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The
Gabelli
Global
Telecommunications
Fund
SEMI-ANNUAL REPORT
JUNE 30, 1999
<PAGE>
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The Gabelli Global Telecommunications Fund
Semi-Annual Report
June 30, 1999
* * * * *
Morningstar Rated(TM) Gabelli Global Telecommunications Fund 5 stars for
the three-year period ended 6/30/99 among 3043 domestic equity funds, and
4 stars overall and for the five-year period ended 6/30/99 among 3043
and 1878 domestic equity funds, respectively.
To Our Shareholders,
Global telecommunications stocks continued to reward investors generously
in the second quarter of 1999. All of the forces driving the
group--technological advances, new services, deregulation and
consolidation--remain intact. Additionally, the economic and stock market
recovery in emerging market Asia translated into exceptional gains for most of
the region's telecommunications providers.
Investment Performance
For the second quarter ended June 30, 1999, The Gabelli Global
Telecommunications Fund's (the "Fund") total return was 14.4%. The Lipper
Telecommunications Fund Average and Salomon Smith Barney Global
Telecommunications Index had total returns of 11.8% and 10.2%, respectively,
over the same period. The Salomon Smith Barney Global Telecommunications index
is an unmanaged indicator of stock market performance, while the Lipper Average
reflects the average performance of mutual funds classified in this particular
category. The Fund was up 46.1% over the trailing twelve-month period. The
Lipper Telecommunications Fund Average and Salomon Smith Barney Global
Telecommunications Index rose 50.8% and 38.9%, respectively, over the same
twelve-month period.
For the five-year period ended June 30, 1999, the Fund's total return
averaged 24.9% annually versus average annual total returns of 23.9% and 20.2%
for the Lipper Telecommunications Fund Average and Salomon Smith Barney Global
Telecommunications Index, respectively. Since inception on November 1, 1993
through June 30, 1999, the Fund had a cumulative total return of 194.8%, which
equates to an average annual total return of 21.0%.
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results. Morningstar proprietary
ratings reflect historical risk adjusted performance as of June 30, 1999 and are
subject to change every month. Morningstar ratings are calculated from a Fund's
three, five and ten-year average annual returns in excess of 90-day T-Bill
returns with appropriate fee adjustments and a risk factor that reflects fund
performance below 90-day T-Bill returns. The top 10% of the funds in a broad
asset class receive five stars, the next 22.5% receive four stars, the next 35%
receive three stars, the next 22.5% receive two stars and the bottom 10% receive
one star.
<PAGE>
INVESTMENT RESULTS (a)
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Quarter
--------------------------------------
1st 2nd 3rd 4th Year
----- ----- ------ ------ ------
1999: Net Asset Value... $19.18 $21.95 -- -- --
Total Return...... 15.4% 14.4% -- -- --
- -------------------------------------------------------------------------------
1998: Net Asset Value... $15.91 $16.22 $14.48 $16.62 $16.62
Total Return...... 19.4% 1.9% (10.7)% 24.0% 34.8%
- -------------------------------------------------------------------------------
1997: Net Asset Value... $11.29 $13.17 $14.22 $13.32 $13.32
Total Return...... 0.1% 16.7% 7.9% 4.6% 31.9%
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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%
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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)
- -------------------------------------------------------------------------------
- ---------------------------------------------------------
Average Annual Return - June 30, 1999 (a)
-----------------------------------------
1 Year................................... 46.1%
5 Year................................... 24.9%
Life of Fund (b)......................... 21.0%
- ---------------------------------------------------------
Dividend History
- -------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
- ----------------- -------------- ------------------
December 28, 1998 $1.310 $16.38
December 30, 1997 $1.550 $13.28
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
(a) Total returns and average annual returns reflect changes in share price and
reinvestment of dividends and are net of expenses. The net asset value of the
Fund is reduced on the ex-dividend (payment) date by the amount of the dividend
paid. 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 investment operations on November 1,
1993. Note: Investing in foreign securities involves risks not ordinarily
associated with investments in domestic issues, including currency fluctuation,
economic and political risks.
- --------------------------------------------------------------------------------
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Global Allocation
The accompanying chart presents the Fund's holdings by geographic region
as of June 30, 1999. 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.
Industry Allocation
The accompanying chart depicts the Fund's holdings by industry sector as
of June 30, 1999. Industry sectors represented in the chart and below may or may
not be included in the Fund's future portfolio.
HOLDINGS BY GEOGRAPHIC REGION - 6/30/99
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[The following table was depicted as a pie chart.]
United States 47.7%
Cash 21.5%
Europe 13.2%
Canada 7.1%
Asia/Pacific Rim 3.7%
Latin America 3.4%
Japan 3.3%
HOLDINGS BY INDUSTRY SECTOR - 6/30/99
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[The following table was depicted as a pie chart.]
Wireless/Satallite 22.6%
Cash 21.5%
Regional Providers 16.1%
Networks 15.7%
Cable/Media 10.9%
Long Distance 6.3%
Equipment 5.5%
Alternative Providers 0.7%
Business Services 0.7%
COMMENTARY
The Americanization of the European Telecommunications Industry
America refined the "art of the deal". We were early to recognize the
economic benefits of consolidation and our investment bankers pioneered
sophisticated financial packages and strategies to facilitate economically
sensible mergers and acquisitions. Europe is now beginning to think along the
same lines.
We were delighted to see Deutsche Telekom compete with Olivetti for
Telecom Italia. Not only were we receiving a premium bid for one of our
portfolio holdings, but also it was the first true takeover battle in the
European telecommunications industry. Importantly, rather than pulling in its
horns following Olivetti's victory, Deutsche Telekom moved to issue a pile of
new equity in order to finance what appears to be an acquisition war chest. The
gloves are coming off in Europe and we expect to see more duels for attractive
telecommunications assets.
We are seeing friendly deals as well. European regulatory authorities are
currently reviewing the proposed merger of Sweden's Telia with Norway's Telenor.
We think the merger will be approved and, in the process, provide guidelines
that will accelerate telecommunications consolidation in Europe.
3
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Now that we are seeing "cross-border" transactions in Europe, will major
"cross-continent" telephone deals follow? We have seen deals in the cellular
sector, most notably Vodafone's acquisition of AirTouch, and British Telecom
recently bid unsuccessfully for MCI. Now, Bermuda-based Global Crossing is vying
with Qwest Communications International for US West and Frontier Corp. If Global
Crossing wins, it will be interesting to see if European giants such as Deutsche
Telekom are emboldened to aggressively pursue a major U.S. telecommunications
provider.
The upshot of the initial stages of what we believe will be a major
consolidation in Europe is that European telecommunications companies are now
receiving stock market valuations similar to, if not equal to, those enjoyed by
leading American telecommunications providers.
