Annual Report
[Logo]
THE GABELLI
GLOBAL
MULTIMEDIA
TRUST INC.
December 31, 1996
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[Logo]
THE GABELLI
GLOBAL
MULTIMEDIA
TRUST INC.
Our cover icon represents the underpinnings of Gabelli. The Teton mountains in
Wyoming represent what we believe in in America -- that creativity, ingenuity,
hard work and a global uniqueness provide enduring values. They also stand out
in an increasingly complex, interconnected and inter-dependent economic world.
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,
In the fourth quarter of 1996, we experienced one of the most breathtaking
rallies in stock market history. Investors saw the Clinton victory, combined
with the Republicans retaining control of Congress, as the best of all possible
worlds and poured money into equities. Blue chip stocks led the post-election
charge, with the Standard & Poor's 500 Index (S&P 500) and the Dow Jones
Industrial Average (DJIA) surging to record levels. This strong fourth quarter
capped a second great year for U.S. equities, concluding one of the best
two-year periods in history.
[Photo of Mario J. Gabelli]
[Logo]
THE GABELLI
GLOBAL
MULTIMEDIA
TRUST INC.
For the twelve months ended December 31, 1996, The Gabelli Global
Multimedia Trust Inc.'s ("Multimedia Trust") net asset value per share increased
9.4% to $8.10 on December 31, 1996. This compares to the average 16.3% increase
of the 30 open-end Global Funds tracked by Lipper Analytical Services. For the
fourth quarter ended December 31, 1996, the Fund increased 0.6%. Since its
inception on November 15, 1994, the Multimedia Trust's net asset value has
achieved a 25.8% total return after adjusting for the rights offering and all
distributions. This equates to an 11.4% average annual return.
The Multimedia Trust's common shares ended the fourth quarter at $6.875
per share on the New York Stock Exchange, an increase of 5.4% for the quarter
and 7.4% for the year. The common shares have increased 0.2% since inception
after adjusting for all distributions and the rights offering.
THE PORTFOLIO OVERVIEW
Global Allocation
The chart at the right represents the Multimedia Trust's holdings by
geographic region as of December 31, 1996. 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
Multimedia Trust's portfolio in the future.
[The following table was represented as a pie graph in the printed material.]
HOLDINGS BY GEOGRAPHIC REGION - 12/31/96
United States 71.3%
Europe 9.4%
South America 6.7%
Canada 6.4%
Asia/Pacific Rim 6.2%
Equity Mix
The Multimedia Trust's investment premise falls within the context of two
main investment universes: 1) companies involved in creativity, as it relates to
the development of intellectual property rights (copyrights); and 2) companies
involved in distribution, as it relates to the delivery of these copyrights.
Additionally, this includes the broad scope of communications-related services
such as basic voice and data.
The chart to the right depicts our equity mix of the copyright/creativity
and distribution companies in our portfolio as of
December 31, 1996.
[The following table was represented as a pie graph in the printed material.]
Copyright/Creativity 40.6%
Distribution 59.4%
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BARRON'S 1997 Roundtable
We thought we would share with you excerpts from BARRON'S 1997 Roundtable
interview with our Chief Investment Officer. Discussion of individual companies
is not necessarily reflective of the Fund's entire portfolio.
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BARRON'S
ROUNDTABLE
o
MARIO GABELLI
ARCHIE MACALLASTER
JOHN NEFF
MARC PERKINS
MICHAEL PRICE
JIM ROGERS
OSCAR SCHAFER
CARLENE MURPHY ZIEGLER
FELIX ZULAUF
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(the following has been excerpted:)
Playing Themes
Our panelists scour the globe for underappreciated stocks
Barron's 1997 Investment Roundtable features an avalanche of ideas - mega-cap
and micro-, foreign and domestic, straight equity and derivative - about
profitable ways to engage with the markets this year. This second of three
Roundtable installments is a distillation of the mid-section of our marathon
Jan. 6 gabfest. And it's dominated by the four panelists we put on the
stockpicking hot seat during that stretch: Felix Zulauf, Mario Gabelli, Carlene
Ziegler and Mike Price (in the order that we grilled them). But it includes,
too, considerably more than two cents' worth of (frequently contrary) opinions
from the other five stalwarts who graced the table.
The stocks Felix, Mario, Carlene and Mike came prepared to talk about
range from a play on the Polish economy (no kidding) to a little company that's
tearing up the ski slopes; from restructuring stories to consolidation dreams.
Then there's Mario's "Hall of Shame," and even one single solitary short - but
it does encompass an entire market.
So what are they? For all the juicy details, read the Q&A that follows
these brief bios of the knights of the Roundtable who take their stockpicking
turns in this issue.
- Kathryn M. Welling
Mario Gabelli: Iconoclastic, irrepressible, ingenious and indefatigable. The
erstwhile auto analyst from the Bronx is chairman and chief investment officer
of Gamco Inc., the money-management firm otherwise known as Gabelli Asset
Management. Mario is also chairman of Gabelli Funds Inc., the adviser to the
Gabelli family of mutual funds.
PART 1: Outlook on the Economy and Stock Market
Q: Mario, what kind of economy do you see?
Gabelli: Oh, 1997 should be another good year, with GDP up about 2% to 3%. We
talked a year ago about seeing the early part of a global recovery in '97, but
that seems a little further off now. Still, with the currency changes taking
place, you could see a pretty decent economy in the second half in Germany and
France. Hungary, Poland, the Czech Republic are reasonably strong. Latin
America's reasonably good. Southeast Asia, ex-Japan, and the 3.5 billion new
consumers around the world, have a pretty good appetite for American goods.
Overall, the export side of the house - even with the recent strength of the
dollar vis-a-vis the yen and the mark - should be decent. The outlook for '98 is
not clear. But for '97, I'm in the 2% inflation camp, trickling up to 3% to
3 1/2% by year-end, and I see long interest rates backed up to a level of
stability around 6 3/4% to 7 1/4%.
Q: Everyone always says that.
Gabelli: No. A year ago, long rates were 6.05%, and I argued they would back up
to 6 1/2% to 6 3/4% - as they have.
Q: Mario, what's in store for the stock market ?
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Gabelli: I don't see the market helped by rate changes. Profits, I see up 7%,
more or less. So I don't see any gremlins there, though I watch for them.
Earnings surprises are clearly the wild card for the market. Valuations are not
outrageously high. The flow of funds is incredibly positive. The net inflow into
mutual funds in '96 was about $200 billion, compared with $100 billion net in
'95. Corporate buybacks announced were about $130 billion in '96. Only completed
about $30 billion. But even that is a big number. Corporate dividends were about
$100 billion. There are a couple of other elements. The buying of U.S. stocks by
non-U.S. holders I see accelerating. So I see the money flow into mutual funds
continuing, though it's hard to make the case that it will go up at a higher
incremental rate.
But the big number is not any of those. It is acquisitions. In 1996, we
announced $1 trillion on a global basis, $659 billion in the U.S. So whatever we
see in mutual fund inflows, dividends, buybacks, net foreign investments will be
a paltry number relative to transactions, many of which are for cash.
Q: Isn't that circular? One reason you've had this M&A boom is that the stock
market is so high. If it were to drop off for some reason, mergers would, too.
Gabelli: No. In 1995, there were $200 billion in cash deals, retiring shares and
putting cash in investors' hands. In 1996, I don't have the final number.
Counterbalancing that, last year there was about $48 billion raised in IPOs,
which take cash out of the market and put shares in. And another big chunk of
cash left the U.S. in '95 to go into foreign markets. But that is a loop. In
1997, that flow of funds is still going to be enormously powerful. Deals will be
at an all-time record. Whether, as you saw Gillette do with Duracell, paper will
be swapped for paper, or whether cash is exchanged for paper, it's all recycled.
I would guess the entire world did $1.2 trillion worth of deals in 1996. In
1997, you are going to see more Boeing/McDonnells. Megadeals like Philip Morris
buying Pepsi-Cola. American Express and someone. GTE buying British Telecom.
Q: In any event, is your point that this is going to keep the stock market going
up?
Gabelli: Let me keep going. I don't think 1997 is going to be a year in which
"three-peats" happen. The Lakers and the Celtics and the Bulls may have been
able to do it. But I don't think the market is going to make it three
championship seasons in a row. So 1997, even with its powerful flow of funds,
will not see another big uplift. However, in light of the powerful flow of funds
and all the deal activity, it's going to be a fertile year to get in front of
themes like the consolidations in certain industries.
Q: Utilities?
