[FLAGS OMITTED]
THE GABELLI
GLOBAL
MULTIMEDIA
TRUST INC.
Semi-Annual Report
June 30, 1998
<PAGE>
[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 interdependent economic world.
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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. The Fund seeks opportunities for
long-term growth within the context of two main investment universes: companies
involved in creativity, as it relates to the development of intellectual
property rights (copyrights); and companies involved in distribution, as it
relates to the delivery of these copyrights. Additionally, the Fund will invest
in companies participating in emerging technological advances in interactive
services and products.
This report is printed on recycled paper.
<PAGE>
To Our Shareholders,
In the second quarter of 1998, global multimedia stocks paused after the
recent first quarters' breathtaking rally. However, we believe the group will be
re-energized by the June 24 AT&T/Tele-Communications, Inc. merger announcement.
This business combination will permeate on the global telecommunications/media
industry, which we believe enhances its already promising investment potential.
[PHOTO OMITTED]
[LOGO]
THE GABELLI
GLOBAL
MULTIMEDIA
TRUST INC.
Investment Performance
For the twelve months ended June 30, 1998, The Gabelli Global Multimedia
Trust Inc.'s ("Multimedia Trust") net asset value per share increased 40.7% to
$11.90 on June 30, 1998. This compares to the average 14.1% increase of the 229
Global Funds tracked by Lipper Analytical Services. For the second quarter ended
June 30, 1998, the Fund's net asset value increased 2.4%. Since its inception on
November 15, 1994, the Multimedia Trust's net asset value has achieved a 102.7%
total return after adjusting for the rights offering and all distributions. This
equates to a 21.5% average annual return.
The Multimedia Trust's common shares ended the second quarter at $10.125
per share on the New York Stock Exchange, down 0.6% for the quarter and an
increase of 46.9% for the twelve-month period ending June 30, 1998. The common
shares have increased 61.8% since inception after adjusting for all
distributions and the rights offering.
What We Do
The success of momentum investing in recent years and investors' desire
for instant gratification have combined to make value investing appear dull. At
the risk of being dull, we will once again describe the "boring" value approach
that has seen us through both good and bad markets over the last 3 years at The
Gabelli Global Multimedia Trust and for over 20 years at Gabelli Asset
Management Company. In past reports, we have tried to articulate our investment
philosophy and methodology. The following graphic further illustrates the
interplay among the four components of our valuation approach.
[GRAPHIC OMITTED]
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
<PAGE>
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 world-wide 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 the globalization of the market in filmed entertainment and
telecommunications, and micro trends, such as an increased focus on productivity
enhancing goods and services.
THE PORTFOLIO OVERVIEW
Global Allocation
The chart at the right represents the Multimedia Trust's holdings by
geographic region as of June 30, 1998. 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 BY A PIE CHART IN THE PRINTED MATERIAL.]
HOLDINGS BY GEOGRAPHIC REGION - 6/30/98
United States 79.6%
Europe 7.9
Canada 5.2
Latin America 4.0
Asia/Pacific Rim 3.3
Equity Mix
The Multimedia Trust's investment premise falls within the context of two
main investment universes: a) companies involved in creativity, as it relates to
the development of intellectual property rights (copyrights); and b) 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 at the right depicts our equity mix of the copyright/creativity
and distribution companies in our portfolio as of June 30, 1998.
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Distribution 56.3%
Copyright/Creativity 43.7
2
<PAGE>
COMMENTARY
The Envelope Please. The Winners Are . . .
With only a few exceptions, our media and telecommunications holdings
posted positive returns this quarter. These industry groups are all benefiting
from powerful, and in our opinion, sustainable trends. Leading media companies
like Time Warner, Seagrams, and News Corp. were all applauded for making bold
moves to extend their global franchises. At the end of the quarter, cable
television stocks like Tele-Communications, Inc. (TCI), Comcast and Cablevision
soared following the announcement of the AT&T/TCI deal. Telephone stocks like
Sprint and AirTouch continued to make progress as investors acknowledged these
companies' competitive advantages in arguably the greatest growth industry
worldwide.
Dialing Up a Big Deal - "Ma Bell" is Now Riding Motorcycles
Deregulation and technology have been driving change in the global
telecommunications industry. The need for speed is swiftly changing the "dial
tone" into the "web tone" as the telephone, computer and television converge
into one all purpose interactive information and entertainment instrument.
Convergence has just taken a leap forward with the prospective merger of AT&T
and cable television leader Tele-Communications, Inc.
Does the proposed AT&T/TCI combination make sense? We think so. The
transaction gives AT&T the digital platform to compete in the local telephone
business. It also allows them to bundle long distance, local telephony, internet
access and entertainment programming services on one line, passing approximately
one third of all U.S. homes.
How will this change the global telecommunications/media landscape? It
opens the door for long distance companies to break into local telephone
monopolies and perhaps for local telephone operators to further their inroads to
the long distance business. It dramatically increases the value of the cable
television industry's millions of coaxial connections into homes worldwide. It
will push the pace in which telephone infrastructure is upgraded to match
cable's digital and high speed capacity. It puts increasing pressure on every
global telecommunications company to create business combinations that will
allow them to compete with the full range of services that AT&T/TCI would be
capable of delivering. Finally, as additional business combinations are formed,
the value of 'content and creativity' providers should grow substantially.
3
<PAGE>
Deal Activity Surfaces Value
A component of our investment methodology is to identify industry and
sector trends and themes ahead of the curve and position ourselves to benefit
from these developments. Industry consolidation is one such trend. As we have
discussed in previous letters, the continued strong activity in mergers and
acquisitions is providing a tailwind to the excellent performance of the
Multimedia Trust this year. The accompanying tables illustrate how deal activity
surfaced value in a small sample of the portfolio holdings.
- --------------------------------------------------------------------------------
1998 Completed Deals
Fund Holding Closing Date % Return(a)
- ------------ ------------ -----------
Ticketmaster Group Inc. 6/24 24.5%
Lancit Media Entertainment Ltd. 6/16 6.7
American Radio Systems Corp. 6/05 22.6
Cineplex Odeon Corp. 5/15 40.0
Orion Network Systems Inc. 3/23 16.1
Shared Technologies Fairchild Inc. 3/12 1.7
LIN Television Corp. 3/03 0.9
Percentage Changes through 6/30/98 for Announced Deals
Second Year-to-Date
Current Fund Holdings Quarter Return(b) Return(b)
- --------------------- ----------------- ---------
Cable Michigan Inc. 52.9% 70.5%
360(degree) Communications Co. 6.0 64.1
Tele-Communications Inc./Liberty Media Group 12.9 60.6
TCI Ventures Group 13.8 41.7
Tele-Communications Inc. 23.6 37.6
Southern New England Telecommunications Corp. (9.8) 30.2
BET Holdings Inc. 3.0 15.2
PolyGram NV 9.7 6.7
Teleport Communications Group Inc. (7.7) (1.1)
- --------------------------------------------------------------------------------
(a) Represents changes in share price and dividends paid from December 31,
1997 through the closing date.
(b) Represents changes in share price and dividends paid from the beginning of
the period through June 30, 1998.
- --------------------------------------------------------------------------------
Continued on page 8
4
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-----------------------------------------------------------------------
Mr. Gabelli appeared in the August 1998 edition of Louis Rukeyser's
Mutual Funds newsletter. We have condensed the article for your review.
-----------------------------------------------------------------------
Excerpted from
[PHOTO OMITTED] LOUIS
RUKEYSER'S
MUTUAL FUNDS
August 1998
Growth or Value? Keeping Your Cool is Always in Style
by Louis Rukeyser
One of the most entertaining, and enlightening, confrontations at our
Louis Rukeyser Investment Conferences in recent years has been that between
Foster Friess and Mario Gabelli. I deliberately put them on the same panel,
because Foster, the lead manager of the Brandywine Fund, has been an
outstandingly articulate advocate of "growth" investing, while Mario, Chairman
of Gabelli Funds, is a similarly effective spokesman for the "value" camp.
Last year, for example, when Mario dramatized his then-current
recommendation of American Express by holding up his green credit card, Foster
got a roar out of the crowd of 10,000 by saying that if Mario had been a
growth-stock investor, he would have had a gold card by now. Gabelli was
unfazed: "That's a perfect example of the problem with 'growth' investors," he
said. "A 'value' investor knows that the green American Express card is the
better bargain."
Who's right about the best approach to investing? The only true answer is
that they both are. Over the years, stocks will respond to their companies'
increases in earnings, as the "growth" investors contend--and no sensible
"value" investor can afford to be indifferent to that trend. And no sensible
"growth" investor should want heedlessly to overpay for a stock, a rash act that
can make the unwary investor susceptible to some of the market's most jolting
downturns. At different periods, the market will favor one style of investing
over another. The most successful long-term managers stick to a consistent
style. But they don't ignore the rest of the equation, either: nothing is nicer
than buying what the market thinks of as a "value" stock and selling it long
after the market has perceived it as a "growth" stock. Bargains are sometimes in
the eye of the beholder; profits, on the other hand, cross party lines . . .
Which takes me to Mario's triumph. As you'll see in The Rukeyser Interview
this month, this self-described "stuck-in-the-wool, Graham & Dodd type"--an
old-fashioned "value" investor--had the year of his life in 1997, a period when
most prominent investors of similar bent were conspicuously missing large chunks
of the market's lavish profits, on the selfrighteous grounds that it had become
far too pricey to merit their august involvement.
It wasn't that Mario had no concerns about the market's valuation; he did,
and does. He knows that no market ever goes straight up, and he worries about
certain historical benchmarks. But he figures, as it were, that that's not what
he's being paid to do. He's being paid to discern meaningful business trends and
to find individual stocks that meet his standards. And that he has continued,
resolutely, to do. Far more important (and far more successful) than his overall
market judgments has been his ability to find stocks that most investors were
neglecting. As he put it to me in the interview, "It really was not what we
bought in 1997 but what we bought in 1995 and 1996: domestic businesses that
were somewhat out of favor."