The Broadband Wars
After exceptional performance over the past two years, leading cable
stocks such as Cablevision and Time Warner cooled off this quarter. Investors
appeared to shift their focus away from the cable guys to telephone companies
rolling out new digital service line networks ("DSL") to provide higher speed
Internet access. The new DSLs do not match the speed of cable lines and modems,
while also being more expensive. But, DSLs are a major improvement over Internet
transmission via standard copper telephone lines. This is not a "winner take
all" proposition. We still believe cable will ultimately be the Internet
transmission vehicle of choice and that their success will continue to drive
cable company valuations. However, DSLs will help the telephone companies hold
on to a meaningful market share in this rapid growth business and provide
incremental revenues and profits.
We are also seeing increasing investor interest in wireless data
transmission companies, which were given up for dead several years ago. MCI
WorldCom and Paul Allen's Vulcan Ventures have invested $600 million in Metracom
and there is rampant speculation that MCI WorldCom may make a bid for Nextel.
Liberty Media Group is acquiring Associated Group, which is a 40%-owner of
Teligent. Sprint is also investing in wireless cable companies. We think a third
front is opening in the war for Internet and other data transmission business.
We will be monitoring these developments closely.
This Quarter's Scorecard
The top of this quarter's performance list was sprinkled with emerging
market Asian telecommunications stocks including: Thai Telephone; PT
Telekomunikasi Indonesia; Telekom Malaysia; and Telecom Asia. Two manufacturers
of digital set-top boxes for the cable industry, Scientific-Atlanta and General
Instrument, also performed well as revenues ramped up. Judging from the terrific
performance of Liberty Media Group, Associated Group and Teligent, investors
appear to support John Malone's first major acquisition for AT&T's new Liberty
Media subsidiary.
As aforementioned, leading cable television stocks declined. We believe
this is primarily profit taking by momentum investors who jumped on the cable
bandwagon late and jumped off as soon as the group hit its first speed bump. We
believe Internet oriented services will continue to drive cable company values
and that after a well-earned rest, these stocks will regain momentum.
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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, 1999.
Associated Group Inc. (AGRPA - $65.125 - Nasdaq; AGRPB - $65.1875 - Nasdaq) is a
diversified communications company with ownership and operation of a variety of
wireless communications businesses and interests including TruePosition, a
controlling interest in Teligent (a facilities-based wireless competitive local
exchange carrier), a controlling interest in a Mexican cellular operator and
five radio broadcasting stations in Ohio. Associated Group also has a marketable
equity securities portfolio, which includes approximately 20 million shares of
AT&T Corp. common stock and 14 million shares of Liberty Media Group, an AT&T
tracking stock, having a current market value of approximately $1.9 billion. The
company also operates Associated American Artists, a prominent art gallery in
New York City. In early June, Liberty Media Group (LMG'A - $36.75 - NYSE), an
investment vehicle led by John Malone and owned by AT&T, announced a plan to
acquire Associated for $2.8 billion in stock.
AT&T Corp. (T - $55.8125 - NYSE), the world's second-largest telephone company,
is a global provider of communications services. Chairman Michael Armstrong is
positioning the company to participate more dynamically in the growth of the
telecommunications industry. AT&T has completed a merger with cable operator TCI
and has announced a strategy to leverage cable assets with telephone services.
The company recently bid for another cable operator, MediaOne Group (UMG -
$74.375 - NYSE), endeavoring to become a major provider of high-speed Internet
access via cable. The introduction of the Digital One rate for its wireless
service has created momentum in its cellular and PCS segments with revenues
growing more than 40%.
BCE Inc. (BCE - $49.3125 - NYSE) is Canada's global communications company. BCE
recently completed a major transaction with Ameritech (AIT - $73.50 - NYSE).
Under the agreement, BCE sold 20% of Bell Canada, its wholly-owned Canadian
telecommunications subsidiary, to Ameritech. BCE also owns strategic stakes in
Nortel Networks (NT - $86.8125 - NYSE), Teleglobe (TGO - $29.4375 - NYSE), BCE
Emergis and CGI Group. One share of BCE provides ownership of 0.42 shares of
Nortel Networks. The company's positions in satellites, network operations,
information technology, media and e-commerce are expected to provide growth for
the company.
Cablevision Systems Corp. (CVC - $70.00 - AMEX) is one of the nation's leading
communications and entertainment companies, with a portfolio of operations that
span state-of-the-art, high-speed multimedia delivery, subscription cable
television services, championship professional sports teams and national cable
television networks. Headquartered in Bethpage, NY, Cablevision serves more than
3.4 million cable customers primarily in three core markets: New York, Boston
and Cleveland. Cablevision is a
5
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leader in delivering cutting-edge technological innovation, such as Optimum TV,
to the home. Through its Rainbow Media Holdings subsidiary, Cablevision manages
and develops internationally recognized content offerings such as the popular
national television networks American Movie Classics, Bravo and The Independent
Film Channel. Cablevision has a controlling interest in New York City's famed
Madison Square Garden which includes the arena complex, the NY Knicks, the NY
Rangers and the MSG network. Cablevision operates Radio City Entertainment and
holds a long term lease for Radio City Music Hall, home of the world famous
Radio City Rockettes.
Cable & Wireless plc (CWP - $39.625 - NYSE), a United Kingdom-based company, is
a global telecommunications provider with interests in local telephone
companies. Major subsidiaries include Hong Kong Telecommunications (HKT -
$26.9375 - NYSE) (54% owned) and the publicly traded, U.K.-based company, Cable
& Wireless Communications (CWZ - $48.50 - NYSE) (53% owned) - the largest cable
system operator in the U.K. CWZ owns 100% of Mercury Communications, the second
largest provider of telecom services in Britain, and is a majority stakeholder
in Bell Cable Media, Nynex CableComms and Videotron Holdings plc. Hong Kong
Telecom is the dominant telecom service provider in Hong Kong and remains the
"crown jewel" of the CWP portfolio. Cable & Wireless has dramatically expanded
its global Internet presence with its September 1998 acquisition of Internet MCI
for $1.75 billion.
Citizens Utilities Co. (CZN - $11.125 - NYSE) provides telecommunications
services and public services to approximately 1.8 million customers in 21
states. Citizens owns 83% of Electric Lightwave (ELIX - $13.00 -Nasdaq), a
competitive local exchange carrier ("CLEC") serving primarily the western U.S.
Last year, management authorized the separation of Citizens' telecommunications
businesses and public services businesses into two stand-alone, publicly traded
companies. Recently, CZN announced agreements to acquire over 700,000 rural
access lines in 10 states for $2.3 billion. CZN intends to finance the
transactions by divesting its public services operations. The company has sold
its 16% stake in Centennial Cellular Corp. for approximately $205 million.
Citizens also anticipates monetizing its ownership of Century Communications'
(CTYA - $46.00 - Nasdaq) stock and cable operations through a sale to Adelphia
Communications for approximately $220 million.
Commonwealth Telephone Enterprises Inc. (CTCO - $40.4375 - Nasdaq; CTCOB -
$40.75 - Nasdaq), located in Dallas, Pennsylvania, provides local, long distance
and other telecommunications services in rural areas of Pennsylvania. CTCO was
formed as the result of a restructuring of C-Tec Corp. in 1997. The company
currently has over 300,000 access lines and is expanding into competitive local
exchange carrier ("CLEC") businesses.
