[PHOTOS OMITTED]
Mark J. Gabelli and Caesar Bryan
Portfolio Managers
The
Gabelli
Global
Opportunity
Fund
INITIAL REPORT
JUNE 30, 1998
<PAGE>
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Gabelli Global Opportunity Fund
[PHOTO OMITTED]
Initial Report - June 30, 1998
To Our Shareholders,
Welcome to the initial report for the newest member of the Gabelli Family
of mutual funds, The Gabelli Global Opportunity Fund. First and foremost, we
want to thank you for your investment in this exciting new Fund. We are taking
the Gabelli value investment philosophy around the globe in search of
outstanding investment opportunities.
Our Investment Objective
The Gabelli Global Opportunity Fund seeks to invest in common stock of
companies which have rapid growth in revenues and earnings and equities trading
at a significant discount to their intrinsic value. The Fund's primary objective
is capital appreciation. Marc Gabelli and Caesar Bryan will be responsible for
the day-to-day management of the Gabelli Global Opportunity Fund. Currently,
Marc Gabelli is Portfolio Manager for the Gabelli Global Interactive Couch
Potato(R) Fund. Caesar Bryan is Portfolio Manager of the Gabelli International
Growth and Gold Funds.
Investment Performance
Since inception on May 11, 1998 through June 30, 1998, the Gabelli Global
Opportunity Fund (the "Fund") had a return of 2.3%. The Lipper Analytical
Services Global Fund Average and Morgan Stanley World Free Index of global
markets declined 1.4% and 0.1%, respectively, over the same period. Each index
is an unmanaged indicator of investment performance.
INVESTMENT RESULTS (a)
- --------------------------------------------------------------------------------
Quarter
--------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
1998: Net Asset Value .. -- $10.23 -- -- --
Total Return ..... -- 2.3%(b) -- -- --
- --------------------------------------------------------------------------------
(a) Total returns and average annual returns reflect changes in share price 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. (b) From commencement of operations on May 11,
1998. Note: Investing in foreign securities involves risks not ordinarily
associated with investments in domestic issues, including currency fluctuation,
economic and political risks.
- --------------------------------------------------------------------------------
<PAGE>
Global Allocation
The accompanying chart presents the Fund's holdings by geographic region
as of June 30, 1998. The geographic allocation will change based on current
global market conditions. Countries and/or regions represented in the chart and
below may or may not be included in the Fund's future portfolio.
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL]
HOLDINGS BY GEOGRAPHIC REGION - 6/30/98
Cash 61.6%
United States 24.5%
Europe 11.8%
Canada 1.6%
Japan 0.5%
COMMENTARY
European Convergence
Europe took another important step towards integration at the beginning of
May when European leaders reached an agreement as to which countries would join
the single currency. There were no surprises and out of fifteen European Union
member countries, those not joining the euro club at the outset include the
United Kingdom, Sweden, Denmark and Greece. After considerable haggling, it was
also decided that a former central banker and finance minister from Holland, Wim
Duisenberg, will head the European Central Bank which will be headquartered in
Frankfurt. Beginning on January 1, 1999, responsibility for European monetary
policy will transfer from national central banks, such as the Bundesbank and the
Bank of France, to the European Central Bank. For investors, Mr. Duisenberg is
about to become a very important person.
Economic activity in continental Europe has accelerated and hopefully
France's victory in the World Cup will put French consumers in a better mood.
However, with unemployment levels remaining very high and little evidence of
inflation, it is unlikely that interest rates will be raised during the
remainder of the year. In this event, the euro will begin life with an interest
rate structure similar to that which currently exists in France and Germany,
where short term interest rates are about 3.5%. Therefore, rates in other
European countries, such as Spain and Italy, have further to fall. Italy, a
country with a very high savings rate, has never before experienced interest
rates at current low levels. This has caused savers to shift assets from
traditional fixed bank deposits to equities. Indeed, one analyst quipped that
the only things that people are buying in Italy are mutual funds and cellular
telephones.