Gabelli: They're one example. Banks. Brokers. Money managers. There's an
incredible consolidation going on in the money-management business!
Q: Does lightning strike twice?
Gabelli: Hit me!
Q: So it will be a terrible market year except for investors?
Gabelli: I didn't say "terrible." I am not where John is, down 15% to 20%.
Neff: I said zip, though, for the year.
Gabelli: That's where I am, as well, for the whole year. More volatility in the
market. The flow of funds is so powerful that it doesn't allow a material
downdraft from here. At the same time, the places you make money are in
spinoffs, split-ups, corporate transactions. On March 14, 1994, when GE went
after Kemper, I said that signaled a third wave of takeovers. Each year since,
we have seen progressively more, and 1997 is going to be the year of the global
behemoths. Scale economics on a global basis are at work. When you see British
Telecom buying MCI and then you see GTE thinking about buying British Telecom,
it's just phenomenal. The Boeing/McDonnell Douglas and Gillette/Duracell are
just a taste of what you will see. And when you have a stock that's up 20 points
in a day, you're going to say, "Hey, what else can I buy that's going to be
bought?" You are going to have all the speculative fervor of 1986-87, or 1968
- -69. Whenever Charlie Bluhdorn was around and Jimmy Ling.
PART 2: Gabelli Talks Stocks
Gabelli: In the 'Nineties, one of the themes is consolidation. That is, to buy a
fragmented industry, get the benefit of synergistic dynamics at work. Eliminate
overhead. Use scale economics in the financial and operating areas. We've talked
in years past about consolidations in the banks, the brokers, the broadcasters.
I added to that the defense industry, the Baby Bells and utilities a year ago.
Gabelli: Cash flow. I'm going to give you a bunch of stocks in discrete
industries, but all have one common characteristic: a lot of cash. The first is
GC Cos., symbol GCX, the old General Cinema. Harcourt spun it off to their
shareholders. The stock closed last week [Jan. 3] at 35. There are 7.8 million
shares; fiscal year ends October. They operate theaters, 1,159 screens in 189
locations. The company has about $10 a share in cash, no debt. They have $50
million invested in venture capital, where their record has been lackluster.
They will sell a deal, take writeoffs and obfuscate all of the
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GABELLI'S PICKS
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Price
Company Sym. Exch. 1/6/97
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GC Cos. GCX NYSE 36 1/4
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BHC Comm BHC ASE 102 3/8
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Gray Comm GCS NYSE 19 1/4
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Int'l Family Ent FAM NYSE 16 5/8
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BET BTV NYSE 29 1/2
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Liberty Media LBTYA NNM 28 3/8
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HSN HSNI NNM 23
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Viacom VIA ASE 34
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Time Warner TWX NYSE 37 1/4
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values. EBITDA in the theater business is about $40 million. You could probably
sell those theaters today for $320 million-$480 million. The company announced a
major change in direction within the last month or so: They are going to buy
back one million shares. This is a classic value investment.
Q: The stock hasn't done much, has it?
Gabelli: No, it's traded between 28 and 40. Full disclosure: I own a million
shares and I'm nibbling at it; constantly buying.
One last company in this cash camp, which will segue into an area that you
might have an interest in. I'm going to talk about BHC Communications. Stock is
at 100, on the Amex. There are 23.9 million shares outstanding - 24 million for
Archie. That's a $2.4 billion market cap. What you get is a company with $1.3
billion in cash, no debt. A company that owns three television stations, in
L.A., New York and Portland, probably worth another $1.2 billion. Then they own
five million shares of United Television Inc., which sells at 87. So, marked to
market, that's another $500 million. Marked to model.
Q: Marked to what?
Rogers: To valuations he made up in his model.
Gabelli: Marked to my model of the value of the business, based on what would be
paid by a company that wanted to buy the entire enterprise, the company is worth
$130 million more than market.
MacAllaster: Herb Siegel [chairman and CEO] is never going to sell.
Gabelli: My point is, you get their network for free. They own a half-interest -
and Paramount Television Group owns the other in the United Paramount Network,
UPN, which is the fifth network, or fourth or sixth, depending on who's
counting, but most likely the fifth or sixth. That network, if it works, could
have substantial value down the road. So BHC is attractive. That leads me into
the consolidation in the broadcasting industry. Last year, we talked about three
broadcasters. They were taken over. This year, I'll just talk about one in a
little more detail, Gray Communications Systems. Gray operates in what I call
"Bubba country," Lexington and Hazard, Ky.; Augusta, Albany and Thomasville,
Ga.; Panama City and Tallahassee, Fla.; and Knoxville, Tenn. There are 8.1
million shares. It's run by two outstanding value managers. The stock is 17 1/2.
Earnings for 1997 should be 55 cents. They go to 90 cents, $1.25, $1.65. By
2000, the company will have only $140 million of debt. They will have a
private-market value marked to model based on a terminal multiple for both its
newspapers and TV stations - of about $60 a share. I'm buying as much as I can.
Q: What's the cash flow?
Gabelli: Substantial. EBITDA in 1997 is $40 million, by the year 2001 it goes to
$55 million.
Gabelli: Now, to Alan's favorite subject: cable. I want to talk about 3.5
billion new eyeballs, i.e., consumers around the world who have an insatiable
appetite for American goods and services.
Perkins: Are they interactive couch potatoes?
Gabelli: As you know that is a trademark of Gabelli & Co. and you should bow
your head when you say it.
Q: Or pay a royalty.
Gabelli: We all know about what happened to cable in 1996: Satellite bloodied
the industry. The concern that telephone was going into cable damaged it. Cable
stocks, on balance, fell 40%. But let's look at the positives. First, satellite
has four million new consumers. Anyone who has a DirecTV views it as an
exceptionally attractive product. I bought it for my house in Moose, Wyo. It
works. It's fabulous. Easy to use.
Gabelli: That four-million-user delivery system is growing probably 25%-50% a
year over the next several years. But DirecTV has to pay for programs. So if
you're an International Family Entertainment with the Family Network, they have
to pay you. And, since they don't have nearly as many subscribers as, say, TCI
[Tele-Communications Inc.], they pay you a higher-than-average rate. So Family
Entertainment is getting 20 cents per set of eyeballs as opposed to 11 cents.
Secondly, it's getting incremental growth in eyeballs at an accelerating rate.
Enlarging its advertising base. So a Family Entertainment has a powerful uplift
to its revenue stream. Family Entertainment, symbol FAM, is run by our dear
friends in Virginia. It closed Friday [Jan. 3] up 1 3/8, to $17. And 17 times 48
million shares is an $850 million market value. There's about $140 million of
debt. The Family Channel itself had a cash-flow run rate in the fourth quarter
of $100 million. So it's selling at 8.5 times. They also own 72% of FiT TV,
which is 10% owned by Liberty, 10% by Reebok, and is cash-flow negative. They
have a piece of a cable channel in China. They gave up on the Pakistani
telephone venture after they read my comments last year in Barron's. Have a
piece of an equity in Latin America. They got out of their cable channel in the
U.K., but took back a 5% stake in the buyer, Flextech
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PLC, a U.K. company controlled by TCI's TCI International unit. Bottom line:
This stock, if they had nothing else, would be worth probably $28-$30 a share.
Family Channel's EBITDA margins are growing substantially. They've started
originating better programming through MTM Entertainment, their Mary Tyler Moore
production company, on Family Channel. That's increasing its penetration. I
think the company will be sold. Pat Robinson has a problem. He doesn't want to
give up the 700 Club, which has a time slot in prime time. The buyer has to find
a way to let him not give that up. The second cable programmer I like is Black
Entertainment, or BET Holdings. I recommended it at 16. I recommended it at 23.
It's 29. This wonderful niche market, Bob Johnson dominates. He's in front of
98% of African-American households in the U.S. He bought back three million
shares from Warner. There are 17.5 million outstanding. They had $1.20 in fiscal
'96 earnings, the year ends in July. This year they'll do about $1.40-$1.45.
They have some start-up ventures, BET On Jazz. It is going cash-flow negative by
about $6 million.
The third company I want to talk about is Liberty Media, my favorite in
this area. There are 185 million shares; the stock is 28. But they've just
announced a 3-for-2 split.
Q: Where did you recommend that last year?
