The Gabelli Global Telecommunications Fund First Quarter Report March 31, 1996

Transcription

1 Gabelli Global Series Funds, Inc. One Corporate Center Rye, New York The Gabelli Global Telecommunications Fund First Quarter Report March 31, 1996 To Our Shareholders: In the first quarter of 1996, the stock market shrugged off an economy mired in snow, the GM strike, the ongoing budget stalemate in Washington and rising long-term interest rates to post a solid advance. Flow of funds into mutual funds and continued merger activity at record levels provided the fuel for an ebullient U.S. stock market. s around the world marched in step. INVESTMENT RESULTS (a) Quarter 1st 2nd 3rd 4th Year 1996: Net Asset Value $11.72 Total Return % 1995: Net Asset Value $9.77 $10.29 $11.12 $11.12 $11.12 Total Return % 5.3% 8.1% 1.6% 16.2% 1994: Net Asset Value $9.68 $9.62 $10.38 $9.73 $9.73 Total Return (5.1)% (0.6)% 7.9% (5.3)% (3.7)% 1993: Net Asset Value $10.20 $10.20 Total Return %(b) 3.0%(b) Average Annual Return - March 31, 1996 (a) 1 Year % Life of Fund(b) % Dividend History Payment (ex) Date Rate Per Share Reinvestment Price December 29, 1995 $0.182 $11.12 December 30, 1994 $0.095 $ 9.73 December 31, 1993 $0.102 $10.20 (a) Average annual and total returns reflect changes in share price and reinvestment of dividends and are net of expenses. Of course, returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed they may be worth more or less than their original cost. Investing in foreign securities involves risks not ordinarily associated with investments in domestic issues, including currency fluctuation, economic and political risks. (b) From commencement of operations on November 1, Investment Performance During the first quarter ended March 31, 1996, the Fund s total return was 5.4%. This compares to returns of 5.4% and 5.6% over the same period for the Standard & Poor s 500 Index (S&P 500) and the Lipper Global Fund Index, respectively. The S&P 500 is an unmanaged indicator of stock market performance and the Lipper Global Fund Index covers 30 global open-end mutual funds which may invest in a diversified group of industry sectors. For the 12 months ended March 31, 1996, the Fund gained 21.9%, including reinvested dividends, versus 32.1% for the S&P 500 and 20.7% for the Lipper Global Fund Index.

2 Since its inception on November 3, 1993, through March 31, 1996, the Fund achieved a total return of 21.5%, which equates to an average annual return of 8.4%. As of March 31, 1996, the Fund s shareholders numbered 20,491 and total net assets were $123.6 million. COMMENTARY Finally, A Telecommunications Bill In the context of a catalyst surfacing value, we would like to highlight the Telecommunications Act of 1996 and its implications for investors. On February 8, 1996, the Telecom Act was signed into law, promising a massive reformation of the telecommunications industry. The legislation dissolves artificial barriers between the local telephone, long distance and cable TV industries and unlocks new opportunities for growth. The legislation was driven by market forces, technological advances, consumer and business demand for higher-value services and the desire to develop a telecommunications infrastructure for the 21st century. The consolidation and convergence that we expect to emerge should bring shareholder values to the surface. The price to be paid is increased competition. Telecommunications is a key area of focus for investors. The Regional Bell Operating Companies (RBOCs) and GTE have a total market capitalization of about $245 billion (representing 5% of the S&P 500), and the top three long distance companies have a total market capitalization of $135 billion (3% of the S&P 500). Telecom Companies Preparing For Competition