080 | |||||||||
200,000 | Thomas & Betts Corp.† | 3,797,729 | 5,772,000 | |||||||||
80,000 | Tyco Electronics Ltd. | 2,657,886 | 1,487,200 | |||||||||
12,630,636 | 12,599,760 | |||||||||||
Energy and Utilities — 2.7% | ||||||||||||
3,000 | Allegheny Energy Inc. | 37,046 | 76,950 | |||||||||
12,000 | Chevron Corp. | 723,710 | 795,000 | |||||||||
143,500 | ConocoPhillips | 3,903,080 | 6,035,610 | |||||||||
5,000 | FPL Group Inc. | 222,324 | 284,300 | |||||||||
5,420 | Mirant Corp.† | 25,619 | 85,311 | |||||||||
200,000 | Mirant Corp., Escrow† (a) | 0 | 0 | |||||||||
90,000 | Northeast Utilities | 1,732,487 | 2,007,900 | |||||||||
40,000 | Southwest Gas Corp. | 959,677 | 888,400 | |||||||||
7,603,943 | 10,173,471 | |||||||||||
Entertainment — 18.6% | ||||||||||||
8,570 | Chestnut Hill Ventures† (a) | 233,241 | 288,638 | |||||||||
200,500 | Discovery Communications Inc., Cl. A† | 2,820,007 | 4,521,275 | |||||||||
196,500 | Discovery Communications Inc., Cl. C† | 1,959,643 | 4,034,145 | |||||||||
65,000 | Dover Motorsports Inc. | 315,664 | 92,300 | |||||||||
266,000 | Grupo Televisa SA, ADR | 2,422,178 | 4,522,000 | |||||||||
683,000 | Liberty Media Corp. — Entertainment, Cl. A† | 9,469,464 | 18,270,250 | |||||||||
53,000 | Macrovision Solutions Corp.† | 979,463 | 1,155,930 | |||||||||
363,001 | Time Warner Inc. | 11,002,847 | 9,143,995 | |||||||||
894,000 | Viacom Inc., Cl. A† | 26,260,511 | 21,438,120 | |||||||||
306,001 | Vivendi | 4,443,045 | 7,312,721 | |||||||||
16,000 | Warner Music Group Corp.† | 89,559 | 93,600 | |||||||||
59,995,622 | 70,872,974 | |||||||||||
Environmental Services — 2.8% | ||||||||||||
332,000 | Republic Services Inc. | 4,148,053 | 8,104,120 | |||||||||
93,000 | Waste Management Inc. | 2,469,778 | 2,618,880 | |||||||||
6,617,831 | 10,723,000 | |||||||||||
Equipment and Supplies — 3.9% | ||||||||||||
185,000 | CIRCOR International Inc. | 2,164,535 | 4,367,850 | |||||||||
89,000 | Flowserve Corp. | 1,535,731 | 6,213,090 | |||||||||
100,000 | Gerber Scientific Inc.† | 728,983 | 250,000 | |||||||||
100,000 | GrafTech International Ltd.† | 1,163,637 | 1,131,000 | |||||||||
132,000 | Watts Water Technologies Inc., Cl. A | 1,876,251 | 2,843,280 | |||||||||
7,469,137 | 14,805,220 | |||||||||||
Financial Services — 3.7% | ||||||||||||
266,000 | American Express Co. | 7,255,045 | 6,181,840 | |||||||||
30,000 | Ameriprise Financial Inc. | 840,894 | 728,100 | |||||||||
26,000 | Deutsche Bank AG | 1,500,517 | 1,586,000 | |||||||||
40,000 | H&R Block Inc. | 781,256 | 689,200 | |||||||||
24,000 | Interactive Brokers Group Inc., Cl. A† | 503,976 | 372,720 | |||||||||
20,038 | JPMorgan Chase & Co. | 679,279 | 683,496 | |||||||||
69,000 | Legg Mason Inc. | 2,068,511 | 1,682,220 | |||||||||
40,000 | SLM Corp.† | 963,321 | 410,800 | |||||||||
14,000 | The Bank of New York Mellon Corp. | 401,714 | 410,340 | |||||||||
15,000 | The Phoenix Companies Inc.† | 120,000 | 25,050 | |||||||||
56,000 | Wells Fargo & Co. | 1,596,884 | 1,358,560 | |||||||||
16,711,397 | 14,128,326 | |||||||||||
Food and Beverage — 6.6% | ||||||||||||
12,000 | Cadbury plc, ADR | 578,367 | 412,800 | |||||||||
8,000 | Corn Products International Inc. | 98,620 | 214,320 | |||||||||
45,000 | Davide Campari — Milano SpA | 439,326 | 360,149 | |||||||||
36,000 | Del Monte Foods Co. | 273,028 | 337,680 | |||||||||
192,000 | Diageo plc, ADR | 7,402,380 | 10,992,000 | |||||||||
48,000 | Dr. Pepper Snapple Group Inc.† | 1,186,728 | 1,017,120 | |||||||||
8,000 | Flowers Foods Inc. | 43,372 | 174,720 | |||||||||
136,000 | Fomento Economico Mexicano SAB de CV, ADR | 1,656,151 | 4,384,640 | |||||||||
35,000 | H.J. Heinz Co. | 1,177,350 | 1,249,500 | |||||||||
12,000 | Kellogg Co. | 554,827 | 558,840 | |||||||||
25,000 | Kerry Group plc, Cl. A | 290,481 | 566,404 | |||||||||
200 | MEIJI Holdings Co. Ltd.† | 10,116 | 8,055 | |||||||||
72,000 | PepsiAmericas Inc. | 990,835 | 1,930,320 | |||||||||
22,174 | Pernod-Ricard SA | 2,042,252 | 1,395,771 | |||||||||
16,000 | Remy Cointreau SA | 962,471 | 579,100 | |||||||||
25,000 | The Hershey Co. | 995,111 | 900,000 | |||||||||
18,701,415 | 25,081,419 | |||||||||||
See accompanying notes to financial statements.
5
The Gabelli Value Fund Inc.