Gabelli: At 29, probably. FAM has also split since last year, I recommended it
at the equivalent of 13 1/2. Liberty Media has about $45 of asset values [all
figures pre-split]. They converted their ownership of Turner into about 55
million shares of Time Warner. They've announced plans to spin that off to the
shareholders. That's about $11 of value in Spinco. So I'm really buying the
stock at $28 today minus the $11, or for $17 a share, pre-split. There are 185
million shares, no debt, $300 million in cash. You get 49% of the Discovery
Channel, which is one of the best in cable - travels well globally. You get a
piece of QVC. A piece of Family, of Black Entertainment. A piece of a whole
series of sports networks. The company is buying back its own stock. This is a
terrific way to capture eyeballs on a global basis.
Another company I'm going to recommend is new, HSN Inc., symbol HSNI. It's
the merger of Silver King Communications, Savoy Pictures and Home Shopping
Network, Barry Diller's vehicle for fame and success, or ignominy and defeat.
There are about 57 million shares out not including Diller's 10 million options.
He is motivated to make this succeed! The stock is trading at 24. There's a
273-page merger document out, you can read it. But there are only two pages you
need to read.
Q: You're not going to read it .
Gabelli: I've read it; you can, too.
Q: We meant here.
Gabelli: Only page 141, which has the projections, and page 171, which has the
balance sheet. There are a couple of technical issues dealing with their
ownership of TV stations. But essentially, I think Home Shopping Network becomes
a wonderful vehicle for Barry Diller. I don't have any numbers. It's a $1
billion speculation. The station licenses could have substantial value, if
something called duopoly - that is, the one-TV-station-per-market rule - is
changed. Also a lot of changes could take place in cable because of something
called "must-carry," an FCC rule that the Supreme Court is looking at. If
duopoly happens and must-carry stays, the stock triples.
Q: And if it's the other way around?
Gabelli: You will have some short-term fluctuations in the stock.
Q: Let me ask, is this going to be home shopping exclusively?
Gabelli: No. Home Shopping has been turned around. They're doing a good job on
the basics. Getting more per consumer in terms of fulfillment, cash flow. I'll
give you some numbers that are very achievable based on what he created at QVC
and what it did: EBITDA in Home Shopping Network in 1996 were estimated at $70
million on $1.1 billion of revenues. They go to $125-$165-$200-$235-$275
million. This will become much more visible when QVC, which Comcast owns, goes
public at some point. I think Barry is thinking of creating "city television,"
something that appeals to the urban viewer, because that's where his stations
are. He clearly is one of those gifted individuals who understand in a three-,
four-,five-dimensional way, what the viewer wants to see. He has done it at
Paramount, Disney, Fox. He is terrific. He's going to do it again, even if he
doesn't have scale economies.
Q: What else, dare we ask?
Gabelli: Time Warner and Viacom. Viacom at 35. I think Sumner Redstone sells a
piece of the radio stations, or all of them, sells a piece of Blockbuster,
focuses on the basic business. It's not a cable play but a cable-network play.
Time Warner, I can always talk about. With the Turner deal behind them, they
will resolve their issues with US West Media and that should work exceptionally
well.
Q: Well, thank heavens. I mean, thanks, Mario.
Reprinted by Permission.
The views expressed in this article reflect
those of the portfolio manager as of its
writing. The manager's views
are subject to change at any time based
on market and other conditions.
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Let's Talk Stocks
The following are stock specifics on selected holdings of the Multimedia
Trust. Favorable EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization) prospects do not necessarily translate into higher stock prices,
but they do express a positive trend which we believe will develop over time.
BC TELECOM Inc. (BCTL - $21.63 - TSE) is a full-service telecommunications
company operating in British Columbia, Canada. Its major investor is GTE
Corporation (GTE - $45.50 - NYSE), which owns 52% of the company. We estimate
the private market value of BCTL to be $50 per share. Its basic telephone
operations provide service to more than two million telephone lines and are
growing at twice the Canadian industry average. BCTL's crown jewel is a rapidly
growing cellular phone company which currently serves more than 270,000
subscribers. We expect BCTL to take advantage of the deregulatory trend in
Canada by entering new businesses in which they are now allowed to participate.
Grupo Televisa S.A. (TV - $25.625 - 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 suffered in line with the Mexican
market and economy. Nevertheless, it remains an excellent vehicle for accessing
the growth in disposable income among the Spanish speaking population on a
global basis. Its business mix includes film, music, cable television and
broadcasting. Grupo Televisa also has valuable holdings in PanAmSat Corporation
(SPOT - $28.00 - NASDAQ) and Univision Communications Inc. (UVN - $37.00 -
NYSE).
Pacific Telecom, Inc. is a Vancouver, WA-based telecommunications company, whose
primary business is delivering local exchange services to rural and suburban
markets across the western and mid-western states. Pacific Telecom also has
cellular telephone interests in 29 rural and metropolitan markets representing
about two million POPS. Effective September 27, 1995, Pacific Telecom's majority
shareholder, PacifiCorp., acquired the remaining shares it did not previously
own at a price of $30.00. We believe the intrinsic value of Pacific Telecom to
be in excess of $50.00 and are seeking dissenters rights to capture this value
for our shareholders. We placed PacifiCorp in our Hall of Shame for the way it
froze out minority shareholders.
Renaissance Communications Corporation (RRR - $35.75 - NYSE) owns and operates a
diversified group of six television stations in Dallas/Ft. Worth, Miami/Ft.
Lauderdale, Sacramento, Hartford/New Haven, Indianapolis and Harrisburg. Four
are affiliates of the Fox Network and the other two are affiliates of the WB
Network. The company has agreed to merge with a subsidiary of the Tribune
Company by receiving $36.00 per share in cash.
Seagram Company Ltd. (VO - $38.75 - NYSE), with its 1995 purchase of an 80%
interest in MCA from Matsushita Electric Industrial Co. for $5.7 billion,
operates two global businesses: beverages and entertainment/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 and recreation
operations. We estimate that Seagram's PMV exceeds $50 per share.
Telecomunicacoes Brasileiras SA (Telebras) (TBR - $76.50 - NYSE) is the
Brazilian government-controlled monopoly telecommunications holding company
consisting of 28 subsidiaries serving 13.9 million telephone lines and 2.1
million cellular customers in a country with a population of 160 million. The
penetration rate is less than 9% for telephone and 1% for cellular. The stock is
attractively priced at less than four times our estimate of 1996 cash flow.
Future opportunities include the prospects of privatization, strong line growth
and improvements in efficiency. The company is benefiting from an improved rate
structure which allows the company to recoup inflation-related cost increases on
a more consistent basis.
Telefonica de Espana (TEF - $69.25 - NYSE) is a diversified telecommunications
service provider offering services to more than 15 million lines. The company
also services a fast growing cellular subscriber base which now exceeds 2.0
million subscribers. We consider TEF an ideal way to invest in Latin America,
with a diversified portfolio of telecommunications operators in the region. Its
portfolio of publicly-traded Latin American companies includes: Compania de
Telefonos de Chile, Telefonica de Argentina S.A. and Compania Peruana de
Telefonos. TEF also holds interests in non-public Latin American telecom
operators in Mexico, Colombia, Puerto Rico, Uruguay and Venezuela. The company's
long-term strategy is to create a Pan-American network, leveraging the
Spanish-speaking world.
Tele-Communications, Inc./Liberty Media Group (LBTYA - $28.5625 - NASDAQ) owns a
collection of interests in some of the most powerful programming entities in the
world. Liberty Media is the second largest investor in Time Warner Inc.
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(TWX - $37.50 -NYSE), the world's largest media company. Liberty Media, News
Corporation Limited (NWS - $20.875 - NYSE), and Tele-Communications
International, Inc. (TINTA - $13.25 - NASDAQ) have created a global sports
joint-venture, called Fox Sports, that will offer an integrated package of
sports programming across network broadcast, national cable, and regional cable
channels. Liberty's 49% owned Discovery Communications is a major
advertiser-supported basic cable network that includes the flagship Discovery
Channel, The Learning Channel, and developing businesses such as Discovery
Europe and Animal Planet. We consider Liberty Media to be ideally positioned to
benefit from expanding distribution channels, including direct broadcast
satellite ventures like DirecTV and the Internet.
Time Warner Inc. (TWX - $37.50 - NYSE), having completed its acquisition of
Turner Broadcasting, is the world's largest diversified media and publishing
company. The combined companies will have more than $21 billion in revenues and
control a host of powerful media brands, such as CNN, Warner Brothers film, HBO,
and Time magazine. Under the leadership of Chairman Gerald Levin and
Vice-Chairman Ted Turner, Time Warner is now focused on reducing debt and
simplifying its capital structure. Achievement of both goals would be greatly
aided by a successful restructuring of the Time Warner Entertainment partnership
with U.S. West Media Group. Time Warner's holiday film, Space Jam, starring
Michael Jordan and Bugs Bunny was a hit at the box office.
