UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-05848
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The Gabelli Value Fund Inc.
-------------------------------------------------------
(Exact name of registrant as specified in charter)
One Corporate Center
Rye, New York 10580-1422
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(Address of principal executive offices) (Zip code)
Bruce N. Alpert
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
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2006
-------------------
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. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
THE GABELLI VALUE FUND INC.
ANNUAL REPORT
DECEMBER 31, 2006
TO OUR SHAREHOLDERS,
The Sarbanes-Oxley Act requires a Fund's principal executive and financial
officers to certify the entire contents of the semi-annual and annual
shareholder reports in a filing with the Securities and Exchange Commission on
Form N-CSR. This certification would cover the portfolio manager's commentary
and subjective opinions if they are attached to or a part of the financial
statements. Many of these comments and opinions would be difficult or impossible
to certify.
Because we do not want our portfolio managers to eliminate their opinions
and/or restrict their commentary to historical facts, we have separated their
commentary from the financial statements and investment portfolio and have sent
it to you separately. Both the commentary and the financial statements,
including the portfolio of investments, will be available on our website at
www.gabelli.com/funds.
Enclosed are the audited financial statements and the investment portfolio
as of December 31, 2006 with a description of factors that affected the
performance during the past year.
PERFORMANCE DISCUSSION (UNAUDITED)
In 2006, the Gabelli Value Fund (Class A Share) outperformed the Standard
& Poor's (S&P) 500 Index by 591 basis points primarily due to superior stock
selection, but also due to favorable industry weightings versus the index. The
strongest S&P industry group in 2006 was Telecommunications Services (up 37%),
an area in which the Fund is significantly overweighted. The only two S&P
sectors not up double-digits in 2006 were Health Care and Information
Technology, two areas in which the Fund is underweighted.
With some exceptions, media and telecommunications, areas of focus for the
Fund, returned to favor in 2006. The Fund's largest holding, Cablevision (+64%
after adjusting for the $10 per share special distribution made in April 2006),
benefited from strong fundamentals, a revaluation by investors of cable equities
and a buyout offer in October from the controlling Dolan family. Other top media
performers included Rogers Communications (+41%), News Corp. (+38%), Time Warner
(+25%) and CBS Corp. (+20%). Holdings over 1% that were up more than 20%
included Aztar Corp. (+79% after being the subject of a bidding war), Swedish
Match (+59%), Telephone & Data Systems (+51%), Diageo (+36%), Watts Water
Technologies (+35%), Vivendi (+25%) and Waste Management (+21%).
Two exceptions to the strong performance of media and telecommunications
were Media General (-27%) and Sprint Nextel (-11%). Media General suffered along
with many of its newspaper peers from a shift in consumer attention and
advertising dollars to newer forms of media while Sprint Nextel has struggled
with the integration of Nextel. Dana Corp. (-81%) also contributed negatively to
the Fund's performance as it filed for bankruptcy protection in 2006. No other
holdings of more than 1% declined in 2006.
Sincerely yours,
/s/ Bruce N. Alpert
Bruce N. Alpert
President
January 22, 2007
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GABELLI VALUE FUND,
THE CONSUMER PRICE INDEX + 10%, AND THE S&P 500 INDEX
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
Gabelli Value Fund Consumer Price
(Class A Share) S&P 500 Index Index + 10%
9/29/89 9,450 10,000 10,000
12/31/89 9,648 10,205 11,460
12/31/90 9,109 9,888 13,305
12/31/91 10,505 12,893 15,048
12/31/92 11,838 13,875 16,989
12/31/93 16,508 15,270 19,147
12/31/94 16,508 15,470 21,578
12/31/95 20,214 21,277 24,276
12/31/96 21,980 26,160 27,504
12/31/97 32,581 34,884 30,723
12/31/98 40,150 44,860 34,286
12/31/99 52,966 54,295 38,641
12/31/00 48,808 49,354 43,819
12/31/01 51,453 43,491 48,902
12/31/02 43,247 33,884 54,965
12/31/03 57,029 43,598 61,506
12/31/04 64,318 48,337 69,686
12/31/05 64,208 50,710 79,024
12/31/06 78,135* 58,712 88,903
* INCLUDES EFFECT OF MAXIMUM SALES CHARGE OF 5.5%.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. The performance tables and
graph do not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares.
COMPARATIVE RESULTS
- ---------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 2006 (A)
----------------------------------------------------
Since
Inception
Quarter 1 Year 3 Year 5 Year 10 Year 15 Year (9/29/89)
- --------------------------------------------------------------------------------------------------------------------
GABELLI VALUE FUND CLASS A ............ 10.58% 21.69% 11.07% 8.72% 13.52% 14.31% 13.03%
4.50(B) 15.00(B) 8.99(B) 7.49(B) 12.88(B) 13.88(B) 12.66(B)
S&P 500 Index ......................... 6.69 15.78 10.43 6.18 8.42 10.63 10.80
Dow Jones Industrial Average .......... 7.31 18.98 8.49 6.83 8.95 12.02 11.94
Nasdaq Composite Index ................ 6.95 9.52 6.43 4.37 6.46 9.90 9.91
Class B ............................... 10.36 20.78 10.25 7.90 12.94 13.92 12.69
5.36(c) 15.78(c) 9.42(c) 7.60(c) 12.94(c) 13.92(c) 12.69(c)
Class C ............................... 10.29 20.69 10.20 7.88 12.96 13.94 12.70
9.29(d) 19.69(d) 10.20 7.88 12.96 13.94 12.70
(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 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' NET ASSET VALUES ARE USED TO CALCULATE PERFORMANCE FOR
THE PERIODS PRIOR TO THE ISSUANCE OF CLASS B SHARES AND CLASS C SHARES ON
MARCH 15, 2000. THE ACTUAL PERFORMANCE FOR THE CLASS B SHARES AND CLASS C
SHARES WOULD HAVE BEEN LOWER DUE TO THE ADDITIONAL EXPENSES ASSOCIATED WITH
THESE CLASSES OF SHARES. THE DOW JONES INDUSTRIAL AVERAGE IS AN UNMANAGED
INDEX OF 30 LARGE CAPITALIZATION STOCKS. THE S&P 500 INDEX AND THE NASDAQ
COMPOSITE INDEX ARE UNMANAGED INDICATORS OF STOCK MARKET PERFORMANCE.
DIVIDENDS ARE REINVESTED EXCEPT FOR THE NASDAQ COMPOSITE INDEX. YOU CANNOT
INVEST DIRECTLY IN AN INDEX.
(b) INCLUDES THE EFFECT OF THE MAXIMUM 5.5% SALES CHARGE AT THE BEGINNING OF
THE PERIOD.
