<PAGE> 1
GABELLI GLOBAL SERIES FUNDS, INC.
One Corporate Center
Rye, New York 10580 - 1434
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
ANNUAL REPORT - 1996
TO OUR SHAREHOLDERS:
For the fourth quarter, The Gabelli Global Telecommunications Fund's net
asset value increased 3.3% to $11.28 per share on December 31, 1996 after
adjusting for the $0.84 per share distribution paid on December 31, 1996. This
compares to the Lipper Analytical Services, Inc. Global Fund Index which was up
4.9% for the same period. The Lipper index covers 30 global open-end mutual
funds which may invest in a diversified group of industry sectors. The Salomon
Brothers Global Telecommunications Index, an unmanaged index of 52 equity
security issues of companies in the telecommunications industry, increased 9.9%
over the same period. For the year ended December 31, 1996, the Fund increased
9.0%, versus 16.3% and 14.0% for the Lipper Global Fund Index and the Salomon
Brothers Global Telecommunications Index.
Since inception on November 1, 1993, through December 31, 1996, the Fund
gained 25.6% which reflects an average annual rate of return of 7.5% assuming
reinvestment of dividends. On December 31, 1996, total net assets were $108.5
million.
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 $11.73 $11.28 $11.28
Total Return ......................... 5.4% 3.8% (3.5)% 3.3% 9.0%
- -------------------------------------------------------------------------------------------------------------
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>
Average Annual Return - December 31, 1996 (a)
<TABLE>
<S> <C>
1 Year .................................. 9.0%
Life of Fund(b) ......................... 7.5%
</TABLE>
<TABLE>
<CAPTION>
Dividend History
- ----------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
- ----------------- -------------- ------------------
<S> <C> <C>
December 31, 1996 $0.840 $11.28
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.
<PAGE> 2
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GABELLI GLOBAL
TELECOMMUNICATIONS FUND, THE S&P 500 INDEX AND THE SALOMON BROTHERS GLOBAL
TELECOMMUNICATIONS INDEX
<TABLE>
<CAPTION>
11/1/93 12/31/93 12/31/94 12/31/95 12/31/96
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Gabelli Global $10,000 $10,300 $ 9,919 $11,530 $12,568
Salomon Brothers $10,000 $10,045 $ 9,555 $10,794 $12,307
S&P Index $10,000 $10,190 $10,322 $14,203 $17,469
</TABLE>
THE PORTFOLIO
GLOBAL ALLOCATION
The chart to the right represents the Fund's holdings by geographic region
as of December 31, 1996. 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 - 12/31/96
[PIE CHART]
<TABLE>
<S> <C>
EUROPE 19.5%
UNITED STATES 46.3%
ASIA/PACIFIC
RIM 10.5%
LATIN AMERICA 8.8%
CANADA 8.6%
OTHER 6.3%
</TABLE>
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. For most of our holdings, 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.
2
<PAGE> 3
COMMENTARY
1996: YEAR OF THE BIG BANG AND GLOBAL MEGA-DEALS
In February 1996, the "Big Bang" occurred with the passage of the
Telecommunications Reform Act of 1996. The Act dissolved barriers between local
telephone, cable and long distance companies and eased broadcast regulations. A
flurry of mergers in the radio, television and telecommunications industries
followed. In 1996, "telemedia" deals worth $140 billion were announced, compared
with $79 billion in announced deals during 1995. February: US West announced the
$11 billion acquisition of privately-held Continental Cablevision. April:
Pacific Telesis and SBC Communications announced a $17 billion merger,
demonstrating that two are better than one. Shortly following, NYNEX and Bell
Atlantic announced a $21 billion merger. August: Joining the rush toward
"one-stop shopping" for communications, WorldCom agreed to buy MFS
Communications in a deal valued at $12 billion. September: Under its plan to
focus on its core long distance and wireless businesses, AT&T spun-off Lucent
Technologies, its equipment unit. November: British Telecom agreed to buy MCI
Communications, forming a global super carrier. December: AT&T completed its
restructuring with the spin-off of its computer unit, NCR, positioning the "new
AT&T" for an unprecedented era of competition and opportunity.
WHY ALL THESE MEGA-MERGERS? WHAT DOES IT MEAN FOR INVESTORS?
Companies in all areas of communications are facing increasing competition
in their core business. Management needs to protect the core franchise and, at
the same time, expand into new markets. The first step is to "circle the wagons"
- - cut costs, bring prices down and keep the existing customer base by creating
value. The next move is to stake out new territories - revenue streams that have
opened due to deregulation and competition. The most important theme is to seek
global opportunities. We believe values exist overseas, which investors have
overlooked in the past. Accordingly, we expect the trend toward global
super-carriers to accelerate, surfacing shareholder value.
CABLE TV: A NEW ERA OF OPPORTUNITIES
The Telecommunications Reform Act of 1996 had an important impact on cable
television operators. Most significantly, the door was opened to the $100
billion local telephone market - four times the size of the domestic cable
business. Under the Act, cable companies also received pricing flexibility and
relief from regulation as competition unfolds. The cable business remains
healthy, evidenced by double-digit EBITDA growth in 1996 for the major
operators. Direct broadcast satellite (DBS) services (such as "DirecTV") have
captured several million customers to date. Nevertheless, we believe that
reports of cable's death have been greatly exaggerated. Growth in the number of
DBS subscribers has been vibrant, albeit at a slower than anticipated rate for
several reasons, including cable companies providing greater value to customers.
