[Photo]
The
Gabelli
Global
Telecommunications
Fund
ANNUAL REPORT
DECEMBER 31, 1994
<PAGE>
Gabelli Global Series Funds, Inc.
One Corporate Center
Rye, New York 10580 - 1434
The Gabelli Global Telecommunications Fund
Annual Report - 1994
To Our Shareholders:
INVESTMENT RESULTS (a)
- --------------------------------------------------------------------------------
Quarter
---------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
1994: Net Asset Value $9.68 $9.62 $10.38 $9.73 $9.73
Total Return (5.1)% (0.6)% 7.9% (5.3)% (3.7)%
- --------------------------------------------------------------------------------
1993: Net Asset Value --- --- --- $10.20 $10.20
Total Return --- --- --- 3.0%(b) 3.0%(b)
Average Annual Return - December 31, 1994 (a)
1 Year (3.7)%
Life of Fund (0.7) %(b)
Dividend History
- ---------------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
- ----------------- -------------- ------------------
December 30, 1994 $0.095 $9.73
December 31, 1993 $0.102 $10.20
(a) Average annual and total return reflects changes in share price and
reinvestment of dividends and is net of expenses. Of course, returns represent
past performance and does not guarantee future results. Investment returns and
the principal value of an investment will fluctuate. When shares are redeemed
they may be worth more or less than their original cost.
(b) From commencment of operations on November 1, 1993.
For the fourth quarter, The Gabelli Global Telecommunications Fund's net
asset value slipped 5.3% to $9.83 per share (reflecting the $.095 dividend paid
on December 30, 1994) on December 31, 1994 from $10.38 per share on September
30, 1994. This compares favorably to the Salomon, Inc. Global Telecommunications
Index which was down 7.1% for the same period. The Salomon, Inc. Global
Telecommunications Index covers 52 equity security issues of companies in the
telecommunications industry. The Standard & Poor's 500 Index, a widely accepted,
unmanaged index of stock market performance was unchanged for the quarter. For
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
GABELLI GLOBAL TELECOMMUNICATIONS FUND, THE SALOMON, INC.
GLOBAL TELECOMMUNICATIONS INDEX AND THE S&P 500 INDEX
[FOLLOWING INFORMATION IS SHOWN BY A CHART]
Gabelli Global Salomon, Inc. Global S&P 500
Date Telecommunications Fund Telecommunications Index Fund Index
11/1/93 $10,000 $10,000 $10,000
12/31/93 $10,300 $10,045 $10,190
12/31/94 $ 9,919* $ 9,555 $10,322
* Past performance is not predictive of future performance.
<PAGE>
the twelve months ended December 31, 1994, the Fund was off 3.7% while the
Salomon Inc. Global Telecommunications Index was down 0.9%, and the S&P 500
Index was up 1.3%.
From inception on November 1, 1993 through December 31, 1994, the Fund has
declined 0.8% assuming reinvestment of dividends. Our shareholder base is 28,042
as of December 31, 1994.
Commentary
1994 Overview
1994 was a challenging year in which to earn a return in
telecommunications service stocks around the globe. Domestically, while the
cellular telephone stocks, especially LIN Broadcasting Corp. (LINB-$133.50 -
NASDAQ)and AirTouch Communications, Inc. (ATI - $29.125 - NYSE), rose, most
other telecom service stocks, such as those in long distance or local telephone,
retracted. This is partially traceable to the sharp rise in interest rates. The
stocks of cable television operators lagged under the weight of newly imposed
(and draconian) industry rate regulations. In Canada, the reaction of the market
to the "teething" process of the new long distance competitors proved less
patient than we anticipated.
In Europe, the restructuring of the Italian telecom sector into the newly
formed Telecom Italia (TELI. MA - $2.60 -MILAN) resulted in portfolio gains, but
these were offset by declines in the shares of Cable and Wireless plc (CWP -
$17.50 - NYSE) and British Telecommunications plc (BTY - $60.125 - NYSE). The
shares of Vodafone Group plc (VOD - $33.625 - NYSE), a U.K. based global
cellular telephone operator, rose based on strong business volume gains.
Telecom stocks in South America declined sharply following the currency
crisis in Mexico, which surfaced in earnest in December. Asian telecoms declined
in connection with overall stock market weakness, especially in Hong Kong, after
the exceptional returns of 1993. In summary, 1994 was a year of treading water
for us, but we look with optimism for superior returns in the years ahead.
1995 Outlook
The underpinnings of our enthusiasm for telecommunications stocks around
the globe remains strong. The five basic drivers: job creation, international
competitiveness, deregulation, wireless and new interactive technologies, will
continue to fuel growth rates and returns to equity capital for telecom stocks
for years.
We are optimistic regarding portfolio returns for 1995. Telecommunications
service stocks, as a group, are cheap and on an individual, bottoms up basis
there are some we would term "absolute bargains." These continue to be the focus
of our investment activities. We are particularly optimistic that changes in U.
S. regulatory policy will be a major catalyst to the stock prices of U. S.
telecommunications companies this year. Recent deregulatory legislation
introduced in Congress would result, we think, in significant industry
consolidation over the next two to three years, i.e. a flood of merger and
acquisition activity. In addition, as part of the new deregulatory/competitive
models gaining favor in Congress, cable television rates look to be deregulated
again by 1996. This would boost "cable" stocks in our portfolio such as
Tele-Communications Inc. (TCOMA - $21.75 - NASDAQ) and Comcast Corporation
(CMCSA - $15.375 - NASDAQ). Globally, high growth rates in the Latin American
and Asian telecoms will provide upside to stock prices over time.
<PAGE>
THE PORTFOLIO
Global Allocation
The chart at right presents the Fund's holdings by geographic region at
December 31, 1994. The geographic allocation will change based on current global
market conditions. Countries and/or regions or companies represented in the
chart and below may or may not be included in the Fund's portfolio in the
future.
HOLDINGS BY GEOGRAPHIC REGION - 12/31/94
Europe 17.1%
Asia/Pacific Rim 8.5%
Latin America 5.4%
Canada 2.9%
Cash and Equivalents 8.5%
United States 57.6%
Let's Talk Stocks
The following are stock specifics on selected holdings of our Fund's
investments. Favorable EBITDA prospects do not necessarily translate into higher
stock prices, but they do express a positive trend which we believe will develop
over time.
AirTouch Communications Inc. (ATI - $29.125 - NYSE) is the Fund's largest
investment due to the stock's fair price and the company's position as the
premier global wireless communications provider. Wireless, particularly cellular
telephone, is the fastest growing sector of the telecommunications industry.
During 1994, ATI added to its wireless portfolio with significant cellular
telephone license wins in Italy, Spain, Belgium and South Korea. In addition,
new cellular telephone service was launched in three major Japanese cities. In
the U.S., AirTouch is awaiting regulatory approval to combine its domestic
cellular operations with those of U.S. West (USW - $35.625 - NYSE). The pair is
aligning with NYNEX Corporation (NYN - $36.75 - NYSE) and Bell Atlantic
Corporation (BEL - $49.75 - NYSE) in jointly bidding for new government
auctioned spectrum for "Personal Communications Services" ("PCS"). We expect ATI
will continue to be a core holding of the Fund.
Vodafone Group plc. (VOD - $33.625 - NYSE) is a United Kingdom based company
similar in business focus to AirTouch Communications. The stock, which trades
American Depository Receipts on the New York Stock Exchange, represents the
Fund's second largest holding at year-end. Vodafone has the largest cellular
service market share in the U.K. with a national license there. Internationally,
they operate or have an interest in cellular systems in eleven other countries,
including France, Sweden, Hong Kong, Greece and Australia. VOD sells at a low
multiple of existing cash flow.
LIN Broadcasting Corp. (LINB - $133.50 - NASDAQ) is among the largest and most
attractive cellular telephone operators in the U.S. with controlling interests
in the New York, Los Angeles, Dallas and Houston markets. McCaw Cellular
Communications (which was itself acquired by AT&T in September 1994) controls
52% of LIN and is contractually bound to purchase the rest of LIN or to put all
of LIN up for sale in a process which begins in January 1995. We expect McCaw
(AT&T) will purchase the balance of LIN for a price between $140 and $150 per
share in 1995. The Fund is holding LIN to earn the difference between the
current price and the eventual "take out" price of LIN.
<PAGE>
Pacific Telesis Group Inc. (PAC - $28.50 - NYSE), driven by cost cutting
initiatives and an improving California economy, reported modestly improved
earnings for 1994 of $2.77 per share. Strategically, in 1994, the company began
to build out an advanced broadband communications network that will deliver
interactive multimedia services across California, entered bidding for PCS
licenses to provide wireless services in California and aligned, along with Bell
Atlantic and NYNEX, with the Creative Artists Agency to develop interactive home
entertainment services. With a 7.6% current return, a low P/E ratio and a $60
per share private market value, we continue to see PAC as an excellent
communications franchise at a bargain price. Despite new competition, we see PAC
emerging in several years as the dominant information distribution company in
the best consumer market in the U. S.
Telephone and Data Systems (TDS - $46.125 - ASE) remains one of our favorite
long-term investments. Management is honest, smart and value creation driven (as
opposed to earnings per share driven). TDS is a domestic provider of local
telephone service to about 400,000 mostly rural access lines, the seventh
largest cellular telephone company in the U.S. and a fast growing paging
company. Consolidated operating cash flow rose 39% in 1994, driven mostly by
internal growth in cellular telephone. Cellular telephone subscribers, in turn,
grew by 61% to 421,000 by year end 1994. Earnings per share (excluding one time
gains) were $0.92, up from $0.62 in 1993. We expect strong growth at TDS to
continue, resulting in a private market value of $155 per share and earnings of
$5.60 per share by 2000. TDS is also active in the PCS auctions.
AT&T Corporation (T - $50.25 - NYSE) is the second largest telephone company in
the world and is attractively valued relative to its growth potential at 7.5
times EBITDA. 1994 was a banner year for AT&T as its domestic long distance
division began to regain residential market share for the first time since the
1984 split-up. AT&T's equipment manufacturing and network integration business
scored major wins in securing contracts to upgrade both local telephone and
cable television plant to broadband interactive networks. In addition, AT&T is
well positioned to benefit from the above average long-term growth of the global
telecommunications industry. Its strategy includes taking advantage of its
strong global franchise, including brand name, broad product offering, and
international customer base. AT&T will satisfy communications needs by packaging
its broad array of products including its global wired and wireless
telecommunications services, telecommunications equipment, and financial
services. On September 30, 1994, AT&T closed its acquisition of McCaw Cellular
Communications positioning it as a major player in the U.S. wireless
communications industry. The company is one of the major bidders in the PCS
auctions which will result, when combined with McCaw, in AT&T owning the
dominant national wireless network.
Telecom Italia (TELI.MA - $2.60 - Milan) formerly SIP (Societa Italiana per L'
Esercizio delle Telecomunicazioni p.a.) completed the first phase of the
restructuring process of the Italian telecommunications sector in 1994. The
company now provides basic local telephone service to more than 24 million
access lines, domestic and international long distance service, and cellular
service to more than 1.6 million subscribers. Telecom Italia is currently
undervalued at less than 4 times EBITDA. We believe the remaining stages of the
restructuring process, including the spinoff of the cellular telephone
operations into a separate publicly traded company will act as a catalyst for
enhancing shareholder value. This spinoff is expected to occur in the third
quarter of 1995. Completion of privatization is also expected in 1995. However,
the timing of this event is less certain.
<PAGE>
Cable & Wireless plc. (CWP - $17.50 - NYSE) owns long distance, local, wireless
and other telecommunications franchises globally. We see CWP as among the
absolute bargains in telephony around the world. The most valuable component of
the company's portfolio is its 57% controlling interest in Hong Kong Telecom
(HKT - $19.125 - NYSE) the primary provider of telecom services in that country.
The value of CWP's shares of Hong Kong Tel, taken at HKT's market price, is
almost equal to the total stock market capitalization of Cable & Wireless
itself. The shareowner, therefore, is paying little for CWP's other assets,
which include Mercury, the leading competitor to British Telecom in the U.K.,
local telephone companies in several Caribbean countries, one of the largest
second tier long distance companies in the U.S., a 50% interest in Mercury
One-One, the successful PCS wireless operator in the U.K. and many other wired
and wireless telecom ventures around the globe.
C-TEC Corporation (CTEX - $19.875 - NASDAQ; CTEXB - $19.688 - NASDAQ) was a "pot
hole" for the Fund in 1994 as an ill conceived and poorly structured rights
offer was undertaken by the company to raise money for future acquisitions. We
were essentially given little choice but to fully subscribe to the rights offer
to maintain the Fund's economic interest in C-TEC's assets. The effect of the
rights offer was an almost doubling of the number of shares of C-TEC held by the
Fund coupled with a 40% lower stock price. While we disagreed with the structure
of the rights offer, we believe the company, as a provider of both local
telephone and cable television service, is extremely well positioned to grow its
per share private market value going forward. We estimate that C-TEC's PMV is
currently $45-$50 per share.