and Convergence The telecom industry began to prepare for the coming increase in competition before the Telecom Act was passed. In 1995, US West, Sprint and AT&T announced plans to split up their respective companies to enhance shareholder value. In November 1995, US West created two tracking stocks: US West Communications Group (USW - $ NYSE) to track the performance of its plain old telephone service (POTS) company and US West Media Group (UMG - $ NYSE) to track the performance of its multimedia, wireless, Yellow Pages and international assets. Sprint Corp. (FON - $ NYSE) spun off its cellular unit, 360 Communications (XO - $ NYSE), on March 7, 1996 in order to concentrate on the development of personal communications services (PCS) and cable telephony through an alliance of major cable operators. In 1996, AT&T intends to spin off its equipment and computer businesses to focus on its long distance and wireless operations. On April 1, 1996, SBC Communications (SBC - $ NYSE, formerly Southwestern Bell) and Pacific Telesis (PAC - $ NYSE) announced a definitive merger agreement, under which PAC shareholders would receive of an SBC share for each PAC share held. Industry Consolidation Should Continue at a Brisk Pace Competitive access providers (CAPs) should benefit from the new law because the opening of local phone markets is accelerated. Long distance companies need access to customers in the local loop, so they are likely to team up with and/or buy CAPs. Speculation abounds that NYNEX (NYN - $

3 NYSE) and Bell Atlantic (BEL - $ NYSE) are planning a merger to expand their footprint of inregion long distance coverage and to realize economies of scale. Other RBOCs are likely to join the mating game. Smaller long distance carriers such as LCI International (LCI - $ NYSE) and Frontier Corp. (FRO - $ NYSE) are possible takeover candidates by RBOCs looking for entry into long distance. Independent phone companies such as Southern New England Telephone (SNG - $ NYSE) are also potential takeover targets by RBOCs looking to expand their service footprint and increase inter-city long-distance traffic. Big Win for Cable: Telephone s Opened The big win for cable companies is the ability to enter telephony under a uniform, national framework. Cable revenues total about $25 billion. This compares with a local telephone market of $100 billion. Cable operators get immediate pricing flexibility such as the opportunity to offer bulk discounts to apartment buildings. Multiple cable system operators, or MSO s, will be freed from price regulation in three years - by March Small systems are exempt from price regulation immediately upon enactment. Small systems are defined as those serving less than 1% of total U.S. cable subscribers, with gross annual revenues of less than $250 million and which serve franchise areas with fewer than 50,000 subscribers. Cable companies can be deregulated sooner than March 1999 if they are subject to effective competition: 1) 50% of households are passed by a competitor and 15% take the service or, 2) a telephone company offers comparable programming services. Providing direct broadcast satellite (DBS) service does not count as comparable programming. Telco/cable (or cable/telco) investments cannot exceed 10% in a region. Joint-venturing or partnering to offer video and/or telephony services is not permitted. Rural systems with less than 35,000 subscribers are an exception. The law eliminates a previous rule that prohibited the purchase and sale of a cable system within three years. Consumers are also given the choice of renting or purchasing their set-top boxes. Long Distance: Opening of $100 Billion Local Phone The new law opens the local telephone market to the long distance companies. Long