SEMI-ANNUAL REPORT
THE GABELLI
GLOBAL
MULTIMEDIA
TRUST INC.
JUNE 30, 1995
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EPS PMV
MANAGEMENT
CASH FLOW
RESEARCH
INVESTMENT OBJECTIVE:
The Gabelli Global Multimedia Trust Inc. is a closed-end, non-diversified
management investment company whose primary objective is long-term growth of
capital, with income as a secondary objective.
This report is printed on recycled paper.
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TO OUR SHAREHOLDERS,
For the second quarter, the Gabelli
Global Multimedia Trust Inc.'s
("Multimedia Trust") net asset value per
share increased 3.8% to $7.96 on June
30, 1995 from $7.67 on March 31, 1995. [PHOTO OF MARIO J. GABELLI]
For the six months ended June 30, the
net asset value was up 6.0%. Since
inception on November 15, 1994, the
Multimedia Trust's net asset value has
achieved a 6.6% total return after
adjusting for the $0.05 per share
dividend paid on December 28, 1994.
The Multimedia Trust's common
shares ended the second quarter at $7.50
per share on the New York Stock
Exchange, up 7.1% for the quarter and up The Gabelli
1.7% year to date. The common shares Global Multimedia
were down 5.6% since inception after Trust Inc.
adjusting for the December distribution.
RIGHTS OFFERING 1995
Your Board of Directors has announced a transferable rights offering for
1995. The offering will be made to shareholders of record on August 11, 1995, by
means of a prospectus. The Multimedia Trust is offering shareholders one
transferable right for every share held as of the record date. Three rights will
be required to purchase one additional share at the discounted price of $6.50
and free of commission.
Shareholders who fully exercise their primary subscription rights may
oversubscribe for any additional amount of shares they wish. These
oversubscription shares will also be at the subscription price of $6.50 and will
be distributed based on a pro-rata allocation formula.
WHAT WE DO
We do what is described as bottom up research: we read annual reports; we
visit the competition; we talk to customers; we go belly to belly with
management. We structure our portfolio by picking stocks. The graphic on the
inside of the front cover further illustrates the interplay among the four
components of our valuation approach.
Our focus is on free cash flow; earnings before interest, taxes,
depreciation and amortization (EBITDA) minus the capital expenditures necessary
to grow the business. We believe free cash flow is the best barometer of a
business' value. Rising free cash flow often foreshadows net earnings
improvement. We also look at earnings per share trends. Unlike Wall Street's
ubiquitous earnings momentum players, we do not try to forecast earnings with
accounting precision and then trade stocks based on quarterly expectations and
realities. We simply try to position ourselves in front of long-term earnings
uptrends. In addition, we analyze on and off balance sheet assets and
liabilities such as plant and equipment, inventories, receivables, and legal,
environmental and health care issues. We want to know everything and anything
that will add to or detract from our private market value (PMV) estimates.
Finally, we look for a catalyst; something happening in the company's industry
or indigenous to the company itself that will surface value. In the case of the
independent telephone stocks, the catalyst is a regulatory change. In the
agricultural equipment business, it is the increasing worldwide demand for
American food and feed crops. In other instances, it may be a change in
management, sale or spin-off of a division, or the development of a profitable
new business.
Once we identify stocks that qualify as fundamental and conceptual
bargains, we then become patient investors. This has been a proven long-term
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method for preserving and enhancing wealth in the U.S. equities arket. At the
margin, our new investments are focused on businesses that are well managed and
will benefit from sustainable long-term economic dynamics. These include macro
trends, such as globalization of the market in filmed entertainment and
telecommunications, and micro trends, such as increased focus on productivity
enhancing goods and services.
COMMENTARY
Strong corporate profits and declining long-term interest rates pushed the
stock market to record highs in the second quarter of 1995. Technology related
issues as well as financial stocks were particularly buoyant. With the appetite
for transactions whetted by IBM's hostile offer for Lotus, the performance of
the Multimedia Trust should again return to its historical relationship to other
benchmarks.
At the beginning of 1995, we opined that due to cost cutting and
productivity gains, corporate profits would remain strong even in a slowing
economy. We did not anticipate fully the 170 basis point decline in long-term
interest rates that has helped to propel the stock market to its present levels.
Despite the current conjecture that the Federal Reserve will cut short-term
interest rates to ensure a "soft landing" for the economy, we suspect long-term
and perhaps short-term rates are near an intermediate-term bottom. This may
restrain stocks over the balance of the year. However, we believe companies that
continue to report positive earnings and cash flow gains will be adequately
rewarded. In short, stock pickers will have an opportunity to excel.
MARIO J. GABELLI - ON THE MARKET,
We thought we would share with you some excerpts from a May 13, 1995 speech
by our Chief Investment Officer.
"What do we do for you? Are we value investors? Are we growth investors? I
think what we do is simple. We look for bargains, wherever they are in the
world, and we try to put them in your portfolio.
If you focus on stocks like I do, and the market's at 4500 and the S&P is
525 and the CAC 40 is over 2000 and the DAX is 2100 and the FTSE is 3300 and the
Hang Seng is at 9200 and interest rates are back down to seven percent, you're
asking yourselves the same question, Why? Where are we going?
At the same time, we envisage the world as a war of economic chicken. Many
of you have seen in a 1950's movie the image of teenagers on a highway driving
toward each other. Bill Clinton is doing the same thing in terms of economic
policy with regards to Japan. Is this going to make sense for us? Are we going
to have a re-run of the 1930s when we created roadblocks to global trade? Or is
it basically a sound economic principle to induce Japan to function as a
cooperative citizen and to lead the growth rate of the world because of its
excess cash flows?
What happens to the global economy? Let's talk a little bit about that.
Will the Fed engineer a soft landing? What does that mean? What are the risks?
What are the risks in our portfolios? What are the risks in the way we approach
a most important element - growing your net worth.
From the point of view of the U.S. economy I think it's pretty straight
forward. Yes, it will slow down. That's what's supposed to happen to economic
sectors that have a high correlation to interest rates. But when we look into
the balance of this year and into 1996, we see strong exports. America is
competing. It's terrific, it's working.
Germany is moving forward despite the strong mark. We just had the French
elections and we want to see how that unwinds, but U.S. exports to Europe should
be quite strong. In Latin America we are in a lull. Mexico is not buying as much
as they once were.
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What about Asia? Three billion consumers. In India, five percent of the
population, 45 million people, is greater than the middle class in Germany. It's
a powerful economic base that's just entering the global market place.
Japan. Will Japan become a consumer state? Will they recycle the $140
billion that they earn each year and become the engine of continued growth in
statesmanship and leadership? I'm a believer that it will happen. What does that
mean if it happens? How do we sell to Japan? What does it mean for Hawaii? What
does it mean for California? You may have the same questions I have, Why is the
Yen at 83? Why is the D-mark at 1.36? A year ago it was 1.65 and we heard about
that. Those are the things that come into our mix of how we look at businesses.
