<PAGE> 1
GABELLI GLOBAL SERIES FUNDS, INC.
One Corporate Center
Rye, New York 10580 - 1434
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
SEMI-ANNUAL REPORT - 1996
TO OUR SHAREHOLDERS:
The telecommunications sector advanced in line with global markets in
the second quarter of 1996. The tremendous long-term growth prospects for U.S.
telecommunications companies continues to be obscured by uncertainty over
dramatic changes in regulation resulting from the February 8 passage of the
Telecommunications Act of 1996. With the Federal Communications Commission
(FCC) scheduled to provide a detailed plan for the opening of local network
markets on August 8, one big piece of what is a complex puzzle will be in
place.
INVESTMENT PERFORMANCE (a)
<TABLE>
<CAPTION>
Quarter
-----------------------------
1st 2nd 3rd 4th Year
------ ------ ----- ------ ----------
<S> <C> <C> <C> <C> <C>
1996: Net Asset Value . . . $11.72 $12.16 -- -- --
Total Return . . . . . 5.4% 3.8% -- -- --
- ----------------------------------------------------------------------------
1995: Net Asset Value . . . $9.77 $10.29 $11.12 $11.12 $11.12
Total Return . . . . . 0.4% 5.3% 8.1% 1.6% 16.2%
- ----------------------------------------------------------------------------
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)
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Average Annual Return - June 30, 1996 (a)
- -------------------------------------------
<S> <C>
1 Year 20.1%
Life of Fund(b) 9.1%
</TABLE>
<TABLE>
<CAPTION>
Dividend History
- -----------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
- ----------------- -------------- ------------------
<S> <C> <C>
December 29, 1995 $0.182 $11.12
December 30, 1994 $0.095 $ 9.73
December 31, 1993 $0.102 $10.20
</TABLE>
(a) Average annual and total returns reflect changes in share price and
reinvestment of dividends and are net of expenses. Of course, returns represent
past performance and do not guarantee future results. Investment returns and
the principal value of an investment will fluctuate. When shares are redeemed
they may be worth more or less than their original cost. Investing in foreign
securities involves risks not ordinarily associated with investments in
domestic issues, including currency fluctuation, economic and political risks.
(b) From commencement of operations on November 1, 1993.
During the second quarter ended June 30, 1996, the Fund's total return was
3.8%. This compares to returns of 4.5% and 3.8% over the same period for the
Standard & Poor's 500 Index (S&P 500) and the Lipper Global Fund Index,
respectively. The S&P 500 is an unmanaged indicator of stock market
performance and the Lipper Global Fund Index covers 30 global open-end mutual
funds which may invest in a diversified group of industry sectors. For the 12
months ended June 30, 1996, the Fund posted a total return of 20.1% compared to
returns of 26.0% and 17.1% for the S&P 500 and Lipper Global Fund Index,
respectively.
<PAGE> 2
Since its inception on November 3, 1993 through June 30, 1996, the Fund
achieved a 26.0% total return, which equates to an average annual return of
9.1%. As of June 30, 1996, the Fund's shareholders numbered 19,987 and total
net assets were $126.4 million.
BARRON'S 75TH ANNIVERSARY ISSUE
BARRON'S asked our Chief Investment Officer, Mario J. Gabelli, to
discuss his investment themes in its 75th Special Anniversary Issue.
While these comments were written in mid-February, we believe they
are still valid today. Discussion of individual companies is not
necessarily reflective of the fund's entire portfolio.
GRAND SLAM HITTING
THE NEW INTERNATIONAL MIDDLE CLASS WILL BE TAKING
TO THE FRIENDLY SKIES, FOR BUSINESS AND PLEASURE.
BY MARIO GABELLI
[PHOTO OF MARIO GABELLI]
The ancient Greek dramatist Euripides said, "The best of seers is he who
guesses well." Each year since 1980, Barron's has given me the opportunity to
sit down with a distinguished group of good guessers at the annual Roundtable
and divine what the economy, the markets and some individual stocks would do in
the year ahead. Now, in honor of Barron's 75th Anniversary, I've been invited
to stick my neck out even further and discuss several investment themes that
will theoretically enrich readers over the next five years. Fair enough.
I will begin with the confession that over the past 20 years, our annual
macroeconomic and market forecasts haven't always been right. Fortunately for
our clients and Barron's readers, our investment methodology is not built upon
accurately predicting interest-rate trends or timing the market, but rather on
picking stocks, and many of our picks have fared quite well.
One reason is that we've had a good batting average identifying trends -
we call them catalysts - that have unlocked value in selected industry groups.
A catalyst can be a change in regulatory standards such as the original cable
television deregulation bill of 1984 that led us to lucrative investments in
cable stocks. It can be consolidation within an industry. The scramble for
filmed entertainment assets engendered by expanding distribution systems
throughout the 1980s and early 1990s inspired us to take substantial and
ultimately quite profitable positions in Warner Communications, MCA and
Paramount prior to their acquisitions by Time Inc., Matsushita and Viacom,
respectively.
Catalysts can also be corporate restructurings. The recent trend to help
realize shareholder value through the sale or spinoff of businesses has helped
us earn good returns from "Humpty Dumpty" companies as all the king's horses
and all the king's men help break conglomerates into pieces again. Among them
have been TENNECO, AMERICAN BRANDS, AMERICAN EXPRESS, ITT and, now, AT&T.
Over the next five years, the most powerful trend we see is the explosive
growth of the international marketplace for American goods and services. This
traces its roots to two major catalysts: the rejuvenation of American industry
spawned by a declining cost of capital and enormous productivity gains, and the
victory of global capitalism symbolized best by the crumbling of the Berlin
Wall. Good old-fashioned Yankee ingenuity has made us more than competitive
with Japan and Germany. We are now in a terrific position to conquer new
international economic frontiers.
With free-market economies evolving in China and the former Soviet bloc,
and the middle classes rapidly expanding in developing nations in Latin America
and the Pacific Rim, there will be 2.5 billion to three billion new consumers
by the turn of the century. How is this emerging international middle class
going to spend its money? If past is prologue - and we can learn something by
looking back at the economic evolution of the great American middle class - the
new international middle class
[PICTURE]
Photograph: Merry Alpern/Jim Lukoski for Barron's; Illustration: Jessie
Hartland for Barron's
- ------------------
Mario Gabelli, a regular member of Barron's Roundtable since 1980, is chairman
and chief investment officer of Gabelli Funds Inc.
2
<PAGE> 3
will upgrade their food consumption habits; if it is made available, they will
buy telephone service; they will spend money on entertainment, and they will
travel.
Investors of our persuasion - stockpickers, if you will - can't talk about
investment trends without naming some names. Unlike the Roundtable, where we
are constantly prodded both by Barron's and our colleagues to fill in the
fundamental blanks on individual stock selections, I won't be providing hard
data on the companies I mention in this article. Nor will I make predictions
about short-term earnings and cash flow. That said, consistent with our
Graham-and-Dodd-oriented value philosophy, we would like to own the businesses
named here for the long term.
