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THE GABELLI
GLOBAL
MULTIMEDIA
TRUST INC.
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Annual Report
December 31, 1997
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THE GABELLI
GLOBAL
MULTIMEDIA
TRUST INC.
Our cover icon represents the underpinnings of Gabelli. The Teton mountains in
Wyoming represent what we believe in in America -- that creativity, ingenuity,
hard work and a global uniqueness provide enduring values. They also stand out
in an increasingly complex, interconnected and inter-dependent economic world.
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USA
Canada UK
Australia Belgium
Germany Japan
S. Korea Mexico
France Italy
Investment Objective:
The Gabelli Global Multimedia Trust Inc. is a
closed-end, non-diversified management investment
company whose primary objective is long-term growth of
capital, with income as a secondary objective.
This report is printed on recycled paper.
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To Our Shareholders,
Driven by low inflation, low interest rates, good corporate earnings
gains, deals, stock repurchase programs and liquidity (the continuing strong
flow of cash into U.S. equities funds), stocks posted strong gains in 1997.
Until correcting in late December, large cap growth stocks continued to lead the
market parade. However, second tier large cap and mid and small cap indices also
posted solid gains. 1997 was a particularly good year for global multimedia
stocks as was evidenced by the strong returns of The Gabelli Global Multimedia
Trust.
In the fourth quarter of 1997, the U.S. stock market suffered repeated
bouts of the Asian Flu. As we write, the patient remains unstable. While the
International Monetary Fund is ministering to ailing Asian economies, the ever
vigilant Dr. Greenspan is carefully monitoring the U.S. economy's vital signs.
As we head into 1998, we will be making our rounds as well. We are relatively
pleased with the patient's condition, but as always, are on the lookout for any
symptoms of a relapse.
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THE GABELLI
GLOBAL
MULTIMEDIA
TRUST INC.
Investment Performance
For the twelve months ended December 31, 1997, The Gabelli Global
Multimedia Trust Inc.'s ("Multimedia Trust") net asset value per share increased
34.4% to $9.91 on December 31, 1997. This compares to the average 13.0% increase
of the 212 Global Funds tracked by Lipper Analytical Services. For the fourth
quarter ended December 31, 1997, the Fund's net asset value increased 7.7%.
Since its inception on November 15, 1994, the Multimedia Trust's net asset value
has achieved a 68.8% total return after adjusting for the rights offering and
all distributions. This equates to a 18.2% average annual return.
The Multimedia Trust's common shares ended the fourth quarter at $8.75 per
share on the New York Stock Exchange, up 12.1% for the quarter and an increase
of 39.6% for the year. The common shares have increased 39.8% 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.
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Our focus is on free cash flow; earnings before interest, taxes,
depreciation and amortization (EBITDA) minus the capital expenditures necessary
to grow the business. We believe free cash flow is the best barometer of a
business' value. Rising free cash flow often foreshadows net earnings
improvement. We also look at earnings per share trends. Unlike Wall Street's
ubiquitous earnings momentum players, we do not try to forecast earnings with
accounting precision and then trade stocks based on quarterly expectations and
realities. We simply try to position ourselves in front of long-term earnings
uptrends. In addition, we analyze on and off balance sheet assets and
liabilities such as plant and equipment, inventories, receivables, and legal,
environmental and health care issues. We want to know everything and anything
that will add to or detract from our private market value (PMV) estimates.
Finally, we look for a catalyst; something happening in the company's industry
or indigenous to the
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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.
Corporate Governance
One of The Gabelli Global Multimedia Trust's benchmark objectives is to
increase the public market price to equal or exceed the net asset value. That
is, to eliminate the current market discount. 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. 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 December 31, 1997, 464,133 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.
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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 increases demand for the
Gabelli Global Multimedia Trust's shares in the open market. This provides a
willing buyer of fund shares which offsets sales of fund shares.
THE PORTFOLIO OVERVIEW
Global Allocation
The chart at the right represents the Multimedia Trust's holdings by
geographic region as of December 31, 1997. The geographic alloca tion 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.
Equity Mix
The Multimedia Trust's investment premise falls within the context of two
main investment universes: 1) compa nies involved in creativity, as it relates
to the development of intellectual property rights (copyrights); and 2)
companies involved in distribution, as it relates to the delivery of these
copyrights. Additionally, this includes the broad scope of
communications-related services such as basic voice and data.
The chart at the right depicts our equity mix of the copyright/creativity
and distribution companies in our portfolio as of December 31, 1997.
HOLDINGS BY GEOGRAPHIC REGION - 12/31/97
[The following table was depicted as a pie chart in the printed material]
United States 80.6%
Europe 5.9%
Latin America 5.3%
Canada 4.9%
Asia/Pacific Rim 3.3%
[The following table was depicted as a pie chart in the printed material]
Distribution 62.5%
Copyright/Creativity 37.5%
COMMENTARY
1997 Revisited
Year ends are always time for reflection. We look back over the last
twelve months and assess what went right and what went wrong. If I can borrow
from Joseph Heller's classic novel Catch 22, we total up the "feathers in our
cap" and "black eyes". This year, the former vastly outnumber the latter.
Heading our "feathers in cap" list is deals. In 1997, the Trust bid a cheerful
farewell to several portfolio holdings which found new homes under other
corporate roofs. Also prominent on our list are cable television stocks,
Cablevision Systems (CVC - $95.75 - ASE), Tele-Communications, Inc. (TCOMA -
$27.9375 - Nasdaq) and Comcast (CMCSA - $31.875 -Nasdaq), which gained 212.7%,
113.9% and 80.9%, respectively, over the course of the year, thanks to better
than generally expected cash flow growth and Bill Gates' decision that coaxial
cable will be the most effective digital highway into the home. Cable network
stocks, BET Holdings (BTV - $54.625 - NYSE), Liberty Media Group (LBTYA - $36.25
- - Nasdaq) and Home Shopping Network (HSNI - $51.50 - Nasdaq), also soared as
investors acknowledged the escalating value of these established distribution
channels. Telecommunications stocks including AirTouch Communications (ATI -
$41.5625 - NYSE), Sprint (FON - $58.625 - NYSE), and Century Telephone (CTL -
$49.8125 - NYSE) buoyed returns. Radio and television broadcasters such as Baton
Broadcasting (BNB - $17.50 - Toronto), Cox Radio (CXR - $40.25 - NYSE), Clear
Channel Communications (CCU - $79.4375 - NYSE), American Radio Systems (AFM -
$53.3125 - NYSE) and Jacor Communications (JCOR - $53.125 - Nasdaq)
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were high on our leader board, and even Media General (MEG'A - $41.8125 -ASE)
- -- long a disappointment -- rose 38.2%.
Our "black eyes" list had a distinct Asian accent, with Asian companies in
virtually every multimedia category suffering all the severe symptoms of the
Asian Flu. Among our larger holdings, Viacom (VIA - $40.875 - ASE) and Seagrams
(VO - $32.3125 - NYSE) disappointed. We view these two as loaded laggards
capable of making substantial performance contributions in the year ahead.
1998: Will it be Another Good Year for Multimedia Stocks
After several years of under-performing relative to other market sectors,
telecommunications, cable television, cable network, broadcast, and filmed
entertainment producers were among 1997's best performing industry groups. There
are a number of reasons why these sleeping giants awoke. Cable television
operators did a good job protecting market share from satellite broadcasters and
received strong strategic and financial backing from leading technology
companies committed to making CATV companies' coaxial connections into American
homes the primary internet transmission highway. We think the cable television
industry is in terrific shape. The systems are built out. Strong financial
partners are providing the capital for technological upgrades. Cash flows from
traditional cable TV services are trending up and new services are finally
coming on stream. This industry, which Wall Street had written off a year ago,
has a very promising future.
The same can be said for cable networks. Until cable television operators
fully upgrade systems to provide more channel capacity, the existing network
slots will be coveted by programmers and advertisers. We expect to see
continuing consolidation in the industry and strategic partners that can help
maximize cash flow and profits.
Telecommunications stocks probably offer the greatest long term upside
potential. The global deregulation of the telecommunications industry is finally
unfolding. Giant mergers will take place as the big players jockey for domestic
and global market share. WorldCom's acquisition of MCI will not be the last
mega-deal in the industry. We think AT&T will go after someone -GTE? Cable and
Wireless? Smaller companies like Southern New England Telephone and Century
Telephone must also be viewed as potential targets.
Filmed entertainment producers like Time Warner (Warner Brothers), Viacom
(Paramount), and Seagrams (MCA) will be able to premium price entertainment
products as the global expansion in entertainment distribution systems heightens
already strong demand. Broadcasters should also do well as deregulation
continues to spawn consolidation in the industry.
So, we think the short, intermediate and long term prospects for global
multimedia stocks are exciting and continue to believe these industry groups
will be market leaders in 1998 and beyond.
Looking ahead, many of the favorable economic factors that propelled
stocks in recent years will likely remain intact. Asian currency devaluation
will probably diminish inflationary pressure on the U.S. economy and delay the
need for a Federal Reserve interest rate hike. Long-term interest rates should
remain low and perhaps trend lower. Deals, restructurings and share repurchase
programs should continue to buoy stocks.
The wild cards are corporate earnings and investor psychology. In general,
we believe corporate earnings from U.S. operations growth will be relatively
strong--in the 8% to 9% range. However, the non-U.S. portion of earnings is
likely to be as much as 10% lower in 1998. With earnings expectations high
across the board, we suspect we will see more earnings disappointments in the
year ahead. Other issues on our "Bear Watch" include:
o The Asian Flu spreading to Latin American currencies and economies.
o An upswing in wage inflation not offset by productivity gains.
o The emergence of trade barriers that cause a global political backlash.
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o A disruption of oil flow from the Middle East.
o The lame duck administration. Will Greenspan and Rubin retire before
2000 causing a crisis in confidence, if not in the economy?
o Last, but not least, the level of the market -- valuations are high and
the margin of safety relatively low.
