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The
Gabelli
Global
Telecommunications
Fund
THIRD QUARTER REPORT
SEPTEMBER 30, 1999
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The Gabelli Global Telecommunications Fund
Third Quarter Report
September 30, 1999
*****
Morningstar Rated(TM) Gabelli Global Telecommunications
Fund 5 stars overall and for the three-year period ended
9/30/99 among 3210 domestic equity funds, and for the five-year
period ended 9/30/99 among 2010 domestic equity funds.
To Our Shareholders,
In the third quarter of 1999, the powerful forces driving change in the
telecommunications industry--deregulation, consolidation, and technology--helped
telecommunications stocks swim against the market tides. Year-to-date through
the third quarter, the Gabelli Global Telecommunications Fund has outdistanced
global equity indices, a testament to the strength of the telecommunications
group worldwide.
Investment Performance
For the third quarter ended September 30, 1999, The Gabelli Global
Telecommunications Fund's (the "Fund") total return was 4.24%. The Lipper
Telecommunications Fund Average and Salomon Smith Barney Global
Telecommunications Index declined 1.98% and 0.18%, 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 70.65% over the trailing twelve-month period. The Lipper
Telecommunications Fund Average and Salomon Smith Barney Global
Telecommunications Index rose 75.72% and 47.90%, respectively, over the same
twelve-month period.
For the five-year period ended September 30, 1999, the Fund's total return
averaged 24.00% annually versus average annual total returns of 27.17% and
21.32% for the Lipper Telecommunications Fund Average and Salomon Smith Barney
Global Telecommunications Index, respectively. Since inception on November 1,
1993 through September 30, 1999, the Fund had a cumulative total return of
207.32%, which equates to an average annual total return of 20.89%.
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Past performance is no guarantee of future results. Morningstar proprietary
ratings reflect historical risk adjusted performance as of September 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.
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INVESTMENT RESULTS (a)
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Quarter
---------------------------------------
1st 2nd 3rd 4th Year
------ ------ ------ ------ ------
1999: Net Asset Value $19.18 $21.95 $22.88 -- --
Total Return .. 15.4% 14.4% 4.2% -- --
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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%
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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%
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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)%
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1993: Net Asset Value -- -- -- $10.20 $10.20
Total Return .. -- -- -- 3.0%(b) 3.0%(b)
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Average Annual Return - September 30, 1999 (a)
----------------------------------------------
1 Year ................................ 70.65%
5 Year ................................ 24.00%
Life of Fund (b) ...................... 20.89%
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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 September 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 September 30, 1999. Industry sectors represented in the chart and below may
or may not be included in the Fund's future portfolio.
[The following table was depicted as a pie chart in the printed material.]
HOLDINGS BY GEOGRAPHIC REGION - 9/30/99
United States 46.3%
Europe 13.0%
Canada 7.6%
Japan 4.1%
Asia/Pacific Rim 2.9%
Latin America 2.8%
Cash 23.3%
[The following table was depicted as a pie chart in the printed material.]
HOLDINGS BY INDUSTRY SECTOR - 9/30/99
Wireless/Satellite 24.1%
Cash 23.3%
Regional Providers 15.0%
Networks 13.3%
Cable/Media 10.2%
Equipment 4.8%
Long Distance 4.6%
Business Services 2.2%
Utilities 2.0%
Alternative Providers 0.5%
Commentary
Wireless Works
About one year ago, AT&T began to set a new standard for the wireless
communications industry. By piecing together a nearly seamless national network,
eliminating roaming charges, and lowering prices to 20 cents per minute for
calls to anywhere in the U.S., AT&T has forced other wireless providers to
follow suit. The push is on for low cost national and even global wireless
services. Prices throughout the industry are dropping and usage is increasing.
New programs such as "calling party pays" and prepaid plans are also making
wireless services more attractive. Finally, laptop computer sales continue to
rise, and more data is moving over wireless systems. This further fuels demand
for wireless spectrum and enhances the value of wireless assets.
We expect to see the same trends throughout the world. This should
translate into national and regional consolidation as companies fill service
holes and extend the reach of wireless systems. Those companies that develop
dominant shares in their own markets will become attractive to larger companies
seeking to provide global wireless services. Microsoft co-founder and noted
venture capitalist Paul Allen envisions a "wired world", in which voice and data
can be transmitted globally from the largest cities to the smallest backwaters.
We believe a "wireless world" will accomplish the same objective, perhaps more
inexpensively and efficiently.
3
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In the U.S., three out of every ten people subscribe to wireless voice
service. Outside the U.S., penetration statistics are even more compelling. In
Italy, nearly 50% of the population subscribes to cellular service. In Denmark,
this figure exceeds 60%. These figures underscore the insatiable consumer demand
for communications products globally, which is most visible in the wireless
arena. Future wireless growth should be propelled by ongoing replacement of
traditional wired phone calls by wireless services and by data transmission via
wireless channels. Several recent announcements have reaffirmed the emergence of
these new revenue streams, including plans by Sprint PCS to rollout a handset
with Internet browser capabilities. Nextel already offers similar capabilities.