(c) PERFORMANCE RESULTS INCLUDE THE DEFERRED SALES CHARGES FOR THE CLASS B
SHARES UPON REDEMPTION AT THE END OF THE QUARTER, ONE YEAR, THREE YEAR,
FIVE YEAR, TEN YEAR, FIFTEEN YEAR, AND SINCE INCEPTION PERIODS OF 5%, 5%,
3%, 2%, 0%, 0%, AND 0%, RESPECTIVELY, OF THE FUND NAV 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 AND ONE YEAR PERIODS OF 1%
OF THE FUND'S NAV AT THE TIME OF PURCHASE OR SALE, WHICHEVER IS LOWER.
- --------------------------------------------------------------------------------
2
THE GABELLI VALUE FUND INC.
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
For the Six Month Period from July 1, 2006 through December 31, 2006
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. The "Annualized Expense Ratio" represents the actual expenses
for the last six months and may be different from the expense ratio in the
Financial Highlights which is for the year ended December 31, 2006.
Beginning Ending Annualized Expenses
Account Value Account Value Expense Paid During
07/01/06 12/31/06 Ratio Period*
- --------------------------------------------------------------------------------
THE GABELLI VALUE FUND INC.
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A $1,000.00 $1,124.40 1.39% $ 7.44
Class B $1,000.00 $1,120.20 2.14% $11.44
Class C $1,000.00 $1,119.50 2.14% $11.43
HYPOTHETICAL 5% RETURN
Class A $1,000.00 $1,018.20 1.39% $ 7.07
Class B $1,000.00 $1,014.42 2.14% $10.87
Class C $1,000.00 $1,014.42 2.14% $10.87
* 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.
3
SUMMARY OF PORTFOLIO HOLDINGS (UNAUDITED)
The following table presents portfolio holdings as a percent of total net assets
as of December 31, 2006:
THE GABELLI VALUE FUND
Entertainment ................................. 12.3%
Cable and Satellite ........................... 9.8%
Publishing .................................... 9.2%
Telecommunications ............................ 7.7%
Broadcasting .................................. 6.4%
Food and Beverage ............................. 5.5%
Financial Services ............................ 5.4%
Consumer Products ............................. 4.6%
Metals and Mining ............................. 4.2%
Diversified Industrial ........................ 4.2%
Energy and Utilities .......................... 3.8%
Electronics ................................... 3.4%
Equipment and Supplies ........................ 3.1%
Hotels and Gaming ............................. 2.9%
Environmental Services ........................ 2.7%
Consumer Services ............................. 2.3%
Aviation: Parts and Services .................. 2.2%
Communications Equipment ...................... 1.9%
Automotive: Parts and Accessories ............. 1.5%
Automotive .................................... 1.1%
Specialty Chemicals ........................... 1.1%
Retail ........................................ 1.1%
Aerospace ..................................... 1.0%
Machinery ..................................... 0.7%
Business Services ............................. 0.6%
Manufactured Housing .......................... 0.5%
Real Estate ................................... 0.5%
Agriculture ................................... 0.4%
Health Care ................................... 0.4%
Wireless Communications ....................... 0.3%
Computer Software and Services ................ 0.3%
Transportation ................................ 0.0%
Other Assets and Liabilities (Net) ............ (1.1)%
-------
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 SEPTEMBER
30, 2006. 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 12 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.
4
THE GABELLI VALUE FUND INC.
SCHEDULE OF INVESTMENTS -- DECEMBER 31, 2006
================================================================================
MARKET
SHARES COST VALUE
------ ---- -----
COMMON STOCKS -- 101.1%
AEROSPACE -- 1.0%
1,000 Lockheed Martin Corp. .......$ 25,800 $ 92,070
1,000,000 Rolls-Royce Group plc+ ...... 7,007,796 8,766,864
36,700,000 Rolls-Royce Group plc,
Cl. B ...................... 69,833 72,936
------------ ------------
7,103,429 8,931,870
------------ ------------
AGRICULTURE -- 0.4%
100,000 Archer-Daniels-Midland Co. .. 1,384,467 3,196,000
35,000 The Mosaic Co.+ ............. 456,574 747,600
------------ ------------
1,841,041 3,943,600
------------ ------------
AUTOMOTIVE -- 1.1%
298,100 Navistar
International Corp.+ ....... 8,042,403 9,965,483
------------ ------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 1.5%
38,000 China Yuchai
International Ltd. ........ 300,576 261,820
350,000 Dana Corp.+ ................. 4,224,359 486,500
260,000 Genuine Parts Co. ........... 7,010,372 12,331,800
25,000 Proliance
International Inc.+ ........ 116,679 115,000
------------ ------------
11,651,986 13,195,120
------------ ------------
AVIATION: PARTS AND SERVICES -- 2.2%
43,000 Curtiss-Wright Corp. ........ 764,822 1,594,440
340,000 GenCorp Inc.+ ............... 3,135,471 4,766,800
76,700 Sequa Corp., Cl. A+ ......... 3,364,878 8,825,102
33,000 Sequa Corp., Cl. B+ ......... 1,673,268 3,792,360
350,000 The Fairchild Corp.,
Cl. A+ ..................... 2,383,921 766,500
------------ ------------
11,322,360 19,745,202
------------ ------------
BROADCASTING -- 6.4%
1,200,000 CBS Corp., Cl. A ............ 21,763,305 37,464,000
135,000 Gray Television Inc. ........ 1,531,383 989,550
187,500 Liberty Media Corp. -
Capital, Cl. A+ ........... 11,537,181 18,371,250
30,000 Young Broadcasting Inc.,
Cl. A+ .................... 270,342 84,600
------------ ------------
35,102,211 56,909,400
------------ ------------
BUSINESS SERVICES -- 0.6%
10,000 ChoicePoint Inc.+ ........... 375,967 393,800
50,000 Digital Insight Corp.+ ...... 1,922,393 1,924,500