Let's go through the basics.
EARNINGS. Earnings are going to be strong in '95, and reasonably good in
'96 because of the election. We're starting to gaze into 1997. We're trying to
figure out what Bill Clinton's going to do to re-engineer his re-election. I
think he's going to come on strong in the second half with a program that will
keep him as the front runner of the Democratic party, allowing him to regain
confidence in the heart of the American public. Within that framework we need to
look at 1997. A year from now, that obviously is what we're going to think
about. But let's look in terms of components before we get to interest rates.
INFLATION. Commodities: we see flareups, cotton is over a dollar a bale.
Other commodities like silver spiked up 30 percent and have come back down. A
year ago coffee was on its way from eighty cents to a dollar twenty-five to two
dollars and it's backed off. So, we look at commodity prices as harbingers of
inflation.
The wild card here is obvious to all of us. Russia is becoming the
incremental supplier in many industrial commodities and its supply can keep a
lid on prices. In foodstuffs, the U.S. is the supplier of last resort. The Iowa
corn farmer will be the buffer to global food supply. But the main wild card is
oil. We're consuming more, we're producing less, we need and have more
dependence on the rest of the world, particularly the Mideast. Isn't this a
rerun of 1972? Having to worry about Algeria. Having to worry about
fundamentalism. I'll be in Kuwait in three weeks visiting that part of the world
to do research on the area, but these are the kinds of things we're concerned
about. It's a fragile supply and demand relationship. So you have commodities,
with the wild card being oil, that we are observing as an important dynamic.
SERVICES. We have talked about this for several years now, whether it was
FASB 106, whether it was Corporate America or whether it was Hillary Clinton.
The point is that health care costs have come into control. We don't see much of
a surge in the service sector.
LABOR. Labor is the big dynamic but the supply of labor is global.
Production is being moved around the world. So when we put the mix together
we're almost reading the script and almost reading the statements I made a year
ago. On balance what will turn this stock market back is an acceleration of
inflation which will accelerate interest rates. So far the Fed, unlike previous
periods when they'd go at 100 miles an hour and then jam on the brakes, has
acted early to curb excesses, and it's working. So we're encouraged by that.
How about corporate profits? They've been powerful. S&P 500 earnings were
probably up ten percent this year, and will probably be up another eight or nine
percent next year, excluding the effects of non-U.S. operations being translated
into U.S. dollars. What does that mean? I think there's a strong desire by
corporations around the world to remain efficient. It means that earnings are
going to be pretty robust. That provides a buttressing effect to the stock
market when interest rates will invariably seek a higher level. The rally in
interest rates, in other words, is over. You've had a terrific, terrific rally
from November 8th where long rates were at 8.3 percent. So the combination of
strong earnings and declining interest rates has offset a lot of the other
elements that created a negative environment for stocks.
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It's been a terrific first four months. We don't see that continuing over
the balance of the year. We have to be prepared for sharp corrections. And that
will happen. But fortunately, as we touched on, there are going to be ballasts.
The important one to psychology is the flow of funds from this transaction
driven environment that we're in. $135 billion dollars is reworking itself into
the market place. When a company is taken over, the money that is put back in is
recycled into common stocks. And if the market comes down, the preconditions are
there for a significant step-up in corporate merger and acquisition activity.
Now when talking about buccaneers, you know I couldn't help but think about
Chrysler. Do you think that Kerkorian was doing the right thing for American
society by putting a $55 bid on the table for Chrysler? Could he have financed
it? Yes. That deal could have been done. In 1986 he would have received a highly
confident letter from Mike Millken and Drexel Burnham in terms of financing.
Today we analyzed it and we thought it could be self-financing and generate a
return to the investors. The problem? No margin of safety. And if there was an
economic contraction during this period, a miscalculation about what happens to
oil prices, Chrysler would be back where they were in the early seventies. So
the buccaneers are back and that provides a ballast to transactions.
Overall we think this is going to be a good time over the next twelve
months for old-fashioned stock selection. The easy money has been made. What do
we buy and why?
Consumers, there are three billion consumers in Asia. They want telephone
services. I was in Kansas City two days ago for a meeting Sprint had for
analysts. And an interesting statistic that we don't think about, outbound
traffic, units of demand for voice and data, was up 60 percent, inbound was up
70 percent. Communications is an American export. In most places in the United
States it's pretty cheap to make long distance calls. So when you look at the
consumer, our portfolio has some ways that you're participating in calls to
Turkey, to India, to Japan, to China, that you don't think about.
Obviously we also like the Interactive Couch Potato. The Interactive Couch
Potato, yes that's a buzz word for the nineties that we've created. Yes, that is
an area in which we feel we have research dominance and whether it's Larry
(Tisch at CBS) and Barry (Diller) or Ted (Turner) and Jack (Welch at GE) or
whether it's Mike Eisner and Rupert Murdoch, or whoever gets together, there is
a media merging and a media mating game. We are there. British Telecom makes an
investment in MCI, MCI then makes an investment in News Corp., what does that
mean on a global basis? Is this giant going to bring us Power Rangers and put it
in everyone's household? Why is Rupert Murdoch able to convince the Asians that
he's an Asian, the Americans that he's an American and the Italians that he's an
Italian? How does he pull that off? Well, we need our own versions of the
Murdochs. And every time I turn around, great American intellectual talents like
John Malone, Craig McCaw or Bill Gates are being hounded by government. Instead
of being applauded they're being hounded. And even Murdoch, who we adopted since
he is a U.S. citizen now, we should applaud, because he's reducing costs on a
global basis.
Another theme is takeovers. What is on our menu? And how else can we invest
in that area? Let me give you a few other names that tie into this. In the
entertainment area we're still strong in television. We're still comfortable
owning cable. We like what's going on at Time Warner. We believe that Gerry
Levin will rearrange his company. Time Warner is at thirty-nine dollars. We
believe that the cable business will show strong EBITDA growth over the next six
quarters, that he is going to take the copyright and creativity, move it to the
left hand side and do a joint venture in cable within the next year with US
WEST. So we're holding that position. I think we'll have a substantial return on
our investment from Time Warner.
The same thing is true with regard to Viacom. A year ago the stock was
twenty-two, today it's forty-nine. At that time we had questions about their
leverage. Was the Blockbuster deal attractive? But we said we believed in
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software, we believed in MTV, in Nick at Night, Nickelodeon, and we believed
that dynamic would pay off. As it turned out, it was Forrest Gump that did it.