Various European and Asian companies also announced similar intentions.
We have already seen a significant number of wireless deals in the U.S.,
with established companies such as AT&T and MCI WorldCom building national
networks via acquisition. We have also witnessed several large international
combinations, most notably the U.K.'s Vodafone acquiring AirTouch. We think this
game is still in the early innings and that more telecommunications industry
sluggers will be stepping up to the plate, swinging for the global wireless
fences.
In the third quarter, Bell Atlantic and Vodafone reaffirmed the importance
of wireless communications with the announcement of their intention to combine
their U.S. cellular properties. By combining these assets they will be able to
realize economies of scale that can be shared with ever more demanding customers
through technology development and larger bundled service plans. This
declaration came on the back of several merger announcements including
VoiceStream's merger with Omnipoint, Vodafone's merger with CommNet Cellular and
the decision by Hutchinson Wampoa and Sonera to increase their stakes in the
U.S. wireless arenas. The stage is set for further strategic reshuffling.
Cable Modems
In our second quarter letter to shareholders, we opined that high speed
cable modems gave the cable television providers an edge over telephone
companies in the battle for Internet traffic. This was also the reason we cited
for our investments in General Instrument and Scientific-Atlanta, two of the
leading cable modem manufacturers. Motorola must have been listening. While we
were somewhat disappointed at the relatively modest premium Motorola agreed to
pay to acquire General Instrument, we were compensated by the sharp rise in
Scientific-Atlantic's stock price following the announcement of the deal. When
interviewed by the financial press following this announced deal,
Scientific-Atlantic management stated that they believe they can continue to
compete in the fast growing market for cable modems as an independent company.
However, they also promised not to stand in the way of anything that would
enhance the value of their shareholders' investment. That could be interpreted
as an invitation to dance.
4
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More Bandwidth Please
The ability to transmit information today as bits and bytes, regardless of
origin (voice, video or data), is blurring the traditional boundaries between
various distribution network types, such as telephone, cable television, and
wireless. Consumers, empowered by improvements in technology and more diverse
product offerings, are demanding faster, more reliable and more capable
communications services. Traditional network companies are feeling a greater
urgency to upgrade their networks to carry larger and more diverse packages of
data and niche "Emerging Competitive Communications" companies are evolving to
take advantage of service gaps and opportunities created as deregulation allows
new competitors.
Sprinting into Battle
Global and less regulated industry interaction increases the value of
customer loyalty, content, and cost control. This emphasis underscores a wave of
mergers and acquisitions in the industry that has played a dominant role in
surfacing the intrinsic value of publicly traded companies and has amply
rewarded investors. In the three months ended September 30, 1999,
telecommunications mergers ranked first in terms of worldwide volume with almost
$80 billion announced, more than 10% of total mergers and acquisitions in the
quarter. Spotlighting the globalization theme, $50 billion of these announced
mergers involved deals with a non-U.S. target. This deal-making environment has
provided a stable backdrop for continued strong performance of
telecommunications company shares.
As we write, BellSouth has joined MCI WorldCom in bidding for Sprint. Both
bids face serious regulatory hurdles. Bell South/Sprint would challenge current
rules preventing the regional Bells from getting into the long distance business
and an MCI WorldCom/Sprint combination may inspire antitrust scrutiny. So, we
may not see any deal get done. But these competing bids underscore the value of
wireless and wired telecommunications assets and the economic forces driving
large telecommunications companies to get even larger. We believe that at some
point, regulatory resistance to such deals will wane and the telecommunications
giants here and abroad will be allowed to slug it out for the assets they need
to become global powerhouses.
Going forward, the "Emerging Competitive International Long Distance"
sector and the "Competitive Local Exchange Carrier" ("CLEC") segments of the
industry appear ripe for consolidation. Both have seen aggressive growth in the
number of publicly listed peers. The participants in this sector are building
next generation communications networks, long haul and last mile for the
Emerging Competitive Long Distance companies and CLECS, respectively.
Traditional telephone companies may find it economically advantageous to acquire
these companies rather then build to their needs from scratch.
5
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Good Calls and Some Bad Connections
This quarter, seven wireless communications companies--Celular CRT, Rural
Cellular, VoiceStream Wireless, Aerial Communications (which agreed to be
acquired by VoiceStream), Omnipoint, Western Wireless, and Nextel
Communications--made our Top 20 performance list. Developed nations in Asia
contributed two big winners (Korea Telecom and Japan Telecom); Latin America
chipped in with Telefonica del Peru and the "Great White North" of Canada heated
up with Rogers Cantel.