It's Not Chickenfeed: Let's start in, of all places, Iowa. The American
grains farmer is the most productive in the world. Iowa is agriculturally
state-of the-art. Let me give you a hypothetical example. There are seven
ounces of grain needed to produce one ounce of meat at market. If chicken or
pork consumption in China were to increase by one ounce per capita, and Iowa
were to produce all the grain used to fatten these Chinese chickens and hogs,
on a gross national product basis, Iowa would be among the richest countries in
the world. This may be perceived as a silly example. But its purpose is to call
attention to the tremendous upside potential for American grain farmers and
vendors to those farmers. Agricultural equipment manufacturers like JOHN DEERE,
companies that move grains to shipping centers, like ARCHER-DANIELS-MIDLAND,
and irrigation-equipment makers like LINDSAY MANUFACTURING should all be
long-term beneficiaries of the increased role the American farmer will play in
feeding the world.
Dialing for Dollars: Once the new international consumer puts some more
meat on the table, what else would make his or her life better? Being able to
call friends and family on the telephone would be a big step forward. In fact,
you could argue that telecommunications is both the engine and the caboose in
the emergence of the international middle class. To compete on the global
stage, businesses in developing countries need healthy stock markets to attract
global capital. Modern telecommunications systems are a prerequisite. As
efficient telecommunications systems further enhance economic growth and expand
the middle class, the demand for more universal telephone service increases.
Here, we need to tip our hat to Craig McCaw's evolutionary theory of time and
space, which effectively jump-started the cellular telephone industry. And when
it comes to developing countries, it is wireless service that will help bring
telecommunications services at reasonable prices.
Arguably, telecommunications is the No. 1 global growth industry for the
next decade or more. Consequently, long-term investors will not have to be
terribly discriminating to earn pretty good returns in this sector. But rather
than take a scattershot approach, investors might maximize their returns by
focusing on those segments of the industry that will grow the fastest and the
dominant players therein. The big three U.S. long distance companies, AT&T, MCI
and SPRINT, are rapidly developing the strategic alliances with national and
local carriers around the world that should allow them to dominate the
international long-distance market. Telecommunications equipment manufacturers
like LUCENT, the spinoff from AT&T, and NORTHERN TELECOM will play a big role
in wiring the world. Suppliers of advanced cable equipment like SCIENTIFIC
ATLANTA also have terrific international growth prospects. On the wireless
side, cellular-phone makers like MOTOROLA and NOKIA should thrive. A special
mention should go to AIRTOUCH, which has done a terrific job winning
joint-venture cellular-telephone franchises throughout Europe. Two other
cellular investments worth considering are 360 COMMUNICATIONS, which is the
domestic cellular spinoff from Sprint, and Britain's VODAFONE.
If you favor a more focused "special situation" approach, the Canadian
telephone giant BCE should benefit when it sells off its substantial investment
in Northern Telecom and as Canadian deregulation catches up to the rest of the
world. On a per-capita basis, the Vancouver metropolitan area has the highest
concentration of expatriate Chinese in North America. This could prove to be a
great "gateway to China."
Global Eyeballs: No American products travel better than filmed
entertainment and pre-recorded music. Several years ago, the investor relations
people at TIME WARNER were kind enough to give us a tape of Warner cartoon
characters providing a global geography lesson dubbed in a dozen foreign
languages. We've used this tape at our annual client meeting to illustrate the
global reach of the American entertainment industry. There is simply no place
you can go in the world without American film being a staple of cinematics,
cable TV or broadcast entertainment. The same goes for music. Just look at the
convergence of the computer, telephone and cable television industries in the
U.S. Overseas opportunities beckon as well. In the past five years alone, the
number of satellite dishes in India has gone from 400,000 to 10 million. As the
distribution channels expand worldwide, the value of entertainment will
continue to increase.
With the consolidation we've already experienced in the filmed
entertainment industry, there are fewer ways to participate. Time Warner is a
dominant global company in both filmed entertainment and pre-recorded music.
Assuming the marriage with TURNER BROADCASTING is consummated, Time could
become an international cable TV powerhouse as well. The stock price has been
restrained by concerns about Time's debt, the unwinding of what has become an
acrimonious relationship with US WEST, and the uncertain prospects for Time
Warner's huge cable television operations. Investors are currently blind to the
forest through the trees on this one. In the long run, however, we are
confident the market will recognize Time Warner's pre-eminent global position
in entertainment software.
Other beneficiaries of this favorable long-term trend for entertainment
software producers and packagers also include Viacom - the world wants its MTV;
SEAGRAM, the new owner of MCA, and LIBERTY MEDIA, John Malone's combination of
TELE-COMMUNICATIONS INC.'S cable network investments.
Up and Away: Air traffic is tremendously sensitive to increases in
personal income. The new international middle class will be taking to the
friendly skies. They will fly for business, and they will fly for pleasure.
Over the next five years, you could probably make a lot of money investing in
international airline stocks. But it will be less complicated and perhaps just
as profitable investing in BOEING, which along with Europe's Airbus consortium
will build the foreign fleets to accommodate increasing air traffic abroad.
We are almost right at the bottom of a five-year down cycle in the
aircraft industry. Industry studies indicate that in the next 20 years, there
will be 12,000 new aircraft built to satisfy incremental global demand and
4,000 to replace aircraft that will be retired because they are too old or
fuel-inefficient or don't meet new noisecontrol requirements. That's 16,000 new
3
<PAGE> 4
airplanes to be built over the next two decades. Boeing, which is a
technological leader, will get the lion's share of orders.
Another option is to invest in vendors to Boeing. There are very few
pure plays in this arena, but companies deriving a material volume of revenues
from commercial aerospace include AMETEK, PRECISION CASTPARTS, MOOG, CRANE, SPS
TECHNOLOGIES, HONEYWELL and CURTISS-WRIGHT. SEQUA Corp., whose Chromalloy
division is a leader in jet engine maintenance and repair, would be a good
"aging of the existing fleet" play.
The Deal: Another global dynamic that isn't new, but is far from finished,
is strategic merger-and-acquisition activity. At the 1995 Roundtable, I said
there would be a ton of deals done in the year ahead. It worked out to be $458
billion in deals in the U.S. and $866 billion globally. I don't know that we
will see that kind of record volume this year, but you will see some big
numbers. Why? The world is awash in liquidity, rising equity markets make
stock a more valuable currency and, most importantly, it is still cheaper to
buy businesses on global stock markets than it is to build them from scratch.
How do you take advantage of this long-term trend? I am going to
unabashedly preach for my own church here. As Benjamin Graham and his successor
at Columbia, Roger Murray, instructed us, and as Warren Buffett has put so
profitably into practice, you approach stocks as if they were pieces of a
business you want to buy at a discount to what Graham called intrinsic value,
others call economic value, and what years ago was termed "private market
value."
How do you go about quantifying value? We believe free cash flow, defined
as earnings before interest, taxes and depreciation (EBITD), or a slight
variation, EBITDA, both minus the capital expenditures necessary to grow the
business, is the best barometer of a company's value. Most corporate
merger-and-acquisition people look at the very same thing. When the informed
industrialist is evaluating a business for purchase, he or she is not going to
put a lot of weight on stated book value. That's for accountants, not for
savvy buyers of businesses. They probably don't care much about net earnings.