Within that context, we have a new movie company - Seagram's. We tried to preach
the virtues of Seagram's at $30 because they owned a substantial position in
DuPont. They owned a substantial position in Time Warner. They had the liquids
business. Today Seagram's (VO) is selling at $27 and has sold most of its DuPont
investment to buy 80% of MCA. Seagram's has 373 million shares outstanding. If
you put an eleven multiple of EBITDA on their beverage business (which I think
is reasonable), then we get MCA for free when we buy one share of VO. We've
always made money when we've bought movie companies for free. And within that
framework MCI paid two billion dollars to buy a piece, 13%, of News Corp. which
owns Twentieth Century Fox.
Now the reason we haven't been a lot more aggressive on Seagram's is that
to be ultimately successful it needs to have distribution. So it's no longer
Larry Tisch and Barry Diller trying to make a deal. It is now Edgar (Bronfman,
Chairman of Seagram's) and Larry (Tisch). That is, I'm convinced that you'll see
some overtures by MCA and CBS in terms of strategically positioning themselves.
Satellite dishes. How many of us have been exposed to an ad for direct TV
in the last twelve months? What does that mean for the enlargement of the market
for cable television? It's having an incredibly positive effect. Some of it is
cannibalizing from the traditional cable provider, but on balance, it's
enlarging the market.
What does that mean for companies like CNN? For Ted Turner? There are
several that we're going to be focusing on in your portfolio. International
Family Entertainment is at $16, we think you will make 50 percent from here over
the next twelve months. We think it's time to take another look at Family. Pat
Robertson, we're his largest shareholder. Black Entertainment, Bob Johnson's
company. Gaylord Entertainment, and obviously we will not ignore Viacom, which
is MTV, and we'll even start looking at Ted if only Jane can keep him busy so
that he doesn't try to make a run for a network. But I want to wait until that
happens before we jump on his stock, we want to know what he wants to do next.
So within that framework let me just touch base on other portfolio holdings
and deal with takeovers. Hilton. You know Barron was honored by us. We honored
Jack Frasee a couple of years ago, just to have Centel collapse on us, but
ultimately to be taken over by Sprint. We think Barron wants out. The Hilton is
for sale. It's being divided into two parts: Hilton - the hotel operations - and
gaming. What will happen is that the sum of the two parts a year from now should
give us a 50 percent return. The stock has dropped from seventy-seven to
sixty-eight, but a year ago it was fifty-five. And we think we'll get ninety
plus over the next twelve months. The big hotel leverage for them is Hawaii and
at some point we believe that the Japanese government will tell their citizens
to go and spend, go and travel, and Hawaii is the preferred choice. It's cheap,
it's a bargain, and Hilton has a major leverage opportunity in the hotel
business.
Multimedia. The stock is thirty-eight and is worth fifty-five. Western
Publishing, which has gone to the altar twice. We think this time around Dick
Bernstein is going to be taken over. Whether we get fifteen or eighteen or
twenty is not clear, but the values are there and they're compelling at $9. And
yes, if we own some in your portfolio we'll try to average down. I can go on and
on because there are so many companies that are on the bargain counter even with
the Dow at 4500.
So in sum, the easy money has been made. We will have more volatility.
Earnings are going to be reasonably strong for this year and 1996. We are going
to see somewhat of a backup in interest rates. But on balance we should be able
to earn our ten percent return plus inflation over the next twelve months."
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LET'S TALK STOCKS
The following are stock specifics on selected holdings of the Multimedia Trust's
investments. Favorable EBITDA prospects do not necessarily translate into higher
stock prices, but they do express a positive trend which we believe will develop
over time.
GRUPO TELEVISA SA (TV - $22.00 - NYSE) is a Mexican-based entertainment company
that dominates the Spanish speaking world through its fully integrated mix of
content and distribution. The stock has been hurt in line with the Mexican
market and economy, but nevertheless, is the best vehicle for accessing the
growth of disposable income among the Spanish speaking population on a global
basis. The business mix includes film, music, cable television and broadcasting.
We believe the stock to be rich in assets and it remains a core holding.
TIME WARNER INC. (TWX - $41.125 - NYSE) is one of the largest diversified media
and publishing companies in the world, with a market capitalization of over $15
billion. Warner Brothers Studios, the company's filmed entertainment subsidiary,
was ranked number one at the box office for the third consecutive year. Its most
recent summer blockbuster, Batman Forever, grossed $150 million in its first few
weeks in theaters. Time Warner is restructuring its business into copyright and
creativity (notably publishing, music and filmed entertainment) on one side and
distribution (mostly cable) on the other. Under the aegis of Gerald M. Levin,
investors can expect significant returns.
SPRINT CORPORATION (FON - $30.25 - NYSE) remains very attractive in light of its
very low valuation and prospects for earnings acceleration. It trades at 59% of
our $67 estimate of private market value. We expect the telephone and cellular
operations to be the main contributors to operations due to the continuation of
strong customer growth. We point out subscriber growth of 67% in cellular last
year. The long distance operations should maintain less spectacular call volume
growth at the industry average of approximately 8%. Sprint's high cost structure
also provides an opportunity for earnings acceleration through further cost
restructuring. An alliance with a multinational communications partner also
appears imminent and will provide Sprint with the critical mass necessary to
position itself strategically as a dominant player in the multinational
telecommunications market.
TELE-COMMUNICATIONS INC. (TCOMA - $23.4375 - NASDAQ) is the largest cable
television multiple system operator (MSO) in the U.S., serving some 12 million
subscribers. Regulation historically has driven the outlook for cable stocks.
With a deregulation-minded Congress in place, the outlook is once again
improving. (Proposed legislation which provides for reduced rate regulation and
higher cross ownership of cable television systems represents a significant,
favorable catalyst for cable. We are tracking this process closely.) TCI is
well-positioned for the future. Last year, in association with Comcast
Corporation (CMCSA -$18.1875 - NASDAQ) and Cox Communications (COX - $19.375 -
NYSE), TCI established a joint venture and strategic alliance with Sprint
Corporation (FON - $33.625 - NYSE) to provide both wired and wireless telephone
services in competition with the local telephone industry, utilizing TCI's cable
infrastructure and Sprint's well-recognized national brand name. The joint
venture is one of the largest bidders for new PCS spectrum and looks to emerge
as one of the best-positioned competitors to the cellular telephone duopoly. TCI
has recently announced various financial restructuring moves which we expect
will benefit the price of the stock this year.
AT&T CORP. (T - $53.125 - NYSE) is the second-largest telephone company in the
world. AT&T, selling at 7.5 times EBITDA, is attractively valued relative to its
growth potential. The company is well-positioned to benefit from the
above-average, long-term growth of the global telecommunications industry. Its
strategy includes a tailored approach in order to take advantage of its strong
global franchise, including its brand name, broad product offerings and an
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international customer base. AT&T will satisfy communication needs by packaging
a broad array of products, including its global wired and wireless
telecommunications services, telecommunications equipment and financial
services.