How will investors react if any or all of our concerns prove justified? We
will just have to wait and see. Investors have become conditioned to buying on
market dips. That's understandable because it's worked quite well since this
bull market began in 1982. Indeed, we saw the market rebound strongly from the
sharp correction we experienced in late October. However, if the problems in
Asia continue to escalate and we see more widespread earnings disappointments
from U.S. companies, investors may be somewhat more reluctant to view each
market dip as a buying opportunity. Bear in mind, liquidity itself does not
drive markets higher. It is liquidity combined with favorable investor
psychology that fuels a rising market. In other words, if greed turns to fear,
we could see a more substantial and prolonged market slump than we have become
accustomed to.
Our conclusion after all this conjecture is that in 1998, the market will
be up 5% to down 15%. We hope the market surprises on the upside. However, we
believe in the Boy Scout motto: "be prepared". Although value stocks will not
likely be immune to a substantial market correction, we believe they will
perform significantly better than the more fully valued market darlings.
Consequently, we are carefully monitoring the Fund portfolio, trimming or
eliminating holdings that have become more fully priced in this market advance
and adding to positions that offer better fundamental value. We are also being
more patient in re-deploying cash reserves. We doubt the Trust will be able to
duplicate its terrific 1997 returns in what should be a much more challenging
market.
Deals, Deals, Deals
There was an estimated $919 billion in domestic mergers and acquisition
activity during 1997. We do not believe a market correction will materially slow
deal activity in the year ahead. While we will probably continue to see some big
companies being taken over, much of the action will likely be in smaller, family
dominated public companies, as owner/managers take advantage of reduced long
term capital gains taxes to monetize their investments.
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Deals - "Third Wave of Takeovers"
($ Billions)
1993 1994 1995 1996 1997E
---- ---- ---- ---- -----
Worldwide Deals $ 452 $ 575 $ 950 $1,140 $1,600
U.S. Deals 234 340 511 652 919
52% 59% 54% 57% 57%
U.S. Deals $ 234 $ 340 $ 511 $ 652 $ 919
Cash Deals 131 212 254 356 414
56% 62% 50% 55% 45%
Sources: Securities Data Corp, Investment Company Institute, Birinyi Associates.
- --------------------------------------------------------------------------------
And the Winner Is?
Despite giving up a lot of financial weight and reach to its better known
opponent, little Starwood Lodging (HOT - $57.875 - NYSE) upset Hilton Hotels
(HLT - $29.75 - NYSE) in the battle for ITT (ITT - $82.875 - NYSE). The deal,
which is scheduled to close in February 1998, is for 30% in cash and the balance
in Starwood stock -- about an $83 per share value at year end. We sided with the
heavily favored Hilton, primarily due to the higher cash component of its offer.
However, since the cost per share of the Trust's ITT holdings was approximately
$68 per share, we were hardly distraught over the outcome.
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Bottoms Up
We believe the biblical adage "those that are last shall be first" may be
prophetic for several of the laggards in the Trust's portfolio. Seagram stock
declined 16.6% in 1997. Investors appear to think Seagram (VO - $32.3125 - NYSE)
will have a tough time competing against the new Grand Metropolitan/Guiness
combination, which will be a global spirits powerhouse. The fact that 20% of
Seagram's spirits sales are from Asia is another justifiable concern. Problems
duly noted, we see a company that is making some good moves. Seagram bought out
partner Viacom's (VIA - $40.875 - ASE) 50% stake in the USA Network and then
repackaged it in a deal with Home Shopping Network's Barry Diller, a terrific
entertainment programmer. We believe Diller will further energize USA and
Seagram will put the $1.2 billion in cash received in the transaction to good
use by making an acquisition to bolster its spirits business and/or by funding
another round of share repurchases. In fiscal 1997 (June 30) the company
repurchased 11 million shares and thus far in fiscal 1998, it has brought in
another 10 million. Its other businesses are doing relatively well. Under Frank
Biondi's leadership, MCA is rebounding. Tropicana is generating plenty of cash.
Seagram still has 26.8 million shares of Time Warner (TWX - $62.00 - NYSE) worth
approximately $1.65 billion, and over 70 million shares of Home Shopping Network
- -- a stock we like. While Seagram's short term earnings prospects are cloudy, we
believe the stock is trading well below the company's increasing economic value.
A Loaded Laggard
Viacom is the portfolio's most prominent loaded laggard. We think the new
management is making progress at Blockbuster Video and can re-invigorate cash
flows from this troubled division. Simon & Schuster and Prentice Hall are
well-positioned in the educational publishing business, but we believe Viacom
will liquidate these assets. And, the value of the MTV, VH1 and Nickelodeon
cable networks just keeps growing. Chairman Sumner Redstone is a proud and
competitive man --this is a fellow who survived a hotel fire by hanging by his
finger tips from a balcony. We don't think he will give up until he gets Viacom
stock back up to where it belongs.
Mr. Market
Each year, we like to leave our shareholders with something to think
about. This year, we quote verbatim from Professor Benjamin Graham's classic,
The Intelligent Investor.
"Let us close this section with something in the nature of a parable.
Imagine that in some private business you own a small share which cost you
$1,000. One of your partners, named Mr. Market, is very obliging indeed. Every
day he tells you what he thinks your interest is worth and furthermore offers
either to buy you out or to sell you an additional interest on that basis.
Sometimes his idea of value appears plausible and justified by business
developments and prospects as you know them. Often, on the other hand, Mr.
Market lets his enthusiasm or his fears run away with him, and the value he
proposes seems to you a little short of silly."
At Gabelli Funds, we want to take advantage of "Mr. Market's"
generosity--buying shares of businesses he offers us at prices below our
appraisal of their true worth, and selling back to him (or someone else) when
prices equal or exceed true value. It is this simple philosophy that guides us
in good markets and bad.
"The Tigers' Currency Crisis and Six Months to the EMU"
On Wednesday, November 19 we were privileged to have the distinguished
Karl Otto Pohl, the former President of Germany's Bundesbank and a Director of
the Multimedia Trust, give an address on subjects ranging from the currency
crisis in Southeast Asia to the establishment of European Monetary Union. We
wanted to share Mr. Pohl's comments with you.
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Karl Otto Pohl:
Thank you for inviting me to speak to you today. Foremost on everyone's
minds is probably the situation in Southeast Asia and its impact on the rest of
the world. I will begin by confessing that I was surprised by the currency
crisis and attendant economic problems in the region. I suppose most economists
and market observers were accustomed to strong growth in these countries and
overlooked the speculative excesses that had built up in these economies. I was
in Indonesia in July and at that time, the consensus was that Thailand was an
isolated incident and the rest of the Asian Tigers' currencies and economies
were secure. We now know the consensus was quite wrong. The brush fire in
Thailand spread quickly throughout the region destroying currencies and
threatening economic growth in almost every Southeast Asian nation. Currency
speculators played a role in the process, but they are not the cause of the
problems. Over-capacity, over-borrowing and euphoria in the regions' equities
and real estate markets deserve much of the blame with regional currencies' ties
to the strong U.S. dollar also fanning the flames.
Is the crisis now over?
I'm not sure. I am skeptical of the long-term benefits of financial
bailouts by the International Monetary Fund like the $40 billion package put
together to rescue Indonesia, a very small economic entity on the global stage.
This strategy, which is supported by the U.S., may dampen volatility by
discouraging currency speculation and limiting immediate economic disruption.
However, in the long run, I believe problems are better solved by letting the
markets do their job. Burned fingers make people more careful around the fire.
Will the currency crisis in Southeast Asia spread to other parts of the world?
One has to be concerned by the high current account deficit and overvalued
currency in Brazil.
What happens to the Hong Kong Dollar?
Generally, I question the benefit of pegging currencies to the world's
strongest. However, I believe Hong Kong may be justified in doing everything in
its power to defend its currency peg to the U.S. dollar. Failure to preserve the
peg would threaten Hong Kong's position as the region's financial center. As
much as Singapore would like to see its rival's demise, support from mainland
China and Hong Kong's substantial U.S. dollar reserves should allow it to
successfully defend the peg.
The Spillover to Japan
I am less concerned about what may happen to the economies of smaller
countries like Thailand, Indonesia, and Malaysia, than the impact economic
weakness in the Pacific Rim will have on larger economic entities like Korea and
particularly Japan. With substantial over-capacity and a still vulnerable
currency, Korea is in trouble. I have never seen the Japanese so frustrated. The
Japanese government and Japanese corporate leaders are at a loss as to how to
get out of the current economic quagmire. At 0.5%, the discount rate is already
quite low. Dropping short-term rates even lower is not likely to accomplish
much. Budget deficits prevent the government from spending much to bolster the
economy--it is interesting to note that because of a deficit that equals 7% of
GDP, Japan would not qualify for entry into the European Monetary Union. This
summer, I had lunch with the Board of Nippon Life and met with the Chairman of
Fuji Bank. They didn't seem to have any answers. Recently, a major commercial
bank was allowed to go under. Interestingly, the Japanese stock market rallied
on the news. I don't believe any of the Japanese money center banks are in
serious trouble, but I can't fully discount the possibility. Perhaps the
long-term solution for Korea and Japan is to run companies with a view to
increasing share of profits rather than just share of markets.
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For every cloud, there's . . .
The silver lining in the economic cloud hanging over Southeast Asia and
Japan is its favorable impact on inflation in the U.S. and Europe. Over-capacity
and weaker currencies in Asia will translate into more imports and lower prices
in the developed nations. U.S. Federal Reserve Chairman Alan Greenspan has
already acknowledged that the problems in Southeast Asia will likely help
eliminate inflationary pressure in the U.S. economy. I believe Mr. Greenspan is
also concerned that any increase in U.S. rates may have a very negative effect
on worldwide financial markets. So, I doubt we will see the Fed raise short-term
rates for the foreseeable future. As I predicted, long-term U.S. bond rates are
already coming down. Supply/demand factors in the bond market are favorable and
the federal budget deficit is shrinking dramatically. I expect we will see the
30 year Treasury Bond yield dropping below 6% relatively soon and perhaps
trending even lower over the next year. As the yield curve flattens, the Fed may
be more inclined to reduce short-term rates rather than raise them. This, of
course, will be good for U.S. stocks and bonds.