NYNEX Corp. (NYN - $36.75 - NYSE) is one of the "cheapest" telephone stocks, on
an asset value basis, that we track, with a private market value of about $90
per share. The company also is developing earnings per share momentum for the
first time in several years based on aggressive cost cutting and a pick-up in
access line growth and calling volume in its New York and New England region. In
1994, NYNEX reached a landmark agreement with the staff of the New York Public
Service Commission, soon to be ratified by the full commission, which will
replace all forms of rate of return regulation with price caps. This will allow
the benefits of aggressive cost cutting to flow into competitive pricing (i.e.
Lower prices) as well as higher earnings. In sum, the plan is an excellent
regulatory framework for NYNEX. In addition, the F.C.C. recently granted NYNEX
approval to go ahead with a large scale video dial tone rollout in New England,
one of the first such approvals granted. Internationally, NYNEX's activities in
Asia, especially Thailand, continue to flourish. An agreement to provide
telephony in Indonesia was recently signed.
Tele-Communications Inc. (TCOMA - $21.75 - NASDAQ) We are bullish on the
prospects for cable television in 1995 and beyond. TCI remains the largest cable
television multiple system operator (MSO) in the U.S., serving some 11.5 million
subscribers. Regulation historically has driven the outlook for cable stocks,
and currently with a newly elected deregulation minded Congress in place, the
regulatory outlook is once again improving. Recently proposed legislation which
provides for eliminating rate regulation and cross ownership restrictions of
cable television systems would be a significant catalyst for cable if various
elements fall into place this year. We will be tracking this process closely.
TCI is well positioned for the future. In 1994, along with Comcast Corp. (CMCSA
- - $15.375 - NASDAQ) and Cox Communications, TCI established a joint venture and
strategic alliance with Sprint Corporation (FON - $27.625 - NYSE) to provide
both wired and wireless telephone services in competition with the local
telephone industry utilizing cable's infrastructure and Sprint's well recognized
national brand name. The joint venture is one of the largest bidders for new PCS
spectrum and looks to emerge as one of the best positioned competitors to the
<PAGE>
cellular telephone duopoly. TCI has recently announced various financial
restructuring moves which we expect will benefit the price of the stock this
year as well.
Media General, Inc. (MEG'A - $28.375 - ASE) is a diversified media company with
ownership of cable television, newspaper, broadcast and newsprint assets. The
company's private market value is in the range of $60 - $70 per share with cable
the largest component. The cable television industry is now undergoing a
dramatic consolidation with the largest MSO's seeking to cluster their ownership
of systems geographically in order to compete effectively against the similarly
clustered Regional Bell Operating Companies (RBOC's) when regulatory barriers
fall. Media General's excellent cable system in Fairfax, Virginia, will be
sought after in this context with the result being to surface the intrinsic
value of the company for shareowners. Fundamentally, MEGA's businesses are
improving. Advertising driven media such as television broadcasting and
newspapers are experiencing a strong resurgence after several years of
stagnation. Newsprint pricing is strong and cable's prospects are brightening.
BCE, Inc. (BCE - $32.125 - NYSE) is a diversified telecommunications company.
Its operations consist of its core Canadian telecommunications operations which
serve approximately 9.5 million consolidated telephone lines as well as its
operations in equipment manufacturing, directory publishing and international
telecommunication operations. BCE remains among the most undervalued
telecommunications companies around the world. We estimate its value at
approximately $70 per share. The Canadian communications industry is undergoing
a process of deregulation. This process will benefit BCE's basic telephone
operations by allowing them to increase their competitiveness and increase their
efficiencies. Deregulation will also make available new revenue streams such as
broadcasting and media. In the meantime, BCE will continue to benefit from
improving performances from its cellular and equipment operations.
BC TELECOM Inc. (BCTL - $17.12 - TSE) is a full service telecommunications
company operating in British Columbia. Its major investor is GTE Corporation
(GTE - $30.375 - NYSE), which owns 52% of the company. We estimate the value of
BC Tel at $50 per share. Its basic telephone operations provide service to more
than two million telephone lines and are growing at 2 times the Canadian
industry average. BC Tel also operates a very attractive cellular phone company
which currently serves more than 150,000 subscribers. We expect BC Tel to take
advantage of the deregulatory trend in Canada by entering new businesses, as
they are allowed to participate.
Telefonica de Argentina, S.A. (TAR - $53.00 - NYSE) is a full service provider
in the southern half of Argentina including parts of Buenos Aires. TAR's stock
performance has been negatively impacted by the Mexican currency crisis.
Although short-term volatility may continue, we remain attracted to Telefonica
de Argentina's fundamentals. TAR is now valued at a discount to US Regional Bell
EBITDA multiples, while maintaining growth in high double digits. We are also
attracted to TAR's favorable competitive position, as its monopoly position will
likely be maintained until 2002.
British Telecommunications plc (BTY - $60.125- NYSE) is the dominant provider of
local, long distance and other telecommunications services in the United
Kingdom. While competition from the emerging dual cable television/ television
providers is increasing, BT is well positioned going forward. We expect earnings
per share to grow modestly, while BT continues to generate large amounts of free
cash flow.
<PAGE>
Royal PTT Nederland NV (RPTTF - $33.25 - NYSE) is the primary postal and
telecommunications company in the Netherlands. It remains attractive based on
its low valuation and continuing strength in the performance of its operating
units. It provides service to almost 8 million telephone lines and more than
250,000 cellular subscribers. The new digital cellular service (GSM), launched
in mid 1994, is doing extremely well, adding more than 60,000 subscribers since
inception. The company also continues to benefit from an improving cost
structure resulting from ongoing process reengineering.
Telekom Malaysia Berhad (MYTEF - $6.78 - Kuala Lumpur Stock Exchange) is a good
example of the high level of telephone growth in most parts of Asia. The
company, as the primary provider of telecommunications services in the 18
million population country of Malaysia, as of June 1994 served 2.6 million
telephone access lines and 92,000 cellular subscribers as well as providing long
distance and international calling. Due to the high growth, low inflation
economy in Malaysia, access lines over the past four years have grown at an
annual rate of nearly 15% while earnings before depreciation, interest and taxes
(operating cash flow, or EBITDA) have grown at over 18% per annum. This would
compare to growth in mature economies of 3-5%. While Telekom is 76.5% owned by
the government of Malaysia, regulatory policies are open and embrace
competition. The stock sells at a premium relative to lower growth telephone
network generators, we expect 15% growth to continue for at least the next five
years. Telekom Malaysia is an excellent way to invest in one of the fastest
growing economies in Asia.
Minimum Initial Investment
As of May 1, 1994 the Fund's minimum initial investment became $25,000 for
new investors. However, there is no minimum initial Investment for accounts
established through our Automatic Investment Plan. Shares of the Fund are
offered at no load through June 30, 1995. After such date, the Fund will impose
a 4.5% front-end sales charge on all new accounts. Shareholders in the Fund
prior to that date will never be subject to a load, even on subsequent
investments.
Gabelli U.S. Treasury Money Market Fund
Shareholders of any of the Gabelli Funds may invest in The Gabelli U.S.
Treasury Money Market Fund with an initial investment of $3,000 or more. The
Fund provides checkwriting and exchange privileges. The Fund's expenses are
capped at .30% of average net assets, making it one of the most attractive U.S.
Treasury-only money market funds. With dividends that are exempt from state and
local income taxes in all states, the Fund is an excellent vehicle in which to
store idle cash. Call us at 1 800-GABELLI (1-800-422-3554) for a prospectus
which gives a more complete description of the Fund, including management fees
and expenses. Read it carefully before you invest or send money.
<PAGE>
In Conclusion
The Fund's daily net asset value is available in the financial press and
each evening after 6:00 PM (Eastern Time) by calling 1-800-GABELLI
(1-800-422-3554). The Fund's NASDAQ symbol is GABTX. Please call us during the
day for further information.
We thank you for your confidence in our investing abilities and wish you a
productive and financially rewarding 1995.
Sincerely,
/s/ Mario J. Gabelli, CFA /s/ Salvatore Muoio, CFA
Mario J. Gabelli, CFA Salvatore Muoio, CFA
President Vice President, Research
Team Manager
/s/ Bruce N. Alpert /s/ Ivan Arteaga, CPA
Bruce N. Alpert Ivan Arteaga, CPA
Vice President and Associate Portfolio Manager
Treasurer
/s/ Marc J. Gabelli
Marc J. Gabelli
Associate Portfolio Manager
February 1, 1994
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Top Ten Holdings
December 31, 1994
AirTouch Communications AT&T Corporation
Vodafone Group C-TEC Corporation
LIN Broadcasting Corp. Cable & Wireless plc
Pacific Telesis Group Inc. Royal PTT Nederland NV
Telephone and Data Systems Inc. NYNEX Corporation
- --------------------------------------------------------------------------------
<PAGE>
The Gabelli Global Telecommunications Fund
Portfolio of Investments -- December 31, 1994
- --------------------------------------------------------------------------------
Market
Shares Value
------ ------
COMMON STOCKS -- 87.96%
ALTERNATIVE TELECOMMUNICATION
SERVICE PROVIDERS - 0.96%
31,000 Intelcom Group+ ................ $410,750
1,000 Intermedia Communications of
Florida, Inc.+ .............. 11,750
27,600 MFS Communications
Company Inc.+ ............... 903,900
-----------
1,326,400
-----------
CABLE - 11.89%
52,000 Adelphia Communications
Corporation Cl. A+ .......... 448,500
53,000 Bell Cablemedia plc ADR+ ....... 1,073,250
27,800 Cablevision Systems
Corporation Cl. A+ .......... 1,403,900
45,000 Century Communications
Corporation Cl. A+ .......... 337,500
70,000 Comcast Cable Corporation
of U.K.+ .................... 1,120,000
130,000 Comcast Corporation Cl. A ...... 1,998,750
45,000 International CableTel
Incorporated+ ............... 1,248,750
16,000 LIN Television Corporation+ .... 364,000
97,000 Media General, Inc. Cl. A ...... 2,752,375
30,000 Multimedia, Inc.+ .............. 855,000
143,000 Tele-Communications Inc.
Cl. A+ ...................... 3,110,250
5,000 Telewest Communications plc
ADR+ ........................ 132,500
87,500 United International Holdings
Cl. A+ ...................... 1,531,250
-----------
16,376.025
-----------
ENTERTAINMENT - 0.30%
31,100 Lodgenet Entertainment
Corporation+ ................ 235,194
5,000 Time Warner Inc. ............... 175,625
-----------
410,819
-----------
LONG DISTANCE TELEPHONE COMPANIES - 10.92%
2,000 ACC Corp. ...................... 29,500
2,000 ALC Communications
Corporation+ ................ 62,250
80,000 AT&T Corporation ............... 4,020,000
33,000 Call-Net Enterprises Inc.+ ..... 129,458
57,000 Cam-Net Communications
Network Inc.+ ............... 131,813
154 DDI Corporation ................ 1,331,188
5,000 Fonorola Inc.+ ................. 16,049
156,000 General Communication Inc.
Cl. A+ ...................... 604,500
1,300 Kokusai Denshin ................ 128,184
40,000 LCI International Inc.+ ........ 1,045,000
85,600 LDDS Communications Inc.+ ...... 1,663,850
125,000 MCI Communications
Corporation ................. 2,296,875
62,000 Petersburg Long
Distance Inc.+ .............. 395,250
75,000 Sprint Corporation ............. 2,071,875
415,500 STN Inc.+ ...................... 183,734
161,700 WCT Communications, Inc.+ ...... 929,775
-----------
15,039,301
-----------
REGIONAL/LOCAL TELEPHONE SERVICES - 19.28%
39,000 ALLTEL Corporation ............. 1,174,875
26,000 Ameritech Corporation/Del. ..... 1,049,750
70,000 Atlantic Tele-Network Inc.+ .... 599,375
26,000 Bell Atlantic Corporation ...... 1,293,500
20,000 BellSouth Corporation .......... 1,082,500
7,500 Bruncor, Inc. .................. 129,725
63,000 Cincinnati Bell Inc. ........... 1,055,250
81,900 C-TEC Corporation+ ............. 1,627,763
91,000 C-TEC Corporation Cl. B+ ....... 1,791,563
22,000 GTE Corporation ................ 668,250
14,000 Island Telephone Company
Limited ..................... 214,069
60,700 Lincoln Telecommunications
Company ..................... 1,031,900
14,000 Maritime Telegraph and
Telephone Company
Limited ..................... 224,679
10,000 NewTel Enterprises Limited ..... 140,870
85,000 NYNEX Corporation .............. 3,123,750
8,000 Pacific Telecom, Inc. .......... 240,000
148,000 Pacific Telesis Group Inc. ..... 4,218,000
20,000 Peoples Telephone
Company Inc.+ ............... 91,250
6,000 Quebec-Telephone ............... 77,300
68,000 Rochester Telephone
Corporation ................. 1,436,500
47,000 Southern New England
Telecommunications
Corporation ................. 1,509,875
40,448 SBC Communications, Inc. ....... 1,633,088
10,000 Telus Corp. .................... 113,231
57,000 U.S. West Inc. ................. 2,030,625
-----------
26,557,688
-----------
TELECOMMUNICATIONS (OTHER) - 0.23%
3,500 Great Nordic Stores ............ 284,857
1,000 United Communication
Industries .................. 27,888
-----------
312,745
-----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
The Gabelli Global Telecommunications Fund
Portfolio of Investments -- December 31, 1994 (Continued)
- --------------------------------------------------------------------------------
Market
Shares Value
------ ------
TELEPHONE EQUIPMENT - 0.58%
104,000 Champion Technology
Holdings .................... $ 21,639
20,000 Champion Technology
Holdings ADR ................ 20,808
4,000 Motorola, Inc. ................. 231,500
10,000 Northern Telecom United ........ 333,750
30,000 Time Engineering Berhad ........ 74,618
47,000 Time Engineering Berhad Cv.