Clever corporate managements can be creative in booking earnings. What that
informed industrialist wants to know is: How much cash is this business
throwing off today and how much is he going to have to invest in this business
to sustain or grow this stream of cash in the future?
There are other factors in determining a stock's private market value.
Cost of capital always affects a company's values. That's why stocks tend to
be valued lower when interest rates rise. Cash flow growth rates will alter
values, too. Just as growth-stock investors will pay a higher price-to-earnings
ratio for higher earnings growth, private-market-value investors will pay a
higher multiple of cash flow for faster cash-flow growth. Finally,
sophisticated business buyers will look beyond the balance sheet for hidden
assets - valuable land on the books at original cost or an overfunded pension
plan - as well as hidden liabilities, like unfunded health-care
responsibilities or potentially costly environmental problems.
By doing this kind of analysis of income statements and balance sheets,
and checking out all those little footnotes attached, and keeping an eye on the
prices businesses are being bought and sold at every day out there in the real
world, you can quantify the value of a business or group of businesses. You can
usually find fundamental bargains - stocks selling at substantial discounts to
private market value. Then you have to ask the subjective questions: Who might
want to own this company? Would management be receptive to a takeover proposal?
Are the target company's assets so unique that someone might pay well above
fair value?
If you can come up with some positive answers to questions like these, you
may well have found yourself a terrific takeover candidate.
Don't Expect Too Much: Lastly, some comments on the longer-term prospects
for equities. I'm not talking about what is going to happen to the market over
the next quarter or even the next several years. However, I do think investors
should have some perspective on what they can expect. The average annualized
return on equities over the last 15 years, as measured by the S&P 500, is
14.8%. That's almost 50% above the historical return on stocks on an annualized
basis. When you compound this out 10 years, the differential is staggering.
Will we see the same kind of returns from stocks over the next 15 years? I
wouldn't bet the ranch on it. Sooner or later, this roaring bull market will
end, either with a substantial correction or a bear market or, preferably, an
extended period of much more modest returns.
How should today's investor prepare for this? I would start by adjusting
expectations. When making financial planning assumptions, use conservative
return figures for equities, and save and invest accordingly. In other words,
if you are putting a given amount of dollars into equities and assuming that it
will compound at 15% a year over the next 10-20 years, you will likely find
your children's college fund or your retirement nest egg more than a little
short.
Secondly, you might want to look at alternative investment strategies.
Market-neutral disciplines like risk arbitrage, which is capable of delivering
low- to mid-double-digit annualized returns regardless of the direction of the
broad equities market, should be considered. This will be particularly
rewarding if what we have characterized as the third great wave of mergers
continues as long as we expect it to.
Finally, although one can play many global trends from the relative
comfort of the New York Stock Exchange, investors should internationalize their
portfolios. Twenty-five years ago, U.S. equities represented 66% of the
capitalization of the total global equities market. Today it is 38%. Twenty
years ago, only the most adventurous Americans would invest in places like
Spain or Italy. Today, there are billions of American dollars in emerging
markets in Latin America and the Pacific Rim. It has always been my inclination
to challenge the conventional wisdom. But I do think there is some legitimacy
to the idea that many foreign economies will grow faster than the U.S., and
that returns from foreign equities markets will trend higher than our own.
4
<PAGE> 5
OUR APPROACH
Our approach is multifaceted. We purchase companies that are attractively
valued relative to what we estimate a buyer would be willing to pay for the
entire company in a private transaction. When the gap between a company's
Private Market Value (PMV) and public market value widens, our risk/reward
parameters improve. To maximize returns, our decision process requires the
expectation of a trigger that will promote a reduction in this gap. But we
will not invest in just any "cheap" company. Our selection is based on "bottom
up" fundamental analysis, which requires strong cash flow and earnings power,
positive industry dynamics and, certainly not least, good management with a
track record of growing value for their shareholders.
THE PORTFOLIO
GLOBAL ALLOCATION
The chart at the right represents the Fund's holdings by geographic region
as of June 30, 1996. 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 - 6/30/96
<TABLE>
<S> <C>
UNITED STATES 62.9%
EUROPE 17.6%
ASIA/PACIFIC RIM 10.3%
LATIN AMERICA 9.6%
CANADA 7.4%
OTHER 2.2%
</TABLE>
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 Corp. (ATI - $28.25 - NYSE) is one of the premier
players in global wireless communications. Operating in attractive cellular
markets in the U.S. and overseas (including Germany, Japan, Portugal, Sweden,
Belgium, Italy, Spain and South Korea), the company is well-positioned to
participate in the worldwide expansion of wireless communications. There are
currently 80 million cellular customers worldwide, with half of those in the
U.S. Annual customer growth is 40% to 50%. To consolidate its cellular
position in the U.S., AirTouch has arranged to buy the 60% of Cellular
Communications Inc., it doesn't already own for a total of $1.65 billion.
AirTouch's PMV is estimated at $45 for 1996 and should increase 20% annually
through the year 2000.
Cable & Wireless, PLC (CWP - $19.75 - NYSE) is a United Kingdom based company
comprised of broad global telecommunications interests. These include 80% of
Mercury Communications, the primary competitor in the U.K. to British
Telecommunications (which is the "AT&T" of the U.K.), 58% of Hong Kong
Telecommunications, the dominant telecom service provider in Hong Kong, a U.S.
based long
5
<PAGE> 6
distance company and numerous other wired and wireless investments on a global
basis. Deducting CWP's interest in Hong Kong Tel at public market value, we
are paying about three times the EBDIT of CWP's other assets. We are attracted
to CWP based on its high rate of growth and reasonable stock market valuation.
Comcast Corporation (CMCSA - $18.375 - NASDAQ), pro-forma for previously
announced acquisitions, is the third largest cable company in the U.S. serving
approximately 4.3 million subscribers. The company owns a cellular telephone
business serving 8 million "POPs" in the high traffic middle Atlantic region
including parts of New Jersey, Pennsylvania and Delaware. In addition to its
controlling ownership of QVC, the cable TV retailer, Comcast recently added to
its programming investments by purchasing a controlling interest in the
Philadelphia 76ers, Philadelphia Flyers and two arenas. We estimate Comcast's
PMV to be about $29 per share.
NYNEX Corporation (NYN - $47.50 - NYSE) has agreed to be acquired by Bell
Atlantic to form a larger service "footprint" which will create economies of
scale. The combined companies should generate accelerated growth.
Internationally, the company is the second largest player in the U.K. cable
market. It has also established a significant presence in Asia, including
Thailand and China.
Tele-Communications, Inc. (TCOMA - $18.125 - NASDAQ), the largest cable TV
operator in the U.S., serving about 14 million subscribers, is guided by Dr.
John C. Malone - one of the most shareholder sensitive managers we have found.
Given that regulation has historically played a major role in the valuation of
cable properties, we believe that the recent passage of the Telecommunications
Act of 1996, combined with the current deregulatory climate in Congress, could
prove to be a significant catalyst for cable stocks. Strategically, TCOMA is a
well-positioned industry leader, from its telephony joint-venture with Sprint
to its innovative Internet access business, dubbed "@ Home", to its 80%
ownership of Tele-Communications International.