120,000 Intermec Inc.+ .............. 2,713,571 2,912,400
35,700 Nashua Corp.+ ............... 295,577 298,809
------------ ------------
5,307,508 5,529,509
------------ ------------
CABLE AND SATELLITE -- 9.8%
130,000 Adelphia Communications
Corp., Cl. A+ ............. 91,925 1,300
1,935,000 Cablevision Systems Corp.,
Cl. A+ .................... 6,428,880 55,108,800
MARKET
SHARES COST VALUE
------ ---- -----
115,000 EchoStar Communications
Corp., Cl. A+ .............$ 3,551,365 $ 4,373,450
250,000 Liberty Global Inc.,
Cl. A+ .................... 4,300,954 7,287,500
240,000 Rogers Communications Inc.,
Cl. B ..................... 1,767,716 14,304,000
245,000 The DIRECTV Group Inc.+ ..... 3,547,633 6,110,300
------------ ------------
19,688,473 87,185,350
------------ ------------
COMMUNICATIONS EQUIPMENT -- 1.9%
100,000 Agere Systems Inc.+ ......... 1,576,057 1,917,000
144,448 Alcatel-Lucent, ADR ......... 3,096,299 2,054,051
425,000 Corning Inc.+ ............... 3,868,976 7,951,750
30,000 Motorola Inc. ............... 210,940 616,800
150,000 Nortel Networks Corp.+ ...... 5,573,119 4,009,500
------------ ------------
14,325,391 16,549,101
------------ ------------
COMPUTER SOFTWARE AND SERVICES -- 0.3%
90,000 Yahoo! Inc.+ ................ 2,901,361 2,298,600
------------ ------------
CONSUMER PRODUCTS -- 4.6%
85,000 Energizer Holdings Inc.+ .... 1,992,017 6,034,150
92,000 Gallaher Group plc, ADR ..... 2,356,458 8,275,400
500 Givaudan SA ................. 135,440 462,864
130,000 Hartmarx Corp.+ ............. 606,543 917,800
4,000 National Presto
Industries Inc. ............ 117,871 239,480
168,000 Pactiv Corp.+ ............... 1,620,198 5,995,920
1,000,000 Swedish Match AB ............ 13,071,817 18,697,186
3,000 Wolverine World
Wide Inc. .................. 29,203 85,560
------------ ------------
19,929,547 40,708,360
------------ ------------
CONSUMER SERVICES -- 2.3%
70,000 IAC/InterActiveCorp+ ........ 1,547,371 2,601,200
625,000 Liberty Media Corp. -
Interactive, Cl. A+ ....... 12,682,090 13,481,250
185,000 Rollins Inc. ................ 1,346,770 4,090,350
------------ ------------
15,576,231 20,172,800
------------ ------------
DIVERSIFIED INDUSTRIAL -- 4.2%
47,000 Ampco-Pittsburgh Corp. ...... 235,017 1,573,560
12,000 Cooper Industries Ltd.,
Cl. A ..................... 803,600 1,085,160
210,000 Crane Co. ................... 5,510,883 7,694,400
29,000 Griffon Corp.+ .............. 644,825 739,500
375,000 Honeywell
International Inc. ......... 11,514,241 16,965,000
150,000 ITT Corp. ................... 5,499,219 8,523,000
220,000 Katy Industries Inc.+ ....... 1,802,518 589,600
3,000 The Lamson &
Sessions Co.+ ............. 34,956 72,780
------------ ------------
26,045,259 37,243,000
------------ ------------
See accompanying notes to financial statements.
5
THE GABELLI VALUE FUND INC.
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2006
================================================================================
MARKET
SHARES COST VALUE
------ ---- -----
COMMON STOCKS (CONTINUED)
ELECTRONICS -- 3.4%
400,000 Symbol Technologies Inc. ....$ 5,935,250 $ 5,976,000
218,000 Texas Instruments Inc. ...... 5,498,427 6,278,400
5,000 Thermo Fisher
Scientific Inc.+ ........... 115,249 226,450
300,000 Thomas & Betts Corp.+ ....... 5,345,034 14,184,000
125,000 Tyco International Ltd. ..... 3,469,899 3,800,000
------------ ------------
20,363,859 30,464,850
------------ ------------
ENERGY AND UTILITIES -- 3.8%
6,000 Allegheny Energy Inc.+ ...... 74,092 275,460
14,000 Chevron Corp. ............... 848,670 1,029,420
185,000 ConocoPhillips .............. 5,122,693 13,310,750
50,000 Giant Industries Inc.+ ...... 4,080,237 3,747,500
106,000 Kinder Morgan Inc. .......... 11,059,148 11,209,500
5,420 Mirant Corp.+ ............... 25,619 171,110
200,000 Mirant Corp. Escrow+ (a) .... 0 0
100,000 Northeast Utilities ......... 1,922,987 2,816,000
30,000 Southwest Gas Corp. ......... 664,383 1,151,100
------------ ------------
23,797,829 33,710,840
------------ ------------
ENTERTAINMENT -- 12.3%
8,570 Chestnut Hill Ventures+ (a) . 233,241 184,030
400,000 Discovery Holding Co.,
Cl. A+ ..................... 4,551,612 6,436,000
60,000 Dover Motorsports Inc. ...... 309,314 318,600
1,290,000 Gemstar-TV Guide
International Inc.+ ........ 6,227,564 5,172,900
320,000 Grupo Televisa SA, ADR ...... 2,949,674 8,643,200
1,260,000 Time Warner Inc. ............ 18,053,221 27,442,800
34,000 Triple Crown
Media Inc.+ ................ 365,718 263,160
1,100,000 Viacom Inc., Cl. A+ ......... 29,661,492 45,111,000
400,000 Vivendi ..................... 5,332,296 15,634,612
------------ ------------
67,684,132 109,206,302
------------ ------------
ENVIRONMENTAL SERVICES -- 2.7%
240,000 Republic Services Inc. ...... 4,425,922 9,760,800
380,000 Waste Management Inc. ....... 8,959,895 13,972,600
------------ ------------
13,385,817 23,733,400
------------ ------------
EQUIPMENT AND SUPPLIES -- 3.1%
210,000 CIRCOR International Inc. ... 2,325,092 7,725,900
185,000 Flowserve Corp.+ ............ 2,864,920 9,336,950
85,000 Gerber Scientific Inc.+ ..... 578,987 1,067,600
95,000 GrafTech
International Ltd.+ ........ 1,159,625 657,400
220,000 Watts Water Technologies Inc.,
Cl. A ..................... 3,209,764 9,044,200
------------ ------------
10,138,388 27,832,050
------------ ------------
FINANCIAL SERVICES -- 5.4%
530,000 American Express Co. ........ 17,244,922 32,155,100
100,000 Ameriprise
Financial Inc. ............. 2,346,124 5,450,000
95,000 Citigroup Inc. .............. 4,575,534 5,291,500
27,000 Deutsche Bank AG ............ 1,569,799 3,597,480
110,000 The Phoenix
Companies Inc. ............. 1,214,393 1,747,900
------------ ------------
26,950,772 48,241,980
------------ ------------
MARKET
SHARES COST VALUE
------ ---- -----