Emerging markets in Asia produced some wrong numbers in Thai Telephone, PT
Telekomunikasi Indonesia, and Telekom Malaysia. Two of our Brazilian
communications holdings, Telecomunicacoes Brasileiras and Telecomunicacoes de
Sao Paulo, put us on hold. Our U.S. holdings were mixed, with Sprint and
Telephone & Data Systems connecting and AT&T not answering our call.
Telecommunications is a global growth industry. However, over any given
period of time, geography will have an impact on returns. Due to more volatile
economies and markets, the short term performance of emerging market
telecommunications stocks will be erratic. However, over the longer term, these
stocks have exceptional upside potential. We believe that is a fair trade-off
and justifies our portfolio commitments in emerging market countries.
Good Things Come To Those Who Wait
The critical element to our success in the equity markets has been
patience in both the selection process and in waiting for the values of
portfolio positions to be recognized. We will continue to be patient and
opportunistic in selecting holdings for the Fund, and will invest in short-term
instruments when appropriate.
In short, the high cash position in the Fund does not reflect any effort
on our part to time the securities market. It is rather a consequence of our
value oriented discipline. We are always hard at work evaluating opportunities
and identifying fundamental bargains to progress to a more fully invested
posture. However, we will not stretch our fundamental parameters and introduce
greater market risk to the portfolio.
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 September 30, 1999.
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Aerial Communications Inc. (AERL - $27.125 - Nasdaq) is an 82%-owned subsidiary
of Telephone & Data Systems that has Personal Communications Services ("PCS")
access covering 26.2 million people. On September 20, Aerial agreed to be
acquired by VoiceStream Wireless (VSTR - $61.72 - Nasdaq) in a $3.3 billion
stock transaction. TDS's ownership of Aerial will be converted to VoiceStream
stock, resulting in TDS owning more than 36 million shares of VSTR. Upon
consummation of the Aerial and Omnipoint acquisitions, VoiceStream will emerge
as a major national PCS carrier with licenses covering over 230 million people.
Associated Group Inc. (AGRPA - $60.50 - Nasdaq; AGRPB - $60.5625 - 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 - $37.125 - 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.
BCE Inc. (BCE - $49.8125 - NYSE) is Canada's global communications company. BCE
recently completed a major transaction with Ameritech (AIT - $67.1875 - 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 - $51.00 - NYSE), Teleglobe (TGO - $15.44 -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.
Cable & Wireless plc (CWP - $33.125 - NYSE), a United Kingdom-based company, is
a global telecommunications provider with interests in local telephone
companies. Major subsidiaries include Hong Kong Telecommunications (HKT - $21.75
- - NYSE) (54% owned) and the publicly traded, U.K.-based company, Cable &
Wireless Communications (CWZ - $52.125 - NYSE) (53% owned) which is the largest
cable system operator in the U.K. CWZ owns 100% of Mercury Communications, the
second largest provider of telecommunications services in Britain, and is a
majority stakeholder in Bell Cable Media, Nynex CableComms and Videotron
Holdings plc. In August, the company agreed to sell Cable & Wireless
Communications' consumer business to NTL Inc. for 8 billion pounds and will
retain its data assets including Mercury Communications. Hong Kong Telecom is
the dominant telecommunications 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.
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Commonwealth Telephone Enterprises Inc. (CTCO - $44.00 - Nasdaq; CTCOB -
$43.4375 - 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.
Japan Telecom Co. Ltd. (9434.T - $23,405.00 - Tokyo Stock Exchange) provides
domestic long distance telephone and leased line services through its fiber
optic cable network connected to local telephone exchanges owned by Nippon
Telegraph & Telephone and local common carriers. The company also participates
in other telecommunications-related businesses such as cellular telephone
services. British Telecommunications and AT&T have each recently taken a
significant stake in Japan Telecom and Vodafone AirTouch is a partner in its
cellular operations.
KDD Corp. (9431.T - $103.08 - Tokyo Stock Exchange) provides international
telecommunications services in Japan. The company's services include telephone,
telex, circuit leasing, data communications, and data transfer. KDD completed
the JIH (a nationwide fiber-optic network) in the spring of this year,
augmenting the existing fiber-optic network it inherited from its merger with
TWJ, forming the most extensive fiber-optic network in the country. KDD is
reportedly discussing a joint venture with American providers Qwest
Communications and SBC.
Liberty Media Group (LMG'A - $37.125 - NYSE) is engaged in businesses which
provide programming services, including production, acquisition and distribution
through all available media formats, as well as businesses engaged in electronic
retailing, direct marketing and other services. LMG holds interests in
globally-branded entertainment networks such as Discovery Channel, USA Network,
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 - $43.50 - NYSE) and are now traded on the New York
Stock Exchange.