Viacom Inc. (VIA - $34.50 - ASE), long a major provider of entertainment
"content", has evolved into one of the world's dominant media companies.
Following its acquisitions of Paramount Communications and Blockbuster
Entertainment, the company is now divesting non-core assets to reduce debt and
is focusing on the global expansion of its media franchises. The company has
divested its cable systems subsidiary in a transaction with Tele-Communications,
Inc. which has reduced Viacom's debt by $1.7 billion and the number of common
shares outstanding by about 4%. Viacom is well-positioned in music (notably MTV)
and cable networks such as Nickelodeon, USA (50% interest) and the Sci-Fi
Channel.
Multimedia Trust Share Buyback
At a special meeting of the Board of Directors on July 3, 1996, the Board
authorized the repurchase of up to 500,000 shares of the Multimedia Trust's
outstanding shares. The Multimedia Trust may from time to time purchase shares
of its capital stock in the open market when the shares are trading at a
discount of 10% or more from the net asset value of the shares. Through December
31, 1996, 180,000 shares were repurchased in the open market.
Internet
You can now visit us on the Internet. Our home page at
http://www.gabelli.com contains information about Gabelli Funds, Inc., the
Gabelli Mutual Funds, quarterly reports, closing prices, IRAs, 401(k)s and other
current news. You can also send us e-mail at [email protected].
In Conclusion
As always, we are focusing on the individual stocks in the Multimedia
Trust's portfolio. By concentrating on niche industry groups and individual
companies that can do well independent of prevailing economic and broad market
trends, we believe we are well-positioned to prosper, even in a less generous
market environment. Our investment philosophy is simple and straightforward:
buying good businesses cheap will generate consistently superior returns.
In closing, we thank you for your confidence in our investing abilities
and will strive to achieve our shared investment objective of strong
risk-adjusted returns.
Sincerely,
/s/ Mario J. Gabelli
Mario J. Gabelli, CFA
President and Chief Investment Officer
February 3, 1997
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.
7
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
PORTFOLIO OF INVESTMENTS
December 31, 1996
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 83.4%
COPYRIGHT/CREATIVITY COMPANIES -- 33.9%
Advertising -- 0.0%
200 Havas Advertising, S.A. ................ $ 19,126 $ 22,158
200 Publicis SA ............................ 13,971 17,418
---------- ----------
33,097 39,576
---------- ----------
Cable Programmers -- 6.9%
3,000 BET Holdings, Inc., Class A+ ........... 52,188 86,250
15,000 CANAL+, Sponsored ADR .................. 431,000 662,428
25,000 Flextech plc+ .......................... 163,093 290,054
25,000 Gaylord Entertainment
Company, Class A ..................... 552,342 571,875
40,000 HSN, Inc.+ ............................. 852,384 950,000
100,000 International Family
Entertainment, Inc., Class B+ ........ 1,468,980 1,550,000
75,000 Tele-Communications, Inc./
Liberty Media
Group, Class A+ ...................... 1,896,038 2,142,188
---------- ----------
5,416,025 6,252,795
---------- ----------
Diversified Publishers -- 11.6%
8,500 American Media Inc., Class A+ .......... 65,800 49,937
10,000 Arnoldo Mondadori Editore
SpA .................................. 63,827 81,357
4,000 Belo (A.H.) Corporation ................ 130,539 139,500
2,500 Central Newspapers, Inc.,
Class A .............................. 71,479 110,000
1,040 CEP Communications ..................... 92,284 73,441
4,000 Dow Jones & Company Inc. ............... 144,950 135,500
700 Filipacchi Medias ...................... 87,284 155,780
30,000 Golden Books Family
Entertainment, Inc.+ ................. 302,154 333,750
2,000 Harcourt General, Inc. ................. 80,725 92,250
16,000 Harte-Hanks
Communications Inc. .................. 356,367 444,000
7,000 Houghton Mifflin Company ............... 312,401 396,375
60,639 Independent Newspapers plc
ORD .................................. 177,182 313,398
11,000 Knight-Ridder, Inc. .................... 313,659 420,750
9,000 K-III Communications Corp.+ ............ 90,000 96,750
20,000 Lee Enterprises, Incorporated .......... 393,038 465,000
12,000 Media General, Inc., Class A ........... 340,225 363,000
18,000 Meredith Corporation ................... 478,650 949,500
60,000 Nation Multimedia Group ................ 95,837 175,411
100,000 New Straits Times
Press Berhad ......................... 319,511 578,218
100,000 Oriental Press Group ORD ............... 41,863 44,929
10,000 Playboy Enterprises, Inc.,
Class A .............................. 97,125 101,250
80,000 Post Publishing Company Ltd. ........... 219,014 171,513
45,000 Providence Journal Company,
Class A+ ............................. 675,000 1,378,125
30,000 Pulitzer Publishing Company ............ 940,587 1,391,250
3,000 Reader's Digest Association,
Inc., Class B ........................ 112,675 108,750
50,000 Singapore Press Holdings, Ltd. ......... 760,993 986,207
600,000 South China Morning Post
Holdings ORD ......................... 402,970 496,477
300 SPIR Communication ..................... 23,329 28,549
5,000 Thomas Nelson Inc. ..................... 59,563 74,375
4,000 Times Mirror Company,
Class A .............................. 76,575 199,000
50,000 Times Publishing Ltd. .................. 126,892 112,914
200 Wiley (John) & Sons, Inc.,
Class B .............................. 5,692 6,400
1,000 Wolters Kluwer NV ...................... 90,625 132,789
---------- ----------
7,548,815 10,606,445
---------- ----------
Entertainment Production -- 1.8%
5,000 All American
Communications Inc.+ ................. 46,295 67,500
20,000 All American Communica-
tions Inc., Class B+ ................. 190,000 200,000
7,000 Ascent Entertainment
Group Inc.+ .......................... 104,708 112,875
4,000 Cinergi Pictures
Entertainment Inc.+ .................. 13,305 7,875
2,000 DMX Inc.+ .............................. 4,975 2,062
13,000 EMI Group plc, Sponsored
ADR .................................. 192,709 308,620
7,000 Grammy Entertainment plc+ .............. 67,723 78,584
3,500 Granada Group plc ...................... 35,566 51,636
10,000 GTECH Holdings
Corporation+ ......................... 169,281 320,000
1,000 Harvey Entertainment
Company+ ............................. 12,857 5,937
8,000 Katz Media Group Inc.+ ................. 105,933 90,000
1,000 Lancit Media Productions,
Ltd.+ ................................ 13,040 5,250
300 NRJ SA ................................. 22,694 38,035
877 People's Choice TV
Corporation+ ......................... 13,356 5,372
100,000 Shaw Brothers (Hong Kong)
Ltd. ................................. 145,929 118,948
20,000 Spelling Entertainment
Group, Inc.+ ......................... 152,993 147,500
3,250 THORN plc, ADR+ ........................ 54,979 55,656
1,700 Tring International Group .............. 3,099 422
---------- ----------
1,349,442 1,616,272
---------- ----------
Global Media and Entertainment -- 10.6%
69,000 Grupo Televisa S.A., GDR ............... 1,389,523 1,768,125
25,000 Havas, Sponsored ADR 498,375 428,125
21,000 News Corporation Limited,
ADS .................................. 413,278 438,375
21,000 News Corporation Limited,
Sponsored ADR
Preference Shares .................... 339,847 370,125
2,000 PolyGram NV ............................ 114,825 99,500
51,000 Seagram Company Ltd. ................... 1,723,346 1,976,250
1,000 Sony Corporation, ADR .................. 54,114 65,625
55,000 Time Warner Inc. ....................... 2,105,744 2,062,500
See Notes to Financial Statements.