Moreover, three major new revenue streams lie ahead: a) digital video services
b) high-speed cable modems and c) telephony. These new revenue sources should
enhance shareholder value considerably. Cable operators also have substantial
"hidden assets," including investments in: the Internet; personal communications
services (PCS); programming; competitive telephony - (e.g., Teleport
Communications Group); and international ventures. Many of these hidden values
are in the process of being brought to the surface to maximize shareholder
value.
3
<PAGE> 4
PERSONAL COMMUNICATIONS SERVICES: A WIRELESS WORLD
To promote competition and increase the availability of wireless services
to consumers, the Federal Communications Commission (FCC) designated spectrum to
be allocated via auctions for personal communications services (PCS). The FCC
has completed the final phase of the auction process. Already, more than 35 PCS
systems have launched. Four of them have "gone public": Aerial Communications
(AERL - $8.125 - NASDAQ), Intercel, Inc. (ICEL - $12.25 - NASDAQ), Omnipoint
Corp. (OMPT - $19.25 - NASDAQ) and Western Wireless Corp. (WWCA - $13.875 -
NASDAQ). In 1997, the pace of companies launching systems and public offerings
should pick up significantly, providing increasingly tangible data for
evaluation. We are optimistic about the early results.
PCS should roll out as an extension of cellular. Digital technology will
give PCS an advantage over the primarily analog networks of most cellular
operators. PCS will offer advanced features such as voice-mail, caller ID, and
integrated paging and more efficient capacity utilization, critical as wireless
usage explodes.
PCS should spur innovation, lower prices, creative promotions, and greater
public awareness that should accelerate wireless subscriber additions and
stimulate usage. Our wireless market projections reflect our optimism. We expect
the current U.S. wireless subscriber base to triple by 2005 from about 45
million today. The industry's more than $60 billion in revenues then, would
compare in size to the U.S. local telephone industry - today. Our projections
reflect our belief that almost every U.S. residence will house a wireless
subscriber, with many housing multiple subscribers.
"TICKLE ME, ELMO": SIGN OF THE TIMES?
The holiday craze for "Tickle me, Elmo" characters reminds us of Charles
Mackay's classic work Extraordinary Popular Delusions and the Madness of Crowds.
In 1841, Mackay described historic examples of excess speculation such as the
tulip bulb mania in 1740's Holland. Mr. Mackay's book is just as applicable
today whether investors are looking at companies in the wireless communications
area or the Internet. We question whether today's stock market reflects strong
fundamentals or euphoria. Nevertheless, we are not market timers. We believe in
businesses fundamental to society's needs which provide critical services to the
consumer. Given the basic necessity and future growth for telecommunications, we
believe this area represents a prime source of value particularly in an
increasingly interconnected global marketplace.
GLOBAL TRENDS: POSITIONING THE PORTFOLIO FOR THE NEW MILLENNIUM
We have identified several global trends in telecommunications which
should continue to surface values: a huge, rapidly growing market; exploding
demand; deregulation; and digital technology. In 1995, telecom services
world-wide was a $600 billion industry. By 2000, it is projected to exceed a
trillion dollars. Today, half the world's population has never made a telephone
call. Consumer desire for value-added communications is driving rapid growth in
traditional land-line telephone and wireless services. Countries must build
information highways for the 21st Century.
Around the world, countries are opening their telecom markets to
competition. In the U.S., the Telecommunications Reform Act of 1996 removed
regulatory barriers between industry segments
4
<PAGE> 5
(local telephone, long distance, and cable TV) to encourage competition and spur
development. Europe plans to open its markets to competitive forces by 1998.
Foreign governments in Asia and elsewhere are opening their markets, creating
growth opportunities.
Digital technology is facilitating new services like the Internet,
satellites (e.g., DirecTV) and personal communications services (PCS). New
technology means lower costs for communication companies and lower prices for
consumers.
PORTFOLIO STRUCTURE
We remain "bottom-up" focused, with roughly half the fund's investment in
the U.S. Internationally, the trend continues to be liberalization and
privatization of the telecommunications sector. The result is an expanding
universe of publicly-traded telecom companies poised for growth. Deutsche
Telekom, the largest telecom company in Europe and the third-largest in the
world, successfully completed its initial public offering in November 1996. Many
other major telecom companies are expected to "go public" in the years ahead.
Almost 20% of the Fund is invested in Europe, much of that in the UK. Key
holdings are companies with a strong global presence and attractive valuations.
Included are Cable & Wireless, the UK's second-largest telecom group, and
Vodafone, the biggest UK cellular service provider with attractive wireless
investments on a global basis. Telefonica de Espana is another key investment in
light of its strong telecom franchise and significant discount to its underlying
asset value.
Asia/Pacific Rim represents about 10.5% of the Fund and Latin America
around 8.8%. These regions are among the most rapidly growing in the world.
Telecommunications forms the "information highways" necessary for strong
economic development. Telebras, the Brazilian telephone company, and Telekom
Malaysia, the primary provider of domestic and international telecom services in
Malaysia, are key examples of attractively valued, rapidly growing investments.
Competition, consolidation and convergence are occurring globally as
companies seek economies of scale. Simply put, "bigger is better."
Telecommunications stocks are selling at large discounts to their estimated
Private Market Values. Moreover, the stock price performance has not kept pace
with the growth in value. Major forces -- strong demand, open markets,
technology, consolidation -- should drive telecom stock prices toward their
Private Market Values, thereby enhancing shareholder value.