distance carriers have a 2 to 3 year window, by our estimate, to enter local telephony before the RBOCs are allowed into long distance. We expect long distance companies to be very aggressive in their pursuit of new revenue streams. The pursuit of local telephony is likely to be multi-faceted, including build-out of local facilities, resale, acquisition of alternative carriers (e.g., competitive access providers), and wireless POTS via cellular or PCS. AT&T becomes completely deregulated as a result of the new law and is likely to lead the charge into local markets. AT&T recently applied to offer local service in all 50 states. The long distance approval process is likely to be lengthy. We believe the process for allowing RBOCs into long distance will be long and drawn out and, in our opinion, the regulatory approval process is likely to take several years. Nevertheless, the RBOCs number one goal is to enter long distance within their regions as the RBOCs are immediately allowed to perform incidental in-region services such as carrying long distance calls for cellular or video services. 3

4 The Opportunity: New Business + New s = New Growth We estimate communications services to be a $200 billion pie. POTS accounts for about half the total revenue. If the $30 billion in access charges paid to local phone companies for use of the local network is excluded, long distance revenue is about $45 billion. Wireless and cable TV each generate about $25 billion in revenue. Emerging markets such as CAPs and the Internet amount to $1 billion and $7 billion, respectively. EBITDA margins are in the 40-45% range for the mature businesses. By 2000, we expect each industry segment to capture a portion of the other areas as well as lose market share in its original segment, i.e., there will be a substantial amount of give and take among the different industry segments. Individual telephone, cable and long distance companies are in the process of developing new competitive strategies. The first goal is to cut costs to become the low cost provider, bring prices in line, and hold on to the existing customer base by creating value added services. The next step would be to stake out new territories fresh revenue streams that are opening due to the legislation, and develop cohesive strategies to attack those markets. Deregulation is occurring at a rapid pace on a global scale. It will be important to take advantage of international opportunities and position companies for the worldwide growth in communications. It will be essential to participate in all or the majority of these emerging areas to maintain a competitive product offering. Additionally, to compete on the global economic stage and to attract foreign capital, developing countries need modern telecommunications systems. Who will build and service them? AT&T and Northern Telecom Limited (NT - $ NYSE) will play a big role in wiring the world. AirTouch Communications (ATI - $ NYSE) which has done a terrific job winning joint venture cellular telephone franchises on technical merit throughout Europe, will expand into the Pacific Rim and Latin America. Motorola, Inc. (MOT - $ NYSE) will build millions of handsets for new international wireless customers. Cable and Wireless plc (CWP - $ NYSE) (51% owners of Hong Kong Telephone) will be a gateway to China. THE PORTFOLIO HOLDINGS BY GEOGRAPHIC REGION - 3/31/96 Global Allocation The chart at the right represents the Fund s holdings by geographic region as of March 31, The geographic allocation will change based on current global market conditions. Countries and/or regions and companies represented in the chart and below may or may not be included in the Fund s portfolio in the future. United States 53.5% Europe 17.5% Asia/Pacific Rim 9.7% Canada 6.7% Latin America 6.2% Other 4.3% Cash 2.1% 4

