ANNUAL REPORT
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GLOBAL
MULTIMEDIA
TRUST INC.
DECEMBER 31, 1995
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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 PRINED ON RECYCLED PAPER.
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TO OUR SHAREHOLDERS,
For the fourth quarter of 1995, the Gabelli Global Multimedia Trust Inc.'s
("Multimedia Trust") net asset value per share increased 2.1% to $7.81 on
December 31, 1995 after adjusting for the $0.25 per share dividend paid on
December 27, 1995. This compares favorably to the average 1.3% increase of the
149 open-end Global Funds tracked by Lipper Analytical Services. For the year
ended December 31, the net asset value increased 14.1% versus the 16.1% return
of the average Global Fund according to Lipper. Since inception on November 15,
1994, the Multimedia Trust's net asset value has achieved a 15.0% total return
after adjusting for the rights offering and all distributions. This equates to a
13.2% average annual return.
The Multimedia Trust's common shares ended the fourth quarter at $6.75 per
share on the New York Stock Exchange, up 1.8% for the quarter and 0.4% for the
year. The common shares are down 6.8% since inception after adjusting for all
distributions and the rights offering.
The bull market stumbled at year-end 1995 as the Administration and
Congress fought over a balanced budget agreement. However, an early Christmas
gift from the Federal Reserve in the form of a 25 basis point drop in the
federal funds rate helped stocks regain some momentum to end the year at
near-record levels. Investors continued to migrate from technology stocks to
consumer non-durables, seeking safety in the form of more predictable earnings
in 1996. Cyclical stocks staged a comeback with the recognition that the economy
still had some "legs".
COMMENTARY
THE GREAT BULL MARKET OF 1995--A HARD ACT TO FOLLOW
MODEST STRONG LOW DECLINING RISING
ECONOMIC GROWTH + CORPORATE PROFITS + INFLATION + INTEREST RATES = STOCK PRICES
This simple equation drove equity prices to record levels in 1995. Will the
same factors add up to another good year for stocks in 1996? Let's take a fresh
look at all the components of this winning formula.
We are estimating growth in Gross Domestic Product (GDP) of 2.5% to 3% this
year. With lower interest rates in Great Britain, Germany and France as a
stimulant, we see European economies growing at about 2%. As a free market
system continues to evolve in China and the expansion of the middle classes in
more developed Asian countries translates into economic activity, Pacific Rim
economies should regain momentum. In short, we anticipate reasonably good
worldwide economic growth in the year ahead.
On the inflation front, we see little pressure coming from wage increases.
In fact, we are encouraged by the strong stands governments here and abroad have
taken against inflationary wage demands. Even the French, who have traditionally
been at the mercy of public workers unions, are holding the line. Rising food
and fuel prices could, however, result in more inflation than most investors
expect. Lower grain production in the U.S. last year, strong demand from the
Chinese, and crop failures in the former Soviet Union, will push food prices
higher. Regarding energy, we are producing less and consuming more. This will
ultimately lead to higher pricing. The potential of political unrest in the
Saudi Arabia may be a short-term catalyst for higher fuel prices. We are
estimating that inflation could run as high as 3.5% in the second half of 1996.
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If this inflation forecast proves accurate, long-term interest rates will
not stay at the current 5% level. The consensus is that, with a soft economy,
low inflation, lower interest rates in Europe, a balanced budget agreement, and
a Federal Reserve Chairman who is up for reappointment in an election year,
interest rates are bound to come down. At current levels, stock and bond
valuations reflect this consensus. With a soft economy coupled with a flat yield
curve, we could see short-term rates come down without long-term rates
following. Be reminded that price/earnings multiples are a function of earnings
growth and longer term interest rates. If earnings growth slows as we anticipate
and long rates remain flat or possibly trend modestly higher, stock multiples
are likely to contract.
Flow of funds into the U.S. stock market should continue to be favorable.
Equity mutual funds still enjoy strong cash inflows. If deal activity matches
that of 1995 ($458 billion in the U.S. and $866 billion worldwide), investors
will end up with a pile of cash. In addition, corporate stock buybacks and
rising dividends will buttress stock prices. Some of that money finds its way
into initial public offerings. More will go into non-U.S. investments,
particularly markets which languished in 1995. But much more will be recycled
into a shrinking supply of stock.
Our conclusion from all this conjecture is a somewhat different formula for
the 1996 stock market:
MODEST DECENT LOW SLIGHTLY HIGHER
ECONOMIC GROWTH + CORPORATE PROFITS + INFLATION + INTEREST RATES =
A DECENT, BUT MUCH LESS
INSPIRING STOCK MARKET
THE NET
Speculative bubbles are part of the free market system. In the 1960s, it
was the "nifty fifty" growth stocks. In the 1970s, it was oil, gold, silver, and
the Hong Kong stock market. In the 1980s, it was semiconductors, biotechnology,
and Japanese real estate. Today, it is the Internet. These bubbles are always
very exciting and can be profitable for a time. Unfortunately, most people who
invest in these bubbles end up taking a bath. The Internet is showing signs of
becoming a "similar" speculative frenzy.
This is not to say that the Internet will not be a tremendous growth
business. But, how does the value oriented investor participate? One of the
tenets of value investing is to buy what is, as opposed to what will be. We
believe we have found a way, in the terminology of Graham & Dodd, to buy
"net/nets" on the Internet.
The cable television industry currently has more than 60 million
subscribers in the U.S. and is working feverishly to upgrade systems to offer
telephony services. It is estimated that 25 million people will be Internet
users.
How will they access the Internet? They can do it through telephone line
modems. Or, in the not-too-distant future, through cable modems that will be
more than 100 times faster, since existing cable lines going into the home will
be able to carry much more digital information than telephone lines. At a recent
investment conference, Comcast Corporation (CMCSA - $17.625 - NASDAQ) staged a
horse race between the most commonly used telephone modem and a cable modem
prototype. It was no contest. The list of telecommunications equipment
manufacturers developing cable modems represents a "Who's Who" of the industry,
including: Motorola, Inc. (MOT - $57.00 - NYSE), Hewlett-Packard Co. (HWP -
$83.75 - NYSE), Intel Corporation (INTC - $56.75 - NASDAQ), Zenith Electronics
Corp. (ZE - $6.875 - NYSE), General Instrument Corporation (GIC - $23.375 -
NYSE), and Scientific-Atlanta, Inc. (SFA - $15.00 - NYSE). Rollout of these new
modems is scheduled for mid-1996. We believe personal computer manufacturers
will respond by adapting their machines for cable modem use.
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The bottom line is that those dull old cable television stocks are good
"back door" plays on the promising future of the Internet. You don't have to pay
nosebleed multiples to participate. Cable stocks are good values today based on
their existing business. If they can tack on incremental revenues of $25 per
month from those subscribers who want to "Surf the Net", they are an even
greater bargain.