Schedule of Investments (Continued) — June 30, 2009 (Unaudited)
Schedule of Investments (Continued) — June 30, 2009 (Unaudited)
Market | ||||||||||||
Shares | Cost | Value | ||||||||||
COMMON STOCKS (Continued) | ||||||||||||
Health Care — 0.3% | ||||||||||||
4,000 | Chemed Corp. | $ | 125,792 | $ | 157,920 | |||||||
12,000 | Covidien plc | 499,814 | 449,280 | |||||||||
14,000 | Mead Johnson Nutrition Co., Cl. A† | 360,448 | 444,780 | |||||||||
986,054 | 1,051,980 | |||||||||||
Hotels and Gaming — 1.0% | ||||||||||||
52,900 | Dover Downs Gaming & Entertainment Inc. | 328,276 | 245,985 | |||||||||
145,000 | Gaylord Entertainment Co.† | 3,990,984 | 1,842,950 | |||||||||
320,000 | Ladbrokes plc | 3,253,472 | 968,692 | |||||||||
50,000 | Las Vegas Sands Corp.† | 677,716 | 393,000 | |||||||||
60,000 | MGM Mirage† | 1,276,607 | 383,400 | |||||||||
9,527,055 | 3,834,027 | |||||||||||
Machinery — 1.3% | ||||||||||||
90,000 | CNH Global NV† | 1,642,336 | 1,263,600 | |||||||||
66,000 | Deere & Co. | 1,384,349 | 2,636,700 | |||||||||
45,000 | Zebra Technologies Corp., Cl. A† | 1,322,400 | 1,064,700 | |||||||||
4,349,085 | 4,965,000 | |||||||||||
Manufactured Housing — 0.0% | ||||||||||||
30,000 | Champion Enterprises Inc.† | 250,558 | 9,600 | |||||||||
Metals and Mining — 9.1% | ||||||||||||
390,000 | Barrick Gold Corp. | 6,775,559 | 13,084,500 | |||||||||
33,000 | Freeport-McMoRan Copper & Gold Inc. | 1,171,182 | 1,653,630 | |||||||||
120,000 | Kinross Gold Corp. | 1,045,421 | 2,178,000 | |||||||||
433,000 | Newmont Mining Corp. | 8,235,206 | 17,696,710 | |||||||||
17,227,368 | 34,612,840 | |||||||||||
Publishing — 2.1% | ||||||||||||
60,000 | Belo Corp., Cl. A | 716,285 | 107,400 | |||||||||
700,000 | Media General Inc., Cl. A | 13,220,201 | 1,477,000 | |||||||||
60,000 | Meredith Corp. | 1,206,782 | 1,533,000 | |||||||||
506,000 | News Corp., Cl. A | 7,618,926 | 4,609,660 | |||||||||
55,000 | The E.W. Scripps Co., Cl. A | 457,137 | 114,950 | |||||||||
23,219,331 | 7,842,010 | |||||||||||
Real Estate — 1.1% | ||||||||||||
134,000 | Griffin Land & Nurseries Inc. | 1,587,460 | 4,191,520 | |||||||||
Retail — 1.0% | ||||||||||||
40,000 | HSN Inc.† | 440,419 | 422,800 | |||||||||
50,000 | Ingles Markets Inc., Cl. A | 572,181 | 762,000 | |||||||||
112,000 | Safeway Inc. | 2,272,056 | 2,281,440 | |||||||||
30,000 | SUPERVALU Inc. | 850,468 | 388,500 | |||||||||
4,135,124 | 3,854,740 | |||||||||||
Specialty Chemicals — 0.4% | ||||||||||||
220,000 | Ferro Corp. | 3,409,417 | 605,000 | |||||||||
5,000 | FMC Corp. | 212,967 | 236,500 | |||||||||
15,000 | International Flavors & Fragrances Inc. | 660,566 | 490,800 | |||||||||
3,500 | Monsanto Co. | 149,303 | 260,190 | |||||||||
4,432,253 | 1,592,490 | |||||||||||
Telecommunications — 5.4% | ||||||||||||
600,000 | Cincinnati Bell Inc.† | 2,169,229 | 1,704,000 | |||||||||
44,000 | RCN Corp.† | 186,437 | 262,680 | |||||||||
870,000 | Sprint Nextel Corp.† | 9,906,954 | 4,184,700 | |||||||||
382,000 | Telephone & Data Systems Inc. | 8,294,188 | 10,810,600 | |||||||||
140,000 | Telephone & Data Systems Inc., Special | 3,124,234 | 3,634,400 | |||||||||
23,681,042 | 20,596,380 | |||||||||||
Transportation — 0.0% | ||||||||||||
94,000 | Grupo TMM SA, Cl. A, ADR† | 726,005 | 82,720 | |||||||||
Wireless Communications — 0.4% | ||||||||||||
40,000 | United States Cellular Corp.† | 1,880,524 | 1,538,000 | |||||||||
TOTAL COMMON STOCKS | 341,721,688 | 383,367,927 | ||||||||||
WARRANTS — 0.0% | ||||||||||||
Energy and Utilities — 0.0% | ||||||||||||
17,405 | Mirant Corp., Ser. A, expire 01/03/11† | 35,380 | 25,585 | |||||||||
TOTAL INVESTMENTS — 100.5% | $ | 341,757,068 | 383,393,512 | |||||||||
Other Assets and Liabilities (Net) — (0.5)% | (1,856,733 | ) | ||||||||||
NET ASSETS — 100.0% | $ | 381,536,779 | ||||||||||
(a) | Security fair valued under procedures established by the Board of Directors. The procedures may include reviewing available financial information about the company and reviewing valuation of comparable securities and other factors on a regular basis. At June 30, 2009, the market value of fair valued securities amounted to $290,891 or 0.08% of net assets. | |
† | Non-income producing security. | |
ADR | American Depositary Receipt |
See accompanying notes to financial statements.
6
The Gabelli Value Fund Inc.