5 Let s Talk Stocks The following are stock specifics on selected holdings of our Fund s investments. Favorable EBITDA prospects do not necessarily translate into higher stock prices, but they do express a positive trend which we believe will develop over time. AirTouch Communications Corp. (ATI - $ NYSE) is one of the premier players in global wireless communications. Operating in attractive cellular markets in the U.S. and overseas (including Germany, Japan, Portugal, Sweden, Belgium, Italy, Spain and South Korea), the company is well-positioned to participate in the worldwide expansion of wireless communications. There are currently 70 million cellular customers worldwide, with half of those in the U.S. Annual growth is 40% to 50%. To consolidate its cellular position in the U.S., AirTouch has arranged to buy the 60% of Cellular Communications Inc. it doesn t already own for a total of $1.65 billion. AirTouch s PMV is estimated at $45 for 1996 and should increase 20% annually through the year Cable & Wireless plc (CWP - $ NYSE) is a United Kingdom-based company comprised of broad global telecommunications interests. These include 80% of Mercury Communications, the primary competitor in the U.K. to British Telecommunications (which is the AT&T of the U.K.), 51% of Hong Kong Telecommunications, the fastest growing and dominant telecom service provider in Hong Kong, a U.S.-based long distance company and numerous other wired and wireless investments on a global basis. After subtracting out CWP s interest in Hong Kong Tel at public market value, we are paying about three times the EBDIT of CWP s other assets. We are attracted to CWP based on its high rate of growth and reasonable stock market valuation. Comcast Corporation (CMCSA - $ NASDAQ), pro-forma for previously announced acquisitions, is the third-largest cable company in the U.S. serving approximately 4.3 million subscribers. The company owns a cellular telephone business serving 8 million POPs in the high traffic middle Atlantic region including parts of New Jersey, Pennsylvania and Delaware. In addition to its controlling ownership of QVC, the cable TV retailer, Comcast recently added to its programming investments by purchasing a controlling interest in the Philadelphia 76ers, Philadelphia Flyers and two arenas. We estimate Comcast s PMV to be about $29 per share. NYNEX Corporation (NYN - $ NYSE) is one of the seven RBOCs (Regional Bell Operating Companies). Its largest markets are in New York State and Massachusetts. 95% of its Northeast service territory is now deregulated. The company has merged its cellular interests with those of Bell Atlantic to form a larger service footprint which will create economies of scale and accelerate growth. Internationally, the company is the second largest player in the U.K. cable market. It has also established a significant presence in Asia, including Thailand and China. We estimate NYNEX s private market value to be about $100 per share. Tele-Communications, Inc. (TCOMA - $ NASDAQ), the largest cable TV operator in the U.S., serving about 14 million subscribers, is guided by Dr. John C. Malone - one of the most shareholder sensitive managers we have found. Given that regulation has historically played a major role in the valuation of cable properties, we believe that the recent passage of the Telecommunications Act of 1996, combined with the current deregulatory climate in Congress, could prove to be a significant catalyst for 5