LIN BROADCASTING CORPORATION (LINB - $126.50 - NASDAQ) ranks among the largest
and most attractive cellular telephone operators in the U.S. with controlling
interests in the New York, Los Angeles, Dallas and Houston markets. McCaw
Cellular Communications, which was acquired by AT&T in 1994, controls 52% of
LIN. McCaw (AT&T) is buying the 48% balance of LIN for $129.50 per share in
cash. This price reflects AT&T's agreement to settle lawsuits brought by LINB
shareholders by paying an additional $2.00 per share; the initial purchase price
was $127.50 per share. The Fund is holding LIN to earn the difference between
the current market price and the "take out" price of LIN.
IN CONCLUSION
The first half of 1995 has been terrific for equity investors. We believe
the market will prove to be a sterner test in the second half, with stock
selection more critical to success. As always, we have reservations regarding
the broad market. At current levels, investors have made a big bet that the
economy will slow down without stalling and that inflation and interest rates
will remain low. If reality does not conform with expectation, stocks could hit
an air pocket.
Regardless of what Mr. Market has in store for us over the balance of the
year, we believe our portfolio offers excellent fundamental long-term value. We
remain confident that if we buy good businesses at opportunistic prices, we will
enhance the value of the assets you have entrusted to us.
Sincerely,
/s/Mario J. Gabelli, CFA
Mario J. Gabelli, CFA
President and Chief Investment Officer
July 17, 1995
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TOP TEN HOLDINGS
JUNE 30, 1995
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LIN Broadcasting Corporation Pulitzer Publishing Company
Time Warner Inc. AT&T Corp.
Tele-Communications Inc. Grupo Televisa S.A.
Multimedia, Inc. US WEST Inc.
Sprint Corporation Citicasters Inc.
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THE GABELLI GLOBAL MULTIMEDIA TRUST, INC.
PORTFOLIO OF INVESTMENTS (UNAUDITED) -- JUNE 30, 1995
- --------------------------------------------------------------------------------
SHARES COST VALUE
------ ---- -------
COMMON STOCKS -- 53.32%
CABLE -- 4.97%
3,000 Bell Cablemedia plc
ADR+ $ 51,880 $ 57,000
2,000 BET Holdings Inc............ 32,350 36,500
500 Cablemaxx, Inc.+. .......... 2,275 3,562
3,000 Comcast U.K. Cable
Partners Limited+ ......... 43,612 48,375
1,000 Comcast Corporation ........
Special Cl. A ............. 15,612 18,563
4,000 General Cable
Corporation plc ADR+ ...... 58,500 59,500
13,000 General Motors
Corporation Cl. H ........ 519,463 513,500
37,500 Home Shopping
Network, Inc. ............. 277,960 318,750
3,000 International CableTel
Incorporated+ ............. 83,550 97,500
10,000 Media General, Inc. Cl. A... 284,125 305,000
44,500 Multimedia, Inc.+........... 1,387,324 1,724,375
500 NYNEX CableComms
Group plc ADR+ ............ 10,905 10,125
500 People's Choice TV
Corporation+ .............. 7,837 12,562
500 Preferred Entertainment
Inc.+ ..................... 5,525 8,188
1,000 Shaw Communications
Inc. ...................... 7,129 6,013
3,000 Telewest ...................
Communications
plc ADR+ .................. 77,175 77,250
1,500 United International
Holdings Inc. Cl. A+ ...... 22,560 25,125
6,000 Videotron Holdings
plc ADR+ .................. 97,500 84,000
---------- ----------
2,985,282 3,405,888
---------- ----------
ENTERTAINMENT -- 6.80%
4,000 All American
Communications Inc.+ .................. 36,255 42,000
3,000 Bay Meadows
Operating Company...................... 48,150 48,000
1,500 Churchill Downs
Incorporated. ......................... 64,517 64,500
4,000 Cinar Films Inc. Cl. B+ ................ 36,725 39,250
4,000 Cinergi Pictures
Entertainment Inc.+ ................... 26,028 27,000
2,160 Fisher Companies Inc. .................. 120,940 160,920
15,000 Gaylord Entertainment
Company................................ 344,259 378,750
20,000 GC Companies, Inc.+..................... 543,063 655,000
4,000 General Electric Company ............... 192,950 225,500
10,000 GTECH Holdings
Corporation+........................... 169,281 292,500
500 Harvey Entertainment
Company+............................... 7,837 3,875
1,000 Lancit Media
Producitons, Ltd.+..................... 13,040 16,500
3,000 Lodgenet Entertainment
Corporation+........................... 26,370 27,000
500 PolyGram NV ADR......................... 23,338 29,563
2,500 Savoy Pictures
Entertainment+......................... 16,038 22,812
5,000 Seagram Company Ltd. ................... 135,406 173,125
75,000 Shaw Brothers
(Hong Kong) Ltd........................ 119,345 70,288
1,000 Sony Music
Entertainment.......................... 48,546 42,355
10,000 THORN EMI plc ADR....................... 179,687 207,612
45,000 Time Warner Inc......................... 1,797,551 1,850,625
1,500 Viacom Inc. Cl. A+...................... 61,575 69,750
5,100 Videotron Groupe........................ 44,803 41,819
3,000 Walt Disney Company. ................... 150,775 166,875
---------- ----------
4,206,479 4,655,619
---------- ----------
FINANCIAL SERVICES-- 0.24%
4,000 H&R Block Inc........................... 146,638 164,500
---------- ----------
HOTELS/CASINOS -- 0.61%
5,000 Hilton Hotels
Corporation............................ 295,338 351,250
25,000 Ladbroke Group plc. .................... 63,360 67,304
---------- ----------
358,698 418,554
---------- ----------
INTERACTIVE SOFTWARE & SERVICES -- 1.10%
3,000 Acclaim Entertainment,
Inc.+.................................. 45,870 55,313
5,000 Activision Inc.+........................ 32,263 35,625
3,000 Electronic Arts Inc.+ .................. 67,091 81,375
2,000 Intel Corporation... ................... 80,665 126,625
5,000 Microsoft Corporation+ ................. 306,290 451,875
---------- ----------
532,179 750,813
---------- ----------
LONG DISTANCE TELEPHONE COMPANIES-- 4.04%
20,000 AT&T Corp............................... 1,007,013 1,062,500
48,500 Sprint Corporation...................... 1,400,425 1,630,812
345,000 STN Incorporated+....................... 110,702 72,923
---------- ----------
2,518,140 2,766,235
---------- ----------
MEDIA -- 12.71%
500 ACS Enterprises, Inc.+ ................. 3,838 9,125
5,500 BHC Communications,
Inc. Cl. A............................. 410,100 442,063
3,000 British Sky Broadcasting
Group ADR+............................. 72,400 78,375
12,000 Canal Spons. ADR... ................... 345,125 329,240
7,500 Capital Cities/ABC, Inc. ............... 618,125 810,000
7,000 CBS Inc................................. 398,350 469,000
The accompanying notes are an integral part of the financial statements.