Many industries remain relatively fragmented in Europe and we expect a
continuing high level of corporate activity. The largest deal by far announced
during the quarter was Daimler Benz's proposed merger with Chrysler. This
sparked interest in other European auto manufacturers.
Searching for a Cure in Asia
Japan continues to misfire on all cylinders and remains in recession.
Indeed, the only bright spot in the economy up to now, due to the yen's
weakness, has been exports. And even exports are now declining on a year-to-year
basis.
2
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Early in July, Japanese voters handed the ruling party a defeat in Upper
House elections and the Prime Minister has resigned. A new Prime Minister is
expected to be more aggressive in cleaning up the bad debt mess and encouraging
consumption through fiscal reform.
Japan's weakness is another blow to Southeast Asia, which is attempting to
recover from collapsing currencies and crippling levels of foreign debt. It is
important for the global economy that the "Asian Flu" is contained and does not
spread. Potential trouble spots, which we have to monitor closely, include
Russia, China and Brazil. The U.S. and European economies continue to perform
well and have actually been helped by lower commodity prices, which tend to
reduce inflation. However, with valuations at current levels, there is little
margin for error with regard to earnings disappointments.
We certainly do not profess to be able to forecast the full effect of the
"Asian Flu" on the major world equity markets. However, we will continue to
invest in leading global and multi-national companies, paying close attention to
valuation levels.
Dialing Up a Big Deal - "Ma Bell" is Now Riding Motorcycles
Deregulation and technology have been driving change in the global
telecommunications industry. The need for speed is swiftly changing the "dial
tone" into the "web tone" as the telephone, computer and television converge
into one all purpose interactive information and entertainment instrument.
Convergence has just taken a leap forward with the prospective merger of AT&T
and cable television leader Tele-Communications Inc.
Does the proposed AT&T/TCI combination make sense? We think so. The
transaction gives AT&T the digital platform to compete in the local telephone
business. It also allows them to bundle long distance, local telephony, Internet
access and entertainment programming services on one line, passing approximately
one-third of all U.S. homes.
How will this change the global telecommunications/media landscape? It
opens the door for other long distance companies to break into local telephone
monopolies and perhaps for local telephone operators to further their inroads to
the long distance business. It dramatically increases the value of the cable
television industry's millions of coaxial connections into homes worldwide. It
will push the pace in which telephone infrastructure is upgraded to match
cable's digital and high speed capacity. It puts increasing pressure on every
global telecommunications company to create business combinations that will
allow them to compete with the full range of services that AT&T/TCI would be
capable of delivering. Finally, as additional business combinations are formed,
"content and creativity" providers could continue to be viewed as appetizing
targets.
Let's Talk Stocks
The following are stock specifics on selected holdings of our Fund.
Favorable earnings prospects do not necessarily translate into higher stock
prices, but they do express a positive trend which we believe will develop over
time. The share prices of foreign holdings are stated in U.S. dollar equivalent
terms as of June 30, 1998.
3
<PAGE>
British Petroleum Co. plc (BP - $88.25 - NYSE), with an equity market
capitalization exceeding $80 billion, is one of the world's largest integrated
oil companies. Production, which reached 1.25 million barrels and 1.7 billion
cubic feet per day in 1997, is slated to rise five percent per year to reach 1.8
million barrels of oil equivalent (BOE) per day by the year 2000 as new projects
come on stream. The company, like other major oil producers and refiners, has
embarked on a program to deliver $1.5 billion of underlying performance
improvements - cost savings and volume increases - by the year 2000. Sizable
cost savings are expected to result from the joint venture in European refining
and marketing formed with Mobil. BP is a substantial cash flow generator, even
in the current difficult environment of lower oil prices.
Freeport-McMoRan Copper & Gold Inc. (FCX - $15.1875 - NYSE) controls one of the
world's richest mines. The mine, called Grasberg, is located in Irian Jaya,
Indonesia and is one of the world's largest and lowest cost copper and gold
producers. At a gold price of $300 per ounce, the cash cost of producing copper
in 1998 is expected to be below 20 cents per pound. This is at the bottom of the
copper industry's cost curve. This year, the company's share of Grasberg's
production is expected to be 1.4 billion pounds of copper and 2.2 million ounces
of gold and the mine has extensive reserves which will permit further expansion.