Telecom Italia (TELI.MA - $2.15 - Milan), formerly SIP (Societa Italiana per L'
Esercizio delle Telecomunicazioni p.a.), completed the first phase of the
restructuring process in the Italian telecommunications sector. The company
now provides basic local telephone service to almost 25 million access lines,
domestic and international long distance service. Its cellular service to more
than four million subscribers was spun off to shareholders a year ago. Telecom
Italia is currently undervalued, selling at less than three times EBITDA.
Telecomunicacoes Brasileiras SA (Telebras) (TBR - $69.625 - NYSE) is the
Brazilian government-controlled monopoly telecommunications holding company
consisting of 28 subsidiaries serving 13.3 million telephone lines and 1.5
million cellular customers in a country with a population of 160 million. The
penetration rate is only 8.4% for telephone and 1% for cellular. The stock is
attractively valued at less than four times our estimate of 1996 cash flow.
Future opportunities include the prospects of privatization, strong line growth
and improvements in efficiency. The company is benefiting from an improved
rate structure which allows the company to recoup inflation-related cost
increases on a more consistent basis.
Telekom Malaysia Berhad (MYTEF - $8.90 - Kuala Lumpur), the second largest
company on the Kuala Lumpur Stock Exchange, is the only provider of domestic
and international fixed wire telecommunication
6
<PAGE> 7
services in Malaysia. The company's subsidiary, Usha Martin Industries, has
received licensing from Calcutta, India to begin offering its digital-based
mobile cellular services. The company has subsidiaries involved in value-added
networks and multimedia communications. We expect Telekom Malaysia's growth to
continue as demand for telecom services in the ASEAN continues to grow.
Telephone and Data Systems, Inc. (TDS - $45.00 - ASE) is one of our favorite
long-term investments. Management is smart and value-creation driven (as
opposed to earnings per share driven). TDS is a domestic provider of local
telephone service to about 425,000 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 25% in 1995, driven mainly by
internal growth in cellular telephone. Cellular telephone subscribers grew by
almost 70% to 710,000 at year-end 1995. We expect strong growth at TDS to
result in a private market value of $160 per share by 2000 with earnings of
$4.30 per share. TDS has been active in the PCS auctions and was the high
bidder in eight markets with a combined population of 28 million people.
MINIMUM INITIAL INVESTMENT - $1,000
Effective August 12, 1996 The Gabelli Global Telecommunications Fund
minimum initial investment is $1,000 for all accounts. There are no subsequent
investment minimums. No initial minimum is required for those establishing an
Automatic Investment Plan. The Gabelli Global Telecommunications Fund and many
of our other Funds are available through the no-transaction fee programs at
many major discount brokerage firms.
INTERNET
You can now visit us on the Internet. Our home page at
http://www.gabelli.com contains information about Gabelli Funds, Inc., the
Gabelli Mutual Funds, quarterly reports, closing prices, IRAs, 401(k)s and
other current news. You can also send us e-mail at [email protected].
IN CONCLUSION
Returns from U.S. telecommunications stocks have been restrained as
investors digest all the implications of complex regulatory change.
International telecommunications companies have suffered from sluggish
economies (Europe), political uncertainty (China/Hong Kong), and disruptive
currency fluctuations (Latin America).
These factors do not diminish our enthusiasm for what we believe will be
one of the most explosive growth industries over the next decade. Driven by
deregulation, new technologies, and the global demand for modern
telecommunications systems, the industry presents tremendous investment
opportunity. These opportunities will be more fully recognized as the new
regulatory framework in the U.S. evolves and as international economies gain
momentum.
7
<PAGE> 8
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 1996.
Sincerely,
/s/ MARIO J. GABELLI
MARIO J. GABELLI, CFA MARC J. GABELLI
President and Portfolio Manager Associate Portfolio Manager
IVAN ARTEAGA, CPA
Associate Portfolio Manager
August 1, 1996
TOP TEN HOLDINGS
JUNE 30, 1996
Telephone & Data Systems, Inc. Comcast Corporation
Telefonica de Espana Telecomunicacoes Brasileiras S.A.
Tele-Communications, Inc. Telecom Italia Mobile SpA
Cable & Wireless plc AirTouch Communications Inc.
NYNEX Corporation Telekom Malaysia Berhad
NOTE: The views expressed in this report reflect those of the portfolio
manager only through the end of the period of this report as stated on the
cover. The manager's views are subject to change at any time based on market
and other conditions.
8
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THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS -- JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES COST VALUE
- ---------- ------------ -------------
<C> <S> <C> <C>
COMMON STOCKS -- 92.48%
ALTERNATIVE TELECOMMUNICATION SERVICE
PROVIDERS -- 2.87%
500 Bouygues Group.......... $ 58,707 $ 55,717
20,000 GST Telecommunications,
Inc.+................. 132,244 262,500
15,000 Intelcom Group+......... 211,500 375,000
1,000 Intermedia
Communications of
Florida, Inc.+........ 11,540 32,250
2,500 Mannesmann AG........... 819,702 860,144
50,000 MFS Communications
Company, Inc.+........ 666,196 1,881,250
3,000 Veba AG................. 126,255 159,357
------------ -------------
2,026,144 3,626,218
------------ -------------
AVIATION: PARTS AND ACCESSORIES -- 1.43%
30,000 General Motors
Corporation Cl. H..... 1,217,313 1,803,750
------------ -------------
BROADCASTING -- 0.12%
1,000 British Sky Broadcasting
Group ADR............. 36,400 40,625
3,000 U.S. Satellite
Broadcasting Co. ..... 87,040 113,250
------------ -------------
123,440 153,875
------------ -------------
CABLE -- 10.54%
54,000 Adelphia Communications
Corporation Cl. A+.... 602,018 405,000
34,000 Bell Cablemedia plc
ADR+.................. 575,915 569,500
25,000 Cablevision Systems
Corporation Cl. A+.... 1,301,259 1,156,250
65,000 Century Communications
Corporation Cl. A+.... 565,505 552,500
135,000 Comcast Corporation
Cl. A................. 2,122,173 2,480,625
42,000 Comcast U.K. Cable
Partners Limited+..... 630,000 535,500
10,000 General Cable
Corporation plc
ADR+.................. 146,775 153,750
52,000 International CableTel
Incorporated+......... 822,675 1,534,000
18,000 NYNEX CableComms Group
plc ADR+.............. 392,580 292,500
100,000 Tele-Communications,
Inc. Cl. A+........... 1,641,812 1,812,500
36,250 Tele-Communications,
Inc./ Liberty Media
Group Cl. A+.......... 822,183 960,625
<CAPTION>
SHARES COST VALUE
- ---------- ------------ -------------
<C> <S> <C> <C>
5,000 Telewest Communications
plc ADR+.............. $ 121,375 $ 124,688
90,000 United International
Holdings Inc. Cl.