Statement of Assets and Liabilities
June 30, 2009 (Unaudited)
June 30, 2009 (Unaudited)
Assets: | ||||
Investments, at value (cost $341,757,068) | $ | 383,393,512 | ||
Receivable for investments sold | 95 | |||
Receivable for Fund shares sold | 106,046 | |||
Dividends receivable | 567,007 | |||
Prepaid expenses | 33,765 | |||
Total Assets | 384,100,425 | |||
Liabilities: | ||||
Payable to custodian | 1,444,052 | |||
Payable for investments purchased | 66,414 | |||
Payable for Fund shares redeemed | 354,614 | |||
Payable for investment advisory fees | 320,562 | |||
Payable for distribution fees | 85,261 | |||
Payable for accounting fees | 3,750 | |||
Other accrued expenses | 288,993 | |||
Total Liabilities | 2,563,646 | |||
Net Assets applicable to 39,083,094 shares outstanding | $ | 381,536,779 | ||
Net Assets Consist of: | ||||
Paid-in capital, each class at $0,001 par value | $ | 348,387,029 | ||
Accumulated net investment income | 1,349,663 | |||
Accumulated net realized loss on investments and foreign currency transactions | (9,836,310 | ) | ||
Net unrealized appreciation on investments | 41,636,444 | |||
Net unrealized depreciation on foreign currency translations | (47 | ) | ||
Net Assets | $ | 381,536,779 | ||
Shares of Capital Stock: | ||||
Class A: | ||||
Net Asset Value and redemption price per share ($368,029,728 ÷ 37,610,247 shares outstanding; 100,000,000 shares authorized) | $ | 9.79 | ||
Maximum offering price per share (NAV ÷ 0.9425, based on maximum sales charge of 5.75% of the offering price) | $ | 10.39 | ||
Class B: | ||||
Net Asset Value and offering price per share ($3,955,657 ÷ 443,318 shares outstanding; 100,000,000 shares authorized) | $ | 8.92 | (a) | |
Class C: | ||||
Net Asset Value and offering price per share ($5,466,254 ÷ 611,859 shares outstanding; 50,000,000 shares authorized) | $ | 8.93 | (a) | |
Class I: | ||||
Net Asset Value, offering, and redemption price per share ($4,085,140 ÷ 417,670 shares outstanding; 50,000,000 shares authorized) | $ | 9.78 | ||
(a) Redemption price varies based on the length of time held. | ||||
Statement of Operations For the Six Months Ended June 30, 2009 (Unaudited) | ||||
Investment Income: | ||||
Dividends (net of foreign taxes of $177,494) | $ | 4,144,826 | ||
Interest | 149 | |||
Total Investment Income | 4,144,975 | |||
Expenses: | ||||
Investment advisory fees | 1,773,553 | |||
Distribution fees — Class A | 427,731 | |||
Distribution fees — Class B | 19,159 | |||
Distribution fees — Class C | 25,971 | |||
Shareholder services fees | 263,065 | |||
Shareholder communications expenses | 93,842 | |||
Custodian fees | 46,923 | |||
Legal and audit fees | 39,400 | |||
Directors’ fees | 34,375 | |||
Accounting fees | 22,500 | |||
Registration expenses | 21,963 | |||
Interest expense | 1,354 | |||
Miscellaneous expenses | 26,369 | |||
Total Expenses | 2,796,205 | |||
Less: | ||||
Advisory fee reduction on unsupervised assets | (893 | ) | ||
Net Expenses | 2,795,312 | |||
Net Investment Income | 1,349,663 | |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency: | ||||
Net realized loss on investments | (2,176,715 | ) | ||
Net realized gain on foreign currency transactions | 13,836 | |||
Net realized loss on investments and foreign currency transactions | (2,162,879 | ) | ||
Net change in unrealized appreciation/ depreciation on investments | 29,455,176 | |||
Net change in unrealized appreciation/ depreciation on foreign currency translations | 80 | |||
Net change in unrealized appreciation/ depreciation on investments and foreign currency translations | 29,455,256 | |||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency | 27,292,377 | |||
Net Increase in Net Assets Resulting from Operations | $ | 28,642,040 | ||
See accompanying notes to financial statements.
7
The Gabelli Value Fund Inc.
Statement of Changes in Net Assets
Six Months Ended | ||||||||
June 30, 2009 | Year Ended | |||||||
(Unaudited) | December 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 1,349,663 | $ | 1,604,541 | ||||
Net realized gain/(loss) on investments and foreign currency transactions | (2,162,879 | ) | 269,015 | |||||
Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 29,455,256 | (337,654,021 | ) | |||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | 28,642,040 | (335,780,465 | ) | |||||
Distributions to Shareholders: | ||||||||
Net investment income | ||||||||
Class A | — | (1,532,510 | ) | |||||
Class I | — | (29,462 | ) | |||||
— | (1,561,972 | ) | ||||||
Net realized gain | ||||||||
Class A | — | (1,146,901 | ) | |||||
Class B | — | (14,429 | ) | |||||
Class C | — | (19,608 | ) | |||||
Class I | — | (11,183 | ) | |||||
— | (1,192,121 | ) | ||||||
Return of capital | ||||||||
Class A | — | (11,113,485 | ) | |||||
Class B | — | (139,813 | ) | |||||
Class C | — | (190,005 | ) | |||||
Class I | — | (108,364 | ) | |||||
— | (11,551,667 | ) | ||||||
Total Distributions to Shareholders | — | (14,305,760 | ) | |||||
Capital Share Transactions: | ||||||||
Class A | (26,228,426 | ) | (94,716,927 | ) | ||||
Class B | (578,650 | ) | (2,363,555 | ) | ||||
Class C | (598,175 | ) | (3,170,905 | ) | ||||
Class I | 259,429 | 4,331,144 | ||||||
Net Decrease in Net Assets from Capital Share Transactions | (27,145,822 | ) | (95,920,243 | ) | ||||
Redemption Fees | 6,859 | 770 | ||||||
Net Increase/(Decrease) in Net Assets | 1,503,077 | (446,005,698 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 380,033,702 | 826,039,400 | ||||||
End of period (including undistributed net investment income of $1,349,663 and $0, respectively) | $ | 381,536,779 | $ | 380,033,702 | ||||
See accompanying notes to financial statements.
8
The Gabelli Value Fund Inc.
Financial Highlights
Financial Highlights
Selected data for a share of capital stock outstanding throughout each period:
Ratios to Average Net Assets/ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income from Investment Operations | Distributions | Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Net | Realized and | Total | Net | Net Asset | Net Assets | Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Value, | Investment | Unrealized | from | Net | Realized | Return | Value, | End of | Investment | Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||||
Ended | Beginning | Income | Gain (Loss) on | Investment | Investment | Gain on | of | Total | Redemption | End of | Total | Period | Income | Operating | Turnover | |||||||||||||||||||||||||||||||||||||||||||||
December 31 | of Period | (Loss)(a) | Investments | Operations | Income | Investments | Capital | Distributions | Fees(a) | Period | Return† | (in 000’s) | (Loss) | Expenses | Rate†† | |||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2009 (b) | $ | 9.00 | $ | 0.03 | $ | 0.76 | $ | 0.79 | — | — | — | — | $ | 0.00 | (c) | $ | 9.79 | 8.8 | % | $ | 368,030 | 0.78 | %(d) | 1.56 | %(d)(e) | 2 | % | |||||||||||||||||||||||||||||||||
2008 | 16.78 | 0.04 | (7.47 | ) | (7.43 | ) | $ | (0.04 | ) | $ | (0.03 | ) | $ | (0.28 | ) | $ | (0.35 | ) | 0.00 | (c) | 9.00 | (44.2 | ) | 366,568 | 0.28 | 1.41 | (e) | 4 | ||||||||||||||||||||||||||||||||
2007 | 17.61 | (0.04 | ) | 0.86 | 0.82 | — | (1.65 | ) | 0.00 | (c) | (1.65 | ) | 0.00 | (c) | 16.78 | 4.6 | 800,586 | (0.20 | ) | 1.39 | (e) | 9 | ||||||||||||||||||||||||||||||||||||||
2006 | 18.11 | 0.03 | 3.92 | 3.95 | (0.03 | ) | (4.42 | ) | — | (4.45 | ) | 0.00 | (c) | 17.61 | 21.7 | 860,789 | 0.14 | 1.41 | (e) | 17 | ||||||||||||||||||||||||||||||||||||||||
2005 | 19.49 | 0.02 | (0.05 | ) | (0.03 | ) | (0.01 | ) | (1.34 | ) | — | (1.35 | ) | 0.00 | (c) | 18.11 | (0.2 | ) | 1,063,137 | 0.08 | 1.40 | 3 | ||||||||||||||||||||||||||||||||||||||
2004 | 17.97 | (0.02 | ) | 2.31 | 2.29 | — | (0.77 | ) | — | (0.77 | ) | 0.00 | (c) | 19.49 | 12.8 | 1,261,293 | (0.11 | ) | 1.39 | (e) | 12 | |||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2009 (b) | $ | 8.24 | $ | 0.00 | (c) | $ | 0.68 | $ | 0.68 | — | — | — | — | $ | 0.00 | (c) | $ | 8.92 | 8.3 | % | $ | 3,956 | 0.02 | %(d) | 2.31 | %(d)(e) | 2 | % | ||||||||||||||||||||||||||||||||
2008 | 15.46 | (0.06 | ) | (6.85 | ) | (6.91 | ) | — | $ | (0.03 | ) | $ | (0.28 | ) | $ | (0.31 | ) | 0.00 | (c) | 8.24 | (44.6 | ) | 4,252 | (0.48 | ) | 2.16 | (e) | 4 | ||||||||||||||||||||||||||||||||
2007 | 16.46 | (0.17 | ) | 0.82 | 0.65 | — | (1.65 | ) | 0.00 | (c) | (1.65 | ) | 0.00 | (c) | 15.46 | 3.9 | 10,774 | (0.95 | ) | 2.14 | (e) | 9 | ||||||||||||||||||||||||||||||||||||||
2006 | 17.28 | (0.10 | ) | 3.70 | 3.60 | — | (4.42 | ) | — | (4.42 | ) | 0.00 | (c) | 16.46 | 20.8 | 13,046 | (0.53 | ) | 2.16 | (e) | 17 | |||||||||||||||||||||||||||||||||||||||
2005 | 18.79 | (0.12 | ) | (0.05 | ) | (0.17 | ) | — | (1.34 | ) | — | (1.34 | ) | 0.00 | (c) | 17.28 | (0.9 | ) | 17,804 | (0.67 | ) | 2.15 | 3 | |||||||||||||||||||||||||||||||||||||
2004 | 17.47 | (0.15 | ) | 2.24 | 2.09 | — | (0.77 | ) | — | (0.77 | ) | 0.00 | (c) | 18.79 | 12.0 | 20,366 | (0.86 | ) | 2.14 | (e) | 12 | |||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2009 (b) | $ | 8.25 | $ | 0.00 | (c) | $ | 0.68 | $ | 0.68 | — | — | — | — | $ | 0.00 | (c) | $ | 8.93 | 8.2 | % | $ | 5,466 | 0.02 | %(d) | 2.31 | %(d)(e) | 2 | % | ||||||||||||||||||||||||||||||||
2008 | 15.48 | (0.06 | ) | (6.86 | ) | (6.92 | ) | — | $ | (0.03 | ) | $ | (0.28 | ) | $ | (0.31 | ) | 0.00 | (c) | 8.25 | (44.6 | ) | 5,686 | (0.47 | ) | 2.16 | (e) | 4 | ||||||||||||||||||||||||||||||||
2007 | 16.47 | (0.17 | ) | 0.83 | 0.66 | — | (1.65 | ) | 0.00 | (c) | (1.65 | ) | 0.00 | (c) | 15.48 | 4.0 | 14,679 | (0.94 | ) | 2.14 | (e) | 9 | ||||||||||||||||||||||||||||||||||||||
2006 | 17.29 | (0.11 | ) | 3.71 | 3.60 | — | (4.42 | ) | — | (4.42 | ) | 0.00 | (c) | 16.47 | 20.7 | 14,704 | (0.58 | ) | 2.16 | (e) | 17 | |||||||||||||||||||||||||||||||||||||||
2005 | 18.80 | (0.12 | ) | (0.05 | ) | (0.17 | ) | — | (1.34 | ) | — | (1.34 | ) | 0.00 | (c) | 17.29 | (0.9 | ) | 14,003 | (0.67 | ) | 2.15 | 3 | |||||||||||||||||||||||||||||||||||||
2004 | 17.49 | (0.15 | ) | 2.23 | 2.08 | — | (0.77 | ) | — | (0.77 | ) | 0.00 | (c) | 18.80 | 11.9 | 16,400 | (0.85 | ) | 2.14 | (e) | 12 | |||||||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2009 (b) | $ | 8.99 | $ | 0.05 | $ | 0.74 | $ | 0.79 | — | — | — | — | $ | 0.00 | (c) | $ | 9.78 | 8.8 | % | $ | 4,085 | 1.04 | %(d) | 1.31 | %(d)(e) | 2 | % | |||||||||||||||||||||||||||||||||
2008 (f) | 15.87 | 0.08 | (6.57 | ) | (6.49 | ) | $ | (0.08 | ) | $ | (0.03 | ) | $ | (0.28 | ) | $ | (0.39 | ) | 0.00 | (c) | 8.99 | (40.8 | ) | 3,528 | 0.66 | (d) | 1.16 | (d)(e) | 4 |
† | 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 distributions and does not reflect applicable sales charges. Total return for a period of less than one year is not annualized. | |
†† | Effective in 2008, a change in accounting policy was adopted with regard to the calculation of the portfolio turnover rate to include cash proceeds due to mergers. Had this policy been adopted retroactively, the portfolio turnover rate for the years ended December 31, 2007, 2006, 2005, and 2004 would have been as shown. | |
(a) | Per share amounts have been calculated using the average shares outstanding method. | |
(b) | For the six months ended June 30, 2009, unaudited. | |
(c) | Amount represents less than $0.005 per share. | |
(d) | Annualized. | |
(e) | The Fund incurred interest expense during the year ended December 31, 2006. If interest expense had not been incurred, the ratios of operating expenses to average net assets would have been 1.40% (Class A), and 2.15% (Class B and Class C), respectively. For the six months ended June 30, 2009 and the years ended December 31, 2008, 2007, and 2004, the effect of the interest expense was minimal. | |
(f) | From the commencement of offering Class I Shares on January 11, 2008 through December 31, 2008. |
See accompanying notes to financial statements.