The Status on the EMU
The second subject of great interest to most economists and investors is
European Monetary Union. It is going to happen ahead of schedule in May 1998
with 11 nations including Italy, Spain and Portugal participating. Greece is not
ready and for many reasons, the UK does not wish to join at this time, nor will
Sweden and Denmark. Part of the process of monetary union is to establish fixed
exchange rates for all European currencies--in essence, creating one currency
with many different names. For this to work, Europe must have a single monetary
policy, which will be accomplished by the creation of an independent European
central bank in 1998. For the time being, Germany's Bundesbank will fill that
role. That is why the Bundesbank is pushing up short-term rates in Germany
despite an economy that is just now gaining some momentum and an inflation rate
under 2%. Concurrently, interest rates will have to come down in countries like
Italy, Spain and Ireland despite a robust economy. These changes in short-term
interest rates are being instituted solely to make monetary union easier to
effectuate.
What does European Monetary Union mean for global exchange rates? I
believe the united European currencies will prove to be an alternative to the
U.S. dollar as a strong and stable currency. If I am right, the dollar will
weaken versus the D-mark. I think the U.S. dollar will strengthen to as much as
135-140 against the Japanese Yen. There has been a lot of speculation that
Japanese financial institutions will be forced to abandon the U.S. bond market.
This is not likely to happen. Japanese banks and insurance companies need to
generate a 5-6% return on investment to meet their financial obligations. Right
now, the U.S. bond market is the only safe place they can get these kind of
returns.
Mergers & Acquisitions and the EURO
In the year ahead, I expect European economies to continue to grow, albeit
not as rapidly as consensus estimates. For example, I am seeing projections of
3% GDP growth for Germany. With weaker Asian currencies restraining German
exports, I suspect GDP growth will come in closer to 2.5%. European Monetary
Union will spawn more cross-border mergers and acquisitions. Consolidation will
benefit European companies as it has American companies in recent years. To
date, cross border corporate transactions have been difficult to accomplish. It
will get easier and corporate combinations that make economic sense will be
realized.
I have now taken enough of your time ruminating on current events. I hope
my comments have given you some beneficial insight on global financial markets.
Now, let's go back to work.
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Preferred Stock -- An Investment For The Future
In the first quarter of 1997, the Board of Directors of The Gabelli Global
Multimedia Trust authorized management to consider an offering of preferred
stock. On June 4, 1997, the Trust successfully completed its offering of
cumulative preferred stock which was rated 'aaa' by Moody's Investors Service
Inc. Shareholder response has been positive and we appreciate the efforts of
Smith Barney and Gabelli & Company, Inc., the underwriters, and wish to thank
and welcome all those investors who participated.
The Trust issued 1,250,000 Preferred Shares at $25 with an annual dividend
rate of $1.98 per share paying semi-annually starting in December 1997. The
Preferred Shares are trading on the New York Stock Exchange under the symbol
"GGT Pr" and closed at $25.4375 on December 31, 1997. 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 December 31, 1997, the
Multimedia Trust has earned a 18.2% 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 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.
9
<PAGE>
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 34.4% with the
preferred offering versus 29.1% had the Preferred Shares not been issued.
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 trans late into higher stock prices,
but they do express a positive trend which we believe will develop over time.
Ascent Entertainment Group Inc. (GOAL - $10.375 - Nasdaq) operates entertainment
distribution and production businesses. Ascent owns 57% of On Command Corp. and
owns the Denver Nuggets and the Colorado Avalanche. The Denver Arena Co., a
division of Ascent, is building a new arena in Denver 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 - $54.625 - NYSE) is a media and entertainment company
that primarily targets black consumers, a market that was estimated to have
spent over $425 billion in 1997. BTV's core business is Black Entertainment
Television (BET), an advertiser-supported cable television programming service.
BET reaches over 45 million cable households. BET on Jazz: The Cable Jazz
Channel has attracted one million subscribers since its launch in 1996. Action
Pay-Per-View's subscriber base grew by one million to over eight million as the
service expanded beyond a traditional urban audience. The company is leveraging
its brand identity into markets including pay-per-view movies, direct
merchandising and magazine publishing. A $48 per share offer to take BTV private
from a group led by founder Robert Johnson has been declared inadequate by the
board's independent member.
Cablevision Systems Corp. (CVC - $95.75 - ASE), based in Woodbury, NY, is a
major cable TV operator serving 2.9 million subscribers, including managed
systems. CVC's revenue per 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. Cablevision is also
purchasing Tele-Communications Inc.'s ten New York area cable properties with
roughly 820,000 subscribers by issuing over 12 million shares (a one-third
interest in the company) and assuming about $670 million of TCI's debt. 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 - $38.6875 - 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 - $43.125 - Nasdaq)
and Univision Communications (UVN - $69.8125 - NYSE). A five year restructuring
plan - "Televisa 2000" - is designed to cut costs by $90 million annually over
the next three years and to raise Televisa's cash flow margin by more than 25%.
LIN Television Corp. (LNTV - $54.50 - Nasdaq) owns and operates eight network-
affiliated television stations. In October, LIN agreed to be acquired by Hicks,
Muse, Tate & Furst, a Dallas-based investment firm for $55 a share, or
approximately $1.9 billion. The transaction gives AT&T, which owns 45% of LIN,
the vehicle to cash out its investment before the 1998 deadline by which it had
to either buy the rest of LIN or put the company up for sale. Hicks Muse is
paying a multiple of over 13 times LIN's broadcast cash flow.
10
<PAGE>
Shared Technologies Fairchild Inc. (STCH - $14.625 - OTC) agreed to be acquired
by Intermedia Communications for $15 per share, or $713 million in cash and
assumed debt, ending Tel-Save Holdings' bid. Tel-Save agreed in July to buy
Shared Technologies for stock valued at roughly $12 per share. All three
companies offer phone services, mainly as a package, to businesses. Tel-Save
agreed to drop its bid and will receive $63 million in breakup fees.
Intermedia's move to buy Shared Technologies illustrates the urgency among phone
companies of all sizes to get bigger in order to stay competitive. As part of
the transaction, Intermedia initiated a $15 cash tender offer for four million
shares, or 23%, of Shared Technologies' common shares. The offer expired on
December 26, 1997 with shareholders receiving approximately 25% of their
position in cash. The remaining shares will be acquired in a second-step $15
cash merger, subject to shareholder and regulatory approvals. The deal is
expected to close by the end of the first quarter of 1998.
Tele-Communications Inc./Liberty Media Group (LBTYA - $36.25 - 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. (TINTA - $18.00 - Nasdaq) 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. We consider
Liberty Media to be ideally positioned to benefit from expanding distribution
channels, including direct broadcast satellite ventures like DirecTV and the
Internet.
Time Warner Inc. (TWX - $62.00 - NYSE), having completed its acquisition of
Turner Broadcasting in the fourth quarter of 1996, is the world's largest
diversified media and publishing company. The combined companies have more than
$23 billion in revenues and over $4.5 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 $13
billion in debt and simplifying its capital structure. Cash flow in 1997 is
demonstrating a substantial increase as the companies reap the synergies of
their merged activities.
Viacom Inc. (VIA - $40.875 - 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 TeleCommunications 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.
Barron's Closed-End Fund Section
The net asset value of the Gabelli Global Multimedia Trust appears in
Monday's The Wall Street Journal, in Saturday's The New York Times in the
Publicly Traded Funds column under the heading "General Equity Funds", and in
Barron's Mutual Funds/Closed-End Funds section under the heading "Specialized
Equity Funds". You may also call 1-(800)-GABELLI (1-800-422-3554) to obtain
daily NAVs.
The following chart appeared in Barron's on February 2, 1998. To review
what is presented, the first column lists the fund name and its trading symbol,
with the second column indicating the exchange on which it trades. In our case
the Multimedia Trust trades on the New York Stock Exchange under the symbol
"GGT".
11
<PAGE>
The "NAV" column illustrates what the actual portfolio value is worth per
share - total assets minus the liabilities divided by the number of shares
outstanding. The market price is simply the price at which the fund is trading
on the exchange. Closed-end funds have a limited number of shares outstanding.
To buy or sell shares investors use the NYSE to complete their transactions.
Concerning the market price, closed-end funds can either trade at a
premium or a discount to the NAV. The "Prem/Disc" column illustrates the
percentage difference the market price varies from the NAV. As of the close on
Friday, January 30, 1998, the Multimedia Trust's last trade was at a 12.5%
discount to NAV. The final column indicates the total return (change in market
value plus an adjustment for reinvestment of dividends and distributions) of the
fund over the twelve months ending January 30, 1998.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
52 Week
Stock Market Prem Market
Fund Name (Symbol) Exch NAV Price /Disc Return
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
C&S Realty (RIF) A 11.00 12 1/8 +10.2 7.9
C&S Total Rtn (RFI) N 17.33 18 11/16 + 7.8 23.0
Centri Fd Canada (CEF)-c A 4.41 4 3/16 - 5.0 2.0
Delaware Gr Div (DDF) N 17.79 18 1/4 + 2.6 19.6
Delaware Grpp Gi (DGF) N 16.80 18 1/16 + 7.5 18.6
Duff&Ph Util Inc (DNP)-a N 9.77 10 3/8 + 8.8 26.4
Emer Mkts Infra (EMG) N 13.41 11 3/8 -15.2 -4.0
Emer Mkts Tel (ETF) N 15.16 13 5/16 -12.2 -4.0
First Financial (FF) N 16.19 18 3/16 +12.3 26.4
Gabelli Gl Multimedia (GGT) N 9.93 8 11/16 -12.5 44.0
H&Q Health Inv (HQH) N 19.09 16 3/16 -15.2 -1.2
H&O Life Sci Inv (HQL) N 15.74 13 5/16 -15.4 -1.4
INVESCO Gl Hlth (GHS) N 19.72 18 1/8 - 8.1 32.1
J Han Bank (BTO) N 12.25 12 1/4 0.0 70.8
J Han Pat Globl (PGD) N 15.16 13 7/16 -11.4 18.3
J Han Pat Sel (DIV) N 16.80 15 11/16 - 6.6 15.7
Nations Bal Tgt (NBM) N 10.29 9 1/8 - 8.9 26.2
Petroleum & Res (PEO) N 39.15 36 1/8 - 7.7 6.9
Royce Micro-Cap (OTCM) O 10.65 9 3/4 - 8.5 36.2
SthEastrn Thrift (STBF) O 26.46 27 7/8 + 5.3 76.2
Thermo Opprtynty (TMF) A 11.65 9 13/16 - 15.8 -18.2
Source: Barron's
- -------------------------------------------------------------------------------------------
</TABLE>
The Gabelli Global Multimedia Trust was ranked #1 among 6 Specialty
Closed-End Funds in the "Other" category by Lipper Analytical based on 1 year
performance.