A+.................... 1,368,219 1,237,500
75,000 US WEST Media Group+.... 1,261,203 1,368,750
7,500 Videotron Holdings plc
ADR+.................. 113,299 139,688
------------ -------------
12,486,991 13,323,376
------------ -------------
ELECTRICAL EQUIPMENT -- 0.18%
5,000 General Instrument
Corporation........... 132,702 144,375
400 Omnipoint Corporation... 6,400 10,425
5,000 Scientific-Atlanta,
Inc. ................. 90,558 77,500
------------ -------------
229,660 232,300
------------ -------------
ENTERTAINMENT -- 1.26%
15,000 Lodgenet Entertainment
Corporation+.......... 112,132 206,250
4,000 Metromedia International
Group Inc. ........... 44,000 49,000
7,000 News Corporation Limited
ADR................... 163,100 164,500
30,000 Time Warner Inc. ....... 1,159,125 1,177,500
------------ -------------
1,478,357 1,597,250
------------ -------------
LONG DISTANCE TELEPHONE COMPANIES -- 7.99%
25,000 AT&T Corp............... 1,244,294 1,550,000
25,000 Call-Net Enterprises
Inc.+................. 236,025 296,921
25,000 Cam-Net Communications
Network Inc.+......... 139,153 44,531
165 DDI Corporation......... 973,198 1,441,206
5,000 Fonorola Inc.+.......... 21,782 46,004
148,000 General Communication
Inc. Cl. A+........... 673,625 1,184,000
6,000 Kokusai Denshin......... 524,459 635,907
24,000 LCI International
Inc.+................. 214,263 753,000
30,000 MCI Communications
Corporation........... 711,275 768,750
60,000 Petersburg Long Distance
Inc.+................. 375,000 491,250
12,000 Portugal Telecom S.A.
ADR+.................. 233,785 315,000
40,000 Sprint Corporation...... 1,089,059 1,680,000
16,000 WorldCom Inc.+.......... 294,020 886,000
------------ -------------
6,729,938 10,092,569
------------ -------------
PUBLISHING -- 0.50%
17,000 Media General, Inc. Cl.
A..................... 395,350 633,250
------------ -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 10
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES COST VALUE
- ---------- ------------ -------------
<C> <S> <C> <C>
COMMON STOCKS (continued)
REGIONAL/LOCAL TELEPHONE SERVICES -- 16.34%
34,000 ALLTEL Corporation...... $ 956,525 $ 1,045,500
24,000 Ameritech Corporation... 997,075 1,425,000
38,000 Atlantic Tele-Network
Inc.+................. 357,063 912,000
18,000 Bell Atlantic
Corporation........... 968,992 1,147,500
40,000 BellSouth Corporation... 1,187,988 1,695,000
9,000 Bruncor, Inc. .......... 160,442 170,894
32,000 Cincinnati Bell Inc. ... 541,350 1,668,000
62,000 C-TEC Corporation Cl.
B..................... 1,748,221 1,821,250
1,000 First Pacific Company
Ltd. Spons. ADR....... 35,875 76,868
8,000 Frontier Corporation.... 171,879 245,000
50,000 GTE Corporation......... 1,745,125 2,237,500
15,000 Island Telephone Company
Limited............... 282,503 250,183
44,000 Lincoln
Telecommunications
Company............... 682,020 720,500
19,000 Maritime Telegraph and
Telephone Company
Limited............... 330,491 293,915
12,000 NewTel Enterprises
Limited............... 207,133 193,548
58,000 NYNEX Corporation....... 2,143,937 2,755,000
12,000 Pacific Telecom,
Inc. ................. 357,168 360,000
10,000 Pacific Telesis Group
Inc. ................. 318,938 337,500
3,000 Peoples Telephone
Company Inc.+......... 19,000 8,625
10,000 Quebec-Telephone........ 153,660 156,524
25,000 SBC Communications,
Inc. ................. 995,807 1,231,250
23,000 Southern New England
Telecommunications
Corporation........... 747,100 966,000
400 Teleport Communications
Group Inc. Cl. A...... 6,400 7,650
10,000 Telus Corporation....... 129,540 134,897
25,000 US WEST Communications
Group................. 590,972 796,875
------------ -------------
15,835,204 20,656,979
------------ -------------
SOFTWARE -- 0.01%
1,600 NetCom ASA.............. 22,185 17,097
------------ -------------
TELECOMMUNICATIONS (OTHER) -- 0.20%
2,500 Great Nordic Stores..... 215,022 221,427
2,000 United Communication
Industry.............. 18,341 26,320
------------ -------------
233,363 247,747
------------ -------------
TELEPHONE EQUIPMENT -- 2.71%
80,000 Champion Technology
Holdings ADR.......... $ 133,658 $ 47,024
4,400 Ericsson (L.M.)
Telephone Company
ADR................... 60,972 94,600
30,000 Lucent Technologies
Inc. ................. 918,500 1,136,250
2,500 Motorola, Inc. ......... 113,969 157,188
25,000 Northern Telecom
Limited............... 861,000 1,359,375
1,000 Phillips Electronics
N.V. ................. 30,050 32,625
2,000 Thyssen AG+............. 367,787 365,725
77,000 Time Engineering
Berhad................ 252,516 209,860
38,500 Time Engineering
Berhad -- Rights for
Shares................ 0 18,517
------------ -------------
2,738,452 3,421,164
------------ -------------
TELEPHONE NETWORKS -- 28.65%
110,000 BC TELECOM Inc. ........ 1,995,770 2,141,129
45,000 BCE Inc. ............... 1,540,812 1,777,500
3,000 BHI Corporation......... 48,250 43,875
19,000 British
Telecommunications plc
ADR................... 1,297,575 1,021,250
160,000 Cable & Wireless plc
ADR................... 3,471,713 3,160,000
20,000 Compania Telefonos Chile
S.A. ADR.............. 1,575,797 1,962,500
30,000 CP Pokphand Spons.
ADR................... 245,000 297,945
525,100 CPT Telefonica del Peru
Cl. B................. 750,380 1,056,211
3,430 Hellenic
Telecommunications
Organization S.A.
(OTE)................. 56,776 56,886
15,000 Hong Kong
Telecommunications
Ltd. ADR.............. 294,183 270,000
1,000 Hungarian Telephone &
Cable Corporation+.... 14,882 12,000
40 Japan Telecom Co.
Ltd. ................. 980,645 888,077
167 Nippon Telegraph &
Telephone
Corporation........... 1,216,226 1,238,958
5,000 Nippon Telegraph &
Telephone Corporation
ADR................... 215,013 182,500
50,000 Nordictel Holdings
AB+................... 460,320 722,674
1,500,000 Orient Telecom &
Technology Holdings
Limited+.............. 908,905 678,295
800 Pakistan
Telecommunications
GDR+.................. 98,165 94,400
27,500 Philippine Long Distance
Telephone Company..... 1,854,125 1,598,438
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 11
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES COST VALUE
- ---------- ------------ -------------
<C> <S> <C> <C>
COMMON STOCKS (continued)
TELEPHONE NETWORKS (CONTINUED)
2,000 PT Indonesia Satellite
ADR................... $ 68,225 $ 67,000
8,000 PT Telekomunikasi
Indonesia............. 155,960 238,000
33,000 Royal PTT Nederland NV
ADR(a)................ 969,320 1,245,750
20,000 Singapore
Telecommunications
Limited............... 48,208 53,296
30,000 STET SpA -- Societa
Financiaria Telfonica
SpA ADR............... 713,058 1,027,500
8,000 Tele Danmark A/S........ 216,693 176,597
8,000 Tele Danmark A/S ADR.... 215,400 203,000
18,000 Telecom Argentina
Stet -- France Telecom
S.A. ADR.............. 848,848 843,750
2,000 Telecom Asia ADR+....... 50,620 35,000
34,000 Telecom Corporation of
New Zealand Ltd.