9
The Gabelli Value Fund Inc.
Notes to Financial Statements (Unaudited)
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 United States (“U.S.”) 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 or traded in the U.S. over-the-counter market for which market quotations are readily available are valued at the last quoted sale price or a market’s official closing price 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. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price or, if the Board of Directors (the “Board”) so determines, by such other method as the Board shall determine in good faith to reflect its fair market value. 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”).
Portfolio securities primarily traded on a foreign market are generally valued at the preceding closing values of such securities on the relevant market, but may be fair valued pursuant to procedures established by the Board if market conditions change significantly after the close of the foreign market but prior to the close of business on the day the securities are being valued. Debt instruments with remaining maturities of sixty days or less that are not credit impaired are valued at amortized cost, unless the Board determines such amount does not reflect the securities’ fair value, in which case these securities will be fair valued as determined by the Board. Debt instruments having a maturity greater than sixty days for which market quotations are readily available are valued at the average of the latest bid and asked prices. If there were no asked prices quoted on such day, the security is valued using the closing bid price. Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract is traded.
Securities and assets for which market quotations are not readily available are fair valued as determined by the Board. Fair valuation methodologies and procedures may include, but are not limited to: analysis and review of available financial and non-financial information about the company; comparisons with the valuation and changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S. dollar value ADR securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security.
Statement of Financial Accounting Standard No. 157, “Fair Value Measurements” (“SFAS 157”) clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value, and requires additional disclosures about the use of fair value measurements. The three levels of the fair value hierarchy under SFAS 157 are described below:
• | Level 1 — quoted prices in active markets for identical securities; |
10
The Gabelli Value Fund Inc.
Notes to Financial Statements (Continued) (Unaudited)
Notes to Financial Statements (Continued) (Unaudited)
• | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | ||
• | Level 3 – significant unobservable inputs (including the Fund’s determinations as to the fair value of investments). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments by inputs used to value the Fund’s investments as of June 30, 2009 is as follows:
Valuation Inputs | ||||||||||||||||
Level 1 - | Level 2 - Other Significant | Level 3 - Significant | Total Market Value | |||||||||||||
Quoted Prices | Observable Inputs | Unobservable Inputs | at 6/30/09 | |||||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||||
ASSETS (Market Value): | ||||||||||||||||
Common Stocks | ||||||||||||||||
Aerospace | $ | 5,987,712 | $ | 141,158 | — | $ | 6,128,870 | |||||||||
Cable and Satellite | 51,185,430 | — | $ | 0 | 51,185,430 | |||||||||||
Energy and Utilities | 10,173,471 | — | 0 | 10,173,471 | ||||||||||||
Entertainment | 70,584,336 | — | 288,638 | 70,872,974 | ||||||||||||
Other Industries(a) | 245,007,182 | — | — | 245,007,182 | ||||||||||||
Total Common Stocks | 382,938,131 | 141,158 | 288,638 | 383,367,927 | ||||||||||||
Warrants(a) | 25,585 | — | — | 25,585 | ||||||||||||
TOTAL INVESTMENTS IN SECURITIES | $ | 382,963,716 | $ | 141,158 | $ | 288,638 | $ | 383,393,512 | ||||||||
(a) | Security and industry classifications for these categories are detailed in the Schedule of Investments. |
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
Net change | ||||||||||||||||||||||||||||||||
in unrealized | ||||||||||||||||||||||||||||||||
appreciation/ | ||||||||||||||||||||||||||||||||
depreciation | ||||||||||||||||||||||||||||||||
Change in | during the | |||||||||||||||||||||||||||||||
Balance | Accrued | Realized | unrealized | Net | Transfers in | Balance | period on Level 3 | |||||||||||||||||||||||||
as of | discounts/ | gain/ | appreciation/ | purchases/ | and/or out | as of | investments held | |||||||||||||||||||||||||
12/31/08 | (premiums) | (loss) | depreciation† | (sales) | of Level 3 | 6/30/09 | at 6/30/09† | |||||||||||||||||||||||||
INVESTMENTS IN SECURITIES: | ||||||||||||||||||||||||||||||||
ASSETS (Market Value): | ||||||||||||||||||||||||||||||||
Common Stocks | ||||||||||||||||||||||||||||||||
Cable and Satellite | $ | 0 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 0 | $ | — | ||||||||||||||||
Energy and Utilities | 0 | — | — | — | — | — | 0 | — | ||||||||||||||||||||||||
Entertainment | 288,638 | — | — | — | — | — | 288,638 | — | ||||||||||||||||||||||||
Total Common Stocks | 288,638 | — | — | — | — | — | 288,638 | — | ||||||||||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES | $ | 288,638 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 288,638 | $ | — | ||||||||||||||||
† | Net change in unrealized appreciation/depreciation on investments is included in the related amounts in the Statement of Operations. |
Derivative Financial Instruments.
The Fund may invest in various derivative financial instruments and engage in various portfolio investment strategies for the purpose of hedging against changes in the value of its portfolio securities and in the value of securities it intends to purchase. Losses may arise if the value of the contract decreases due to an unfavorable
11
The Gabelli Value Fund Inc.
Notes to Financial Statements (Continued) (Unaudited)
Notes to Financial Statements (Continued) (Unaudited)
change in the price of the underlying security or if the counterparty does not perform its duties under the contract. Investing in certain derivative financial instruments entails certain execution, market, liquidity, hedging, and tax risks. Participation in the options or futures markets and in currency exchange transactions involves investment risks and transaction costs to which the Fund would not be subject absent the use of these strategies. If the Adviser’s prediction of movements in the direction of the securities, foreign currency, and interest rate markets is inaccurate, the consequences to the Fund may leave the Fund in a worse position than if it had not used such strategies.
The Fund is subject to equity price risk in the normal course of pursuing its investment objectives by investing in various derivative financial instruments, as described below.
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 fluctuations in the value of the contract, which are included in unrealized appreciation/depreciation on investments and futures contracts. 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 instrument. 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. At June 30, 2009, there were no open futures contracts.
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. 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. It is the policy of the Fund to always receive and maintain securities as collateral whose market value, including accrued interest, is at least equal to 102% 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. At June 30, 2009, there were no open repurchase agreements.