================================================================================
1997 Lipper Analytical Services, Inc.
Performance Achievement Certificate
Gabelli Global Multimedia Trust, Inc.
Ranks NUMBER ONE in the
LIPPER CLOSED-END FUNDS PERFORMANCE ANALYSIS SERVICE
PERIOD ENDING INVESTMENT [SEAL]
DECEMBER 31, 1997 OBJECTIVE
1 Year Specialty Funds: Other
[LOGO] LIPPER
ANALYTICAL The Analytical Standard
SERVICES, INC. for Investment Companies.
/s/ A. MICHAEL LIPPER
--------------------------
A. MICHAEL LIPPER, CFA
PRESIDENT
================================================================================
12
<PAGE>
Dividends
The Trust recently distributed a dividend of $0.85 per share to Common
Shareholders on December 26, 1997. Our Preferred Shareholders were paid a
dividend of $1.1165 per share on December 26, 1997. This initial distribution
for Preferred Shareholders represents the accrual period from June 4 through
December 26, 1997. The next semi-annual dividend of $0.99 per share for the
Preferred Shareholders will be paid in June.
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].
In Conclusion
Multimedia stocks reigned in 1997. We believe they continue to offer a
wealth of opportunity for investors. Global barriers are finally coming down.
The mating game will be intense as suitors compete for the most attractive
partners. We are in the midst of an exciting party that could last well into the
next decade.
Sincerely,
/s/ Mario J. Gabelli
Mario J. Gabelli, CFA
President and Chief Investment Officer
February 1, 1998
--------------------------------------------------------------------
Top Ten Holdings
December 31, 1997
LIN Television Corp. BET Holdings Inc.
Viacom, Inc. Ascent Entertainment Corp.
Cablevision Systems Corp. Shared Tech Fairchild Inc.
TCI-Liberty Media Group Grupo Televisa S.A.
ITT Corporation Time Warner, Inc.
--------------------------------------------------------------------
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.
13
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 80.6%
<C> <S> <C> <C>
COPYRIGHT/CREATIVITY COMPANIES -- 31.0%
Advertising -- 0.0%
200 Havas Advertising SA ..................... $ 19,126 $ 25,914
200 Publicis SA .............................. 13,971 16,312
----------- -----------
33,097 42,226
----------- -----------
Cable Programmers -- 1.9%
15,000 CANAL +, Sponsored ADR+ .................. 431,000 557,966
6,000 Flextech plc+ ............................ 37,551 51,931
40,000 HSN Inc.+ ................................ 843,828 2,060,000
----------- -----------
1,312,379 2,669,897
----------- -----------
Diversified Publishers -- 7.5%
10,000 American Media Inc.,
Class A+ ............................... 74,500 77,500
10,000 Arnoldo Mondadori Editore
SpA .................................... 63,827 78,575
17,000 Belo (A.H.) Corp., Class A ............... 423,307 954,125
2,500 Central Newspapers Inc.,
Class A ................................ 71,479 184,844
10,000 Dow Jones & Co. Inc. ..................... 445,096 536,875
700 Filipacchi Medias ........................ 87,284 145,349
25,000 Golden Books Family
Entertainment Inc.+ ................... 245,000 257,813
8,000 Harcourt General Inc. .................... 368,400 438,500
10,000 Harte-Hanks Communications
Inc .................................... 222,167 371,250
4,000 Houghton Mifflin Co. ..................... 81,819 153,500
58,000 Independent Newspapers
Ltd., ORD .............................. 172,446 317,823
10,000 Knight-Ridder Inc. ....................... 284,196 520,000
21,000 Lee Enterprises Inc. ..................... 419,650 620,812
10,000 McClatchy Newspapers Inc.,
Class A ................................ 273,000 271,875
7,000 McGraw-Hill Companies
Inc .................................... 357,850 518,000
9,000 Media General Inc., Class A .............. 255,575 376,313
24,000 Meredith Corp. ........................... 306,413 856,500
70,000 Nation Multimedia Group .................. 107,608 19,122
90,000 New Straits Times
Press Berhad ........................... 287,048 111,531
100,000 Oriental Press Group ORD ................. 41,863 30,326
10,000 Playboy Enterprises Inc.,
Class A+ ............................... 97,125 138,750
80,000 Post Publishing Co. Ltd. ................. 219,014 51,419
9,000 PRIMEDIA Inc.+ ........................... 90,000 113,625
26,000 Pulitzer Publishing Co. .................. 819,755 1,633,125
8,000 Reader's Digest Association
Inc., Class A .......................... 178,525 189,000
2,000 Reader's Digest Association Inc.,
Class B ................................ 45,350 48,750
30,000 Singapore Press Holdings Ltd. ............ 458,532 375,556
250,000 South China Morning Post
Holdings ORD ............................. 172,312 175,829
300 SPIR Communication ....................... 23,329 18,837
20,000 Thomas Nelson Inc. ....................... 214,063 231,250
4,000 Times Mirror Co., Class A ................ 76,575 246,000
50,000 Times Publishing Ltd. .................... 126,892 86,918
10,000 United News & Media plc,
ADR .................................... 249,375 232,500
200 Wiley (John) & Sons Inc.,
Class A ................................ 5,693 10,825
1,000 Wolters Kluwer NV ........................ 90,625 129,161
----------- -----------
7,455,693 10,522,178
----------- -----------
Entertainment Production -- 8.3%
5,450 American Radio Systems
Corp.+ ................................. 246,911 290,553
300,000 Ascent Entertainment
Group Inc.+ ............................ 3,550,639 3,112,500
60,000 BET Holdings Inc., Class A+ .............. 3,001,600 3,277,500
2,523 EMI Group plc ............................ 12,685 21,048
10,000 EMI Group plc,
Sponsored ADR .......................... 157,997 166,250
7,000 Grammy Entertainment plc+ ................ 67,723 30,745
3,500 Granada Group plc ........................ 35,566 53,458
7,000 GTECH Holdings Corp.+ .................... 118,256 223,562
1,000 Harvey Entertainment Co.+ ................ 12,858 10,000
1,000 Lancit Media Productions
Ltd.+ .................................. 13,040 937
300 NRJ SA ................................... 22,694 41,761
2,877 People's Choice TV Corp.+ ................ 17,186 5,125
10,000 Princeton Video Image, Inc.+ ............. 70,000 93,750
100,000 Shaw Brothers (Hong Kong)
Ltd .................................... 145,929 74,203
20,000 Spelling Entertainment Group
Inc.+ .................................. 152,993 140,000
112,500 Tele-Communications Inc./
Liberty Media Group,
Class A+ ............................... 1,896,038 4,078,125
1,700 Tring International Group+ ............... 3,099 154
----------- -----------
9,525,214 11,619,671
----------- -----------
Global Media and Entertainment -- 9.2%
70,000 Grupo Televisa SA, GDR+ .................. 1,569,017 2,708,125
22,000 Havas, Sponsored ADR ..................... 436,125 385,000
21,000 News Corp. Ltd., ADS ..................... 413,278 468,562
2,000 PolyGram NV .............................. 114,825 95,375
50,000 Seagram Co. Ltd. ......................... 1,712,589 1,615,625
1,000 Sony Corp., ADR .......................... 54,114 90,750
40,000 Time Warner Inc. ......................... 1,469,175 2,480,000
115,000 Viacom Inc., Class A+ .................... 3,729,277 4,700,632
4,000 Walt Disney Co. .......................... 273,750 396,250
---------- ----------
9,772,150 12,940,319
---------- ----------
Hotels and Gaming -- 3.4%
2,500 Churchhill Downs Inc. .................... 102,432 109,687
1,000 Gaming Lottery Corp.+ .................... 4,727 3,000
35,000 Gaylord Entertainment Co.,
Class A ................................ 871,567 1,117,813
40,000 ITT Corp., New+ .......................... 2,721,650 3,315,000
60,847 Ladbroke Group plc ....................... 173,125 263,820
2,500 Quintel Entertainment Inc.+ .............. 12,500 13,594
----------- -----------
3,886,001 4,822,914
----------- -----------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
Market
Shares Cost Value
------ ---- -----
<C> <S> <C> <C>
Information Publishing -- 0.2%
4,000 Berlitz International Inc.+ .............. $ 80,606 $ 106,500
25,000 Data Broadcasting Corp.+ ................. 139,756 140,625
1,000 Dun & Bradstreet Corp. ................... 28,747 30,937
500 Scholastic Corp.+ ........................ 16,500 18,750
----------- -----------
265,609 296,812
----------- -----------
Software -- 0.5%
1,000 Activision Inc.+ ......................... 6,415 17,875
500 Electronic Arts Inc.+ .................... 11,176 18,906
1,000 Excaliber Technologies Corp.+ ............ 7,790 8,562
10,000 H&R Block Inc. ........................... 289,962 448,125
1,000 Intel Corp ............................... 32,500 70,250
500 Microsoft Corp.+ ......................... 15,510 64,625
200 Netscape Communications
Corp.+ ................................. 2,800 4,875
100 Pixar Inc.+ .............................. 2,200 2,162
----------- -----------
368,353 635,380
----------- -----------
TOTAL COPYRIGHT/CREATIVITY
COMPANIES ........................................ 32,618,496 43,549,397
----------- -----------
DISTRIBUTION COMPANIES -- 49.6%
Broadcasting -- 13.5%
70,000 Ackerley Group Inc. ...................... 385,687 1,185,625
1,000 Audiofina ................................ 54,505 41,041
3,000 Baton Broadcasting Inc.+ ................. 19,240 52,482
1,000 BHC Communications Inc.,
Class A ................................ 89,925 130,250
3,000 British Sky Broadcasting
Group, Sponsored ADR ................... 72,400 133,500
18,000 CanWest Global
Communications Corp. ................... 92,011 326,231
2,000 Carlton Communications plc,
Sponsored ADR .......................... 63,625 78,000
750 Chancellor Media Corp.,
Class A+ ............................... 10,736 55,969
27,260 Chris-Craft Industries Inc. .............. 1,008,422 1,426,039
1,000 Clear Channel
Communications Inc.+ ................... 14,122 79,438
9,000 Cox Radio Inc., Class A+ ................. 166,500 362,250
500 Emmis Broadcasting Corp.,
Class A+ ............................... 10,489 22,813
200 Europe 1 Communication+ .................. 44,101 43,821
8,160 Fisher Companies Inc. .................... 821,610 979,200
4,000 General Electric Co. ..................... 100,069 293,500
8,750 Gray Communications
Systems Inc. ........................... 172,625 229,688
40,000 Gray Communications
Systems Inc., Class B .................. 810,062 1,030,000
1,000 Groupe AB SA, ADR+ ....................... 7,300 6,438
5,000 Grupo Radio Centro, SA de
CV, ADR ................................ 42,937 71,250
500 Jacor Communications Inc.+ ............... 6,958 26,563
2,500 King World Productions, Inc.+ ............ 121,625 144,375
700 LaGardere Groupe ......................... 12,878 23,140
2,000 Liberty Corp. ............................ 87,819 93,500
160,000 LIN Television Corp.+ .................... 7,409,795 8,720,000
400 Metropole TV M6 SA ....................... 35,208 43,787
1,100 Nippon Television
Broadcasting ........................... 323,764 322,712
4,000 NTN Communications Inc.+ ................. 23,200 4,000
1,400 Pathe SA ................................. 257,661 271,628
60,000 Paxson Communications Corp.,
Class A+ ............................... 502,195 442,500
976 SAGA Communications Inc.,
Class A+ ............................... 9,710 20,740
2,000 Scandinavian Broadcasting
System SA+ ............................. 42,022 49,000
25,000 Sistem Televisyen Malaysia
Berhad ................................. 36,518 8,420
5,000 Telemundo Group Inc.+ .................... 208,019 204,375
50,000 Television Broadcasting Ltd. .............
