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Global
Growth
Gabelli
Global Interactive
Couch Potato(R) Fund
SEMI-ANNUAL REPORT
JUNE 30, 1999
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Global Growth
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Marc J. Gabelli
Semi-Annual Report - June 30, 1999
The Gabelli Global Interactive Couch Potato(R) Fund
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[GRAPHIC OMITTED--5 STARS]
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Morningstar Rated(TM) Gabelli Global Interactive Couch Potato(R)
Fund 5 stars overall and for the three and five-year
periods ended 6/30/99 among 3043 and
1878 domestic equity funds, respectively.
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#1 Global Fund!
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Ranked 1 by Lipper Inc. for the three
and five-year periods ended 6/30/99 among
155 and 89 global funds, respectively.
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To Our Shareholders,
Our vision, as well as your vision and commitment as an investor, have
been grandly rewarded over the past two years. Investors continued to enjoy
excellent investment returns during the second quarter, as the interactive
revolution maintained its strength. Looking forward into the next century, we
continue to believe that the dominant companies of tomorrow will be conducting a
major portion of their business via the Internet within the next five years. In
anticipation of this period of revolutionary change, we believe now is an
appropriate time to change the name of the Fund to the Gabelli Global Growth
Fund, from the Gabelli Global Interactive Couch Potato(R) Fund. The investment
objective of the Fund will remain the same, and while we are saddened to bid
farewell to the original name, keep in mind that it is only a name.
We formed the Fund in 1994, believing that we were entering a period of
accelerated growth globally. After scattered economic growing pains, we have
essentially settled onto a path of continued momentum. The major catalysts for
this growth are the proliferation of free market economies, the deregulation of
major industries and the advances of commerce through greater interaction among
societies. All of these factors are enhanced as new technologies are developed
and accepted that will provide, for the first time in history, an instant world
marketplace.
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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. Lipper Inc. ranked The Gabelli Global Interactive Couch Potato(R) Fund
4 among 239 global funds for the one year period ended June 30, 1999. Lipper
rankings are based upon one, three and five-year total returns at NAV.
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INVESTMENT RESULTS (a)
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Quarter
-----------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
1999: Net Asset Value .. $20.33 $23.52 -- -- --
Total Return ..... 19.7% 15.7% -- -- --
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1998: Net Asset Value .. $16.45 $17.39 $15.17 $16.99 $16.99
Total Return ..... 15.2% 5.7% (12.8)% 21.4% 28.9%
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1997: Net Asset Value .. $11.79 $13.72 $15.02 $14.28 $14.28
Total Return ..... 0.3% 16.4% 9.5% 10.9% 41.7%
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1996: Net Asset Value .. $12.57 $13.40 $13.22 $11.75 $11.75
Total Return ..... 7.3% 6.6% (1.3)% (0.3)% 12.5%
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1995: Net Asset Value .. $10.62 $11.28 $12.30 $11.72 $11.72
Total Return ..... 3.6% 6.2% 9.0% (1.8)% 17.9%
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1994: Net Asset Value .. $ 9.90 $ 9.97 $10.54 $10.25 $10.25
Total Return ..... (1.0)%(b) 0.7% 5.7% (2.8)% 2.5%(b)
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Average Annual Returns - June 30, 1999 (a)
- ------------------------------------------
1 Year 46.6%
5 Year 28.1%
Life of Fund (b) 25.7%
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Dividend History
- ----------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
- ----------------- -------------- ------------------
December 28, 1998 $1.385 $16.56
December 31, 1997 $2.370 $14.28
December 31, 1996 $1.436 $11.75
December 29, 1995 $0.363 $11.72
(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 February 7,
1994. 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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Investment Performance
For the second quarter ended June 30, 1999, The Gabelli Global Interactive
Couch Potato Fund's (the "Fund") total return was 15.7%. The Lipper Global Fund
Average and Morgan Stanley Capital International World Free Index of global
equity markets had total returns of 7.6% and 5.6%, respectively, over the same
period. The Morgan Stanley World Free 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 46.6% over
the trailing twelve-month period. The Lipper Global Fund Average and Morgan
Stanley World Free Index rose 10.7% and 16.7%, respectively, over the same
twelve-month period.