Loan Stock .................. 119,663
-----------
801,978
-----------
TELEPHONE NETWORKS - 22.75%
41,000 BC TELECOM Inc. ................ 701,854
38,000 BCE Inc. ....................... 1,220,750
36,000 British Telecommunications plc
ADR ......................... 2,164,500
193,000 Cable & Wireless plc ADR ....... 3,377,500
406,384 Compania Peruana de Telefonos
SA Ser. B+ .................. 473,313
2,000 Compania Portugesa Radio
Marconia SA ................. 67,912
15,000 Compania Telefonos de Chile
ADR ......................... 1,181,250
30,000 CP Pokphand Spons. ADR ......... 175,452
15,000 Hong Kong Telecommunications
Ltd. ADR .................... 286,875
1,000 Hungarian Telephone & Cable
Corporation+ ................ 10,500
5 Japan Telecom Co., Ltd.+ ....... 170,369
110 Nippon Telegraph & Telephone
Corporation ................. 974,068
50,000 Nordictel Holdings AB+ ......... 572,468
1,350,000 Orient Telecom & Technology
Holdings Limited+ ........... 427,436
150 Pakistan Telecommunications
GDR+ ........................ 20,325
28,000 Philippine Long Distance
Telephone Company ........... 1,543,500
1,000 PT Indonesia Satellite ADR+ .... 35,750
100,000 Royal PTT Nederland NV
ADR ......................... 3,325,000
1,000 Singapore Telecommunications
Limited ..................... 1,907
400,000 STET SpA - Societa Finanziaria
Telfonica p.er. ............. 1,179,155
26,000 Telecomunicacoes Brasilairas
(Telebras) SA Spons. ADR .... 1,166,750
592 Telecomunicacoes Brasilairas
(Telebras) SA Spons.
ADR - New+ .................. 26,566
3,000,000 Telecomunicacoes de Rio
de Janeiro+ ................. 166,500
900,000 Telecomunicacoes de Sao
Paulo SA (Telesp)+ .......... 147,872
15,000 Telecom Argentina Stet -
France Telecom S.A. ADR ..... 776,250
1,000 Telecom Asia ADR+ .............. 29,000
39,000 Telecom Corporation of New
Zealand Ltd. ADR ............ 2,003,625
1,000,000 Telecom Italia SpA+ ............ 2,602,529
4,000,000 Telecommunications of
Jamaica+ .................... 360,360
24,000 Telefonica de Argentina S.A.
ADR ......................... 1,272,000
52,000 Telefonica de Espana ADR ....... 1,826,500
30,000 Telefonos De Mexico SA
Cl. L ADR ................... 1,230,000
192,000 Telekom Malaysia ............... 1,301,058
8,000 Tele Danmark A/S ............... 210,457
8,000 Tele Danmark A/S ADR+ .......... 204,000
5,800 Thai Telephone & Telecom
GDR+ ........................ 106,064
-----------
31,339,415
-----------
WIRELESS COMMUNICATIONS - 21.05%
40,000 ABC Communications
Holdings Ltd. ............... 17,576
191,000 AirTouch Communications
Inc.+ ....................... 5,562,875
1,000 American Mobile Satellite
Corporation+ ................ 12,750
6,000 American Mobile Systems
Incorporated+ ............... 25,500
63,000 American Paging
Incorporated+ ............... 464,625
14,200 Associated Group Inc. Cl. A+ ... 333,700
14,200 Associated Group Inc. Cl. B+ ... 333,700
1,000 BCE Mobile Communications
Inc.+ ....................... 31,740
10,000 Cellular Communications, Inc.
Cl. A+ ...................... 535,000
21,000 Cellular Communications
International Inc+ .......... 913,500
1,000 Cellular Communications of
Puerto Rico Inc.+ ........... 33,500
130,000 Centennial Cellular Corp.
Cl. A+ ...................... 2,210,000
9,000 Century Telephone
Enterprises Inc. ............ 265,500
1,000 Commnet Cellular Inc.+ ......... 29,000
50,000 COMSAT Corporation ............. 931,250
19,000 Contel Cellular Inc.+ .......... 473,813
6,630 Grupo Iusacell SA ADR
Ser. D+ ..................... 106,080
The accompanying notes are an integral part of the financial statements.
<PAGE>
The Gabelli Global Telecommunications Fund
Portfolio of Investments -- December 31, 1994
- --------------------------------------------------------------------------------
Market
Shares Value
------ ------
70,100 IDB Communications
Group Inc. .................. $ 644,044
8,000 Jasmine International+ ......... 143,426
32,000 LIN Broadcasting
Corporation+ ................ 4,272,000
85,600 Malaysian Helicopter Services
Berhad ...................... 160,940
5,300 Matrix Telecommunications
Ltd. ........................ 6,161
1,000 Metrocall, Inc.+ ............... 17,000
18,000 Mobile Telecommunication
Technologies Corp. .......... 351,000
6,000 Nationwide Cellular Service,
Inc.+ ....................... 114,750
20,000 NEXTEL Communications, Inc.
Cl. A+ ...................... 287,500
1,000 OneComm Corporation+ ........... 14,875
2,000 Pittencrieff Communications
Inc.+ ....................... 10,000
50,000 PriCellular Corporation+ ....... 487,500
11,000 Securicor Group plc ............ 264,767
224,000 Technology Resources
Industries+ ................. 715,080
4,000 Teleglobe Inc. ................. 54,208
90,000 Telephone and Data Systems
Inc. ........................ 4,151,250
1,000 United States Cellular
Corporation+ ................ 32,750
1,500 Vanguard Cellular Systems Inc.
Cl. A+ ...................... 38,625
147,000 Vodafone Group plc ADR ......... 4,942,875
------------
28,988,860
------------
TOTAL COMMON STOCKS
(Cost: $125,160,961) ........... 121,153,231
------------
CONVERTIBLE PREFERRED STOCKS - 1.59%
CABLE - 0.84%
20,000 Tele-Communications Inc. Cv.
Pfd. Ser. E ................. 1,160,000
------------
LONG DISTANCE TELEPHONE COMPANIES - 0.39%
10,000 Philippine Long Distance
Telephone Company
7.00% Cv. Pfd. Ser. III ..... 541,250
------------
WIRELESS COMMUNICATIONS - 0.36%
10,000 LCI International, Inc. 5.00%
Cv. Pfd. .................... 351,250
5,000 Mobile Telecommunication
Technologies Corp.
$2.25 Cv. Pfd. .............. 140,000
------------
491,250
------------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost: $2,349,213) .......... 2,192,500
------------
Principal Market
Amount Value
------ ------
CONVERTIBLE CORPORATE BONDS - 1.99%
ENTERTAINMENT - 0.69%
$1,000,000 Time Warner Inc. Sub. Deb.
Cv. 8.75%, 01/01/15 ......... $ 945,000
------------
TELEPHONE NETWORKS - 0.64%
1,000,000 Telekom Malaysia Sub. Deb.
Cv. 4.00%, 10/03/04 ......... 885,000
------------
WIRELESS COMMUNICATIONS - 0.66%
300,000,000(a)Softe SA Unsub. Deb.
Cv. 4.25%, 07/30/98 ......... 192,877
250,000 Technology Resources
Industries Sub. Deb. Cv. .... 241,250
500,000 Tele 2000 Sub. Deb. Cv.
9.75%, 04/14/97 ............. 477,500
------------
911,627
------------
TOTAL CONVERTIBLE CORPORATE
BONDS (Cost: $3,005,320) ..... 2,741,627
------------
U.S. GOVERNMENT OBLIGATIONS - 9.53%
13,190,000 U.S. Treasury Bills, 4.66% to
5.28% Due 01/26/95 to
02/16/95 .................... 13,119,704
------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS
(Cost: $13,119,704)* ........ 13,119,704
------------
TOTAL INVESTMENTS
(Cost: $143,635,198)-101.07% 139,207,062
Liabilities, in excess of Other
Assets - (1.07%) ............ (1,476,247)
------------
NET ASSETS - 100.00% ........... $137,730,815
(14,158,012 shares ============
outstanding)
Net Asset Value And
Redemption Price
Per Share. .................. $9.73
=====
+- Non-income producing security
(a)- Principal amount denoted in Italian Lira.
* For Federal income tax purposes:
Aggregate Cost $143,670,790
============
Gross unrealized appreciation $ 8,833,374
Gross unrealized deppreciation (13,298,000)
------------
Net unrealized depreciation $ (4,464,626)
============
The accompanying notes are an integral part of the financial statements.
<PAGE>
The Gabelli Global Telecommunications Fund
Statement of Assets and Liabilities
December 31, 1994
- --------------------------------------------------------------------------------
Assets:
Investments in securities, at value
(Cost $143,635,198) ................................... $ 139,207,062
Cash ................................................... 91,605
Receivable for investments sold ........................ 514,203
Receivable for Fund shares sold ........................ 108,562
Dividends receivable ................................... 423,531
Accrued interest receivable ............................ 46,574
Deferred organizational expenses ....................... 64,190
--------------
Total assets ......................................... 140,455,727
--------------
Liabilities:
Payable for investments purchased ...................... 2,097,339
Payable for Fund shares redeemed ....................... 215,773
Payable to Advisor ..................................... 116,014
Dividend payable ....................................... 56,388
Payable for distribution fees .......................... 28,145
Other accrued expenses ................................. 211,253
--------------
Total liabilities .................................... 2,724,912
--------------
Net assets (applicable to 14,158,012
shares outstanding) .................................. $ 137,730,815
==============
Net asset value and redemption
price per share .................................. $ 9.73
==============
Net Assets Consist of:
Capital Stock, at par value ............................ $ 14,158
Additional paid in capital ............................. 142,196,718
Distributions in excess of net realized gains .......... (48,956)
Distributions in excess of net investment
income ............................................... (2,071)
Net unrealized depreciation on investments
and foreign currency transactions .................... (4,429,034)
--------------
Net assets ........................................... $ 137,730,815
==============
Statement of Operations
For The Year Ended December 31, 1994
- --------------------------------------------------------------------------------
Investment Income:
Dividends (Net of foreign tax of $133,283) ............. $ 2,111,874
Interest (Net of foreign tax of $1,002) ................ 1,019,911
--------------
Total income ......................................... 3,131,785
--------------
Expenses:
Investment advisory fee ................................ 1,233,454
Transfer and shareholder servicing agent ............... 423,289
Distribution expenses .................................. 307,633
Registration fees ...................................... 82,795
Custodian fees & expenses .............................. 61,101
Printing & mailing ..................................... 46,377
Legal and audit fees ................................... 32,000
Amortization of organization expenses .................. 11,913
Directors' fees and expenses ........................... 8,161
Miscellaneous .......................................... 14,833
--------------
Total expenses ....................................... 2,221,556
--------------
Investment income - net ................................ 910,229
--------------
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized gain on investments ....................... 782,413
Net change in unrealized appreciation .................. (5,822,573)
--------------
Net loss on investments .............................. (5,040,160)
--------------
Net decrease in net assets resulting from
operations ............................................. $ (4,129,931)
==============
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
November 1, 1993
Year (Commencement of
Ended Operations) through
December 31, 1994 December 31, 1993
----------------- -----------------
<S> <C> <C>
Increase in Net Assets:
Investment income - net ................................ $ 910,229 $ 67,654
Net realized gain (loss) on investments ................ 782,413 (37,554)
Change in unrealized appreciation-- net ................ (5,822,573) 1,393,539
------------ -----------
Net increase (decrease) in net assets resulting from operations (4,129,931) 1,423,639
------------ -----------
Distributions from net investment income ............... (912,300) (67,654)
Distributions from net realized gains .................. (421,173) (372,642)
------------ -----------
(1,333,473) (440,296)
------------ -----------
Share transactions -- net .............................. 97,904,548 44,206,328
------------ -----------
Net increase in net assets ........................... 92,441,144 45,189,671
Net Assets:
Beginning of period .................................... 45,289,671 100,000
------------ -----------
End of period .......................................... $137,730,815 $45,289,671
============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
The Gabelli Global Telecommunications Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies. The Gabelli Global Telecommunications Fund
(the "Fund") is a series of Gabelli Global Series Funds, Inc. (the
"Corporation"), incorporated in Maryland on July 16, 1993. The Fund is a
no-load, open-end, non-diversified management investment company and one of five
separately managed portfolios of the Corporation. The Fund commenced investment
operations on November 1, 1993. The following is a summary of significant
accounting policies followed by the Fund:
Security Valuation. Portfolio securities listed or traded on the New York or
American Stock Exchanges, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("NASDAQ") or traded on foreign exchanges are
valued at the last sale price on that exchange (if there were no sales that day,
the security is valued at the average of the bid and asked prices). All other
portfolio securities for which over-the-counter market quotations are readily
available are valued at the latest average of the bid and asked prices. When
market quotations are not readily available, portfolio securities are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision of the Corporation's Directors. Short-term debt
securities with remaining maturities of 60 days or less are valued at amortized
cost, unless the Directors determine such does not reflect the securities' fair
value, in which case these securities will be valued at their fair value as
determined by the Directors. Options are valued at the last sale price on the
exchange on which they are listed, unless no sales of such options have taken
place that day, in which case they will be valued at the mean between their
closing bid and asked prices.