8
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1996
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (Continued)
COPYRIGHT/CREATIVITY COMPANIES (Continued)
Global Media and Entertainment (Continued)
55,000 Viacom Inc., Class A+ .................. $ 2,117,875 $ 1,897,500
8,500 Walt Disney Company .................... 581,719 591,813
----------- -----------
9,338,646 9,697,938
----------- -----------
Hotels/Gaming -- 1.3%
2,500 Churchill Downs
Incorporated ......................... 102,432 90,000
9,000 Hilton Hotels Corporation .............. 134,875 235,125
15,000 ITT Corporation, New+ .................. 714,675 650,625
50,000 Ladbroke Group plc ..................... 128,134 197,794
2,500 Quintel Entertainment Inc.+ ............ 12,500 23,438
----------- -----------
1,092,616 1,196,982
----------- -----------
Information Publishing -- 0.3%
2,500 Berlitz International Inc.+ ............ 43,500 52,187
20,000 Data Broadcasting
Corporation+ ......................... 112,256 140,000
1,000 Dun & Bradstreet Corp. ................. 28,747 23,750
500 Scholastic Corporation+ ................ 30,672 33,625
----------- -----------
215,175 249,562
----------- -----------
Software -- 1.4%
1,000 Activision Inc.+ ....................... 6,415 12,875
7,000 BBN Corporation+ ....................... 170,225 157,500
1,000 Electronic Arts Inc.+ .................. 22,352 29,937
2,000 Excaliber Technology
Corporation .......................... 32,500 31,500
15,000 H&R Block Inc. ......................... 422,658 435,000
1,000 Intel Corporation ...................... 65,000 130,937
6,000 Microsoft Corporation+* ................ 183,020 495,750
200 Netscape Communications
Corporation+ ......................... 2,800 11,375
100 Pixar Inc.+ ............................ 2,200 1,300
----------- -----------
907,170 1,306,174
----------- -----------
TOTAL COPYRIGHT/CREATIVITY
COMPANIES 25,900,986 30,965,744
----------- -----------
DISTRIBUTION COMPANIES -- 49.5%
Broadcasting -- 14.0%
70,000 Ackerley Communications,
Inc. ................................. 385,688 822,500
1,000 Audiofina .............................. 54,505 46,548
3,000 Baton Broadcasting Inc.+ ............... 19,240 18,771
7,000 BHC Communications, Inc.,
Class A .............................. 544,987 709,625
3,000 British Sky Broadcasting
Group, Sponsored ADR ................. 72,400 157,500
19,875 Can West Global
Communications Corp. ................. 101,199 207,379
2,000 Carlton Communications plc,
Sponsored ADR ........................ 63,625 89,000
16,758 Chris-Craft Industries, Inc. ........... 560,422 701,741
2,000 Clear Channel
Communications, Inc.+ ................ 28,244 72,250
15,000 Cox Radio Inc., Class A+ ............... 277,500 262,500
500 Emmis Broadcasting
Corporation, Class A+ ................ 10,489 16,375
200 Europe 1 Communication+ ................ 44,101 42,389
750 Evergreen Media Corporation,
Class A+ ............................. 10,736 18,750
500 EZ Communications, Inc.,
Class A+ ............................. 7,911 18,313
3,560 Fisher Companies Inc. .................. 260,310 348,880
5,000 General Electric Company ............... 260,875 494,375
5,000 Granite Broadcasting
Corporation+ ......................... 58,518 53,125
4,000 Granite Broadcasting
Corporation,
Preference Shares ...................... 266,525 226,000
5,250 Gray Communications
Systems, Inc. ........................ 105,950 99,094
40,000 Gray Communications
Systems, Inc., Class B ............... 810,062 680,000
5,000 Grupo Radio Centro, S.A.
de CV, ADR ........................... 42,938 34,375
4,000 Heritage Media Corporation,
Class A+ ............................. 57,850 45,000
750 Infinity Broadcasting Corp.,
Class A+ ............................. 13,985 25,490
500 Jacor Communications, Inc.+ ............ 6,958 13,688
700 LaGardere Groupe ....................... 12,878 19,206
25,000 LIN Television Corporation+ ............ 763,430 1,056,250
400 Metropole TV M6 S.A. ................... 35,208 33,295
30,000 New World Communications
Group Incorporated,
Class A+ ............................. 688,562 757,500
1,100 Nippon Television
Broadcasting ......................... 323,764 331,668
7,500 NTN Communications Inc.+ ............... 43,500 28,594
5,000 Osborn Communications
Corporation+ ......................... 37,925 74,453
50,000 Paxson Communications
Corporation, Class A+ ................ 498,935 393,750
60,000 Renaissance Communica-
tions Corporation+ ................... 2,086,625 2,145,000
781 SAGA Communications,
Inc., Class A+ ....................... 9,712 15,229
2,000 Scandinavian Broadcasting
System S.A.+ ......................... 42,023 34,750
12,500 Sistem Televisyen Malaysia
Berhad ............................... 18,259 25,000
12,500 Sistem Televisyen Malaysia
Berhad, Class A+ ..................... 18,259 23,168
50,000 Television Broadcasting
Ltd. ORD ............................. 187,673 199,754
2,000 Television Francaise 1 ................. 206,188 191,137
40,000 Tokyo Broadcasting System .............. 655,630 609,924
10,000 United Television, Inc. ................ 763,979 861,250
40,000 Westinghouse Electric Corp. ............ 599,035 795,000
----------- -----------
11,056,603 12,798,596
----------- -----------
Cable -- 5.1%
3,000 Bell Cablemedia plc, ADR+ .............. 51,880 46,500
See Notes to Financial Statements.
9
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1996
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (Continued)
DISTRIBUTION COMPANIES (Continued)
Cable -- (Continued)
30,000 Cablevision Systems
Corporation, Class A+ ................ $ 1,229,966 $ 918,750
12,000 Comcast Corporation,
Class A .............................. 202,665 211,500
1,000 Comcast Corporation,
Class A Special ...................... 15,612 17,812
3,000 Comcast U.K. Cable Partners
Limited, Class A+ .................... 43,612 40,875
4,000 General Cable Corporation
plc, ADR+ ............................ 58,500 66,000
3,000 International CableTel
Incorporated+ ........................ 62,325 75,750
2,000 NYNEX CableComms Group plc,
ADR+ ................................. 26,750 36,250
2,000 Rogers Communications, Inc.,
Class B+ ............................. 12,683 14,250
5,000 Telewest Communications plc,
Sponsored ADR+ ....................... 116,432 103,750
85,000 Tele-Communications, Inc.,
Class A+ ............................. 1,249,354 1,110,313
45,000 Tele-Communications Interna-
tional, Inc., Class A+ ............... 719,737 596,250
95,000 United International Holdings,
Inc., Class A+ ....................... 1,350,645 1,163,750
5,000 Videotron Groupe ....................... 42,106 41,226
9,000 Videotron Holdings plc, ADR+ ........... 137,923 176,625
100 Wireless One Inc.+ ..................... 1,329 663
----------- ---------
5,321,519 4,620,264
----------- ---------
Consumer Services -- 0.2%
2,500 Department 56, Inc.+ ................... 57,679 61,875
10,000 Ticketmaster Group Inc.+ ............... 145,000 121,250
----------- ---------
202,679 183,125
----------- ---------
Entertainment Distribution -- 2.0%
125,000 Cineplex Odeon Corporation+ ............ 171,875 171,875
23,000 GC Companies, Inc.+ .................... 645,588 796,375
1,500 Lodgenet Entertainment
Corporation+ ......................... 13,252 26,625
19,500 Shaw Communications Inc.,
Class B, Conv. ....................... 122,708 108,136
40,000 US WEST Media Group+ ................... 705,819 740,000
----------- ---------
1,659,242 1,843,011
----------- ---------
Equipment -- 0.7%
6,000 General Instrument
Corporation+ ......................... 159,588 129,750
7,000 Lucent Technologies, Inc. .............. 189,000 323,750
1,000 Northern Telecom Limited ............... 34,956 61,875
1,000 Philips Electronics N.V.,
New York ............................. 38,425 40,000
3,000 Scientific-Atlanta, Inc. ............... 50,804 45,000
----------- ---------
472,773 600,375
----------- ---------
Information Services -- 0.4%
10,000 Cognizant Corporation .................. 272,637 330,000
----------- ---------
International Telephone -- 12.0%
80,000 BC TELECOM Inc. ........................ 1,435,326 1,730,755
18,000 BCE Inc. ............................... 631,400 859,500
5,000 BHI Corporation ........................ 78,754 99,688
28,000 Cable & Wireless plc,
Sponsored ADR ........................ 564,900 689,500
12,500 Compania de Telecomuni-
caciones de Chile SA,
Sponsored ADR ........................ 945,122 1,264,063
500 PT Telefonica del Peru,
ADR .................................. 10,250 9,438
200,000 CPT Telefonica del Peru,
Class B .............................. 414,925 372,129
2,000 Deutsche Telekom AG, ADR+ .............. 37,780 40,750
6,000 GST Telecommunications,
Inc.+ ................................ 38,425 53,250
20 Japan Telecom Co., Ltd. ................ 393,221 446,244
10 Nippon Telegraph &
Telephone Corp. ...................... 81,575 75,637
1,000 PT Telekomunikasi Indonesia ............ 20,185 34,500
3,000 Quebec-Telephone ....................... 44,083 52,536
1,800 Telecom Argentina Stet-France
Telecom S.A., Sponsored
ADR .................................. 69,082 72,675
1,000 Telecom Corporation of
New Zealand Ltd., ADR ................ 62,150 81,000
175,000 Telecom Italia SpA ..................... 287,420 454,216
26,000 Telecomunicacoes Brasileiras
SA (Telebras), Sponsored
ADR .................................. 834,650 1,989,000
3,000 Telefonica de Argentina S.A.,
Sponsored ADR ........................ 64,387 77,625
31,000 Telefonica de Espana,
Sponsored ADR ........................ 1,326,643 2,146,750
14,000 Telefonos De Mexico SA,
Class L, ADR ......................... 458,967 462,000
----------- ---------
7,799,245 11,011,256
----------- ---------
Satellite Communications -- 2.6%
100 Asia Satellite Tele-
communications Holdings
Ltd., Sponsored ADR+ ................. 2,583 2,337
37,000 COMSAT Corporation,
Series 1 ............................. 818,672 911,125
6,500 EchoStar Communications
Corporation, Class A+ ................ 155,827 143,000
15,000 General Motors Corporation,
Class H .............................. 601,063 843,750
1,000 Globalstar
Telecommunications+ .................. 14,472 63,000
7,000 Orion Network Systems, Inc.+ ........... 68,005 90,125
1,500 PanAmSat Corporation+ .................. 22,600 42,000
1,100 PT Indonesia Satellite, ADR ............ 36,493 30,113
19,000 TCI Satellite Entertainment
Inc., Class A+ ....................... 252,990 187,625
6,000 U.S. Satellite Broadcasting
Co., Inc.+ ........................... 146,675 60,000
----------- ---------
2,119,380 2,373,075
----------- ---------
See Notes to Financial Statements.