2
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For the five-year period ended June 30, 1999, the Fund's total return
averaged 28.1% annually versus average annual total returns of 14.3% and 16.2%
for the Lipper Global Fund Average and Morgan Stanley World Free Index,
respectively. Since inception on February 7, 1994 through June 30, 1999, the
Fund had a cumulative total return of 243.8%, which equates to an average annual
total return of 25.7%.
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.
HOLDINGS BY GEOGRAPHIC REGION - 6/30/99
[The following table was represented as a pie chart in the printed material.]
United States 49.0%
Europe 26.0%
Japan 10.5%
Canada 8.3%
Cash 3.4%
Asia/Pacific Rim 2.8%
Portfolio Structure
As we have indicated in past discussions, the Interactive Couch
Potato's(R) investments are focused in areas of growth, within the context of
two main investment themes: 1) companies involved in creativity, as it relates
to the development of intellectual property rights (copyrights); and 2)
companies involved in distribution, as it relates to the delivery of these
copyrights. Additionally, this includes the broad scope of communications and
commerce-related services such as basic voice, data and the Internet.
The accompanying chart depicts our equity mix of the copyright/creativity
and distribution companies in our portfolio as of June 30, 1999.
PORTFOLIO STRUCTURE - 6/30/99
[The following table was represented as a pie chart in the printed material.]
Distribution 66.9%
Copyright/Creativity 33.1%
3
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COMMENTARY
Hardware Kicks In
In recent years, a great deal of investment attention has focused on the
build out of the Internet transmission highway and the advent of new interactive
services. Cable television stocks have soared as investors recognized the
enormous potential of their Internet pipeline business. Telecommunications
companies and information/entertainment software producers have also benefited
from the realization that the age of interactivity was upon us. This quarter, it
was the hardware manufacturers' turn to be in the limelight. Two of the industry
leaders in the set-top box/cable modem business, Scientific-Atlanta and General
Instrument, finally received recognition for their contributions in developing
the hardware that is further enhancing interactive services. We believe this is
just the beginning of what should be productive years ahead for leading
interactive hardware producers.
A Broadcast Recovery?
American broadcasters suffered through a dismal 1998. They continued to
lose eyeballs and advertising dollars to cable television operators, and the
Internet captured a larger piece of many companies' advertising budgets.
However, the tide may be turning. Although the national and local spot markets
remain soft, upfront advertising sales are up 13%. Buoyed by spending from
pharmaceutical companies (which are now allowed to market their prescription
products on television), Internet companies that are spending lavishly on
advertising to establish their brand names and big new ad campaigns planned for
the millennium, broadcasters' ad revenues should trend higher. Broadcasters will
get an additional boost in the upcoming election year as politicians open
campaign treasure chests to win the hearts and minds of American voters.
This quarter, our broadcast holdings were mixed. Small independents Paxson
Communications and Ackerley Group posted strong gains, but Young Broadcasting
tuned out. On the network front, News Corp. (FOX) moved up strongly, but Disney
(ABC) languished. We believe that when investors start focusing on next year's
numbers, they will begin tuning in to our broadcast laggards.
From Top to Bottom
As aforementioned, Scientific-Atlanta and General Instrument were near the
top of our performance list this quarter. Other leading performers came from a
wide range of interactive service sub-sectors including cable television (Jones
Intercable and MediaOne), communications providers (Telephone & Data Systems and
Bell Atlantic), publishers (Mannesmann and Independent News & Media), and
broadcasters (Grupo Televisa). Takeover lightning struck in the form of
VoiceStream Wireless' bid for Omnipoint.
North American cable giants Time Warner, Cablevision and Rogers
Communications closed the quarter with modest declines. 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
value-added services will continue to drive cable company values and that after
a well-earned rest, these stocks will regain momentum.
4
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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.