Novartis AG (NOVZN.S - $1,664.02 - Zurich Stock Exchange) is one of the world's
largest pharmaceutical companies and was created by the merger of two of
Europe's dominant pharmaceutical companies, Ciba Geigy and Sandoz, both of which
were headquartered in Basel, Switzerland. Apart from pharmaceuticals, the merged
company has a strong position in agribusiness and nutrition. Ciba Specialty
Chemicals, with sales of nearly $5 billion, was recently spun-off to
shareholders as the new company concentrates on its core divisions. Novartis has
a number of new drugs in development that have excellent sales potential and we
believe management will continue to reduce costs.
Schlumberger Ltd. (SLB - $68.3125 - NYSE) is the leading provider of engineering
services to the oil and gas industries. Fully 75% of sales (approximately $10
billion total) comes from non-U.S. customers. The company is the industry leader
in terms of research and development, spending about $300 million annually.
TCI Ventures Group (TCIVA - $20.0625 - Nasdaq) is a portfolio of
telecommunications investments essentially controlled by Dr. John Malone of
Tele-Communications Inc. (TCOMA - $38.4375 - Nasdaq). The company holds an 85%
equity interest in Tele-Communications International (TINTA - $20.0938 - Nasdaq)
and has interests in telephony and programming businesses together with a 39%
equity interest in United Video Satellite Group (UVSGA - $39.625 - Nasdaq) and a
39% equity interest in @Home (ATHM - $47.3125 - Nasdaq). The company is slated
to be part of the transaction proposed by AT&T (T - $57.125 - NYSE) to acquire
all of the TCI group, whereupon TCIVA's shares will be converted into Liberty
Media Group.
Minimum Initial Investment - $1,000
The Fund's minimum initial investment for both regular and retirement
accounts is $1,000. There are no subsequent investment minimums. No initial
minimum is required for those establishing an Automatic Investment Plan.
Additionally, The Gabelli Global Opportunity Fund and other Gabelli Funds are
available through the no-transaction fee programs at many major discount
brokerage firms.
4
<PAGE>
In Conclusion
As the Fund's current asset allocation indicates, we are favorably
disposed to the U.S. and European equity markets and quite wary of the Far East
including Japan. We expect continued volatility in global stock markets, but
believe this volatility will present the kind of long term investment
opportunities we seek.
The Fund's daily net asset value is available each evening after 6:00 PM
(Eastern Time) by calling 1-800-GABELLI (1-800-422-3554). Please call us during
the business day for further information. We thank you for your commitment and
as always, pledge our best efforts on your behalf.
Sincerely,
/s/ Marc J. Gabelli /s/ Caesar Bryan
Marc J. Gabelli Caesar Bryan
Portfolio Manager Portfolio Manager
August 1, 1998
- --------------------------------------------------------------------------------
Top Ten Holdings
June 30, 1998
Novartis AG General Motors Corp.
Fortune Brands Inc. British Petroleum Co. plc
Centennial Cellular Corp. Schlumberger Ltd.
Compagnie Financiere Richemont AG Freeport-McMoRan Copper & Gold Inc.
Viatel Inc. Tele-Communications International 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.