Securities Sold Short. The Fund may enter into short sale transactions. Short selling involves selling securities that may or may not be owned and, at times, borrowing the same securities for delivery to the purchaser, with an obligation to replace such borrowed securities at a later date. The proceeds received from short sales are recorded as liabilities and the Fund records an unrealized gain or loss to the extent of the
12
The Gabelli Value Fund Inc.
Notes to Financial Statements (Continued) (Unaudited)
Notes to Financial Statements (Continued) (Unaudited)
difference between the proceeds received and the value of an open short position on the day of determination. The Fund records a realized gain or loss when the short position is closed out. By entering into a short sale, the Fund bears the market risk of an unfavorable change in the price of the security sold short. Dividends on short sales are recorded as an expense by the Fund on the ex-dividend date and interest expense is recorded on the accrual basis. The Fund did not hold any short positions as of June 30, 2009.
Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at the current exchange rates. 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 that 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 translations. 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.
Foreign Securities. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the ability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. issuers.
Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
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 on the accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method. Dividend income is recorded on the ex-dividend date except for certain dividends which are recorded as soon as the Fund is informed of the dividend.
Determination of Net Asset Value and Calculation of Expenses. Certain administrative expenses are common to, and allocated among, various affiliated funds. Such allocations are made on the basis of each fund’s average net assets or other criteria directly affecting the expenses as determined by the Adviser pursuant to procedures established by the Board.
In calculating the NAV per share of each class, investment income, realized and unrealized gains and losses, redemption fees, and expenses other than class specific expenses are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Distribution expenses are borne solely by the class incurring the expense.
13
The Gabelli Value Fund Inc.
Notes to Financial Statements (Continued) (Unaudited)
Notes to Financial Statements (Continued) (Unaudited)
Custodian Fee Credits and Interest Expense. When cash balances are maintained in the custody account, the Fund receives credits which are used to offset custodian fees. The gross expenses paid under the custody arrangement are included in custodian fees in the Statement of Operations with the corresponding expense offset, if any, shown as “custodian fee credits.” When cash balances are overdrawn, the Fund is charged an overdraft fee equal to 2.00% above the federal funds rate on outstanding balances. This amount, if any, would be included in “interest expense” in the Statement of Operations.
Distributions to Shareholders. Distributions to shareholders are recorded on the ex-dividend date. Distributions to shareholders are based on income and capital gains as determined in accordance with federal income tax regulations, which may differ from income and capital gains as determined under U.S. generally accepted accounting principles. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. Distributions from net investment income include net realized gains on foreign currency transactions. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. These reclassifications have no impact on the NAV of the Fund.
The tax character of distributions paid during the year ended December 31, 2008 was as follows:
Distributions paid from: | ||||
Ordinary income | $ | 1,580,200 | ||
Net long-term capital gains | 1,173,893 | |||
Return of capital | 11,551,667 | |||
Total distributions paid | $ | 14,305,760 | ||
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 (the “Code”). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
The following summarizes the tax cost of investments and the related unrealized appreciation/depreciation at June 30, 2009:
Gross | Gross | |||||||||||||||
Unrealized | Unrealized | Net Unrealized | ||||||||||||||
Cost | Appreciation | Depreciation | Appreciation | |||||||||||||
Investments | $ | 350,092,818 | $ | 114,308,655 | $ | (81,007,961 | ) | $ | 33,300,694 |
Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (current and prior three tax years) and has concluded that no provision for federal income tax is required in the Fund’s financial statements. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
3. Investment Advisory Agreement and Other Transactions. The Fund has 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 its average daily net assets. In accordance with the Advisory Agreement, the Adviser provides a continuous investment program for the Fund’s
14
The Gabelli Value Fund Inc.
Notes to Financial Statements (Continued) (Unaudited)
Notes to Financial Statements (Continued) (Unaudited)
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 affiliated persons of the Adviser.
The Fund pays each Director who is not considered to be an affiliated person an annual retainer of $10,000 plus $1,000 for each Board meeting attended. Each Director is reimbursed by the Fund for any out of pocket expenses incurred in attending meetings. All Board committee members receive $500 per meeting attended, the Chairman of each committee receives $2,500 per year, and the Lead Director receives an annual fee of $1,000. A Director may receive a single meeting fee, allocated among the participating funds, for participation in certain meetings held on behalf of multiple funds. Directors who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Fund.
4. Distribution Plan. The Fund’s Board has adopted a distribution plan (the “Plan”) for each class of shares, except for Class I Shares, pursuant to Rule 12b-1 under the 1940 Act. Gabelli & Company, Inc. (“Gabelli & Company”), an affiliate of the Adviser, serves as distributor of the Fund. Under the Class A, Class B, and Class C Share Plans, payments are authorized to Gabelli & Company at annual rates of 0.25%, 1.00%, and 1.00%, respectively, of the average daily net assets of those classes, the annual limitations under each Plan. Such payments are accrued daily and paid monthly.
5. Portfolio Securities. Purchases and sales of securities for the six months ended June 30, 2009, other than short-term securities and U.S. Government obligations, aggregated $6,219,038 and $32,455,080, respectively.
6. Transactions with Affiliates. During the six months ended June 30, 2009, the Fund paid brokerage commissions on security trades of $54,734 to Gabelli & Company. Additionally, Gabelli & Company informed the Fund that it retained $12,445 from investors representing commissions (sales charges and underwriting fees) on sales and redemptions of Fund shares.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement between the Fund and the Adviser. During the six months ended June 30, 2009, the Fund paid or accrued $22,500 to the Adviser in connection with the cost of computing the Fund’s NAV.
7. Capital Stock. The Fund offers four classes of shares – Class A Shares, Class B Shares, Class C Shares, and Class I Shares. Class I Shares are offered to foundations, endowments, institutions, and employee benefit plans without a sales charge. 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 and automatically convert to Class A Shares approximately eight years after the original purchase. The applicable CDSC is equal to a declining percentage of the lesser of the NAV per share at the date of the original purchase or at the date of redemption, based on the length of time held. Class C Shares are subject to a 1.00% CDSC for one year after purchase. Class B Shares are available only through exchange of Class B Shares of other funds distributed by Gabelli & Company. Class I Shares were first issued on January 11, 2008.
The Fund imposes a redemption fee of 2.00% on all classes of shares that are redeemed or exchanged on or before the seventh day after the date of a purchase. The redemption fee is deducted from the proceeds otherwise payable to the redeeming shareholders and is retained by the Fund. The redemption fees retained by the Fund during the six months ended June 30, 2009 and the year ended December 31, 2008, amounted to $6,859 and $770, respectively.
15
The Gabelli Value Fund Inc.