LET'S TALK STOCKS
The following are stock specifics on selected holdings of our Fund.
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 - $25.25- 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 world-wide expansion of wireless communications. There are currently 100
million cellular customers world-wide, with half of those in the U.S. Annual
growth is estimated at 40% to 50%. To strengthen its cellular position in the
U.S., AirTouch has formed a joint venture with U.S. West
5
<PAGE> 6
Media Group (UMG - $18.50 - NYSE) to merge the two companies' domestic cellular
and personal communications services (PCS) properties.
BCE Inc. (BCE - $47.75 - NYSE) is the holding company for Bell Canada and has
controlling interests in Northern Telecom Limited (NT - $61.875 - NYSE) and
BCE Mobile Communications, Inc. (BCX - $29.64 - TSE). There are excellent values
in BCE. For example, "behind" each share of BCE there is 0.4 share of NT. This
NT interest, marked to market, is worth about $25 per BCE share. The company is
a possible split-up candidate. In the interim, The Canadian Radio and Television
Commission is providing a more attractive operating environment in which BCE is
becoming more competitive.
BC TELECOM Inc. (BCTL - $21.63 - TSE) is a full-service telecommunications
company operating in British Columbia, Canada. Its major investor is GTE
Corporation (GTE - $45.50 - NYSE), which owns 52% of the company. We estimate
the private market value of BCTL to be $50 per share. Its basic telephone
operations provide service to more than two million telephone lines and are
growing at twice the Canadian industry average. BCTL's crown jewel is a rapidly
growing cellular phone company which currently serves more than 270,000
subscribers. We expect BCTL to take advantage of the deregulatory trend in
Canada by entering new businesses in which they are now allowed to participate.
Comcast Corporation (CMCSA - $17.625 - NASDAQ) is the fourth-largest cable
company in the U.S., serving approximately 4.3 million subscribers. The company
owns a cellular telephone business serving eight million "POP"s in the high
traffic, mid-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.
Telecomunicacoes Brasileiras SA (Telebras) (TBR - $76.50 - NYSE) is the
Brazilian government-controlled monopoly telecommunications holding company
consisting of 28 subsidiaries serving 13.9 million telephone lines and 2.1
million cellular customers in a country with a population of 160 million. The
penetration rate is less than 9% for telephone and 1% for cellular. The stock is
attractively priced 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 - $8.91 - Kuala Lumpur), the second largest
company on the Kuala Lumpur Stock Exchange, is the only provider of domestic and
international fixed wire telecommunications 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 (Association of South East Asian Nations) continues to grow.
Telephone and Data Systems, Inc (TDS - $36.25 - ASE) TDS's management is
oriented to create substantial shareholder value (as compared to focusing on
near-term earnings per share). TDS is a domestic provider of local telephone
service to about 480,000 mostly rural access lines and is the
6
<PAGE> 7
seventh largest cellular telephone company in the U.S. with a fast growing
paging company. Consolidated operating cash flow rose 25% in 1996, driven mainly
by internal growth in cellular telephone. Cellular telephone subscribers grew by
almost 55% to over one million at year-end 1996. We expect strong growth at TDS
to result in a private market value of $160 per share by 2000. TDS has been
active in the PCS auctions and was the high bidder in eight markets with a
combined population of 27 million. TDS's investments in U.S. Cellular, American
Portable Telephone and American Paging, at their current market prices, are
worth $36 per TDS share.
Telefonica de Espana (TEF - $69.25 - NYSE) is a diversified telecommunications
service provider offering services to more than 15 million lines. The company
also services a fast growing cellular subscriber base which now exceeds two
million subscribers. We consider TEF an ideal way to invest in Latin America,
with a diversified portfolio of telecommunications operators in the region. Its
portfolio of publicly-traded Latin American companies includes: Compania de
Telefonos de Chile, Telefonica de Argentina S.A. and Compania Peruana de
Telefonos. TEF also holds interests in non-public Latin American telecom
operators in Mexico, Colombia, Puerto Rico, Uruguay and Venezuela. The company's
long-term strategy is to create a Pan-American network, leveraging the
Spanish-speaking world.
Tele-Communications, Inc. (TCOMA - $13.0625 - 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 passage of the Telecommunications Reform
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 wireless telephony PCS venture with
Sprint, Comcast and Cox, to its innovative Internet access business, dubbed
"@Home", to its 80% ownership of Tele-Communications International, Inc.
Vodafone Group plc (VOD - $41.375 - NYSE) is a U.K.-based global provider of
wireless telecommunications services. The company's major interests in the U.K.
include cellular, paging and data transmission. Vodafone's shares sell at one of
the lowest multiples of EBITDA among the major wireless companies, despite a
pristine balance sheet and prospects for 20% annual growth in earnings and cash
flow. Management is highly respected and has positioned the company to share in
the exciting and rapidly growing global market for wireless communications.
MINIMUM INITIAL INVESTMENT - $1,000
Effective August 12, 1996 The Gabelli Global Telecommunications Fund's
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.
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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
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.
Sincerely,
/s/ Mario J. Gabelli /s/ Marc J. Gabelli
----------------------------------- -------------------------------
MARIO J. GABELLI, CFA MARC J. GABELLI
President and Portfolio Manager Associate Portfolio Manager
/s/ Ivan Arteaga
-------------------------------
IVAN ARTEAGA, CPA
Associate Portfolio Manager
February 3, 1997
TOP TEN HOLDINGS
DECEMBER 31, 1996
Telefonica de Espana
Telecomunicacoes Brasileiras SA (Telebras)
Telephone & Data Systems, Inc.