No market timer could have told Mario precisely when the market would
vindicate these judgments. He clearly didn't know the answer to that himself.
But he held to what he did know, and was notably patient. That's something we
all can emulate. In my view, there is no one single way to make the most money
in Wall Street-- there is merit, over time, in both the "growth" and "value"
camps, and intelligently diversified mutual fund investors will keep a foot in
both--but there is one pretty certain way to lose money: panicking in the face
of temporary adversity . . .
More on the next page . . .
Reprinted with permission.
Louis Rukeyser's Mutual Funds o 1750 Old Meadow Road, McLean, VA 22102
o August 1998 (C) Financial Service Associates
For subscriptions, call (800) 892-9702 or (703) 905-8000 in Virginia.
5
<PAGE>
Excerpted from Louis Rukeyser's Mutual Funds
The Rukeyser Interview
Anyone who still thinks of successful money management as a grim and humorless
business has clearly never encountered Mario Gabelli. Mario gets a lot of fun
out of life, whether running his $15-billion-plus money-management operation in
Rye, N.Y., fly-fishing near his home in Jackson Hole, Wyo., or entertaining and
enlightening the world's biggest financial audience as a perennial favorite at
our annual Louis Rukeyser Investment Conference. His manner and mind are cutting
edge, but his approach to investing is rooted in the old-fashioned "value" ideas
of Benjamin Graham: the search for bargains that provide a margin of safety when
the market stumbles.
Mario's engaging smile was returned by the market in 1997; when his funds
(800-422-3554) had their best year ever, thanks both to rallies in some of his
favorite sectors (such as cable, telephone and media firms) and to his penchant
for picking companies that eventually get taken over at higher prices;
Morningstar named him "1997 Domestic Equity Fund Manager of the Year." Mario's
long-term method of investing, which typically involves holding periods of three
to five years, means that he won't always be manager of the year, and there will
be times when shareholders will have to show a fair amount of patience
themselves. But the evidence mounts that this kind of vision, which seeks to
discern enduring shifts in the investment climate, has worked far better over
time than trying to outguess every passing shift in the market winds. --LR
................................................................................
---------------------------
GABELLI IN FOCUS
---------------------------
[PHOTO OMITTED]
---------------------------
Mario Gabelli: "Instead
of buying the growth
company in a sector we
like; we buy the potential
takeout company.
Deals are going to continue
to be very powerful,
and I still want to be in
front of them."
---------------------------
Mario, you have carved out a reputation as one of the market's most formidable
"value" investors, but you've somehow managed to outperform lately even while
many value investors have been cursing the market and claiming that it's gone
nuts. What are you doing that they aren't?
Well, we just got lucky. The moon, the sun and the stars came together in
1997, but it really was not what we bought in 1997 but what we bought in 1995
and 1996: domestic businesses that were somewhat out of favor. And also, we
believe very strongly, Lou, that the third great wave of postwar takeovers
started four years ago, and so instead of buying the growth company in a sector
we like, we buy the potential takeout company. Deals are going to continue to be
very powerful, and I still want to be in front of them.
You've played more winning themes than Tommy Dorsey over the years. What do you
see as the best new investment themes today-and the stocks that will provide the
sweetest music for investors?
One big theme I believe in now is speed and digital. Speed used to be
getting a product to the market ahead of the competition. Today, it's getting
what the consumer wants when he wants it. The kissing cousin of speed is
digital; we're going through a major revolution, involving electronic commerce,
entertainment on a global basis, and taking your dial tone and making it a web
tone. At your conference in April I recommended MediaOne, a broadband-
communications and Internet company, created as a tracking stock by US West,
that then went from $36 to $50; I still like it.
On the theme of integrated entertainment companies, I think there is
significant value in Viacom, even though it's doubled since September. Its crown
jewels are the cable networks (including MTV, VH1, Nickelodeon and
Nick-at-Nite), with potential cash flow of a billion dollars from them next
year--which means you get the studio for free, at a time when "ER" and
"Seinfeld" and "Titanic" have underscored again the virtue of software
programming.
And I have a new theme to add to my four "B's"--bankers, brokers,
broadcasters and Bell operating companies--which I used to talk about as places
to be in front of the takeovers. I will now add BTU: the opportunity to take
advantage of the deregulation and restructuring of the gas and electric-utility
industries. We're buying companies at slightly over their book value (sometimes
1.5 to 2.0 times), with very good yields. They're perceived to be defensive
plays. For example, I like Eastern Enterprises, which owns and operates the
Boston Gas Company,
6
<PAGE>
which has lots of cash and is in the middle of a geographic area that's going
through an accelerated consolidation. The whole electric area around the country
may see bigger companies gobbling up smaller ones.
Elsewhere in the area of possible takeovers, my favorite in the telephone
area is Frontier, which is the old Rochester Telephone; in the entertainment
area, Gaylord Entertainment, which is a Nashville, Tenn.-based entertainment
dynamo with the Opryland Hotel, Christian Contemporary music,
country-and-western music and a TV station in Dallas that alone is worth about
$450 million; and, among smaller companies, Pioneer Group, which is in the
money-management business.
When you're picking new stocks, do you think of the theme first, or find the
companies first and then develop the theme?
Well, take Gaylord. I started following Gaylord because I believed that
cable networks were very attractively valued. So I started looking within that
conviction, finding companies like Black Entertainment (we were the largest
shareholder), Pat Robertson's Family Entertainment, Cablevision (which has gone
up six times in the last two years) and Liberty Media (which I'm buying because
they own the best cable networks in the world). And that attracted me to
Gaylord, because they own the Nashville Network and Country Music Television.
After focusing on the stock, I analyze the parts: what can I get for each of
them, who's likely to buy it, what would they pay.
- --------------------------------------------------------------------------------
ENDURING VALUES?
Stock Recent 52-Week
(NYSE Symbol) Price High/Low
MediaOne (UMG) $ 48.44 $50.00/$19.81
Viacom (AMEX:VIA) 65.38 65.94/ 26.00
Eastern Enterprises (EFU) 42.19 45.63/ 35.06
Frontier (FRO) 34.31 37.13/ 19.00
Gaylord Entertainment (GET) 33.69 37.50/ 22.38
Pioneer Group (OTC:PIOG) 28.00 33.88/ 24.13
- --------------------------------------------------------------------------------
* Consensus estimates. Sources: Bloomberg, Zacks.
- --------------------------------------------------------------------------------
Which takes me to a question about the future of the Gabelli Funds: I know you
can't comment right now about your efforts to sell a stake in your firm to the
public. But since you're merely a stripling of 56 years yourself, many people
wonder whether this is a signal that you think the market is at a peak.
Not at all. I've acknowledged that we are looking to monetize some of our
older partners--much the way Goldman Sachs is. We've filed an S-l form that said
we're going public--not selling our business. It's not a question of thinking
that the market is peaking (the record of companies calling that peak has been
pretty bad over the years!) but of getting fresh capital to accelerate our
growth.
How has your market philosophy changed over the decades, if at all?
We are stuck-in-the-wool, Graham & Dodd types. But one thing did change
about 10 or 11 years ago. For 20 years we had followed industries around the
world, just to see what was going on; we never invested in them. I then made a
fundamental shift. I said, "Hey, if you follow beverages at Gabelli, you've got
to follow every beverage company around the world. If they drink it, you follow
it." And the same for other industries. We globalized our thought process and
internationalized the stock-selection process.
Finally, Mario, what's your single best piece of advice for mutual-fund
investors over the next 12 months?
Continue to do your homework and be patient. And I hate to say it, but
don't extrapolate from the high returns of the last three years in terms of what
your future returns are likely to be. Don't get panicked by the first 30% down.
- --------------------------------------------------------------------------------
The views expressed in this article reflect those of Mario J. Gabelli,
Chairman and Chief Investment Officer of Gabelli Funds, Inc., only through July
15, 1998 as edited and selected by Louis Rukeyser. The Chief Investment
Officer's views are subject to change at any time based on market and other
conditions. Securities discussed in this article do not necessarily reflect
holdings of The Trust. Specific holdings of the Trust are incorporated in the
portfolio appearing within this semi-annual report.
7
<PAGE>
Continued from page 4
Corporate Governance
The Gabelli Global Multimedia Trust continues to consider actions that may
reduce or eliminate the market discount of its shares. How do we accomplish
this? There are several factors that historically have worked to narrow the
discounts of closed-end funds. One of these is a stock repurchase program, which
we instituted back in July of 1996.
Stock Repurchase Plan - Q & A
Q: What is a stock repurchase plan?
A stock repurchase plan allows a company to buy back its own shares in the
open market (in our case, the New York Stock Exchange). This reduces the total
number of shares outstanding and increases the earnings per share.
Q: When did the Multimedia Trust implement a stock repurchase plan?
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. On February 26, 1997, the Board voted to increase the
authorized shares which may be repurchased to 750,000 and on May 13, 1998, the
Board increased the authorized shares which may be repurchased by another
250,000 shares to 1,000,000 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. In
total, through June 30, 1998, 601,433 shares were repurchased in the open
market.
Back on October 19, 1987, an affiliated closed-end fund, The Gabelli
Equity Trust, was the first company on the New York Stock Exchange to implement
a stock buyback program after the market crash. At the time, the Equity Trust
was trading at a discount to net asset value and represented an excellent value
for the Trust to acquire its own shares. This stock repurchase plan resulted in
the purchase of 800,000 shares in the open market from 1987 to 1988.
Similarly, the first company on the New York Stock Exchange to announce a
stock repurchase program on October 27, 1997 - a day in which the market
declined 554.26 points, or 7.2% -- was our other affiliated closed-end fund, The
Gabelli Convertible Securities Fund.
Q: What is the benefit of a stock repurchase plan?