AT&T Canada Inc. (ATTC - $64.0625 - Nasdaq) is the entity resulting from the
merger of MetroNet Communications and AT&T Canada Corp. AT&T Canada is Canada's
largest facilities-based competitive voice, data and Internet telecommunications
provider. AT&T Canada brings together the country's largest competitive local
exchange carrier ("CLEC"), three of Canada's leading competitive Internet
service providers ("ISP") and Canada's pioneer in competitive long distance
service. Deploying the most advanced fiber-optic networking and digital
switching platforms, AT&T Canada offers customers across the country local and
long distance voice, data and Internet services.
Bell Atlantic Corp. (BEL - $65.375 - NYSE), following its merger with NYNEX and
its impending merger with GTE (GTE - $75.75 - NYSE) is a premier provider of
advanced voice and data services from Maine to Virginia - the world's most
information-intensive marketplace. The company serves 22 million households.
Bell Atlantic is one of the world's largest and most successful wireless
companies, with domestic operations in 24 states and international investments
in Latin America, Europe and the Pacific Rim. BEL is also a global leader in
publishing directories and in providing Internet-based shopping guides, website
creation and hosting, and other electronic commerce services. The company has a
mix of mature and start-up communications businesses in Europe and the Pacific
Rim, including a 24.9% stake in Telecom Corp. of New Zealand and a 18.5% stake
in Cable & Wireless Communications.
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 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.
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
5
<PAGE>
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.
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.
Seagram Co. (VO - $50.375 - NYSE), with its 1995 purchase of an 80% interest in
MCA from Matsushita Electric Industrial Co. for $5.7 billion, operates two
global businesses: beverages and entertainment. Spirits and Wine group's major
beverage brands include Chivas Regal, Martell, Mumm, Crown Royal and Seagram's
Gin. With its December acquisition of Polygram, Seagram has created the world's
leading music company, the Universal Music Group. Seagram's entertainment
business includes the Universal Motion Pictures Group, the Universal Studios
Recreation Group and a 46% interest in USA Networks (USAI - $40.125 - Nasdaq).
Viacom Inc. (VIA'A - $44.125 - AMEX; VIA'B - $44.00 - AMEX), long a major
provider of entertainment "content", has evolved into one of the world's
dominant media companies. The addition of Paramount Communications, Blockbuster
Entertainment (acquired in 1994), along with publisher Simon & Schuster, makes
Viacom one of the largest entertainment and publishing companies. Non-core
assets are being divested and debt has been reduced to approximately $8 billion.
Viacom is focusing on global expansion of its media franchises. Viacom is
particularly well-positioned in music (notably MTV) and cable networks (such as
Nickelodeon).
Viatel Inc. (VYTL - $56.125 - Nasdaq), headquartered in New York, is a
facilities-based international and domestic long distance telecommunications
company with network points of presence ("POPs") in European cities and
operations in the United States, Latin America and the Pacific Rim. The company
offers a broad array of competitively priced, value-added international and
domestic long distance services. Its customers are primarily small and
medium-sized businesses. Viatel provides long distance service to more than 230
countries and territories worldwide through its international network.
Vivendi (EX.PA - $81.00 - Paris Stock Exchange) is France's largest
environmental services company engaged in water purification and distribution,
energy, waste management, construction and communications. The group owns 44% of
Cegetel, France's second largest telecommunications operator. Sales at Cegetel
rose 90% in 1998 to $3.4 billion following the company's launch of long distance
service and the boom in demand for mobile services. Only five percent of sales
are generated in emerging markets. With 159 million shares outstanding, the
company has an equity market capitalization of Euro 35 billion or $40 billion.
6
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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 Interactive Couch Potato(R) Fund and other
Gabelli Funds are available through the no-transaction fee programs at many
major discount brokerage firms.
In Conclusion
While it may be optimistic to expect the kind of returns we have achieved
in recent years to continue indefinitely, we remain confident that creative
companies, with innovative products and services worldwide, still represent
excellent investment opportunities. The advent of growing economies, new
technologies and the proliferation of the free market system continue to provide
a positive backdrop for the Fund as we leave this millenium and move forward
into the 21st century.