ORD .................................... 187,673 142,599
2,500 Television Francaise 1 ................... 249,649 255,399
40,000 Tokyo Broadcasting System ................ 655,630 505,553
1,000 TV Azteca, S.A. de C.V.+ ................. 18,250 22,563
10,000 United Television Inc. ................... 763,979 1,038,750
----------- -----------
14,938,919 18,887,139
----------- -----------
Cable -- 7.5%
8,750 Cable Michigan Inc.+ ..................... 91,757 200,156
46,000 Cablevision Systems Corp.,
Class A+ ............................... 1,756,462 4,404,500
25,000 Century Communications Corp.,
Class A+ ............................... 190,788 243,750
6,000 Comcast Corp., Class A ................... 87,000 191,250
1,000 Comcast Corp., Class A
Special ................................ 15,613 31,563
3,000 Comcast U.K. Cable Partners
Ltd., Class A+ ......................... 43,613 28,313
2,000 General Cable plc, ADR+ .................. 29,000 13,750
3,000 NTL Inc.+ ................................ 62,325 83,625
2,000 Mercom Inc.+ ............................. 15,250 19,000
21,000 Rogers Communications Inc.,
Class B+ ............................... 143,446 102,375
51,000 TCI Ventures Group+ ...................... 746,971 1,443,937
10,000 Telewest Communications plc,
Sponsored ADR+ ......................... 179,722 122,500
56,000 Tele-Communications Inc.,
Class A+ ............................... 964,372 1,564,503
50,000 Tele-Communications
International Inc., Class A+ ........... 795,562 900,000
100,000 United International
Holdings Inc., Class A+ ................ 1,395,845 1,150,000
5,000 Videotron Groupe ......................... 42,106 44,085
100 Wireless One Inc.+ ....................... 1,329 200
----------- -----------
6,561,161 10,543,507
----------- -----------
Consumer Services -- 0.6%
1,000 Department 56 Inc.+ ...................... 17,550 28,750
33,000 Ticketmaster Group Inc.+ ................. 495,476 759,000
----------- -----------
513,026 787,750
----------- -----------
Energy -- 0.7%
50,000 USX-Delhi Group+ ......................... 952,500 1,025,000
----------- -----------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
Market
Shares Cost Value
------ ---- -----
<C> <S> <C> <C>
Entertainment Distribution -- 2.2%
120,000 Cineplex Odeon Corp.+ .................... $ 165,000 $ 150,000
22,000 GC Companies Inc.+ ....................... 609,162 1,042,250
19,500 Shaw Communications Inc.,
Class B, Conv .......................... 122,708 207,411
3,000 TCI Music Inc.+ .......................... 23,850 22,875
55,000 US WEST Media Group+ ..................... 1,023,235 1,588,125
---------- ----------
1,943,955 3,010,661
---------- ----------
Equipment -- 0.8%
2,000 CommScope Inc.+ .......................... 29,407 26,875
3,000 Lucent Technologies Inc. ................. 81,000 239,625
1,000 Northern Telecom Ltd. .................... 34,956 89,000
1,000 Philips Electronics N.V.,
New York ............................... 38,425 60,500
1,128 Raytheon Company, Class A ................ 37,072 55,625
3,000 Scientific-Atlanta Inc. .................. 50,804 50,250
25,000 Sterling Electronics Corp.+ .............. 510,625 521,875
---------- ----------
782,289 1,043,750
---------- ----------
Information Services -- 0.0%
1,000 Cognizant Corp ........................... 29,380 44,563
---------- ----------
International Telephone -- 7.9%
70,000 BC TELECOM Inc. .......................... 1,258,080 2,179,770
35,000 BCE Inc. ................................. 693,375 1,165,937
5,000 BHI Corp. ................................ 78,750 153,750
3,551 Cable & Wireless plc,
Sponsored ADR .......................... 78,620 86,556
30,000 Compania de Telecomunicaciones
de Chile SA, Sponsored ADR ............. 545,490 896,250
500 CPT Telefonica del Peru, ADR ............. 10,250 11,625
200,000 CPT Telefonica del Peru,
Class B ................................ 414,925 446,972
2,000 Deutsche Telekom AG,
ADR+ ................................... 37,780 37,250
2,000 Esprit Telecom Group plc,
ADR+ ................................... 10,330 22,500
1,000 France Telecom SA, Sponsored
ADR+ ................................... 34,487 36,000
50,000 GST Telecommunications
Inc.+ .................................. 616,453 593,750
40 Japan Telecom Co., Ltd. .................. 603,933 352,355
500 Matav Rt., Sponsored ADR+ ................ 9,650 13,000
10 Nippon Telegraph &
Telephone Corp. ........................ 81,575 85,791
6,000 Philippine Long Distance
Telephone Co. .......................... 184,252 135,000
1,000 PT Telekomunikasi
Indonesia .............................. 20,185 11,063
3,000 Quebec-Telephone ......................... 44,083 62,139
3,600 Telecom Argentina Stet-France
Telecom SA, Sponsored ADR .............. 69,082 128,700
2,000 Telecom Corp. of New
Zealand Ltd., ADR ...................... 62,150 77,500
18,000 Telecomunicacoes Brasileiras
SA (Telebras), Sponsored
ADR .................................... 604,423 2,095,875
3,000 Telefonica de Argentina SA,
Sponsored ADR .......................... 64,387 111,750
18,000 Telefonica de Espana,
Sponsored ADR ......................... 778,556 1,639,125
14,000 Telefonos De Mexico SA,
Class L, ADR ........................... 458,967 784,875
600 Telstra Corporation Ltd.,
ADR+ ................................... 19,666 24,900
----------- -----------
6,779,449 11,152,433
----------- -----------
Manufacturers -- 1.2%
50,000 TriMas Corporation ....................... 1,715,000 1,718,750
----------- -----------
Satellite -- 0.7%
100 Asia Satellite Telecommunications Holdings
Ltd., Sponsored ADR+ ................... 2,583 1,681
6,000 EchoStar Communications
Corp., Class A+ ........................ 148,257 100,500
2,000 General Motors Corp.,
Class H ................................ 44,528 73,875
2,000 Globalstar Telecommunications+ ........... 13,663 98,250
7,000 Orion Network Systems
Inc.+ .................................. 68,005 119,875
2,000 PT Indonesia Satellite, ADR .............. 59,556 38,625
70,000 TCI Satellite Entertainment
Inc., Class A + ........................ 650,173 481,250
5,000 U.S. Satellite Broadcasting
Co.+ ................................... 61,675 39,688
----------- -----------
1,048,440 953,744
----------- -----------
Telecommunications -- 4.6%
2,000 Bruncor Inc. ............................. 34,068 60,880
2,000 Electric Lightwave Inc.,
Class A+ ............................... 30,625 29,750
40,000 Frontier Corp ............................ 741,488 962,500
1,075 Hellenic Telecommunication
Organization SA (OTE) .................. 18,170 22,042
7,000 Metromedia International
Group Inc.+ ............................ 74,775 66,500
1,000 MIDCOM Communications
Inc.+ .................................. 9,000 109
3,000 NewTel Enterprises Ltd. .................. 45,184 71,691
33,500 RCN Corporation+ ......................... 584,889 1,147,375
196,500 Shared Technologies
Fairchild Inc.+ ........................ 2,885,630 2,873,813
20,000 Southern New England
Telecommunications Corp. ............... 793,365 1,006,250
3,000 Telegroup Inc.+ .......................... 30,000 37,875
12,000 Tel-Save Holdings Inc.+ .................. 55,770 238,500
----------- -----------
5,302,964 6,517,285
----------- -----------
Telecommunications - Long Distance -- 1.4%
13,000 AT&T Corp. ............................... 449,846 796,250
16,000 MCI Communications Corp. ................. 597,262 685,000
7,000 Sprint Corp. ............................. 168,313 410,375
2,000 STARTEC Global
Communications Corp.+ .................. 24,000 44,750
----------- -----------
1,239,421 1,936,375
----------- -----------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
Market
Shares Cost Value
------ ---- -----
<C> <S> <C> <C>