When the Multimedia Trust purchases its own shares at a discount to NAV,
the Trust realizes a benefit equal to the difference between the net asset value
and the purchase price. This benefit is credited to the net assets of the
remaining shares, thus boosting the NAV. The larger the discount, the greater
the benefit on the NAV.
The market price is determined by supply and demand factors. If there are
more sellers than buyers the price will decline until buyers enter the market to
establish a sales price. A stock repurchase program
8
<PAGE>
increases demand for the Gabelli Global Multimedia Trust's shares in the open
market. This provides a willing buyer of fund shares which offsets, at least in
part, sales of fund shares.
Preferred Stock -- An Investment For The Future
On June 4, 1997, the Trust successfully completed its offering of
cumulative preferred stock which was rated 'aaa' by Moody's Investors Service,
Inc. The Trust issued 1,250,000 Preferred Shares at $25 with an annual dividend
rate of $1.98 per share. The Preferred Shares are trading on the New York Stock
Exchange under the symbol "GGT Pr" and closed at $25.5625 on June 30, 1998. We
thought we would answer some questions about preferred stock.
Q: What is Preferred Stock?
Preferred stock is a form of equity investment which has certain rights
that differ from those of common stock. In our case, the preferred stock was
issued at $25 per share with a fixed dividend rate of $1.98. The Trust is
obligated to pay this dividend to the Preferred Shareholders before any
dividends are paid to the holders of common shares. Thereafter, any return
earned in excess of this dividend rate would work to benefit the Common
Shareholders.
Q: How would Preferred Shares benefit Common Shareholders?
From its inception on November 15, 1994 through June 30, 1998, the
Multimedia Trust has earned a 21.5% average annual return. The only obligation
that the Trust has to the Preferred Shareholders is to pay the stated dividend
rate. Given the current market environment, we considered this to be an ideal
opportunity to take advantage of relatively low long-term interest rates and to
earn an excess return for our Common Shareholders consistent with our
conservative investment approach. Any return earned in excess of the stated
dividend rate, which is less than the Trust's average annual return, would
directly benefit Common Shareholders; however, any shortfall from the stated
rate would impact the Common Shareholders in the opposite fashion. Therefore, by
taking advantage of the current relatively low interest rate environment and
achieving our investment objectives, the Preferred Share issuance offers what we
believe is a conservative method of adding wealth for our Common Shareholders.
Furthermore, Common Shareholders stand to receive certain tax benefits as
a result of the Preferred Stock offering. Since taxable income is allocated to
the Preferred Shareholders before Common Shareholders, taxable distributions to
Common Shareholders are not required to the extent they would be if the
Preferred Shares were not outstanding. Common Shareholders thus avoid having to
pay taxes on that portion of taxable income that previously would have been
distributed to them. By deferring these taxable distributions and taxes
associated therewith, the net asset value of the common shares are likely to
grow at a faster rate.
Q: Why did the Trust consider Preferred Shares?
Long-term interest rates were at relatively low levels. The dividend rate
that the Trust is required to pay
9
<PAGE>
on the Preferred Shares was related to long-term rates. In this environment, we
had a great opportunity to create value by earning a return in excess of the
Preferred's dividend rate over the long term. Therefore, we believe this
represented an opportunistic time for the Trust to take advantage of these low
rates.
Q: Will Gabelli Funds, Inc. be paid a management fee on the Preferred Capital?
With the completion of the preferred offering, the Adviser has agreed to
waive the management fee on the incremental assets if the net asset value total
return on the Trust does not exceed the stated dividend rate on the Preferred
Shares.
Q: What were the offering costs involved with the Preferred Shares?
Consistent with our conservative approach, the Trust issued the Preferred
Shares in a cost efficient manner at less than $0.13 per share. This modest
investment provided the underpinnings for successful returns in the future and
incrementally boosted the Trust's twelve month returns to 40.7% with the
preferred offering versus 27.4% had the Preferred Shares not been issued. Stated
differently, shareholders have received approximately 13% in incremental returns
since the Preferred Shares were issued.
Shareholder Meeting - June 29, 1998 - Final Results
The Annual Meeting of Shareholders was held on June 29, 1998 at the
Greenwich Library in Greenwich, Connecticut. At that meeting, Common
Shareholders and Preferred Shareholders, voting together as a single class,
elected Mario J. Gabelli and Thomas E. Bratter as Directors of the Global
Multimedia Trust. A total of 6,531,830 votes and 6,519,552 votes were cast in
favor of each Director and 302,642 votes and 314,920 votes were withheld for
each Director, respectively. Preferred Shareholders, voting as a separate class,
elected Felix J. Christiana and James P. Conn as Directors of the Preferred
Shares of the Global Multimedia Trust. A total of 674,388 votes were cast in
favor of each Director and 9,208 votes were withheld for each Director.
Bill Callaghan, Karl Otto Pohl, Anthony R. Pustorino and Salvatore J.
Zizza continue to serve in their capacities as Directors of the Multimedia
Trust.
At the meeting, Common and Preferred Shareholders also selected
PricewaterhouseCoopers LLP as the independent accountants for the Global
Multimedia Trust for the year ending December 31, 1998. 6,555,635 votes were
cast in favor of the approval of this proposal, 215,513 votes were cast against
the proposal and 63,323 votes abstained.
In addition, Common and Preferred Shareholders ratified the Board's
authority to issue senior securities. 4,981,764 votes were cast in favor of the
approval of this proposal, 865,642 votes were cast against the proposal and
1,250,189 votes abstained, including broker non-votes.
THANK YOU!
This is the second time such a resolution on senior securities has been
passed. Last year at the 1997 Annual Meeting, a similar resolution was approved
with 71.0% of the shares being voted in favor of the resolution. This year, a
similar vote of 70.2% of the shares voted in favor of the resolution.
10
<PAGE>
We would like to take this opportunity to extend our appreciation to all
the shareholders who participated in this Annual Meeting in person or by proxy
and to all the full service brokers who communicated the merits of Preferred
Stock to our shareholders and their clients.
The proxy material for the 1998 meeting discussed several shareholder
lawsuits filed in 1997 which sought to rescind the outcome of the original vote
in 1997 and the issuance of the Preferred Stock. There can be no doubt now that
a substantial majority of our shareholders agreed and continue to agree with the
Board of Directors' assessment of the potential benefits of Preferred Stock. It
is equally clear that a substantial majority of our shareholders do not share
the goals and interests of the plaintiffs in the lawsuits which seek to rescind
the issuance of the Preferred Stock. This favorable vote demonstrates that the
plaintiffs, in pursuing their own agenda, have sought to obstruct the interests
of a significant majority of the shareholders.
The overwhelming shareholder approval at the 1998 Annual Meeting,
following as it did on the expanded disclosure in the proxy material, makes it
apparent that continuation of the litigation can serve no reasonable purpose. It
is also a clear signal for the Directors of the Trust to consider taking all
appropriate action to hold the plaintiffs responsible for the economic costs of
this litigation.
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.
Ascent Entertainment Group Inc. (GOAL - $11.125 - Nasdaq) is a fully independent
media and entertainment company. Ascent owns 57% of On Command Corp., which is
the worldwide lodging industry's leading provider of on-demand, in-room video
entertainment and information services, with a total of over 890,000 rooms
served at year end. Ascent also owns two professional sports franchises: the
Denver Nuggets and the Colorado Avalanche. The Denver Arena Co., a division of
Ascent, is building a new arena to house these professional basketball and
hockey teams. The arena is expected to open for the 1999-2000 NBA and NHL
seasons.
BET Holdings Inc. (BTV - $62.9375 - NYSE) is a media and entertainment company
that primarily targets black consumers, a market that was estimated to have
spent over $450 billion in 1997. BTV's core business is Black Entertainment
Television (BET), an advertiser-supported cable television programming service.
Of the 70 million cable households in the U.S., BET reaches over 51 million. BET
on Jazz: The Cable Jazz Channel produced nearly 150 hours of original jazz
programming in 1997. Action Pay-Per-View's subscriber base has grown to over
nine million as the service expands beyond a traditional urban audience. The
company is leveraging its brand identity into markets including pay-per-view
movies, direct merchandising and magazine publishing. The $48 per share offer
from a group led by founder Robert Johnson to take BTV private has been
increased to $63 per share.
Cablevision Systems Corp. (CVC - $83.50 - ASE), based in Woodbury, NY, owns and
operates cable television systems in 18 states serving 2,844,000 basic service
subscribers at year end 1997. CVC's revenue per
11
<PAGE>
subscriber is the highest in the cable industry. CVC has exercised its option to
purchase ITT's 50% stake in MSG (Madison Square Garden) Properties, including
the NY Knicks and NY Rangers. In March, Cablevision purchased
Tele-Communications Inc.'s New York area cable properties with 829,000
subscribers by issuing almost 24.5 million shares (adjusted for the March 30,
1998 two-for-one stock split) and assuming $670 million of TCI's debt. These
shares represent a one-third stake in CVC. The company's new, vigorous activity
includes the sale of a 40% stake in Rainbow Sports to a News Corp./TCI joint
venture with the proceeds used to pay down a significant portion of MSG's debt.
With its upgraded cable systems, CVC is well-positioned to offer telephony, high
speed data and enhanced video services.
Grupo Televisa SA (TV - $37.625 - NYSE) is a Mexico-based entertainment company
that dominates the Spanish speaking world through its fully integrated mix of
content and distribution. The company is an excellent vehicle for accessing the
growth in disposable income among the Spanish speaking population on a global
basis. The business mix includes film, music, cable television and broadcasting.
Grupo Televisa also has valuable holdings in PanAmSat (SPOT - $56.875 - Nasdaq)
and Univision Communications (UVN - $37.25 - NYSE). A five year restructuring
plan - "Televisa 2000" - is designed to cut costs by $100 million annually over
the next three years and to raise Televisa's cash flow margin by more than 25%.