Foreign Currency Transactions. The books and records of the Fund are maintained
in U.S. dollars as follows:
(i) market value of investment securities and other assets and
liabilities are recorded at the exchange rate on the valuation date.
(ii) purchases and sales of investment securities, income and expenses
are recorded at the exchange rate prevailing on the respective date
of such transactions.
The Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuation arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Security Transactions and Investment Income. Security transactions are accounted
for on the dates the securities are purchased or sold (the trade dates), with
realized gain and loss on investments determined by using specific
identification as the cost method. Interest income (including amortization of
premium and discount) is recorded as earned. Dividend income and dividend and
capital gain distributions to shareholders are recorded on the ex-dividend date.
Federal Income Taxes. The Fund has qualified and intends to continue to qualify
as a "regulated investment company" under Subchapter M of the Internal Revenue
Code of 1986 and distribute all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required.
Dividends and interest from non-U.S. sources received by the Fund are generally
subject to non-U.S. withholding taxes at rates ranging to 30%. Such withholding
taxes may be reduced or eliminated under the terms of applicable U.S. income tax
treaties, and the Fund intends to undertake any procedural steps required to
claim the benefits of such treaties. If more than 50% in value of the Fund's
total assets at the close of any taxable year consists of stocks or securities
of non-U.S. corporations, the Fund is permitted and may elect to treat any
non-U.S. taxes paid by it as paid by its shareholders.
<PAGE>
The Gabelli Global Telecommunications Fund
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
2. Capital Stock Transactions. The Articles of Incorporation, dated July 16,
1993, permit the Fund to issue 200,000,000 shares (par value $0.001).
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
November 1, 1993
Year Ended (commencement of operations)
December 31, 1994 through December 31, 1993
---------------------------- ----------------------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Beginning balance ................................. 4,441,251 $44,306,328 10,000 $100,000
---------- ------------ --------- -----------
Shares sold ....................................... 12,248,890 123,216,487 4,497,096 44,845,010
Shares issued upon reinvestment of dividends ...... 131,277 1,277,326 41,614 424,465
Shares redeemed ................................... (2,663,406) (26,589,265) (107,459) (1,063,147)
---------- ------------ --------- -----------
Net increase .................................... 9,716,761 97,904,548 4,431,251 44,206,328
---------- ------------ --------- -----------
Ending balance .................................... 14,158,012 $142,210,876 4,441,251 $44,306,328
========== ============ ========= ===========
</TABLE>
3. Purchases and Sales of Securities. Purchases and sales of securities for the
year ended December 31, 1994, other than U.S. government obligations and
short-term securities, aggregated $108,938,284 and $13,738,055, respectively.
Repurchase Agreements. The Fund may enter into repurchase agreements with
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 the credit guidelines established by the Directors. The Fund will always
receive and maintain securities as collateral whose market value, including
accrued interest, will be at least equal to 100% of the dollar amount invested
by the Fund in each agreement, and 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.
4. Investment Advisory Contract. The Fund employs Gabelli Funds, Inc. (the
"Advisor") to provide a continuous investment program for the Fund's portfolio,
provide all facilities and personnel, including officers, required for its
administrative management, and to pay the compensation of all officers and
Directors of the Fund who are affiliated with the Advisor. As compensation for
the services rendered and related expenses borne by the Advisor, the Fund pays
the Advisor a fee, computed and accrued daily and payable monthly, equal to
1.00% per annum of the Fund's average daily net assets. The Advisor is obligated
to reimburse the Fund in the event the Fund's expenses exceed the most
restrictive expense ratio limitation imposed by any state. No such reimbursement
was required during 1994.
5. Organization Expenses. The organization expenses of the Fund are being
amortized on a straight-line basis over a period of 60 months. The Advisor has
agreed that in the event that any of the initial 10,000 shares it acquired on
September 30, 1993 are redeemed during the period of amortization of the Fund's
organization expenses, the redemption proceeds will be reduced by any such
unamortized organization expenses in the same proportion as the number of
initial shares being redeemed bears to the number of initial shares outstanding
at the time of redemption.
<PAGE>
The Gabelli Global Telecommunications Fund
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
6. Distribution Plan. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") under Section 12(b) of the Investment Company Act of 1940 and
Rule 12b-1 thereunder. For the year ended December 31, 1994, the Fund has
incurred distribution costs of $307,633 or 0.25% of average net assets, the
annual limitation under the Plan, payable to Gabelli & Company, Inc., an
affiliate of the Advisor. The Board of Directors has approved that distribution
costs incurred by Gabelli & Company, Inc., totalling $570,322, which are in
excess of the .25% limitation, may be recovered from the Fund in future periods,
subject to such limitation.
7. Transactions with Affiliates. The Fund paid brokerage commissions during the
year ended December 31, 1994 of $58,812 to Gabelli & Company, Inc.
8. Distributions to Shareholders. Net investment income and realized gains
differ for financial statement and tax purposes primarily because of the mark to
market provisions on certain securities. As a result, the Fund made a taxable
distribution of realized gains which was less than the realized gains recorded
for financial statement purposes.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
November 1, 1993
Year Ended (commencement of operations)
December 31, 1994 through December 31, 1993
----------------- -------------------------
<S> <C> <C>
Operating Performance:
Net asset value, beginning of period $10.20 $10.00
------ ------
Net investment income 0.065 0.01
Net realized and unrealized gain (loss) on securities (0.440) 0.29
------- ------
Total from investment operations (0.375) 0.30
------- ------
Less Distributions:
Distributions from net investment income (0.065) (0.01)
Distributions from realized gains (0.030) (0.09)
------- ------
Total Distributions (0.095) (0.10)
------- ------
Net asset value, end of period $ 9.73 $10.20
====== ======
Total Return (3.7)% 3.0%
Ratios to average net assets/supplemental data:
Net assets, end of period (in thousands) $137,731 $45,290
Ratio of operating expenses to average net assets 1.80% 2.54%*
Ratio of net investment income to average net assets 0.74% 1.28%*
Portfolio turnover rate 14% 3%
</TABLE>
- ----------
* Annualized.
<PAGE>
The Gabelli Global Telecommunications Fund
Report of Grant Thornton LLP, Independent Auditors
- --------------------------------------------------------------------------------
Shareholders and Board of Directors
The Gabelli Global Telecommunications Fund
We have audited the accompanying statement of assets and liabilities of The
Gabelli Global Telecommunications Fund (one of the series constituting Gabelli
Global Series Funds, Inc.), including the portfolio of investments, as of
December 31, 1994, and the related statements of operations for the year then
ended, the statement of changes in net assets and financial highlights for the
year then ended and for the period from November 1, 1993 (commencement of
operations) through December 31, 1993. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Gabelli Global Telecommunications Fund of Gabelli Global Series Funds, Inc. at
December 31, 1994, the results of its operations, the changes in its net assets
and the financial highlights for the periods indicated above, in conformity with
generally accepted accounting principles.
/s/ Grant Thornton LLP
New York, New York
February 5, 1995
- --------------------------------------------------------------------------------
1994 TAX NOTICE TO SHAREHOLDERS (unaudited)
On December 30, 1994 the Fund paid to shareholders an ordinary income
dividend (comprised of net investment income and short-term capital
gains) of $0.095 per share. For 1994, 68.37% of such ordinary income
dividend qualifies for the dividend received deduction available to
corporations.
U.S. Government income:
The percentage of the ordinary income dividend paid by the Fund during
1994 which was derived from U.S. Treasury securities was 23.22%. Such
income is exempt from state and local income tax in most states.
However, many states, including New York and California, allow a tax
exemption for a portion of the income earned only if a mutual fund has
invested at least 50% of its assets at the end of each quarter of the
Fund's fiscal year in U.S. Government securities. The Gabelli Global
Telecommunications Fund did not meet this strict requirement in 1994.
- --------------------------------------------------------------------------------
16
<PAGE>
The Gabelli Global Telecommunications Fund
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 P.M.)
Board of Directors
Mario J. Gabelli, CFA
Chairman and Chief
Investment Officer
Gabelli Funds, Inc.
Felix J. Christiana
Former Senior
Vice President
Dollar Dry Dock Savings Bank
Anthony J. Colavita
Attorney-at-Law
Anthony J. Colavita, P.C.
John D. Gabelli
Vice President
Gabelli & Company,Inc.
Karl Otto Pohl
Former President
Deutsche Bundesbank
Werner J. Roeder, MD
Director of Surgery
Lawrence Hospital
Anthonie C. van Ekris
Managing Director
BALMAC International, Inc.
Officers and Portfolio Managers
Mario J. Gabelli, CFA
President
J. Hamilton Crawford, Jr.
Secretary
Marc J. Gabelli
Associate Portfolio Manager
Salvatore Muoio
Vice President and
Team Manager
Bruce N. Alpert
Vice President
and Treasurer
Ivan Arteaga, CPA
Associate Portfolio Manager
Distributor
Gabelli & Company, Inc.
Custodian, Transfer Agent and Dividend Agent
State Street Bank and Trust Company
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom
Independent Auditors
Grant Thornton LLP
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
Gabelli Global Telecommunications Fund. It is not authorized for distribution to
prospective investors unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
<PAGE>
[PHOTO]
The
Gabelli
Global
Interactive
Couch Potato(TM)(C)
Fund
ANNUAL REPORT
DECEMBER 31, 1994
<PAGE>
Gabelli Global Series Funds, Inc.
One Corporate Center
Rye, New York 10580 - 1434
The Gabelli Global Interactive Couch PotatoTM(C) Fund
Annual Report - 1994
To Our Shareholders:
We have completed our first fiscal year on December 31, 1994 and from
inception on February 7, 1994 the Fund appreciated 2.5%, beating both the Lipper
Analytical Services Inc. Global Fund Index, which was down 1.7% and the Standard
& Poor's 500 Index, a widely accepted unmanaged index of stock market
performance, which was down 1.9% for the same period. We welcome our new
shareholders who now total 7,898. Our total net assets are at $24.8 million.
Investment Results(a)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Quarter
------------------------------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
<C> <C> <C> <C> <C> <C>
1994: Net Asset Value .................... $ 9.90 $ 9.97 $ 10.54 $ 10.25 $ 10.25
Total Return ....................... (1.0)%(b) 0.7% 5.7% (2.8)% 2.5%(b)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return reflects changes in share price and is net of expenses. Of
course, total return represents past performance and does not guarantee future
results. Investment returns and the principal value of an investment will
fluctuate. When shares are redeemed they may be worth more or less than their
original cost. (b) From commencement of operations on February 7, 1994.
- --------------------------------------------------------------------------------
For the fourth quarter, The Gabelli Global Interactive Couch PotatoTM(C)
Fund's net asset value slipped 2.8% to $10.25 on December 31, 1994 from $10.54
on September 30, 1994. This compares to the S&P 500 Index, which was unchanged
and the Lipper An-alytical Services, Inc. Global Fund Index, which was down 5.4%
for the same period. Lipper's Global Fund Index covers 99 global open-end mutual
funds which may invest in a diversified group of industry sectors.
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN THE GABELLI GLOBAL INTERACTIVE
COUCH POTATO TM(C) FUND, THE LIPPER ANALYTICAL
SERVICES GLOBAL FUND INDEX AND THE S&P 500 INDEX
[FOLLOWING INFORMATION IS SHOWN BY A CHART]
Gabelli Global Interactive Lipper Global S&P 500
Date Couch Potato TM(C) Fund Fund Index Index
2/7/94 $10,000 $10,000 $10,000
12/31/94 $10,250* $ 9,835 $ 9,810
* Past performance is not predictive of future performance.