US Regional Operators -- 1.1%
1,000 Cincinnati Bell Inc. ..................... $ 14,629 $ 31,000
20,200 Citizens Utilities Co.,
Class B+ ............................... 198,954 194,425
22,633 Commonwealth Telephone
Enterprises Inc.+ ...................... 262,379 594,116
11,000 GTE Corp. ................................ 377,300 574,750
731 SBC Communications Inc. .................. 26,800 53,546
800 Teleport Communications
Group Inc., Class A+ ................... 12,800 43,900
1,000 US WEST Communications
Group+ ................................. 24,802 45,125
------------ ------------
917,664 1,536,862
------------ ------------
Wireless Communications -- 7.4%
62,000 Aerial Communications Inc.+ ............. 420,170 441,750
3,000 AirTouch Communications
Inc.+ .................................. 74,400 124,687
10,000 American Paging Inc.+ .................... 49,863 21,250
5,000 BCE Mobile Communications
Inc.+ .................................. 163,511 125,958
38,000 Cable & Wireless
Communications plc, ADR ................ 841,650 1,033,125
1,000 CAI Wireless Systems Inc.+ ............... 1,125 1,125
35,000 Centennial Cellular Corp.,
Class A + .............................. 560,156 717,500
24,000 Century Telephone Enterprises
Inc .................................... 743,800 1,195,500
35,000 COMSAT Corp. ............................. 656,055 848,750
7,000 CoreComm Inc.+ ........................... 192,808 70,875
24,000 Iridium World Communications
Ltd .................................... 479,125 876,000
5,000 Loral Space & Communications
Ltd.+ .................................. 69,750 107,187
8,446 NEXTEL Communications Inc.,
Class A+ ............................... 94,069 219,596
3,000 Omnipoint Corp.+ ......................... 23,330 69,750
1,250 Price Communications Corp.+ .............. 7,675 10,703
1,000 Qualcomm Inc.+ ........................... 41,625 50,500
28,500 Rogers Cantel Mobile
Communications Inc.,
Class B+ ............................... 574,235 263,625
2,000 Rural Cellular Corp., Class A+ ........... 20,250 26,125
350,000 Telecom Italia Mobile SpA ................ 419,860 1,615,461
40,000 Telephone and Data Systems
Inc .................................... 1,718,156 1,862,500
8,000 Teligent Inc., Class A+ .................. 179,200 197,000
5,000 360(degree)Communications Co.+ ........... 81,100 100,937
18,000 Total Access Communications
plc .................................... 113,625 6,120
3,000 U.S. Cellular Corp.+ ..................... 85,463 93,000
15,000 WinStar Communications
Inc.+ .................................. 205,539 374,062
------------ ------------
7,816,540 10,453,086
------------ ------------
TOTAL DISTRIBUTION COMPANIES ....................... 50,540,708 69,610,905
------------ ------------
TOTAL COMMON STOCKS ................................ 83,159,204 113,160,302
------------ ------------
PREFERRED STOCKS -- 2.7%
Broadcasting -- 0.2%
6,000 Granite Broadcasting Corp.,
Pfd .................................... $ 360,107 $ 291,000
------------ ------------
Entertainment -- 0.1%
4,000 AMC Entertainment Inc.,
$1.75, Conv. Pfd. ...................... 105,737 154,000
------------ ------------
Global Media and Entertainment -- 0.9%
62,765 News Corp. Ltd., Sponsored
ADR Preference Shares .................. 986,187 1,247,454
------------ ------------
US Regional Operators -- 1.0%
30,000 Citizens Utilities Co., 5.00%,
Pfd .................................... 1,425,150 1,432,500
------------ ------------
Wireless Communications -- 0.5%
13,000 AirTouch Communications
Inc., Series B, 6.00%, Pfd. ............ 350,933 463,125
AirTouch Communications
3,000 Inc., Series C, 4.25%, Pfd. .............. 133,293 186,937
------------ ------------
484,226 650,062
------------ ------------
TOTAL PREFERRED STOCKS ............................. 3,361,407 3,775,016
------------ ------------
COMMON STOCK WARRANTS AND RIGHTS -- 0.0%
Oriental Press Group,Warrants,
10,000 expires 10/02/1998+ .................... 0 90
------------ ------------
TOTAL COMMON STOCK
WARRANTS AND RIGHTS .............................. 0 90
------------ ------------
<CAPTION>
Principal
Amount
------
CORPORATE BONDS -- 2.0%
Cable -- 1.8%
$1,200,000 HSN Inc., Conv. Sub. Deb.,
5.875% due 03/01/16,
144A (b)............................. 1,200,000 2,250,000
300,000 Tele-Communications
International Inc., Conv.
Sub. Deb., 4.50% due
02/15/06............................. 302,098 261,000
----------- -----------
1,502,098 2,511,000
----------- -----------
Global Media and Entertainment -- 0.1%
100,000 Viacom Inc., Sub. Deb., 8.00%
due 07/07/06......................... 87,161 100,500
----------- -----------
Equipment -- 0.1%
90,000 Trans-Lux Corp., Conv. Deb.,
7.50% due 12/01/06 .................. 90,000 109,800
----------- -----------
Software -- 0.0%
50,000 BBN Corp., Conv. Sub. Deb.,
6.00% due 4/01/12 (c) ............... 49,321 48,500
----------- -----------
TOTAL CORPORATE BONDS .............................. 1,728,580 2,769,800
----------- -----------
U.S. TREASURY BILLS -- 2.9%
4,119,000 5.273% due 02/19/98++ ................ 4,090,071 4,090,071
----------- -----------
</TABLE>
See Notes to Financial Statements
17
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
Market
Shares Cost Value
------ ---- -----
<C> <S> <C> <C>
REPURCHASE AGREEMENT -- 14.1%
19,857,000 Agreement with State Street
Bank and Trust, 6.35% dated
12/31/97 to be repurchased
at $19,864,005 on 01/02/98,
collateralized by $15,750,000
U.S. Treasury Note, 8.125%
maturing on 08/15/21
(value $20,362,813) ................... $ 19,857,000 $ 19,857,000
------------ ------------
TOTAL INVESTMENTS --
102.3% ................................ $112,196,262(a) 143,652,279
============ ------------
OTHER ASSETS, LIABILITIES AND
LIQUIDATION VALUE OF
CUMULATIVE PREFERRED
STOCK -- (24.6%) ................................. (34,486,212)
------------
NET ASSETS - COMMON STOCK
(11,012,415 common shares
outstanding)-- 77.7% ............................. 109,166,067
------------
NET ASSETS - CUMULATIVE PREFERRED STOCK
(1,250,000 preferred shares
outstanding)-- 22.3% ............................. 31,250,000
------------
TOTAL NET ASSETS-- 100% ............................ $140,416,067
============
NET ASSET VALUE
($109,166,067 / 11,012,415
shares outstanding) .............................. $9.91
=====
SCHEDULE OF FORWARD EXCHANGE CONTRACTS
Expiration Unrealized
Date Depreciation
---- ------------
Forward Foreign Contracts to Deliver
4,700,000 Hong Kong Dollars
in exchange for
USD600,370 ....................................... 02/26/98 $ (3,762)
--------
</TABLE>
(a) Aggregate cost for Federal tax purposes was $112,251,171. Net unrealized
appreciation for Federal tax purposes was $31,401,108 (gross unrealized
appreciation was $34,810,431 and gross unrealized depreciation was
$3,409,323).
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. The security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. The market value
of this security at December 31, 1997 was $2,250,000, representing 1.6% of
total net assets.
(c) Security fair valued by the Board of Directors. + Non-income producing
security
++ Represents annualized yield at date of purchase.
ADR - American Depositary Receipt
ADS - American Depositary Share
GDR - Global Depositary Receipt
ORD - Ordinary Share
% of
Net Market
Assets Value
------ -----
GEOGRAPHIC DIVERSIFICATION
United States.................... 80.6% $113,217,394
Europe........................... 5.9 8,271,537
Latin America.................... 5.3 7,431,735
Canada........................... 4.9 6,920,662
Asia/Pacific Rim................. 3.3 4,574,739
------ ------------
Net Assets................... 100.0% $140,416,067
====== ============
See Notes to Financial Statements.