THE WAITING GAME
As little as ten years ago, America had the best telecommunications system
in the world by far. Today, we are already behind Great Britain and France, and
in danger of losing ground to other industrialized countries. It is not as a
result of telecommunications technology, in which we remain a world leader.
Rather, it is our antiquated regulatory system which has restrained competition
and productivity in the industry.
As of this writing, the comprehensive telecommunications bill promised to
us by the Clinton Administration and Congress three years ago remains stalled in
committee. Most of the difficult issues seem to be resolved. Presently, the bill
is being held captive to political posturing over whether broadcasters should be
made to pay for high definition television spectrum or simply be given this
spectrum as the FCC had originally planned. Once this issue is resolved, one
fears another will emerge to further delay this essential legislation. The devil
may be in the details here, however, as Washington must eliminate the artificial
barriers preventing the public from getting what they want: better service and
lower prices -- and telecommunications companies from getting what they need: a
set of rules that will allow them to implement competitive strategies for the
upcoming free market free-for-all.
With this cloud of uncertainty still hanging over the telephone/cable
television/broadcast industries, investors are not fully valuing the bright
future of well-managed, financially strong companies in all of these sectors.
THE BROADCASTERS
Through the first three quarters of 1995, broadcast stocks were among the
Fund's best performing groups. The Westinghouse/CBS and GE/Outlet Communications
deals rewarded us directly. The Disney/Cap Cities and Gannet/Multimedia deals
helped call attention to other values in our portfolios. Either via the long
awaited comprehensive telecommunications bill or FCC fiat, broadcast companies
will be allowed to expand their national footprint. This foreshadows more
consolidation in the industry. In addition, broadcast company earnings, which
were relatively soft in 1995, will accelerate dramatically with the broadcast of
the Olympic Games and more importantly the flood of political advertising in
this national election year.
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 front cover further illustrates the interplay among the four components
of our valuation approach.
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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
method for preserving and enhancing wealth in the U.S. equities market. 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.
THE PORTFOLIO
HOLDINGS BY GEOGRAPHIC REGION - 12/31/95
[The table represents a pie chart in the printed piece.]
UNITED STATES 54.7%
CASH 24.6%
EUROPE 6.2%
LATIN AMERICA 5.6%
CANADA 5.2%
ASIA/PACIFIC RIM 3.7%
GLOBAL ALLOCATION
The chart at the right represents the Fund's holdings by geographic region
as of December 31, 1995. The geographic allocation will change based on current
global market conditions. Countries and/or regions and companies represented in
the chart and below may or may not be included in the Fund's portfolio in the
future.
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.
CABLEVISION SYSTEMS CORPORATION (CVC - $54.25 - ASE), based in Woodbury, NY, is
a major cable TV operator serving 2.7 subscribers, including managed systems.
CVC's cable systems generate average monthly subscriber revenues among the
highest in the industry. CVC participates in a 50-50 venture which manages
Madison Square Garden and owns Rainbow Programming which has interests in cable
TV networks (Bravo, AMC, News 12 Long Island, and various sports channels). We
believe CVC's PMV is about $90 per share.
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CAPITAL CITIES/ABC, INC. (CCB - $123.375 - NYSE) is going to Disney World. The
Walt Disney Company has arranged to buy CCB for $19 billion. CCB owns and
operates ABC Television Network and ABC Radio Networks, eight TV stations,
publishes numerous newspapers and trade magazines and has investments in cable
programming such as ESPN, Lifetime and the Arts and Entertainment channel. The
company's association with Disney improves its position to exploit new
opportunities in the coming multimedia age as both a producer and distributor of
programming. Capital Cities/ABC would be a prime beneficiary of legislation
pending in Congress intended to relax regulatory barriers pertaining to the
ownership and distribution of its copyright businesses.
SEAGRAM COMPANY LTD. (VO - $34.50 - NYSE), with its June 1995 purchase of an 80%
interest in MCA from Matsushita Electric Industrial Co. for $5.7 billion, now
operates two global businesses: beverages and entertainment/communications.
Seagram produces and markets distilled spirits, wines, fruit juices and mixers.
Major beverage brands include Chivas Regal, Absolut, Martell, Mumm, Crown Royal,
Seagram's Gin and Tropicana and Dole fruit juices. MCA's film and entertainment
activities feature Universal Studios. MCA also has music, recreation services
and book publishing operations. Our estimated PMV is $50, increasing to over $85
by the year 2000.
SPRINT CORPORATION (FON - $39.625 - NYSE) is the third largest long-distance
carrier and the second largest independent local telephone company in the U.S.
The company has announced a spin-off of its cellular unit, which should take
place in the first quarter of 1996. The estimated trading value of the spin-off
is $9 to $10 per FON share. After the spin-off, the remaining long
distance/local telco shares should trade close to FON's current market price,
indicating shareholders are getting the cellular spin-off for "free". Sprint has
positioned itself on a global basis through a joint venture with France
Telecom/Deutsche Telekom, which will purchase a 20% stake in Sprint (excluding
the cellular unit) for $3.5 billion. Our interest in Sprint stems from its
promising national cable/telephony and PCS/wireless joint venture with three
major cable operators: Tele-Communications, Inc.; Comcast Corporation and Cox
Communications, Inc. We consider FON an interesting value with the risks
associated with new entrants in the long distance business offset by the
cable/telephony venture.
TELE-COMMUNICATIONS INC. (TCOMA - $19.875 - NASDAQ), the largest cable TV
operator in the U.S., serving about 14 million subscribers, is guided by Dr.
John C. Malone - one of the most shareholder sensitive managers we have found.
Given that regulation has historically played a major roll in the valuation of
cable properties, we believe that proposed telecommunications legislation,
combined with the current deregulatory climate in Congress, could prove a
significant catalyst for cable stocks. Strategically, TCOMA is a well-positioned
industry leader, from its telephony joint-venture with Sprint to its innovative
Internet access business, dubbed @ Home.
TIME WARNER INC. (TWX - $37.875 - NYSE), in a bold and brilliant tactic, is
acquiring Turner Broadcasting System Inc. for $7.5 billion. The acquisition will
make TWX the largest diversified media and publishing company in the world and
will add a wealth of programming to a company already rich in entertainment
content. Time Warner is restructuring into two general areas: copyright and
creativity, which includes publishing, music and filmed entertainment, and
distribution, which is mostly cable. Under the aegis of Gerald M. Levin,
investors can expect significant returns over the rest of the decade.