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THE GABELLI GLOBAL MULTIMEDIA TRUST, INC.
PORTFOLIO OF INVESTMENTS (UNAUDITED)(CONTINUED) -- JUNE 30, 1995
- --------------------------------------------------------------------------------
SHARES COST VALUE
------ ---- -------
14,270 Chris-Craft Industries,
Inc.+.................................. $ 483,825 $ 499,450
30,100 Citicasters Inc.+....................... 527,454 827,750
500 Clear Channel
Communications, Inc.+ ................. 28,244 32,188
15,000 Data Broadcasting
Corporation+........................... 66,844 90,000
500 Emmis Broadcasting
Corporation Cl. A+. ................... 10,489 13,625
500 Evergreen Media
Corporation Cl. A+. ................... 10,736 13,000
500 EZ Communications,
Inc.+.................................. 7,911 9,250
22,000 Flextech plc+........................... 144,943 128,619
3,000 Grupo Raido Centro,
S.A. de CV............................. 23,650 27,375
50,000 Grupo Televisa
S.A. GDR............................... 1,036,572 1,018,750
4,000 Havas ADR............................... 78,250 79,216
500 Heftel Broadcasting
Corporation Cl. A+. ................... 6,500 7,875
1,000 Heritage Media
Corporation Cl. A+. ................... 29,175 28,875
500 Infinity Broadcasting
Corporation Cl. A+. ................... 13,895 16,688
10,000 International Family
Entertainment, Inc.+ .................. 135,188 157,500
500 Jacor Communications,
Inc.+.................................. 6,958 8,000
2,000 Katz Media Group Inc.+ ................. 33,075 31,750
2,000 LIN Television
Corporation+........................... 47,258 67,250
4,000 Multi-Market Radio,
Inc. Cl. A............................. 38,863 40,000
16,500 Outlet Communications,
Inc. Cl. A+............................ 416,619 618,750
500 SAGA Communications,
Inc. Cl. A+............................ 9,713 10,375
2,000 Scandinavian Broadcasting
System S.A.+........................... 42,023 40,500
1,000 SFX Broadcasting, Inc.+ ................ 23,020 26,750
1,000 SiIver King
Communications, Inc.+ ................. 14,420 16,250
92,000 Tele-Communications,
Inc. Cl. A+............................ 1,966,466 2,156,250
20,000 Television Broadcasting
Ltd.................................... 78,640 70,321
10,000 Tokyo Broadcasting
System................................. 163,130 142,756
1,500 Turner Broadcasting
System, Inc. Cl. A. ................... 29,888 30,000
5,000 United Television, Inc. ................ 290,816 355,000
---------- ----------
7,612,503 8,701,916
---------- ----------
MEDIA SERVICES -- 0.38%
21,000 Ackerley Communications,
Inc.+.................................. 194,050 257,250
---------- ----------
PUBLISHING -- 6.37%
12,000 American Media Inc.
Cl. A.................................. 116,888 82,500
2,500 Central Newspaper,
Inc. Cl. A............................. 71,479 74,062
1,000 Dow Jones & Company
Inc.................................... 36,050 36,875
500 Gray Communications
Systems Inc............................ 12,375 14,313
30,000 Independent
Newspapers plc......................... 132,294 162,858
2,000 Knight-Ridder, Inc...................... 113,413 113,750
1,500 Lee Enterprises,
Incorporated........................... 57,638 57,188
60,000 Ming Pao Enterprise
Corporation Ltd........................ 34,917 31,799
10,000 Nation Publishing Group
Company Ltd............................ 17,414 16,207
50,000 New Straits Times Press
Berhad................................. 157,197 154,904
10,000 News Corporation
Limited ADR............................ 154,353 226,250
1,000 News Corporation
Limited Preference
Shares ADR+............................ 13,847 20,000
40,000 Oriental Press Group 17,360 16,158
10,000 Playboy Enterprises,
Inc. Cl. B+............................ 97,125 80,000
32,000 Post Publishing
Company................................ 193,805 191,896
27,000 Pulitzer Publishing
Company................................ 1,115,731 1,150,875
7,500 Reader's Digest
Association, Inc. Cl. B ............... 296,200 306,563
60,000 Singapore Press
Holdings, Ltd.......................... 909,867 896,995
99,000 South China Morning
Post Holdings.......................... 57,614 59,507
4,000 Times Mirror Company
Cl. A.................................. 76,575 95,500
50,000 Times Publishing Ltd. .................. 126,892 123,748
10,000 TVE Holdings Limited ................... 4,127 4,007
40,000 Western Publishing
Group, Inc.+........................... 422,889 450,000
---------- ----------
4,236,050 4,365,955
---------- ----------
REGIONAL/LOCAL TELEPHONE SERVICES -- 2.64%
1,000 Bruncor Inc............................. 16,450 15,215
12,000 GTE Corporation......................... 405,663 409,500
3,000 NewTel Enterprises
Limited................................ 45,184 44,005
10,000 Pacific Telecom, Inc. .................. 298,250 297,500
3,000 Quebec-Telephone........................ 44,083 41,545
24,000 US WEST, Inc............................ 995,488 999,000
---------- ----------
1,805,118 1,806,765
---------- ----------
9
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST, INC.
PORTFOLIO OF INVESTMENTS (UNAUDITED)(CONTINUED) -- JUNE 30, 1995
- --------------------------------------------------------------------------------
SHARES COST VALUE
------ ---- -------
TELEPHONE EQUIPMENT -- 0.05%
1,000 Northern Telecom
Limited................................ $ 34,956 $ 36,500
---------- ----------
TELEPHONE NETWORKS-- 4.17%
15,000 BC TELECOM Inc.......................... 269,085 258,291
11,000 BCE Inc................................. 346,800 353,375
2,000 Belize Holdings Inc. ................... 30,892 32,000
1,400 Compania Telefonos
Chile SA ADR........................... 101,509 113,925
1,000 GST Telecommuni-
cations, Inc.+......................... 5,175 5,938
6 Japan Telecom Co, Ltd. ................. 132,758 104,059
1,000 Pacific Telesis
Group Inc.............................. 26,800 26,750
2,300 Philippine Long Distance
Telephone Company...................... 148,080 165,025
1,100 PT Indonesia Satellite
ADR.................................... 36,493 42,075
1,800 Telecom Argentina Stet -
France Telecom
S.A. ADR............................... 69,082 81,900
1,000 Telecom Corporation of
New Zealand Ltd. ADR .................. 62,150 60,625
200,000 Telecom Italia SpA+. ................... 501,000 542,840
20,000 Telecomunicacoes
Brasileiras SA
(Telebras) Spons.