FOOD AND BEVERAGE -- 5.5%
15,000 Corn Products
International Inc. ........$ 184,913 $ 518,100
2,000 Davide Campari-Milano
SpA ........................ 19,701 19,827
50,000 Del Monte Foods Co. ......... 379,205 551,500
208,000 Diageo plc, ADR ............. 7,993,283 16,496,480
130,000 Flowers Foods Inc. .......... 1,043,242 3,508,700
80,000 Fomento Economico Mexicano
SAB de CV, ADR ............ 2,934,106 9,260,800
65,000 General Mills Inc. .......... 3,302,432 3,744,000
80,000 H.J. Heinz Co. .............. 2,590,412 3,600,800
70,000 Kerry Group plc,
Cl. A ...................... 797,221 1,737,179
380,000 PepsiAmericas Inc. .......... 5,323,773 7,972,400
12,000 Remy Cointreau SA ........... 768,190 776,186
3,000 The Hershey Co. ............. 145,382 149,400
15,000 Wm. Wrigley Jr. Co. ......... 727,034 775,800
3,750 Wm. Wrigley Jr. Co.,
Cl. B ...................... 193,262 192,750
------------ ------------
26,402,156 49,303,922
------------ ------------
HEALTH CARE -- 0.4%
10,000 Advanced Medical
Optics Inc.+ .............. 385,843 352,000
5,000 Chemed Corp. ................ 157,240 184,900
100,000 Pfizer Inc. ................. 2,487,765 2,590,000
------------ ------------
3,030,848 3,126,900
------------ ------------
HOTELS AND GAMING -- 2.9%
18,000 Aztar Corp.+ ................ 197,676 979,560
63,000 Dover Downs Gaming &
Entertainment Inc. ........ 410,200 842,310
185,000 Gaylord
Entertainment Co.+ ........ 5,187,585 9,422,050
177,500 Hilton Hotels Corp. ......... 1,385,106 6,194,750
352,941 Ladbrokes plc ............... 3,502,005 2,890,325
20,000 Las Vegas Sands Corp.+ ...... 736,642 1,789,600
65,000 MGM Mirage+ ................. 1,478,603 3,727,750
------------ ------------
12,897,817 25,846,345
------------ ------------
MACHINERY -- 0.7%
86,800 CNH Global NV ............... 1,632,870 2,369,640
38,000 Deere & Co. ................. 1,565,024 3,612,660
------------ ------------
3,197,894 5,982,300
------------ ------------
MANUFACTURED HOUSING -- 0.5%
480,000 Champion
Enterprises Inc.+ .......... 4,727,447 4,492,800
------------ ------------
METALS AND MINING -- 4.2%
478,000 Barrick Gold Corp. .......... 7,651,550 14,674,600
123,133 Kinross Gold Corp.+ ......... 1,119,196 1,462,820
471,000 Newmont Mining Corp. ........ 9,100,344 21,265,650
------------ ------------
17,871,090 37,403,070
------------ ------------
See accompanying notes to financial statements.
6
THE GABELLI VALUE FUND INC.
SCHEDULE OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 2006
================================================================================
MARKET
SHARES COST VALUE
------ ---- -----
COMMON STOCKS (CONTINUED)
PUBLISHING -- 9.2%
150,000 Belo Corp., Cl. A ...........$ 2,592,089 $ 2,755,500
900,000 Media General Inc.,
Cl. A ...................... 17,694,000 33,453,000
70,000 Meredith Corp. .............. 1,404,532 3,944,500
950,000 News Corp., Cl. A ........... 13,866,747 20,406,000
320,000 PRIMEDIA Inc.+ .............. 927,102 540,800
300,000 The E.W. Scripps Co.,
Cl. A ...................... 10,208,574 14,982,000
300,000 The Reader's Digest
Association Inc. .......... 4,510,861 5,010,000
15,000 Tribune Co. ................. 462,292 461,700
------------ ------------
51,666,197 81,553,500
------------ ------------
REAL ESTATE -- 0.5%
134,000 Griffin Land &
Nurseries Inc.+ ............ 1,587,460 4,348,300
------------ ------------
RETAIL -- 1.1%
50,000 Ingles Markets Inc., Cl. A .. 572,181 1,489,500
130,000 Safeway Inc. ................ 2,649,854 4,492,800
30,000 SUPERVALU Inc. .............. 850,469 1,072,500
60,000 The Home Depot Inc. ......... 2,042,786 2,409,600
------------ ------------
6,115,290 9,464,400
------------ ------------
SPECIALTY CHEMICALS -- 1.1%
220,000 Ferro Corp. ................. 4,605,734 4,551,800
230,000 Hercules Inc.+ .............. 2,187,787 4,441,300
4,000 Monsanto Co. ................ 170,632 210,120
15,000 Sensient Technologies Corp. . 300,492 369,000
8,065 Tronox Inc., Cl. B .......... 78,763 127,346
------------ ------------
7,343,408 9,699,566
------------ ------------
TELECOMMUNICATIONS -- 7.7%
645,000 Cincinnati Bell Inc.+ ....... 2,473,255 2,947,650
25,000 Commonwealth Telephone
Enterprises Inc. .......... 989,702 1,046,500
70,000 Embarq Corp. ................ 1,823,080 3,679,200
250,000 Qwest Communications
International Inc.+ ....... 683,237 2,092,500
1,470,000 Sprint Nextel Corp. ......... 19,821,488 27,768,300
425,000 Telephone & Data
Systems Inc. .............. 9,269,310 23,090,250
148,000 Telephone & Data
Systems Inc., Special ..... 3,302,453 7,340,800
------------ ------------
38,362,525 67,965,200
------------ ------------
MARKET
SHARES COST VALUE
------ ---- -----
TRANSPORTATION -- 0.0%
99,000 Grupo TMM SA, Cl. A, ADR+ ...$ 780,160 $ 249,480
------------ ------------
WIRELESS COMMUNICATIONS -- 0.3%
40,000 United States
Cellular Corp.+ ............ 1,880,524 2,783,600
------------ ------------
TOTAL COMMON STOCKS ......... 517,020,813 897,786,200
------------ ------------
WARRANTS -- 0.0%
ENERGY AND UTILITIES -- 0.0%
17,405 Mirant Corp., Ser. A,
expire 01/03/11+ .......... 35,380 228,006
------------ ------------
TOTAL
INVESTMENTS -- 101.1% .....$517,056,193 898,014,206
============
OTHER ASSETS AND LIABILITIES
(NET) -- (1.1)% .......................... (9,475,387)
------------
NET ASSETS -- 100.0% ...................... $888,538,819
============
- ----------------
(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 the valuation of comparable
securities and other factors on a regular basis. At December 31, 2006, the
market value of the fair valued security amounted to $184,030 or 0.02% of
total net assets.
+ Non-income producing security.
ADR American Depository Receipt
See accompanying notes to financial statements.