ADR................... 1,650,825 2,269,500
350,000 Telecom Italia SpA+..... 457,508 751,548
42,000 Telecomunicacoes
Brasileiras (Telebras)
S.A. Spons. ADR....... 1,267,785 2,924,250
3,000,000 Telecomunicacoes de Rio
de Janeiro+........... 203,464 339,173
938,570 Telecomunicacoes de Sao
Paulo SA (Telesp)..... 141,797 165,465
4,000,000 Telecommunications of
Jamaica............... 406,750 320,920
45,000 Telefonica de Argentina
S.A. ADR.............. 1,249,274 1,333,125
65,000 Telefonica de Espana
ADR................... 2,674,449 3,583,125
50,000 Telefonos De Mexico S.A.
Cl. L ADR............. 1,945,500 1,675,000
190,000 Telekom Malaysia
Berhad................ 1,457,048 1,690,581
8,700 Thai Telephone & Telecom
GDR+.................. 103,902 56,028
------------ -------------
31,869,171 36,201,246
------------ -------------
WIRELESS COMMUNICATIONS -- 19.68%
14,666 360 Communications
Company............... 265,272 351,999
40,000 ABC Communications
Holdings Ltd. ........ 20,301 8,733
100,000 AirTouch Communications
Inc.+................. 2,304,361 2,825,000
<CAPTION>
SHARES COST VALUE
- ---------- ------------ -------------
<C> <S> <C> <C>
1,000 American Mobile
Satellite
Corporation+.......... $ 18,925 $ 15,500
72,000 American Paging,
Incorporated+......... 515,426 535,500
5,000 American Portable
Telephone Inc. ....... 74,809 53,750
100 Asia Satellite
Telcommunications
Holdings Ltd. ........ 2,583 2,975
14,200 Associated Group, Inc.
Cl. A+................ 308,905 429,550
16,000 Associated Group, Inc.
Cl. B+................ 339,440 478,000
14,000 BCE Mobile
Communications
Inc.+................. 461,860 455,205
11,000 Cellular Communications,
Inc. Cl. A+........... 501,665 584,375
20,000 Cellular Communications
International Inc.+... 332,622 675,000
1,000 Cellular Communications
of Puerto Rico,
Inc.+................. 21,915 32,500
110,000 Centennial Cellular
Corp.
Cl. A+................ 1,806,170 1,856,250
20,000 Century Telephone
Enterprises, Inc. .... 553,750 637,500
2,000 Commnet Cellular
Inc.+................. 45,978 60,000
50,000 COMSAT Corporation...... 1,271,480 1,300,000
1,200 Echostar Communications
Corporation Cl. A..... 41,048 33,900
5,000 Globalstar
Telecommunications
Limited+.............. 72,765 221,250
55,000 Grupo Iusacell S.A. ADR
Ser. D+............... 712,426 481,250
15,000 Himachal(a)+............ 131,850 63,750
24,000 Jasmine
International(a)...... 117,135 86,052
20,000 Loral Space &
Communications
Ltd. ................. 242,500 272,500
5,300 Matrix
Telecommunications
Ltd.+................. 8,992 9,802
1,000 Metrocall, Inc.+........ 16,915 11,125
15,000 Mobile Telecommunication
Technologies Corp.+... 263,355 219,375
12,154 NEXTEL Communications,
Inc. Cl. A+........... 158,251 231,689
8,500 PanAmSat Corporation+... 155,990 246,500
8,000 Pittencrieff
Communications,
Inc.+................. 41,180 53,250
37,500 PriCellular
Corporation+.......... 219,875 454,688
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE> 12
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES COST VALUE
- ---------- ------------ -------------
<C> <S> <C> <C>
COMMON STOCKS (continued)
WIRELESS COMMUNICATIONS (CONTINUED)
42,000 Rogers Cantel Mobile
Communications Cl.
B+.................... $ 994,761 $ 981,750
10,000 Rogers Communications,
Inc. Cl. B............ 101,750 92,500
4,000 Rural Cellular Corp. Cl.
A..................... 40,000 51,000
73,821 Securicor Group plc..... 193,311 300,367
224,000 Technology Resources
Industries+........... 837,129 781,082
1,300,000 Telecom Italia Mobile
SpA+.................. 1,437,598 2,901,597
25,000 Tele-Communications
International,
Inc.+................. 462,325 440,625
4,000 Teleglobe Inc. ......... 60,486 63,196
85,000 Telephone and Data
Systems, Inc. ........ 3,692,368 3,825,000
22,000 Total Access
Communications plc+... 138,875 187,000
3,000 United States Cellular
Corporation+.......... 90,900 93,000
1,500 Vanguard Cellular
Systems, Inc. Cl.
A+.................... 29,040 32,625
66,000 Vodafone Group plc
ADR................... 1,841,213 2,433,750
------------ -------------
20,947,500 24,870,460
------------ -------------
TOTAL COMMON STOCKS..... 96,333,068 116,877,281
------------ -------------
CONVERTIBLE PREFERRED STOCKS -- 2.28%
CABLE -- 0.98%
20,000 Tele-Communications,
Inc. Cv. Pfd. Ser.
E..................... 1,420,021 1,235,000
------------ -------------
LONG DISTANCE TELEPHONE COMPANIES -- 0.56%
10,000 Philippine Long Distance
Telephone Company
7.00% Cv. Pfd. Ser.
III................... 500,000 545,000
4,000 Sprint Corporation 8.25%
Cv. Pfd. ............. 127,500 161,000
------------ -------------
627,500 706,000
------------ -------------
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES COST VALUE
- ---------- ------------ -------------
<C> <S> <C> <C>
WIRELESS COMMUNICATIONS -- 0.74%
9,700 LCI International, Inc.
5.00% Cv. Pfd......... $ 279,018 $ 809,950
5,000 Mobile Telecommunication
Technologies Corp.
$2.25 Cv. Pfd.(a) .... 141,250 125,000
------------ -------------
420,268 934,950
------------ -------------
TOTAL CONVERTIBLE
PREFERRED STOCKS...... 2,467,789 2,875,950
------------ -------------
CONVERTIBLE CORPORATE BONDS -- 1.69%
TELEPHONE NETWORKS -- 0.83%
$1,000,000 Telekom Malaysia
Berhad Sub. Deb.
Cv. 4.00%,
10/03/04(a)....... 1,000,423 1,053,750
------------ ------------
WIRELESS COMMUNICATIONS -- 0.86%
300,000,000(b) Softe SA Unsub. Deb.
Cv. 4.25%,
07/30/98.......... 193,741 298,876
250,000 Technology Resources
Industries Sub.