AirTouch Communications Inc.
BCE, Inc.
Telekom Malaysia Berhad
Vodafone Group plc
Comcast Corporation
BC Telecom, Inc.
Tele-Communications, Inc.
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 -- DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ----------- ------------
<C> <S> <C> <C>
COMMON STOCKS -- 95.18%
ALTERNATIVE TELECOMMUNICATION SERVICE
PROVIDERS -- 1.90%
500 Bouygues Group........ $ 58,707 $ 51,830
20,000 GST
Telecommunications+.. 132,243 177,500
15,000 ICG Communications
Inc. ............... 211,500 264,375
1,000 Intermedia
Communications of
Florida, Inc.+...... 11,540 25,750
25,000 MFS Communications
Company, Inc.+...... 351,143 1,362,500
400 Teleport
Communications Group
Inc. Cl. A+......... 6,400 12,200
3,000 Veba AG............... 126,255 172,515
----------- ------------
897,788 2,066,670
----------- ------------
AVIATION: PARTS AND ACCESSORIES -- 1.55%
30,000 General Motors
Corporation Cl. H... 1,217,313 1,687,500
----------- ------------
CABLE -- 11.10%
54,000 Adelphia
Communications
Corporation Cl.
A+.................. 602,018 310,500
32,000 Bell Cablemedia plc
ADR+................ 541,915 496,000
32,000 Cablevision Systems
Corporation Cl.
A+.................. 1,516,109 980,000
65,000 Century Communications
Corporation Cl.
A+.................. 565,505 369,688
135,000 Comcast Corporation
Cl. A............... 2,122,173 2,379,375
42,000 Comcast U.K. Cable
Partners Limited+... 630,000 572,250
10,000 General Cable
Corporation plc
ADR+................ 146,775 165,000
47,000 International CableTel
Incorporated+....... 743,878 1,186,750
18,500 NYNEX CableComms Group
plc ADR+............ 390,465 335,313
10,000 Rogers Communications,
Inc. Cl. B.......... 63,000 71,250
85,000 Tele-Communications,
Inc. Cl. A+......... 1,230,525 1,110,313
40,250 Tele-Communications,
Inc./Liberty Media
Group Cl. A+........ 928,984 1,149,641
28,000 Tele-Communications
International,
Inc.+............... 508,225 371,000
6,000 Telewest
Communications plc
ADR+................ 140,050 124,500
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ----------- ------------
<C> <S> <C> <C>
95,000 United International
Holdings Inc. Cl.
A+.................. $ 1,434,720 $ 1,163,750
60,000 US WEST Media
Group+.............. 995,489 1,110,000
7,500 Videotron Holdings plc
ADR+................ 113,299 147,188
----------- ------------
12,673,130 12,042,518
----------- ------------
LONG DISTANCE TELEPHONE COMPANIES -- 6.35%
25,000 AT&T Corp. ........... 896,015 1,087,500
25,000 Call-Net Enterprises
Inc.+ .............. 236,025 328,228
25,000 Cam-Net Communications
Network Inc.+ ...... 139,154 25,000
165 DDI Corporation....... 973,198 1,092,394
5,000 Fonorola Inc.+ ....... 21,783 59,263
130,000 General Communication
Inc. Cl. A+......... 588,743 1,056,250
6,000 Kokusai Denshin....... 524,459 413,829
20,000 LCI International
Inc.+ .............. 216,539 430,000
18,000 MCI Communications
Corporation......... 421,775 588,375
66,000 P.D.L. Holdings
Limited............. 420,944 404,250
2,000 PT Indonesia Satellite
ADR................. 68,225 54,750
31,000 Sprint Corporation.... 845,159 1,236,125
4,000 Teleglobe Inc. ....... 60,488 118,161
----------- ------------
5,412,507 6,894,125
----------- ------------
MISCELLANEOUS -- 1.07%
7,000 Lodgenet Entertainment
Corporation+........ 52,707 124,250
10,000 News Corporation
Limited ADR......... 226,250 208,750
22,000 Time Warner Inc. ..... 835,400 825,000
----------- ------------
1,114,357 1,158,000
----------- ------------
PUBLISHING -- 0.47%
17,000 Media General Class
A................... 395,350 514,250
----------- ------------
REGIONAL/LOCAL TELEPHONE SERVICES -- 15.50%
44,000 Aliant Communications
Inc. ............... 682,020 748,000
32,000 ALLTEL Corporation.... 900,435 1,004,000
24,000 Ameritech
Corporation......... 997,075 1,455,000
38,000 Atlantic Tele-Network
Inc.+ .............. 357,063 579,500
10,000 Bell Atlantic
Corporation......... 538,458 647,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
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THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ----------- ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
REGIONAL/LOCAL TELEPHONE SERVICES (CONTINUED)
40,000 BellSouth
Corporation......... $ 1,187,988 $ 1,615,000
9,000 Bruncor, Inc. ........ 160,442 205,799
10,000 Cincinnati Bell
Inc. ............... 159,125 616,250
62,000 C-TEC Corporation Cl.