GTE Corp. (GTE - $75.75 - NYSE) is one of the largest publicly held
telecommunications companies in the world. The company is the largest U.S.-based
local telephone company. GTE's domestic and international operations serve 25.9
million access lines in the United States, Canada, the Dominican Republic and
Venezuela. GTE is a leading cellular operator in the U.S. with the potential of
serving 62 million cellular and personal communications services ("PCS")
customers. Outside the U.S., GTE operates cellular networks serving some 16.4
million points of presence ("POPs"). GTE is also a leader
6
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in government and defense communications systems and equipment, aircraft
passenger telecommunications, directories and telecommunications-based
information services and systems. On July 28, 1998, GTE and Bell Atlantic (BEL -
$65.375 - NYSE) confirmed plans to merge in a $52.5 billion stock swap which
would result in a national telecommunications giant.
Liberty Media Group (LMG'A - $36.75 - NYSE) is engaged in businesses which
provide programming services, including production, acquisition and distribution
through all available media formats, and businesses engaged in electronic
retailing, direct marketing and other services. LMG holds interests in
globally-branded entertainment networks such as Discovery Channel, USA, QVC,
Encore and STARZ!. Liberty's assets also include interests in international
video distribution businesses; international telephony and domestic wireless;
plant and equipment manufacturers; and other businesses related to broadband
services. Liberty Media Group Class A and Class B common stock are tracking
stocks of AT&T Corp. (T - $55.8125 - NYSE) and are now traded on the New York
Stock Exchange.
MediaOne Group Inc. (UMG - $74.375 - NYSE) is one of the nation's leading
broadband services companies. UMG provides more than five million subscribers in
17 states with basic and premium cable television services and has recently
introduced high speed Internet access, telephone services and digital television
in some of its service areas. MediaOne was created from the 1996 union of
telecommunications company MediaOne Group (formerly US West Media Group) and
Continental Cablevision. Headquartered in Englewood, Colorado, the company is
conducting a national upgrade of its hybrid fiber optic/coaxial cable ("HFC")
network to broadband technology which improves traditional cable service and
enables next-generation products and services. The Group's investment interests
include 25% of Time Warner Entertainment (which includes Warner Brothers Studio
and Home Box Office), 24% of PCS Prime Co. and almost 27% of TeleWest plc. The
number three U.S. cable television company recently agreed to be acquired by
AT&T Corp. (T - $55.8125 - NYSE) for $54 billion.
Omnipoint Corp. (OMPT - $28.9375 - Nasdaq) is a leading personal communications
services ("PCS") carrier in the U.S. with licenses covering major metropolitan
areas containing nearly 100 million people. On June 23, 1999, Omnipoint agreed
to be acquired by VoiceStream Wireless (VSTR - $28.4375 - Nasdaq) for $32 per
share in cash and stock. The combined company will have PCS licenses covering
about 190 million points of presence ("POPs") and will become a major PCS
carrier.
Rogers Communications Inc. (RG - $16.0625 - NYSE) is a Canadian company engaged
in cable operations, cellular (through its 81%-owned Rogers Cantel Mobile
cellular provider) and media. Through Rogers@Home, the company will be one of
the major beneficiaries of the growing penetration of cable high speed access to
the Internet in Canadian homes.
Telecom Italia Mobile SpA (TIM.MI - $5.96 - Milan Stock Exchange), formerly a
subsidiary of Telecom Italia (the provider of wired local and long distance
telephone service in Italy), was spun-off in July 1998 and began trading on the
Milan Stock Exchange as an independent company. Telecom Italia Mobile is the
leading cellular provider in Italy. The company is the largest cellular provider
in Europe with close to
7
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15 million GSM subscribers. The competitive environment in which Telecom Italia
Mobile operates remains favorable, with only two competitors, Omnitel and Wind.
Telephone & Data Systems Inc. (TDS - $73.0625 - AMEX) is a diversified
telecommunications company with established cellular and local telephone
operations and a developing personal communications services ("PCS") business.
TDS provides high quality telecommunications services to three million customers
in 35 states. TDS owns 81.1% of United States Cellular Corp. (USM - $53.50 -
AMEX), the nation's seventh largest cellular telephone company. It also owns
82.4% of Aerial Communications Inc. (AERL - $13.50 - Nasdaq), TDS's PCS
subsidiary which owns the licenses to provide PCS service in six major trading
areas ("MTAs") encompassing approximately 27.6 million population equivalents.
On December 8, 1998, TDS announced its intent to spin-off its Aerial stake to
existing TDS shareholders on a tax-free basis and focus on its core wireline and
cellular operations. The transaction is expected to close by the end of the
year.
U.S. West Inc. (USW - $58.75 - NYSE) headquartered in Denver, Colorado, provides
a full range of telecommunications services to more than 25 million customers in
14 western and midwestern states. The company's primary products and services
include: local telephone services; long distance services within specified
calling areas; high-speed data networking, including Internet access and digital
subscriber line ("DSL") services; wireless personal communications services
("PCS"); print and electronic directories; local phone interconnections to
interstate long distance companies; operator services; and video services in
limited markets. U.S. West leads the nation in deployment of leading-edge DSL
technologies. The company's Internet access service now has well over 100,000
subscribers. In May, the company and Global Crossing (GBLX - $42.625 - Nasdaq)
agreed to a $37 billion merger. Nonetheless, Qwest Communications International
(QWST - $33.0625 - Nasdaq) and U.S. West are holding merger talks. Qwest, the
number four U.S. long distance company, sweetened its offers to buy both U.S.
West and local and long distance phone company Frontier Corp. (FRO - $59.00 -
NYSE), in a second attempt to win them away from their current merger partner,
Global Crossing.
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 Telecommunications Fund and other Gabelli Funds
are available through the no-transaction fee programs at many major discount
brokerage firms.
Internet
You can now visit us on the Internet. Our home page at
http://www.gabelli.com contains information about Gabelli Asset Management Inc.,
the Gabelli Mutual Funds, IRAs, 401(k)s, quarterly reports, closing prices and
other current news. You can send us e-mail at [email protected].
8
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In Conclusion
We formed the Gabelli Global Telecommunications Fund in 1993, believing
that telecommunications was becoming a global growth industry. Our vision has
been grandly rewarded. While it may be optimistic to expect the kind of returns
we have achieved in recent years to continue indefinitely, we remain confident
that telecommunications companies worldwide still represent excellent investment
opportunities.
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
business day for further information.
Sincerely,
/s/ Mario J. Gabelli /s/ Marc J. Gabelli
Mario J. Gabelli, CFA Marc J. Gabelli
Portfolio Manager and Associate Portfolio Manager
Chief Investment Officer
/s/ Ivan Arteaga
Ivan Arteaga, CFA
Associate Portfolio Manager
July 30, 1999
------------------------------------------------------------------------
Top Ten Holdings
June 30, 1999
Telephone & Data Systems Inc. Associated Group Inc.
Commonwealth Telephone Enterprises AT&T Corp.
U.S. West Inc. Rogers Communications Inc.