MediaOne Group Inc. (UMG - $43.9375 - NYSE), recently split-off from US West
Media Group, is a cable distributor committed to providing multiple services
with an emphasis on high speed transmission. Following the sale of its
investment in Dex and the resale of its wireless operations, MediaOne has a
strong financial position which should allow the company to be one of the
leaders in the upgrading of cable infrastructures.
Tele-Communications Inc./Liberty Media Group (LBTYA - $38.8125 - 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, the world's
largest media company. Liberty Media, News Corp. and Tele-Communications
International Inc. have created a global sports joint venture, Fox Sports, that
offers 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. Liberty Media is to be
merged into AT&T (T - $57.125 - NYSE) as part of AT&T's acquisition of TCI.
Thereafter, AT&T will issue a "tracking stock" at a one-to-one ratio.
Telephone and Data Systems Inc. (TDS - $39.375 - ASE) is a diversified
telecommunications company with established cellular, local telephone and radio
paging operations and a developing personal communications services (PCS)
business. TDS provides high-quality telecommunications services to 3.2 million
customers in 37 states and the District of Columbia. The company was active in
the PCS auctions and was the high bidder in markets with a combined population
of 27 million. TDS owns 81.1% of United States Cellular Corporation and 82.5% of
Aerial Communications, Inc., TDS's PCS subsidiary which owns the licenses to
provide PCS service in six major trading areas encompassing approximately 27.6
million population equivalents. TDS also owns American Paging, Inc., a provider
of wireless messaging communications services to 811,100 customers in 21 states
and the District of Columbia.
12
<PAGE>
Time Warner Inc. (TWX - $85.4375 - NYSE), having completed its acquisition of
Turner Broadcasting, is the global leader in media and entertainment. The
combined companies have more than $24 billion in revenues and almost $5.4
billion in EBITDA. Together they control a host of powerful media brands, such
as CNN, Warner Brothers, HBO, Cinemax and Time and People magazines. Under the
leadership of Chairman Gerald Levin and Vice Chairman Ted Turner, Time Warner is
now focused on reducing its almost $12 billion in debt and simplifying its
capital structure.
USA Networks Inc. (USAI - $25.125 - Nasdaq) is a diversified entertainment and
electronic commerce company. Chairman and CEO Barry Diller has brought together
the following assets under one umbrella: the USA Network, the Sci-Fi Channel,
USA Networks Studios, USA Broadcasting, Home Shopping Network and Ticketmaster.
Plans are to integrate these assets, leveraging programming production
capabilities and electronic commerce across its strong distribution platform.
Viacom Inc. (VIA - $58.50 - 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 its debt
of approximately $10 billion and is focusing on the global expansion of its
media franchises. The company divested its cable systems subsidiary in a
transaction with Tele-Communications Inc. which reduced Viacom's debt by $1.7
billion and the number of common shares outstanding by about four percent. Its
radio group, Evergreen Media, is being sold for $1.1 billion in cash. Its
publishing business, Simon & Schuster, has been put up for sale. Viacom is
well-positioned in music (notably MTV) and cable networks (such as Nickelodeon).
Dividends
The Trust distributed a dividend of $0.85 per share to Common Shareholders
on December 26, 1997. Our Preferred Shareholders were recently paid a dividend
of $0.99 per share on June 26, 1998. For the year ended June 30, 1998, the
Preferred Shareholders received a total distribution of $2.1065 per share. This
includes an initial distribution paid on December 26, 1997 of $1.1165 per share
which represented the accrual period from June 4, 1997 through December 26,
1997.
At a meeting held on May 13, 1998, the Board of Directors elected to pay
dividends on the Trust's Preferred Shares quarterly rather than semi-annually.
Accordingly, the Preferred Shareholders will receive quarterly distributions of
$0.495 per share starting in September 1998.
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, IRAs, 401(k)s, quarterly reports, closing prices and other
current news. You can send us e-mail at [email protected].
13
<PAGE>
In Conclusion
We created this Fund because we believed multimedia was truly the wave of
the future. We saw the telephone, computer and television converging into one
powerful instrument providing information and entertainment to consumers
worldwide. The AT&T/Tele-Communications, Inc. combination signals that our dream
of convergence is well on its way to becoming reality.
Sincerely,
/s/ Mario J. Gabelli
Mario J. Gabelli, CFA
President and Chief Investment Officer
August 1, 1998
---------------------------------------------------------------
Top Ten Holdings
June 30, 1998
Viacom Inc. Ascent Entertainment Corp.
TCI-Liberty Media Group Time Warner Inc.
BET Holdings Inc. Telephone & Data Systems
USA Networks Inc. MediaOne Group Inc.
Cablevision Systems Corp. 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.
14
<PAGE>
The Gabelli Global Multimedia Trust Inc.
Portfolio of Investments -- June 30, 1998 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- ------
COMMON STOCKS - 76.6%
COPYRIGHT/CREATIVITY COMPANIES - 33.7%
Advertising - 0.0%
200 Havas Advertising SA ............ $ 19,126 $ 40,425
200 Publicis SA ..................... 13,971 34,636
100 Lamar Advertising Co. ........... 3,279 3,588
------------ ------------
36,376 78,649
------------ ------------
Cable Programmers - 3.5%
15,000 CANAL +, Sponsored ADR+ ......... 431,000 560,238
6,000 Flextech plc+ ................... 37,551 55,351
202,300 USA Networks Inc.+ .............. 2,751,752 5,082,788
------------ ------------
3,220,303 5,698,377
------------ ------------
Diversified Publishers - 7.5%
10,000 American Media Inc.,
Cl. A+ ........................ 74,500 66,250
10,000 Arnoldo Mondadori
Editore SpA ................... 63,827 118,193
32,000 Belo (A.H.) Corp., Cl. A ........ 398,406 780,000
2,500 Central Newspapers Inc.,
Cl. A ......................... 71,479 174,375
8,000 Dow Jones & Co. Inc. ............ 373,746 446,000
700 Filipacchi Medias ............... 87,284 202,623
25,000 Golden Books Family
Entertainment Inc.+ ........... 245,000 96,094
8,000 Harcourt General Inc. ........... 368,400 476,000
18,000 Harte-Hanks Communications
Inc. .......................... 199,800 463,500
1,000 Hollinger International Inc. .... 16,175 17,000
4,000 Houghton Mifflin Co. ............ 81,819 128,000
58,000 Independent Newspapers Ltd.,
ORD ........................... 172,446 311,905
10,000 Knight-Ridder Inc. .............. 284,196 550,625
21,000 Lee Enterprises Inc. ............ 419,650 643,125
12,000 McClatchy Newspapers Inc.,
Cl. A ......................... 324,225 415,500
7,000 McGraw-Hill Companies
Inc. .......................... 357,850 570,938
5,000 Media General Inc., Cl. A ....... 141,375 246,250
24,000 Meredith Corp. .................. 306,413 1,126,500
100,000 Nation Multimedia Group ......... 114,444 21,327
100,000 New Straits Times Press
Berhad ........................ 296,714 37,106
125,000 Oriental Press Group ORD ........ 46,315 11,616
10,000 Playboy Enterprises Inc.,
Cl. A+ ........................ 97,125 163,750
110,900 Post Publishing Co. Ltd. ........ 238,915 107,746
9,000 PRIMEDIA Inc.+ .................. 90,000 122,063
26,000 Pulitzer Publishing Co. ......... 819,755 2,320,500
9,000 Reader's Digest Association Inc.,
Cl. A ......................... 204,575 244,125
18,000 Reader's Digest Association Inc.,
Cl. B ......................... 471,553 488,250
38,280 Singapore Press Holdings Ltd. ... 458,532 256,715
250,000 South China Morning Post
Holdings ORD .................. 172,312 120,192
300 SPIR Communication .............. 23,329 24,410
20,000 Thomas Nelson Inc. .............. 214,063 267,500
4,500 Times Mirror Co., Cl. A ......... 106,131 282,938
50,000 Times Publishing Ltd. ........... 126,892 83,086
800 Tribune Co. ..................... 56,609 55,050
10,000 United News & Media plc,
ADR ........................... 249,375 284,531
200 Wiley (John) & Sons Inc.,
Cl. A ......................... 5,693 12,350
1,000 Wolters Kluwer NV ............... 90,625 137,358
1,000 Ziff-Davis Inc. ................. 16,363 13,875
------------ ------------
7,885,911 11,887,366
------------ ------------
Entertainment Production - 9.9%
300,000 Ascent Entertainment
Group Inc.+ ................... 3,550,639 3,337,500
82,500 BET Holdings Inc., Cl. A+ ....... 4,390,850 5,192,334
2,523 EMI Group plc ................... 12,685 22,073
10,000 EMI Group plc, Sponsored
ADR ........................... 157,997 180,000
7,000 Grammy Entertainment
plc+ .......................... 67,723 16,256
3,500 Granada Group plc ............... 35,566 64,400
7,000 GTECH Holdings Corp.+ ........... 118,256 235,813
1,000 Harvey Entertainment Co.+ ....... 12,858 9,000
1,000 Livent Inc. ..................... 9,550 8,750
300 NRJ SA .......................... 22,694 47,836
3,877 People's Choice TV Corp.+ ....... 18,476 4,846
6,000 Princeton Video Image, Inc.+ .... 42,000 27,750
100,000 Shaw Brothers (Hong Kong)
Ltd. .......................... 145,929 60,661
30,000 Spelling Entertainment Group
Inc.+ ......................... 239,930 281,250
See accompanying notes to financial statements.
15
<PAGE>
The Gabelli Global Multimedia Trust Inc.