Deb. Cv. 2.75%,
11/28/04(a)....... 250,000 280,625
500,000 Tele 2000 Sub. Deb.
Cv. 9.75%,
04/14/97(a)....... 500,000 502,500
------------ ------------
943,741 1,082,001
------------ ------------
TOTAL CONVERTIBLE
CORPORATE BONDS... 1,944,164 2,135,751
------------ ------------
PREFERRED STOCKS -- 0.06%
TELEPHONE EQUIPMENT -- 0.06%
2,000 Nokia Group AB
Preference........ 76,675 74,000
------------ ------------
TOTAL PREFERRED
STOCKS............ 76,675 74,000
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE> 13
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS -- 2.55%
$3,250,000 U.S. Treasury Bills,
4.80% to 4.95%
Due 08/08/96
to 08/15/96....... $ 3,230,806 $ 3,230,806
------------ ------------
TOTAL U.S.
GOVERNMENT
OBLIGATIONS....... 3,230,806 3,230,806
------------ ------------
TOTAL INVESTMENTS --
99.06%............ $104,052,502 125,193,788
===========
CASH AND OTHER ASSETS,
IN EXCESS OF
LIABILITIES -- 0.94%............ 1,182,394
------------
NET ASSETS -- 100.00%
(10,392,613 shares
outstanding).................... $126,376,182
===========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE................. $12.16
=====
</TABLE>
- ---------------
<TABLE>
<S> <C>
+ -- Non-income producing security
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
(a) -- Security exempt from registration under
Rule 144A of the Securities Act of 1933.
These securities may be resold in
transactions exempt from registration,
normally to qualified institutional
buyers. At June 30, 1996, Rule 144A
securities amounted to $3,357,427 or 2.7%
of net assets.
(b) -- Principal amount denoted in Italian Lira.
</TABLE>
For Federal income tax purposes:
<TABLE>
<S> <C>
Aggregate cost............... $104,052,502
===========
Gross unrealized
appreciation............... $ 23,934,551
Gross unrealized
depreciation............... (2,793,265)
------------
Net unrealized
appreciation............... $ 21,141,286
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE> 14
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1996
- ----------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(Cost $104,052,502).................... $ 125,193,788
Cash..................................... 246,363
Receivable for Fund shares sold.......... 1,025,968
Dividends and interest receivable........ 370,569
Deferred organizational expenses......... 45,042
-------------
TOTAL ASSETS........................... 126,881,730
-------------
LIABILITIES:
Payable to Advisor....................... 102,968
Payable for distribution fees............ 24,966
Payable for investments purchased........ 53,840
Payable for Fund shares redeemed......... 114,502
Other accrued expenses................... 209,272
-------------
TOTAL LIABILITIES...................... 505,548
-------------
NET ASSETS (applicable to 10,392,613
shares outstanding).................. $ 126,376,182
=============
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE.................................. $ 12.16
=============
NET ASSETS CONSIST OF:
Capital Stock, at par value.............. $ 10,393
Additional paid-in-capital............... 102,765,776
Distributions in excess of net realized
gains.................................. (84,361)
Accumulated net investment income........ 2,542,998
Net unrealized appreciation on
investments and foreign currency
transactions........................... 21,141,376
-------------
NET ASSETS............................. $ 126,376,182
=============
</TABLE>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1996
- ----------------------------------------------------------
<TABLE>
<S> <C>
INCOME:
Dividends (net of foreign taxes of
$117,760)............................... $ 1,301,369
Interest.................................. 138,769
------------
Total Income............................ 1,440,138
------------
EXPENSES:
Investment Advisory....................... 620,716
Shareholder services...................... 241,718
Distribution expenses..................... 155,136
Custodian................................. 27,694
Printing and mailing...................... 22,739
Legal and audit........................... 20,902
Amortization of organization expenses..... 7,749
Registration.............................. 4,918
Directors' fees and expenses.............. 2,869
Miscellaneous............................. 9,989
------------
Total expenses.......................... 1,114,430
------------
NET INVESTMENT INCOME....................... 325,708
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on investments.......... 2,542,998
Net change in unrealized appreciation..... 8,233,844
------------
Net gain on investments................. 10,776,842
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................ $ 11,102,550
===========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1996 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995
------------- -----------------
<S> <C> <C>
Increase (decrease) in Net Assets:
Net Investment Income............................................................... $ 325,708 $ 686,669
Net realized gain on investments.................................................... 2,542,998 914,207
Net change in unrealized appreciation............................................... 8,233,844 17,336,566
------------- -----------------
Net increase in net assets resulting from operations................................ 11,102,550 18,937,442
------------- -----------------
Distributions from net investment income............................................ -- (696,292)
Distributions from net realized gains............................................... -- (1,283,788)
------------- -----------------
-- (1,980,080)
------------- -----------------
Share transactions -- net........................................................... (7,571,067) (31,843,478)
------------- -----------------
Net increase (decrease) in net assets........................................... 3,531,483 (14,886,116)
NET ASSETS:
Beginning of period................................................................. 122,844,699 137,730,815
------------- -----------------
End of period....................................................................... $ 126,376,182 $ 122,844,699
============= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE> 15
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES. The primary investment objective of The
Gabelli Global Telecommunications Fund (the "Fund") is capital appreciation. 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 preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund:
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 their 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.
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
15
<PAGE> 16
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
addition, the Fund could be exposed to risks if the counterparties to the
contracts are unable to meet the terms of their contracts.
At June 30, 1996, the Fund had no forward foreign currency contracts open.
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 or 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 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 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% of the 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:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 1,012,595 $ 11,938,291 2,039,537 $ 21,055,961
Shares issued upon reinvestment of dividends................... -- -- 170,930 1,900,751
Shares redeemed................................................ (1,666,926) (19,529,519) (5,321,535) (54,800,190)
----------- ------------- ----------- -------------
Net decrease................................................... (654,331) $ (7,591,228) (3,111,068) $ (31,843,478)
========== ============= ========== =============
</TABLE>
3. PURCHASES AND SALES OF SECURITIES. Purchases and sales of securities for the
six months ended June 30, 1996, other than U.S. government obligations and
short-term securities, aggregated $6,284,918 and $10,854,991, 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 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's value are
recorded as unrealized gains or losses. The Fund recognizes a realized
16
<PAGE> 17
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
gain or loss when the contract is closed. The net unrealized
appreciation/depreciation is shown in the financial statements. During the six
months ended June 30, 1996, the Fund did not engage in any futures contracts.
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 its affiliates. 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 of the Fund's average daily net assets (excluding taxes, interest,
distribution expenses and extraordinary items). No such reimbursement was
required during the six months ended June 30, 1996.
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.
6. DISTRIBUTION PLAN. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") under Section 12(b) if the Investment Company Act of 1940 and
Rule 12b-1 thereunder. For the six months ended June 30, 1996, the Fund has
incurred distribution costs of $155,136, or 0.25% of average net assets, the
annual limitation under the Plan. The Board of Directors has approved that
distribution costs incurred by Gabelli & Company, Inc., totaling $411,120, which
are in excess of the 0.25% limitation, may be recovered from the Fund in future
periods, subject to such limitation.