7
THE GABELLI VALUE FUND INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
================================================================================
ASSETS:
Investments, at value (cost $517,056,193) ............... $ 898,014,206
Receivable for investments sold ......................... 3,446,836
Dividends and interest receivable ....................... 560,380
Receivable for Fund shares sold ......................... 196,952
Prepaid expense ......................................... 31,382
-------------
TOTAL ASSETS ............................................ 902,249,756
-------------
LIABILITIES:
Payable to custodian .................................... 10,898,615
Payable for Fund shares redeemed ........................ 1,367,022
Payable for investment advisory fees .................... 760,254
Payable for distribution fees ........................... 207,990
Payable for accounting fees ............................. 7,501
Other accrued expenses .................................. 469,555
-------------
TOTAL LIABILITIES ....................................... 13,710,937
-------------
NET ASSETS applicable to 50,579,514
shares outstanding .................................... $ 888,538,819
=============
NET ASSETS CONSIST OF:
Paid-in capital, each class at $0.001 par value ......... $ 514,136,836
Accumulated net investment income ....................... 461
Accumulated distributions in excess of net
realized gain on investments and foreign
currency transactions ................................. (6,556,713)
Net unrealized appreciation on investments .............. 380,958,013
Net unrealized appreciation on foreign
currency translations ................................. 222
-------------
NET ASSETS .............................................. $ 888,538,819
=============
SHARES OF CAPITAL STOCK:
CLASS A:
Net Asset Value and redemption price per share
($860,788,559 / 48,894,274 shares outstanding;
100,000,000 shares authorized) ........................ $17.61
======
Maximum offering price per share
(NAV / .945, based on maximum sales
charge of 5.50% of the offering price) ................ $18.63
======
CLASS B:
Net Asset Value and offering price per share
($13,045,873 / 792,411 shares outstanding;
100,000,000 shares authorized) ........................ $16.46(a)
======
CLASS C:
Net Asset Value and offering price per share
($14,704,387 / 892,829 shares outstanding;
50,000,000 shares authorized) ......................... $16.47(a)
======
- --------------
(a) Redemption price varies based on the length of time held.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign taxes of $166,246) ............ $ 13,767,747
Interest ................................................ 959,993
-------------
TOTAL INVESTMENT INCOME ................................. 14,727,740
-------------
EXPENSES:
Investment advisory fees ................................ 9,484,566
Distribution fees - Class A ............................. 2,297,197
Distribution fees - Class B ............................. 159,088
Distribution fees - Class C ............................. 136,826
Shareholder services fees ............................... 807,026
Shareholder communications expenses ..................... 180,762
Custodian fees .......................................... 119,431
Legal and audit fees .................................... 70,487
Directors' fees ......................................... 68,000
Interest expense ........................................ 64,907
Accounting fees ......................................... 45,000
Registration expenses ................................... 40,609
Miscellaneous expenses .................................. 109,430
-------------
TOTAL EXPENSES .......................................... 13,583,329
Less: Custodian fee credits ............................. (21,034)
-------------
NET EXPENSES ............................................ 13,562,295
-------------
NET INVESTMENT INCOME ................................... 1,165,445
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain on investments ........................ 180,280,158
Net realized gain on foreign
currency transactions ................................. 12,442
-------------
Net realized gain on investments and
foreign currency transactions ......................... 180,292,600
-------------
Net change in unrealized appreciation/
depreciation on investments ........................... 4,923,475
Net change in unrealized appreciation/
depreciation on foreign currency
translations .......................................... 322
-------------
Net change in unrealized appreciation/
depreciation on investments and
foreign currency translations ......................... 4,923,797
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY ...................... 185,216,397
-------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ....................................... $ 186,381,842
=============
See accompanying notes to financial statements.
8
THE GABELLI VALUE FUND INC.
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
----------------- -----------------
OPERATIONS:
Net investment income ............................................... $ 1,165,445 $ 744,617
Net realized gain on investments and foreign currency transactions .. 180,292,600 77,766,169
Net change in unrealized appreciation/depreciation on investments and
foreign currency translations ..................................... 4,923,797 (82,512,239)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..... 186,381,842 (4,001,453)
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class A ........................................................... (1,177,420) (666,736)
Class B ........................................................... (6) --
--------------- ---------------
(1,177,426) (666,736)
--------------- ---------------
Net realized gains on investments and foreign currency transactions
Class A ........................................................... (175,292,657) (73,800,544)
Class B ........................................................... (2,830,343) (1,289,884)
Class C ........................................................... (3,171,930) (1,025,214)
--------------- ---------------
(181,294,930) (76,115,642)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................................. (182,472,356) (76,782,378)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS
Class A ........................................................... (206,787,976) (120,095,977)
Class B ........................................................... (4,770,251) (1,087,763)
Class C ........................................................... 1,241,683 (1,199,523)
--------------- ---------------
NET DECREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS .......... (210,316,544) (122,383,263)
--------------- ---------------
REDEMPTION FEES ..................................................... 1,667 52,322
--------------- ---------------
NET DECREASE IN NET ASSETS .......................................... (206,405,391) (203,114,772)
NET ASSETS:
Beginning of period ................................................. 1,094,944,210 1,298,058,982
--------------- ---------------
End of period (including undistributed net
investment income of $461 and $0, respectively) ................... $ 888,538,819 $ 1,094,944,210
=============== ===============
NOTES TO FINANCIAL STATEMENTS
================================================================================
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
9
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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 60 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 60 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 to the
valuation and changes in valuation of similar securities, including a comparison
of foreign securities to 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.
In September 2006, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") 157, Fair Value
Measurements, which clarifies the definition of fair value and requires
companies to expand their disclosure about the use of fair value to measure
assets and liabilities in interim and annual periods subsequent to initial
recognition. Adoption of SFAS 157 requires the use of the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. At this time,
management is in the process of reviewing the requirements of SFAS 157 against
its current valuation policies to determine future applicability.
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.
The Fund will always receive and maintain securities as collateral whose market
value, including accrued interest, will be 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 December
31, 2006, there were no open repurchase agreements.
10
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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 December 31, 2006, there were no
open futures contracts.
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 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 December 31,
2006.
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 purchase 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.
11
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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 net asset value ("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.
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 110% of the 90 day
Treasury bill rate. This amount, if any, would be shown as "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. For the fiscal year
ended December 31, 2006, reclassifications were made to increase accumulated net
investment income by $13,331 and decrease accumulated distributions in excess of
net realized gain on investments and foreign currency transactions by $13,331.
The tax character of distributions paid during the fiscal years ended December
31, 2006 and December 31, 2005 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
----------------- -----------------
DISTRIBUTIONS PAID FROM:
Ordinary income
(inclusive of short-term
capital gains) .................... $ 1,874,083 $ 1,290,094
Net long-term capital gains ......... 180,598,273 75,492,284
------------ -----------
Total distributions paid ............ $182,472,356 $76,782,378
============ ===========
12
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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.