Liberty Media Group Cable & Wireless plc
Omnipoint Corp. Telecom Italia Mobile SpA
------------------------------------------------------------------------
NOTE: The views expressed in this report reflect those of the portfolio manager
only through the end of the period stated in this report. The manager's views
are subject to change at any time based on market and other conditions.
9
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The Gabelli Global Telecommunications Fund
Portfolio of Investments -- June 30, 1999 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 77.3%
Alternative Telecommunications Providers-- 0.6%
4,000 Colt Telecom Group plc+ ............... $ 31,875 $ 345,500
1,940 Davel Communications Group Inc.+....... 21,203 10,428
48,000 GST Telecommunications Inc.+ .......... 544,300 633,000
18,000 ICG Communications Inc.+ .............. 238,475 384,750
4,000 Intermedia Communications Inc.+....... 27,830 120,000
3,500 McLeodUSA Inc., Cl. A+ ................ 61,390 192,500
5,000 Startec Global Communications Corp.+... 40,321 60,625
10,000 USN Communications Inc.+ .............. 19,252 5,000
------------ ------------
984,646 1,751,803
------------ ------------
Broadcasting -- 0.1%
25,000 CanWest Global Communications Corp..... 345,737 342,188
------------ ------------
Business Services -- 0.6%
9,000 Carlisle Holdings Ltd.+ ............... 48,250 130,500
20,000 Convergys Corp.+ ...................... 267,262 385,000
2,000 EarthLink Network Inc.+ ............... 45,250 122,875
30,000 IDT Corp.+ ............................ 405,536 667,500
20,000 R. H. Donnelley Corp. ................. 272,932 391,250
------------ -------------
1,039,230 1,697,125
------------ -------------
Cable -- 7.3%
10,000 Adelphia Communications Corp., Cl. A+.. 94,825 636,250
42,000 Cablevision Systems Corp., Cl. A+...... 329,213 2,940,000
56,500 Century Communications Corp., Cl. A+... 444,563 2,599,000
27,000 Comcast Corp., Cl. A .................. 214,182 966,938
27,000 Comcast Corp., Cl. A, Special ......... 214,182 1,037,813
10,000 Le Groupe Videotron ltee .............. 125,234 158,779
50,000 MediaOne Group Inc.+ .................. 883,235 3,718,749
33,000 NTL Inc.+ ............................. 857,121 2,844,188
25,000 TCA Cable TV Inc. ..................... 1,414,685 1,387,500
23,000 Telewest Communications plc, ADR+...... 368,757 1,052,250
35,000 United International Holdings Inc.,
Cl. A+............................... 651,365 2,366,875
------------ -------------
5,597,362 19,708,342
------------ -------------
Communications Equipment -- 5.3%
200,000 Allen Telecom Inc.+ ................... 1,004,999 2,150,000
120,000 Champion Technology Holdings, ADR...... 81,258 40,992
10,000 Communications Systems Inc. ........... 91,603 123,750
50,000 Dialogic Corp.+ ....................... 2,175,199 2,193,750
8,000 Ericsson (L.M.) Telephone Co., ADR..... 55,422 263,500
6,000 Gemstar International Group Ltd.+...... 116,993 391,500
5,000 General Instrument Corp.+ ............. 76,830 212,500
2,500 General Semiconductor Inc.+ ........... 33,120 22,813
12,500 GN Store Nord A/S ..................... 215,022 422,357
3,500 L - 3 Communications Holdings Inc.+.... 77,000 169,094
10,000 Lucent Technologies Inc. .............. 114,818 674,376
25,000 Mannesmann AG ......................... 819,702 3,730,631
2,500 Motorola Inc........................... 113,969 236,875
8,000 Nokia Corp., Cl. A, ADR ............... 76,675 732,500
25,000 Nortel Networks Corp. ................. 450,625 2,170,313
12,000 Scientific-- Atlanta Inc. ............. 197,408 432,000
500 Siemens AG, ADR........................ 23,625 38,569
100,000 Time Engineering Berhad+ .............. 264,576 37,105
15,000 TNT Post Group NV, ADR ................ 198,278 360,000
------------ -------------
6,187,122 14,402,625
------------ -------------
Computer Software and Services -- 0.0%
25,000 VirtualSellers.com Inc.+ .............. 112,129 7,250
------------ -------------
Energy and Utilities -- 0.1%
20,000 El Paso Electric Co.+ ................. 171,000 178,750
3,000 Florida Public Utilities Co. .......... 45,125 56,625
------------ -------------
216,125 235,375
------------ -------------
Entertainment -- 2.6%
23,462 Ascent Entertainment Group Inc.+....... 177,530 331,401
15,000 GC Companies Inc.+ .................... 622,631 536,250
141,048 Liberty Media Group, Cl. A+ ........... 1,631,534 5,183,514
8,000 Metromedia International Group Inc.+... 74,575 60,000
2,000 TCI Music Inc., Cl. A+ ................ 53,750 70,750
6,000 Time Warner Inc........................ 221,700 441,000
10,000 Viacom Inc., Cl. A+ ................... 380,138 441,250
------------ -------------
3,161,858 7,064,165
------------ -------------
Equipment and Supplies -- 0.3%
6,000 Amphenol Corp., Cl. A+ ................ 186,478 238,500
20,000 Thyssen Krupp AG+ ..................... 367,786 439,941
------------ -------------
554,264 678,441
------------ -------------
Long Distance Telephone Providers-- 5.9%
80,000 AT&T Corp. ............................ 1,908,535 4,465,000
25,000 Call-Net Enterprises Inc.+ ............ 236,026 155,400
270 DDI Corp............................... 1,237,907 1,679,746
23,000 Embratel Participacoes SA, ADR ........ 476,687 319,125
3,000 Esat Telecom Group plc, ADR+ .......... 129,000 131,625
68,000 General Communication Inc., Cl. A+..... 300,203 462,188
14,000 Kokusai Denshin Denwa Co. Ltd. ........ 813,222 1,005,154
8,500 MCI WorldCom Inc.+..................... 234,681 733,125
8,000 MIDCOM Communications Inc.+ ........... 6,958 280
64,000 Philippine Long Distance Telephone Co.. 1,920,450 1,928,000
90,000 PLD Telekom Inc.+ ..................... 498,670 281,250
11,660 Qwest Communications
International Inc.+.................. 45,262 385,509
10
<PAGE>
The Gabelli Global Telecommunications Fund
Portfolio of Investments (Continued) -- June 30, 1999 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (Continued)
Long Distance Telephone Providers (Continued)
40,000 Sprint Corp. .......................... $ 484,192 $ 2,112,500
8,000 Teleglobe Inc.......................... 60,486 235,398
5,000 Telegroup Inc.+........................ 20,540 50
88,000 VDC Communications Inc.+ .............. 323,268 264,000
34,000 Viatel Inc.+ .......................... 406,323 1,908,250
------------ -------------
9,102,410 16,066,600