7. TRANSACTIONS WITH AFFILIATES. During the six months ended June 30, 1996, the
Fund paid brokerage commissions of $8,825 to Gabelli & Company, Inc., an
affiliate of the Advisor.
17
<PAGE> 18
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED NOVEMBER 1, 1993
ENDED DECEMBER 31, (COMMENCEMENT OF
JUNE 1996 -------------------- OPERATIONS) THROUGH
(UNAUDITED) 1995 1994 DECEMBER 31, 1993
----------- -------- -------- -------------------
<S> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of period................................ $ 11.12 $ 9.73 $ 10.20 $ 10.00
----------- -------- -------- --------
Net investment income............................................... 0.03 0.064 0.065 0.01
Net realized and unrealized gain (loss) on investments.............. 1.01 1.508 (0.440) 0.29
----------- -------- -------- --------
Total from investment operations.................................... 1.04 1.572 (0.375) 0.30
----------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income.............................. -- (0.064) (0.065) (0.01)
Distributions from net realized gain on investments............... -- (0.118) (0.030) (0.09)
----------- -------- -------- --------
Total Distributions............................................... -- (0.182) (0.095) (0.10)
----------- -------- -------- --------
Net asset value, end of period...................................... $ 12.16 $ 11.12 $ 9.73 $ 10.20
=========== ======== ======== =============
Total return(a)..................................................... 9.4% 16.2% (3.7)% 3.0%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands).......................... $ 126,376 $122,865 $137,731 $45,290
Ratio of operating expenses to average net assets................. 1.80%(b) 1.75% 1.80% 2.64%(b)
Ratio of net investment income to average net assets.............. 0.52%(b) 0.54% 0.74% 1.28%(b)
Portfolio turnover................................................ 5% 24% 14% 0%
Average Commission Rate........................................... $ 0.0524 -- -- --
</TABLE>
- ---------------
(a) Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of dividends. Total return for the period of less
than one year is not annualized.
(b) Annualized.
18
<PAGE> 19
GABELLI FAMILY OF FUNDS
Distributed by Gabelli & Company, Inc.
One Corporate Center, Rye, NY 10580-1435
GABELLI ASSET FUND
Invests in a diversified portfolio of companies selling below their private
market value. The Fund's primary objective is to seek growth of capital.
(No-load)
Portfolio Manager: Mario J. Gabelli, CFA
GABELLI GROWTH FUND
Invests in a diversified portfolio of common stocks that have favorable, yet
undervalued, prospects for earnings growth. The Fund's primary objective is to
seek capital appreciation by employing an earnings-driven investment approach.
(No-load)
Portfolio Manager: Howard F. Ward, CFA
GABELLI VALUE FUND
Invests in a concentrated portfolio of securities of companies which are
selling below their private market value. The Fund's primary objective is
long-term capital appreciation. $250 initial minimum for IRAs.
Portfolio Manager: Mario J. Gabelli, CFA
Max. Sales charge: 5 1/2%
GABELLI SMALL CAP GROWTH FUND
Invests primarily in equity securities of smaller companies (companies with a
total market capitalization of less than $500 million) which are believed
likely to have rapid growth in revenues and earnings. The Fund's primary
objective is to seek capital appreciation. (No-load)
Portfolio Manager: Mario J. Gabelli, CFA
Max. Sales charge: 4 1/2%
GABELLI EQUITY INCOME FUND
Invests primarily in a portfolio of income producing equity securities. Pays
quarterly dividends. The Fund's primary objective is to seek a high level of
total return. (No-load)
Portfolio Manager: Mario J. Gabelli, CFA
Max. Sales charge: 4 1/2%
GABELLI/WESTWOOD FUNDS
Three investment portfolios, designed to pursue a variety of investment
objectives: Equity Fund seeks capital appreciation, Balanced Fund seeks income
and growth, and Intermediate Bond Fund seeks current income. (No-load)
Portfolio Managers: Susan Byrne & Pat Fraze
GABELLI GLOBAL SERIES
GABELLI GLOBAL TELECOMMUNICATIONS FUND
Invests in telecommunications companies throughout the world. Targets
undervalued companies with strong earnings per share and cash flow
dynamics. The Fund's primary objective is to seek capital appreciation.
(No-load)
Team Manager: Mario J. Gabelli, CFA
GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
Invests principally in bonds and preferred stocks which are convertible
into common stock of foreign and domestic companies. The Fund's primary
objective is to seek a high level of total return through a combination of
current income and capital appreciation. (No-load)
Portfolio Manager: Hart Woodson
GABELLI GLOBAL INTERACTIVE COUCH POTATO(R) FUND
Invests in companies involved in communications, creativity and copyright
throughout the world. The Fund will also invest in companies
participating in emerging technological advances in interactive services
and products. The Fund's primary objective is to seek capital
appreciation. (No-load)
Portfolio Manager: Mario J. Gabelli, CFA
GABELLI GOLD FUND
Invests in a global portfolio of equity securities of gold mining and related
companies. The Fund's primary objective is to seek capital appreciation.
Investment in gold stocks is considered speculative and is affected by a
variety of worldwide economic, financial and political factors. (No-load)
Portfolio Manager: Caesar Bryan
GABELLI INTERNATIONAL GROWTH FUND
Invests in a diversified portfolio of equity securities of companies outside of
the U.S. Seeks to achieve international diversification and capital
appreciation, and to serve as a complement to a domestic investment portfolio.
(No-load)
Portfolio Manager: Caesar Bryan
The five funds above invest in foreign securities which involves risks not
ordinarily associated with investments in domestic issues, including currency
fluctuation, economic and political risks.
GABELLI U.S. TREASURY MONEY MARKET FUND
Invests exclusively in short-term U.S. Treasury securities. The Fund's primary
objective is to provide high current income consistent with the preservation of
principal and liquidity. Features low expenses, free checkwriting, telephone
exchange and redemption privileges.
Portfolio Manager: Ronald Eaker
To request a prospectus, call 1-800-GABELLI (1-800-422-3554)
Or, visit our Internet homepage at: http://www.gabelli.com
The prospectus(es) contain more complete information, including fees and
expenses, and should be read carefully prior to investing.
<PAGE> 20
Gabelli Global Series Funds, Inc.
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
FAX: 1-914-921-5118
HTTP://WWW.GABELLI.COM
E-MAIL: [email protected]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 P.M.)
BOARD OF DIRECTORS
Mario J. Gabelli, CFA Karl Otto Pohl
Chairman and Chief Former President
Investment Officer Deutsche Bundesbank
Gabelli Funds, Inc.
Felix J. Christiana Werner J. Roeder, MD
Former Senior Vice President Director of Surgery
Dollar Dry Dock Savings Bank Lawrence Hospital
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
Mario J. Gabelli, CFA Marc J. Gabelli
President Associate Portfolio Manager
Bruce N. Alpert Ivan Arteaga, CPA
Vice President and Treasurer Associate Portfolio Manager
James E. McKee
Secretary
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
THE
GABELLI
GLOBAL
TELECOMMUNICATIONS
FUND
SEMI-ANNUAL REPORT
JUNE 30, 1996