18
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
ASSETS:
Investments, at value (Cost $112,196,262)
See accompanying portfolio:
Investment securities .................................. $ 123,795,279
Repurchase agreement ................................... 19,857,000
-------------
143,652,279
Cash and Foreign currency (Cost $287,963) .............. 287,390
Dividends and interest receivable ...................... 107,367
Unamortized organization costs ......................... 131,070
Receivable for investments sold ........................ 289,671
-------------
Total Assets ....................................... 144,467,777
-------------
LIABILITIES:
Dividend payable ....................................... 2,518,010
Payable for investments purchased ...................... 986,646
Payable for investment advisory fee .................... 101,542
Net unrealized depreciation on forward
foreign exchange contracts ........................... 3,762
Accrued expenses and other payables .................... 441,750
-------------
Total Liabilities .................................. 4,051,710
-------------
Net assets ......................................... $ 140,416,067
=============
NET ASSETS consist of:
Cumulative Preferred Stock (7.92%, $25
liquidation value, 1,250,000
shares outstanding, 2,000,000 shares
authorized of $0.001 par value)
redemption value ..................................... $ 31,250,000
Common stock at par value .............................. 11,012
Additional paid-in capital ............................. 77,782,668
Distributions in excess of net
realized gain on investments ......................... (79,296)
Net unrealized appreciation
on investments ....................................... 31,451,683
-------------
Total Net Assets ................................... $ 140,416,067
=============
NET ASSET VALUE ($109,166,067 /
11,012,415 shares outstanding;
200,000,000 shares authorized
of $0.001 par value) ................................. $9.91
=====
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1997
INVESTMENT INCOME:
Interest income ......................................... $ 1,376,113
Dividend income (net of foreign
withholding taxes of $31,852) ......................... 822,419
------------
Total Investment Income ............................... 2,198,532
------------
EXPENSES:
Investment advisory fee ................................. 1,203,809
Shareholder communications expense ...................... 294,000
Legal and audit fees .................................... 209,366
Shareholder services fees ............................... 173,668
Amortization of organization costs ...................... 70,000
Payroll ................................................. 52,446
Directors' fees ......................................... 37,661
Other ................................................... 82,475
------------
Total Expenses .................................... 2,123,425
------------
NET INVESTMENT INCOME ...................................... 75,107
------------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS:
Net realized gain on securities sold .................... 11,220,042
Net realized loss on futures transactions ............... (555,031)
Net realized loss on foreign currency
transactions .......................................... (3,587)
------------
Net realized gain on investments ........................ 10,661,424
------------
Net unrealized appreciation on investments:
Beginning of year ................................... 10,271,498
End of year ......................................... 31,451,683
------------
Change in net unrealized appreciation
on investments ........................................ 21,180,185
------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS ...................................... 31,841,609
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................................ $ 31,916,716
============
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
12/31/97 12/31/96
------------- -------------
<S> <C> <C>
Operations:
Net investment income ....................................................... $ 75,107 $ 121,861
Net realized gain on investments ............................................ 10,661,424 4,082,549
Net change in unrealized appreciation of investments ........................ 21,180,185 3,148,676
------------- -------------
Net increase in net assets resulting from operations ........................ 31,916,716 7,353,086
Distributions to common stock shareholders from:
Net investment income ....................................................... (64,467) (121,844)
Net realized gain on investments ............................................ (9,275,505) (4,082,549)
Distributions in excess of net realized gain on investments ................. (29,346) (31,812)
Distributions to preferred stock shareholders from:
Net investment income ....................................................... (9,706) --
Net realized gain on investments ............................................ (1,385,919) --
Net decrease in net assets from common stock transactions .................... (2,033,650) (1,234,828)
Net proceeds from issuance of preferred stock ................................. 29,836,000 --
------------- -------------
Net increase in net assets .................................................. 48,954,123 1,882,053
NET ASSETS:
Beginning of year ............................................................. 91,461,944 89,579,891
------------- -------------
End of year (Including undistributed net investment income of $0 and $2,653 for
1997 and 1996 respectively) ................................................. $ 140,416,067 $ 91,461,944
============= =============
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies. The Gabelli Global Multimedia Trust Inc.
(the "Multimedia Trust") is a closed-end, non-diversified management investment
company organized as a Maryland corporation and registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), whose primary objective is
long-term growth of capital with income as a secondary objective. The Multimedia
Trust had no operations prior to November 15, 1994, other than the sale of
10,000 shares of common stock for $100,000 to The Gabelli Equity Trust Inc. (the
"Equity Trust"). On November 15, 1994, the Equity Trust contributed $64,382,764
in exchange for 8,587,702 shares of the Multimedia Trust and immediately
thereafter distributed to its shareholders all the shares it held of the
Multimedia Trust. Investment operations commenced on November 15, 1994. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Multimedia Trust in the
preparation of its financial statements.
Security Valuation. Portfolio securities which are traded on a stock
exchange or Nasdaq National Market System are valued at the last sale price as
of the close of business on the day the securities are being valued, or lacking
any sales, at the mean between closing bid and asked prices. 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 Nasdaq, or, in the
case of securities not quoted by Nasdaq, the National Quotation Bureau 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. 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.
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
20
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
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.
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. Permanent
differences incurred during the year ended December 31, 1997 resulting from
different book and tax accounting policies for currency gains and losses are
reclassified between net investment income and net realized gain at year end.
The reclassifications for the year ended December 31, 1997 were a decrease in
undistributed net investment income of $3,587 and a decrease in distributions in
excess of net realized gain on investments of $3,587. Distributions to
shareholders of Cumulative Preferred Stock are accrued on a daily basis and are
determined as described in note 4.
Provision for Income Taxes. The Multimedia Trust has qualified and intends
to continue to qualify as a
21
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended. As a result, a Federal income tax provision is not required.
Deferred Organization Expenses. A total of $350,000 was incurred in
connection with the organization of the Multimedia Trust. These costs have been
deferred and are being amortized on a straight-line basis over a period of 60
months from the date the Multimedia Trust commenced investment operations.
2. Agreements and Transactions with Affiliates. The Multimedia Trust has entered
into an investment advisory agreement (the "Advisory Agreement") with the
Adviser which provides that the Multimedia Trust will pay the Adviser on the
first business day of each month a fee for the previous month at the annual rate
of 1.00% of the Multimedia Trust's average weekly net assets. In accordance with
the Advisory Agreement, the Adviser manages the Multimedia Trust's portfolio,
makes investment decisions for the Multimedia Trust, places orders to purchase
and sell securities of the Multimedia Trust and oversees the administration of
all aspects of the Multimedia Trust's business and affairs. The Adviser has
agreed to reduce the management fee on the incremental net assets attributable
to the Cumulative 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
Cumulative Preferred Stock. For the year ended December 31, 1997, total return
of the net asset value of the common shares of the Multimedia Trust exceeded the
prorated stated dividend rate during the period from the date of issuance of the
Preferred Stock through December 31, 1997.
During the year ended December 31, 1997, Gabelli & Company, Inc. ("Gabelli
& Company") and its affiliates received $49,118 in brokerage commissions as a
result of executing agency transactions in portfolio securities on behalf of the
Multimedia Trust.
Gabelli & Company acted as co-manager in the underwriting of the Preferred
Stock of the Multimedia Trust. In such capacity, Gabelli & Company received
underwriting fees and sales concessions before expenses totaling $110,569.
3. Portfolio Securities. Cost of purchases and proceeds from sales of
securities, other than short-term securities, aggregated $101,371,119 and
$93,300,967, respectively, for the year ended December 31, 1997.
4. Capital. The Board of Directors of the Multimedia Trust has authorized the
repurchase of up to 750,000 shares of the Multimedia Trusts' outstanding common
stock. For the year ended December 31, 1997, the Multimedia Trust repurchased
464,133 shares of its common stock in the open market at a cost of $2,033,650
and an average discount of approximately 18.07% from its net asset value. All
shares repurchased have been retired.
Common stock transactions were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
12/31/97 12/31/96
--------- --------
Shares Amount Shares Amount
------- -------- ------- --------
<S> <C> <C> <C> <C>
Shares repurchased by the
Multimedia Trust................................ (284,133) $(2,033,650) (180,000) $(1,234,828)
Net increase/(decrease)........................... (284,133) $(2,033,650) (180,000) $(1,234,828)
======== ========== ========== ===========
</TABLE>
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 Cumulative Preferred Stock. The Cumulative 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 Cumulative Preferred Stock are
cumulative. The Multimedia Trust is required to meet certain asset coverage
tests with respect to the Cumulative 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 Cumulative
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 Fund, at its
option, may redeem the
22
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Cumulative Preferred Stock in whole or in part at the redemption price. At
December 31, 1997, 1,250,000 shares of the Cumulative Preferred Stock were
outstanding at the fixed dividend rate of 7.92 percent per share and accrued
dividends amounted to $27,500. 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 Cumulative 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
Investment Company Act of 1940 requires that along with 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 Cumulative 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.
5. Industry Concentration. Because the Multimedia Trust primarily invests in
common stocks and other securities of foreign and domestic companies in the
telecommunications, media, publishing and entertainment industries, its
portfolio may be subject to greater risk and market fluctuations than a
portfolio of securities representing a broad range of investments.
6. 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. Because these cases are in their
early stages, their outcomes cannot yet be determined and, accordingly, no
provision has been made in the financial statements of the Multimedia Trust with
respect to these claims.
23
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Per share amounts for a Multimedia Trust common share outstanding throughout
each period/year ended December 31,
<TABLE>
<CAPTION>
1997 1996 1995 1994*
---- ---- ---- -----
<S> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of year ......................... $ 8.10 $ 7.81 $ 7.51 $ 7.50
Net investment income ...................................... 0.01 0.01 0.08 0.03
--------- --------- -------- --------
Net realized and unrealized gain on investments ............ 2.85 0.63 0.98 0.03
--------- --------- -------- --------
Total from investment operations ........................... 2.86 0.64 1.06 0.06
--------- --------- -------- --------
Increase/(decrease) in net asset value from Multimedia Trust
share transactions ....................................... 0.06 0.02 (0.46) --
Offering expenses charged to additional paid-in capital .... (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 .................................... (0.00) -- -- --
Net realized gains ....................................... (0.13) -- -- --
--------- --------- -------- --------
Total distributions ........................................ (0.98) (0.37) (0.25) (0.05)
--------- --------- -------- --------
Net asset value, end of year ............................... $ 9.91 $ 8.10 $ 7.81 $ 7.51
========= ========= ======== ========
Market value, end of year .................................. $ 8.750 $ 6.875 $ 6.750 $ 7.375
========= ========= ======== ========
Net Asset Value Total Return** ............................. 34.4% 9.4% 14.1% 0.8%
========= ========= ======== ========
Total Investment Return*** ................................. 39.6% 7.4% 0.4% (7.9)%
========= ========= ======== ========
Ratios to average net assets/
supplemental data:
Net assets, end of year (in 000's) ....................... $ 140,416 $ 91,462 $ 89,580 $ 64,606
Net assets attributable to common shares,
end of year (in 000's) ................................. $ 109,166 $ 91,462 $ 89,580 $ 64,606
Ratio of net investment income to average net assets ..... 0.07% 0.13% 1.24% 3.15%+
Ratio of operating expenses to average net assets(c) ..... 2.09% 1.87% 2.04% 1.74%+
Portfolio turnover rate .................................... 96.1% 32.1% 86.0% 0.0%
Average commission rate (per share of security)(b) ......... $ 0.0410 $ 0.0367 N/A N/A
Preferred stock:
Liquidation value, end of year in (000's) ................ $ 31,250 -- -- --
Total shares outstanding (in thousands) .................. 1,250 -- -- --
Asset coverage ........................................... 443% -- -- --
Liquidation preference per share ......................... $ 25.00 -- -- --
Average market value(d) .................................. $ 25.59 -- -- --
</TABLE>
- -----------
* The Multimedia Trust commenced operations on November 15, 1994.