Portfolio of Investments (Continued) -- June 30, 1998 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- ------
COPYRIGHT/CREATIVITY COMPANIES (Continued)
Entertainment Production (Continued)
165,000 Tele-Communications Inc./
Liberty Media Group,
Cl. A+ ........................ $ 1,859,500 $ 6,404,063
4,000 Tring International Group+ ...... 3,326 434
------------ ------------
10,687,979 15,892,966
------------ ------------
Farming and Agriculture - 0.3%
5,000 Dekalb Genetics Corp.,
Cl. B ......................... 473,028 473,125
------------ ------------
Global Media and Entertainment - 10.3%
1,000 Boston Celtics Ltd. ............. 20,650 16,938
65,000 Grupo Televisa SA, GDR+ ......... 1,471,892 2,445,625
22,000 Havas, Sponsored ADR ............ 436,125 445,500
21,000 News Corp. Ltd., ADS ............ 413,278 674,625
30,000 PolyGram NV ..................... 1,630,093 1,526,250
38,000 Seagram Co. Ltd. ................ 1,311,162 1,555,625
1,000 Sony Corp., ADR ................. 54,114 86,063
32,000 Time Warner Inc. ................ 1,167,525 2,734,000
115,000 Viacom Inc., Cl. A+ ............. 3,729,278 6,727,500
3,000 Walt Disney Co. ................. 205,313 315,188
------------ ------------
10,439,430 16,527,314
------------ ------------
Hotels and Gaming - 1.6%
5,000 Churchhill Downs Inc. ........... 102,432 207,500
1,000 Gaming Lottery Corp.+ ........... 4,728 594
42,000 Gaylord Entertainment Co.,
Cl. A ......................... 1,108,306 1,354,500
60,847 Ladbroke Group plc .............. 173,125 334,252
20,500 MGM Grand Inc. .................. 669,719 647,031
1,000 Powerhouse Technologies
Inc.+ ......................... 11,750 9,813
2,500 Quintel Entertainment Inc.+ ..... 12,500 9,688
------------ ------------
2,082,560 2,563,378
------------ ------------
Information Publishing - 0.2%
4,000 Berlitz International Inc.+ ..... 80,606 108,000
25,000 Data Broadcasting Corp.+ ........ 139,756 159,375
1,000 Dun & Bradstreet Corp. .......... 28,747 36,125
500 Scholastic Corp.+ ............... 16,500 19,938
------------ ------------
265,609 323,438
------------ ------------
Software - 0.4%
1,000 Activision Inc.+ ................ 6,415 10,313
1,000 EarthLink Network Inc.+ ......... 45,250 76,750
500 Electronic Arts Inc.+ ........... 11,176 27,000
1,000 Excaliber Technologies
Corp.+ ........................ 7,790 11,000
8,000 H&R Block Inc. .................. 235,112 337,000
1,000 Intel Corp. ..................... 32,500 74,125
1,000 Microsoft Corp.+ ................ 15,510 108,375
500 Mobius Management
Systems ....................... 8,938 7,500
200 Netscape Communications
Corp.+ ........................ 2,800 5,413
100 Pixar Inc.+ ..................... 2,200 6,038
2,000 Registry Magic Inc. ............. 14,500 15,750
------------ ------------
382,191 679,264
------------ ------------
TOTAL COPYRIGHT/CREATIVITY
COMPANIES ..................................... 35,473,387 54,123,877
------------ ------------
DISTRIBUTION COMPANIES - 42.9%
Broadcasting - 8.1%
70,000 Ackerley Group Inc. ............. 385,688 1,470,000
5,550 American Tower Systems,
Cl. A ......................... 82,101 138,403
1,000 Audiofina ....................... 54,505 40,995
3,000 Baton Broadcasting Inc.+ ........ 19,240 43,627
1,000 BHC Communications Inc.,
Cl. A ......................... 89,925 140,313
3,000 British Sky Broadcasting
Group, Sponsored ADR .......... 72,400 127,875
18,000 CanWest Global
Communications Corp. .......... 92,012 293,568
2,000 Carlton Communications plc,
Sponsored ADR ................. 63,625 90,000
1,500 Chancellor Media Corp.,
Cl. A+ ........................ 10,736 74,484
28,077 Chris-Craft Industries Inc. ..... 1,008,397 1,535,460
1,000 Clear Channel
Communications Inc.+ .......... 14,122 109,125
9,000 Cox Radio Inc., Cl. A+ .......... 166,500 389,250
500 Emmis Broadcasting Corp.,
Cl. A+ ........................ 10,489 23,906
200 Europe 1 Communication+ ......... 44,101 45,652
16,320 Fisher Companies Inc. ........... 821,610 1,166,880
2,500 General Electric Co. ............ 64,688 227,500
8,750 Gray Communications
Systems Inc. .................. 172,625 283,281
40,000 Gray Communications
Systems Inc., Cl. B ........... 810,063 1,235,000
7,000 Groupe AB SA, ADR+ .............. 42,850 39,375
See accompanying notes to financial statements.
16
<PAGE>
The Gabelli Global Multimedia Trust Inc.
Portfolio of Investments (Continued) -- June 30, 1998 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- ------
DISTRIBUTION COMPANIES (Continued)
Broadcasting (Continued)
5,000 Grupo Radio Centro,
SA de CV, ADR ................. $ 42,938 $ 55,625
500 Jacor Communications Inc.+ ...... 6,958 29,500
15,000 King World Productions,
Inc.+ ......................... 404,688 382,500
700 LaGardere Groupe ................ 12,878 29,143
10,000 Liberty Corp. ................... 500,469 503,125
400 Metropole TV M6 SA .............. 35,208 66,955
1,100 Nippon Television
Broadcasting .................. 323,764 319,809
4,000 NTN Communications Inc.+ ........ 23,200 4,000
5,000 Pathe SA ........................ 961,578 980,035
60,000 Paxson Communications
Corp., Cl. A+ ................. 502,195 727,500
1,220 SAGA Communications Inc.,
Cl. A+ ........................ 9,710 17,080
2,000 Scandanavian Broadcasting
System SA+ .................... 42,023 60,375
43,000 Sistem Televisyen Malaysia
Berhad ........................ 41,566 7,045
5,000 Telemundo Group Inc.+ ........... 208,019 212,813
50,000 Television Broadcasting Ltd.
ORD ........................... 187,673 132,292
2,500 Television Francaise 1 .......... 249,649 387,465
40,000 Tokyo Broadcasting System ....... 655,630 448,396
1,000 TV Azteca, SA de C.V.+ .......... 18,250 10,813
10,000 United Television Inc. .......... 763,979 1,145,000
------------ ------------
9,016,052 12,994,165
------------ ------------
Cable - 10.0%
8,750 Cable Michigan Inc.+ ............ 91,757 341,250
55,000 Cablevision Systems Corp.,
Cl. A+ ........................ 953,908 4,592,500
25,000 Century Communications
Corp., Cl. A+ ................. 190,788 468,750
5,000 Comcast Corp., Cl. A ............ 72,500 198,750
1,000 Comcast Corp., Cl. A Special .... 15,613 40,594
4,000 Comcast U.K. Cable Partners
Ltd., Cl. A+ .................. 53,613 62,750
2,000 General Cable plc, ADR+ ......... 29,000 38,750
57,000 MediaOne Group, Inc. ............ 1,041,205 2,504,438
5,000 Mercom Inc. ..................... 43,375 55,000
3,000 NTL Inc.+ ....................... 62,325 160,500
60,000 Rogers Communications Inc.,
Cl. B+ ........................ 397,155 540,000
100,000 TCI Ventures Group+ ............. 735,350 2,006,245
13,000 Telewest Communications plc,
Sponsored ADR+ ................ 200,298 308,750
55,000 Tele-Communications Inc.,
Cl. A+ ........................ 946,855 2,114,067
50,000 Tele-Communications
International Inc., Cl. A+ .... 795,563 1,004,688
95,000 United International Holdings
Inc., Cl. A+ .................. 1,316,164 1,520,000
10,000 Videotron Groupe ................ 94,010 143,726
500 Wireless One Inc.+ .............. 1,704 578
------------ ------------
7,041,183 16,101,336
------------ ------------
Consumer Services - 0.4%
10,000 Allied Domecq plc ............... 98,592 94,004
1,000 Cendant Corp. ................... 18,874 20,875
1,000 Department 56 Inc.+ ............. 17,550 35,500
18,000 N2K Inc.+ ....................... 425,163 353,250
2,000 Travel Services Intl. Inc. ...... 70,955 65,750
------------ ------------
631,134 569,379
------------ ------------
Entertainment Distribution - 1.1%
6,896 AMC Entertainment Inc. .......... 105,738 124,559
22,000 GC Companies Inc.+ .............. 609,163 1,141,250
12,000 Loews Cineplex
Entertainment ................. 165,000 153,750
19,500 Shaw Communications Inc.,
Cl. B, Conv. (Toronto) ........ 122,708 378,988
3,000 TCI Music Inc.+ ................. 23,850 23,438
------------ ------------
1,026,459 1,821,985
------------ ------------
Equipment - 0.6%
2,000 CommScope Inc.+ ................. 29,407 32,375
2,500 L-3 Communications Hldgs
Inc. .......................... 55,000 81,719
6,000 Lucent Technologies Inc. ........ 81,000 499,125
2,000 Northern Telecom Ltd. ........... 34,956 113,500
1,000 Philips Electronics N.V.,
New York ...................... 38,425 85,000
3,000 Scientific-Atlanta Inc. ......... 50,804 76,125
------------ ------------
289,592 887,844
------------ ------------
See accompanying notes to financial statements.
17
<PAGE>
The Gabelli Global Multimedia Trust Inc.