5
<PAGE>
The Gabelli Global Opportunity Fund
Portfolio of Investments -- June 30, 1998 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 46.0%
Advertising -- 1.0%
775 Young & Rubicam Inc.+ ............ $ 24,451 $ 24,800
---------- ----------
Automotive -- 1.3%
475 General Motors Corp. ............. 34,163 31,736
---------- ----------
Broadcasting -- 0.9%
1,200 Granada Group plc ................ 22,553 22,104
---------- ----------
Cable -- 3.2%
500 NTL Inc.+ ........................ 24,951 26,750
1,200 TCI Ventures Group+ .............. 20,634 24,075
1,500 Tele-Communications
International Inc., Cl. A+ ...... 27,656 30,141
---------- ----------
73,241 80,966
---------- ----------
Conglomerates -- 0.9%
300 Invik & Co. AB, B Free ........... 23,605 23,511
---------- ----------
Consumer Products -- 3.9%
200 Christian Dior SA ................ 27,169 25,174
27 Compagnie Financiere
Richemont AG .................... 37,186 35,334
950 Fortune Brands Inc. .............. 36,301 36,515
---------- ----------
100,656 97,023
---------- ----------
Diversified Industrial -- 1.7%
625 Indus Holding AG ................. 23,877 24,896
100 Oerlikon-Buehrle Holding AG ...... 19,945 18,262
---------- ----------
43,822 43,158
---------- ----------
Energy -- 2.5%
350 British Petroleum Co. plc, ADR ... 30,796 30,887
450 Schlumberger Ltd. ................ 30,510 30,741
---------- ----------
61,306 61,628
---------- ----------
Entertainment -- 1.9%
600 Tele-Communications Inc./
Liberty Media Group, Cl. A+ ..... 19,712 23,288
1,000 USA Networks Inc.+ ............... 25,540 25,125
---------- ----------
45,252 48,413
---------- ----------
Financial Services -- 4.5%
350 Mellon Bank Corp. ................ 24,846 24,369
900 Pioneer Group Inc. ............... 24,961 23,681
1,000 Schroders plc .................... 29,287 25,795
1,075 Skandinaviska Enskilda
Banken, Cl. A ................... 19,149 18,400
700 Trimark Financial Corp. .......... 22,389 21,659
---------- ----------
120,632 113,904
---------- ----------
Food and Beverage -- 1.0%
1,100 Whitman Corp. .................... 24,599 25,231
---------- ----------
Global Entertainment -- 2.0%
350 Havas SA ......................... 32,697 29,697
400 PolyGram NV, ADR ................. 22,670 20,350
---------- ----------
55,367 50,047
---------- ----------
Health Care -- 1.5%
23 Novartis AG ...................... 37,518 38,272
---------- ----------
Hotels and Gaming -- 0.8%
1,000 Mirage Resorts Inc.+ ............. 21,825 21,313
---------- ----------
Metals and Mining -- 2.2%
2,000 Freeport-McMoRan Copper &
Gold Inc., Cl. B ................ 32,431 30,375
900 Stillwater Mining Co. + .......... 23,023 24,413
---------- ----------
55,454 54,788
---------- ----------
Publishing -- 2.6%
3,200 Independent Newspapers plc ....... 19,285 17,219
300 McGraw-Hill Companies Inc. ....... 22,815 24,469
375 Times Mirror Co., Cl. A .......... 24,089 23,578
---------- ----------
66,189 65,266
---------- ----------
Telecommunications -- 4.9%
600 BCE Inc. ......................... 26,605 25,613
700 Cable & Wireless plc, ADR ........ 24,382 25,813
2,400 Citizens Utilities Co., Cl. B+ ... 23,882 23,100
2 DDI Corp. ........................ 6,850 6,960
1 Japan Telecom Co. Ltd. ........... 7,925 7,854
2,000 Viatel Inc.+ ..................... 16,550 33,999
---------- ----------
106,194 123,339
---------- ----------
Utitlities -- 1.0%
800 Florida Public Utilities Co. ..... 24,515 24,200
---------- ----------
Wireless Communications-- 8.2%
400 AirTouch Communications Inc.+ .... 22,970 23,375
500 Cellular Communications
International Inc.+ ............. 25,333 24,937
950 Centennial Cellular Corp., Cl. A+ 32,958 35,446
1,000 CoreComm Inc.+ ................... 21,895 26,249
1,000 Omnipoint Corp.+ ................. 22,665 22,938
600 Telephone and Data
Systems Inc. .................... 24,030 23,625
800 United States Cellular Corp.+ .... 23,590 24,600
1,300 Vanguard Cellular
Systems Inc., Cl. A+ ............ 24,833 24,538
---------- ----------
198,274 205,708
---------- ----------
TOTAL COMMON STOCKS .............. 1,139,616 1,155,407
---------- ----------
See accompanying notes to financial statements.