Nielsen Media Research Inc. (NMR - $37.1875 - NYSE) is the leading provider of
television audience measurement and related services in the United States and
Canada. Its services provide audience estimates for all national program
sources, including broadcast networks, cable networks, Spanish language
television and national syndications. Nielsen also provides competitive
advertising intelligence information and Internet usage and advertising
information. VNU NV, a Dutch international publishing and information services
company, is offering to purchase all shares of NMR for $37.75 per share in cash.
NTT Mobile Communications Network Inc. (9437.T - $19,660.16 - Tokyo Stock
Exchange) provides various telecommunication services including cellular,
pagers, alternative telephone (for ships and
8
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airplanes) and packet communication services. The company also sells cellular
phones, car phones, and pager equipment. NTT Mobile Communications is now well
know as NTT DoCoMo in Japan.
Omnipoint Corp. (OMPT - $55.875 - 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 - $61.72 - Nasdaq) for 0.825 shares
of VoiceStream and $8.00 cash per shares of OMPT. 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 - $16.8125 - NYSE) is Canada's national
communications company, engaged in cellular, digital PCS, paging and data
communications through wholly-owned Rogers Cantel (Canada's largest wireless
provider serving over two million customers from coast to coast); in cable
television, high-speed Internet access, and video retailing through Rogers
Cablesystem; and in radio and television broadcasting, tele-shopping, publishing
and new media businesses through Rogers Media. Over the past several months,
Microsoft and AT&T (through a joint venture with British Telecommunications)
have made major investments into Rogers Communications.
Sprint Corp. (FON - $54.25 - NYSE) is the third largest long distance carrier
and the second largest independent local telephone company in the U.S. Sprint
has positioned itself globally through a joint venture called GlobalOne. Its
joint venture partners, France Telecom and Deutsche Telekom, also have a direct
20% stake in Sprint. FON faces risks from prospective new entrants in its long
distance business which may be offset by the "ION" high bandwith network the
company is developing and by other new services. On October 5, 1999, MCI
Worldcom announced plans to acquire Sprint for $125 billion in stock and cash.
The transaction is expected to close in about 12 months upon regulatory
approval. Sprint PCS group is the leading all digital personal communications
services ("PCS") carrier in the U.S. with over four million customers and
licenses covering over 230 million people. Sprint PCS will be acquired as part
of MCI Worldcom's acquisition of Sprint Corp.
Telephone & Data Systems Inc. (TDS - $88.8125 - 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 - $68.00 -
AMEX), the nation's seventh largest cellular telephone company. It also owns
82.4% of Aerial Communications Inc. (AERL - $27.125 - 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 September 20, 1999, VoiceStream Wireless (VSTR - $61.72 -Nasdaq) announced
the acquisition of Aerial in a $3.3 billion transaction. Pro-forma for this
acquisition, TDS will own over 36 million shares of VoiceStream.
9
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US West Inc. (USW - $57.062 - 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. US West leads the nation in deployment of leading-edge DSL
technologies. The company's Internet access service now has well over 100,000
subscribers. On July 18, USW agreed to be acquired by Qwest Communications
International in a stock transaction for $69.00 per US West share. The
transaction is pending regulatory approval and is expected to close in the
second half of 2000. The combined company will have pro-forma revenues of $18.5
billion and operating cash flow of $7.4 billion.
Vodafone AirTouch plc (VOD - $237.75 - NYSE) has created a dominant global
mobile communications service provider through the completion of its recent
acquisition of AirTouch in the United States. The company has grown its customer
base by over two million subscribers over the past year to command upwards of
37% of the wireless market, with nearly half of those subscribers outside of the
United Kingdom. Vodafone has engaged in 47 new roaming agreements in ten
countries around the world, bringing its global reach to 91 countries. The
company continues to benefit from the increased usage of wireless networks and
the economies of scale of a larger network.
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].
10
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In Conclusion
Telecommunications stocks performed well again this quarter despite mixed
results in global equity markets. We believe this group will continue to be
driven more by secular than cyclical economic or market trends. At some point,
we can expect to see telecommunications stocks stall. However, we believe any
setbacks will be temporary and that the strong global demand for modern
telecommunications services will continue to produce investment profits.
The Fund's daily net asset value is available in the financial press and
each evening after 6:00EPM (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
October 25, 1999
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Top Ten Holdings
September 30, 1999
------------------
Telephone & Data Systems Inc. Cable & Wireless plc
US West Inc. Rogers Communications Inc.
Commonwealth Telephone Enterprises Aerial Communications Inc.
Liberty Media Group Associated Group Inc.
Nielsen Media Research Inc. BCE Inc.
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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.