SPECIAL NOTE
Mr. Paul Ades, one of the original directors of The Gabelli Equity Trust,
has announced that he will resign from the Board of The Gabelli Equity Trust and
its offspring, The Gabelli Global Multimedia Trust, in May, in order to devote
more time to his legal practice. We want to commend Paul for his nearly ten
years of service to the Equity Trust and in the formation of the Multimedia
Trust, both of which have benefited from his insightful guidance. On behalf of
the Trust's shareholders, we wish Paul every success and thank him for his
advice and wisdom.
5
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IN CONCLUSION
1995 was a terrific year for most equity investors. As is usually the case
during big bull markets, growth stocks delivered better returns than those in
the value sector. Looking forward to a less inspiring market in 1996, we believe
value investors will have the opportunity to excel.
We believe the Fund's portfolio is a diversified collection of solid
businesses trading at material discounts to their "real world" economic values.
In an environment in which individual stock fundamentals are likely to be more
important than market momentum in earnings returns, we are confident the Fund
will reward its shareholders.
We thank you for your confidence in our investing abilities and wish you a
productive and financially rewarding 1996.
Sincerely,
/s/ Mario J. Gabelli, CFA
Mario J. Gabelli, CFA
President and Chief Investment Officer
January 31, 1996
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TOP TEN HOLDINGS - DECEMBER 31, 1995
------------------------------------
Time Warner Inc.
Capital Cities/ABC, Inc.
Pacific Telecom, Inc.
Cablevision Systems Corporation
Tele-Communications, Inc.
Sprint Corporation
Liberty Media Corporation
Seagram Company Ltd.
United International Holdings, Inc.
Grupo Televisa S.A.
- --------------------------------------------------------------------------------
NOTE: The views expressed in this report reflect those of the portfolio manager
only through the end of the period of this report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
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THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1995
================================================================================
SHARES COST VALUE
------ ---- -----
COMMON STOCKS -- 72.13%
COPYRIGHT/CREATIVITY COMPANIES -- 43.04%
ADVERTISING -- 0.03%
200 Euro RSCG Worldwide, S.A ............. $ 19,126 $ 16,293
200 Publicis SA .......................... 13,971 11,772
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33,097 28,065
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BROADCASTING -- 11.97%
35,000 Ackerley
Communications, Inc.+ .............. 385,688 533,750
5,500 BHC Communications, Inc.
Cl. A+ ............................. 410,100 519,750
3,000 British Sky Broadcasting
Group ADR+ ......................... 72,400 112,875
6,000 Can West Global
Communications Corp. ............... 101,199 108,791
22,000 Capital Cities/ABC, Inc. ............. 2,309,288 2,714,250
2,000 Carlton Communications
plc ADR ............................ 63,625 60,750
1,040 CEP Communications ................... 92,286 85,996
640 CEP Communications
Warrants Exp: 12/1/97+ ............. 1,792 2,080
16,270 Chris-Craft Industries, Inc.+ ........ 560,425 703,678
42,500 Citicasters Inc.+ .................... 500,365 1,004,062
1,000 Clear Channel
Communications, Inc.+ .............. 28,244 44,125
500 Emmis Broadcasting
Corporation Cl. A+ ................. 10,489 15,500
200 Europe 1 Communication ............... 44,101 40,326
500 Evergreen Media
Corporation Cl. A+ ................. 10,736 16,000
500 EZ Communications, Inc.+ ............. 7,911 9,000
6,000 General Electric Company ............. 310,175 432,000
2,000 Granite Broadcasting
Corporation+ ....................... 22,143 21,250
5,000 Grupo Radio
Centro, S.A. de CV ................. 42,938 36,875
500 Heftel Broadcasting
Corporation Cl. A+ ................. 6,500 8,750
2,000 Heritage Media
Corporation Cl. A+ ................. 57,850 51,250
500 Infinity Broadcasting
Corporation Cl. A+ ................. 13,895 18,625
500 Jacor Communications, Inc.+ .......... 6,958 8,750
700 LaGardere Groupe ..................... 12,878 12,831
2,500 LIN Television Corporation+ .......... 61,778 74,375
400 Metropole TV M6 S.A.+ ................ 35,208 33,564
4,000 Multi-Market Radio, Inc. Cl. A+ ...... 38,863 41,000
5,000 Osborn Communications
Corporation+ ....................... 37,925 42,500
20,000 Outlet Communications, Inc.
Cl. A+ ............................. 576,481 945,000
1,200 Paxson Communications
Corp.+ ............................. 15,810 18,300
625 SAGA Communications, Inc.
Cl. A+ ............................. 9,713 10,156
2,000 Scandinavian Broadcasting
System S.A.+ ....................... 42,023 43,750
1,000 SFX Broadcasting, Inc.+ .............. 23,020 30,250
1,000 Silver King
Communications, Inc.+ .............. 14,420 34,750
12,500 Sistem Televisyen Malaysia
Berhad ............................. 36,518 45,029
50,000 Television Broadcasting Ltd. ......... 187,673 178,133
2,000 Television Francaise 1 ............... 206,188 213,849
20,000 Tokyo Broadcasting System ............ 316,098 329,425
99,000 United International
Holdings Inc. Cl. A+ ............... 1,424,845 1,460,250
40,000 Westinghouse Electric Corp. .......... 599,125 660,000
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8,697,674 10,721,595
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CABLE -- 6.24%
1,000 Audiofina ............................ 54,505 52,997
3,000 BET Holdings Inc.+ ................... 52,188 68,625
25,000 Flextech plc+ ........................ 163,093 182,900
22,000 Gaylord Entertainment
Company ............................ 514,489 610,500
88,000 Home Shopping
Network, Inc.+ ..................... 728,790 792,000
4,000 International CableTel
Incorporated+ ........................ 83,550 98,000
40,000 International Family
Entertainment, Inc.+ ............... 680,438 655,000
60,000 Tele-Communications, Inc. /
Liberty Media Group Cl. A+ ......... 1,471,669 1,612,500
45,000 Tele-Communications
International, Inc. Cl. A+ ......... 719,738 1,023,750
140,000 TVE Holdings Limited ................. 70,015 42,545
5,000 United Television, Inc. .............. 290,816 451,250
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4,829,291 5,590,067
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ENTERTAINMENT PRODUCTION -- 2.59%
5,000 All American
Communications Inc.+ ............... 46,295 49,063
15,000 All American
Communications Inc. Cl. B .......... 157,500 131,250
15,000 Ascent Entertainment
Group Inc.+ ........................ 225,000 236,250
500 Cablemaxx, Inc.+ ..................... 2,275 3,812
15,000 Canal + Spons. ADR ................... 431,000 563,147
4,000 Cinar Films Inc. Cl. B+ .............. 36,725 60,500
15,000 Cinergi Pictures
Entertainment Inc.+ ................ 73,849 38,438
2,000 DMX Inc.+ ............................ 4,975 4,875
2,160 Fisher Companies Inc. ................ 120,940 162,000
3,500 Granada Group plc .................... 35,566 34,991
10,000 GTECH Holdings Corporation+ .......... 169,281 260,000
1,000 Harvey Entertainment
Company+ ........................... 12,857 7,500
9,700 Katz Media Group Inc.+ ............... 158,473 170,963
1,000 Lancit Media
Productions, Ltd.+ ................. 13,040 11,875
300 NRJ SA ............................... 22,694 30,183
The accompanying notes are an integral part of the financial statements.