At December 31, 2006, the difference between book basis and tax basis unrealized
appreciation was primarily due to deferral of losses from wash sales for tax
purposes.
As of December 31, 2006, the components of accumulated earnings/(losses) on a
tax basis were as follows:
Undistributed ordinary income
(inclusive of short-term capital gains) ........... $ 7,432
Undistributed long-term capital gains ............... 116,177
Net unrealized appreciation on
investments and
foreign currency .................................. 374,278,374
------------
Total accumulated gain .............................. $374,401,983
============
The following summarizes the tax cost of investments and the related unrealized
appreciation/(depreciation) at December 31, 2006:
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION APPRECIATION
---- ------------ ------------ --------------
Investments ..... $523,736,054 $395,487,058 $(21,208,906) $374,278,152
In July 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes, an Interpretation of FASB Statement No. 109" ("the
Interpretation"). The Interpretation establishes for all entities, including
pass-through entities such as the Fund, a minimum threshold for financial
statement recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction), and
requires certain expanded tax disclosures. The Interpretation is required to be
implemented for a calendar year open-end fund no later than its June 29, 2007
NAV, and is to be applied to all open tax years as of the date of effectiveness.
Management has begun to evaluate the application of the Interpretation to the
Fund, and is not in a position at this time to estimate the significance of its
impact, if any, on the Fund's financial statements.
3. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS. 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 its 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 affiliated
persons of the Adviser.
The Fund pays each Director that is not considered to be an affiliated person an
annual retainer of $10,000 plus $1,000 for each Board meeting attended and they
are reimbursed for any out of pocket expenses incurred in attending meetings.
All Board committee members receive $1,000 per meeting and the chairman of each
committee also receives $2,500 per year. Directors who are directors or
employees of the Adviser or an affiliated company receive no compensation or
expense reimbursement from the Fund.
13
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
4. DISTRIBUTION PLAN. The Fund's Board has adopted a distribution plan (the
"Plan") for each class of 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 proceeds from the sales of securities for
the fiscal year ended December 31, 2006, other than short-term securities,
aggregated $156,176,282 and $432,746,065, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the fiscal year ended December 31, 2006,
the Fund paid brokerage commissions of $501,264 to Gabelli & Company.
Additionally, Gabelli & Company informed the Fund that it received $190,542 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 fiscal year
ended December 31, 2006, the Fund paid or accrued $45,000 to the Adviser in
connection with the cost of computing the Fund's NAV.
7. CAPITAL STOCK TRANSACTIONS. The Fund currently offers three classes of shares
- - Class A Shares, Class B Shares, and Class C Shares. Class A Shares are subject
to a maximum front-end sales charge of 5.50%. 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. The Board has approved Class I Shares which have not been
offered publicly.
The Fund imposes a redemption fee of 2.00% on Class A Shares, Class B Shares,
and Class C Shares that are redeemed or exchanged on or before the seventh day
after the date of a purchase. (Prior to June 15, 2005, the Fund imposed a
redemption fee on shares that were redeemed or exchanged on or before the
sixtieth 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 fiscal years ended
December 31, 2006 and December 31, 2005 amounted to $1,667 and $52,322,
respectively.
The redemption fee does not apply to shares purchased through programs that the
Adviser determined to have appropriate short-term trading policies in place.
Additionally, certain recordkeepers for qualified and non-qualified retirement
plans that could not collect the redemption fee at the participant level due to
systems limitations have received an extension to implement such systems.
14
THE GABELLI VALUE FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Transactions in shares of capital stock were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
--------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
CLASS A CLASS A
--------------------------- ----------------------------
Shares sold ......................................... 2,603,599 $ 50,582,707 3,107,146 $ 59,989,477
Shares issued upon reinvestment of distributions .... 9,303,834 164,770,939 3,721,831 67,513,966
Shares redeemed ..................................... (21,715,392) (422,141,622) (12,826,666) (247,599,420)
----------- ------------- ----------- -------------
Net decrease ...................................... (9,807,959) $(206,787,976) (5,997,689) $(120,095,977)
=========== ============= =========== =============
CLASS B CLASS B
--------------------------- ----------------------------
Shares sold ......................................... 7,500 $ 131,453 20,985 $ 381,787
Shares issued upon reinvestment of distributions .... 148,543 2,459,882 60,316 1,043,462
Shares redeemed ..................................... (394,141) (7,361,586) (134,928) (2,513,012)
----------- ------------- ----------- -------------
Net decrease ...................................... (238,098) $ (4,770,251) (53,627) $ (1,087,763)
=========== ============= =========== =============
CLASS C CLASS C
--------------------------- ----------------------------
Shares sold ......................................... 140,139 $ 2,542,951 119,549 $ 2,220,629
Shares issued upon reinvestment of distributions .... 128,599 2,130,888 41,465 717,762
Shares redeemed ..................................... (185,965) (3,432,156) (223,193) (4,137,914)
----------- ------------- ----------- -------------
Net increase (decrease) ........................... 82,773 $ 1,241,683 (62,179) $ (1,199,523)
=========== ============= =========== =============
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.
9. OTHER MATTERS. The Adviser and/or affiliates received subpoenas from the
Attorney General of the State of New York and the SEC requesting information on
mutual fund share trading practices involving certain funds managed by the
Adviser. GAMCO Investors, Inc. ("GAMCO"), the Adviser's parent company,
responded to these requests for documents and testimony. In June 2006, GAMCO
began discussions with the SEC regarding a possible resolution of their inquiry.
In February 2007, the Adviser made an offer of settlement to the staff of the
SEC for communication to the Commission for its consideration to resolve this
matter. This offer of settlement is subject to agreement regarding the specific
language of the SEC's administrative order and other settlement documents. On a
separate matter, in September 2005, the Adviser was informed by the staff of the
SEC that the staff may recommend to the Commission that an administrative remedy
and a monetary penalty be sought from the Adviser in connection with the actions
of two of seven closed-end funds managed by the Adviser relating to Section
19(a) and Rule 19a-1 of the 1940 Act. These provisions require registered
investment companies to provide written statements to shareholders when a
dividend is made from a source other than net investment income. While the two
closed-end funds sent annual statements and provided other materials containing
this information, the funds did not send written statements to shareholders with
each distribution in 2002 and 2003. The Adviser believes that all of the funds
are now in compliance. The Adviser believes that these matters would have no
effect on the Fund or any material adverse effect on the Adviser or its ability
to manage the Fund.
15
THE GABELLI VALUE FUND INC.