------------ -------------
Publishing -- 0.3%
3,000 Harcourt General Inc. ................. 156,200 154,687
3,000 Media General Inc., Cl. A ............. 125,072 153,000
8,000 News Corp. Ltd., ADR. ................. 179,088 282,500
100,000 Seat-- Pagine Gialle SpA .............. 28,390 136,644
------------ -------------
488,750 726,831
------------ -------------
Regional and Local Telephone Providers -- 16.2%
60,000 Aliant Communications Inc. ............ 1,140,341 2,771,250
98,675 Aliant Inc.+ .......................... 980,569 1,496,745
2,000 Allegiance Telecom Inc.+ .............. 28,500 109,750
6,000 Alltel Corp............................ 250,348 429,000
42,000 Ameritech Corp. ....................... 872,425 3,087,000
8,800 AT&T Canada Inc.+...................... 513,099 563,750
15,200 Atlantic Tele-Network Inc. ............ 129,263 159,600
10,608 Bell Atlantic Corp. ................... 272,025 693,498
50,000 BellSouth Corp. ....................... 745,371 2,343,750
38,000 CenturyTel Inc. ....................... 510,789 1,510,500
30,000 Cincinnati Bell Inc. .................. 310,839 748,125
120,817 Commonwealth Telephone
Enterprises Inc.+.................... 3,145,389 4,885,536
40,500 Commonwealth Telephone
Enterprises Inc., Cl. B+ ............ 494,914 1,650,375
500 Companhia Riograndense de
Telecomunicacoes+.................... 310 121
9,000 CoreComm Ltd.+......................... 73,858 434,250
7,000 E.Spire Communications Inc.+ .......... 47,813 73,938
12,000 Electric Lightwave Inc., Cl. A+ ....... 122,938 156,000
150,000 First Pacific Co. Ltd. ................ 90,040 127,600
10,000 First Pacific Co. Ltd., ADR ........... 35,875 42,533
40,000 Frontier Corp. ........................ 1,388,581 2,360,000
4,760 Global Telesystems Group Inc.+ ........ 83,339 385,560
40,000 GTE Corp. ............................. 1,553,376 3,030,000
20,000 QuebecTel Group Inc. .................. 153,660 211,480
275,000 Rogers Communications Inc.,
Cl. B, ADR+.......................... 2,662,615 4,451,562
77,500 RCN Corp.+ ............................ 696,908 3,225,938
35,000 SBC Communications Inc. ............... 749,908 2,030,000
2,000 Shenandoah Telecommunications Co....... 46,625 49,250
23,000 Tele Norte Leste Participacoes SA, ADR. 368,349 426,938
23,000 Telesp Participacoes SA, ADR .......... 851,125 526,125
6,500 Time Warner Telecom Inc., Cl. A+ ...... 91,000 188,500
100,000 US West Inc. .......................... 5,550,394 5,874,999
------------ -------------
23,960,586 44,043,673
------------ -------------
Satellite -- 3.4%
3,000 American Mobile Satellite Corp.+ 38,340 49,125
500 Asia Satellite Telecommunications
Holdings Ltd......................... 9,753 11,531
1,000 British Sky Broadcasting Group, ADR.... 36,400 56,125
80,000 COMSAT Corp. .......................... 2,066,684 2,600,000
6,000 Echostar Communications Corp., Cl. A+.. 163,040 920,625
30,000 General Motors Corp., Cl. H+ .......... 1,499,697 1,687,500
16,000 Globalstar Telecommunications+ ........ 55,725 371,000
22,000 Iridium World Communications Ltd.+..... 417,063 235,125
50,000 Loral Space & Communications Ltd.+..... 793,167 900,000
7,000 Orbital Sciences Corp.+ ............... 165,725 165,375
8,400 Pathe SA............................... 566,512 1,008,338
8,000 Pegasus Communications Corp.+ ......... 201,990 315,500
10,000 PT Indonesia Satellite, ADR ........... 146,877 195,000
35,500 TCI Satellite Entertainment Inc.,
Cl. A+............................... 239,524 104,281
40,000 U.S. Satellite Broadcasting Co.+ ...... 486,076 719,776
------------ -------------
6,886,573 9,339,301
------------ -------------
Telecommunications -- 0.1%
4,600 Tele Centro Sul Participacoes SA, ADR.. 268,866 255,300
------------ -------------
Telephone Networks -- 15.3%
78,000 BCE Inc. .............................. 1,511,774 3,846,374
71,079 BCT. Telus Communications Inc. ........ 1,279,790 1,700,078
23,693 BCT. Telus Communications Inc., Cl. A.. 426,475 557,888
1,000 British Telecommunications plc, ADR.... 53,925 171,250
25,000 Cable & Wireless Communications
plc, ADR+............................ 667,779 1,212,500
9,600,000 Cable & Wireless Jamaica Ltd. ......... 406,750 298,433
110,000 Cable & Wireless plc, ADR ............. 2,368,162 4,358,749
338,333 Citizens Utilities Co., Cl. B+ ........ 3,112,200 3,763,954
64,000 Compania de Telecomunicaciones
de Chile SA.......................... 988,703 1,584,000
500,000 CPT Telefonica del Peru, Cl. B ........ 722,310 742,039
1,500 CPT Telefonica del Peru, Cl. B, ADR.... 27,088 22,688
16,000 Deutsche Telekom AG ................... 313,538 676,000
2,000 France Telecom SA...................... 68,975 154,000
4,707 Hellenic Telecommunications
Organization SA...................... 76,629 100,893
2,000 Hellenic Telecommunications
Organization SA, ADR+ ............... 29,975 22,125
30,000 Hong Kong Telecommunications
Ltd., ADR............................ 569,621 808,125
5,000 Hungarian Telephone & Cable Corp.+..... 36,707 32,500
11
<PAGE>
The Gabelli Global Telecommunications Fund
Portfolio of Investments (Continued) -- June 30, 1999 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (Continued)
Telephone Networks (Continued)
80 Japan Telecom Co. Ltd.................. $ 1,328,442 $ 1,136,850
15,000 Koninklijke PTT Nederland NV, ADR...... 272,243 720,000
5,000 Korea Telecom Corp..................... 183,166 331,760
500 Matav, ADR............................. 9,650 13,750
167 Nippon Telegraph and Telephone Corp.... 1,216,226 1,945,452
10,000 Nippon Telegraph and Telephone
Corp., ADR........................... 409,638 626,250
800 Pakistan Telecommunications, GDR (a)... 98,166 29,600
12,000 Portugal Telecom SA, ADR .............. 233,785 494,250
21,600 PT Telekomunikasi Indonesia ........... 229,279 268,650
6,000 Rostelecom, ADR........................ 48,941 58,875
50,000 Singapore Telecommunications Ltd....... 101,494 85,758
25,000 Swisscom AG, ADR ...................... 914,587 959,375
16,000 Tele Danmark A/S, ADR ................. 215,400 412,000
23,000 Telecom Argentina Stet--
France Telecom SA, ADR .............. 520,598 615,250
1,000,000 Telecom Asia Corp. .................... 687,194 1,010,200
21,000 Telecom Corporation of New
Zealand Ltd., ADR.................... 502,962 733,688
190,000 Telecom Italia SpA .................... 448,033 1,975,095