ADR.................................... 641,660 660,000
3,000 Telefonica de Argentina
S.A. ADR............................... 64,387 74,250
1,000 Telefonica de Espana
SA ADR................................. 33,550 38,750
10,000 Telefonos De Mexico
SA Cl. L ADR........................... 362,517 296,250
---------- ----------
2,831,938 2,856,053
---------- ----------
WIRELESS COMMUNICATIONS -- 9.24%
6,000 AirTouch
Communications Inc.+ .................. 166,300 171,000
4,000 American Paging Inc.+ .................. 28,263 27,000
4,000 BCE Mobile
Communications, Inc.+ ................. 129,373 133,382
17,500 Cellular Communi-
cations, Inc. Cl. A+ .................. 826,046 796,250
10,000 Century Telephone
Enterprises, Inc. Cl. A ............... 316,625 283,750
5,000 COMSAT Corporation...................... 94,500 98,125
1,200 Globalstar
Telecommunications
Limited+............................... 17,892 15,900
32,000 LIN Broadcasting
Corporation+........................... 4,009,514 4,048,000
25,000 NEXTEL Communi-
cations, Inc. Cl. A+ .................. 327,288 353,125
2,000 Pittencrieff
Communications, Inc. .................. 8,500 9,000
PRINCIPAL
AMOUNT
SHARES COST VALUE
------ ---- -------
10,000 Rogers Cantel Mobile
Communications, Inc.
Cl. B+................................. 243,673 237,500
4,000 Telephone and Data
Systems, Inc........................... 154,875 145,500
1,000 WinStar Communications
Inc.+.................................. 5,550 8,156
---------- ----------
6,328,399 6,326,688
---------- ----------
TOTAL COMMON STOCKS 33,790,430 36,512,736
---------- ----------
CONVERTIBLE CORPORATE BONDS -- 0.94%
ENTERTAINMENT -- 0.91%
$500,000 Time Warner Inc. Sub.
Deb. Cv. 8.75%,
01/10/15............................... 477,261 523,123
100,000 Viacom Inc. Sub. Deb.
Cv. 8.00%, 07/07/06 85,003 97,000
---------- ----------
562,264 620,123
---------- ----------
MEDIA SERVICES--0.03%
$22,000 Trans-Lux Corporation
Sub. Deb. Cv.
9.00%, 12/01/05........................ 22,026 22,440
---------- ----------
TOTAL CONVERTIBLE
CORPORATE BONDS ....................... 584,290 642,563
---------- ----------
CONVERTIBLE PREFERRED STOCKS--0.16%
ENTERTAINMENT--0.16% 4,000 AMC
Entertainment, Inc.
$1.75 Cv. Pfd.......................... 105,738 111,000
---------- ----------
TOTAL CONVERTIBLE
PREFERRED STOCKS ...................... 105,738 111,000
---------- ----------
U.S. GOVERNMENT OBLIGATIONS--48.53%
$33,390,000 U.S. Treasury Bills,
5.25% to 5.63% due
07/06/95 to 08/24/95 33,230,714 33,230,714
---------- ----------
TOTAL U.S. GOVERNMENT
OBLIGATIONS ........................... 33,230,714 33,230,714
---------- ----------
TOTAL INVESTMENTS--
102.95% ............................... $67,711,172 70,497,013
===========
Liabilities, in excess of
Other Assets--(2.95%) (2,021,818)
----------
NET ASSETS--100.00%
(8,607,411 SHARES
OUTSTANDING) ..... $68,475,195
===========
NET ASSET VALUE PER
SHARE ............. $7.96
=====
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1995
ASSETS:
Investments in securities, at value
(Cost $67,711,172) .................................. $ 70,497,014
Cash ........................1,222,130
Dividends receivable ..................................... 56,018
Accrued interest receivable .............................. 15,100
Deferred organizational expenses ......................... 316,298
Other assets ............................................. 31,629
------------
TOTAL ASSETS ........................................ 72,138,189
------------
LIABILITIES:
Payable for investments purchased ........................ 3,544,720
Payable to Advisor ....................................... 55,822
Payable to Custodian ..................................... 2,478
Dividend payable ......................................... 443
Other accrued expenses ................................... 59,531
------------
TOTAL LIABILITIES ................................... 3,662,994
------------
NET ASSETS for 8,607,411 shares
outstanding ....................................... $ 68,475,195
============
NET ASSETS CONSIST OF:
Capital Stock, at par value............................... $ 8,608
Additional paid-in-capital ............................... 64,503,524
Accumulated undistributed net investment
income .............................................. 792,229
Accumulated undistributed net realized gain
on investments ...................................... 384,750
Net unrealized depreciation on
investments ......................................... 2,786,084
------------
Net Assets .......................................... $ 68,475,195
============
NET ASSET VALUE ($68,475,195 / 8,607,411
shares outstanding ........................................ $ 7.96
==========
(200,000,000 shares authorized
of $0.001 par value)
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1995
INVESTMENT INCOME:
Interest ................................................... $1,206,435
Dividends (Net of foreign tax of $7,197) ................... 200,377
----------
Total Income .......................................... 1,406,812
----------
EXPENSES:
Investment advisory fee .................................... 328,227
Transfer & shareholder servicing agent ..................... 94,798
Printing and mailing ....................................... 40,000
Amortization of organization expenses ...................... 24,693
Legal and audit fees ....................................... 17,500
Directors' fees and expenses ............................... 15,500
Custodian fees and expenses ................................ 12,620
Salary and benefits ........................................ 5,383
Registration fees .......................................... 2,049
Miscellaneous .............................................. 755
----------
Total Expenses ........................................ 541,525
----------
Investment income - net ................................... 865,287
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments and
foreign currency transactions ........................ 408,100
Net realized gain on futures transactions ................. 7,960
Net change in unrealized appreciation ..................... 2,587,736
-----------
Net gain on investments .............................. 3,003,796
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ..................................... $ 3,869,083
===========
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<CAPTION>
NOVEMBER 15, 1994
(COMMENCEMENT OF
SIX MONTHS ENDED OPERATIONS) THROUGH
JUNE 30, 1995 DECEMBER 31, 1994
---------------- ------------------
INCREASE IN NET ASSETS:
<S> <C> <C>
Investment income--net.................................... $ 865,287 $ 261,899
Net realized gain........................................ 416,060 20,609
Change in unrealized appreciation--net.................... 2,587,736 198,348
---------- -----------
Net increase in net assets resulting from operations... 3,869,083 480,856
---------- -----------
Distributions from net investment income................. -- (261,899)
Distributions from net realized gains.................... -- (20,609)
Distributions in excess of net investment income......... -- (73,058)
Distributions in excess of net realized gains............ -- (31,310)
Distributions from paid in capital....................... -- (43,009)
----------- -----------
-- (429,885)
----------- -----------
Share transactions--net................................... -- 64,455,141
----------- -----------
Net increase in net assets............................. 3,869,083 64,506,112
NET ASSETS:
Beginning of period...................................... 64,606,112 100,000
----------- -----------
End of period ........................................... $68,475,195 $64,606,112
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION
The Gabelli Global Multimedia Trust Inc. (the "Multimedia Trust") is a
newly organized closed-end, non-diversified management investment company
organized as a Maryland corporation and registered under the Investment Company
Act of 1940, as amended (the "1940 Act"). The Multimedia Trust had no operations
prior to November 15, 1994, other than the sale of 10,000 shares of common stock
for $100,000 to The Gabelli Equity Trust Inc. (the "Equity Trust"). On November
15,1994, the Equity Trust contributed $64,382,764 in exchange for 8,587,702
shares of the Multimedia Trust and immediately thereafter distributed to its
shareholders all the shares it held of the Multimedia Trust. Investment
operations commenced on November 15,1994.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Multimedia Trust in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities which are traded on a stock
exchange or NASDAQ National Market System are valued at the last sale price as
of the close of business on the day the securities are being valued, or lacking
any sales, at the mean of closing bid and asked prices. Other over-the-counter
securities are valued at the average of the bid and asked prices as obtained
from one or more dealers that make markets in the securities. Portfolio
securities which are traded both in the over-the-counter market and on a stock
exchange are valued according to the broadest and most representative market, as
determined by Gabelli Funds, Inc. (the "Advisor") . Securities traded primarily
on foreign exchanges are valued at the closing price of such securities on their
respective exchanges or markets immediately prior to the close of the New York
Stock Exchange. Securities and assets for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the direction of the Board of Directors of the Multimedia Trust. Options
are generally valued at the last sale price or, in the absence of a last sale
price, the average of the bid and asked price. Short-term investments that
mature in more than 60 days are valued at the highest bid price obtained from a
dealer maintaining an active market on that security. Short-term investments
that mature in 60 days or fewer are valued at amortized cost, unless the Board
of Directors determines that such valuation does not constitute fair value.
REPURCHASE AGREEMENTS. The Multimedia Trust may engage in repurchase
agreement transactions. Under the terms of a typical repurchase agreement, the
Multimedia Trust takes possession of an underlying debt obligation for a
relatively short period (usually not more than one week) subject to an
obligation of the seller to repurchase, and the Multimedia Trust to resell, the
obligation at an agreed-upon price and time, thereby determining the yield
during the Multimedia Trust's holding period. This arrangement results in a
fixed rate of return that is not subject to market fluctuations during the
Multimedia Trust's holding period. The value of the collateral is at least equal
at all times to the total amount of the repurchase obligation, including
interest. The Multimedia Trust bears a risk of loss in the event that the other
party to a repurchase agreement defaults on its obligations and the Multimedia
Trust is delayed or prevented from exercising its rights to dispose of the
collateral securities, including the risk of a possible decline in the value of
the underlying securities during the period while the Multimedia Trust seeks to
12
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
assert its rights. The Advisor, acting under the supervision of the Board of
Directors, reviews the value of the collateral and the creditworthiness of those
banks and dealers with which the Multimedia Trust enters into repurchase
agreements to evaluate potential risks.
OPTION ACCOUNTING. The Multimedia Trust may purchase or write listed call
or put options on securities to hedge the value of the Multimedia Trust's
portfolio. Upon the purchase of a put or call option by the Multimedia Trust,
the premium paid is recorded as an investment, the value of which is
marked-to-market daily. When a purchased option expires, the Multimedia Trust
will realize a loss in the amount of the cost of the option. When the Multimedia
Trust enters into a closing sale transaction, the Multimedia Trust will realize
a gain or loss depending on whether the sales proceeds from the closing sale
transaction are greater or less than the cost of the option. When the Multimedia
Trust exercises a put option, it will realize a gain or loss from the sale of
the underlying security and the proceeds from such sale will be decreased by the
premium originally paid. When the Multimedia Trust exercises a call option, the
cost of the security which the Multimedia Trust purchases upon exercise will be
increased by the premium originally paid.
When the Multimedia Trust writes an option, an amount equal to the premium
received by the Multimedia Trust is recorded as a liability, the value of which
is marked-to-market daily. When a written option expires, the Multimedia Trust
realizes a gain equal to the amount of the premium received. When the Multimedia
Trust enters into a closing purchase transaction, the Multimedia Trust realizes
a gain (or loss if the cost of the closing purchase transaction exceeds the
premium received when the option was sold) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such option is
eliminated. When a written call option is exercised, the Multimedia Trust
realizes a gain or loss from the sale of the underlying security and the
proceeds from such sale are increased by the premium originally received. When a
written put option is exercised, the amount of the premium originally received
will reduce the cost of the security which the Multimedia Trust purchased upon
exercise.
The risk associated with purchasing options is limited to the premium
originally paid. The risk in writing a call option is that the Multimedia Trust
may forego the opportunity of profit if the market price of the underlying
security increases and the option is exercised. The risk in writing a put option
is that the Multimedia Trust may incur a loss if the market price of the
underlying security decreases and the option is exercised. In addition, there is
a risk that the Multimedia Trust may not be able to enter into a closing
transaction because of an illiquid secondary market.
FUTURES CONTRACTS. The Multimedia Trust 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. Such
investments will only be made if they are, in the opinion of Multimedia Trust
management, economically appropriate to the reduction of risks involved in the
management of the Multimedia Trust. Upon entering into a futures contract, the
Multimedia Trust 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 Multimedia Trust each day, depending on the daily fluctuation
of the value of the contract. The daily changes in the contract are recorded as
unrealized gains or losses. The Multimedia Trust recognizes a realized gain or
13
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
loss when the contract is closed. The net unrealized appreciation /depreciation
is shown in the financial statements.
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 Multimedia Trust may not be able to enter into a closing transaction because
of an illiquid secondary market.
During the six months ended June 30, 1995, the Multimedia trust sold short
futures contracts aggregating $2,429,000 and closed short futures contracts
aggregating $2,421,040.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Multimedia Trust may hold
currencies to meet settlement requirements for foreign securities and may engage
in currency exchange transactions to hedge against changes in exchange rates.