Notes to Financial Statements (Continued) (Unaudited)
Notes to Financial Statements (Continued) (Unaudited)
The redemption fee does not apply to redemptions of shares where (i) the shares were purchased through automatic reinvestment of distributions, (ii) the redemption was initiated by the Fund, (iii) the shares were purchased through programs that collect the redemption fee at the program level and remit them to the Fund, or (iv) the shares were purchased through programs that the Adviser determines to have appropriate anti-short-term trading policies in place or as to which the Adviser has received assurances that look-through redemption fee procedures or effective anti-short-term trading policies and procedures are in place.
Transactions in shares of capital stock were as follows:
Six Months Ended | ||||||||||||||||
June 30, 2009 | Year Ended | |||||||||||||||
(Unaudited) | December 31, 2008 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class A | Class A | |||||||||||||||
Shares sold | 658,436 | $ | 5,733,282 | 836,334 | $ | 10,832,495 | ||||||||||
Shares issued upon reinvestment of distributions | — | — | 1,502,488 | 12,830,294 | ||||||||||||
Shares redeemed | (3,767,720 | ) | (31,961,708 | ) | (9,321,726 | ) | (118,379,716 | ) | ||||||||
Net decrease | (3,109,284 | ) | $ | (26,228,426 | ) | (6,982,904 | ) | $ | (94,716,927 | ) | ||||||
Class B | Class B | |||||||||||||||
Shares sold | 21 | $ | 169 | 373 | $ | 2,915 | ||||||||||
Shares issued upon reinvestment of distributions | — | — | 18,061 | 141,243 | ||||||||||||
Shares redeemed | (72,693 | ) | (578,819 | ) | (199,368 | ) | (2,507,713 | ) | ||||||||
Net decrease | (72,672 | ) | $ | (578,650 | ) | (180,934 | ) | $ | (2,363,555 | ) | ||||||
Class C | Class C | |||||||||||||||
Shares sold | 20,421 | $ | 160,294 | 109,970 | $ | 1,374,663 | ||||||||||
Shares issued upon reinvestment of distributions | — | — | 18,236 | 142,790 | ||||||||||||
Shares redeemed | (97,763 | ) | (758,469 | ) | (387,461 | ) | (4,688,358 | ) | ||||||||
Net decrease | (77,342 | ) | $ | (598,175 | ) | (259,255 | ) | $ | (3,170,905 | ) | ||||||
Class I | Class I* | |||||||||||||||
Shares sold | 113,680 | $ | 1,018,441 | 403,538 | $ | 4,453,263 | ||||||||||
Shares issued upon reinvestment of distributions | — | — | 6,600 | 56,297 | ||||||||||||
Shares redeemed | (88,529 | ) | (759,012 | ) | (17,619 | ) | (178,416 | ) | ||||||||
Net increase | 25,151 | $ | 259,429 | 392,519 | $ | 4,331,144 | ||||||||||
* | From the commencement of offering Class I Shares on January 11, 2008. |
8. Indemnifications. The Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
16
The Gabelli Value Fund Inc.
Notes to Financial Statements (Continued) (Unaudited)
Notes to Financial Statements (Continued) (Unaudited)
9. Other Matters. On April 24, 2008, the Adviser entered into an administrative settlement with the SEC to resolve the SEC’s inquiry regarding prior frequent trading activity in shares of the GAMCO Global Growth Fund (the “Global Growth Fund”) by one investor who was banned from the Global Growth Fund in August 2002. In the settlement, the SEC found that the Adviser had violated Section 206(2) of the Investment Advisers Act, Section 17(d) of the 1940 Act, and Rule 17d-1 thereunder,and had aided and abetted and caused violations of Section 12(d)(1)(B)(i) of the 1940 Act. Under the terms of the settlement, the Adviser, while neither admitting nor denying the SEC’s findings and allegations, agreed, among other things, to pay the previously reserved total of $16 million (including a $5 million penalty), of which at least $11 million will be distributed to shareholders of the Global Growth Fund in accordance with a plan being developed by an independent distribution consultant and approved by the independent directors of the Global Growth Fund and the staff of the SEC, and to cease and desist from future violations of the above referenced federal securities laws. The settlement will not have a material adverse impact on the Adviser or its ability to fulfill its obligations under the Advisory Agreement. On the same day, the SEC filed a civil action against the Executive Vice President and Chief Operating Officer of the Adviser, alleging violations of certain federal securities laws arising from the same matter. The officer is also an officer of the Global Growth Fund and other funds in the Gabelli/GAMCO fund complex including the Fund. The officer denies the allegations and is continuing in his positions with the Adviser and the funds. The Adviser currently expects that any resolution of the action against the officer will not have a material adverse impact on the Fund or the Adviser or its ability to fulfill its obligations under the Advisory Agreement.
10. Subsequent Events. Management has evaluated the impact of all subsequent events on the Fund through August 25, 2009, the date the financial statements were issued, and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
17
The Gabelli Value Fund Inc.
Board Consideration and Re-Approval of Investment Advisory Agreement (Unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), contemplates that the Board of Directors (the “Board”) of The Gabelli Value Fund Inc. (the “Fund”), including a majority of the Directors who have no direct or indirect interest in the investment advisory agreement and are not “interested persons” of the Fund, as defined in the 1940 Act (the “Independent Board Members”), are required to annually review and re-approve the terms of the Fund’s existing investment advisory agreement and approve any newly proposed terms therein. In this regard, the Board reviewed and re-approved, during the most recent six month period covered by this report, the Investment Advisory Agreement (the “Advisory Agreement”) with Gabelli Funds, LLC (the “Adviser”) for the Fund.
More specifically, at a meeting held on February 26, 2009, the Independent Board Members, meeting in executive session with their counsel, reviewed the written and oral information that had been made available, and considered the factors and reached the conclusions described below relating to the selection of the Adviser and the re-approval of the Advisory Agreement.
1. Nature, Extent, and Quality of Services. The Independent Board Members considered the nature, quality, and extent of administrative and shareholder services performed by the Adviser, including portfolio management, supervision of Fund operations, and compliance and regulatory filings and disclosures to shareholders, general oversight of other service providers, coordination of Fund marketing initiatives, review of Fund legal issues, assisting the Independent Board Members in their capacity as directors and other services. The Independent Board Members concluded that the services are extensive in nature and that the Adviser consistently delivered a high level of service.