<PAGE>
- --------------------------------------------------------------------------------
Interactive Couch PotatoTM(C)
Interactive (in' ter ak' tiv) Having the capacity for communication flow
in each direction.*
Couch (kouch) An appellation for the heavy user of
television, depicted in the metaphor as
- - plopped before the television set like a
Potato (po ta' to) vegetable with eyes. The term was coined
in the early 1980s by a group of Baby
- - Boomers in the San Francisco area who
(pe ta' to) playfully glorified their addiction to
the tube. Calling themselves The Couch
Potatoes, they formed a national club and
published a hilarious newsletter in the
couch potato lifestyle containing bizarre
recipes for that vital companion to the
TV set, the toaster oven. After a burst
of enlistments, the club quietly
disappeared. All that remains today is
the metaphor, and its current use tends
to be more pejorative than self-mocking
or affectionate.*
* Source: NTC Mass Media Directory.
- --------------------------------------------------------------------------------
What We Do
We do what is described as bottoms up research: we read annual reports; we
visit the competition; we talk to customers; we go belly to belly with
management. We structure our portfolio by picking stocks.
In past reports, we have tried to articulate our investment philosophy and
methodology. The following graphic further illustrates the interplay among the
four components of our valuation approach.
[LOGO]
Our focus is on free cash flow; earnings before interest, taxes,
depreciation and amortization (EBITDA) minus the capital expenditures necessary
to grow the business. We believe free cash flow is the best barometer of a
business' value. Rising free cash flow often foreshadows net earnings
improvement. We also look at earnings per share trends. Unlike Wall Street's
ubiquitous earnings momentum players, we do not try to forecast earnings with
accounting precision and then trade stocks based on quarterly expectations and
realities. We simply try to position ourselves in front of long-term earnings
uptrends. In addition, we analyze on and off balance sheet assets and
liabilities such as plant and equipment, inventories, receivables, and legal,
environmental and health care issues. We want to know everything and anything
that will add to or detract from our private market value estimates. Finally, we
look for a catalyst; something happening in the company's industry or indigenous
to the company itself that will surface value. In the case of the independent
telephone stocks, the catalyst is a regulatory change. In the agricultural
equipment business, it is the increasing worldwide demand for American food and
feed crops. In other instances, it may be a change in management, sale or
spin-off of a division, or the development of a profitable new business. When we
identify stocks that qualify as fundamental and conceptual bargains, we then
become patient investors. This has been a proven long-term method for preserving
<PAGE>
and enhancing wealth in the U.S. equities market. At the margin, our new
investments are focused on businesses that are well managed and will benefit
from sustainable long-term economic dynamics. These include macro trends, such
as globalization of the market in filmed entertainment and telecommunications,
and micro trends, such as increased focus on productivity enhancing goods and
services.
- --------------------------------------------------------------------------------
Commentary - The Investment Climate
The following is an excerpt from an interview with our Chief Investment
Officer, Mario J. Gabelli which appeared in Bloomberg Personal magazine in
December 1994, reprinted with permission from Bloomberg. We thought the comments
would describe our insights into the Interactive Couch Potato universe. Here are
his thoughts on the market, some good movies and his best stock picks:
Bloomberg Personal: What does the term "Information Superhighway" mean to you?
Gabelli: It's what reaches the consumer at home. It's everything the consumer
wants for entertainment or information. Everyone has a different need to access
something. It's like a movie theater with ten screens. My sixteen year old might
be doing games, while my twenty two year old might be on the Internet. There's
no simple answer.
Q: How have things changed in communications?
Gabelli: Today we've accelerated both the content and the delivery of that
content. The content is print, film, records and everything in between. The
delivery system is both wired and wireless.
Q: Competition is fierce isn't it?
Gabelli: Yes , but I don't think it's a game where the pizza pie is divided into
only eight slices. The pizza pie can go from eight to sixteen slices. These
companies are providing goods and services we never had before. Film
entertainment at the box office is now five billion. So it's grown. On the other
side of the coin, you've had Blockbuster Entertainment Corp. (acquired by Viacom
this year) come up out of nowhere. Then you have pay-per-view television. So you
have new windows using the same software, which is film.
Q: You're saying it could be a win-win situation?
Gabelli: Bottom line, if you deliver to the consumer what the consumer wants at
a cost that's efficient, you'll make money. If you do it inefficiently or you're
ahead of the curve, you'll lose money. Like any highway, there are going to be
potholes, there are going to be detours and there are people who are going to be
roadkill.
Q: Are you seeing a lot of bargains in this category?
Gabelli: This is a growth area, and you're going to see real bargains. One of
the best cable companies in the world is located in Denver. It's called United
International Holdings. Then there are companies in Hong Kong, like South China
Morning Post Holdings, the English speaking newspaper. It's a way to participate
in the whole database movement in China. There's a company out of Jackson Hole,
WY., called Data Broadcasting Corp. But it's tough. You've got to work to find
bargains in a bull market.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Q: You started the Gabelli Interactive Couch Potato Fund to find those winners?
Gabelli: Yes, it derives from my perception that you can deliver an array of
entertainment alternatives in a cost-efficient way to the person who's used to
grazing on television in his own home. The world is changing dramatically.
Whether it's CD - ROM based or through his television or whatever, there's a
whole new generation of consumers who want more. The twenty two year old who
repairs a car in the year 2000 will be able to access parts on the Internet or
through her personal computer, using the modem and sitting at home. It's the
electronic catalog. Today you're seeing a very archaic form of this kind of
merchandising. It's clumsy, it's cumbersome, and it's best known as QVC (it
markets consumer products with televised shopping programs). In five or ten
years you're really going to say, "Wow was that crude," much the way a catalog
from 100 years ago now looks to us.
Q: Will we see take-overs in these industries?
Gabelli: There will be consolidation, particularly in some of the small
television outlet companies. Citicasters, which is the old Great American
Communications Co., recently sold network stations to New World Communications
Group. We think CBS will merge. We think there will be a mating game among the
networks in the U.S. and there will be some consolidation in Europe. But I can't
make a case that the German telephone company, which is just being spawned by
the government, will be taken over. Or that the Italian telephone company will
merge. There will be affiliations and partnering.
Q: What do you think of Walt Disney Co. right now?
Gabelli: We are nibbling at Disney. We think (chief executive officer) Michael
Eisner has done a good job. Eisner plus Jeffrey Katzenberg (recently departed
head of Disney's studio operations) would have been terrific. Eisner has to beef
up perceptions about management changes, but I think he's capable of doing that.
We are starting to take a fresh look at Mickey Mouse. I think Disney could own
NBC if it could get the network at the right price.
Q: What about gaming companies?
Gabelli: Global gaming ties in to the Couch Potato. Unfortunately and
regrettably, there have been problems with some states (Kansas and Connecticut)
rejecting video lotteries. But there are lots of companies trying to create
reasonably informed, prudent kinds of gaming with limits, so people don't go to
excess. We think that gaming at home will happen. We think that people will bet
on the Kentucky Derby and the races at Santa Anita. They may even migrate to
sporting events.
Q: How about the U.S. broadcast industry?
Gabelli: In the U.S. 25 years ago, the networks were bashed by every political
power. Today, we are blessed by them, because people realize they have plenty of
competition and that regulation has been going the wrong way.
Q: Are we going to see the day when the couch potato can buy stocks on
television the way he now buys cubic zirconia?
Gabelli: The National Association of Securities Dealers and the Securities and
Exchange Commission are way behind the curve on that one. How should I know? I'm
a money manager. Someone else will have to fight that battle.
- --------------------------------------------------------------------------------
<PAGE>
THE PORTFOLIO
Global Allocation
The chart at right represents the Fund's holdings by geographic region at
December 31,1994. The geographic allocation will change based on current global
market conditions. Countries and/or regions and companies represented in the
chart and below may or may not be included in the Fund's portfolio in the
future.
HOLDINGS BY GEOGRAPHIC REGION - 12/31/94
Asia/Pacific Rim 5.0%
Europe 10.8%
Latin America 3.9%
United States 67.7%
Canada 3.5%
Cash and Equivalents 9.1%
Let's Talk Stocks
The following are stock specifics on selected holdings of our Fund's
investments. Favorable EBITDA prospects do not necessarily translate into higher
stock prices, but they do express a positive trend which we believe will develop
over time.
Time Warner Inc. (TWX - $35.125 - NYSE) is one of the largest diversified media
and publishing companies in the world with a market capitalization of over $15
billion. Warner Brothers Studios, the company's filmed entertainment subsidiary,
was ranked number one at the box office for the third consecutive year. Time
Warner is restructuring its business into copyright and creativity (notably
publishing, music and filmed entertainment) on one side and distribution (mostly
cable) on the other.
Centennial Cellular (CYCL - $17.00 - NASDAQ) is an extremely well managed local
cellular telephone operator, with franchises mainly in the Southern and
Midwestern U.S. markets. Over the past year, management has aggressively focused
on a clustering strategy through acquisitions and divestitures, building its
mass around its existing urban franchises (MSA's - Metropolitan Statistical
Areas), through the acquisitions of adjacent RSA's (Rural Statistical Areas).
Centennial completed 11 acquisitions during this time. This greater, more
consolidated footprint assists company initiatives through greater scale
economics as the newly acquired RSA markets are less developed compared to their
MSA neighbor, and therefore can be combined and upgraded. Additionally, the
clustering adds value to the franchise, and increases CYCL's attractiveness as
the differential between public and private market values increases. We believe
Centennial's Private Market Value (PMV) to be above $40.00 per share.
AT&T Corporation (T - $50.25 - NYSE) is the second largest telephone company in
the world. AT&T is attractively valued at 7.5 times EBITDA relative to its
growth potential. It is well positioned to benefit from the above average
long-term growth of the global telecommunications industry. Its strategy
includes taking advantage of its strong global franchise, including brand name,
broad product offering and an international customer base. The company expects
to take advantage of the growing demand for a tailored approach to
telecommunications services. AT&T will satisfy communication needs by packaging
its broad array of products including its global wired and wireless
telecommunications services, telecommunications equipment and financial
services. We expect earnings growth in 1995 to be above 15% with an EPS estimate
of $3.55.
<PAGE>
LIN Broadcasting Corp. (LINB - $133.50 - NASDAQ) is among the largest and most
attractive cellular telephone operators in the U.S. with controlling interests
in the New York, Los Angeles, Dallas and Houston markets. McCaw Cellular
Communications, which was acquired by AT&T in 1994, controls 52% of LIN and is
contractually bound to either purchase the rest of LIN or to put all of LIN up
for sale in a process which begins in January 1995. We expect McCaw (AT&T) to
purchase the balance of LIN for a price of between $140 and $150 per share in
1995.
QVC Inc. (QVCN - $45.00 - NASDAQ) agreed to accept a sweetened $46 per share
offer by Comcast (CMCSA - $15.75 - NASDAQ) and Tele-Communications Inc. (TCOMA -
$22.188 - NASDAQ) for the 65% of QVCN shares that the two cable giants do not
own. CMCSA and TCOMA have notified the FTC of their intention to consummate the
$46 tender offer at any time after 5pm on February 6, 1995 provided all
conditions have been satisfied. We continue to hold a large position.
Caesars World, Inc. (CAW - $66.75 - NYSE) signed a definitive agreement to be
acquired by ITT Corporation (ITT - $86.875 - NYSE) through a $67.50 cash tender
offer. ITT needs the approval of regulators in Nevada, New Jersey and Canada to
consummate the merger. These approvals are expected by February 1, 1995. ITT is
also addressing potential problems the merger might create with the NBA and the
NHL. (ITT is buying the N.Y. Knicks and the N.Y. Rangers from Viacom.) Their
league policies prohibit franchise owners from having an interest in a
sports-betting operation. (CAW runs the largest sports book in Las Vegas.) ITT
anticipates all issues in this regard will be resolved promptly. The Caesars
World acquisition would be a major boost to ITT's plan to become a forceful
presence in entertainment-related industries.
GC Companies, Inc. (GCX - $26.25 - NYSE ) In an effort to realize shareholder
value, Harcourt General in December of 1993 spun off its movie theater business,
The GC Companies (General Cinema), in a tax free distribution to shareholders.
The result was a pure theatrical motion picture exhibitor with 7.8 million
shares outstanding, a strong balance sheet with over $100 million in cash, and a
proven chairman, Dick Smith, owning 29% of the stock. This well run business can
be viewed as an attractive investment on two fronts: The first - The pure, basic
film exhibition business offers a high return on investment. The theater chain
has a critical mass which increases its bargaining power with film suppliers and
has economies of scale as it optimizes its site capacity through the use of
efficient multiplexing. The second - The internally generated cash from its
basic business, and the reinvestment of that cash. We believe that management
will reinvest the cash from its theater business in alternative opportunities
and thus enhance shareholder value. As an example, the old General Cinema
conglomerate under Mr. Smith invested in the Harcourt Brace publishing company
and the Neiman Marcus Group.