The forward foreign currency contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded by the Multimedia
Trust as an unrealized gain or loss. When the contract is closed, the Multimedia
Trust 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 currency contracts does not eliminate
fluctuations in the underlying prices of the Multimedia Trust's portfolio
securities, but it does establish a rate of exchange that can be achieved in the
future. Although forward foreign currency contracts limit the risk of loss due
to a decline in the value of the hedged currency, they also limit any potential
gain that might result should the value of the currency increase. In addition,
the Multimedia Trust could be exposed to risks if the counterparties to the
contracts are unable to meet the terms of their contracts.
FOREIGN CURRENCY. The books and records of the Multimedia Trust 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 on the respective dates of such
transactions. Unrealized gains or losses which result from changes in the value
of foreign currencies and net other assets have been included in unrealized
appreciation/depreciation of net other assets. Net realized currency gains and
losses include foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Multimedia Trust and the amounts actually received.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuation arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for as of the trade date with realized gain or loss on investments
determined using specific identification as the cost method. Interest income
(including amortization of premium and discount) is recorded as earned.
14
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividend income 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 Multimedia Trust,
temporary differences and differing characterization of distributions made by
the Multimedia Trust. Tax basis return of capital distributions are recorded as
an adjustment to paid-in-capital.
ORGANIZATION EXPENSES. The organization expenses of the Multimedia Trust
are being amortized on a straight-line basis over a period of 60 months.
FEDERAL INCOME TAXES. The Multimedia Trust 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.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
The Multimedia Trust has an investment advisory agreement (the "Advisory
Agreement") with the Advisor. Pursuant to the Advisory Agreement, the Multimedia
Trust pays the Advisor a fee computed weekly and paid monthly at the annual rate
of 1.00 percent of the value of the Multimedia Trust's average weekly net
assets.
During the six months ended June 30, 1995, Gabelli & Company, Inc.
("Gabelli & Company"), an affiliate of the Advisor, received $3,850 in brokerage
commissions as a result of executing agency transactions in portfolio securities
on behalf of the Multimedia Trust.
4. PORTFOLIO SECURITIES
Cost of purchases and proceeds from sales of securities, other than
short-term securities, aggregated $35,590,028 and $14,796,787, respectively, for
the six months ended June 30, 1995.
5. CAPITAL
The articles of incorporation, dated April 6, 1994, permit the Multimedia
Trust to issue 200,000,000 shares (par value $0.001). Common stock transactions
were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
------ -------
<S> <C> <C>
Balance at November 15, 1994 (See note 1) ...................................... 10,000 $ 100,000
Issued via spin-off from The Gabelli Equity Trust Inc.* ........................ 8,587,702 64,382,764
Issued due to reinvestment of dividends and distributions ...................... 9,709 72,377
-------- ----------
Net increase ................................................................... 8,607,411 $64,555,141
========= ===========
- ----------------
* On November 15,1994 The Gabelli Equity Trust Inc. distributed one share of the
Multimedia Trust for each ten shares of the Equity Trust outstanding to
shareholders of record on October 17,1994.
</TABLE>
15
<PAGE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
For a share of capital stock outstanding throughout each period:
SIX MONTHS NOVEMBER 15,1994
ENDED (COMMENCEMENT OF OPERATIONS)
JUNE 30, 1995 THROUGH DECEMBER 31, 1994
------------ ---------------------------
<S> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of period $ 7.51 $ 7.50+
------- -------
Net investment income 0.10 0.03
Net realized and unrealized gain on securities 0.35 0.03
------- -------
Total from Investment operations 0.45 0.06
------- -------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (0.03)
Distributions in excess of net investment income and net
realized gains -- (0.01)
Paid-in capital -- (0.01)
------- -------
Total distributions -- (0.05)
------- -------
NET ASSET VALUE, END OF PERIOD $ 7.96 $ 7.51
======= =======
MARKET VALUE, END OF PERIOD $ 7.50 $ 7.375
======= =======
Total Investment Return 1.70% (7.91)%(a)
======= =======
Net Asset Value Total Return 5.99% 0.80%(b)
======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets end of period (in thousands) $68,475 $64,606
Ratio of operating expenses to average net assets 1.65%* 1.74%*
Ratio of net investment income to average net assets 2.64%* 3.15%*
Portfolio turnover rate 62.65% 0%
- ---------------
* Annualized.
+ Represents net asset value of shares on November 15, 1994.
(a)Based on market value per share at date of issuance of $8.0625, adjusted for reinvestment of all distributions.
(b)Based on net asset value per share, adjusted for reinvestment of all distributions.
</TABLE>
16
<PAGE>
OFFICERS AND DIRECTORS
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
ONE CORPORATE CENTER, RYE, NY 10580-1434
DIRECTORS
Mario J. Gabelli, CFA, Chairman
Paul R. Ades
Attorney-at-Law
Partner, Murov & Ades
Dr. Thomas E. Bratter
President, John Dewey Academy
Bill Callaghan
President, Bill Callaghan Associates
Felix J. Christiana
Former Senior Vice President,
Dollar Dry Dock Savings Bank
James P. Conn
Managing Director/Chief Investment Officer,
Financial Security Assurance
Karl Otto Pohl
Former President, Deutsche Bundesbank
Anthony R. Pustorino
Certified Public Accountant
Professor, Pace University
Salvatore J. Zizza
Chairman & Chief Executive Officer
The Lehigh Group, Inc.
OFFICERS
Mario J. Gabelli, CFA
President &
Chief Investment Officer
Bruce N. Alpert
Vice President & Treasurer
Marc S. Diagonale
Vice President
James E. McKee
Secretary
INVESTMENT ADVISOR
Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580-1434
CUSTODIAN, TRANSFER AGENT AND REGISTRAR
State Street Bank and Trust Company
COUNSEL
Willkie Farr & Gallagher
STOCK EXCHANGE LISTING
NYSE-Symbol: GGT
Shares Outstanding: 8,607,411
The Net Asset Value appears in the Publicly Traded Funds column, under the
heading "Specialized Equity Funds," in Saturday's The New York Times and
Monday's The Wall Street Journal. It is also listed in Barron's Mutual
Funds/Closed End Funds section under the heading "Specialized Equity Funds."
The Net Asset Value may be obtained each day by calling (914) 921-5070.
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For general information about the Gabelli Funds, call 1-800-GABELLI
(1-800-422-3554), fax us at 914-921-5118 or, visit our Internet homepage at:
HTTP: //WWW.GABELLI.COM/GABELLI
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Notice is hereby given in accordance with Section 23 (c) of the Investment
Company Act of 1940, as amended, that the Multimedia Trust may from time to time
purchase shares of its capital stock in the open market when the Multimedia
Trust shares are trading at a discount of 10% or more from the net asset value
of the shares.
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THE GABELLI GLOBAL
MULTIMEDIA TRUST INC.
ONE CORPORATE CENTER
RYE, NY 10580-1434
(914) 921-5070
SEMI-ANNUAL REPORT
JUNE 30, 1995
06/95