FINANCIAL HIGHLIGHTS
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
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 Total
December 31 of Period Income/(Loss)(a) Investments Operations Income Investments Distributions
- ----------- --------- ---------------- -------------- ---------- --------- ----------- -------------
CLASS A
2006 $18.11 $ 0.03 $ 3.92 $ 3.95 $(0.03) $(4.42) $(4.45)
2005 19.49 0.02 (0.05) (0.03) (0.01) (1.34) (1.35)
2004 17.97 (0.02) 2.31 2.29 -- (0.77) (0.77)
2003 13.81 (0.05) 4.45 4.40 -- (0.24) (0.24)
2002 16.43 (0.04) (2.58) (2.62) -- -- --
CLASS B
2006 $17.28 $(0.10) $ 3.70 $ 3.60 -- $(4.42) $(4.42)
2005 18.79 (0.12) (0.05) (0.17) -- (1.34) (1.34)
2004 17.47 (0.15) 2.24 2.09 -- (0.77) (0.77)
2003 13.53 (0.17) 4.35 4.18 -- (0.24) (0.24)
2002 16.23 (0.14) (2.56) (2.70) -- -- --
CLASS C
2006 $17.29 $(0.11) $ 3.71 $ 3.60 -- $(4.42) $(4.42)
2005 18.80 (0.12) (0.05) (0.17) -- (1.34) (1.34)
2004 17.49 (0.15) 2.23 2.08 -- (0.77) (0.77)
2003 13.54 (0.17) 4.36 4.19 -- (0.24) (0.24)
2002 16.24 (0.14) (2.56) (2.70) -- -- --
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-----------------------------------------------
Net Asset Net Assets Net
Period Value, End of Investment Portfolio
Ended Redemption End of Total Period Income/ Operating Turnover
December 31 Fees(a) Period Return+ (in 000's) (Loss) Expenses (b) Rate
- ----------- ---------- ------ ------- ---------- --------- ------------ -------
CLASS A
2006 $0.00(c) $17.61 21.7% $ 860,789 0.14% 1.41%(d) 17%
2005 0.00(c) 18.11 (0.2) 1,063,137 0.08 1.40 3
2004 0.00(c) 19.49 12.8 1,261,293 (0.11) 1.39 12
2003 -- 17.97 31.9 1,255,668 (0.35) 1.44(e) 8
2002 -- 13.81 (16.0) 1,024,452 (0.28) 1.40 16
CLASS B
2006 $0.00(c) $16.46 20.8% $ 13,046 (0.53)% 2.16%(d) 17%
2005 0.00(c) 17.28 (0.9) 17,804 (0.67) 2.15 3
2004 0.00(c) 18.79 12.0 20,366 (0.86) 2.14 12
2003 -- 17.47 30.9 18,059 (1.10) 2.19(e) 8
2002 -- 13.53 (16.6) 10,493 (1.01) 2.16 16
CLASS C
2006 $0.00(c) $16.47 20.7% $ 14,704 (0.58)% 2.16%(d) 17%
2005 0.00(c) 17.29 (0.9) 14,003 (0.67) 2.15 3
2004 0.00(c) 18.80 11.9 16,400 (0.85) 2.14 12
2003 -- 17.49 30.9 14,973 (1.10) 2.19(e) 8
2002 -- 13.54 (16.6) 8,078 (1.01) 2.16 16
- ---------------
+ 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.
(a) Per share amounts have been calculated using the average shares outstanding
method.
(b) The ratios do not include a reduction of expenses for custodian fee credits
on cash balances maintained with the custodian. For the fiscal years ended
December 31, 2002, 2003, and 2006, the effect of the custodian fee credits
were minimal. For the fiscal years ended December 31, 2004 and 2005, there
were no custodian fee credits.
(c) Amount represents less than $0.005 per share.
(d) The Fund incurred interest expense during the fiscal 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), 2.15% (Class
B), and 2.15% (Class C), respectively.
(e) The Fund incurred dividend expense on securities sold short for the year
ended December 31, 2003. If dividend expense had not been incurred, the
ratios of operating expenses to average net assets would have been 1.43%
(Class A), 2.18% (Class B), and 2.18% (Class C), respectively.
See accompanying notes to financial statements.
16
THE GABELLI VALUE FUND INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
================================================================================
To the Board of Directors and Shareholders of
The Gabelli Value Fund Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Value Fund Inc.
(hereafter referred to as the "Fund") at December 31, 2006, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the periods presented, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 2006 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 28, 2007
17
THE GABELLI VALUE FUND INC.
ADDITIONAL FUND INFORMATION (UNAUDITED)
================================================================================
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Directors. Information pertaining to the Directors and officers
of the Fund is set forth below. The Fund's Statement of Additional Information
includes additional information about the Fund's Directors and is available,
without charge, upon request, by calling 800-GABELLI (800-422-3554) or by
writing to The Gabelli Value Fund Inc. at One Corporate Center, Rye, NY
10580-1422.
TERM OF NUMBER OF
NAME, POSITION(S) OFFICE AND FUNDS IN FUND
ADDRESS 1 LENGTH OF COMPLEX OVERSEEN PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIPS
AND AGE TIME SERVED 2 BY DIRECTOR DURING PAST FIVE YEARS HELD BY DIRECTOR 4
- ---------------- ------------ ---------------- ---------------------- ------------------
INTERESTED DIRECTORS 3:
- ----------------------
MARIO J. GABELLI Since 1989 24 Chairman of the Board and Chief Executive Director of Morgan
Director and Officer of GAMCO Investors, Inc. and Chief Group Holdings, Inc.
Chief Investment Officer Investment Officer - Value Portfolios of (transportation services);
Age: 64 of Gabelli Funds, LLC and GAMCO Asset Chairman of the Board of
Management Inc.; Director/Trustee or Lynch Interactive
Chief Investment Officer of other registered Corporation (multimedia
investment companies in the Gabelli Funds and communication
complex; Chairman and Chief Executive services company)
Officer of GGCP, Inc.
INDEPENDENT DIRECTORS 5:
- -----------------------
ANTHONY J. COLAVITA Since 1989 34 Partner in the law firm of --
Director Anthony J. Colavita, P.C.
Age: 71
ROBERT J. MORRISSEY Since 1989 6 Partner in the law firm of Morrissey, --
Director Hawkins & Lynch
Age: 67
ANTHONY R. PUSTORINO Since 1989 14 Certified Public Accountant; Professor Director of The LGL
Director Emeritus, Pace University Group, Inc. (diversified
Age: 81 manufacturing)
WERNER J. ROEDER, MD Since 2001 23 Medical Director of Lawrence Hospital and --
Director practicing private physician
Age: 66
- --------------------------------------------------------------------------------
2006 TAX NOTICE TO SHAREHOLDERS (Unaudited)
For the fiscal year ended December 31, 2006, the Fund paid to shareholders, on
December 27, 2006, ordinary income dividends (inclusive of short-term capital
gains) totaling $0.0467, $0.0170, and $0.0170 and a long-term capital gain
distribution, designated as a capital gain dividend totaling $4.4070, $4.4070,
and $4.4070 per share for Class A, Class B, and Class C, respectively. The Fund
designates a maximum of $180,598,273 of long-term capital gains as a capital
gain dividend for tax purposes. For the fiscal year ended December 31, 2006,
100% of the ordinary income dividend qualifies for the dividend received
deduction available to corporations and 100% of the ordinary income
distributions was qualified dividend income.