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THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1995 (CONTINUED)
================================================================================
SHARES COST VALUE
------ ---- -----
COMMON STOCKS (CONTINUED)
877 PEOPLE'S CHOICE
TV CORPORATION+ .................... $ 13,356 $ 16,663
20,000 Savoy Pictures
Entertainment+ ....................... 124,314 126,250
100,000 Shaw Brothers (Hong Kong)
Ltd. ................................. 145,929 109,919
13,000 THORN EMI plc ADR .................... 247,688 306,188
1,700 Tring International Group ............ 3,099 1,133
----------- -----------
2,044,856 2,325,000
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GAMING -- 1.16%
3,000 Bay Meadows Operating
Company ............................ 48,150 43,875
2,500 Churchill Downs
Incorporated ....................... 102,432 87,500
5,000 Hilton Hotels Corporation ............ 295,338 307,500
8,000 ITT Corporation+ ..................... 413,550 424,000
25,000 Ladbroke Group plc ................... 63,360 56,769
25,000 Quintel Entertainment Inc.+ .......... 125,000 118,750
----------- -----------
1,047,830 1,038,394
----------- -----------
GLOBAL MEDIA
AND ENTERTAINMENT -- 7.63%
66,000 Grupo Televisa S.A. GDR .............. 1,325,144 1,485,000
5,000 Havas ADR ............................ 99,000 99,302
21,000 News Corporation
Limited ADR ........................ 413,278 448,875
1,000 News Corporation Limited
Preference Shares ADR .............. 13,846 19,250
2,000 PolyGram NV ADR ...................... 114,825 105,000
45,000 Seagram Company Ltd. ................. 1,514,921 1,558,125
1,000 Sony Corporation ADR ................. 54,114 61,375
44,000 Time Warner Inc. ..................... 1,796,000 1,666,500
20,000 Turner Broadcasting
System, Inc. Cl. A ................. 518,000 517,500
10,000 Viacom Inc. Cl. A+ ................... 475,938 458,750
7,000 Walt Disney Company .................. 387,287 413,000
----------- -----------
6,712,353 6,832,677
----------- -----------
INFORMATION PUBLISHING -- 1.82%
18,000 Data Broadcasting
Corporation+ ....................... 84,094 222,750
20,000 Dun & Bradstreet Corp. ............... 1,159,188 1,295,000
500 Scholastic Corporation+ .............. 30,672 38,875
8,000 Source Media Inc. .................... 84,000 73,000
----------- -----------
1,357,954 1,629,625
----------- -----------
PUBLISHING -- 9.02%
10,500 American Media Inc. Cl. A+ ........... 86,900 44,625
10,000 Arnoldo Mondadori
Editore SpA ........................ 63,827 86,677
5,700 Belo (A.H.) Corporation .............. 184,812 198,075
2,500 Central Newspaper, Inc. Cl. A ........ 71,479 78,438
4,000 Dow Jones & Company Inc. ............. 144,950 159,500
700 Filipacchi Medias .................... 87,284 111,772
2,250 Gray Communications
Systems Inc. ....................... 42,175 40,219
1,000 Harcourt General, Inc. ............... 41,675 41,875
30,000 Harte-Hanks
Communications Inc. ................ 632,313 592,500
7,000 Houghton Mifflin Company ............. 312,401 301,000
30,000 Independent Newspapers plc ........... 132,294 185,366
5,500 Knight-Ridder, Inc. .................. 313,659 343,750
12,000 K-III Corp.+ ......................... 120,000 145,500
16,000 Lee Enterprises,
Incorporated ....................... 309,588 368,000
12,000 Media General, Inc. Cl. A ............ 340,225 364,500
20,000 Meredith Corporation ................. 545,000 837,500
60,000 Nation Publishing Group
Company Ltd. ....................... 95,837 72,648
100,000 New Straits Times Press
Berhad ............................. 319,511 334,646
100,000 Oriental Press Group ................. 41,864 30,389
10,000 Playboy Enterprises, Inc.
Cl. B+ ............................. 97,125 87,500
32,000 Post Publishing Company .............. 193,805 177,848
25,000 Pulitzer Publishing Company .......... 1,037,881 1,193,750
7,500 Reader's Digest
Association, Inc. Cl. B ............ 296,200 354,375
60,000 Singapore Press
Holdings, Ltd. ..................... 915,408 1,060,820
249,000 South China Morning
Post Holdings ...................... 143,577 152,143
300 SPIR Communication ................... 23,329 27,434
1,000 Thomas Nelson Inc. ................... 13,050 13,000
4,000 Times Mirror Company Cl. A ........... 76,575 135,500
50,000 Times Publishing Ltd. ................ 126,892 115,983
40,000 Western Publishing
Group, Inc.+ ....................... 422,889 315,000
400 Wiley (John) & Sons,
Inc. Cl. A ......................... 11,385 13,000
1,000 Wolters Kluwer NV .................... 90,625 94,344
----------- -----------
7,334,535 8,077,677
----------- -----------
SOFTWARE -- 2.58%
3,000 Acclaim Entertainment, Inc.+ ......... 45,870 37,125
4,000 Activision Inc.+ ..................... 25,832 44,000
5,000 BBN Corporation+ ..................... 183,208 205,625
3,000 Electronic Arts Inc+ ................. 67,091 78,375
7,500 H&R Block Inc. ....................... 278,750 303,750
8,000 Intel Corporation .................... 480,665 454,000
11,500 Microsoft Corporation+ ............... 924,189 1,009,125
100 Netscape Communications
Corporation+ ....................... 2,800 13,900
10,000 Novell Inc.+ ......................... 178,325 142,500
100 Pixar Inc.+ .......................... 2,200 2,888
3,500 Spectrum HoloByte, Inc.+ ............. 35,325 22,750
----------- -----------
2,224,255 2,314,038
----------- -----------
TOTAL COPYRIGHT/
CREATIVITY COMPANIES ................. 34,281,845 38,557,138
---------- ----------
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1995 (CONTINUED)
================================================================================
SHARES COST VALUE
------ ---- -----
COMMON STOCKS (CONTINUED)
DISTRIBUTION COMPANIES -- 29.09%
CABLE TV -- 4.18%
3,000 Bell Cablemedia plc ADR+ ............. $ 51,880 $ 48,000
28,000 Cablevision Systems