B................... 1,748,222 1,472,500
1,000 First Pacific Company
Ltd. Spons. ADR..... 35,875 64,964
41,000 Frontier
Corporation......... 848,487 927,625
48,000 GTE Corporation....... 1,656,775 2,184,000
15,000 Island Telephone
Company Limited..... 282,503 299,234
19,000 Maritime Telegraph and
Telephone Company
Limited............. 330,491 336,762
12,000 NewTel Enterprises
Limited............. 207,133 217,506
22,000 NYNEX Corporation..... 804,349 1,058,750
12,000 Pacific Telecom,
Inc. ............... 357,168 360,000
8,000 Pacific Telesis Group
Inc. ............... 255,150 294,000
3,000 Peoples Telephone
Company Inc.+....... 19,000 9,563
10,000 Quebec-Telephone...... 153,660 175,784
23,000 SBC Communications,
Inc. ............... 916,456 1,190,250
23,000 Southern New England
Telecommunications
Corporation......... 747,100 894,125
10,000 Telus Corporation..... 129,540 145,149
10,000 US WEST Communications
Group............... 243,192 322,500
----------- ------------
13,717,707 16,823,761
----------- ------------
SATELLITE -- 0.30%
1,000 British Sky
Broadcasting Group
ADR................. 36,400 52,500
7,000 Echostar
Communications
Corporation Cl.
A+.................. 204,225 154,000
10,000 TCI Satellite
Entertainment Cl
A+.................. 136,550 98,750
2,000 U.S. Satellite
Broadcasting Co.+... 49,090 20,000
----------- ------------
426,265 325,250
----------- ------------
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ----------- ------------
<C> <S> <C> <C>
TELECOMMUNICATIONS (OTHER) -- 0.24%
2,500 Great Nordic Stores... $ 215,022 $ 244,016
2,000 United Communication
Industry............ 18,341 13,567
----------- ------------
233,363 257,583
----------- ------------
TELEPHONE EQUIPMENT -- 2.56%
60,000 Champion Technology
Holdings ADR........ 80,657 58,650
4,400 Ericsson (L.M.)
Telephone Company
ADR................. 60,972 132,825
5,000 General Instrument
Corporation......... 132,702 108,125
8,102 Lucent Technologies,
Inc. ............... 348,273 374,718
2,500 Motorola, Inc. ....... 113,969 153,438
2,000 Nokia Corp. Spons.
ADR................. 76,675 115,250
25,000 Northern Telecom
Limited............. 861,000 1,546,875
5,000 Scientific-Atlanta,
Inc. ............... 90,557 75,000
115,500 Time Engineering
Berhad.............. 320,630 214,075
----------- ------------
2,085,435 2,778,956
----------- ------------
TELEPHONE NETWORKS -- 34.26%
110,000 BC TELECOM Inc. ...... 1,995,770 2,378,920
50,000 BCE Inc. ............. 1,743,564 2,387,500
3,000 BHI Corporation....... 48,250 59,813
5,000 British
Telecommunications
plc ADR............. 328,375 343,125
125,000 Cable & Wireless plc
ADR................. 2,639,513 3,078,125
20,000 Compania Telefonos
Chile S.A. ADR...... 1,575,797 2,022,500
30,000 CP Pokphand Spons.
ADR................. 245,000 293,307
525,100 CPT Telefonica del
Peru Cl. B.......... 750,380 983,045
1,000 CPT Telefonica del
Peru Cl. B ADR...... 20,500 18,875
7,500 Deutsche Telecom
AG+................. 141,675 152,813
3,430 Hellenic
Telecommunications
Organization S.A.
(OTE)............... 56,776 59,010
15,000 Hong Kong
Telecommunications
Ltd. ADR............ 294,183 243,750
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 11
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ----------- ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
TELEPHONE NETWORKS (CONTINUED)
1,000 Hungarian Telephone &
Cable
Corporation+........ $ 14,882 $ 9,375
40 Japan Telecom Co.
Ltd................. 980,645 895,419
10,000 Midcom
Communications+..... 104,566 85,000
167 Nippon Telegraph &
Telephone
Corporation......... 1,216,226 1,267,295
5,000 Nippon Telegraph &
Telephone
Corporation ADR..... 215,014 196,875
50,000 Nordictel Holdings
AB+................. 460,320 1,094,462
100,000 Orient Telecom &
Technology Holdings
Limited+............ 227,161 25,860
800 Pakistan
Telecommunications
GDR+................ 98,165 49,600
27,500 Philippine Long
Distance Telephone
Company............. 1,854,125 1,402,500
12,000 Portugal Telecom S.A.
ADR................. 233,785 339,000
8,000 PT Telekomunikasi
Indonesia........... 155,960 276,000
28,000 Royal PTT Nederland NV
ADR................. 835,576 1,060,500
20,000 Singapore
Telecommunications
Limited............. 48,208 47,177
28,000 STET SpA -- Societa
Financiaria
Telfonica SpA ADR... 670,030 1,242,500
8,000 Tele Danmark A/S...... 216,693 183,331
8,000 Tele Danmark A/S
ADR................. 215,400 218,000
18,000 Telecom Argentina
Stet -- France
Telecom S.A. ADR.... 848,848 726,750
326,086 Telecom Asia+......... 509,527 680,140
2,000 Telecom Asia ADR...... 50,620 38,200
25,000 Telecom Corporation of
New Zealand Ltd.
ADR................. 1,189,749 2,025,000
350,000 Telecom Italia SpA+... 457,508 908,432
42,000 Telecomunicacoes
Brasileiras
(Telebras) S.A.