11
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The Gabelli Global Telecommunications Fund
Portfolio of Investments -- September 30, 1999 (Unaudited)
================================================================================
Market
Shares Value
------ -----
COMMON STOCKS -- 73.5%
Alternative Telecommunications Providers -- 0.5%
4,000 Colt Telecom Group plc+............................. $ 385,000
2,500 Davel Communications Group Inc.+.................... 9,844
32,000 GST Telecommunications Inc.+........................ 225,000
18,000 ICG Communications Inc.+............................ 280,125
5,000 Intermedia Communications Inc.+..................... 108,750
7,000 McLeodUSA Inc., Cl. A +............................. 297,937
5,000 Startec Global Communications Corp.+................ 68,750
10,000 USN Communications Inc.+............................ 100
------------
1,375,506
------------
Broadcasting -- 0.1%
25,000 CanWest Global Communications Corp.................. 310,938
1,000 Tivo Inc............................................ 29,937
------------
340,875
------------
Business Services -- 2.2%
9,000 Carlisle Holdings Ltd.+............................. 93,094
15,000 Convergys Corp.+.................................... 297,187
20,000 Donnelley (R.H.) Corp............................... 372,500
2,000 EarthLink Network Inc.+............................. 85,875
30,000 IDT Corp.+.......................................... 628,125
130,000 Nielsen Media Research Inc.......................... 4,834,375
------------
6,311,156
------------
Cable -- 6.8%
10,000 Adelphia Communications Corp., Cl. A+............... 588,125
11,500 Austar United Communications Ltd.................... 35,281
52,000 Cablevision Systems Corp., Cl. A+................... 3,783,000
56,500 Century Communications Corp., Cl. A+................ 2,577,813
27,000 Comcast Corp., Cl. A................................ 973,687
27,000 Comcast Corp., Cl. A, Special....................... 1,076,625
11,550 Cox Communications Inc., Cl. A...................... 482,212
55,000 MediaOne Group Inc.+................................ 3,757,187
33,000 NTL Inc.+........................................... 3,171,094
23,000 Telewest Communications plc, ADR+................... 839,500
35,000 UnitedGlobalCom Inc. +.............................. 2,506,875
10,000 Videotron Groupe.................................... 151,371
------------
19,942,770
------------
Communications Equipment -- 4.3%
200,000 Allen Telecom Inc.+................................. 1,950,000
120,000 Champion Technology Holdings, ADR................... 40,943
10,000 Communications Systems Inc.......................... 116,250
8,000 Ericsson (L.M.) Telephone Co., ADR.................. 250,000
6,000 Gemstar International Group Ltd.+................... 468,750
5,000 General Instrument Corp.+........................... 240,625
2,500 General Semiconductor Inc.+......................... 25,781
15,000 GN Store Nord A/S................................... 493,922
3,500 L-3 Communications Holdings Inc.+................... 132,125
10,000 Lucent Technologies Inc............................. 648,750
25,000 Mannesmann AG....................................... 4,009,029
2,500 Motorola Inc........................................ 220,000
8,000 Nokia Corp., Cl. A, ADR............................. 718,500
45,000 Nortel Networks Corp................................ 2,295,000
12,000 Scientific-Atlanta Inc.............................. 594,750
500 Siemens AG, ADR..................................... 40,736
100,000 Time Engineering Berhad+............................ 24,211
15,000 TNT Post Group NV, ADR.............................. 380,625
------------
12,649,997
------------
Diversified Industrial -- 0.2%
15,000 Royal Nedloyd Groups Co. Ltd........................ 667,500
------------
Energy and Utilities -- 1.9%
20,000 Cilcorp Inc......................................... 1,296,250
338,333 Citizens Utilities Co., Cl. B....................... 3,827,392
3,000 Conectiv Inc........................................ 58,875
40,000 El Paso Electric Co.+............................... 360,000
3,000 Florida Public Utilities Co......................... 55,125
------------
5,597,642
------------
Entertainment -- 2.3%
23,462 Ascent Entertainment Group Inc.+.................... 322,603
15,000 GC Companies Inc.+.................................. 450,000
2,200 Liberty Digital Inc................................. 51,287
140,000 Liberty Media Group, Cl. A+ ....................... 5,197,500
8,000 Metromedia International Group Inc.+ .............. 33,000
2,000 Time Warner Inc..................................... 121,500
10,000 Viacom Inc., Cl. A+ ................................ 432,500
------------
6,608,390
------------
Equipment and Supplies -- 0.2%
6,000 Amphenol Corp., Cl. A+ ............................. 297,375
20,000 Thyssen Krupp AG+................................... 401,222
------------
698,597
------------
Long Distance Telephone Providers -- 4.1%
50,000 AT&T Corp........................................... 2,175,000