Corporation Cl. A .................... 1,709,512 1,519,000
4,000 Comcast Corporation Cl. A ............ 79,665 70,500
1,000 Comcast Corporation
Special Cl. A ........................ 15,612 18,188
3,000 Comcast U.K. Cable Partners
Limited+ ............................. 43,612 37,500
4,000 General Cable Corporation
plc ADR+ ............................. 58,500 60,000
1,000 NYNEX CableComms Group
plc ADR+ ............................. 20,238 17,375
3,000 Telewest Communications
plc ADR+ ............................. 77,175 72,375
90,000 Tele-Communications,
Inc.+ Cl. A .......................... 1,454,518 1,788,750
5,000 Videotron Groupe+ .................... 42,106 36,630
6,000 Videotron Holdings plc ADR ........... 97,500 76,500
100 Wireless One Inc.+ ................... 1,329 1,650
----------- -----------
3,651,647 3,746,468
----------- -----------
ENTERTAINMENT DISTRIBUTION-- 1.66%
22,000 GC Companies, Inc.+ .................. 609,162 737,000
3,500 Lodgenet Entertainment
Corporation+ ....................... 30,832 33,250
2,500 Shaw Communications Inc. ............. 16,380 15,797
37,000 US WEST Media Group .................. 643,875 703,000
----------- -----------
1,300,249 1,489,047
----------- -----------
EQUIPMENT -- 0.17%
1,000 Northern Telecom Limited ............. 34,956 43,000
3,000 Philips Electronics N.V .............. 127,150 107,625
----------- -----------
162,106 150,625
----------- -----------
INTERNATIONAL TELEPHONE-- 7.58%
63,000 BC TELECOM Inc. ...................... 1,116,705 1,153,846
11,000 BCE Inc. ............................. 346,800 379,500
5,000 BHI Corporation ...................... 78,754 78,750
28,000 Cable & Wireless plc ADR ............. 564,900 591,500
13,000 Compania Telefonos
Chile SA ADR ....................... 985,772 1,077,375
200,000 CPT Telefonica del Peru Cl. B+ ....... 408,531 423,852
6,000 GST Telecommunications, Inc.+ ........ 38,425 42,000
6 Japan Telecom Co, Ltd. ............... 132,758 115,105
1,100 PT Indonesia Satellite ADR ........... 36,493 40,150
1,000 PT Telekomunikasi Indonesia+ ......... 20,185 25,500
1,800 Telecom Argentina Stet-
France Telecom S.A. ADR ............ 69,082 85,725
1,000 Telecom Corporation of
New Zealand Ltd. ADR ............... 62,150 69,375
275,000 Telecom Italia SpA ................... 445,468 427,874
28,000 Telecomunicacoes
Brasileiras SA (Telebras)
Spons. ADR+ ........................ 922,110 1,326,500
3,000 Telefonica de Argentina
S.A. ADR ........................... 64,387 81,750
10,000 Telefonica de
Espana SA ADR ...................... 408,625 418,750
14,000 Telefonos De Mexico
SA Cl. L ADR ....................... 474,967 446,250
----------- -----------
6,176,112 6,783,802
----------- -----------
TELECOMMUNICATIONS -- 5.69%
18,000 AT&T Corp. ........................... 912,913 1,165,500
1,000 Bruncor Inc. ......................... 16,450 16,117
3,000 NewTel Enterprises Limited ........... 45,184 45,330
64,200 Pacific Telecom, Inc.(a)+ ............ 1,912,772 1,926,000
3,000 Philippine Long Distance
Telephone Company .................... 184,252 162,375
3,000 Quebec-Telephone ..................... 44,083 45,879
42,000 Sprint Corporation ................... 1,189,975 1,674,750
4,500 Tel-Save Holdings, Inc.+ ............. 62,645 62,438
----------- -----------
4,368,274 5,098,389
----------- -----------
US REGIONAL OPERATORS-- 2.24%
5,000 Cincinnati Bell Inc. ................. 146,250 173,750
23,000 GTE Corporation ...................... 809,962 1,012,000
1,000 Pacific Telesis Group Inc. ........... 26,800 33,625
22,000 US WEST Communications+ .............. 541,147 786,500
----------- -----------
1,524,159 2,005,875
----------- -----------
WIRELESS COMMUNICATIONS -- 7.57%
7,500 AirTouch
Communications Inc.+ ............... 209,125 211,875
4,000 American Paging Inc.+ . .............. 28,263 25,500
6,500 BCE Mobile
Communications, Inc.+ .............. 211,076 219,643
825 CAI Wireless Systems, Inc.+ .......... 3,837 7,941
25,000 Cellular Communications,
Inc. Cl. A+ ........................ 1,177,919 1,243,750
23,500 Centennial Cellular
Corp. Cl. A+ ....................... 428,284 402,438
18,000 Century Telephone
Enterprises, Inc. Cl. A ............ 547,650 571,500
18,000 COMSAT Corporation ................... 370,300 335,250
3,000 EchoStar Communications
Corporation Cl. A+ ................. 49,120 72,750
15,000 General Motors
Corporation Cl. H .................. 601,063 736,875
1,000 Globalstar
Telecommunications
Limited+ ........................... 14,472 37,750
10,000 Himachal+ ............................ 93,000 62,500
25,000 NEXTEL Communications,
Inc. Cl. A+ ........................ 327,288 368,750
6,000 Orion Network Systems, Inc.+ ......... 56,323 50,247
5,000 PanAmSat Corporation+ . .............. 79,279 110,313
2,000 Pittencrieff
Communications, Inc.+ .............. 8,500 7,625
1,000 Qualcomm, Inc.+ ...................... 41,625 43,000
25,000 Rogers Cantel Mobile
Communications, Inc. Cl. B+ ........ 603,529 662,500
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1995 (CONTINUED)
================================================================================
PRINCIPAL
AMOUNT
OR SHARES COST VALUE
--------- ---- -----
COMMON STOCKS (CONTINUED)
600,000 TELECOM ITALIA MOBILE SPA+ ........... $ 714,954 $ 1,056,378
10,000 Telephone and Data
Systems, Inc. ...................... 398,675 395,000
22,000 Total Access
Communications plc+ ................ 138,875 143,000
1,000 WinStar
Communications Inc.+ ............... 5,550 17,125
----------- -----------
6,108,707 6,781,710
----------- -----------
TOTAL DISTRIBUTION
COMPANIES .......................... 23,291,254 26,055,916
---------- ----------
TOTAL COMMON STOCKS .................. 57,573,099 64,613,054
---------- ----------
CONVERTIBLE CORPORATE BONDS -- 2.80%
ENTERTAINMENT PRODUCTION -- 2.77%
$2,296,600 Time Warner Inc.