Portfolio of Investments (Continued) -- June 30, 1998 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- ------
DISTRIBUTION COMPANIES (Continued)
Information Services - 0.0%
1,000 Cognizant Corp .................. $ 29,380 $ 63,125
------------ ------------
International Telephone - 7.5%
65,000 BC TELECOM Inc. ................. 1,169,457 2,429,407
35,000 BCE Inc. ........................ 693,375 1,494,060
5,000 BHI Corp. ....................... 78,755 197,500
3,551 Cable & Wireless plc,
Sponsored ADR ................. 78,620 177,550
29,000 Compania de Telecomu-
nicaciones de Chile SA,
Sponsored ADR ................. 527,274 589,063
500 CPT Telefonica del Peru SA,
Sponsored ADR ................. 10,250 10,219
200,000 CPT Telefonica del Peru,
Cl. B ......................... 414,925 411,915
2,000 Deutsche Telekom AG,
ADR+ .......................... 37,780 55,000
2,000 Esprit Telecom Group plc,
ADR+ .......................... 10,330 36,750
1,000 France Telecom SA,
Sponsored ADR+ ................ 34,488 69,563
45,000 GST Telecommunications
Inc.+ ......................... 584,828 649,688
70 Japan Telecom Co., Ltd. ......... 847,718 551,819
500 Matav Rt., Sponsored ADR+ ....... 9,650 14,719
10 Nippon Telegraph &
Telephone Corp. ............... 81,575 83,171
8,000 Philippine Long Distance
Telephone Co. ................. 228,821 181,000
4,000 PT Indosat ADR .................. 89,373 44,500
1,000 PT Telekomunikasi
Indonesia ..................... 20,185 5,813
6,000 Quebec-Telephone ................ 44,083 79,100
1,000 Rostelecom, Sponsored
ADR ........................... 20,925 13,375
3,600 Telecom Argentina Stet-
France Telecom SA,
Sponsored ADR ................. 69,082 107,325
2,000 Telecom Corp. of New
Zealand Ltd., ADR ............. 62,150 65,500
16,500 Telecomunicacoes Brasileiras
SA (Telebras), Sponsored
ADR ........................... 498,182 1,801,591
3,000 Telefonica de Argentina SA,
Sponsored ADR ................. 64,387 97,313
16,000 Telefonica de Espana,
Sponsored ADR ................. 774,598 2,225,000
14,000 Telefonos De Mexico SA,
Cl. L, ADR .................... 458,967 672,875
600 Telstra Corporation Ltd.,
ADR+ .......................... 19,666 30,450
------------ ------------
6,929,444 12,094,266
------------ ------------
Satellite - 0.5%
300 Asia Satellite Telecommunications
Holdings Ltd., Sponsored
ADR+ .......................... 5,693 4,913
5,000 EchoStar Communications Corp.,
Cl. A+ ........................ 130,817 120,313
1,000 General Motors Corp.,
Cl. H ......................... 22,264 47,125
4,000 Globalstar Telecom-
munications+ .................. 13,663 108,000
70,000 TCI Satellite Entertainment
Inc., Cl. A+ .................. 650,173 411,250
8,000 U.S. Satellite Broadcasting
Co.+ .......................... 90,909 93,500
------------ ------------
913,519 785,101
------------ ------------
Telecommunications - 2.6%
1,000 Allegiance Telecom Inc. ......... 15,000 15,000
4,000 Bruncor Inc. .................... 34,068 70,674
1,500 Electric Lightwave Inc.,
Cl. A+ ........................ 19,875 16,594
40,000 Frontier Corp ................... 741,488 1,260,000
1,306 Hellenic Telecommunication
Organization SA (OTE) ......... 18,170 33,474
7,000 Metromedia International
Group Inc.+ ................... 74,775 83,563
1,000 MIDCOM Communications
Inc.+ ......................... 9,000 20
3,000 NewTel Enterprises Ltd. ......... 45,184 76,654
52,550 RCN Corporation+ ................ 472,195 1,018,156
20,000 Southern New England
Telecommunications
Corp. ......................... 793,365 1,310,000
3,000 Telegroup Inc.+ ................. 30,000 27,750
12,000 Tel-Save Holdings Inc.+ ......... 55,770 177,000
1,000 USN Communications Inc. ......... 15,484 8,875
------------ ------------
2,324,374 4,097,760
------------ ------------
See accompanying notes to financial statements.
18
<PAGE>
The Gabelli Global Multimedia Trust Inc.
Portfolio of Investments (Continued) -- June 30, 1998 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- ------
DISTRIBUTION COMPANIES (Continued)
Telecommunications - Long Distance - 1.4%
20,000 AT&T Corp. ...................... $ 880,224 $ 1,142,500
8,000 MCI Communications Corp. ........ 292,013 465,000
7,000 Sprint Corp. .................... 168,313 493,500
2,000 STARTEC Global
Communications Corp.+ ......... 24,000 23,000
7,000 Viatel Inc. ..................... 66,500 119,000
------------ ------------
1,431,050 2,243,000
------------ ------------
U.S. Regional Operators - 1.2%
1,000 Cincinnati Bell Inc. ............ 14,629 28,625
46,725 Citizens Utilities Co.,
Cl. B+ ........................ 464,619 449,728
22,000 Commonwealth Telephone
Enterprises Inc.+ ............. 255,089 577,500
11,000 GTE Corp. ....................... 377,300 611,875
1,462 SBC Communications Inc. ......... 26,800 58,480
800 Teleport Communications
Group Inc., Cl. A+ ............ 12,800 43,400
2,557 US WEST Communications
Group+ ........................ 64,306 120,163
------------ ------------
1,215,543 1,889,771
------------ ------------
Wireless Communications - 9.5%
80,000 Aerial Communications
Inc.+ ......................... 544,360 500,000
2,000 AirTouch Communications
Inc.+ ......................... 48,100 116,875
5,000 BCE Mobile Communications
Inc.+ ......................... 163,511 129,965
38,000 Cable & Wireless Commu-
nications plc, ADR ............ 841,650 1,398,875
1,000 CAI Wireless Systems
Inc.+ ......................... 1,125 120
40,000 Centennial Cellular Corp.,
Cl. A+ ........................ 757,423 1,492,500
33,000 Century Telephone
Enterprises Inc. .............. 681,850 1,513,875
40,000 COMSAT Corp. .................... 809,110 1,132,500
10,000 CoreComm Inc.+ .................. 225,808 262,500
24,000 Iridium World
Communications Ltd. ........... 479,125 1,276,501
10,008 Loral Space &
Communications Ltd.+ .......... 137,742 282,726
8,447 NEXTEL Communications
Inc., Cl. A+ .................. 94,069 210,119
3,000 Omnipoint Corp.+ ................ 23,330 68,813
1,952 Price Communications
Corp.+ ........................ 7,671 29,890
1,000 Qualcomm Inc.+ .................. 41,625 56,188
31,000 Rogers Cantel Mobile
Communications Inc.,
Cl. B+ ........................ 532,870 387,500
2,000 Rural Cellular Corp.,
Cl. A+ ........................ 20,250 31,250
5,000 SK Telecom Co. Ltd., ADR ........ 34,000 27,813
300,000 Telecom Italia Mobile SpA ....... 365,095 1,835,374
68,000 Telephone and Data
Systems Inc. .................. 3,023,430 2,677,500
8,000 Teligent Inc., Cl. A+ ........... 179,200 235,500
30,000 3607 Communications Co.+ ........ 859,809 960,000
18,000 Total Access Communications
plc ........................... 113,625 19,260
6,000 U.S. Cellular Corp.+ ............ 175,264 184,500
500 Vimpel-Communications,
Sponsored ADR+ ................ 19,556 22,375
10,000 WinStar Communications
Inc.+ ......................... 140,200 429,375
------------ ------------
10,319,798 15,281,894
------------ ------------
Utilities - 0.0%
2,000 Orange & Rockland
Utilities ..................... 106,908 107,375
------------ ------------
TOTAL DISTRIBUTION
COMPANIES ..................................... 41,274,436 68,937,001
------------ ------------
TOTAL COMMON
STOCKS ........................................ 76,747,823 123,060,878
------------ ------------
PREFERRED STOCKS - 3.1%
Broadcasting - 0.3%
8,000 Granite Broadcasting Corp.,
Pfd. .......................... 452,816 482,000
------------ ------------
Global Media and Entertainment - 1.1%
62,765 News Corp. Ltd., Sponsored
ADR Preference Shares ......... 986,187 1,773,111
------------ ------------
U.S. Regional Operators - 1.2%
40,000 Citizens Utilities Co., 5.00%,
Pfd. .......................... 1,917,673 1,890,000
------------ ------------
See accompanying notes to financial statements.
19
<PAGE>
The Gabelli Global Multimedia Trust Inc.
Portfolio of Investments (Continued) -- June 30, 1998 (Unaudited)
================================================================================
Market
Shares Cost Value
------ ---- ------
PREFERRED STOCKS (Continued)
Wireless Communications - 0.5%
13,000 AirTouch Communications
Inc., Series B, 6.00%, Pfd. ... $ 350,933 $ 627,250
3,000 AirTouch Communications
Inc., Series C, 4.25%, Pfd. ... 133,293 247,500
------------ ------------
484,226 874,750
------------ ------------
TOTAL PREFERRED STOCKS .......................... 3,840,902 5,019,861
------------ ------------
COMMON STOCK WARRANTS AND RIGHTS - 0.0%
200 Havas Advertising
Warrants ...................... 0 1,125
10,000 Oriental Press Group, Warrants,
expires 10/02/1998+ ........... 0 13
------------ ------------
TOTAL COMMON STOCK
WARRANTS AND RIGHTS ........................... 0 1,138
------------ ------------
Principal
Amount
------
CORPORATE BONDS - 0.4%
Cable - 0.2%
$ 300,000 Tele-Communications
International Inc., Conv.
Sub. Deb.,
4.50% due 02/15/06 ........... 301,988 269,625
100,000 Rogers Communications Inc.,
Conv. Sub. Deb.,
7.5% due 09/01/99 ............. 68,807 67,786
------------ ------------
370,795 337,411
------------ ------------
Global Media and Entertainment - 0.1%
100,000 Viacom Inc., Sub. Deb.,
8.00% due 07/07/06 ............ 87,661 103,250
------------ ------------
Equipment - 0.1%
90,000 Trans-Lux Corp., Conv.