25,000 Call-Net Enterprises Inc.+.......................... 151,371
270 DDI Corp............................................ 2,022,188
23,000 Embratel Participacoes SA .......................... 263,062
3,000 Esat Telecom Group plc, ADR+........................ 119,250
68,000 General Communication Inc., Cl. A+.................. 354,875
14,000 KDD Corp............................................ 1,443,056
8,500 MCI WorldCom Inc.+.................................. 610,937
8,000 MIDCOM Communications Inc.+......................... 300
50,000 Philippine Long Distance Telephone Co............... 1,087,500
90,000 PLD Telekom Inc.+................................... 225,000
11,660 Qwest Communications International Inc.+............ 344,699
40,000 Sprint Corp......................................... 2,170,000
5,000 RSL Communications Ltd.............................. 91,250
8,000 Teleglobe Inc....................................... 123,546
5,000 Telegroup Inc.+..................................... 50
70,000 VDC Communications Inc.+............................ 87,500
34,000 Viatel Inc.+........................................ 1,005,125
------------
12,274,709
------------
Publishing -- 0.3%
7,000 Harcourt General Inc................................ 291,375
3,000 Media General Inc., Cl. A........................... 153,750
12
<PAGE>
The Gabelli Global Telecommunications Fund
Portfolio of Investments (continued) -- September 30, 1999 (Unaudited)
================================================================================
Market
Shares Value
------ -----
COMMON STOCKS (Continued)
Publishing (Continued)
8,000 News Corp. Ltd., ADR................................ $ 227,500
100,000 Seat-Pagine Gialle SpA.............................. 146,015
------------
818,640
------------
Regional and Local Telephone Providers -- 14.7%
98,675 Aliant Inc.+........................................ 1,476,869
2,000 Allegiance Telecom Inc.+............................ 105,250
46,200 Alltel Corp......................................... 3,251,325
42,000 Ameritech Corp...................................... 2,821,875
10,000 AT&T Canada Inc.+................................... 628,125
15,200 Atlantic Tele-Network Inc........................... 148,200
12,608 Bell Atlantic Corp.................................. 848,676
50,000 BellSouth Corp...................................... 2,250,000
58,000 CenturyTel Inc...................................... 2,356,250
500 Cia Riograndense Telecom............................ 112
30,000 Cincinnati Bell Inc................................. 583,125
120,817 Commonwealth Telephone Enterprises Inc.+............ 5,315,948
40,500 Commonwealth Telephone Enterprises Inc., Cl. B+..... 1,759,219
13,500 Corecomm Ltd.+...................................... 444,656
7,000 E.Spire Communications Inc.......................... 50,750
19,000 Eircom plc.......................................... 82,804
12,000 Electric Lightwave Inc., Cl. A+..................... 159,000
150,000 First Pacific Co. Ltd............................... 91,724
15,000 First Pacific Co. Ltd., ADR......................... 45,864
9,520 Global Telesystems Group Inc.+...................... 187,723
40,000 GTE Corp............................................ 3,075,000
1,000 Hyperion Telecommunications Inc..................... 24,813
20,000 QuebecTel Group Inc................................. 215,661
77,500 RCN Corp.+.......................................... 3,177,500
275,000 Rogers Communications Inc., Cl. B................... 4,623,438
35,000 SBC Communications Inc.............................. 1,787,187
6,000 Shenandoah Telecommunications Co.................... 132,000
10,000 Sonera Group Oyj.................................... 289,476
23,000 Telecom Argentina SA................................ 613,812
4,600 Tele Centro Sul Participacoes SA, ADR............... 255,300
23,000 Tele Norte Leste Participacoes SA, ADR.............. 356,500
23,000 Telesp Participacoes SA, ADR........................ 362,250
6,500 Time Warner Telecom Inc., Cl. A+.................... 135,687
100,000 US West Inc......................................... 5,706,250
------------
43,362,369
------------
Satellite -- 1.9%
3,000 American Mobile Satellite Corp.+.................... 52,500
500 Asia Satellite Telecommunications Holdings Ltd...... 12,750
1,000 British Sky Broadcasting Group, ADR................. 57,250
41,877 COMSAT Corp......................................... 1,240,606
35,000 General Motors Corp., Cl. H+........................ 2,003,750
16,000 Globalstar Telecommunications Ltd.+ ................ 368,000
22,000 Iridium World Communications Ltd.+.................. 67,375
20,000 Orbital Sciences Corp.+............................. 350,000
8,400 Pathe SA............................................ 868,045
8,000 Pegasus Communications Corp.+....................... 361,000
35,500 TCI Satellite Entertainment Inc., Cl. A+............ 142,000
------------
5,523,276
------------
Telephone Networks -- 12.6%