Spons. ADR.......... 1,267,785 3,213,000
938,570 Telecomunicacoes de
Sao Paulo SA
(Telesp)............ 141,797 203,095
MARKET
SHARES COST VALUE
- ------------ ----------- ------------
4,000,000 Telecommunications of
Jamaica............. $ 406,750 $ 432,000
45,000 Telefonica de
Argentina S.A.
ADR................. 1,249,274 1,164,375
58,000 Telefonica de Espana
ADR................. 2,376,848 4,016,500
50,000 Telefonos De Mexico
S.A. Cl. L ADR...... 1,945,500 1,650,000
190,000 Telekom Malaysia
Berhad.............. 1,457,048 1,693,068
8,075 Thai Telephone &
Telecom GDR+........ 100,542 20,107
----------- ------------
29,388,335 37,184,344
----------- ------------
WIRELESS COMMUNICATIONS -- 19.88%
40,000 ABC Communications
Holdings Ltd. ...... 20,302 8,430
100,000 AirTouch
Communications
Inc.+............... 2,304,362 2,525,000
20,000 Aerial Communications
Inc.+ .............. 221,633 162,500
1,000 American Mobile
Satellite
Corporation+........ 18,925 12,250
72,000 American Paging,
Incorporated+....... 515,426 337,500
100 Asia Satellite
Telcommunications
Holdings Ltd. ...... 2,584 2,338
14,200 Associated Group, Inc.
Cl. A+.............. 308,905 436,650
16,000 Associated Group, Inc.
Cl. B+.............. 339,440 476,000
14,000 BCE Mobile
Communications
Inc.+............... 461,860 414,588
20,000 Cellular
Communications
International
Inc.+............... 332,623 580,000
2,000 Cellular
Communications of
Puerto Rico,
Inc.+............... 47,865 39,500
110,000 Centennial Cellular
Corp. Cl. A+........ 1,806,170 1,333,750
20,000 Century Telephone
Enterprises,
Inc. ............... 553,750 617,500
2,000 Commnet Cellular
Inc.+............... 45,978 55,750
50,000 COMSAT Corporation.... 1,271,480 1,231,250
4,000 Globalstar
Telecommunications
Limited+............ 55,724 252,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE> 12
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ----------- ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
WIRELESS COMMUNICATIONS (CONTINUED)
53,000 Grupo Iusacell S.A.
ADR Ser. D+......... $ 660,324 $ 304,750
26,000 Himachal(a)........... 141,200 29,250
24,000 Jasmine
International(a).... 117,135 36,725
15,000 Loral Space &
Communications
Ltd.+ .............. 181,875 275,625
2,500 Mannesmann AG......... 819,702 1,075,699
5,300 Matrix
Telecommunications
Ltd.+............... 8,992 9,047
1,500 Metrocall, Inc.+...... 11,137 7,521
4,000 Metromedia
International Group
Inc.+............... 44,000 39,500
15,000 Mobile
Telecommunication
Technologies
Corp.+.............. 263,355 127,500
12,154 NEXTEL Communications,
Inc. Cl. A+......... 158,252 158,763
400 Omnipoint Corp.+...... 6,400 7,700
3,000 PanAmSat
Corporation+........ 60,790 84,000
8,000 Pittencrieff
Communications,
Inc.+............... 41,180 29,500
40,000 PriCellular
Corporation+........ 186,435 460,000
45,000 Rogers Cantel Mobile
Communications Cl.
B+.................. 1,056,786 871,875
4,000 Rural Cellular Corp.
Cl. A+.............. 40,000 38,500
70,000 Securicor Group plc... 183,666 335,147
224,000 Technology Resources
Industries.......... 837,129 441,790
900,000 Telecom Italia Mobile
SpA+................ 1,077,857 2,273,715
85,000 Telephone and Data
Systems, Inc. ...... 3,692,368 3,081,250
5,000 360 degrees
Communications
Company+............ 91,437 115,640
2,000 Thyssen AG............ 367,787 364,646
22,000 Total Access
Communications
plc................. 138,875 151,800
3,000 United States Cellular
Corporation+........ 90,900 83,625
1,500 Vanguard Cellular
Systems, Inc. Cl.
A+.................. 29,040 23,625
1,000 Vimpel
Communications+..... 28,300 23,625
64,000 Vodafone Group plc
ADR................. 1,781,180 2,648,000
----------- ------------
20,423,129 21,573,824
----------- ------------
TOTAL COMMON STOCKS... 87,984,679 103,306,781
----------- ------------
<CAPTION>
PRINCIPAL
AMOUNT OR MARKET
SHARES COST VALUE
- ------------ ----------- ------------
<C> <S> <C> <C>
CONVERTIBLE PREFERRED STOCKS -- 2.17%
CABLE -- 1.16%
19,000 Tele-Communications,
Inc. Cv. Pfd. Ser.
E................... $ 1,325,981 $ 1,263,500
----------- ------------
LONG DISTANCE TELEPHONE COMPANIES -- 0.60%
10,000 Philippine Long
Distance Telephone
Company 7.00% Cv.
Pfd. Ser. III....... 500,000 510,000
4,000 Sprint Corporation
8.25% Cv. Pfd....... 127,500 143,500
----------- ------------
627,500 653,500
----------- ------------
WIRELESS COMMUNICATIONS -- 0.41%
6,222 AirTouch
Communications Inc.