Sub. Deb. Cv.
8.75%, 01/10/15..................... 2,394,713 2,379,852
100,000 Viacom Inc. Sub. Deb. Cv.
8.00%, 07/07/06....................... 85,390 103,000
---------- ----------
2,480,103 2,482,852
---------- ----------
EQUIPMENT -- 0.03%
22,000 Trans-Lux Corporation
Sub. Deb. Cv.
9.00%, 12/01/05....................... 22,026 23,210
---------- ----------
TOTAL CONVERTIBLE
CORPORATE BONDS ...................... 2,502,129 2,506,062
---------- ----------
CONVERTIBLE PREFERRED STOCKS -- 0.48%
CABLE -- 0.30%
10,000 Cablevision Systems
Corporation
8.50% Cv. Pfd. Ser. 1 $ 250,000 $ 272,500
---------- ----------
ENTERTAINMENT -- 0.18% 4,000
AMC Entertainment, Inc.
$1.75 Cv. Pfd......................... 105,738 163,000
---------- ----------
TOTAL CONVERTIBLE
PREFERRED STOCKS ..................... 355,738 435,500
---------- ----------
U.S. GOVERNMENT OBLIGATIONS -- 25.32%
$22,760,000 U.S. Treasury Bills,
4.66% to 5.27%
due 01/04/96 to 02/08/96............. 22,678,064 22,678,064
---------- ----------
TOTAL U.S. GOVERNMENT
OBLIGATIONS ....................... 22,678,064 22,678,064
---------- ----------
TOTAL INVESTMENTS --
100.73% .............................. $83,109,029 90,232,680
===========
LIABILITIES, IN EXCESS OF
OTHER ASSETS-- (0.73)% ................ (652,789)
----------
NET ASSETS --
(11,476,548 SHARES
OUTSTANDING) 100.00% ................. $89,579,891
===========
NET ASSET VALUE
PER SHARE ........................... $7.81
=====
- ---------------
(a) Fair valued as determined by Board of Directors
+Non-income producing security.
ADR-American Depositary Receipt
GDR-Global Depositary Receipt
*For Federal income tax purposes:
Aggregate cost $83,133,279
===========
Gross unrealized appreciation $ 8,347,068
Gross unrealized depreciation (1,247,667)
-----------
Net unrealized appreciation $ 7,099,401
===========
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
================================================================================
ASSETS:
Investments in securities, at value
(Cost $83,109,029).................. $90,232,680
Cash...........................55,999
Receivable for investments sold...... 591,933
Dividends receivable................. 75,107
Accrued interest receivable.......... 54,102
Deferred organizational expenses..... 271,030
Other assets ........................ 35,530
----------
Total Assets ...................... 91,316,381
----------
LIABILITIES:
Payable to Advisor................... 77,340
Payable for investments purchased.... 268,592
Dividends payable.................... 961,639
Accrued rights offering expenses..... 332,732
Other accrued expenses............... 96,187
----------
Total Liabilities ................. 1,736,490
----------
NET ASSETS for 11,476,548 shares
outstanding...................... $89,579,891
==========
NET ASSETS CONSIST OF:
Capital Stock, at par value.......... $ 11,477
Additional paid-in-capital........... 82,464,679
Accumulated undistributed net
investment income................... 5,160
Distributions in excess of net
realized gains..................... (24,247)
Net unrealized appreciation on
investments........................ 7,122,822
----------
NET ASSETS ...................... $89,579,891
==========
NET ASSET VALUE ..................... $ 7.81
==========
($89,579,891 / 11,476,548 shares outstanding)
(200,000,000 shares authorized of $0.001 par value)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
================================================================================
INCOME:
Interest............................. $1,866,950
Dividends (net of foreign taxes
of $21,899) ....................... 566,251
---------
Total Income........................ 2,433,201
---------
EXPENSES:
Investment advisory fees............. 742,302
Printing and mailing................. 331,246
Transfer and shareholder servicing
agent ............................. 208,015
Amortization of organization expenses 69,961
Directors' fees and expenses......... 40,000
Legal and audit fees................. 38,611
Custodian fees and expenses.......... 36,151
Registration fees.................... 20,567
Salary and benefits.................. 11,887
Miscellaneous........................ 14,021
---------
Total expenses...................... 1,512,761
---------
Investment Income-- net.............. 920,440
---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments..... 1,921,540
Net realized gain on futures
transactions....................... 7,960
Net change in unrealized appreciation 6,924,474
---------
Net gain on investments 8,853,974
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................... $9,774,414
=========
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
NOVEMBER 15, 1994
YEAR ENDED (COMMENCEMENT OF OPERATIONS)
DECEMBER 31, 1995 THROUGH DECEMBER 31, 1994
---------------- ------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Net investment income .......................................... $ 920,440 $ 261,899
Net realized gain on investments and futures transactions ...... 1,929,500 20,609
Net change in unrealized appreciation .......................... 6,924,474 198,348
---------- ----------
Net increase in net assets resulting from operations............ 9,774,414 480,856
---------- ----------
Distributions from net investment income........................ (906,647) (261,899)
Distributions from net realized gains on investments
and futures transactions...................................... (1,929,500) (20,609)
Distributions in excess of net investment income................ -- (73,058)
Distributions in excess of net realized gains................... (32,880) (31,310)
Distributions from paid-in capital.............................. -- (43,009)
---------- ----------
(2,869,027) (429,885)
---------- ----------
Share transactions-- net........................................ 18,068,392 64,455,141
---------- ----------
Net increase in net assets.................................... 24,973,779 64,506,112
NET ASSETS:
Beginning of period............................................. 64,606,112 100,000
----------- -----------
End of period (Includes accumulated undistributed net
investment income of $5,160, in 1995.)....................... $89,579,891 $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
1. ORGANIZATION
The Gabelli Global Multimedia Trust Inc. (the "Multimedia Trust" ) is a
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's primary objective is long-term
growth of capital, with income as a secondary objective. 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 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 Multimedia Trust.
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 in 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
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
12
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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
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.
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
13
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 on investments. Realized gains and losses on
investments 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
fluctuation is included with the net realized and unrealized gain or loss on
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.
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 have been
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 year ended December 31, 1995, Gabelli & Company, Inc. ("Gabelli
& Company"), an affiliate of the Advisor, received $13,690 in brokerage
commissions as a result of executing agency transactions in portfolio securities
on behalf of the Multimedia Trust.