2. Investment Performance of the Fund and Adviser. The Independent Board Members considered investment performance for the Fund over various periods of time as compared with the performance of such Fund’s Lipper peer group. While the Fund had underperformed relative to its peer group over various time periods, the Independent Board Members noted the improvement during the most recently completed nine months. In addition, they noted several factors that may have contributed to the past underperformance and which may not have affected many peer funds, including (1) that the Fund is a non-diversified fund with larger exposure to certain issuers; (2) that the Fund tends to have low turnover, holding positions for longer periods; (3) that the Fund’s investments had focused on the entertainment and media sectors, which underperformed certain other sectors; and (4) that the Fund was experiencing net redemptions, which can adversely affect portfolio management flexibility. Encouraged by the more recent Fund performance, the Independent Board Members and concluded that the Adviser was delivering acceptable performance results.
3. Costs of Services and Profits Realized by the Adviser.
(a) Costs of Services to Fund: Fees and Expenses. The Independent Board Members considered the Fund’s management fee rate and expense ratio relative to industry averages for the Fund’s peer group category. They noted that, while the management fees are at the higher end relative to peer firms, the Fund’s other expenses are below the group average. The Independent Board Members also considered the advisory fees charged by the Adviser and its affiliates to other fund and non-fund clients. The Independent Board Members noted that the mix of services under the Agreement are much more extensive than those under the advisory agreements for non-fund clients.
18
(b) Profitability and Costs of Services to Adviser. The Independent Board Members considered the Adviser’s overall profitability and costs, and pro forma estimates of the Adviser’s profitability and costs attributable to the Fund. With regard to the Adviser, that information was prorated (i) assuming the Fund was part of the Gabelli/GAMCO fund complex and (ii) assuming the Fund constituted the Adviser’s only investment company under its management. The Independent Board Members also considered whether the amount of profit is a fair entrepreneurial profit for the management of the Fund and noted that the Adviser has substantially increased its resources devoted to Fund matters in response to recently enacted regulatory requirements and new or enhanced Fund policies and procedures. The Independent Board Members concluded that the Adviser’s profitability was at an acceptable level, particularly in light of the high quality of the services being provided to the Fund.
4. Extent of Economies of Scale as Fund Grows. The Independent Board Members considered whether there have been economies of scale with respect to the management of the Fund and whether the Fund has appropriately benefited from any economies of scale. The Independent Board Members noted that economies of scale may develop for certain funds as their assets increase and their fund level expenses decline as a percentage of assets, but that fund level economies of scale may not necessarily result in Adviser level economies of scale.
5. Whether Fee Levels Reflect Economies of Scale. The Independent Board Members also considered whether the management fee rate is reasonable in relation to the asset size of the Fund and any economies of scale that may exist, and concluded that it currently was reasonable.
6. Other Relevant Considerations.
(a) Adviser Personnel and Methods. The Independent Board Members considered the size, education, and experience of the Adviser’s staff, the Adviser’s fundamental research capabilities, and the Adviser’s approach to recruiting, training, and retaining portfolio managers and other research and management personnel, and concluded that in each of these areas the Adviser was structured in such a way to support the high level of services being provided to the Fund.
(b) Other Benefits to the Adviser. The Independent Board Members also considered the character and amount of other incidental benefits received by the Adviser and its affiliates from its association with the Fund. The Independent Board Members concluded that potential “fall-out” benefits that the Adviser and its affiliates may receive, such as brokerage commissions paid to an affiliated broker, greater name recognition, or increased ability to obtain research services, appear to be reasonable, and may in some cases benefit the Fund.
Conclusions
In considering the Agreement, the Independent Board Members did not identify any factor as all important or all controlling and instead considered these factors collectively in light of the Fund’s surrounding circumstances. Based on this review, it was the judgment of the Independent Board Members that shareholders had received satisfactory absolute and relative performance at reasonable fees and, therefore, re-approval of the Agreement was in the best interests of the Fund and its shareholders. As a part of its decision making process, the Independent Board Members noted that the Adviser has managed the Fund since its inception, and the Independent Board Members believe that a long-term relationship with a capable, conscientious adviser is in the best interests of the Fund. The Independent Board Members considered, generally, that shareholders invested in the Fund knowing that the Adviser managed the Fund and knowing its investment management fee schedule. As such, the Independent Board Members considered, in particular, whether the Adviser managed the Fund in accordance with its investment objectives and policies as disclosed to shareholders. The Independent Board Members concluded that the Fund was managed by the Adviser consistent with its investment objectives and policies.
19
The Gabelli Value Fund Inc.
One Corporate Center
Rye, New York 10580-1422
800-GABELLI
800-422-3554
fax: 914-921-5118
website: www.gabelli.com
e-mail: info@gabelli.com
Net Asset Value per share available daily by calling
800-GABELLI after 7:00 P.M.
One Corporate Center
Rye, New York 10580-1422
800-GABELLI
800-422-3554
fax: 914-921-5118
website: www.gabelli.com
e-mail: info@gabelli.com
Net Asset Value per share available daily by calling
800-GABELLI after 7:00 P.M.
Board of Directors
Mario J. Gabelli, CFA | Anthony R. Pustorino | |
Chairman and Chief | Certified Public Accountant, | |
Executive Officer | Professor Emeritus | |
GAMCO Investors, Inc. | Pace University | |
Anthony J. Colavita | Werner J. Roeder, MD | |
President | Medical Director | |
Anthony J. Colavita, P.C. | Lawrence Hospital | |
Robert J. Morrissey | ||
Attorney-at-Law | ||
Morrissey, Hawkins & Lynch |
Officers
Bruce N. Alpert | Peter D. Goldstein | |
President and Secretary | Chief Compliance Officer | |
Agnes Mullady | ||
Treasurer |
Custodian
The Bank of New York Mellon
The Bank of New York Mellon
Transfer Agent and Dividend Disbursing Agent
State Street Bank and Trust Company
State Street Bank and Trust Company
Legal Counsel
Willkie Farr & Gallagher LLP
Willkie Farr & Gallagher LLP
Distributor
Gabelli & Company, Inc.
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.
GAB409Q209SR
The
Gabelli
Value
Fund
Inc.
Gabelli
Value
Fund
Inc.
SEMI ANNUAL REPORT
JUNE 30, 2009
JUNE 30, 2009
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed registrants.
Not applicable.
Item 6. Investments.
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. | |
(b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s Board of Directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). | ||
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Exhibits.
(a)(1) | Not applicable. | |||
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. | |||
(a)(3) | Not applicable. | |||
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) | The Gabelli Value Fund Inc. | |||
By (Signature and Title)* | /s/ Bruce N. Alpert | |||
Date 9/1/09 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* | /s/ Bruce N. Alpert | |||
Date 9/1/09 | ||||
By (Signature and Title)* | /s/ Agnes Mullady | |||
Date 9/1/09 |
* | Print the name and title of each signing officer under his or her signature. |