Deb., 7.50% due 12/01/06 ...... 90,000 96,188
------------ ------------
Software - 0.0%
50,000 BBN Corp., Conv. Sub.
Deb., 6.00% due
04/01/12 (b) ................. 49,386 48,500
------------ ------------
TOTAL CORPORATE BONDS ........................... 597,842 585,349
------------ ------------
U.S. TREASURY BILLS - 19.8%
$32,123,000 4.64% to 4.97% ++ due
08/06/98 to 09/17/98 .......... $ 31,944,121 $ 31,944,121
------------ ------------
TOTAL INVESTMENTS - 100% ........................ $113,130,688 160,611,360
============ ============
OTHER ASSETS, LIABILITIES AND
LIQUIDATION VALUE OF
CUMULATIVE PREFERRED
STOCK - (19.4%) ............................... (31,199,219)
------------
NET ASSETS - COMMON STOCK
(10,875,115 common shares
outstanding) - 80.6% .......................... 129,412,141
------------
NET ASSETS - CUMULATIVE
PREFERRED STOCK
(1,250,000 preferred shares
outstanding) - 19.4% .......................... 31,250,000
------------
TOTAL NET ASSETS - 100.0%. ...................... $160,662,141
============
NET ASSET VALUE PER COMMON SHARE
($129,398,391 / 10,875,115
shares outstanding) ........................... $11.90
======
SCHEDULE OF FORWARD FOREIGN EXCHANGE
CONTRACTS
Unrealized
Expiration Appreciation/
Date (Depreciation)
---------- -------------
Forward Foreign Contracts to Deliver
1,113,248 U.S. Dollars in exchange
for FRF 185,202 ....................... 07/31/98 $ (702)
3,300,000 U.S. Dollars in exchange
for HKD 419,794 ....................... 08/26/98 3,911
------------
Total Net Unrealized Appreciation on
Forward Foreign Exchange Contracts .......................... $ 3,209
============
- ----------
For Federal income tax purposes:
Aggregate cost .................................... $113,130,688
============
Gross unrealized appreciation ..................... $ 50,878,955
Gross unrealized depreciation ..................... (3,398,283)
------------
Net unrealized appreciation ....................... $ 47,480,672
============
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADS -- American Depositary Share
GDR -- Global Depositary Receipt
HKD -- Hong Kong Dollars
FRF -- French Francs
ORD -- Ordinary Share
% of
Market Market
Geographic Diversification Value Value
- -------------------------- -------- -------------
United States .............................. 79.6% $127,887,064
Europe ..................................... 7.9 12,692,309
Canada ..................................... 5.2 8,354,431
Latin America .............................. 4.0 6,426,486
Asia/Pacific Rim ........................... 3.3 5,301,851
------- ------------
Net Assets ............................... 100.0% $160,662,141
======= ============
See accompanying notes to financial statements.
20
<PAGE>
The Gabelli Global Multimedia Trust Inc.
Statement of Assets and Liabilities
June 30, 1998 (Unaudited)
================================================================================
Assets:
Investments at value (Cost $113,130,688) ............... $ 160,611,360
Cash ................................................... 11,115
Foreign currency, at value (Cost $279,869) ............. 284,303
Net unrealized appreciation on forward
foreign exchange contracts ........................... 3,209
Dividends and interest receivable ...................... 123,758
Unamortized organization costs ......................... 101,903
Receivable for investments sold ........................ 1,915,515
-------------
Total assets ......................................... 163,051,163
-------------
Liabilities:
Payable for investments purchased ...................... 1,776,806
Payable for investment advisory fees ................... 407,490
Accrued expenses and other payables .................... 204,726
-------------
Total liabilities .................................... 2,389,022
-------------
Net assets applicable to
10,875,115 shares outstanding ....................... $ 160,662,141
=============
Net Assets Consist of:
Cumulative Preferred Stock (7.92%, $25 liqui-
dation value, $0.001 par value, 2,000,000
shares authorized with 1,250,000 shares
issued and outstanding) ............................. $ 31,250,000
Capital stock, at par value ............................ 10,875
Additional paid-in capital ............................. 76,488,427
Accumulated net realized gain on investments,
futures contracts and foreign currency
transactions ......................................... 6,629,141
Distributions in excess of net realized gain
on investments ....................................... (1,200,565)
Net unrealized appreciation on investments,
futures contracts and foreign currency
transactions ......................................... 47,484,263
-------------
Total Net Assets ..................................... $ 160,662,141
=============
Net Asset Value per Common Share
($129,398,391 / 10,875,115 shares
outstanding) .......................................... $ 11.90
=============
Statement of Operations
For the Six Months Ended June 30, 1998 (Unaudited)
================================================================================
Investment Income:
Interest ................................................. $ 839,508
Dividends (net of foreign taxes of $22,326) .............. 606,340
-----------
Total Investment Income ................................ 1,445,848
-----------
Expenses:
Investment advisory fees ................................. 749,539
Shareholder communications expenses ...................... 142,250
Legal and audit fees ..................................... 243,866
Shareholder services fees ................................ 123,994
Amortization of organization costs ....................... 35,030
Payroll .................................................. 26,706
Directors' fees .......................................... 33,073
Miscellaneous expenses ................................... 56,509
-----------
Total expenses ......................................... 1,410,967
-----------
Net Investment income ........................................ 34,881
-----------
Net Realized and Unrealized Gain
on Investments:
Net realized gain on investments, futures
contracts and foreign currency transactions ............ 6,708,437
Net change in unrealized appreciation on
investments, futures contracts and foreign
currency transactions .................................. 16,032,580
-----------
Net realized and unrealized gain on
investments, futures contracts and
foreign currency transactions .............................. 22,741,017
-----------
Net increase in net assets resulting from
operations ............................................... $22,775,898
===========
See accompanying notes to financial statements.
21
<PAGE>
The Gabelli Global Multimedia Trust Inc.
Statement of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
Six Months
Ended 6/30/98 Year Ended
(Unaudited) 12/31/97
- ------------- -------------
<S>
<C> <C>
Operations:
Net investment income
............................................................... $ 34,881
$ 75,107
Net realized gain on investments, futures contracts and foreign currency
transactions 6,708,437 10,661,424
Net change in unrealized appreciation of investments, futures contracts
and foreign currency transactions
................................................. 16,032,580
21,180,185
- ------------- -------------
Net increase in net assets resulting from operations
................................ 22,775,898 31,916,716
Distributions to common stock shareholders:
Net investment income
............................................................... --
(64,467)
Net realized gain on investment transactions
........................................ -- (9,275,505)
In excess of net realized gain on investments
....................................... -- (29,346)
- ------------- -------------
Total distributions to common stock shareholders
.................................. -- (9,369,318)
- ------------- -------------
Distributions to preferred stock shareholders:
Net investment income
............................................................... (1,235,446)
(9,706)
Net realized gain on investment transactions
........................................ -- (1,385,919)
- ------------- -------------
Total distributions to preferred stock shareholders
............................... (1,235,446) (1,395,625)
- ------------- -------------
Net decrease in net assets from common stock transactions
............................... -- (2,033,650)
Net proceeds from issuance of preferred stock
........................................... -- 29,836,000
- ------------- -------------
Capital Share Transactions:
Net increase in net assets from capital share transactions
.......................... (1,294,378) --
- ------------- -------------
Net increase in net assets
........................................................ 20,246,074
48,954,123
Net Assets:
Beginning of period
.................................................................
140,416,067 91,461,944
- ------------- -------------
End of period
....................................................................... $
160,662,141 $ 140,416,067
============= =============
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
The Gabelli Global Multimedia Trust Inc.
Notes to Financial Statements (Unaudited)
================================================================================
1. Description. 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.
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 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. If no asked prices
are quoted on such day, then the security is valued at the closing bid price on
such day. If no bid or asked prices are quoted on that day, then the security is
valued by such method as the Board of Directors shall determine in good faith to
reflect its fair market value. Other over-the-counter securities are valued at
the mean of the current bid and asked prices as reported by the National
Association of Securities Dealers Automated Quotations, Inc. ("Nasdaq"), or
other comparable sources as the Board of Directors deems appropriate to reflect
their fair value. If no asked prices are quoted on such day, then the security
is valued at the closing bid price on that day. Portfolio securities which are
traded on more than one national exchange or market 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 on such foreign exchange immediately prior to the close of the
New York Stock Exchange, Inc. ("NYSE"). 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 60 days or fewer are
valued at amortized cost, unless the Board of Directors determines that such
valuation does not constitute fair value. Short term instruments having a
greater maturity are valued at the highest bid price obtained from a dealer
maintaining an active market in those securities.
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 Adviser, 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.
23
<PAGE>
The Gabelli Global Multimedia Trust Inc.
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
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.
Forward Foreign Exchange Contracts. The Multimedia Trust may engage in
forward foreign currency exchange contracts in an effort to reduce the level of
volatility caused by changes in foreign currency exchange rates. The Multimedia
Trust may use forward foreign exchange contracts to facilitate transactions in
foreign securities and to manage Multimedia Trust's currency exposure. Forward
foreign exchange contracts are valued at the forward exchange rate and are
marked-to-market daily. The change in market value is included in unrealized
appreciation/depreciation on investments. 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 exchange contracts does not eliminate
fluctuations in the underlying prices of the Multimedia Trust's securities, but
it does establish a rate of exchange that can be achieved in the future.
Although forward foreign exchange contracts limit the risk of loss due to a
decline in the value of the hedged currency, they also limit any potential gain
that might result should the value of the currency increase. In addition, the
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 and losses not relating to securities which
result from changes in foreign currency exchange rates have been included in
unrealized appreciation/depreciation on investments. 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.
24
<PAGE>
The Gabelli Global Multimedia Trust Inc.