6
<PAGE>
The Gabelli Global Opportunity Fund
Portfolio of Investments (Continued) -- June 30, 1998 (Unaudited)
================================================================================
Principal Market
Amount Cost Value
------ ---- -----
U.S. GOVERNMENT OBLIGATIONS -- 60.1%
$1,307,000 U.S. Treasury Bills,
4.81% to 5.14%,
due 08/06/98 to 09/17/98++ ...... $1,296,875 $1,296,875
400,000 U.S. Treasury Bonds, 5.63%
to 6.125%, due 11/15/27++ ....... 213,979 214,375
---------- ----------
TOTAL U.S. GOVERNMENT
OBLIGATIONS ..................... 1,510,854 1,511,250
---------- ----------
FOREIGN GOVERNMENT OBLIGATIONS -- 13.5%
370,000(a) U.K. Treasury Bonds, 5.71%
to 5.93%, due 12/07/07 .......... 334,304 339,926
---------- ----------
TOTAL INVESTMENTS
-- 119.6% ....................... $2,984,774 3,006,583
==========
Other Assets and
Liabilities (Net)-- (19.6)% (492,612)
----------
NET ASSETS -- 100.0%
(245,792 shares outstanding) $2,513,971
==========
NET ASSET VALUE,
Offering and Redemption
Price Per Share ................. $10.23
======
FORWARD FOREIGN EXCHANGE CONTRACTS
Expiration Net Unrealized
Date Appreciation
---- ------------
4,758 (a) Sold British Pounds
in exchange for
USD 7,937 07/07/98 $ 2
37,913 (b) Sold French Francs
in exchange for
USD 6,268 07/31/98 $ 1
188,250 (c) Sold Swedish Kronas
in exchange for
USD 23,561 07/06/98 $44
20,303 (d) Sold Swiss Francs
in exchange for
USD 13,366 07/06/98 $19
2,050,514 (e) Sold Japenese Yen
in exchange for
USD 14,768 07/06/98 $14
For Federal tax purposes:
Aggregate cost ................................. $2,984,774
==========
Gross unrealized appreciation .................. $ 51,176
Gross unrealized depreciation .................. (29,367)
----------
Net unrealized appreciation .................... $ 21,809
==========
- ----------
(a) Principal amount denoted in British Pounds.
(b) Principal amount denoted in French Francs.
(c) Principal amount denoted in Swedish Kronas.
(d) Principal amount denoted in Swiss Francs.
(e) Principal amount denoted in Japanese Yen.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR-- American Depositary Receipt.
GDR -- Global Depositary Receipt.
% of
Market Market
Geographic Diversification Value Value
- -------------------------- ----- -----
North America 76.4% $2,296,129
Europe 23.1% 695,640
Japan 0.5% 14,814
------ ----------
100.0% $3,006,583
====== ==========
See accompanying notes to financial statements.