82,000 BCE Inc............................................. 4,084,625
71,079 BCT. Telus Communications Inc....................... 1,482,122
23,693 BCT. Telus Communications Inc., Cl. A............... 487,593
1,000 British Telecommunications plc, ADR................. 154,938
142,500 Cable & Wireless plc, ADR........................... 4,720,313
31,000 Cable & Wireless Communications plc, ADR+........... 1,615,875
30,000 Cable & Wireless HKT Ltd............................ 652,500
9,600,000 Cable & Wireless Jamaica Ltd......................... 337,565
64,000 Cia Telecom Chile................................... 1,156,000
16,000 Deutsche Telekom AG................................. 669,000
2,000 France Telecom SA................................... 174,125
55,350 Global Crossing Ltd................................. 1,466,775
4,707 Hellenic Telecommunications Organization SA......... 109,717
2,000 Hellenic Telecommunications Organization SA, ADR+... 22,375
5,000 Hungarian Telephone & Cable Corp.+.................. 30,938
80 Japan Telecom Co. Ltd............................... 1,872,396
5,000 Korea Telecom Corp.................................. 308,672
500 Magyar Tavkozlesi Rt, ADR........................... 13,625
167 Nippon Telegraph & Telephone Corp................... 2,048,121
10,000 Nippon Telegraph & Telephone Corp., ADR............. 616,875
800 Pakistan Telecommunications, GDR (a)................ 32,594
12,000 Portugal Telecom SA, ADR............................ 495,750
21,600 PT Telekomunikasi Indonesia......................... 149,850
6,000 Rostelecom, ADR..................................... 27,750
50,000 Singapore Telecommunications Ltd.................... 91,176
42,000 Swisscom AG, ADR.................................... 1,320,375
20,000 Tele Danmark A/S, ADR............................... 592,500
1,000,000 Telecom Asia Corp................................... 683,677
21,000 Telecom Corporation of New Zealand Ltd., ADR........ 672,000
190,000 Telecom Italia SpA.................................. 1,650,013
18,500 Telecom Italia SpA, ADR............................. 1,594,469
23,000 Telecomunicacoes Brasileiras SA (Telebras).......... 719
938,570 Telecomunicacoes de Sao Paulo SA (Telesp)........... 72,837
67,000 Telefonica SA, ADR.................................. 3,216,000
500,000 Telefonica del Peru................................. 676,865
1,500 Telefonica del Peru, ADR............................ 20,156
23,000 Telefonos de Argentina SA, ADR...................... 606,625
31,000 Telefonos de Mexico SA, Cl. L, ADR.................. 2,208,750
300,000 Telekom Malaysia Berhad............................. 777,632
2,400 Telestra Corp. Ltd.................................. 63,300
13
<PAGE>
The Gabelli Global Telecommunications Fund
Portfolio of Investments (continued) -- September 30, 1999 (Unaudited)
================================================================================
Market
Shares Value
------ -----
COMMON STOCKS (Continued)
Telephone Networks (Continued)
8,075 Thai Telephone & Telecom, GDR+ (a).................. $ 4,037
3,000 Veba AG............................................. 164,267
------------
37,145,492
------------
Wireless Communications -- 21.4%
40,000 ABC Communications Holdings Ltd..................... 9,526
170,000 Aerial Communications Inc.+......................... 4,611,250
33,400 Associated Group Inc., Cl. A+....................... 2,020,700
42,000 Associated Group Inc., Cl. B+....................... 2,543,625
60,000 BCE Mobile Communications Inc.+..................... 2,382,349
500 Bouygues Group...................................... 158,467
500 Celular CRT Participacoes........................... 55
4,000 Centennial Cellular Corp.+.......................... 181,750
2,000 Clearnet Communications Inc., Cl. A+................ 36,125
80,090 CommNet Cellular Inc.+.............................. 2,507,818
35,000 CP Pokphand, ADR+................................... 36,610
5,300 Easycall Group+..................................... 1,142
12,000 Echostar Communications Corp., Cl. A................ 1,089,750
250,000 Europolitan Holdings AB............................. 2,685,219
42,988 Grupo Iusacell, ADR................................. 408,386
26,000 Himachal Futuristic (a)............................. 464,750
24,000 Jasmine International+.............................. 10,841
52,000 Leap Wireless International Inc.+................... 1,222,000
26,000 Libertel NV+........................................ 469,015
1,500 Metrocall Inc.+..................................... 1,875
17,289 NEXTEL Communications Inc., Cl. A+.................. 1,172,410
200 NTT Mobile Communications Network Inc.+............. 3,932,032
70,000 Omnipoint Corp.+.................................... 3,911,250
55,000 Price Communications Corp.+......................... 1,378,438
10,000 PT Indonesia Satellite, ADR......................... 135,000
150,000 Rogers Cantel Mobile Communications Inc., Cl. B+.... 3,553,125
35,000 Rural Cellular Corp., Cl. A+........................ 1,605,625