18,500 Telecom Italia SpA, ADR ............... 535,665 1,945,969
23,000 Telecomunicacoes Brasilciras
SA (Telebras), ADR+.................. 21,668 1,438
938,570 Telecomunicacoes de Sao Paulo
SA (Telesp).......................... 101,286 76,496
23,000 Telefonica de Argentina SA, ADR ....... 613,524 721,625
22,440 Telefonica de Espana, ADR ............. 914,028 3,301,484
31,000 Telefonos de Mexico SA, Cl. L, ADR..... 1,185,988 2,505,187
300,000 Telekom Malaysia Berhad ............... 1,420,411 1,121,053
600 Telestra Corp. Ltd..................... 47,304 69,300
8,075 Thai Telephone & Telecom, GDR+ (a)..... 100,542 9,204
3,000 Veba AG................................ 126,255 176,348
------------ -------------
25,146,876 41,396,503
------------ -------------
Wireless Communications -- 19.2%
40,000 ABC Communications Holdings Ltd........ 20,301 12,116
230,000 Aerial Communications Inc.+ ........... 1,489,740 3,105,000
33,400 Associated Group Inc., Cl. A+ ......... 483,480 2,175,175
42,000 Associated Group Inc., Cl. B+ ......... 667,565 2,737,875
25,500 BCE Mobile Communications Inc.+........ 791,727 775,313
500 Bouygues Group......................... 58,707 132,158
10,000 Cellular Communications of
Puerto Rico Inc.+.................... 108,534 285,000
500 Celular CRT Participacoes ............. 206 6,768
4,000 Centennial Cellular Corp.+ ............ 133,955 142,500
2,000 Clearnet Communications Inc., Cl. A+... 25,000 27,875
37,890 CommNet Cellular Inc.+ ................ 407,066 994,613
35,000 CP Pokphand, ADR+ ..................... 259,575 46,802
5,300 Easycall Group+........................ 8,992 702
250,000 Europolitan Holdings AB ............... 229,475 2,470,080
36,000 Grupo Iusacell SA, Ser. D, ADR+ ....... 428,962 459,000
26,000 Himachal Futuristic (a) ............... 141,200 68,045
24,000 Jasmine International+ ................ 117,135 16,760
50,000 Leap Wireless International Inc.+ ..... 349,000 1,012,500
9,000 Libertel NV+........................... 196,853 176,348
1,500 Metrocall Inc.+........................ 11,138 4,125
17,289 NEXTEL Communications Inc., Cl. A+..... 378,670 867,692
160 NTT Mobile Communication Network Inc.+. 1,394,698 2,141,508
40 NTT Mobile Communication Network Inc.+. 348,675 541,987
170,000 Omnipoint Corp.+ ...................... 1,790,893 4,919,374
59,375 Price Communications Corp.+ ........... 86,067 890,625
162,000 Rogers Cantel Mobile
Communications Inc., Cl. B+ ......... 2,101,447 2,662,875
40,000 Rural Cellular Corp., Cl. A+ .......... 468,778 800,000
70,000 Securicor Group plc ................... 183,666 614,048
95,000 SK Telecom Co. Ltd., ADR .............. 1,171,697 1,615,000
5,000 SkyTel Communications Inc.+ ........... 87,075 104,688
10,000 Sprint Corp. (PCS Group)+ ............. 84,112 571,250
80,000 Technology Resources Industries ....... 309,067 65,263
2,300 Tele Celular Sul Participacoes SA,
ADR.................................. 37,449 49,881
7,666 Tele Centro Oeste Celular
Participacoes SA, ADR ............... 22,224 30,185
460 Tele Leste Celular Participacoes
SA, ADR.............................. 12,153 13,685
1,150 Tele Nordeste Celular
Participacoes SA, ADR ............... 16,568 31,050
460 Tele Norte Celular Participacoes
SA, ADR.............................. 7,079 12,449
4,600 Tele Sudeste Celular
Participacoes SA, ADR ............... 140,230 133,400
500 Telecel-Comunicacaoes
Pessoais SA.......... ............... 67,584 64,455
500,000 Telecom Italia Mobile SpA ............. 703,504 2,985,536
1,150 Telemig Celular Participacoes SA,
ADR +................................ 30,497 28,319
150,000 Telephone & Data Systems Inc. ......... 6,381,857 10,959,374
9,200 Telesp Celular Participacoes
SA, ADR.............................. 284,292 246,100
938,570 Telesp Celular SA ..................... 2,665 29,651
4,000 Teligent Inc., Cl. A+ ................. 90,000 239,250
20,000 Total Access Communications plc+....... 126,250 64,000
25,000 United States Cellular Corp.+ ......... 759,016 1,337,500
10,000 Vimpel Communications+ ................ 166,000 231,875
12
<PAGE>
The Gabelli Global Telecommunications Fund
Portfolio of Investments (Continued) -- June 30, 1999 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (Continued)
Wireless Communications (Continued)
16,015 Vodafone AirTouch plc, ADR ............ $ 620,498 $ 3,154,954
30,000 VoiceStream Wireless Corp.+ ........... 249,912 853,125
30,000 Western Wireless Corp., Cl. A+ ........ 326,188 810,000
1,500 Winstar Communications Inc.+ .......... 19,185 73,125
------------ ------------
24,396,607 51,790,979
------------ ------------
TOTAL COMMON STOCKS 108,449,141 209,506,501
------------ ------------
PREFERRED STOCKS -- 1.5%
Cable -- 0.7%
18,000 Tele-Communications Inc.,
6.00% Cv. Pfd., Ser. E .............. 1,234,247 1,835,999
------------ ------------
Entertainment -- 0.0%
1,500 Metromedia International Group Inc.,
7.25% Cv. Pfd........................ 61,513 52,313
------------ ------------
Long Distance Telephone Providers -- 0.4%
12,000 Sprint Corp.,
8.25% Cv. Pfd........................ 424,102 1,044,000
------------ ------------
Regional and Local Telephone Providers -- 0.0%
500 Telecomunicacoes do Parana ............ 164 89
------------ ------------
Telephone Networks -- 0.2%
10,000 Philippine Long Distance Telephone Co.,
7.00% Cv. Pfd., Ser. III ............ 497,200 520,000
3,355,677 Telecomunicacoes de Rio de Janeiro
SA (Telerj), Pfd..................... 148,557 57,709
40,900 Telecomunicacoes de Sao Paulo
SA (Telesp), Pfd..................... 9,633 4,856
------------ ------------
655,390 582,565
------------ ------------
Wireless Communications -- 0.2%
3,355,677 Telerj Celular SA, Pfd., Cl. B+ ....... 118,824 109,399
40,900 Telesp Celular SA, Pfd., Cl. B+ ....... 40,511 2,099
3,000 Vodafone AirTouch plc
4.25% Cv. Pfd., Cl. C ............... 144,750 443,062
------------ ------------
304,085 554,560
------------ ------------
TOTAL PREFERRED STOCKS................. 2,679,501 4,069,526
------------ ------------
RIGHTS -- 0.0%
Wireless Communications -- 0.0%
500 Bouygues SA............................ 0 1,330
24,000 Jasmine International plc+ ............ 0 0
------------ ------------
TOTAL RIGHTS........................... 0 1,330
------------ ------------
Principal
Amount
------
CORPORATE BONDS -- 0.4%
Telephone Networks -- 0.3%
$1,000,000 Telekom Malaysia Berhad, Sub. Deb. Cv.