7
<PAGE>
The Gabelli Global Opportunity Fund
Statement of Assets and Liabilities
June 30, 1998 (Unaudited)
================================================================================
Assets:
Investments, at value (Cost $2,984,774) ................... $3,006,583
Cash ...................................................... 20,988
Dividends and interest receivable ......................... 5,672
Deferred organizational expenses .......................... 38,729
----------
Total Assets ............................................ 3,071,972
----------
Liabilities:
Payable for investments purchased ......................... 503,456
Payable to adviser ........................................ 40,000
Payable for investment advisory fees ...................... 2,682
Payable for distribution fees ............................. 670
Payable to custodian ...................................... 11,193
----------
Total Liabilities ....................................... 558,001
---------
Net Assets applicable to 245,792
shares outstanding .................................... $2,513,971
==========
Net Assets consist of:
Capital stock, at par value ............................... $ 246
Additional paid-in capital ................................ 2,470,719
Undistributed net investment income ....................... 10,082
Accumulated net realized gain on investments
and foreign currency transactions ....................... 11,025
Net unrealized appreciation on investments
and foreign currency transactions ....................... 21,899
----------
Total Net Assets ........................................ $2,513,971
==========
Net Asset Value, offering and redemption
price per share ($2,513,971 245,792
shares outstanding; 1,000,000,000
shares authorized of $0.001 par value) ................ $ 10.23
=======
Statement of Operations
For the Period Ended June 30, 1998 (Unaudited)+
================================================================================
Investment Income:
Dividends ................................................. $ 5,083
Interest .................................................. 11,754
--------
Total Investment Income ................................. 16,837
--------
Expenses:
Investment advisory fees .................................. 2,302
Distribution fees ......................................... 670
Organizational expenses ................................... 1,271
Legal and audit fees ...................................... 855
Shareholder report expenses ............................... 570
Registration fees ......................................... 439
Custodian fees ............................................ 267
Shareholder services fees ................................. 174
Miscellaneous expenses .................................... 207
--------
Total Expenses .......................................... 6,755
--------
Net Investment Income ................................... 10,082
--------
Net Realized and Unrealized Gain
on Investments:
Net realized gain on investments and
foreign currency transactions ........................... 11,025
Net change in unrealized appreciation
on investments and foreign currency
transactions ............................................ 21,899
--------
Net realized and unrealized gain
on investments and foreign currency
transactions ............................................ 32,924
--------
Net increase in net assets resulting
from operations ......................................... $ 43,006
========
- ---------
+ From commencement of operations on May 11, 1998.
Statement of Changes in Net Assets
================================================================================
Period Ended
June 30, 1998
(Unaudited)+
-------------
Operations:
Net investment income ....................................... $ 10,082
Net realized gain on investments and foreign
currency transactions ..................................... 11,025
Net change in unrealized appreciation on investments
and foreign currency transactions ......................... 21,899
----------
Net increase in net assets resulting from operations ........ 43,006
----------
Capital share transactions:
Net increase in net assets from capital share transactions .. 2,470,965
----------
Net increase in net assets .................................. 2,513,971
Net Assets:
Beginning of period ......................................... --
----------
End of period ............................................... $2,513,971
==========
- ---------
+ From commencement of operations on May 11, 1998.
See accompanying notes to financial statements.
8
<PAGE>
The Gabelli Global Opportunity Fund
Notes to Financial Statements (Unaudited)
================================================================================
1. Description. The Gabelli Global Opportunity Fund (the "Fund"), a series of
Gabelli Global Series Funds, Inc. (the "Corporation"), is a non-diversified,
open-end management investment company registered under the Investment Company
Act of 1940, as ammended (the "1940 Act") and one of four separately managed
portfolios of the corporation, whose primary objective is capital appreciation.
The Fund commenced investment operations on May 11, 1998.
2. Significant Accounting Policies. 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 in the preparation of its financial statements.
Security Valuation. Portfolio securities listed or traded on a nationally
recognized securities exchange, 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 as of the close of business on
the day the securities are being valued (if there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day). All other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest average of the bid and asked prices. Portfolio securities traded on more
than one national securities exchange or market are valued according to the
broadest and most representative market, as determined by the Adviser. 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 Board of 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. Debt instruments having a greater maturity are
valued at the highest bid price obtained from a dealer maintaining an active
market in those securities. Options are valued at the last sale price on the
exchange on which they are listed. If no sales of such options have taken place
that day, they will be valued at the mean between their closing bid and asked
prices.
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 credit guidelines established by the Directors. Under the terms of a
typical repurchase agreement, the Fund takes possession of an underlying debt
obligation subject to an obligation of the seller to repurchase, and the Fund to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Fund's holding period. The Fund will always receive and
maintain securities as collateral whose market value, including accrued
interest, will be at least equal to 100% of the dollar amount invested by the
Fund in each agreement. The Fund will make payment for such securities only upon
physical delivery or upon evidence of book entry transfer of the collateral to
the account of the custodian. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market on a
daily basis to maintain the adequacy of the collateral. If the seller defaults
and the value of the collateral declines or if bankruptcy proceedings are
commenced with respect to the seller of the security, realization of the
collateral by the Fund may be delayed or limited.