6.00% Cv. Pfd. Cl.
B................... 182,382 169,550
3,996 AirTouch
Communications Inc.
4.25% Cv. Pfd. Cl.
C................... 192,807 180,820
5,000 Mobile
Telecommunication
Technologies Corp.
$2.25 Cv. Pfd.(a)... 141,250 91,250
----------- ------------
516,439 441,620
----------- ------------
TOTAL CONVERTIBLE
PREFERRED STOCKS.... 2,469,920 2,358,620
----------- ------------
CONVERTIBLE CORPORATE BONDS -- 1.99%
TELEPHONE NETWORKS -- 0.95%
$1,000,000 Telekom Malaysia
Berhad Sub. Deb. Cv.
4.00%,
10/03/04(a)......... 1,000,362 1,033,500
----------- ------------
WIRELESS COMMUNICATIONS -- 1.04%
300,000,000(b) Softe SA Unsub. Deb.
Cv. 4.25%,
07/30/98............ 191,318 332,510
250,000 Technology Resources
Industries Sub. Deb.
Cv. 2.75%,
11/28/04(a)......... 250,000 286,250
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE> 13
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR MARKET
SHARES COST VALUE
- ------------ ----------- ------------
<C> <S> <C> <C>
CONVERTIBLE CORPORATE BONDS (CONTINUED)
WIRELESS COMMUNICATIONS (CONTINUED)
500,000 Tele 2000 Sub. Deb.
Cv. 9.75%,
04/14/97(a)......... $ 500,000 $ 502,500
----------- ------------
941,318 1,121,260
----------- ------------
TOTAL CONVERTIBLE
CORPORATE BONDS..... 1,941,680 2,154,760
----------- ------------
PREFERRED STOCKS -- 0.35%
WIRELESS COMMUNICATIONS --0.35%
3,000,000 Tel Rio de Janeiro
Pfd................. 204,622 381,501
----------- ------------
TOTAL PREFERRED
STOCKS.............. 204,622 381,501
----------- ------------
<CAPTION>
PRINCIPAL
AMOUNT OR MARKET
SHARES COST VALUE
- ------------ ----------- ------------
<C> <S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS -- 0.37%
$400,000 U.S. Treasury Bills,
4.82% due
02/13/97............ $ 397,697 $ 397,697
----------- ------------
TOTAL INVESTMENTS --
100.05%............. $92,998,598* 108,599,359
==========
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (0.05)%............... (55,700)
------------
NET ASSETS -- 100.00% (9,623,798
shares outstanding)............. $108,543,659
===========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE................. $11.28
=====
</TABLE>
- ---------------
<TABLE>
<C> <C> <S>
+ -- 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 December 31, 1996. Rule 144A
securities amounted to $1,979,475 or 1.8%
of net assets.
(b) -- Principal amount denoted in Italian Lira.
</TABLE>
* For Federal income tax purposes:
<TABLE>
<S> <C>
Aggregate cost............... $ 92,998,598
===========
Gross unrealized
appreciation............... $ 22,592,583
Gross unrealized
depreciation............... (6,991,882)
------------
Net unrealized
appreciation............... $ 15,600,761
===========
</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
DECEMBER 31, 1996
- ----------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (Cost
$92,998,598)................................ $108,599,359
Cash.......................................... 132,423
Receivable for investments sold............... 158,663
Receivable for Fund shares sold............... 75,569
Dividends and interest receivable............. 345,759
Deferred organizational expenses.............. 37,161
-----------
TOTAL ASSETS................................ 109,348,934
-----------
LIABILITIES:
Payable to Advisor............................ 92,584
Payable to Custodian.......................... 89,056
Payable for distribution fees................. 22,474
Dividends payable............................. 260,987
Payable for Fund shares redeemed.............. 181,558
Other accrued expenses........................ 158,616
-----------
TOTAL LIABILITIES........................... 805,275
-----------
NET ASSETS (applicable to 9,623,798 shares
outstanding).................................. $108,543,659
===========
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE....................................... $ 11.28
===========
NET ASSETS CONSIST OF:
Capital Stock, at par value................... $ 9,624
Additional paid-in capital.................... 93,417,689
Distributions in excess of net realized
gains....................................... (473,487)
Distribution in excess of net investment
income...................................... (13,635)
Net unrealized appreciation on investments and
foreign currency transactions............... 15,603,468
-----------
NET ASSETS.................................. $108,543,659
===========
</TABLE>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED
DECEMBER 31, 1996
- ----------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes of $168,882)... $ 2,209,392
Interest....................................... 261,353
-----------
Total Income................................. 2,470,745
-----------
EXPENSES:
Investment advisory fee........................ 1,195,023
Transfer and shareholder servicing agent....... 374,547
Distribution expenses.......................... 298,817
Custodian fees and expenses.................... 53,047
Printing and mailing........................... 48,660
Legal and audit fees........................... 42,492
Amortization of organization expenses.......... 15,630
Registration fees.............................. 14,827
Directors' fees................................ 5,832
Miscellaneous.................................. 10,385
-----------
Total expenses............................... 2,059,260
-----------
Net Investment Income........................... 411,485
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments and foreign
currency transactions........................ 7,081,146
Net change in unrealized appreciation.......... 2,695,936
-----------
Net gain on investments...................... 9,777,082
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS..................................... $10,188,567
===========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Net Investment income.............................................................. $ 411,485 $ 686,669
Net realized and unrealized gain on investments and foreign currency
transactions..................................................................... 7,081,146 914,207
Net change in unrealized appreciation.............................................. 2,695,936 17,336,566
------------ ------------
Net increase in net assets resulting from operations............................... 10,188,567 18,937,442
------------ ------------
Distributions from net investment income........................................... (413,426) (696,292)
Distributions from net realized gains.............................................. (7,136,096) (1,283,788)
------------ ------------
(7,549,522) (1,980,080)
------------ ------------
Share transactions -- net.......................................................... (16,940,085) (31,843,478)
------------ ------------
Net decrease in net assets..................................................... (14,301,040) (14,886,116)
NET ASSETS:
Beginning of period................................................................ 122,844,699 137,730,815
------------ ------------
End of period...................................................................... $ 108,543,659 $ 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
- --------------------------------------------------------------------------------
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.