- --------------------------------------------------------------------------------
18
THE GABELLI VALUE FUND INC.
ADDITIONAL FUND INFORMATION (CONTINUED) (UNAUDITED)
================================================================================
TERM OF
NAME, POSITION(S) OFFICE AND
ADDRESS 1 LENGTH OF PRINCIPAL OCCUPATION(S)
AND AGE TIME SERVED 2 DURING PAST FIVE YEARS
- ---------------- ------------- -----------------------
OFFICERS:
- --------
BRUCE N. ALPERT Since 2003 Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC
President since 1988 and an officer of all of the registered investment companies in
Age: 55 the Gabelli Funds complex. Director and President of Gabelli Advisers, Inc.
since 1998
JAMES E. MCKEE Since 1995 Vice President, General Counsel and Secretary of GAMCO Investors, Inc.
Secretary since 1999 and GAMCO Asset Management Inc. since 1993; Secretary of
Age: 43 all of the registered investment companies in the Gabelli Funds complex
AGNES MULLADY Since 2006 Treasurer of all of the registered investment companies in the Gabelli Funds
Treasurer complex; Senior Vice President of U.S. Trust Company, N.A. and Treasurer
Age: 48 and Chief Financial Officer of Excelsior Funds from 2004 through 2005;
Chief Financial Officer of AMIC Distribution Partners from 2002 through 2004;
Controller of Reserve Management Corporation and Reserve Partners, Inc. and
Treasurer of Reserve Funds from 2000 through 2002
PETER D. GOLDSTEIN Since 2004 Director of Regulatory Affairs at GAMCO Investors, Inc. since 2004;
Chief Compliance Officer Chief Compliance Officer of all of the registered investment companies
Age: 53 in the Gabelli Funds complex; Vice President of Goldman Sachs Asset
Management from 2000 through 2004
- ---------------------
1 Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.
2 Each Director will hold office for an indefinite term until the earliest of
(i) the next meeting of shareholders, if any, called for the purpose of
considering the election or re-election of such Director and until the
election and qualification of his or her successor, if any, elected at such
meeting, or (ii) the date a Director resigns or retires, or a Director is
removed by the Board of Directors or shareholders, in accordance with the
Fund's By-Laws and Articles of Incorporation. Each officer will hold office
for an indefinite term until the date he or she resigns or retires or until
his or her successor is elected and qualified.
3 "Interested person" of the Fund as defined in the 1940 Act. Mr. Gabelli is
considered an "interested person" because of his affiliation with Gabelli
Funds, LLC which acts as the Fund's investment adviser.
4 This column includes only directorships of companies required to report to
the SEC under the Securities Exchange Act of 1934, as amended (i.e. public
companies) or other investment companies registered under the 1940 Act.
5 Directors who are not interested persons are considered "Independent"
Directors.
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 6:00 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
ATTORNEY-AT-LAW MEDICAL DIRECTOR
ANTHONY J. COLAVITA, P.C. LAWRENCE HOSPITAL
Robert J. Morrissey
ATTORNEY-AT-LAW
MORRISSEY, HAWKINS & LYNCH
OFFICERS
Bruce N. Alpert James E. McKee
PRESIDENT SECRETARY
Agnes Mullady Peter D. Goldstein
TREASURER CHIEF COMPLIANCE OFFICER
CUSTODIAN
Mellon Trust of New England, N.A.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Willkie Farr & Gallagher LLP
DISTRIBUTOR
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.
- --------------------------------------------------------------------------------
GAB409Q406SR
[GRAPHIC OMITTED] E P
Gabelli Triangle P M
MANAGEMENT S V
CASH FLOW
RESEARCH
THE
GABELLI
VALUE
FUND
INC.
ANNUAL REPORT
DECEMBER 31, 2006
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's Board of
Directors has determined that Anthony R. Pustorino is qualified to serve as an
audit committee financial expert serving on its audit committee and that he is
"independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$47,858 for 2005 and $48,200 for 2006.
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0 for 2005 and $0 for 2006.
TAX FEES
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $2,880 for 2005 and $3,100
for 2006. Tax fees represent tax compliance services provided in
connection with the review of the Registrant's tax returns.
ALL OTHER FEES
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
for 2005 and $0 for 2006.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pre-Approval Policies and Procedures. The Audit Committee ("Committee")
of the registrant is responsible for pre-approving (i) all audit and
permissible non-audit services to be provided by the independent
registered public accounting firm to the registrant and (ii) all
permissible non-audit services to be provided by the independent
registered public accounting firm to the Adviser, Gabelli Funds, LLC,
and any affiliate of Gabelli Funds, LLC ("Gabelli") that provides
services to the registrant (a "Covered Services Provider") if the
independent registered public accounting firm's engagement related
directly to the operations and financial reporting of the registrant.
The Committee may delegate its responsibility to pre-approve any such
audit and permissible non-audit services to the Chairperson of the
Committee, and the Chairperson must report to the Committee, at its
next regularly scheduled meeting after the Chairperson's pre-approval
of such services, his or her decision(s). The Committee may also
establish detailed pre-approval policies and procedures for
pre-approval of such services in accordance with applicable laws,
including the delegation of some or all of the Committee's pre-approval
responsibilities to the other persons (other than Gabelli or the
registrant's officers). Pre-approval by the Committee of any
permissible non-audit services is not required so long as: (i) the
permissible non-audit services were not recognized by the registrant at
the time of the engagement to be non-audit services; and (ii) such
services are promptly brought to the attention of the Committee and
approved by the Committee or Chairperson prior to the completion of the
audit.
(e)(2) The percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) Not applicable
(c) 100%
(d) Not applicable
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was 0%.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $0 for 2005 and $0 for 2006.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
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.
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) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(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
-------------------------------------------------------
Bruce N. Alpert, Principal Executive Officer
Date 03/01/2007
----------------------------------------------------------------------------
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
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Bruce N. Alpert, Principal Executive Officer
Date 03/01/2007
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By (Signature and Title)* /s/ Agnes Mullady
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Agnes Mullady,
Principal Financial Officer & Treasurer
Date 03/01/2007
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* Print the name and title of each signing officer under his or her signature.