9
<PAGE>
The Gabelli Global Opportunity Fund
Notes to Financial Statements (Continued) (Unaudited)
================================================================================
Foreign Currency Translation. The books and records of the Fund are maintained
in United States (U.S.) dollars. Foreign currencies, investments and other
assets and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated at the exchange rate prevailing
on the respective dates of such transactions. Unrealized gains and losses, which
result from changes in foreign exchange rates and/or changes in market prices of
securities, have been included in unrealized appreciation/depreciation on
investments. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amounts actually received.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial trade date and subsequent sale trade date is
included in realized gain/(loss) on investments.
Securities Transactions and Investment Income. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatment of income and gains
on various investment securities held by the Fund, timing differences and
differing characterization of distributions made by the Fund.
Provision for Income Taxes. The Fund intends to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended. As a result, a Federal income tax provision is not 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.
3. Investment Advisory Agreement. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00% of the value of the Fund's average daily net assets.
For the period ended June 30, 1998, the Adviser was entitled to fees of $2,692.
In accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs and pays the compensation of all
Officers and Directors of the Fund who are its affiliates.
10
<PAGE>
The Gabelli Global Opportunity Fund
Notes to Financial Statements (Continued) (Unaudited)
================================================================================
4. Distribution Plan. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. For the period
ended June 30, 1998 the Fund incurred distribution costs payable to Gabelli &
Company, Inc., an indirect wholly-owned subsidiary of the Adviser, of $670, or
0.25% of average net assets, the annual limitation under the Plan. Such payments
are accrued daily and paid monthly.
5. Organizational Expenses. The organizational expenses of the Fund are being
amortized on a straight-line basis over a period of 60 months.
6. Portfolio Securities. Purchases and sales of securities for the period ended
June 30, 1998, other than short term securities, aggregated $1,997,243 and
$320,573, respectively.
7. Transactions with Affiliates. During the period ended June 30, 1998, the Fund
paid brokerage commissions of $895 to Gabelli & Company, Inc. and its
affiliates.
8. Capital Stock Transactions. Transactions in shares of capital stock were as
follows:
Period Ended June 30, 1998
--------------------------
Shares Amount
------ ------
Shares sold ..... 297,666 $2,993,892
Shares redeemed . (51,874) (522,927)
------- ----------
Net increase .. 245,792 $2,470,965
======= ==========
Financial Highlights
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
Period Ended
June 30, 1998
(Unaudited)+
------------
Operating performance:
Net asset value, beginning of period .................... $10.00
-------
Net investment income ................................... 0.04
Net realized and unrealized gain on investments ......... 0.19
-------
Total from investment operations ........................ 0.23
-------
Net asset value, end of period .......................... $ 10.23
=======
Total return++ .......................................... 2.3%
Ratios to average net assets and supplemental data:
Net assets, end of period (in 000's) .................... $2,514
Ratio of net investment income to average net assets .... 3.73%(a)
Ratio of operating expenses to average net assets ....... 2.50%(a)
Portfolio turnover rate ................................. 43%
- ---------
+ From commencement of operations on May 11, 1998.
++ 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. Total return for the period of less than one year is not
annualized.
(a) Annualized.
11
<PAGE>
Gabelli Global Series Funds, Inc.
The Gabelli Global Opportunity 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 and Portfolio Managers
Mario J. Gabelli, CFA Marc J. Gabelli
President and Chief Portfolio Manager
Investment Officer
Caesar Bryan Bruce N. Alpert
Portfolio Manager Vice President and Treasurer
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 LLP
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This report is submitted for the general information of the shareholders of The
Gabelli Global Opportunity Fund. It is not authorized for distribution to
prospective investors unless preceded or accompanied by an effective prospectus.
- --------------------------------------------------------------------------------