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 GICPX. Please call us during the
business day for further information.
Sincerely,
/s/ Marc J. Gabelli /s/ Ivan Arteaga, CFA
Marc J. Gabelli Ivan Arteaga, CFA
Portfolio Manager Associate Portfolio Manager
July 30, 1999
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Top Ten Holdings
June 30, 1999
-------------
Liberty Media Group Omnipoint Corp.
Viacom Inc. Cablevision Systems Corp.
Vivendi USA Networks Inc.
Seagram Co. Bell Atlantic Corp.
Viatel Inc. AT&T Canada 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.
7
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The Gabelli Global Interactive Couch Potato(R) Fund
Portfolio of Investments -- June 30, 1999 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 91.9%
Broadcasting -- 8.9%
55,000 Ackerley Group Inc. ..................... $ 528,733 $1,000,313
800 Asahi Broadcasting Corp. ................ 55,646 58,561
65,000 Audiofina ............................... 2,673,923 3,120,375
100,000 Flextech plc + .......................... 776,459 1,610,190
80,000 Granada Group plc ....................... 1,461,702 1,484,244
35,000 Grupo Televisa SA, GDR .................. 1,176,438 1,568,438
3,000 Nippon Broadcasting System Inc........... 126,323 148,716
6,115 NRJ SA .................................. 1,298,594 1,376,651
96,400 Paxson Communications Corp. +............ 908,782 1,301,400
130,000 Tokyo Broadcasting System Inc............ 1,444,606 1,879,604
27,500 Young Broadcasting Inc., Cl. A +......... 972,238 1,170,469
---------- ----------
11,423,444 14,718,961
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Business Services -- 3.4%
10,000 Berlitz International Inc. + ............ 161,981 183,750
2,000 Telefonica Publicidad e Informacion SA+.. 30,954 39,910
66,000 Vivendi ................................. 5,145,499 5,346,431
---------- ----------
5,338,434 5,570,091
---------- ----------
Cable -- 6.5%
60,000 Cablevision Systems Corp., Cl. A +....... 483,484 4,200,000
60,000 Jones Intercable Inc., Cl. A + .......... 2,616,056 2,940,000
20,000 MediaOne Group Inc. + ................... 845,512 1,487,500
25,000 NTL Inc.+ ............................... 1,559,375 2,154,688
---------- ----------
5,504,427 10,782,188
---------- ----------
Communications Equipment -- 3.8%
60,000 General Instrument Corp.+ ............... 1,739,771 2,550,000
12,500 Mannesmann AG ........................... 1,512,506 1,865,316
50,000 Scientific-Atlanta Inc. ................. 1,439,867 1,800,000
---------- ----------
4,692,144 6,215,316
---------- ----------
Computer Software and Services -- 2.3%
25,000 PSINet Inc.+ ............................ 971,800 1,093,750
13,000 Softbank Corp. .......................... 1,047,511 2,632,519
---------- ----------
2,019,311 3,726,269
---------- ----------
Consumer Products -- 1.5%
1,300 Compagnie Financiere Richemont AG........ 2,310,662 2,500,339
---------- ----------
Entertainment -- 9.9%
270,000 Liberty Media Group, Cl. A + ............ 3,788,234 9,922,500
605,000 Rank Group plc .......................... 2,522,710 2,405,611
100,000 USA Networks Inc. + ..................... 1,774,097 4,012,500
---------- ----------
8,085,041 16,340,611
---------- ----------
Entertainment Distribution -- 0.4%
20,000 GC Companies Inc.+ ...................... 727,907 715,000
---------- ----------
Global Entertainment -- 10.5%
10,000 Canal Plus .............................. 2,410,367 2,806,095
45,000 Disney (Walt) Co. ....................... 1,334,151 1,386,563
180,000 EMI Group plc ........................... 1,109,381 1,444,206
100,000 Seagram Co. ............................. 4,236,875 5,037,499
20,000 Time Warner Inc. ........................ 531,990 1,470,000
80,000 Viacom Inc., Cl. A + .................... 1,416,389 3,530,000
40,000 Viacom Inc., Cl. B + .................... 544,082 1,760,000
---------- ----------
11,583,235 17,434,363
---------- ----------
Publishing -- 5.5%
88,500 Arnoldo Mondadori Editore SpA ........... 1,155,894 1,533,297
910,000 Gakken Co. Ltd.+ ........................ 1,592,849 1,654,050