4.00%, 10/03/04 (a).................. 1,000,042 830,000
------------ ------------
Wireless Communications -- 0.1%
250,000 Technology Resources Industries,
Sub. Deb. Cv. 2.75%, 11/28/04 (a).... 250,000 170,000
------------ ------------
TOTAL CORPORATE BONDS.................. 1,250,042 1,000,000
------------ ------------
U.S. GOVERNMENT OBLIGATIONS -- 21.7%
$59,406,000 U.S. Treasury Bills, 4.19% to 4.74% ++,
due 07/22/99 to 09/30/99............. 58,929,831 58,933,223
------------ ------------
TOTAL
INVESTMENTS -- 100.9%................ $171,308,515 273,510,580
============
Other Assets and
Liabilities (Net) -- (0.9)%.......... (2,413,997)
------------
NET ASSETS -- 100.0%
(12,351,289 shares outstanding)...... $271,096,583
============
NET ASSET VALUE,
Offering and Redemption
Price Per Share.................... $21.95
======
Shares
------
SECURITY SOLD SHORT
COMMON STOCK
2,000 Vodafone AirTouch plc, ADR ............ $ 408,136 $ 394,000
------------ ------------
For Federal tax purposes:
Aggregate cost......................... $171,308,515
============
Gross unrealized appreciation
- investments and short positions.... $106,000,240
Gross unrealized depreciation
- investments........................ (3,784,039)
------------
Net unrealized appreciation ........... $102,216,201
============
Principal Settlement Net Unrealized
Amount Date Depreciation
------- ------------
FORWARD FOREIGN EXCHANGE CONTRACTS
6,874,651 (b) Sell Hong Kong Dollars
in exchange for USD 885,101....... 08/24/99 $899
- ------------
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At June 30,
1999, the market value of Rule 144A securities amounted to $1,106,849 or
0.4% of net assets.
(b) Principal amount denoted in Hong Kong Dollars.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR -- American Depositary Receipt.
GDR -- Global Depositary Receipt.
USD -- U.S. Dollars.
% of
Market Market
Geographic Diversification Value Value
- -------------------------- ------ --------
North America 76.3% $208,524,702
Europe 13.2% 36,099,235
Asia/Pacific Rim 3.8% 10,500,293
Latin America 3.4% 9,309,403
Japan 3.3% 9,076,947
------- ------------
100.0% $273,510,580
======= ============
13
<PAGE>
The Gabelli Global Telecommunications Fund
Statement of Assets and Liabilities
June 30, 1999 (Unaudited)
================================================================================
Assets:
Investments, at value (Cost $171,308,515) ................ $273,510,580
Foreign currency, at value
(Cost $39,336) ......................................... 39,264
Dividends, interest and reclaims receivable .............. 261,662
Receivable for investments sold .......................... 844,527
Receivable for Fund shares sold .......................... 367,262
Net unrealized appreciation on forward
foreign exchange contracts ............................. 899
------------
Total Assets ............................................. 275,024,194
------------
Liabilities:
Payable for investments purchased ........................ 2,535,272
Payable for Fund shares redeemed ......................... 599,722
Securities sold short (Proceeds $408,136) ................ 394,000
Payable for investment advisory fees ..................... 209,676
Payable for distribution fees ............................ 52,417
Payable to custodian ..................................... 6,161
Other accrued expenses ................................... 130,363
------------
Total Liabilities ........................................ 3,927,611
------------
Net Assets applicable to 12,351,289
shares outstanding ..................................... $271,096,583
============
Net Assets consist of:
Capital stock, at par value .............................. $ 12,351
Additional paid-in capital ............................... 148,156,227
Accumulated net investment income ........................ 174,419
Accumulated net realized gain on investments
and foreign currency transactions ...................... 20,530,349
Net unrealized appreciation on investments
and foreign currency transactions ...................... 102,223,237
------------
Total Net Assets ......................................... $271,096,583
============
Net Asset Value, offering and redemption
price per share ($271,096,583 / 12,351,289
shares outstanding; 200,000,000 shares
authorized of $0.001 par value) ........................ $21.95
======
Statement of Operations
For the Six Months Ended June 30, 1999 (Unaudited)
================================================================================
Investment Income:
Dividends (net of foreign taxes of $41,603) .............. $ 962,943
Interest ................................................. 839,061
-----------
Total Investment Income .................................. 1,802,004
-----------
Expenses:
Investment advisory fees ................................. 1,094,377
Distribution fees ........................................ 273,593
Shareholder services fees ................................ 154,005
Custodian fees ........................................... 36,574
Shareholder report expenses .............................. 24,540
Legal and audit fees ..................................... 19,305
Registration fees ........................................ 15,512
Directors' fees .......................................... 5,305
Miscellaneous expenses ................................... 4,374
-----------
Total Expenses ........................................... 1,627,585
-----------
Net Investment Income .................................... 174,419
-----------
Net Realized and Unrealized Gain
on Investments:
Net realized gain on investments
and foreign currency transactions ...................... 20,360,761
Net change in unrealized appreciation
on investments and foreign currency
transactions ........................................... 39,228,417
-----------
Net realized and unrealized gain on
investments and foreign currency
transactions ........................................... 59,589,178
-----------
Net increase in net assets resulting
from operations ........................................ $59,763,597
===========
Statement of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31,
(Unaudited) 1998
---------------- -------------
<S> <C> <C>
Operations:
Net investment income ............................................ $ 174,419 $ 118,684
Net realized gain on investments and foreign currency transactions 20,360,761 12,504,671
Net change in unrealized appreciation on investments
and foreign currency transactions .............................. 39,228,417 29,961,404
------------- -------------
Net increase in net assets resulting from operations ............. 59,763,597 42,584,759
------------- -------------
Distributions to shareholders:
Net investment income ............................................ -- (106,321)
Net realized gain on investments ................................. -- (12,347,446)
------------- -------------
Total distributions to shareholders .............................. -- (12,453,767)
------------- -------------
Capital share transactions:
Net increase in net assets from capital share transactions ....... 41,270,256 22,060,115
------------- -------------
Net increase in net assets ....................................... 101,033,853 52,191,107
Net Assets:
Beginning of period .............................................. 170,062,730 117,871,623
------------- -------------
End of period .................................................... $ 271,096,583 $ 170,062,730
============= =============
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
The Gabelli Global Telecommunications Fund
Notes to Financial Statements (Unaudited)
================================================================================
1. Organization. The Gabelli Global Telecommunications Fund (the "Fund"), a
series of Gabelli Global Series Funds, Inc. (the "Corporation"), was organized
on July 16, 1993 as a Maryland corporation. The Fund is a non-diversified,
open-end management investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act") and one of four separately managed
portfolios (collectively, the "Portfolios") of the Corporation. The Fund's
primary objective is capital appreciation. The Fund commenced investment
operations on November 1, 1993.