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
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, timing differences and differing
characterization of distributions made by the Multimedia Trust. Distributions to
shareholders of 7.92% Cumulative Preferred Stock ("Preferred Stock"), are
accrued on a daily basis and are determined as described in note 5.
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.
3. 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. The Adviser has
agreed to reduce the management fee on the incremental assets attributable to
the Preferred Stock if the total return of the net asset value of the common
shares of the Multimedia Trust, including distributions and advisory fee subject
to reduction, does not exceed the stated dividend rate of the Preferred Stock.
For the six months ended June 30, 1998, total return of the net asset value of
the common shares of the Multimedia Trust exceeded the stated dividend rate.
During the six months ended June 30, 1998, Gabelli & Company, Inc. ("Gabelli &
Company") and its affiliates received $12,701 in brokerage commissions as a
result of executing agency transactions in portfolio securities on behalf of the
Multimedia Trust.
4. Portfolio Securities. Cost of purchases and proceeds from sales of
securities, other than short-term securities, aggregated $20,660,648 and
$34,263,432, respectively, for the six months ended June 30, 1998.
5. Capital. The Board of Directors of the Multimedia Trust has authorized the
repurchase of up to 1,000,000 shares of the Multimedia Trust's outstanding
common stock. For the six months ended June 30, 1998, the Multimedia Trust
repurchased 137,300 shares of its common stock in the open market at a cost of
$1,294,379 and an average discount of approximately 13.59% from its net asset
value. All shares repurchased have been retired.
Common stock transactions were as follows:
<TABLE>
<CAPTION>
Six months ended
Year ended
June 30, 1998
December 31, 1997
------------------------ --
- ---------------------
Shares Amount
Shares Amount
------ ------ -
- ----- ------
<S> <C> <C>
<C> <C>
Shares repurchased by the Multimedia Trust (137,300) $(1,294,379)
(284,133) $(2,033,650)
-------- ----------- --
- ------ -----------
Net decrease ............................. (137,300) $(1,294,379)
(284,133) $(2,033,650)
-------- ----------- --
- ------ -----------
</TABLE>
25
<PAGE>
The Gabelli Global Multimedia Trust Inc.
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
The Multimedia Trust's Articles of Incorporation authorize the issuance of up to
2,000,000 shares of $0.001 par value preferred stock. On June 4, 1997, the
Multimedia Trust received net proceeds of $29,836,000 (after offering costs and
underwriting discounts of $1,414,000) from the public offering of 1,250,000
shares of Preferred Stock. The Preferred Stock is senior to the common stock and
results in the financial leveraging of the common stock. Such leveraging tends
to magnify both the risks and opportunities to Common Shareholders. Dividends on
shares of the Preferred Stock are cumulative. The Multimedia Trust is required
to meet certain asset coverage tests with respect to the Preferred Stock. If the
Multimedia Trust fails to meet these requirements and does not correct such
failure, the Multimedia Trust may be required to redeem, in part or in full, the
Preferred Stock at a redemption price of $25.00 per share plus an amount equal
to the accumulated and unpaid dividends whether or not declared on such shares
in order to meet these requirements. Additionally, failure to meet the foregoing
asset requirements could restrict the Multimedia Trust's ability to pay
dividends to Common Shareholders and could lead to sales of portfolio securities
at inopportune times. Commencing June 1, 2002 and thereafter, the Multimedia
Trust, at its option, may redeem the Preferred Stock in whole or in part at the
redemption price. At June 30, 1998, 1,250,000 shares of the Preferred Stock were
outstanding at the fixed dividend rate of 7.92% per share and accrued dividends
amounted to $13,750. The income received on the Multimedia Trust's assets may
vary in a manner unrelated to the fixed rate, which could have either a
beneficial or detrimental impact on net investment income and gains available to
Common Shareholders.
The holders of Preferred Stock have voting rights equivalent to those of the
holders of common stock (one vote per share) and will vote together with holders
of shares of common stock as a single class. In addition, the 1940 Act requires
that, along with approval of the holders of two-thirds of any outstanding common
shares, approval of the holders of a majority of any outstanding preferred
shares, voting separately as a class, would be required to (a) adopt any plan of
reorganization that would adversely affect the Preferred Stock, and (b) take any
action requiring a vote of security holders, including, among other things,
changes in the Trust's subclassification as a closed-end investment company or
changes in its fundamental investment restrictions.
6. 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 broad range of investments.
7. Litigation. Since on or about September 4, 1997, the Multimedia Trust and its
Directors have been named as defendants in three shareholder lawsuits seeking
class action status and one derivative action. These actions allege that the
Multimedia Trust's proxy statement used in connection with the 1997 Annual
Meeting of Shareholders failed to disclose the full ramifications of a vote in
favor of the elimination of the Multimedia Trust's investment restriction in
respect of senior securities. The Multimedia Trust and the Directors intend to
vigorously defend these claims which seek, among other things, rescission of the
shareholder vote and rescission of the subsequent issuance of preferred stock by
the Multimedia Trust or unspecified damages. At the 1998 Annual Shareholder
Meeting, the shareholders reaffirmed their earlier decision to eliminate the
investment restrictions with respect to senior securities. On July 20, 1998, the
Court denied plaintiffs' motions for class action certification on the grounds
of mootness. No provision has been made in the financial statements of the
Multimedia Trust with respect to these claims.
26
<PAGE>
The Gabelli Global Multimedia Trust Inc.
Financial Highlights
================================================================================
Selected data for a share ot capital stock outstanding throughout each period.
<TABLE>
<CAPTION>
Six Months Ended
Year Ended December 31,
June 30, 1998 --------
- ---------------------------------------------
(Unaudited) 1997
1996 1995 1994*
-------- --------
- -------- -------- --------
<S> <C> <C>
<C> <C> <C>
Operating Performance
Net asset value, beginning of period ................ $ 9.91 $ 8.10
$ 7.81 $ 7.51 $ 7.50
-------- --------
- -------- -------- --------
Net investment income ............................... 0.88 0.01
0.01 0.08 0.03
Net realized and unrealizedgain on investments ...... 1.22 2.85
0.63 0.98 0.03
-------- --------
- -------- -------- --------
Total from investment operations .................... 2.10 2.86
0.64 1.06 0.06
-------- --------
- -------- -------- --------
Increase (decrease)in net asset value from
share transactions ................................ -- 0.06
0.02 (0.46) --
Offering expenses charged to capital surplus ........ --
(0.13) -- (0.05) --
Distributions to common stock shareholders from:
Net investment income ............................... --
(0.01) (0.01) (0.08) (0.03)
Net realized gains .................................. --
(0.84) (0.36) (0.17) --
Distributions in excess of net investment income
and/or net realized gains ......................... --
(0.00)(a) (0.00)(a) (0.00)(a) (0.01)
Paid-in capital ..................................... -- --
- -- -- (0.01)
Distributions to preferred stock shareholders from:
Net investment income ............................... (0.11)
(0.00) -- -- --
Net realized gains .................................. 0.00
(0.13) -- -- --
-------- --------
- -------- -------- --------
Total distributions ................................. (0.11)
(0.98) (0.37) (0.25) (0.05)
-------- --------
- -------- -------- --------
Net asset value, end of period ...................... $ 11.90 $ 9.91
$ 8.10 $ 7.81 $ 7.51
======== ========
======== ======== ========
Market value, end of period ......................... $ 10.125 $ 8.750
$ 6.875 $ 6.760 $ 7.375
======== ========
======== ======== ========
Net Asset Value Total Return** ...................... 20.1%
34.4% 9.4% 14.1% 0.8%
======== ========
======== ======== ========
Total Return*** ..................................... 15.7%
39.6% 7.4% 0.4% (7.9)%
======== ========
======== ======== ========
Ratios to average net assets available to common stock
shareholders and supplemental data:
Net assets, end of period (in 000's) ................ $160,662 $140,416
$ 91,462 $ 89,580 $ 64,606
Net assets attributable to common shares,
end of period (in 000's) .......................... 129,412 109,166
91,461 89,580 84,606
Ratio of net investment income to average net assets 0.06%+
0.07% 0.13% 1.24% 3.15%+
Ratio of operating expenses to average net assets (b) 2.35%+
2.09% 1.87% 2.04% 1.74%+
Portfolio turnover rate ............................. 17%
96% 32% 86% 0%
Preferred Stock:
Liquidation value, end of period (in 000's) ......... 31,250 31,250
Total shares outstanding (in 000's) ................. 1,250 1,250
Asset coverage ...................................... 509%
443%
Liquidation preference per share .................... $ 25.00 $ 25.00
Average market value (c) ............................ $ 26.18 $ 25.59
</TABLE>
- ----------
* The Fund commenced operations on November 15, 1994.
** Based on net asset value per share, adjusted for reinvestments of all
distributions and rights offering in 1995, assuming full subscription by
shareholder.
*** Based on market value per share, adjusted for reinvestments of all
distributions and rights offering in 1995.
+ Annualized
(a) Amount represents less than $.005 per share.
(b) Based on assets attributable to common stock. The expense ratio based on
total net assets would be 1.88%.
(c) Based on weekly prices.
See accompanying notes to financial statements..
27
<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 NYSE 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 NYSE 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.
28
<PAGE>
DIRECTORS AND OFFICERS
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
One Corporate Center, Rye, NY 10580-1434
Directors
Mario J. Gabelli, CFA
Chairman & Chief Investment Officer
Gabelli Funds, Inc.
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, The Bethlehem Corp.
Officers
Mario J. Gabelli, CFA
President & Chief Investment Officer
Bruce N. Alpert
Vice President & Treasurer
Peter W. Latartara
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: 10,875,115
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.
- --------------------------------------------------------------------------------
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]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
Internet: http://www.gabelli.com
e-mail: [email protected]
Semi-Annual Report
June 30, 1998
GGT 06/98