** Based on net asset value per share, adjusted for reinvestment of all
distributions and rights offering in 1995.
*** Based on market value per share, adjusted for reinvestment of all
distributions and rights offering in 1995.
+ Annualized.
(a) Amount represents less than $0.005 per share.
(b) Average commission rate (per share of security) as required by amended SEC
disclosure requirements effective for fiscal years beginning after
September 1, 1995.
(c) Based on assets attributable to common stock. The expense ratio based on
total net assets would be 1.77%.
(d) Based on weekly prices.
See Notes to Financial Statements.
24
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
The Gabelli Global Multimedia Trust Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Global Multimedia Trust
Inc. (the "Multimedia Trust") at December 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the three years in the period then ended and for the period November 15, 1994
(commencement of operations) through December 31, 1994, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements" are the
responsibility of the Multimedia Trust's management; our responsibility is to
express an opinion these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1997 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from these brokers were not received,
provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 20, 1998
25
<PAGE>
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
FEDERAL INCOME TAX INFORMATION (Unaudited)
Calendar Year 1997
Cash Dividends and Distributions
<TABLE>
<CAPTION>
Total Amount Ordinary Long-Term Dividend
Payable Record Paid Investment Capital Reinvestment
Date Date Per Share Income Gains Price
---------- -------- ------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Common Shares 12/26/97 12/17/97 $0.8500 $0.2740 $0.5760 $8.7676
Preferred Shares 12/26/97 12/18/97 $1.1165 $0.3600 $0.7565
</TABLE>
A Form 1099-DIV has been mailed to all shareholders of record for the
distributions mentioned above, paid during 1997, setting forth specific amounts
to be included in the 1997 tax returns. Ordinary income distributions include
net invest ment income and realized net short-term capital gains. The percentage
of long-term capital gains which are subject to the maximum 28% rate (15% for
individuals in the 15% tax bracket) was 30.12%.
Non-Taxable Return of Capital
The amount received as a non-taxable (return of capital) distribution
should be applied to reduce the tax cost of shares. This amount will be
reflected on Form 1099-DIV. If the amount of the non-taxable portion exceeds
your tax basis, the excess will be taxable as a capital gain.
Corporate Dividends Received Deduction and U.S. Treasury Securities Income
The Multimedia Trust paid to common shareholders and preferred
shareholders an ordinary income dividend of $0.2740 per share and $0.3600 per
share, respectively, on Decem ber 26, 1997. The percentage of such dividends
that qualifies for the dividends received deduction available to corpo ra tions
is 11.35%. The percentage of the ordinary income dividends paid by the Mul ti
media Trust during 1997 derived from U.S. Treasury Securities was 21.19%.
Historical Distribution Summary -- Common Stock
<TABLE>
<CAPTION>
Short- Long-
term term Non-taxable Adjustment
Annual Investment Capital Capital Return of Total to
Summary Income Gains(b) Gains Capital Distributions Cost Basis
------- ---------- -------- ------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
1997.................... $0.0058 $0.2682 $0.5760 -- $0.8500 --
1996.................... 0.0103 0.0790 0.2857 -- 0.3750 --
1995 (a)................ 0.0788 0.1529 0.0183 -- 0.2500 --
1994.................... 0.0305 0.0010 0.0014 $0.0171 0.0500 $0.0171-
</TABLE>
Historical Distribution Summary -- Preferred Stock
<TABLE>
<CAPTION>
Short- Long-
term term Non-taxable Adjustment
Annual Investment Capital Capital Return of Total to
Summary Income Gains(b) Gains Capital Distributions Cost Basis
------- ---------- -------- ------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
1997.................... $0.0077 $0.3523 $0.7565 -- $1.1165 --
</TABLE>
- ------------
(a) On August 11, 1995, the Company distributed Rights equivalent to $0.46 per
share based upon full subscription of all issued shares.
(b) Taxable as ordinary income.
- - Decrease in cost basis.
26
<PAGE>
AUTOMATIC DIVIDEND REINVESTMENT
AND VOLUNTARY CASH PURCHASE PLAN
Enrollment in the Plan
It is the policy of The Gabelli Global Multimedia Trust Inc. ("Multimedia
Trust") to automatically reinvest dividends. As a "registered" shareholder you
automatically become a participant in the Multimedia Trust's Automatic Dividend
Reinvestment Plan (the "Plan"). The Plan authorizes the Multimedia Trust to
issue shares to participants upon an income dividend or a capital gains
distribution regardless of whether the shares are trading at a discount or a
premium to net asset value. All distributions to shareholders whose shares are
registered in their own names will be automatically reinvested pursuant to the
Plan in additional shares of the Multimedia Trust. Plan participants may send
their stock certificates to State Street Bank and Trust Company to be held in
their dividend reinvestment account. Registered shareholders wishing to receive
their distribution in cash must submit this request in writing to:
The Gabelli Global Multimedia Trust Inc.
c/o State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
Shareholders requesting this cash election must include the shareholder's
name and address as they appear on the share certificate. Shareholders with
additional questions regarding the Plan may contact State Street Bank and Trust
Company at 1 (800) 336-6983.
Shareholders wishing to liquidate reinvested shares held at State Street
Bank and Trust Company must do so in writing or by telephone. Please submit your
request to the above mentioned address or telephone number. Include in your
request your name, address and account number. The cost to liquidate shares is
$2.50 per transaction as well as the brokerage commission incurred. Brokerage
charges are expected to be less than the usual brokerage charge for such
transactions.
If your shares are held in the name of a broker, bank or nominee, you
should contact such institution. If such institution is not participating in the
Plan, your account will be credited with a cash dividend. In order to
participate in the Plan through such institution, it may be necessary for you to
have your shares taken out of "street name" and re-registered in your own name.
Once registered in your own name your dividends will be automatically
reinvested. Certain brokers participate in the Plan. Shareholders holding shares
in "street name" at such participating institutions will have dividends
automatically reinvested. Shareholders wishing a cash dividend at such
institution must contact their broker to make this change.
The number of shares of Common Stock distributed to participants in the
Plan in lieu of cash dividends is determined in the following manner. Under the
Plan, whenever the market price of the Multimedia Trust's Common Stock is equal
to or exceeds net asset value at the time shares are valued for purposes of
determining the number of shares equivalent to the cash dividends or capital
gains distribution, participants are issued shares of Common Stock valued at the
greater of (i) the net asset value as most recently determined or (ii) 95% of
the then current market price of the Multimedia Trust's Common Stock. The
valuation date is the dividend or distribution payment date or, if that date is
not a New York Stock Exchange trading day, the next trading day. If the net
asset value of the Common Stock at the time of valuation exceeds the market
price of the Common Stock, participants will receive shares from the Multimedia
Trust valued at market price. If the Multimedia Trust should declare a divi dend
or capital gains distribution payable only in cash, State Street will buy Common
Stock in the open
27
<PAGE>
market, or on the New York Stock Exchange or elsewhere, for the participants'
accounts, except that State Street will endeavor to terminate purchases in the
open market and cause the Multimedia Trust to issue shares at net asset value
if, following the commencement of such purchases, the market value of the Common
Stock exceeds the then current net asset value.
The automatic reinvestment of dividends and capital gains distributions
will not relieve participants of any income tax which may be payable on such
distributions. A participant in the Plan will be treated for Federal income tax
purposes as having received, on a dividend payment date, a dividend or
distribution in an amount equal to the cash the participant could have received
instead of shares.
The Multimedia Trust reserves the right to amend or terminate the Plan as
applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to written notice of the change sent to the members of the Plan
at least 90 days before the record date for such dividend or distribution. The
Plan also may be amended or terminated by State Street on at least 90 days'
written notice to participants in the Plan.
Voluntary Cash Purchase Plan
The Voluntary Cash Purchase Plan is yet another vehicle for our
shareholders to increase their investment in the Multimedia Trust. In order to
participate in the Voluntary Cash Purchase Plan, shareholders must have their
shares registered in their own name and participate in the Dividend Reinvestment
Plan.
Participants in the Voluntary Cash Purchase Plan have the option of making
additional cash payments to State Street Bank and Trust Company for investments
in the Multimedia Trust's shares at the then current market price. Shareholders
may send an amount from $250 to $10,000. State Street Bank and Trust Company
will use these funds to purchase shares in the open market on or about the 15th
of each month. State Street Bank and Trust Company will charge each shareholder
who participates $0.75, plus a pro rata share of the brokerage com missions.
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, bro chures are available by calling (914) 921-5070
or by writing directly to the Multimedia Trust.
- --------------------------------------------------------------------------------
The Annual Meeting of the Multimedia Trust's stockholders will be held at 11:00
A.M. on Monday, May 11, 1998, at the Cole Auditorium, Greenwich Public Library
in Greenwich, Connecticut.
- --------------------------------------------------------------------------------
28
<PAGE>
DIRECTORS AND OFFICERS
THE GABELLI GLOBAL MULTIMEDIA TRUST INC.
One Corporate Center, Rye, NY 10580-1434
Directors
Mario J. Gabelli, CFA
Chairman
Dr. Thomas E. Bratter
President, John Dewey Academy
Bill Callaghan
President, Bill Callaghan Associates
Felix J. Christiana
Former Senior Vice President
Dollar Dry Dock Savings Bank
James P. Conn
Managing Director & Chief Investment Officer
Financial Security Assurance Holdings Ltd.
Karl Otto Pohl
Former President, Deutsche Bundesbank
Anthony R. Pustorino
Certified Public Accountant
Professor, Pace University
Salvatore J. Zizza
Executive Vice President
FMG Group
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 11,012,415
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
Phone: 1-800-GABELLI (1-800-422-3554)
Fax: 914-921-5118 Internet: www.gabelli.com
e-mail: [email protected]
GBFMT-AR-98