10
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1996
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS (Continued)
DISTRIBUTION COMPANIES (Continued)
Telecommunications -- 1.1%
2,000 Bruncor Inc. ........................... $ 34,068 $ 45,531
21,000 Frontier Corporation ................... 431,288 475,125
1,000 Hellenic Telecommunications
Organization S.A. (OTE) .............. 16,553 17,166
6,000 Metromedia International
Group Inc.+ .......................... 65,350 59,250
2,000 MIDCOM Communications
Inc.+ ................................ 20,909 17,000
3,000 NewTel Enterprises Limited ............. 45,184 54,396
3,000 Philippine Long Distance
Telephone Company .................... 184,252 153,000
6,750 Tel-Save Holdings, Inc.+ ............... 62,645 195,750
---------- ---------
860,249 1,017,218
---------- ---------
Telecommunications - Long Distance -- 1.4%
12,000 AT&T Corp. ............................. 438,570 522,000
50 DDI Corp. .............................. 401,727 329,945
12,000 Sprint Corporation ..................... 287,792 478,500
---------- ---------
1,128,089 1,330,445
---------- ---------
US Regional Operators -- 4.2%
1,000 Cincinnati Bell Inc. ................... 29,258 61,375
38,000 C-TEC Corporation,
Class B+ ............................. 1,055,720 902,500
18,000 GTE Corporation ........................ 616,725 819,000
64,200 Pacific Telecom, Inc. (a) .............. 1,912,772 1,926,000
1,000 Pacific Telesis Group Inc. ............. 26,800 36,750
800 Teleport Communications
Group Inc., Class A+ ................. 12,800 24,400
2,000 US WEST Communications
Group ................................ 49,604 64,500
---------- ---------
3,703,679 3,834,525
---------- ---------
Wireless Communications -- 5.8%
15,000 Aerial Communications Inc.+ ........... 160,065 121,875
7,500 AirTouch Communications
Inc.+ ................................ 209,125 189,375
6,000 American Paging Inc.+ .................. 41,863 28,125
6,500 BCE Mobile Communications
Inc.+ ................................ 211,076 192,557
825 CAI Wireless Systems, Inc.+ ............ 3,837 825
8,000 Cellular Communications,
Inc., Class A+ ....................... 244,725 158,000
50,000 Centennial Cellular Corp.,
Class A+ ............................. 815,274 606,250
25,000 Century Telephone
Enterprises, Inc. .................... 774,250 771,875
3,000 Loral Space & Communica-
tions Ltd.+ .......................... 42,150 55,125
10,000 NEXTEL Communications,
Inc., Class A+ ....................... 108,882 130,625
800 Omnipoint Corporation+ ................. 12,800 15,400
1,000 Palmer Wireless Inc., Class A+ ......... 15,250 10,500
2,000 Pegasus Communications
Corporation+ ......................... 28,000 27,500
2,000 Pittencrieff Communications,
Inc.+ ................................ 8,500 7,375
1,000 Qualcomm, Inc.+ ........................ 41,625 39,875
24,000 Rogers Cantel Mobile
Communications, Inc.,
Class B+ ............................. 544,807 465,000
5,000 Rural Cellular Corp.,
Class A+ ............................. 50,375 48,125
400,000 Telecom Italia Mobile SpA .............. 481,275 1,010,540
25,000 Telephone and Data Systems,
Inc. ................................. 1,055,963 906,250
5,000 360(degree) Communications
Company+ ............................. 81,100 115,625
22,000 Total Access Communica-
tions plc ............................ 138,875 151,800
10,000 U.S. Cellular Corporation+ ............. 316,813 278,750
1,000 WinStar Communications
Inc.+ ................................ 5,550 21,000
---------- ---------
5,392,180 5,352,372
---------- ---------
TOTAL DISTRIBUTION
COMPANIES ........................................... 39,988,275 45,294,262
---------- ---------
TOTAL COMMON
STOCKS .............................................. 65,889,261 76,260,006
---------- ---------
PREFERRED STOCKS -- 1.1%
Cable -- 0.1%
2,500 Cablevision Systems
Corporation, Series 1,
8.500%, Conv. Pfd. ................... 62,500 51,250
---------- ---------
Entertainment -- 0.1%
4,000 AMC Entertainment, Inc.,
$1.75, Conv. Pfd. .................... 105,738 108,000
---------- ---------
Wireless Communications -- 0.9%
14,141 AirTouch Communications
Inc., Series B,
6.000%, Pfd. ......................... 381,732 385,342
8,800 AirTouch Communications
Inc., Series C,
4.250%, Pfd. ......................... 390,982 398,200
---------- ---------
772,714 783,542
---------- ---------
TOTAL PREFERRED
STOCKS .............................................. 940,952 942,792
---------- ---------
COMMON STOCK WARRANTS -- 0.1%
640 CEP Communications,
Warrants, expires
12/31/1997+ .......................... 1,794 517
42,500 Jacor Communications, Inc.,
Warrants, expires
09/18/2001+ .......................... 111,563 85,000
See Notes to Financial Statements.
11
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1996
Market
Shares Cost Value
------ ---- -----
COMMON STOCK WARRANTS (Continued)
10,000 Oriental Press Group,
Warrants, expires
10/02/1998+ ..................... $ 0 $ 711
----------- -----------
TOTAL COMMON STOCK
WARRANTS ....................................... 113,357 86,228
----------- -----------
Principal
Amount
---------
CORPORATE BONDS - 2.1%
Cable -- 1.9%
$ 1,500,000 HSN, Inc., Conv. Sub. Deb.,
5.875% due 03/01/2006,
144A(c) ......................... 1,500,000 1,500,000
300,000 Tele-Communications
International, Inc., Conv.