200,000 Independent News & Media plc, Dublin..... 849,504 959,084
25,000 Independent News & Media plc, London..... 121,060 120,799
75,000 Primedia Inc.+ .......................... 846,330 1,270,313
120,000 Schibsted ASA ........................... 1,453,472 1,349,046
20,000 Scripps (E.W.) Co. ...................... 906,366 951,250
125,000 United News & Media plc ................. 1,264,720 1,201,929
---------- ----------
8,190,195 9,039,768
---------- ----------
Satellite -- 1.1%
100,000 Loral Space & Communications Ltd.+. ..... 1,902,815 1,800,000
---------- ----------
Telecommunications -- 26.7%
32,500 AT&T Canada Inc.+ ....................... 1,757,300 2,082,031
19,100 AT&T Canada Inc., Cl. B+ ................ 603,632 1,209,843
55,000 Bell Atlantic Corp. ..................... 3,138,827 3,595,625
55,000 Cable & Wireless plc, ADR ............... 2,079,195 2,179,375
250,751 Citizens Utilities Co., Cl. B + ......... 2,091,843 2,789,604
400 DDI Corp................................. 1,818,356 2,488,513
30,000 Frontier Corp. .......................... 758,532 1,770,000
150,000 GST Telecommunications Inc.+ ............ 1,341,278 1,978,125
115 Japan Telecom Co. Ltd. .................. 851,922 1,634,222
30,000 KDD Corp. ............................... 2,025,257 2,153,902
45,000 Korea Telecom Corp., ADR+ ............... 1,543,293 1,800,000
50,000 KPN NV .................................. 2,070,161 2,346,147
215 Nippon Telegraph and Telephone Corp...... 2,358,927 2,504,623
25,000 Portugal Telecom SA ..................... 1,087,054 1,017,093
115,000 Rogers Communications Inc., Cl. B+ ...... 764,686 1,837,609
60,500 Rogers Communications Inc., Cl. B, ADR+.. 820,415 979,344
100,000 RSL Communications Ltd., Cl. A+.......... 2,594,146 1,931,250
15,000 Telecom Italia SpA, ADR ................. 1,456,943 1,577,813
48,960 Telefonica de Espana SA ................. 2,145,451 2,358,441
4,000 Time Warner Telecom Inc.+ ............... 56,000 116,000
See accompanying notes to financial statements.
8
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The Gabelli Global Interactive Couch Potato(R) Fund
Portfolio of Investments (Continued) -- June 30, 1999 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (Continued)
Telecommunications (Continued)
2,525 Viag AG ................................. $ 1,389,757 $ 1,192,616
85,000 Viatel Inc. + ........................... 1,342,476 4,770,624
----------- -----------
34,095,451 44,312,800
----------- -----------
Wireless Communications -- 11.4%
17,900 Aerial Communications Inc.+ ............. 193,053 241,650
70,200 Cellular Communications of Puerto
Rico Inc.+............................. 1,289,943 2,000,700
125 NTT Mobile Communication Network Inc..... 1,079,131 1,677,185
160,000 Omnipoint Corp. + ....................... 2,980,313 4,630,000
127,000 Rogers Cantel Mobile Communications
Inc., Cl. B+ .......................... 1,624,345 2,087,563
45,000 Telephone & Data Systems Inc............. 2,122,823 3,287,813
10,000 Vodafone AirTouch plc, ADR .............. 654,243 1,970,000
38,000 VoiceStream Wireless Corp.+ ............. 451,395 1,080,625
72,000 Western Wireless, Corp. Cl. A+........... 1,049,021 1,944,000
----------- -----------
11,444,267 18,919,536
----------- -----------
TOTAL COMMON STOCKS...................... 107,317,333 152,075,242
----------- -----------
PREFERRED STOCKS -- 1.6%
Broadcasting -- 0.3%
300,000 Village Roadshow Ltd., Pfd. ............. 580,983 448,783
----------- -----------
Publishing -- 1.3%
500 Golden Books Family Entertainment Inc.,
8.75% Cv. Pfd. +....................... 25,000 2,000
70,000 News Corp. Ltd., ADR Preference Shares... 1,615,522 2,209,375
----------- -----------
1,640,522 2,211,375
----------- -----------
TOTAL PREFERRED STOCKS................... 2,221,505 2,660,158
----------- -----------
RIGHTS -- 0.0%
Telecommunications -- 0.0%
25,000 Portugal Telecom SA ..................... 0 258
----------- -----------
Principal
Amount
------
CORPORATE BONDS -- 0.2%
Entertainment -- 0.2%
$ 50,000 Savoy Pictures Entertainment Inc., Sub.