6 cable stocks. Strategically, TCOMA is a well-positioned industry leader, from its telephony joint-venture with Sprint to its innovative Internet access business, to its 80% ownership of Tele- Communications International. Telefonica de Espana (TEF - $ NYSE) is a diversified telecommunications service provider offering services to more than 15 million lines. The company also services a fast growing cellular subscriber base which now exceeds four hundred thousand. We consider TEF an ideal way to invest in Latin America, given its diversified portfolio of telecommunications operators in the region. Its portfolio of publicly traded Latin American companies includes: Compania del Telefonos de Chile, Telefonica de Argentina S.A. and Compania Peruana de Telefonos. TEF also holds interests in non-public Latin American telecom operators in Colombia, Puerto Rico, Uruguay and Venezuela. We applaud the company s long-term strategy to create a Pan-American network, a leveraging of the Spanish-speaking world, that it can link to its operations in Spain. Telephone and Data Systems (TDS - $ ASE) is one of our favorite long-term investments. Management is smart and value-creation driven (as opposed to earnings per share driven). TDS is a domestic provider of local telephone service to about 425,000 mostly rural access lines, the seventh largest cellular telephone company in the U.S. and a fast growing paging company. Consolidated operating cash flow rose 25% in 1995, driven mainly by internal growth in its cellular business. Cellular telephone subscribers grew by almost 70% to 710,000 at year-end We expect strong growth at TDS to continue, resulting in a private market value of $160 per share and earnings of $5.60 per share by TDS has been active in the PCS auctions and was the high bidder in eight markets with a combined population of 28 million people. Vodafone Group plc (VOD - $ NYSE) is a U.K.-based global provider of wireless telecommunications services. The company s major interests in the U.K. include cellular, paging and data transmission. Vodafone s shares sell at one of the lowest multiples of EBITDA among the major wireless companies, despite a pristine balance sheet and prospects for 20% annual growth in earnings and cash flow. Management is highly respected and has positioned the company to share in the exciting and rapidly growing global market for wireless communications. Minimum Initial Investment - $25,000 The Fund s minimum initial investment for both regular and retirement accounts is $25,000. There are no subsequent investment minimums. No initial minimum is required for those establishing an Automatic Investment Plan. The Gabelli Global Telecommunications Fund and many of our other Funds are available through the no-transaction fee programs at many major discount brokerage firms. Internet You can now visit us on the Internet. Our home page at contains information about Gabelli Funds, Inc., the Gabelli Mutual Funds, quarterly reports, closing prices, IRAs, 401(k)s and other current news. You can also send us at info@gabelli.com. 6

7 In Conclusion As investors entrusted with preserving and enhancing the value of your assets, we react with mixed emotions to rapidly rising equities markets. While we enjoy the tailwind provided by investor euphoria, we worry about what happens when the party winds down. Our reservations about the short-term prospects for the U.S. stock market may or may not prove worthy of concern over the next several quarters. Sooner or later, however, this historic bull market will lose steam, either with a real correction/bear market, or preferably an extended period of more modest returns. In a less robust broad market environment, our conservative value oriented approach to equities investing should demonstrate its virtues on an absolute and relative basis. The Fund s daily net asset value is available in the financial press and each evening after 6:00 PM (Eastern Time) by calling GABELLI ( ). The Fund s NASDAQ symbol is GABTX. Please call us during the day for further information. We thank you for your confidence in our investing abilities and wish you a productive and financially rewarding Sincerely, Mario J. Gabelli, CFA President and Portfolio Manager Marc J. Gabelli Associate Portfolio Manager April 19, 1996 Ivan Arteaga, CPA Associate Portfolio Manager Top Ten Holdings March 31, 1996 Tele-Communications, Inc. Cable & Wireless plc Telephone & Data Systems, Inc. NYNEX Corporation AirTouch Communications Inc. Telefonica de Espana Comcast Corporation Telekom Malaysia Vodafone Group plc Telecom Corp. of New Zealand NOTE: The views expressed in this report reflect those of the portfolio manager only through the end of the period of this report as stated on the cover. The manager s views are subject to change at any time based on market and other conditions. 7

8 The Gabelli Global Telecommunications Fund Portfolio of Investments March 31, 1996 (Unaudited) COMMON STOCKS 93.92% ALTERNATIVE TELECOMMUNICATION SERVICE PROVIDERS 2.52% 500 Bouygues Group $ 58,707 $ 50,964 20,000 GST Telecommunications, Inc , ,750 15,000 Intelcom Group , ,250 1,000 Intermedia Communications of Florida, Inc ,540 18,375 2,500 Mannesmann AG , ,169 25,000 MFS Communications Company, Inc ,196 1,556,250 3,000 Veba AG , ,796 2,026,144 3,119,554 AVIATION: PARTS AND ACCESSORIES 1.38% 27,000 General Motors Corporation Cl. H ,043,162 1,707,750 BROADCASTING 0.11% 1,000 British Sky Broadcasting Group ADR ,400 40,125 3,000 U.S. Satellite Broadcasting Co ,040 98, , ,375 CABLE 11.49% 55,000 Adelphia Communications Corporation Cl. A , ,000 34,000 Bell Cablemedia plc ADR.. 575, ,250 25,000 Cablevision Systems Corporation Cl. A ,301,259 1,437,500 65,000 Century Communications Corporation Cl. A , , ,000 Comcast Corporation Cl. A.. 2,122,173 2,345,625 42,000 Comcast U.K. Cable Partners Limited , ,250 10,000 General Cable Corporation plc ADR , ,375 52,000 International CableTel Incorporated ,675 1,566,500 20,000 NYNEX CableComms Group plc ADR , , ,000 Tele-Communications, Inc. Cl. A ,641,812 1,856,250 36,250 Tele-Communications, Inc. / Liberty Media Group Cl. A 822, ,094 5,000 Telewest Communications plc ADR $ 121,375 $ 107,500 90,000 United International Holdings Inc. Cl. A ,368,219 1,440,000 87,000 US WEST Media Group... 1,488,702 1,794,375 7,500 Videotron Holdings plc ADR 113, ,625 12,775,317 14,196,532 ELECTRICAL EQUIPMENT 0.94% 5,000 General Instrument Corporation , ,875 20,000 Loral Corporation , , Omnipoint Corporation ,400 10,200 2,000 Scientific-Atlanta, Inc ,908 35,500 1,123,760 1,162,575 ENTERTAINMENT 1.33% 20,000 Lodgenet Entertainment Corporation , ,000 7,000 News Corporation Limited ADR , ,000 30,000 Time Warner Inc ,159,125 1,226,250 1,471,971 1,647,250 LONG DISTANCE TELEPHONE COMPANIES 7.50% 25,000 AT&T Corp ,244,294 1,531,250 25,000 Call-Net Enterprises Inc , ,238 25,000 Cam-Net Communications Network Inc ,153 17, DDI Corporation ,198 1,257,246 5,000 Fonorola Inc ,782 38, ,000 General Communication Inc. Cl. A , ,000 6,000 Kokusai Denshin , ,787 26,000 LCI International Inc , ,000 30,000 MCI Communications Corporation , ,500 60,000 Petersburg Long Distance Inc , ,250 12,000 Portugal Telecom S.A. ADR 233, ,500 42,000 Sprint Corporation ,143,260 1,596,000 20,000 WorldCom Inc , ,000 6,937,325 9,265,980 PUBLISHING 0.78% 25,000 Media General, Inc. Cl. A , ,750 8