Pearson plc. (PSON - $8.69 - LSE) This U.K. (United Kingdom) based global media
concern has an attractive, well positioned series of assets. Its core business
is concentrated on the creation and ownership of copyrights. In publishing, its
better known titles are the Financial Times newspaper, the Penguin consumer
books and the Addison-Wesley educational publishers, all of which have a
position in the major markets. In television programming, its interests are well
diversified and include a 14% interest in British Sky Broadcasting (B Sky B),
the U.K. satellite cable network recently taken public; the ownership of Thames
Television, a U.K. network; a venture with the BBC (British Broadcast Company)
in the development of a proprietary global satellite network initially marked
with the launch of two-pan European channels and a U.K. channel called U.K.
Gold. In an effort to gain access to Asia, management has expressed interest in
<PAGE>
an investment in TVB, the Hong Kong broadcaster discussed in last quarter's
review. Additionally, Pearsons acquired Software Toolworks, the U. S. multimedia
publisher, with the objective of producing CD-ROM's to expand its copyright
libraries. Pearsons' assets, focusing on strong brands, build a regional and
global media mix which we believe is attractive over the long-term.
Vodafone Group plc. (VOD - $33.625 - NYSE) is one of the best managed
international cellular communications companies in the world. The core business,
U.K. cellular, has increased subscribers at an estimated 40% rate per year,
consistently surpassing its competition's growth and positioning. Additionally,
the company has interests in cellular systems in a variety of attractive
markets, from France and Germany to Hong Kong, Australia and South Africa; and
is currently in the auction process for European licenses in Spain, Holland and
Ireland. A combination of a strong balance sheet, smart management, formidable
position in the growing and consolidating wireless communications business, and
a portfolio of properties, makes VOD a core cellular holding in your portfolio.
Comcast Corporation (CMCSA - $15.375 - NASDAQ) We believe that Comcast is an
investment with intrinsic values worth over $30.00 per share in the next two
years. At CMCSA's core, it is a cable television and cellular communications
operator, but beneath its surface, it has $2.00 per share in cash, net equity
investments of roughly $6.00 per share, a management depth that is intent on
value and growth, and a market position ready for expansion. Its operations are
geographically diversified in the U.S., but primarily concentrated in
Pennsylvania, Maryland and the New Jersey area. In cable it has net interests in
approximately 2.9 million subscribers. This should increase to roughly 3.3
million, following its completed acquisition of Maclean Hunter's cable
properties, positioning the company as the third largest cable operator in the
U.S. In cellular, the operations serve markets in the lucrative Northeast
corridor with a population (POPs) of 7.4 million. Management was one of the
first to identify the long-term strategic importance of investments in
programming as well as other related non-core assets.
CBS , Inc. (CBS - $55.375 - NYSE ), one of the dominant U.S. television
networks, is a core broadcast holding in your portfolio. The stock has declined
slightly over the past year as a result of several challenges faced by the
company relating to concerns that cash flow has staggered. One reason is a
result of this season's prime-time ratings (advertising share), as CBS dropped
to third place from first last year. The Fox/New World transactions caused
station affiliation costs to rise. Another is the marked absence of the station
in Football, the World Series and The Winter Olympics. We believe that although
these concerns are valid, they are short-term oriented. Fundamentally we like
the stock. The company continues to increase operating income, and has more than
doubled its broadcasting operating profit since 1992. Management is expected to
continue its purchase of stock. CBS also represents a valuable franchise in the
expected consolidation of the broadcast industry, where the change in financial
and syndication rules could effectively transform the broadcasters into
production companies with their own captive distribution.
The Walt Disney Co. ( DIS - $46.125 - NYSE ) a name with characters we all know,
continues its magic. Disney is more than Mickey Mouse, however. It consists of
several distinct, but integrated consumer entertainment businesses: Film, Theme
Parks, and Consumer Products. The famous theme parks, despite a variety of
concerns, have maintained operating margins which are expected to improve. Its
film production unit continues to achieve record numbers with successful live
and animated movies. The two newest titles, The Lion King and Aladdin, are
<PAGE>
examples of the creativity achievable. The Lion King alone was the best grossing
U.S. film in history, and it has yet to have its first birthday for video and
other associated ancillary revenues. In the live film area, management is
focused on a reduced supply of better quality product. The consumer products
division is focused on leveraging its brands globally, capitalizing on the
company's synergies across product lines. This unit alone, although currently
the smallest, generated $500 million in revenues last year. At current levels,
with the positive outlook for its mix of businesses, share repurchases, strong
management and even stronger brands, the stock is attractive for the portfolio.
Minimum Initial Investment - $1,000
The minimum initial investment is $1,000 until the Fund has either 10,000
shareholders or over $100,000,000 in assets under management when the minimum
will increase to $25,000 for new investors. There is no initial minimum
investment for accounts established through our Automatic Investment Plan.
Shares of the Fund are offered at no load through June 30, 1995. After such
date, the Fund will impose a 4.5% front end sales charge on all new accounts.
Shareholders in the Fund prior to that date will never be subject to a load,
even on subsequent investments.
Gabelli U.S. Treasury Money Market Fund
Shareholders of any of the Gabelli Funds may invest in The Gabelli U.S.
Treasury Money Market Fund with an initial investment of $3,000 or more. The
Fund provides checkwriting and exchange privileges. The Fund's expenses are
capped at .30% of average net assets, making it one of the most attractive U.S.
Treasury-only money market funds. With dividends that are exempt from state and
local income taxes in all states, the Fund is an excellent vehicle in which to
store idle cash. Call us at 1-800-GABELLI (1-800-422-3554) for a prospectus
which gives a more complete description of the Fund, including management fees
and expenses. Read it carefully before you invest or send money.
<PAGE>
In Conclusion
The Fund's daily net asset value is available in the financial press and each
evening after 6:00 PM (Eastern Time) by calling 1-800-GABELLI (1-800-422-3554).
The Fund's NASDAQ symbol is GICPX. Please call us during the day for further
information.
We thank you for your confidence in our investing abilities and wish you a
productive and financially rewarding 1995.
Sincerely,
/s/ Mario J. Gabelli
Mario J. Gabelli, CFA
President and
Portfolio Manager
/s/ Marc J. Gabelli /s/ Ivan Arteaga
Marc J. Gabelli Ivan Arteaga, CPA
Associate Portfolio Manager Associate Portfolio Manager
February 1, 1995
- --------------------------------------------------------------------------------
Top Ten Holdings
December 31, 1994
QVC, Inc. Centennial Cellular Corp.
Caesars World, Inc. Citicasters Inc.
American Media, Inc. Contel Cellular Inc.
CBS, Inc. AT&T Corporation
Time Warner Inc. LIN Broadcasting Corp.
- --------------------------------------------------------------------------------
<PAGE>
The Gabelli Global Interactive Couch Potato(TM)(C) Fund
Portfolio of Investments -- December 31, 1994
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 87.99%
CABLE - 12.97%
2,000 Bell Cablemedia plc ADR+ .................. $ 34,330 $ 40,500
7,500 BET Holdings, Inc.+ ....................... 124,925 113,438
1,000 Cablemaxx, Inc.+ .......................... 7,415 3,875
5,000 Cablevision Systems
Corporation Cl. A+ ....................... 227,037 252,500
16,000 Cogeco Cable Ltd .......................... 100,960 87,019
8,000 Comcast Corporation Cl. A ................. 138,379 123,000
1,000 Generale Des Eaux (Cie) ................... 106,250 97,246
25,000 Home Shopping Network
Inc.+ ................................... 281,975 250,000
11,000 International Cablecasting
Technologies Inc.+ ....................... 241,815 305,250
11,000 International Family
Entertainment Inc.+ ...................... 170,150 138,875
10,000 Media General Inc. Cl. A .................. 232,621 283,750
4,000 Multimedia, Inc.+ ......................... 115,950 114,000
1,000 People's Choice TV
Corporation+ ............................. 23,338 15,750
24,000 QVC, Inc.+ ................................ 1,047,911 1,011,000
1,000 Scientific-Atlanta Inc .................... 13,188 21,000
2,000 Shaw Communications, Inc .................. 15,372 14,265
20,000 United International Holdings
Inc. Cl. A+ .............................. 321,434 350,000
----------- ----------
3,203,050 3,221,468
----------- ----------
ENTERTAINMENT - 16.61%
1,000 Amphenol Corporation Cl. A+ .............. 17,125 24,000
3,500 Autotote Corporation Cl. A+ .............. 67,641 39,813
1,500 Bay Meadows Operating
Company ................................. 24,375 21,562
15,000 Caesars World, Inc.+ ..................... 854,983 1,001,250
3,500 Churchill Downs Inc ...................... 159,643 154,000
500 Fisher Companies Inc ..................... 109,500 123,000
7,000 Gaylord Entertainment
Company ................................. 167,775 159,250
10,000 GC Companies Inc.+ ....................... 292,795 262,500
4,000 GTECH Holdings
Corporation+ ............................ 73,387 81,500
100 Harvey Entertainment Inc.+ ............... 1,799 1,425
2,500 Hilton Hotels Corporation ................ 135,750 168,438
1,200 Hollywood Park Inc.+ ..................... 13,710 13,200
3,000 International Game
Technology .............................. 62,150 46,500
2,500 King World Productions,
Inc.+ ................................... 99,563 86,250
100,000 Ladbroke Group plc ....................... 260,292 267,615
1,000 Lodgenet Entertainment
Corporation+ ............................ 8,915 7,563
7,000 Mirage Resorts,
Incorporated+ ........................... 136,700 143,500
500 Nelvana Ltd.+ ............................ 5,451 5,260
1,500 Polygram NV ADR .......................... 60,313 69,188
2,000 Samuel Goldwyn Company+ .................. 14,850 13,000
3,500 Santa Anita Realty
Enterprises ............................. 63,325 48,125
1,000 Savoy Pictures
Entertainment+ .......................... 6,988 6,500
145,000 Shaw Brothers (Hong Kong)
Ltd. ................................... 258,005 222,990
600 Sony Music Entertainment ................. 34,374 33,772
17,500 Spelling Entertainment Inc ............... 177,625 188,125
3,000 THORN EMI PLC ADR ........................ 49,350 48,578
9,500 Time Warner Inc .......................... 340,038 333,688
2,380 Viacom Inc. Cl. A ........................ 71,762 99,068
4,106 Viacom Inc. Cl. B+ ....................... 124,055 166,812
3,500 Videotron Groupe ......................... 33,328 33,078
5,500 Walt Disney Company ...................... 228,125 253,688
----------- ----------
3,953,692 4,123,238
----------- ----------
INTERACTIVE CONSUMER - 0.37%
6,000 Lillian Vernon Corporation ............... 107,112 91,500
----------- ----------
INTERACTIVE FINANCIAL SERVICES - 0.72%
1,000 Belize Holdings, Inc ..................... 19,050 15,625
2,000 H&R Block Inc ............................ 80,712 74,250
2,000 Reuters Holding PLC ADR .................. 90,239 87,750
----------- ----------
190,001 177,625
----------- ----------
INTERACTIVE SOFTWARE & SERVICES - 2.79%
1,000 Acclaim Entertainment Inc.+ .............. 16,016 14,375
400 America Online,Inc.+ ..................... 12,008 22,400
3,000 Broderbund Software, Inc.+ ............... 53,122 140,250
100 Electronic Arts Inc.+ .................... 1,825 1,925
1,000 Intel Corporation ........................ 59,125 63,875
400 Matsushita Electric Industrial
Company Ltd ............................. 69,420 65,200
2,000 Microsoft Corporation+ ................... 92,051 122,250
1,000 Sega Enterprises ......................... 65,036 57,795
5,000 Sierra On-Line Inc.+ ..................... 98,821 171,250
200 Sony Corporation ADR ..................... 12,185 11,225
200 Spectrum Holobyte Inc.+ .................. 1,758 2,700
2,000 Video Lottery Technologies
Inc.+ ................................... 25,673 19,000
----------- ----------
507,040 692,245
----------- ----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
The Gabelli Global Interactive Couch Potato(TM)(C) Fund
Portfolio of Investments -- December 31, 1994 (Continued)
================================================================================
Market
Shares Cost Value
------ ---- -----
LONG DISTANCE TELEPHONE COMPANIES - 2.42%
1,000 ALC Communications
Corporation+ ............................. $ 28,300 $ 31,125
8,000 AT&T Corporation ........................... 430,829 402,000
8,500 LDDS Communications, Inc.+ ................. 152,398 165,219
4,000 STN Inc.+ .................................. 14,183 1,769
----------- ----------
625,710 600,113
----------- ----------
MEDIA - 17.55%
20,000 Ackerley Communications,
Inc.+ ................................... 120,600 135,000
4,200 BHC Communications Inc ....................