Sub. Deb., 4.500% due
02/15/2006 ...................... 302,314 237,750
----------- -----------
1,802,314 1,737,750
----------- -----------
Entertainment Production -- 0.1%
100,000 Viacom Inc., Sub. Deb.,
8.000% due 07/07/2006 ........... 86,227 97,500
----------- -----------
Equipment -- 0.1%
22,000 Trans-Lux Corporation,
Conv. Deb.,
9.000% due 12/01/2005 ........... 22,024 22,220
100,000 Trans-Lux Corporation,
Conv. Deb., 7.500% due
12/01/2006 ...................... 100,000 100,000
----------- -----------
122,024 122,220
----------- -----------
TOTAL CORPORATE
BONDS .......................................... 2,010,565 1,957,470
----------- -----------
U.S. TREASURY BILLS -- 14.2%
13,067,000 4.724% to 5.030%++
due 01/09/1997-
02/13/1997 ...................... 13,003,069 13,003,069
----------- -----------
TOTAL
INVESTMENTS ............................ 100.9% $81,957,204(b) 92,249,565
===========
Principal Market
Amount Cost Value
--------- ---- -----
INVESTMENTS SOLD SHORT -- (0.4)%
(Contract Amount $308,812)
4,000 Microsoft Corporation ................... (0.4)% $ (330,500)
----------
OTHER ASSETS AND
LIABILITIES (Net) .................................... (0.5) (457,121)
---- --------
NET ASSETS ............................................ 100.0% $91,461,944
===== ===========
(a) Security fair valued by the Board of Directors.
(b) Aggregate cost for Federal tax purposes was $82,010,739. Net unrealized
appreciation for Federal tax purposes was $10,238,826 (gross unrealized
appreciation was $13,465,954 and gross unrealized depreciation was
$3,227,128).
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. The security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. The market value
of these securities at December 31, 1996 was $1,500,000, representing 1.64%
of total net assets.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
* Security on which a portion of investments sold short was partially
written.
ADR- American Depositary Receipt
ADS- American Depositary Share
GDR- Global Depositary Receipt
ORD- Ordinary Share
%of
Net Market
Geographic Diversification Assets Value
- -------------------------- ------ -----
United States ................................... 71.3% $65,204,141
Europe .......................................... 9.4 8,560,600
South America ................................... 6.7 6,149,118
Canada .......................................... 6.4 5,885,130
Asia/Pacific Rim ................................ 6.2 5,662,955
----- -----------
Net Assets .................................... 100.0% $91,461,944
===== ===========
- --------------------------------------------------------------------------------
Top Ten Holdings
December 31, 1996
Telefonica de Espana Telecomunicacoes Brasileiras SA (Telebras)
Renaissance Communications
Corporation Seagram Company Ltd.
TCI/Liberty Media Group Pacific Telecom, Inc.
Time Warner Inc. Grupo Televisa S.A.
Viacom Inc. BC TELECOM Inc.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
12
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
ASSETS:
Investments, at value
(Cost $81,957,204) ..................................... $ 92,249,565
Cash .................................................... 99,425
Receivable for short sales .............................. 308,812
Dividends and interest receivable ....................... 238,221
Unamortized organization costs .......................... 201,070
Receivable for investments sold ......................... 107,734
Prepaid expenses ........................................ 51,269
------------
Total Assets ........................................ 93,256,096
------------
LIABILITIES:
Dividend payable ........................................ 1,144,761
Investments sold short, at value
(Contract amount $308,812) ............................. 330,500
Accrued shareholder communications
expense ................................................ 111,425
Payable for investment advisory fee ..................... 78,991
Payable for shareholder services fees ................... 50,000
Accrued expenses and other payables ..................... 78,475
------------
Total Liabilities ................................... 1,794,152
------------
Net assets applicable to
11,296,548 shares
outstanding ......................................... $ 91,461,944
============
NET ASSETS consist of:
Common stock at par value ............................... $ 11,297
Additional paid-in capital .............................. 81,230,031
Distributions in excess of net
realized gain on investments ........................... (53,535)
Undistributed net investment income ..................... 2,653
Net unrealized appreciation of investments .............. 10,271,498
------------
Total Net Assets .................................... $ 91,461,944
============
NET ASSET VALUE ($91,461,944 /
11,296,548 shares outstanding;
200,000,000 shares authorized
of $0.001 par value) .................................. $8.10
=====
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
INVESTMENT INCOME:
Interest income ......................................... $ 1,010,178
Dividend income (net of foreign
withholding taxes of $55,872) ......................... 882,728
------------
Total Investment Income ............................... 1,892,906
------------
EXPENSES:
Investment advisory fee ................................. 947,427
Shareholder communications expense ...................... 362,113
Shareholder services fees ............................... 270,094
Amortization of organization costs ...................... 69,960
Payroll ................................................. 57,712
Directors' fees ......................................... 36,101
Other ................................................... 27,638
------------
Total Expenses .................................... 1,771,045
------------
NET INVESTMENT INCOME ...................................... 121,861
------------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS:
Net realized gain on securities sold .................... 3,999,071
Net realized gain on futures transactions ............... 86,002
Net realized loss on foreign currency
transactions .......................................... (2,524)
------------
Net realized gain on investments ........................ 4,082,549
------------
Net unrealized appreciation of securities,
investments sold short, foreign currency
and other assets and liabilities:
Beginning of year ................................... 7,122,822
End of year ......................................... 10,271,498
------------
Change in net unrealized appreciation of
securities, investments sold short,
foreign currency and other
assets and liabilities ................................ 3,148,676
------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS ...................................... 7,231,225
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................................ $ 7,353,086
============
STATEMENT OF CHANGES INNET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Year
Ended Ended
12/31/96 12/31/95
------------ ------------
<S> <C> <C>
Net investment income ....................................... $ 121,861 $ 920,440
Net realized gain on investments ............................ 4,082,549 1,929,500
Net change in unrealized appreciation of investments ........ 3,148,676 6,924,474
------------ ------------
Net increase in net assets resulting from operations ........ 7,353,086 9,774,414
Distributions to shareholders from:
Net investment income ..................................... (121,844) (906,647)
Net realized gain on investments .......................... (4,082,549) (1,929,500)
Distributions in excess of net realized gain on investments (31,812) (32,880)
Net increase/(decrease) in net assets from Multimedia Trust
share transactions ........................................ (1,234,828) 18,068,392
------------ ------------
Net increase in net assets .................................. 1,882,053 24,973,779
NET ASSETS:
Beginning of year ........................................... 89,579,891 64,606,112
------------ ------------
End of year (including undistributed net investment income
of $2,653 and $5,160, respectively) ....................... $ 91,461,944 $ 89,579,891
============ ============
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies. The Gabelli Global Multimedia Trust Inc.
("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"), whose 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. 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 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 between closing bid and asked prices. Other
over-the-counter securities are valued at the most recent bid 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 "Adviser"). Securities traded primarily
on foreign exchanges are valued at the closing price immediately prior to the
close of the New York Stock Exchange of such securities on their respective
exchanges or markets. Securities and assets for which market quotations are not
readily available are valued at fair market value as determined in good faith by
or under the direction of the Board of Directors of the Multimedia Trust.
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. Debt instruments having a greater maturity are
valued at the highest bid price obtained from a dealer maintaining an active
market in those securities or on the basis of prices obtained from a pricing
service approved as reliable by the Board of Directors.
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 economically appropriate to the
reduction of risks involved in the management of the Multimedia Trust's
investments. 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 the
Multimedia Trust may not be able to enter into a closing transaction because of
an illiquid secondary market.
Short Sales. The Multimedia may make short sales both to obtain capital
gains from anticipated declines in securities and as a form of hedging to offset
potential declines in positions in the same or similar securities. A short sale
is a transaction in which the Multimedia Trust sells securities it may or may
not own in anticipation of a decline in the market price of the securities. To
complete a short sale on securities that it may or may not own, the Multimedia
Trust must arrange through a broker to borrow the securities to be delivered to
the buyer. The proceeds received by the Multimedia Trust from the short sale are
retained by the broker until the Multimedia Trust replaces the borrowed
securities. In borrowing the securities to be delivered to the buyer, the
Multimedia Trust becomes obligated to replace the securities borrowed at their
market price at the time of replacement, whatever that price may be. The
Multimedia Trust must pay any dividends or interest payable on securities while
those securities are in short position.
14
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Possible losses from short sales differ from losses that could be incurred
from a purchase of a security, because losses from short sales may be unlimited
and therefore exceed the liability reflected in the financial statements,
whereas losses from purchases can equal only the total amount invested.
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 and losses, not relating to securities, which
result from changes in foreign currency exchange rates have been included in
unrealized appreciation/depreciation of foreign currency and other assets and
liabilities. Unrealized gains and losses of securities, which result from
changes in foreign exchange rates as well as changes in market prices of
securities, have been included in unrealized appreciation/depreciation of
investment securities. Net realized foreign currency gains and losses resulting
from changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions and the difference between the amounts of interest and
dividends recorded on the books of the Multimedia Trust and the amounts actually
received. The portion of foreign currency gains and losses related to
fluctuation in exchange rates between the initial trade date and subsequent sale
trade date is included in realized gain/(loss) from investment securities sold.