9 The Gabelli Global Telecommunications Fund Portfolio of Investments (Continued) March 31, 1996 (Unaudited) REGIONAL/LOCAL TELEPHONE SERVICES 18.62% 34,000 ALLTEL Corporation $ 956,525 $ 1,054,000 24,000 Ameritech Corporation ,075 1,308,000 50,000 Atlantic Tele-Network Inc.. 475,432 1,125,000 22,000 Bell Atlantic Corporation.... 1,183,225 1,358,500 40,000 BellSouth Corporation ,187,988 1,480,000 9,000 Bruncor, Inc , ,285 45,000 Cincinnati Bell Inc ,125 2,340,000 62,000 C-TEC Corporation Cl. B... 1,748,221 2,278,500 1,000 First Pacific Company Ltd. Spons. ADR ,875 71,123 10,000 Frontier Corporation , ,000 50,000 GTE Corporation ,745,125 2,193,750 15,000 Island Telephone Company Limited , ,066 44,000 Lincoln Telecommunications Company , ,000 19,000 Maritime Telegraph and Telephone Company Limited , ,132 12,000 NewTel Enterprises Limited. 207, ,015 60,000 NYNEX Corporation ,222,287 2,992,500 12,000 Pacific Telecom, Inc , ,000 40,000 Pacific Telesis Group Inc.... 1,274,413 1,105,000 3,000 Peoples Telephone Company Inc ,000 7,500 10,000 Quebec-Telephone , ,205 25,000 SBC Communications, Inc ,807 1,315,625 23,000 Southern New England Telecommunications Corporation , ,750 10,000 Telus Corporation , ,493 25,000 US WEST Communications Group , ,375 17,474,389 23,012,819 TELECOMMUNICATIONS (OTHER) 0.18% 2,500 Great Nordic Stores , ,107 2,000 United Communication Industry ,341 27, , ,502 TELEPHONE EQUIPMENT 1.69% 80,000 Champion Technology Holdings ADR ,658 47,584 4,400 Ericsson (L.M.) Telephone Company ADR ,972 94,050 2,500 Motorola, Inc $ 113,969 $ 132,500 25,000 Northern Telecom Limited.. 861,000 1,193,750 1,000 Phillips Electronics N.V ,050 36,375 2,000 Thyssen AG , ,544 77,000 Time Engineering Berhad , ,343 1,819,952 2,089,146 TELEPHONE NETWORKS 28.24% 110,000 BC TELECOM Inc ,995,770 2,053,900 45,000 BCE Inc ,540,812 1,591,875 3,000 BHI Corporation ,250 45,375 21,000 British Telecommunications plc ADR ,436,675 1,186, ,000 Cable & Wireless plc ADR.. 3,830,513 4,221,875 20,000 Compania Telefonos Chile S.A. ADR ,575,797 1,695,000 30,000 CP Pokphand Spons. ADR.. 245, , ,100 CPT Telefonica del Peru Cl. B 750,380 1,046,637 15,000 Hong Kong Telecommunications Ltd. ADR , ,000 1,000 Hungarian Telephone & Cable Corporation ,882 16, Japan Telecom Co. Ltd , , Nippon Telegraph & Telephone Corporation.... 1,216,226 1,220,961 5,000 Nippon Telegraph & Telephone Corporation ADR , ,000 50,000 Nordictel Holdings AB , ,854 1,500,000 Orient Telecom & Technology Holdings Limited , , Pakistan Telecommunications GDR(a) ,165 78,400 27,500 Philippine Long Distance Telephone Company ,915,813 1,464,375 2,000 PT Indonesia Satellite ADR.. 68,225 68,250 8,000 PT Telekomunikasi Indonesia 155, ,000 38,000 Royal PTT Nederland NV ADR ,103,064 1,501,000 20,000 Singapore Telecommunications Limited ,208 49,148 35,000 STET SpA - Societa Financiaria Telfonica SpA ADR , ,625 8,000 Tele Danmark A/S , ,407 8,000 Tele Danmark A/S ADR , ,000 18,000 Telecom Argentina Stet - France Telecom S.A. ADR.. 848, ,000 2,000 Telecom Asia ADR ,620 57,400 9

10 The Gabelli Global Telecommunications Fund Portfolio of Investments (Continued) March 31, 1996 (Unaudited) TELEPHONE NETWORKS 28.24% (continued) 35,500 Telecom Corporation of New Zealand Ltd. ADR $1,715,462 $2,542, ,000 Telecom Italia SpA , ,334 44,000 Telecomunicacoes Brasileiras (Telebras) S.A. Spons. ADR ,339,035 2,189,000 3,000,000 Telecomunicacoes de Rio de Janeiro , , ,000 Telecomunicacoes de Sao Paulo SA (Telesp) , ,639 4,000,000 Telecommunications of Jamaica , ,200 45,000 Telefonica de Argentina S.A. ADR ,249,274 1,153,125 65,000 Telefonica de Espana ADR.. 2,674,449 3,087,500 50,000 Telefonos De Mexico S.A. Cl. L ADR ,945,500 1,643, ,000 Telekom Malaysia Berhad... 