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, except for open short positions, which are
valued at the last asked price). 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 Gabelli Funds, LLC
(the successor to Gabelli Funds, Inc. as investment adviser) (the "Adviser").
Securities and assets for which market quotations are not readily available 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
primary government securities dealers recognized by the Federal Reserve Bank of
New York, 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
15
<PAGE>
The Gabelli Global Telecommunications Fund
Notes to Financial Statements (Continued) (Unaudited)
================================================================================
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.
Futures Contracts. The Fund may engage in futures contracts for the purpose of
hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin". Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuation of the
value of the contract. The daily changes in the contract are included in
unrealized gains or losses. The Fund recognizes a realized gain or loss when the
contract is closed. At June 30, 1999, there were no open futures contracts.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk that
the Fund may not be able to enter into a closing transaction because of an
illiquid secondary market.
Forward Foreign Exchange Contracts. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency transactions. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange 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
exchange 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.
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 and foreign currency transactions. 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
16
<PAGE>
The Gabelli Global Telecommunications Fund
Notes to Financial Statements (Continued) (Unaudited)
================================================================================
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 treatments of income and gains
on various investment securities held by the Fund, timing differences and
differing characterization of distributions made by the Fund.
Expenses. Certain administrative expenses are common to, and allocated among,
the Portfolios. Such allocations are made on the basis of each Portfolio's
average net assets or other criteria directly affecting the expenses as
determined by the Adviser.
Provision for Income Taxes. The Fund has qualified and intends to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, 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. 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.
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 six months
ended June 30, 1999, the Fund incurred distribution costs payable to Gabelli &
Company, Inc., an affiliate of the Adviser, of $273,593, or 0.25% of average
daily net assets, the annual limitation under the Plan. Such payments are
accrued daily and paid monthly.
5. Portfolio Securities. Purchases and sales of securities for the six months
ended June 30, 1999, other than short term securities, aggregated $66,728,701
and $70,028,255, respectively.
17
<PAGE>
The Gabelli Global Telecommunications Fund
Notes to Financial Statements (Continued) (Unaudited)
================================================================================
6. Transactions with Affiliates. During the six months ended June 30, 1999, the
Fund paid brokerage commissions of $46,553 to Gabelli & Company, Inc. and its
affiliates.
7. Capital Stock Transactions. Transactions in shares of capital stock were as
follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31, 1998
-------------------------- --------------------------
Shares Amount Shares Amount
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold ................................ 8,135,169 $ 159,860,740 9,903,141 $ 155,442,024
Shares issued upon reinvestment of dividends -- -- 733,357 12,011,861
Shares redeemed ............................ (6,017,852) (118,590,484) (9,252,964) (145,393,770)
---------- ------------- ---------- -------------
Net increase ............................. 2,117,317 $ 41,270,256 1,383,534 $ 22,060,115
========== ============= ========== =============
</TABLE>
8. New Share Classes. On March 9, 1999, the Board of Directors of the Fund
approved (subject to shareholder approval of Amendments to the Fund's Articles
of Incorporation to permit the Fund to offer additional classes of shares) a
Rule 18f-3 Multi-Class Plan relating to the creation of three additional classes
of shares of the Fund - Class A Shares, Class B Shares and Class C Shares (the
"New Share Classes"). The existing class of shares was redesignated as Class AAA
Shares. In addition, the Board has also approved an Amended and Restated
Distribution Agreement, Rule 12b-1 plans for each of the New Share Classes and
an Amended and Restated Plan of Distribution for the existing class of shares
(Class AAA Shares) to be effective upon the commencement of the offering of the
New Share Classes. Effective July 22, 1999, shareholder approval permitting the
Fund to offer additional classes of shares was attained.
18
<PAGE>
The Gabelli Global Telecommunications Fund
Financial Highlights
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1999 -----------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of period......... $ 16.62 $ 13.32 $ 11.28 $ 11.12 $ 9.73 $ 10.20
-------- -------- -------- -------- -------- --------
Net investment income........................ 0.01 0.01 0.00(a) 0.05 0.06 0.07
Net realized and unrealized gain / (loss)
on investments............................. 5.32 4.60 3.59 0.95 1.51 (0.44)
-------- -------- -------- -------- -------- --------
Total from investment operations............. 5.33 4.61 3.59 1.00 1.57 (0.37)
-------- -------- -------- -------- -------- --------
Distributions to shareholders:
Net investment income........................ -- (0.01) -- (0.05) (0.06) (0.07)
Net realized gain on investments............. -- (1.30) (1.55) (0.79) (0.12) (0.03)
-------- -------- -------- -------- -------- --------
Total distributions.......................... -- (1.31) (1.55) (0.84) (0.18) (0.10)
-------- -------- -------- -------- -------- --------
Net asset value, end of period............... $ 21.95 $ 16.62 $ 13.32 $ 11.28 $ 11.12 $ 9.73
======== ======== ======== ======== ======== ========
Total return+................................ 32.1% 34.8% 31.9% 9.0% 16.2% (3.7)%
======== ======== ======== ======== ======== ========
Ratios to average net assets and
supplemental data:
Net assets, end of period (in 000's)......... $271,097 $170,063 $117,872 $108,544 $122,845 $137,731
Ratio of net investment income
to average net assets...................... 0.16%(c) 0.08% 0.01% 0.34% 0.53% 0.74%
Ratio of operating expenses
to average net assets (b).................. 1.48%(c) 1.60% 1.78% 1.72% 1.75% 1.80%
Portfolio turnover rate...................... 36% 20% 9% 7% 24% 14%
</TABLE>
- ----------
+ 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.
(a) Amount represents less than $0.005 per share.
(b) The Fund incurred interest expense during the year ended December 31,
1997. If interest expense had not been incurred, the ratio of operating
expenses to average net assets would have been 1.74%.
(c) Annualized.
See accompanying notes to financial statements.
19
<PAGE>
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
Chairman and Chief
Investment Officer
Gabelli Asset Management Inc.
Felix J. Christiana
Former Senior Vice President
Dollar Dry Dock Savings Bank
Anthony J. Colavita
Attorney-at-Law
Anthony J. Colavita, P.C.
John D. Gabelli
Senior Vice President
Gabelli & Company, Inc.
Karl Otto Pohl
Former President
Deutsche Bundesbank
Werner J. Roeder, MD
Medical Director
Lawrence Hospital
Anthonie C. van Ekris
Managing Director
BALMAC International, Inc.
Officers and Portfolio Managers
Mario J. Gabelli, CFA
President and Chief
Investment Officer
Bruce N. Alpert
Vice President and Treasurer
Marc J. Gabelli
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 LLP
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
Gabelli Global Telecommunications Fund. It is not authorized for distribution to
prospective investors unless preceded or accompanied by an effective
prospectus.
- --------------------------------------------------------------------------------
GAB401Q299SR