Deb. Cv. 7.00%, 07/01/03............... 43,530 50,438
200,000 Viacom Inc., Sub. Deb. Cv. 8.00%,
07/07/06............................... 145,926 206,750
----------- -----------
TOTAL CORPORATE BONDS.................... 189,456 257,188
----------- -----------
Principal Market
Amount Cost Value
------ ---- -----
U.S. GOVERNMENT OBLIGATIONS -- 3.3%
$5,561,000 U.S. Treasury Bills, 4.49% to 4.74% ++,
due 08/19/99 to 09/23/99 ............. $ 5,511,285 $ 5,511,922
------------ ------------
TOTAL INVESTMENTS -- 97.0%.............. $115,239,579 160,504,768
============
Other Assets and
Liabilities (Net) -- 3.0% ............ 4,982,299
------------
NET ASSETS -- 100.0%
(7,035,458 shares outstanding) ....... $165,487,067
============
NET ASSET VALUE,
Offering and Redemption
Price Per Share....................... $23.52
======
- ---------------
For Federal tax purposes:
Aggregate cost.......................... $115,239,579
============
Gross unrealized appreciation .......... $ 46,750,837
Gross unrealized depreciation .......... (1,485,648)
------------
Net unrealized appreciation ............ $ 45,265,189
============
Net
Principal Settlement Unrealized
Amount Date Appreciation
------ ---- ------------
FORWARD FOREIGN EXCHANGE CONTRACTS
81,430,081(a) Deliver Japanese Yen in exchange for
USD 672,775.......................... 07/01/99 $715
- ---------------
(a) -- Principal amount denoted in Japanese Yen.
+ -- Non-income producing security.
++ -- Represents annualized yield at date of purchase.
ADR -- American Depositary Receipt.
GDR -- Global Depositary Receipt.
USD -- U.S. Dollars.
% of
Market Market
Geographic Diversification Value Value
- -------------------------- ------ -------
North America 60.7% $97,409,447
Europe 26.0% 41,805,267
Japan 10.5% 16,831,896
Asia/Pacific Rim 2.8% 4,458,158
------ ------------
100.0% $160,504,768
====== ============
See accompanying notes to financial statements.