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 accretion of discount) is recorded as
earned. Dividend income is recorded on the ex-dividend date.
Dividends and Distributions to Shareholders. 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. Permanent
differences incurred during the year ended December 31, 1996 resulting from
different book and tax accounting policies for currency gains and losses, are
reclassified between net investment income and net realized gain at year end.
The reclassifications for the year ended December 31, 1996 were a decrease to
undistributed net investment income of $2,524 and a decrease to distributions in
excess of net realized gain on investments of $2,524.
Provision for 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.
Deferred Organization Expenses. A total of $350,000 was incurred in
connection with the organization of the Multimedia Trust. These costs have been
deferred and are being amortized on a straight-line basis over a period of 60
months from the date the Multimedia Trust commenced investment operations.
2. Agreements and Transactions with Affiliates. The Multimedia Trust has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Multimedia Trust will pay the Adviser on the
first business day of each month a fee for the previous month at the annual rate
of 1.00% of the Multimedia Trust's average weekly net assets. In accordance with
the Advisory Agreement, the Adviser manages the Multimedia Trust's portfolio,
makes investment decisions for the Multimedia Trust, places orders to purchase
and sell securities of the Multimedia Trust and oversees the administration of
all aspects of the Multimedia Trust's business and affairs.
During the year ended December 31, 1996, Gabelli & Company, Inc. ("Gabelli
& Company") and its affiliates received $17,653 in brokerage commissions as a
result of executing agency transactions in portfolio securities on behalf of the
Multimedia Trust.
3. Portfolio Securities. Cost of purchases and proceeds from sales of
securities, other than short-term securities, aggregated $31,629,843 and
$25,343,457, respectively, for the year ended December 31, 1996.
4. Capital. The Board of Directors of the Multimedia Trust has authorized the
repurchase of up to 500,000 shares of the Multimedia Trust's outstanding common
stock. For the year ended December 31, 1996, the
15
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Multimedia Trust repurchased 180,000 shares of its common stock in the open
market at a cost of $1,234,828 and an average discount of approximately 19% from
its net asset value. All shares repurchased have been retired.
Common stock transactions were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
12/31/96 12/31/95
-------- --------
Shares Amount Shares Amount
-------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares issued via rights offering* -- -- 2,869,137 $18,068,392
Shares repurchased by the
Multimedia Trust ............... (180,000) $(1,234,828) -- --
-------- ----------- --------- -----------
Net increase/(decrease) .......... (180,000) $(1,234,828) 2,869,137 $18,068,392
======== =========== ========= ===========
</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 totalled approximately $581,000, were charged
directly against the proceeds of the offering.
5. Industry Concentration. Because the Multimedia Trust primarily invests in
common stocks and other securities of foreign and domestic companies in the
telecommunications, media, publishing and entertainment industries, its
portfolio may be subject to greater risk and market fluctuations than a
portfolio of securities representing a broader range of investments.
FINANCIAL HIGHLIGHTS
Per share amounts for a Multimedia Trust share outstanding throughout each
period/year ended December 31,
<TABLE>
<CAPTION>
1996 1995 1994*
-------- -------- --------
<S> <C> <C> <C>
Operating performance:
Net asset value, beginning of year ......................... $ 7.81 $ 7.51 $ 7.50
-------- -------- --------
Net investment income ...................................... 0.01 0.08 0.03
Net realized and unrealized gain on investments ............ 0.63 0.98 0.03
-------- -------- --------
Total from investment operations ........................... 0.64 1.06 0.06
-------- -------- --------
Increase/(decrease) in net asset value from Multimedia Trust
share transactions ....................................... 0.02 (0.46) --
Offering expenses charged to capital surplus ............... -- (0.05) --
Distributions to shareholders from:
Net investment income .................................... (0.01) (0.08) (0.03)
Net realized gains ....................................... (0.36) (0.17) --
Distributions in excess of net investment income and/or
net realized gains ....................................... (0.00)(a) (0.00)(a) (0.01)
Paid-in capital .......................................... -- -- (0.01)
-------- -------- --------
Total distributions ........................................ (0.37) (0.25) (0.05)
-------- -------- --------
Net asset value, end of year ............................... $ 8.10 $ 7.81 $ 7.51
======== ======== ========
Market value, end of year .................................. $ 6.875 $ 6.750 $ 7.375
======== ======== ========
Net Asset Value Total Return** ............................. 9.4% 14.1% 0.8%
======== ======== ========
Total Investment Return*** ................................. 7.4% 0.4% (7.9)%
======== ======== ========
Ratios to average net assets/supplemental data:
Net assets, end of year (in 000's) ......................... $ 91,462 $ 89,580 $ 64,606
Ratio of net investment income to average net assets ..... 0.13% 1.24% 3.15%+
Ratio of operating expenses to average net assets ........ 1.87% 2.04% 1.74%+
Portfolio turnover rate .................................... 32.1% 86.0% 0.0%
Average commission rate (per share of security)(b) ......... $ 0.0367 N/A N/A
</TABLE>
- ----------
* The Multimedia Trust commenced operations on November 15, 1994.
** Based on net asset value per share, adjusted for reinvestment of all
distributions and rights offering in 1995.
*** Based on market value per share, adjusted for reinvestment of all
distributions and rights offering in 1995.
+ Annualized.
(a) Amount represents less than $0.005 per share.
(b) Average commission rate (per share of security) as required by amended SEC
disclosure requirements effective for fiscal years beginning after
September 1, 1995.
16
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
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, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, the financial highlights for each of the
two years in the period 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, 1996 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 14, 1997
17
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
FEDERAL INCOME TAX INFORMATION (Unaudited)
Calendar Year 1996
Cash Dividends and Distributions
Total Amount Ordinary Long-Term Dividend
Payable Record Paid Investment Capital Reinvestment
Date Date Per Share Income Gains Price
---------- ---------- ---------- ---------- ---------- ----------
12/27/96 12/19/96 $0.3750 $0.0893 $0.2857 $6.8950
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 1996 tax returns. Ordinary income distributions include net investment
income and realized net short-term capital gains.
Non-taxable Return of Capital
The amount received as a non-taxable (return of capital) distribution
should be applied to reduce the tax cost of shares. This amount will be
reflected on Form 1099-DIV. If the amount of the non-taxable portion exceeds
your tax basis, the excess will be taxable as a capital gain.
Corporate Dividends Received Deduction and U.S. Treasury Securities Income
The Multimedia Trust paid to shareholders an ordinary income dividend of
$0.0893 per share on December 27, 1996. The percentage of such dividend that
qualifies for the dividends received deduction available to corporations is
20.27%. The percentage of the ordinary income dividends paid by the Multimedia
Trust during 1996 derived from U.S. Treasury Securities was 27.64%.
Historical Distribution Summary
<TABLE>
<CAPTION>
Short- Long-
term term Non-taxable Adjustment
Annual Investment Capital Capital Return of Total to
Summary Income Gains Gains Capital Distributions Cost Basis
------- ---------- ------- ------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1996 .................. $ 0.0103 $ 0.0790 $ 0.2857 -- $ 0.3750 --
1995 (a) .............. 0.0788 0.1529 0.0183 -- 0.2500 --
1994 .................. 0.0305 0.0010 0.0014 $ 0.0171 0.0500 $0.0171-
</TABLE>
- ----------
(a) 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.
18
<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 Inc.
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
19
<PAGE>
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 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 Multimedia 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 Multimedia 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. 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 12, 1997, at the Cole
Auditorium, Greenwich Public Library in Greenwich, Connecticut.
---------------------------------------------------------------
20
<PAGE>
DIRECTORS AND OFFICERS
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
One Corporate Center, Rye, NY 10580-1434
Directors
Mario J. Gabelli, CFA
Chairman
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
Douglas Neviera
Assistant Vice President
James E. McKee
Secretary
Investment Advisor
Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580-1434
Custodian
State Street Bank and Trust Company
Counsel
Willkie Farr & Gallagher
Transfer Agent and Registrar
State Street Bank and Trust Company
Stock Exchange Listing
NYSE-Symbol: GGT
Shares Outstanding 11,296,548
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
"Specialized Equity Funds" in 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) 921-5071.
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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, visit Gabelli Funds' Internet
homepage at: http://www.gabelli.com
or e-mail us at: [email protected]
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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
Phone: 1-800-GABELLI (1-800-422-3554)
Fax: 1-914-921-5118 Internet: http://www.gabelli.com
e-mail: [email protected]