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 on 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.
15
<PAGE> 16
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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.
At December 31, 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 the value of more than 50%
of the Fund's total assets at the close of any taxable year consists of stocks
or securities of non-U.S. corporations, the Fund is permitted and may elect to
treat any non-U.S. taxes paid by it as paid by its shareholders.
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>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 2,412,958 $ 28,511,972 2,039,537 $ 21,055,961
Shares issued upon reinvestment of dividends................... 646,152 7,288,589 170,930 1,900,751
Shares redeemed................................................ (4,482,256) (52,740,646) (5,321,535) (54,800,190)
---------- ------------ ---------- ------------
Net decrease................................................... (1,423,146) $ (16,940,085) (3,111,068) $ (31,843,478)
========== ============ ========== ============
</TABLE>
3. PURCHASES AND SALES OF SECURITIES. Purchases and sales of securities for the
year ended December 31, 1996, other than U.S. government obligations and
short-term securities, aggregated $8,726,782 and $25,833,382, 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
16
<PAGE> 17
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 year ended December 31, 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) of the Investment Company Act of 1940 and
Rule 12b-1 thereunder. For the year ended December 31 1996, the Fund has
incurred distribution costs of $298,817, 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 $372,459, 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. The Fund paid brokerage commissions during the
year ended December 31, 1996 of $16,320 to Gabelli & Company, Inc. and its
affiliates.
17
<PAGE> 18
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
FINANCIAL HIGHLIGHTS
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<TABLE>
<CAPTION>
NOVEMBER 1, 1993
YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
---------------------------------- OPERATIONS) THROUGH
1996 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............................................... 0.046 0.064 0.065 0.01
Net realized and unrealized gain on securities...................... 0.954 1.508 (0.440) 0.29
-------- -------- -------- -------
Total from investment operations.................................... 1.000 1.572 (0.375) 0.30
-------- -------- -------- -------
LESS DISTRIBUTIONS:
Distributions from net investment income.......................... (0.046) (0.064) (0.065) (0.01)
Distributions from net realized gain on investments............... (0.794) (0.118) (0.030) (0.09)
-------- -------- -------- -------
Total Distributions............................................... (0.840) (0.182) (0.095) (0.10)
-------- -------- -------- -------
Net asset value, end of period...................................... $ 11.28 $ 11.12 $ 9.73 $ 10.20
======== ======== ======== =======
Total Return(a)..................................................... 9.0% 16.2% (3.7)% 3.0%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands).......................... $108,544 $122,845 $137,731 $45,290
Ratio of operating expenses to average net assets................. 1.72% 1.75% 1.80% 2.54%(b)
Ratio of net investment income (loss) to average net assets....... 0.34% 0.53% 0.74% 1.28%(b)
Portfolio turnover rate........................................... 7% 24% 14% 0%
Average Commission Rate(c)........................................ $ 0.0365 -- -- --
</TABLE>
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(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.
(c) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate paid per share for purchases and
sales of investment securities.
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<PAGE> 19
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
REPORT OF GRANT THORNTON LLP, INDEPENDENT AUDITORS
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Shareholders and Board of Directors
The Gabelli Global Telecommunications Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments of The Gabelli Global Telecommunications Fund (one
of the Funds constituting Gabelli Global Series Funds, Inc.), as of December 31,
1996, the related statement of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then ended and
financial highlights for each of the periods presented. 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, 1996 by correspondence with the custodian. 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, 1996, and the results of its operations, the changes in its net
assets and the financial highlights for the respective stated periods, in
conformity with generally accepted accounting principles.
/s/ Grant Thornton LLP
New York, New York
February 27, 1997
1996 TAX NOTICE TO SHAREHOLDERS (UNAUDITED)
For the year ended December 31, 1996, the Fund paid to shareholders, on December
31, 1996, ordinary income dividends (comprised of net investment income and
short-term capital gains) totaling $0.11 per share. Additionally, on that date,
the Fund paid $0.73 per share in long-term capital gains. For 1996, 100% of the
ordinary income dividends qualifies for the dividends received deduction
available to corporations.
U.S. GOVERNMENT INCOME:
The percentage of the ordinary income dividend paid by the Fund during 1996
which was derived from U.S. Treasury securities was 12.74%. Such income is
exempt from state and local income tax in all 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 1996. Due to the diversity in state and local tax law, it is recommended that
you consult your personal tax advisor for the applicability of the information
provided as to your own situation.
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<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
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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.
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LOGO
THE
GABELLI
GLOBAL
TELECOMMUNICATIONS
FUND
ANNUAL REPORT
DECEMBER 31, 1996