9
<PAGE>
The Gabelli Global Interactive Couch Potato(R) Fund
Statement of Assets and Liabilities
June 30, 1999 (Unaudited)
================================================================================
Assets:
Investments, at value (Cost $115,239,579) ............... $160,504,768
Cash .................................................... 230,908
Foreign currency, at value (Cost $1,522,715) ............ 1,542,524
Dividends, interest and reclaims receivable ............. 62,717
Receivable for investments sold ......................... 10,362,329
Receivable for Fund shares sold ......................... 892,657
Net unrealized appreciation on forward
foreign exchange contracts ............................ 715
------------
Total Assets ............................................ 173,596,618
------------
Liabilities:
Payable for Fund shares redeemed ........................ 35,395
Payable for investment advisory fees .................... 125,663
Payable for distribution fees ........................... 31,415
Depreciation on futures contracts ....................... 208,344
Variation margin payable ................................ 103,505
Other accrued expenses .................................. 7,605,229
------------
Total Liabilities ....................................... 8,109,551
------------
Net Assets applicable to 7,035,458
shares outstanding .................................... $165,487,067
============
Net Assets consist of:
Capital stock, at par value ............................. $ 7,035
Additional paid-in capital .............................. 109,631,197
Accumulated net investment loss ......................... (285,394)
Accumulated net realized gain on investments,
futures contracts and foreign currency
transactions .......................................... 11,401,536
Net unrealized appreciation on investments,
futures contracts and foreign currency
transactions .......................................... 44,732,693
------------
Total Net Assets ........................................ $165,487,067
============
Net Asset Value, offering and redemption
price per share ($165,487,067 / 7,035,458
shares outstanding; 200,000,000
shares authorized of $0.001 par value) ................ $23.52
======
Statement of Operations
For the Six Months Ended June 30, 1999 (Unaudited)
================================================================================
Investment Income:
Dividends (net of foreign taxes of $40,630) .............. $ 493,628
Interest ................................................. 81,020
-----------
Total Investment Income .................................. 574,648
-----------
Expenses:
Investment advisory fees ................................. 578,761
Distribution fees ........................................ 144,690
Shareholder services fees ................................ 61,379
Custodian fees ........................................... 30,444
Directors' fees .......................................... 2,908
Interest expense ......................................... 863
Miscellaneous expenses ................................... 69,645
-----------
Total Expenses ........................................... 888,690
-----------
Net Investment Loss ...................................... (314,042)
-----------
Net Realized and Unrealized Gain
on Investments:
Net realized gain on investments, futures
contracts and foreign currency
transactions ........................................... 11,608,436
Net change in unrealized appreciation
on investments, futures contracts
and foreign currency transactions ...................... 23,084,724
-----------
Net realized and unrealized gain
on investments, futures contracts
and foreign currency transactions ...................... 34,693,160
-----------
Net increase in net assets resulting
from operations ........................................ $34,379,118
===========
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 / (loss) ........................... $ (314,042) $ 458,939
Net realized gain on investments, futures contracts
and foreign currency transactions ...................... 11,608,436 4,964,163
Net change in unrealized appreciation on investments,
futures contracts and foreign currency transactions .... 23,084,724 10,723,070
------------ -----------
Net increase in net assets resulting from operations ..... 34,379,118 16,146,172
------------ -----------
Distributions to shareholders:
Net investment income .................................... -- (448,581)
Net realized gain on investments ......................... -- (4,950,101)
In excess of net realized gain on investments ............ -- (196,018)
------------ -----------
Total distributions to shareholders ...................... -- (5,594,700)
------------ -----------
Capital share transactions:
Net increase in net assets from capital share transactions 57,108,605 22,890,207
------------ -----------
Net increase in net assets ............................... 91,487,723 33,441,679
Net Assets:
Beginning of period ...................................... 73,999,344 40,557,665
------------ -----------
End of period ............................................ $165,487,067 $73,999,344
============ ===========
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
The Gabelli Global Interactive Couch Potato(R) Fund
Notes to Financial Statements (Unaudited)
================================================================================
1. Organization. The Gabelli Global Interactive Couch Potato 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 February 7, 1994.
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
11
<PAGE>
The Gabelli Global Interactive Couch Potato(R) 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
12
<PAGE>
The Gabelli Global Interactive Couch Potato(R) 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 $144,690, or 0.25% of average
daily net assets, the annual limitation under the Plan. Such payments are
accrued daily and paid monthly.
5. Organizational Expenses. The organizational expenses of the Fund are being
amortized on a straight-line basis over a period of 60 months.
13
<PAGE>
The Gabelli Global Interactive Couch Potato(R) Fund
Notes to Financial Statements (Continued) (Unaudited)
================================================================================
6. Portfolio Securities. Purchases and sales of securities for the six months
ended June 30, 1999, other than short term securities, aggregated $79,627,690
and $42,517,549, respectively.