Cl. A+ ................................... 320,885 308,700
1,000 British Sky Broadcasting
ADR+ ..................................... 24,425 24,000
13,000 CBS, Inc .................................. 782,549 719,875
2,500 Canal Plus Spons. ADR ..................... 83,800 80,104
4,500 Capital Cities/ABC Inc .................... 308,433 383,625
2,000 Carlton Communications plc
ADR ...................................... 55,750 56,500
1,000 Chris-Craft Industries, Inc.+ ............. 33,775 34,500
22,500 Citicasters Inc.+ ......................... 474,380 556,875
10,000 Data Broadcasting
Corporation+ ............................. 51,234 41,250
100 Europe 1 Communication .................... 32,545 27,394
30,000 Flextech plc+ ............................. 178,765 187,800
1,500 Grupo Radio Centro, S.A. de
C.V.+ ................................... 28,213 21,375
7,000 Grupo Televisa SA ......................... 265,200 222,250
10,000 Havas SA ADR .............................. 205,262 195,342
2,000 Heritage Media Corporation
Cl. A+ ................................... 34,725 53,750
1,500 LIN Television Corporation+ ............... 26,657 34,125
2,000 New World Communications
Group, Inc.+ ............................. 23,675 23,500
600 Nippon Television
Broadcasting ............................. 151,150 144,135
10,000 NTN Communications Inc.+ .................. 70,813 60,000
15,000 Outlet Communications Inc .................
Cl. A .................................... 152,426 251,250
3,000 Park Communications Inc.+ ................. 74,676 84,000
5,000 Publishing & Broadcasting
Ltd. .................................... 15,250 13,989
400 Scandinavian Broadcasting
System SA+ ............................... 10,191 8,200
2,500 Scottish Television plc ................... 17,800 16,511
3,500 Silver King
Communications+ .......................... 36,703 37,625
500 StarSight Telecast, Inc.+ ................. 6,900 3,875
5,850 Tele-Communications, Inc.+ ................ 125,973 127,238
45,000 Television Broadcasting Ltd ............... 174,013 179,698
200 Television Francaise ...................... 19,530 18,145
8,000 Tokyo Broadcasting System ................. 134,279 132,677
6,000 Turner Broadcasting System,
Inc.Cl.A ................................. 121,963 98,250
1,000 Turner Broadcasting System,
Inc.Cl.B ................................. 19,363 16,375
4,000 United Communication
Industries ............................... 58,569 55,777
1,000 Valuevision International,
Inc.Cl.A+ ................................ 5,125 4,750
----------- ----------
4,245,597 4,358,460
----------- ----------
MEDIA EQUIPMENT & SUPPLIES - 1.12%
1,000 General Instrument
Corporation+ ............................ 23,200 30,000
500 Siemens AG ADR+ .......................... 41,650 41,871
23,000 Trans-Lux Corporation .................... 213,025 207,000
----------- ----------
277,875 278,871
----------- ----------
MEDIA SERVICES - 0.31%
6,000 Berlitz International, Inc.+ ............. 81,713 78,000
----------- ----------
PUBLISHING - 11.19%
45,000 American Media, Inc. Cl. A+ .............. 730,463 731,250
1,000 Arnoldo Mondadori Ed+ .................... 8,954 7,689
1,000 CEP Communications ....................... 93,684 87,315
1,000 Dow Jones & Company, Inc ................. 30,925 31,000
3,750 Elsevier NV Spons. ADR+ .................. 71,688 77,344
800 Groupe de la Cite ........................ 114,079 114,671
1,000 Harcourt General, Inc .................... 30,675 35,250
20,000 Independent Newspapers
plc .................................... 96,754 85,449
4,000 Lee Enterprises, Inc ..................... 134,588 138,000
1,000 McClatchy Newspapers, Inc ................
Cl. A ................................... 24,550 21,500
2,500 McGraw-Hill, Inc ......................... 183,450 167,188
3,500 Meredith Corporation ..................... 150,525 163,188
30,000 Ming Pao Enterprise Corp .................
Ltd. .................................... 21,300 18,028
9,500 Mirror Group plc ......................... 19,760 19,179
5,000 Nation Publishing Group
Company Ltd.+ ........................... 13,714 8,964
The accompanying notes are an integral part of the financial statements.
<PAGE>
The Gabelli Global Interactive Couch Potato(TM)(C) Fund
Portfolio of Investments -- December 31, 1994 (Continued)
================================================================================
Market
Shares Cost Value
------ ---- -----
12,000 News Corporation Ltd. ADR ................ $ 217,935 $ 187,500
6,000 News Corporation Ltd. ADR
Preference Shares+ ...................... 91,228 83,250
3,500 New York Times Company
Cl. A ................................... 85,488 77,437
120,000 Oriental Press Group ..................... 85,648 56,216
3,000 Pearson plc .............................. 28,535 26,057
2,500 Playboy Enterprises, Inc.+ ............... 19,225 23,438
1,000 Post Publishing Company .................. 8,899 6,574
1,000 Pulitzer Publishing Company .............. 37,538 40,125
2,000 Readers Digest Association,
Inc. Cl. B .............................. 82,600 89,500
3,000 Reed International plc ADR+ .............. 72,250 74,250
50,000 South China Morning Post
Holdings ................................ 29,302 29,239
2,500 Thomson Corporation ...................... 30,118 30,760
1,000 Times Mirror Company ..................... 31,425 31,375
9,000 United Newspapers plc ADR ................ 145,625 133,313
10,000 Western Publishing Group,
Inc.+ ................................... 110,978 95,000
2,000 Wiley (John) & Sons Inc ..................
Cl. B ................................... 84,800 88,000
----------- ----------
2,886,703 2,778,049
----------- ----------
REGIONAL/LOCAL TELEPHONE SERVICES - 1.83%
3,000 Bell Atlantic Corporation ................ 161,900 149,250
1,000 Cincinnati Bell Inc ...................... 16,375 16,750
5,000 GTE Corporation .......................... 154,875 151,875
1,500 NYNEX Corporation ........................ 54,388 55,125
1,000 Rochester Telephone
Corporation ............................. 21,650 21,125
720 SBC Communications Inc ................... 27,212 29,070
1,000 Southern New England
Telecommunications
Corporation ............................. 32,300 32,125
----------- ----------
468,700 455,320
----------- ----------
TELEPHONE EQUIPMENT - 0.42%
1,000 Colonial Data Tech Systems+ .............. 4,613 15,125
500 Ericsson (L.M.) Telephone
Company ................................. 22,550 27,563
200 Motorola, Inc ............................ 8,985 11,575
1,500 Northern Telecom Limited ................. 44,300 50,062
----------- ----------
80,448 104,325
----------- ----------
12,000 BCE Inc.+ ................................. 406,675 385,500
5,000 BC TELECOM Inc ............................ 93,319 85,592
1,400 British Telecommunications
plc ADR .................................. 79,295 84,175
5,000 Cable & Wireless plc ADR .................. 98,188 87,500
2,500 Compania Telfonos de Chile
SA ADR ................................... 220,875 196,875
400 Empresas Telex Chile ...................... 7,133 4,250
7,500 General Communication, Inc ................
Cl. A+ ................................... 36,388 29,062
1,500 Hong Kong Telecommuni-
cations Ltd. ADR ......................... 27,868 28,688
2 Japan Telecom Co., Ltd.+ .................. 79,097 68,147
400 Philippine Long Distance
Telephone Company ........................ 23,495 22,050
600 PT Indonesia Satellite ADR+ ............... 20,093 21,450
1,000 Royal PTT Nederland NV
ADR .................................... 26,749 33,250
2,000 Singapore Telecommuni-
cations Ltd .............................. 4,700 3,813
4,000 STET Spa - Societa Finanziaria
Telefonica p.a. ADR ...................... 124,937 117,861
4,500 Telecomunicacoes Brasileiras
SA (Telebras) Spons. ADR+ ................ 152,628 201,938
91 Telecomunicacoes Brasileiras
SA (Telebras) Spons. ADR
New ...................................... 5,118 4,084
1,000 Telecom Argentina SA ADR+ ................ 46,762 51,750
500 Telecom Corporation of
New Zealand Limited ...................... 23,900 25,688
10,000 Telecom Italia SpA+ ....................... 25,180 26,025
1,000 Telefonica de Argentina SA
ADR .................................... 49,281 53,000
1,500 Telefonica de Espana ADR .................. 59,325 52,687
5,000 Telefonos De Mexico Cl. L
ADR ..................................... 218,700 205,000
----------- ----------
1,829,706 1,788,385
----------- ----------
WIRELESS COMMUNICATIONS - 12.49%
5,000 Advanced Information
Services ................................. 74,683 69,323
5,000 AirTouch Communications
Inc.+ ................................... 113,900 145,625
1,500 All American Communications
Inc.+ ................................... 9,375 9,375
The accompanying notes are an integral part of the financial statements.
<PAGE>
The Gabelli Global Interactive Couch Potato(TM)(C) Fund
Portfolio of Investments -- December 31, 1994 (Continued)
================================================================================
Principal
Amount Market
or Shares Cost Value
-------- ---- -----
5,000 American Paging, Inc.+ .................... $ 39,500 $ 36,875
500 Associated Group Inc. Cl. A+ .............. 10,064 11,750
500 Associated Group Inc. Cl. B+ .............. 10,064 11,750
6,000 BCE Mobile Communication
Inc. .................................... 162,665 190,442
7,000 Cellular Communications, Inc ..............
Cl. A+ ................................... 320,358 374,500
33,236 Centennial Cellular Corp ..................
Cl. A+ ................................... 510,060 565,012
8,000 Century Telephone Enterprises
Inc. Cl. A ............................... 202,063 236,000
14,000 COMSAT Corporation ........................ 334,363 260,750
20,000 Contel Cellular Inc.+ ..................... 362,572 498,750
3,000 IDB Communications Group
Inc. .................................... 19,850 27,563
3,000 LIN Broadcasting
Corporation .............................. 293,782 400,500
3,300 NEXTEL Communications Inc .................
Cl. A+ ................................... 66,954 47,434
8,500 Pittencrieff Communications
Inc.+ ................................... 120,077 42,500
1,000 United States Cellular
Corporation+ ............................. 27,925 32,750
750 Vanguard Cellular Systems
Inc. Cl. A+ .............................. 14,713 19,308
3,600 Vodafone Group plc ADR .................... 97,585 121,050
----------- -----------
2,790,553 3,101,257
----------- -----------
TOTAL COMMON STOCKS 21,247,900 21,848,856
----------- -----------
CONVERTIBLE CORPORATE BONDS - 2.56%
ENTERTAINMENT - 1.79%
$50,000 Savoy Pictures Entertainment
Sub. Deb. Cv. 7.00%,
07/01/03 ................................ 38,932 35,750
250,000 Time Warner Inc. Sub. Deb.
Cv. 8.75%, 01/10/15 ...................... 253,234 236,250
200,000 Viacom International Inc. Sub.
Deb. Cv. 8.00%,
07/07/06 ................................. 127,109 171,500
----------- -----------
419,275 443,500
----------- -----------
MEDIA - 0.19%
218,750(a)Havas Sub. Deb. Cv.
3.00%, 12/31/97 .......................... 46,262 47,053
----------- -----------
RETAIL - 0.28%
$ 93,000 General Host Corporation Sub.
Deb. Cv. 8.00%, 02/15/02. ................ 72,911 70,215
----------- -----------
WIRELESS COMMUNICATIONS - 0.30%
100,000 All American Communications
Inc. Sub. Deb. Cv. 6.50%,
10/01/03 ................................. 77,236 74,000
----------- -----------
TOTAL CONVERTIBLE
CORPORATE BONDS 615,684 634,768
----------- -----------
PREFERRED STOCK - 0.03%
CELLULAR COMMUNICATIONS - 0.03%
100 Nokia Group AB Preference ................ 5,717 7,500
----------- -----------
TOTAL PREFERRED STOCK .................... 5,717 7,500
----------- -----------
U.S. GOVERNMENT OBLIGATIONS - 10.44%
2,610,000 U.S. Treasury Bills, 4.82% to
4.85% Due 02/09/95 to
02/16/95 ................................ 2,594,776 2,594,776
----------- -----------
TOTAL U.S. GOVERNMENT
OBLIGATIONS ............................. 2,594,776 2,594,776
----------- -----------
TOTAL INVESTMENTS -
101.02% $24,464,077* 25,085,900
===========
Liabilities, in excess of
Other Assets ............................. (1.02%) (254,415)
-----------
NET ASSETS - 100.00% $24,831,485
===========
(2,421,484 shares outstanding)
Net Asset Value and Redemp-
tion Price Per Share $10.25
======
- -----------
(a)- Principal amount denoted in French Francs.
+- Non-income producing security.
* For Federal income tax purposes:
Aggregate cost ............................ $24,464,077
===========
Gross unrealized appreciation ............. $ 1,758,121
Gross unrealized depreciation ............. (1,128,971)
-----------
Net unrealized
appreciation ................ $ 629,150
===========
Short futures contracts outstanding at December 31, 1994:
Number of
Contracts Value
--------- -----
4 S&P 500 March `95 $922,700
========
The accompanying notes are an integral part of the financial statements.