In connection with the 1995 Rights Offering, holders of unexercised rights
to purchase shares of the Trust's common stock ("Rights") were permitted to
instruct the Subcription Agent to sell such Rights on their behalf. The
Subscription Agent was permitted to effect such sales through Gabelli & Company,
unless the Subscription Agent was able to negotiate a lower commission rate with
an independent broker. Total commissions from sales of Rights effected by the
Subscription Agent through Gabelli & Company amounted to $9,725.
14
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. PORTFOLIO SECURITIES
Cost of purchases and proceeds from sales of securities, other than
short-term securities, aggregated $81,906,353 and $36,675,532, respectively, for
the year ended December 31, 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>
NOVEMBER 15, 1994
(COMMENCEMENT
YEAR ENDED OF OPERATIONS) THROUGH
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------------ ---------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------- ------ -------
<S> <C> <C> <C> <C>
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
Shares Issued via rights offering* 2,869,137 $18,068,392 -- --
--------- ----------- ---------- -----------
Net increase 2,869,137 $18,068,392 8,597,411 $64,455,141
========= =========== ========== ===========
</TABLE>
- --------------------------------------------------------------------------------
*On August 11, 1995 the Multimedia Trust distributed one transferable Right for
each of the 8,607,411 shares outstanding to shareholders of record on that date
entitling each shareholder to acquire, with three Rights, one newly issued share
of Common Stock at the issue price of $6.50 per share. Stock issuance costs,
which totaled approximately $581,000, were charged directly against the proceeds
of the offering.
================================================================================
FINANCIAL HIGHLIGHTS
For a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
NOVEMBER 15, 1994
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED THROUGH
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
Operating Performance:
Net asset value, beginning of period $ 7.51 $ 7.50+
-------- -------
Net investment income 0.08 0.03
Net realized and unrealized gain on securities 0.98 0.03
-------- -------
Total from Investment operations 1.06 0.06
-------- -------
Decrease in net asset value from
Multimedia Trust share transactions (0.46) --
Offering expenses charged to capital surplus (0.05) --
Distributions to Shareholders from:
Net investment income (0.08) (0.03)
Distributions in excess of net investment
income and net realized gains 0.00 (a)(0.01)
Net realized gains (0.17) --
Paid-in capital -- (0.01)
-------- -------
Total distributions (0.25) (0.05)
-------- -------
Net asset value, end of period $ 7.81 $ 7.51
======== =======
Market value, end of year $ 6.75 $7.375
======== =======
Total Investment Return 0.4%(b) (7.9)%(b)
======== =======
Net Asset Value Total Return 14.1%(c) 0.8%(c)
======== =======
Ratios to average net assets / supplemental data:
Net assets, end of period (in thousands) $89,580 $64,606
Ratio of operating expenses to average net assets 2.04% 1.74%*
Ratio of net investment income to average net assets 1.24% 3.15%*
Portfolio turnover rate 86% 0%
</TABLE>
- --------------------------------------------------------------------------------
* Annualized.
+ Represents net asset value of shares on November 15, 1994.
(a) Actual amount of distribution was less than $0.01 per share.
(b) Based on market value per share adjusted for reinvestment of all
distributions and rights offering in 1995. (c) Based on net asset value per
share, adjusted for reinvestment of all distributions and rights offering in
1995.
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
QUARTERLY RESULTS OF INVESTMENT OPERATIONS (UNAUDITED)
Shown in thousands of dollars and per common share:
<TABLE>
<CAPTION>
NET REALIZED
AND UNREALIZED NET
TOTAL NET GAIN/(LOSS) ON INCREASE/(DECREASE)
INVESTMENT INVESTMENT INVESTMENT AND IN NET ASSETS
INCOME INCOME NET OTHER ASSETS FROMOPERATIONS
------------ ------------- ------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995--QUARTER ENDED
12/31/95................ $585 $0.05 $ (79) $(0.01) $1,560 $0.14 $1,481 $0.13
09/30/95................ 441 0.00 134 0.01 4,290 0.42 4,424 0.43
06/30/95................ 714 0.08 438 0.04 2,057 0.31 2,495 0.35
03/31/95................ 693 0.08 427 0.04 947 0.11 1,374 0.15
1994--QUARTER ENDED
12/31/94................ 407 0.05 262 0.03 219 0.03 481 0.06
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Global Multimedia Trust
Inc. (the "Multimedia Trust") at December 31, 1995, the results of its
operations for the year then ended, and the changes in its net assets and the
financial highlights for the year then ended and for the period November 15,
1994 (commencement of operations) through December 31, 1994, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Multimedia Trust's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1995 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 21, 1996
16
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
CALENDAR YEAR 1995
CASH DIVIDENDS AND DISTRIBUTIONS
<TABLE>
<CAPTION>
TOTAL AMOUNT ORDINARY LONG-TERM DIVIDEND
PAYABLE RECORD PAID INVESTMENT CAPITAL REINVESTMENT
DATE DATE PER SHARE INCOME GAINS PRICE
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
12/27/95 12/22/95 $0.2500 $0.2317 $0.0183 $6.8284
</TABLE>
- ----------
A Form 1099-DIV has been mailed to all shareholders of record for the
distributions mentioned above, setting forth specific amounts to be included in
the 1995 tax returns. Ordinary income distributions include net investment
income and realized net short-term capital gains.
CORPORATE DIVIDENDS RECEIVED DEDUCTION AND U.S. TREASURY SECURITIES INCOME
The Trust paid to shareholders ordinary income dividends of $0.2317 per
share on December 27, 1995. The percentage of such dividends that qualifies for
the dividends received deduction available to corporations is 17.45%. The
percentage of the net investment income dividends paid by the Trust during 1995
derived from U.S. Treasury Securities was 71.00%.
HISTORICAL DISTRIBUTION SUMMARY
<TABLE>
<CAPTION>
SHORT- LONG-
TERM TERM ADJUSTMENT
ANNUAL INVESTMENT CAPITAL CAPITAL RETURN OF TOTAL TO
SUMMARY INCOME (A) GAINS (A) GAINS CAPITAL (B) DISTRIBUTIONS COST BASIS
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1995(c) $0.0788 $0.1529 $0.0183 -- $0.25 --
1994 0.0305 0.0010 0.0014 $0.0171 0.05 $0.0171-
- ------------
</TABLE>
(a) Taxable as ordinary income for Federal tax purposes.
(b) Non-taxable.
(c) On August 11, 1995, the Company distributed Rights equivalent to $0.46
per share based upon full subscription of all issued shares.
- - Decrease in cost basis.
DISTRIBUTION OF RIGHTS
Neither the receipt nor the exercise of Rights distributed to shareholders
results in taxable income and no loss will be realized if the Rights expired
without being exercised. Rights sold will result in a capital gain or loss to
shareholders based on the difference between their adjusted cost basis and the
sale price. The holding period for the Rights includes the holding period of the
Common Stock in respect of which the Rights were distributed.