7. Transactions with Affiliates. During the six months ended June 30, 1999, the
Fund paid brokerage commissions of $2,350 to Gabelli & Company, Inc. and its
affiliates.
8. Line of Credit. The Fund has access to an unsecured line of credit from the
custodian for temporary borrowing purposes. Borrowings under this arrangement
bear interest at 0.75% above the Federal Funds rate on outstanding balances.
There were no borrowings outstanding at June 30, 1999.
The average daily amount of borrowings outstanding during the six months ended
June 30, 1999 was $2,845,000, with a related weighted average interest rate of
5.46%. The maximum amount borrowed at any time during the six months ended June
30, 1999 was $3,790,000.
9. 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 ................................ 5,759,651 $121,114,028 7,109,075 $113,132,679
Shares issued upon reinvestment of dividends -- -- 342,029 5,633,747
Shares redeemed ............................ (3,079,759) (64,005,423) (5,935,470) (95,876,219)
---------- ------------ ---------- ------------
Net increase ............................. 2,679,892 $ 57,108,605 1,515,634 $ 22,890,207
========== ============ ========== ============
</TABLE>
10. 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.
14
<PAGE>
The Gabelli Global Interactive Couch Potato(R) 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 ............ $ 16.99 $ 14.28 $ 11.75 $ 11.72 $ 10.25 $ 10.00
-------- ------- ------- ------- ------- -------
Net investment income / (loss) .................. (0.05) 0.11 (0.07) (0.09) (0.01) (0.01)
Net realized and unrealized gain
on investments ................................ 6.58 3.98 4.97 1.56 1.84 0.26
-------- ------- ------- ------- ------- -------
Total from investment operations ................ 6.53 4.09 4.90 1.47 1.83 0.25
-------- ------- ------- ------- ------- -------
Distributions to shareholders:
Net investment income ........................... -- (0.11) -- -- -- --
In excess of net investment income .............. -- -- -- (1.44) (0.36) --
Net realized gain on investments ................ -- (1.23) (2.37) -- -- --
In excess of net realized gain on investments ... -- (0.04) -- -- -- --
-------- ------- ------- ------- ------- -------
Total distributions ............................. -- (1.38) (2.37) (1.44) (0.36) --
-------- ------- ------- ------- ------- -------
Net asset value, end of period .................. $ 23.52 $ 16.99 $ 14.28 $ 11.75 $ 11.72 $ 10.25
======== ======= ======= ======= ======= =======
Total return++ .................................. 38.4% 28.9% 41.7% 12.5% 17.9% 2.5%
======== ======= ======= ======= ======= =======
Ratios to average net assets and supplemental data:
Net assets, end of period (in 000's) ............ $165,487 $73,999 $40,558 $37,779 $31,439 $24,831
Ratio of net investment income / (loss)
to average net assets ......................... (0.54)%(a) 0.66% (0.61)% (0.70)% (0.07)% (0.13)%(a)
Ratio of operating expenses
to average net assets (b) ..................... 1.53%(a) 1.66% 1.78% 2.06% 2.47% 2.47%(a)
Portfolio turnover rate ......................... 37% 105% 68% 47% 33% 14%
</TABLE>
- ----------
+ From commencement of operations on February 7, 1994.
++ 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) Annualized.
(b) The Fund incurred interest expense during the six months ended June 30,
1999 and the years ended December 31, 1998 and 1997. If interest expense
had not been incurred, the ratios of operating expenses to average net
assets would have been 1.50%, 1.63% and 1.64%, respectively.
See accompanying notes to financial statements.
15
<PAGE>
Gabelli Global Series Funds, Inc.
The Gabelli Global Interactive Couch Potato(R) 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
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 Interactive Couch Potato(R) Fund. It is not authorized for
distribution to prospective investors unless preceded or accompanied by an
effective prospectus.
- --------------------------------------------------------------------------------
GAB442Q299SR