<PAGE>
The Gabelli Global Interactive Couch Potato (TM)(C)Fund
Statement of Assets and Liabilities
December 31, 1994
================================================================================
Assets:
Investments in securities, at value
(Cost $24,464,077) ..................................... $ 25,085,900
Cash .................................................... 28,693
Receivable for Fund shares sold ......................... 103,786
Dividends receivable .................................... 22,538
Accrued interest receivable ............................. 25,899
Deferred organizational expenses ........................ 54,800
Other assets ............................................ 714
------------
Total assets .......................................... 25,322,330
------------
Liabilities:
Payable for investments purchased ....................... 381,451
Payable to Advisor ...................................... 20,296
Payable for Fund shares redeemed ........................ 11,745
Payable for distribution fees ........................... 4,922
Other accrued expenses .................................. 72,431
------------
Total liabilities ..................................... 490,845
------------
Net assets applicable to 2,421,484
shares outstanding .................................... $ 24,831,485
============
Net asset value and redemption
price per share ...................................... $10.25
======
Net Assets Consist of:
Capital Stock, at par value ............................. $ 2,422
Additional paid in capital .............................. 24,248,029
Accumulated net realized loss on
investments ........................................... (48,116)
Net unrealized appreciation on investments
and foreign currency transactions ..................... 629,150
------------
Net assets ............................................ $ 24,831,485
============
Statement of Operations
For the Period February 7, 1994 (Commencement of Operations) through December
31, 1994
================================================================================
Investment Income:
Interest ................................................. $ 307,084
Dividends (Net of foreign tax of $6,039) ................. 101,108
----------
Total income ........................................... 408,192
----------
Expenses:
Investment advisory fee .................................. 174,399
Transfer and shareholder servicing agent ................. 100,802
Distribution expenses .................................... 43,605
Legal and audit fees ..................................... 32,000
Custodian fees & expenses ................................ 23,630
Printing & mailing ....................................... 19,738
Registration fees ........................................ 19,458
Amortization of organization expenses .................... 10,200
Directors' fees and expenses ............................. 4,167
Miscellaneous ............................................ 3,661
----------
Total expenses ......................................... 431,660
----------
Investment loss - net .................................... (23,468)
----------
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized loss on investments ......................... (48,116)
Net change in unrealized appreciation .................... 629,150
----------
Net gain on investments ................................ 581,034
----------
Net increase in net assets resulting from
operations ............................................... $ 557,566
==========
Statement of Changes in Net Assets -- February 7, 1994 (Commencement of
Operations) through December 31, 1994
================================================================================
Increase in Net Assets:
Investment loss - net ...................................... $ (23,468)
Net realized loss on investments ........................... (48,116)
Change in unrealized appreciation-- net .................... 629,150
------------
Net increase in net assets resulting from operations ..... 557,566
Share transactions -- net .................................. 24,273,919
------------
Net increase in net assets ............................... 24,831,485
Net Assets:
Beginning of period ........................................ --
End of period .............................................. $ 24,831,485
============
The accompanying notes are an integral part of the financial statements.
<PAGE>
The Gabelli Global Interactive Couch Potato(TM)(C) Fund
Notes to Financial Statements
================================================================================
1. Significant Accounting Policies. The Gabelli Global Interactive Couch
Potato(TM)(C) Fund (the "Fund") is a series of Gabelli Global Series Funds, Inc.
(the "Corporation"), incorporated in Maryland on July 16, 1993. The Fund is a
no-load, open-end, non-diversified management investment company and one of five
separately managed portfolios of the Corporation. The Fund commenced investment
operations on February 7, 1994. The following is a summary of significant
accounting policies followed by the Fund:
Security Valuation. Portfolio securities listed or traded on the New York or
American Stock Exchanges, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("NASDAQ") or traded on foreign exchanges are
valued at the last sale price on that exchange (if there were no sales that day,
the security is valued at the average of the bid and asked prices). All other
portfolio securities for which over-the-counter market quotations are readily
available are valued at the latest average of the bid and asked prices. When
market quotations are not readily available, portfolio securities are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision of the Corporation's Directors. Short-term debt
securities with remaining maturities of 60 days or less are valued at amortized
cost, unless the Directors determine such does not reflect the securities' fair
value, in which case these securities will be valued at their fair value as
determined by the Directors. Options are valued at the last sale price on the
exchange on which they are listed, unless no sales of such options have taken
place that day, in which case they will be valued at the mean between their
closing bid and asked prices.
Foreign Currency Transactions. The books and records of the Fund are maintained
in U.S. dollars as follows:
(i) market value of investment securities and other assets and liabilities
are recorded at the exchange rate on the valuation date.
(ii) purchases and sales of investment securities, income and expenses are
recorded at the exchange rate prevailing on the respective date of
such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Forward Foreign Currency Contracts. The Fund may hold currencies to meet
settlement requirements for foreign securities and may engage in currency
exchange transactions to hedge against changes in exchange rates. Forward
foreign currency contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded by the Fund as an
unrealized gain or loss. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
currency contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts.
Security Transactions and Investment Income. Security transactions are accounted
for on the dates the securities are purchased or sold (the trade dates), with
realized gain and loss on investments determined by using specific
identification as the cost method. Interest income (including amortization of
premium and discount) is recorded as earned. Dividend income and dividend and
capital gain distributions to shareholders are recorded on the ex-dividend date.
Federal Income Taxes. The Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986 and distribute
all of its taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
<PAGE>
The Gabelli Global Interactive Couch Potato(TM)(C) Fund
Notes to Financial Statements (Continued)
================================================================================
Dividends and interest from non-U.S. sources received by the Fund are generally
subject to non-U.S. withholding taxes at rates ranging up to 30%. Such
withholding taxes may be reduced or eliminated under the terms of applicable
U.S. income tax treaties, and the Fund intends to undertake any procedural steps
required to claim the benefits of such treaties. If more than 50% in value of
the Fund's total assets at the close of any taxable year consists of stocks or
securities of non-U.S. corporations, the Fund is permitted and may elect to
treat any non-U.S. taxes paid by it as paid by its shareholders.
2. Capital Stock Transactions. The Articles of Incorporation, dated July 16,
1993, permit the Fund to issue 200,000,000 shares (par value $0.001).
Transactions in shares of common stock were as follows:
February 7, 1994
(Commencement of Operations)
through December 31, 1994
----------------------------
` Shares Amount
--------- -----------
Shares sold ................................ 2,700,779 $27,120,985
Shares redeemed ............................ (279,295) (2,847,066)
--------- -----------
Share transactions-- net ................. 2,421,484 24,273,919
Reclassification of net investment loss .... -- (23,468)
--------- -----------
Ending balance ............................. 2,421,484 24,250,451
========= ===========
3. Purchases and Sales of Securities. Purchases and sales of securities for the
period ended December 31, 1994, other than U.S. government obligations and
short-term securities, aggregated $23,547,397 and $1,631,708, respectively.
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. Such investments will only be made
if they are, in the opinion of Fund management, economically appropriate to the
reduction of risks involved in the management of the Fund. Upon entering into a
futures contract, the Fund is required to deposit with the broker an amount of
cash or cash equivalents equal to a certain percentage of the contract amount.
This is known as the "initial margin." Subsequent payments ("variation margin")
are made or received by the Fund each day, depending on the daily fluctuation of
the value of the contract. The daily changes in the contract are recorded as
unrealized gains or losses. The Fund recognizes a realized gain or loss when the
contract is closed. The net unrealized appreciation/depreciation is shown in the
financial statements.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk that
the Fund may not be able to enter into a closing transaction because of an
illiquid secondary market.
During the period ended December 31, 1994, the Fund sold short futures contracts
aggregating $2,040,550 and closed short futures contracts aggregating
$1,116,833.
Repurchase Agreements. The Fund may enter into repurchase agreements with
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 the credit guidelines established by the Directors. The Fund will always
receive and maintain securities as collateral whose market value, including
accrued interest, will be at least equal to 100% of the dollar amount invested
by the Fund in each agreement, and 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.
<PAGE>
The Gabelli Global Interactive Couch Potato(TM)(C) Fund
Notes to Financial Statements (Continued)
================================================================================
4. Investment Advisory Contract. The Fund employs Gabelli Funds, Inc. (the
"Advisor") to provide a continuous investment program for the Fund's portfolio,
provide all facilities and personnel, including officers, required for its
administrative management, and pay the compensation of all officers and
Directors of the Fund who are affiliated with the Advisor. As compensation for
the services rendered and related expenses borne by the Advisor, the Fund pays
the Advisor a fee, computed and accrued daily and payable monthly, equal to
1.00% per annum of the Fund's average daily net assets. The Advisor is obligated
to reimburse the Fund in the event the Fund's expenses exceed the most
restrictive expense ratio limitation imposed by any state, currently believed to
be 2.5% of the first $30 million and 2% of the next $70 million of the Fund's
average daily net assets (excluding taxes, interest, distribution expenses and
extraordinary items). No such reimbursement was required during 1994.
5. Organization Expenses. The organization expenses of the Fund are being
amortized on a straight-line basis over a period of 60 months.
6. Distribution Plan. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") under Section 12(b) of the Investment Company Act of 1940 and
Rule 12b-1 thereunder. For the period ended December 31, 1994, the Fund has
incurred distribution costs of $43,605, or 0.25% of average net assets, subject
to 0.25% limitation, the annual limitation under the Plan, payable to Gabelli &
Company, Inc., an affiliate of the Advisor. The Board of Directors has approved
that Distribution costs incurred by Gabelli & Company, Inc., totalling $215,343
which are in excess of the .25% limitation may be recovered from the Fund in
future periods, subject to such limitation.
7. Transactions with Affiliates. The Fund paid brokerage commissions during the
period ended December 31, 1994 of $5,040 to Gabelli & Company, Inc. and its
affiliates.
Financial Highlights
================================================================================
Selected data for a share of capital stock outstanding throughout the period
February 7, 1994 (Commencement of Operations) through December 31, 1994:
Operating Performance:
Net asset value, beginning of period .................... $ 10.00
-------
Net investment income/(loss) ............................ (0.01)
Net realized and unrealized gain on securities .......... 0.26
-------
Total from investment operations ........................ 0.25
-------
Net asset value, end of period .................................. $ 10.25
-------
Total Return ............................................ 2.50%
Ratios to average net assets/supplemental data:
Net assets, end of period (in thousands) ................ $24,831
Ratio of operating expenses to average net assets ....... 2.47%*
Ratio of net investment loss to average net assets ...... (0.13)%*
Portfolio turnover rate ................................. 14.28%
- ----------
* Annualized.
<PAGE>
The Gabelli Global Interactive Couch Potato(TM)(C) Fund
Report of Grant Thornton LLP, Independent Auditors
================================================================================
Shareholders and Board of Directors
The Gabelli Global Interactive Couch Potato(TM)(C) Fund
We have audited the accompanying statement of assets and liabilities of The
Gabelli Global Interactive Couch Potato(TM)(C) Fund (one of the series
constituting Gabelli Global Series Funds, Inc.), including the portfolio of
investments, as of December 31, 1994, and the related statements of operations,
changes in net assets and financial highlights for the period from February 7,
1994 (commencement of operations) through December 31, 1994. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Gabelli Global Interactive Couch Potato(TM)(C) Fund of Gabelli Global Series
Funds, Inc. at December 31, 1994, the results of its operations, the changes in
its net assets and the financial highlights for the period indicated above, in
conformity with generally accepted accounting principles.
/s/ Grant Thornton LLP
New York, New York
February 5, 1995
<PAGE>
The Gabelli Global Interactive Couch Potato(TM)(C) Fund
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 P.M.)
Board of Directors
Mario J. Gabelli, CFA Karl Otto Pohl
Chairman and Chief Former President
Investment Officer Deutsche Bundesbank
Gabelli Funds, Inc.
Felix J. Christiana Werner J. Roeder, MD
Former Senior Director of Surgery
Vice President Lawrence Hospital
Dollar Dry Dock Savings Bank
Anthony J. Colavita Anthonie C. van Ekris
Attorney-at-Law Managing Director
Anthony J. Colavita, P.C. BALMAC International, Inc.
John D. Gabelli
Vice President
Gabelli & Company,Inc.
Officers and Portfolio Managers
Mario J. Gabelli, CFA Bruce N. Alpert
President and Vice President
Portfolio Manager and Treasurer
J. Hamilton Crawford, Jr. Ivan Arteaga, CPA
Secretary Associate Potfolio Manager
Marc J. Gabelli
Associate Potfolio Manager
Distributor
Gabelli & Company, Inc.
Custodian, Transfer Agent and Dividend Agent
State Street Bank and Trust Company
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom
Independent Auditors
Grant Thornton LLP
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
Gabelli Global Interactive Couch Potato Fund(TM)(C). It is not authorized for
distribution to prospective investors unless preceded or accompanied by an
effective prospectus.
- --------------------------------------------------------------------------------