Shareholders may opt to make an election on their form 1040, Schedule D, to
assign cost basis to the Rights received from their existing Multimedia Trust
shares. The allocation percentage for the 1995 Rights is:
Common Stock .................. 97.02128%
Rights ........................ 2.97872%
Multiply the existing basis of common stock by the above percentages to
determine the new basis on both the stock and the Rights. If no election is
made, the adjusted basis of the Rights is $0.00 and the basis of the common
stock remains unchanged. Consult your personal tax adviser to determine which
approach is most advantageous to you.
17
<PAGE>
AUTOMATIC DIVIDEND REINVESTMENT AND VOLUNTARY CASH PURCHASE PLAN
ENROLLMENT IN THE PLAN
It is the policy of The Gabelli Global Multimedia Trust Inc. ("Multimedia
Trust") to automatically reinvest dividends. As a "registered" shareholder you
automatically become a participant in the Multimedia Trust's Automatic Dividend
Reinvestment Plan (the "Plan"). The Plan authorizes the Multimedia Trust to
issue shares to participants upon an income dividend or a capital gains
distribution regardless of whether the shares are trading at a discount or a
premium to net asset value. All distributions to shareholders whose shares are
registered in their own names will be automatically reinvested pursuant to the
Plan in additional shares of the Multimedia Trust. Plan participants may send
their stock certificates to State Street Bank and Trust Company to be held in
their dividend reinvestment account. Registered shareholders wishing to receive
their distribution in cash must submit this request in writing to:
The Gabelli Global Multimedia Trust
c/o State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan may contact State Street Bank and Trust
Company at 1 (800) 336-6983.
Shareholders wishing to liquidate reinvested shares held at State Street
Bank and Trust Company must do so in writing or by telephone. Please submit your
request to the above mentioned address or telephone number. Include in your
request your name, address and account number. The cost to liquidate shares is
$2.50 per transaction as well as the brokerage commission incurred. Brokerage
charges are expected to be less than the usual brokerage charge for such
transactions.
If your shares are held in the name of a broker, bank or nominee, you
should contact such institution. If such institution is not participating in the
Plan, your account will be credited with a cash dividend. In order to
participate in the Plan through such institution, it may be necessary for you to
have your shares taken out of "street name" and re-registered in your own name.
Once registered in your own name your dividends will be automatically
reinvested. Certain brokers participate in the Plan. Shareholders holding shares
in "street name" at such participating institutions will have dividends
automatically reinvested. Shareholders wishing a cash dividend at such
institution must contact their broker to make this change.
The number of shares of Common Stock distributed to participants in the
Plan in lieu of cash dividends is determined in the following manner. Under the
Plan, whenever the market price of the Multimedia Trust's Common Stock is equal
to or exceeds net asset value at the time shares are valued for purposes of
determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued shares of Common Stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current market price of the Multimedia Trust's Common Stock. The
valuation date is the dividend or distribution payment date or, if that date is
not a New York Stock Exchange trading day, the next trading day. If the net
asset value of the Common Stock at the time of valuation exceeds the market
price of the Common Stock, participants will receive shares from the Multimedia
Trust valued at market price. If the Multimedia Trust should declare a dividend
or capital gains distribution payable only in cash, State Street will buy Common
Stock in the open market, or on the New York Stock Exchange or elsewhere, for
the participants' accounts, except that State Street will endeavor to terminate
purchases in the open market and cause the Multimedia Trust to issue shares at
18
<PAGE>
net asset value if, following the commencement of such purchases, the market
value of the Common Stock exceeds the then current net asset value.
The automatic reinvestment of dividends and capital gains distributions
will not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for Federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.
The Multimedia Trust reserves the right to amend or terminate the Plan as
applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to written notice of the change sent to the members of the Plan
at least 90 days before the record date for such dividend or distribution. The
Plan also may be amended or terminated by State Street on at least 90 days'
written notice to participants in the Plan.
VOLUNTARY CASH PURCHASE PLAN
The Voluntary Cash Purchase Plan is yet another vehicle for our
shareholders to increase their investment in the Equity Trust. In order to
participate in the Voluntary Cash Purchase Plan, shareholders must have their
shares registered in their own name and participate in the Dividend Reinvestment
Plan.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to State Street Bank and Trust Company for investments
in the Equity Trust's shares at the then current market price. Shareholders may
send an amount from $250 to $10,000. State Street Bank and Trust Company will
use these funds to purchase shares in the open market on or about the 15th of
each month beginning in April, 1996. State Street Bank and Trust Company will
charge each shareholder who participates $0.75, plus a pro rata share of the
brokerage commissions. Brokerage charges for such purchases are expected to be
less than the usual brokerage charge for such transactions. It is suggested that
any voluntary cash payments be sent to State Street Bank and Trust Company, P.O.
Box 8200, Boston, MA 02266-8200 such that State Street receives such payments
approximately 10 days before the 15th of the month. Funds not received at least
five days before the investment date shall be held for investment in the
following month. A payment may be withdrawn without charge if notice is received
by State Street Bank and Trust Company at least 48 hours before such payment is
to be invested.
For more information regarding the Dividend Reinvestment Plan and Voluntary
Cash Purchase Plan, brochures are available by calling (914) 921-5070 or by
writing directly to the Multimedia Trust.
- --------------------------------------------------------------------------------
The Annual Meeting of the Multimedia Trust's stockholders will be held at 11:00
A.M. on Monday, May 13, 1996, at the Cole Auditorium, Greenwich Public Library
in Greenwich, Connecticut.
- --------------------------------------------------------------------------------
19
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20
<PAGE>
DIRECTORS AND OFFICERS
THE GLOBAL GABELLI 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 HOLDINGS LTD.
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
Douglas Neviera
ASSISTANT VICE PRESIDENT
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 11,476,548
The Net Asset Value appears in the Publicly Traded Funds column, under the
heading "General Equity Funds," in Saturday's The New York Times and Monday's in
The Wall Street Journal. It is also listed in Barron's Mutual Funds/Closed End
Funds section under the heading "General Equity Funds".
The Net Asset Value may be obtained each day by calling (914) 921-5071.
- --------------------------------------------------------------------------------
For general information about the Gabelli Funds, call 1-800-GABELLI
(1-800-422-3554), fax us at 914-921-5118, visit our Internet homepage at:
http://www.gabelli.com, or e-mail us at: [email protected]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
ONE CORPORATE CENTER, RYE, NY 10580-1434
PHONE: 1-800-GABELLI (1-800-422-3554)
FAX: 1-914-921-5118 INTERNET: http://www.gabelli.com
E-MAIL: [email protected]
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