1,457,048 1,747,040 5,800 Thai Telephone & Telecom GDR ,462 62,002 32,739,557 34,903,482 WIRELESS COMMUNICATIONS 19.14% 14, o Communications Company , ,166 40,000 ABC Communications Holdings Ltd ,301 7, ,000 AirTouch Communications Inc ,304,361 3,112,500 1,000 American Mobile Satellite Corporation ,925 17,000 75,000 American Paging, Incorporated , ,188 14,200 Associated Group, Inc. Cl. A 308, ,350 16,000 Associated Group, Inc. Cl. B 339, ,000 14,000 BCE Mobile Communications Inc , ,713 11,000 Cellular Communications, Inc. Cl. A , ,375 20,000 Cellular Communications International Inc , ,000 1,000 Cellular Communications of Puerto Rico, Inc ,915 27, ,000 Centennial Cellular Corp. Cl. A ,806,170 1,677,500 20,000 Century Telephone Enterprises, Inc $ 553,750 $ 635,000 2,000 Commnet Cellular Inc ,978 55,750 50,000 COMSAT Corporation ,271,480 1,168,750 1,200 Echostar Communications Corporation Cl. A ,048 40,500 5,000 Globalstar Telecommunications Limited , ,000 55,000 Grupo Iusacell S.A. ADR Ser. D , ,125 15,000 Himachal(a) ,850 93,750 24,000 Jasmine International ,135 88,836 5,300 Matrix Telecommunications Ltd ,992 9,183 1,000 Metrocall, Inc ,915 20,750 15,000 Mobile Telecommunication Technologies Corp , ,375 12,154 NEXTEL Communications, Inc. Cl. A , ,407 8,500 PanAmSat Corporation , ,250 8,000 Pittencrieff Communications, Inc ,180 40,000 37,500 PriCellular Corporation , ,563 42,000 Rogers Cantel Mobile Communications Cl. B ,761 1,008,000 4,000 Rural Cellular Corp. Cl. A... 40,000 46,000 11,000 Securicor Group plc , , ,000 Technology Resources Industries , ,420 1,300,000 Telecom Italia Mobile SpA. 1,437,598 2,361,377 17,000 Tele-Communications International, Inc , ,375 4,000 Teleglobe Inc ,486 61,074 80,000 Telephone and Data Systems, Inc ,460,243 3,700,000 22,000 Total Access Communications plc , ,600 3,000 United States Cellular Corporation , ,500 1,500 Vanguard Cellular Systems, Inc. Cl. A ,040 30,000 68,000 Vodafone Group plc ADR... 1,901,246 2,550,000 20,214,242 23,660,010 TOTAL COMMON STOCKS.. 98,579, ,094,725 10

11 The Gabelli Global Telecommunications Fund Portfolio of Investments (Continued) March 31, 1996 (Unaudited) Principal Amount or CONVERTIBLE PREFERRED STOCKS 2.24% CABLE 1.08% 20,000 Tele-Communications, Inc. Cv. Pfd. Ser. E $ 1,420,021 $ 1,332,500 LONG DISTANCE TELEPHONE COMPANIES 0.54% 10,000 Philippine Long Distance Telephone Company % Cv. Pfd. Ser. III , ,500 4,000 Sprint Corporation 8.25% Cv. Pfd , , , ,500 WIRELESS COMMUNICATIONS 0.62% 9,700 LCI International, Inc. 5.00% Cv. Pfd , ,350 5,000 Mobile Telecommunication Technologies Corp. $2.25 Cv. Pfd.(a) , , , ,850 TOTAL CONVERTIBLE PREFERRED STOCKS ,467,787 2,767,850 CONVERTIBLE CORPORATE BONDS 1.68% TELEPHONE NETWORKS 0.88% $1,000,000 Telekom Malaysia Berhad Sub. Deb. Cv. 4.00%, 10/03/04(a) ,000,453 1,090,000 WIRELESS COMMUNICATIONS 0.80% 300,000,000(b)Softe SA Unsub. Deb. Cv. 4.25%, 07/30/98(a) , , ,000 Technology Resources Industries Sub. Deb. Cv. 2.75%, 11/28/04(a) , ,500 Principal Amount or $500,000 Tele 2000 Sub. Deb. Cv. 9.75%, 04/14/97(a) $ 500,000 $ 475, , ,141 TOTAL CONVERTIBLE CORPORATE BONDS ,945,368 2,076,141 PREFERRED STOCKS 0.06% TELEPHONE EQUIPMENT 0.06% 2,000 Nokia Group AB Preference. 76,675 68,500 TOTAL PREFERRED STOCKS 76,675 68,500 U.S. GOVERNMENT OBLIGATIONS 1.62% $2,010,000 U.S. Treasury Bills, 4.68% to 5.02% Due 04/04/96 to 05/02/ ,004,691 2,004,691 TOTAL U.S. GOVERNMENT OBLIGATIONS ,004,691 2,004,691 TOTAL INVESTMENTS 99.52% $105,074,013* 123,011,907 Cash and Other Assets, in excess of Liabilities 0.48% 598,058 NET ASSETS % (10,548,918 Shares outstanding) $123,609,965 Net Asset Value And Redemption Price Per Share $11.72 Non-income producing security. ADR American Depositary Receipt. GDR Global Depositary Receipt. (a) Security exempt from registration under Rule 144A of the Securities Act of These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 1996, Rule 144A securities amounted to $2,145,150 or 1.74% of net assets. (b) Principal amount denoted in Italian Lira. *For Federal Income Tax purposes: Aggregate cost $105,074,013 Gross unrealized appreciation $ 22,068,659 Gross unrealized depreciation (4,130,765) Net unrealized appreciation $ 17,937,894 11