70,000 Securicor Group plc................................. 690,869
116,780 SK Telecom Co. Ltd., ADR............................ 1,204,294
5,000 SkyTel Communications Inc.+......................... 91,562
10,000 Sprint Corp. (PCS Group)+........................... 745,625
80,000 Technology Resources Industries..................... 40,632
2,300 Tele Celular Sul Participacoes SA, ADR.............. 43,556
7,666 Tele Centro Oeste Celular Participacoes SA, ADR..... 25,394
460 Tele Leste Celular Participacoes SA, ADR............ 14,547
1,150 Tele Nordeste Celular Participacoes SA, ADR......... 26,162
460 Tele Norte Celular Participacoes SA, ADR............ 13,110
4,600 Tele Sudeste Celular Participacoes SA, ADR.......... 98,900
500 Telecel-Comunicacaoes Pessoais SA................... 61,663
500,000 Telecom Italia Mobile SpA........................... 3,107,609
1,150 Telemig Celular Participacoes SA, ADR............... 33,925
150,000 Telephone & Data Systems Inc........................ 13,321,875
938,570 Telesp Celular SA................................... 33,730
9,200 Telesp Celular Participacoes SA, ADR................ 240,350
4,000 Teligent Inc., Cl. A+............................... 198,750
20,000 Total Access Communications plc+.................... 38,200
23,000 United States Cellular Corp.+....................... 1,564,000
10,000 Vimpel Communications+.............................. 127,500
15,000 Vodafone AirTouch plc, ADR.......................... 3,566,250
5,000 VoiceStream Wireless Corp.+......................... 308,594
15,000 Western Wireless Corp., Cl. A+...................... 672,656
5,500 Winstar Communications Inc.+........................ 214,844
------------
63,013,730
------------
TOTAL COMMON STOCKS................................. 216,330,649
------------
PREFERRED STOCKS -- 1.5%
Cable -- 0.6%
18,000 Tele-Communications Inc., 6.00% Cv. Pfd., Ser. E.... 1,800,000
------------
Energy and Utilities -- 0.0%
2,000 Citizens Utility Trust, Cv. Pfd..................... 99,500
------------
Entertainment -- 0.0%
1,500 Metromedia International Group Inc., 7.25% Cv. Pfd.. 36,938
------------
Long Distance Telephone Providers -- 0.3%
12,000 Sprint Corp., 8.25% Cv. Pfd......................... 940,500
------------
Satellite -- 0.3%
50,000 Loral Space & Communications Ltd., 6.00% Cv. Pfd.... 859,375
------------
Telephone Networks -- 0.1%
500 Telecomunicacoes de Parana SA, Pfd.................. 94
10,000 Philippine Long Distance Telephone Co.,
7.00% Cv. Pfd., Ser. III ......................... 415,000
3,355,677 Telecomunicacoes de Rio Janeiro SA.................. 49,810
40,900 Telecomunicacoes de Sao Paulo SA.................... 3,625
------------
468,529
------------
Wireless Communications -- 0.2%
3,355,677 Telerj Celular SA, Pfd., Cl. B+..................... 63,793
40,900 Telesp Celular SA, Pfd., Cl. B...................... 2,130
------------
65,923
------------
TOTAL PREFERRED STOCKS.............................. 4,270,765
------------
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)................. 815,000
------------
Wireless Communications -- 0.1%
250,000 Technology Resources Industries,
Sub. Deb. Cv. 2.75%, 11/28/04..................... 190,000
------------
TOTAL CORPORATE BONDS............................... 1,005,000
------------
14
<PAGE>
The Gabelli Global Telecommunications Fund
Portfolio of Investments (continued) -- September 30, 1999 (Unaudited)
================================================================================
Principal Market
Amount Value
------ -----
U.S. GOVERNMENT OBLIGATIONS -- 22.9%
67,787,000 U.S. Treasury Bills, 4.53% to 4.74%++,
due 10/07/99 to 12/09/99.......................... $ 67,410,402
------------
TOTAL INVESTMENTS -- 98.3%.......................... 289,016,816
(Cost $187,132,247)
Other Assets and Liabilities -- 1.7%.............. 5,144,143
------------
NET ASSETS -- 100.00%
(12,855,976 shares outstanding)................... $294,160,959
============
NET ASSET VALUE,
Offering and Redemption
Price Per Share................................... $22.88
======
Net
Settlement Unrealized
Date Depreciation
---- ------------
FORWARD FOREIGN EXCHANGE CONTRACTS
6,874,651(b) Sell Hong Kong Dollars
in exchange for
USD 872,750 ........................... 08/24/00 $ (4,643)
------------
- ----------
(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
September 30, 1999, the market value of Rule 144A securities amounted to
$1,316,381 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 ...................................... 77.2% $223,226,233
Europe ............................................. 13.0% 37,412,495
Japan .............................................. 4.1% 11,934,667
Asia/Pacific Rim ................................... 2.9% 8,362,206
Latin America ...................................... 2.8% 8,081,215
----- ------------
100.0% $289,016,816
===== ============
15
<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 accompa nied by an effective
prospectus.
- --------------------------------------------------------------------------------
GAB401Q399SR
